Labor Law Review

Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 199890
August 19, 2013
JEROME M. DAABAY, PETITIONER,

vs.
COCA-COLA BOTTLERS PHILS., INC., RESPONDENT.
DECISION
REYES, J.:
This resolves petitioner Jerome M. Daabays (Daabay) Verified Petition for Review1 , which
assails the Decision2dated June 24, 2011 and Resolution3 dated December 9, 2011 of the Court
of Appeals (CA) in CA-G.R. SP No. 03369-MIN.
The case stems from a complaint for illegal dismissal, illegal suspension, unfair labor practice
and monetary claims filed by Daabay against respondent Coca-Cola Bottlers Phils., Inc. (CocaCola) and three officers of the company.4The records indicate that the employment of Daabay
with Coca-Cola as Sales Logistics Checker was terminated by the company in June
2005,5 following receipt of information from one Cesar Sorin (Sorin) that Daabay was part of a
conspiracy that allowed the pilferage of company property.6
The allegations of Sorin were embodied in an affidavit which he executed on April 16, 2005.7 The
losses to the company were also confirmed by an inventory and audit conducted by Coca-Colas
Territory Finance Head, Silvia Ang. Such losses comprised of cases of assorted softdrinks, empty
bottles, missing shells and missing pallets valued at P20,860,913.00.8
Coca-Cola then served upon Daabay a Notice to Explain with Preventive Suspension, which
required him to explain in writing his participation in the scheme that was reported to involve
logistics checkers and gate guards. In compliance therewith, Daabay submitted an Explanation
dated April 19, 2005 wherein he denied any participation in the reported pilferage.9
A formal investigation on the matter ensued. Eventually, Coca-Cola served upon Daabay a
Notice of Termination that cited pilferage, serious misconduct and loss of trust and confidence
as grounds. At the time of his dismissal, Daabay had been a regular employee of Coca-Cola for
eight years, and was receiving a monthly pay ofP20,861.00, exclusive of other benefits.10
Daabay then filed the subject labor complaint against Coca-Cola and Roberto Huang (Huang),
Raymund Salvador (Salvador) and Alvin Garcia (Garcia), who were the President and Plant
Logistics Managers, respectively, of Coca-Cola at the time of the dispute.11 On April 18, 2008,
Executive Labor Arbiter Noel Augusto S. Magbanua (ELA Magbanua) rendered his Decision12 in
favor of Daabay. He ruled that Daabay was illegally dismissed because his participation in the
alleged conspiracy was not proved by substantial evidence. In lieu of reinstatement and
considering the already strained relations between the parties, ELA Magbanua ordered the
payment to Daabay of backwages and separation pay or retirement benefits, as may be
applicable. The dispositive portion of ELA Magbanuas Decision reads:
WHEREFORE, premises considered, judgment is hereby rendered declaring the dismissal of
complainant Jerome Daabay as illegal, and ordering respondents to pay complainant his
backwages in the amount of [P]750,996.00.
Additionally, respondents are hereby ordered to pay complainant his separation pay at one (1)
month for every year of service, or his retirement benefits based on the latest Collective
Bargaining Agreement prior to his suspension/termination.
Other claims are hereby ordered dismissed for failure to substantiate.
SO ORDERED.13
Dissatisfied, Coca-Cola, Huang, Salvador and Garcia, appealed from ELA Magbanuas Decision to
the National Labor Relations Commission (NLRC). Daabay filed a separate appeal to ask for his
reinstatement without loss of seniority rights, the payment of backwages instead of separation
pay or retirement benefits, and an award of litigation expenses, moral and exemplary damages
and attorneys fees.
The NLRC reversed the finding of illegal dismissal. In a Resolution14 dated August 27, 2009, the
NLRC held that there was "reasonable and well-founded basis to dismiss [Daabay], not only for
serious misconduct, but also for breach of trust or loss of confidence arising from such company
losses."15 Daabays participation in the conspiracy was sufficiently established. Several
documents such as checkers receipts and sales invoices that made the fraudulent scheme
possible were signed by Daabay.16 The NLRC also found fault in Daabay for his failure to detect
the pilferage, considering that the "timely recording and monitoring as security control for the
outgoing [sic] of company products are necessarily connected with the functions, duties and
responsibilities reposed in him as Sales Logistics Checker."17 Notwithstanding its ruling on the
legality of the dismissal, the NLRC awarded retirement benefits in favor of Daabay. The
dispositive portion of its Resolution reads:
WHEREFORE, premises considered, the appeal of complainant is DENIED for lack of merit, while
that of respondent Coca-Cola Bottlers Philippines, Inc. is GRANTED.
Accordingly, the assailed 18 April 2008 Decision of the Executive Labor Arbiter is hereby
REVERSED and SET ASIDE, and a new judgment is entered DISMISSING the present complaint for
want of evidence.
Let, however, this case be REMANDED to the Executive Labor Arbiter or the Regional Arbitration
Branch of origin for the computation of complainants retirement benefits in accordance with
the latest Collective Bargaining Agreement prior to his termination.
SO ORDERED.18
Coca-Colas partial motion for reconsideration to assail the award of retirement benefits was
denied by the NLRC in a Resolution19 dated October 30, 2009. The NLRC explained that there
was a need "to humanize the severe effects of dismissal"20 and "tilt the scales of justice in favor
of labor as a measure of equity and compassionate social justice."21 Daabay also moved to
reconsider, but his motion remained unresolved by the NLRC.22Undaunted, Coca-Cola appealed
to the CA.
The CA agreed with Coca-Cola that the award of retirement benefits lacked basis considering
that Daabay was dismissed for just cause. It explained:
We are not oblivious of the instances where the Court awarded financial assistance to dismissed
employees, even though they were terminated for just causes. Equity and social justice was the
vague justification. Quickly realizing the unjustness of these [s]o-called equitable awards, the
Supreme Court took the opportunity to curb and rationalize the grant of financial assistance to
legally dismissed employees. Thus, in Philippine Long Distance Telephone Company v. National
Labor Relations Commission, the Supreme Court recognized the harsh realities faced by
employees that forced them, despite their good intentions, to violate company policies, for
which the employer can rightfully terminate their employment. For these instances, the award
of financial assistance was allowed. But, in clear and unmistakable language, the Supreme Court
also held that the award of financial assistance should not be given to validly terminated
employees, whose offenses are iniquitous or reflective of some depravity in their moral
character. x x x.23 (Citation omitted)
Thus, the dispositive portion of its Decision dated June 24, 2011 reads:
FOR THESE REASONS, the writ of certiorari is GRANTED; the portion of the Resolution
promulgated on 27 August 2009 remanding of the case to the Executive Labor Arbiter or the
Regional Arbitration Branch of origin for computation of retirement benefits is DELETED.
SO ORDERED.24
Daabays motion for reconsideration was denied in a Resolution25 dated December 9, 2011;
hence, this petition.
It bears stressing that although the assailed CA decision and resolution are confined to the issue
of Daabays entitlement to retirement benefits, Daabay attempts to revive through the present
petition the issue of whether or not his dismissal had factual and legal bases. Thus, instead of
confining itself to the issue of whether or not Daabay should be entitled to the retirement
benefits that were awarded by the NLRC, the petition includes a plea upon the Court to affirm
ELA Magbanuas Decision, with the modification to include: (a) his allowances and other
benefits or their monetary equivalent in the computation of his backwages; (b) his actual
reinstatement; and (c) damages, attorneys fees and litigation expenses.
We deny the petition.
We emphasize that the appeal to the CA was brought not by Daabay but by Coca-Cola, and was
limited to the issue of whether or not the award of retirement benefits in favor of Daabay was
proper. Insofar as CA-G.R. SP No. 03369-MIN was concerned, the correctness of the NLRCs
pronouncement on the legality of Daabays dismissal was no longer an issue, even beyond the
appellate courts authority to modify. In Andaya v. NLRC,26 the Court emphasized that a party
who has not appealed from a decision may not obtain any affirmative relief from the appellate
court other than what he had obtained from the lower court, if any, whose decision is brought
up on appeal.27 Further, we explained in Yano v. Sanchez,28 that the entrenched procedural rule
in this jurisdiction is that a party who did not appeal cannot assign such errors as are designed to
have the judgment modified. All that he can do is to make a counter-assignment of errors or to
argue on issues raised below only for the purpose of sustaining the judgment in his favor.29 Due
process prevents the grant of additional awards to parties who did not appeal.30 Considering
that Daabay had not yet appealed from the NLRCs Resolution to the CA, his plea for the
modification of the NLRCs findings was then misplaced. For the Court to review all matters that
are raised in the petition would be tolerant of what Daabay was barred to do before the
appellate court.
Before the CA and this Court, Daabay attempts to justify his plea for relief by stressing that he
had filed his own motion for reconsideration of the NLRCs Resolution dated August 27, 2009
but the same remained unacted upon by the NLRC. Such bare allegation, however, is insufficient
to allow the issue to be disturbed through this petition. We take note of Daabays failure to
attach to his petition a copy of the motion which he allegedly filed with the NLRC. It is also quite
baffling why Daabay does not appear to have undertaken steps to seek the NLRCs resolution on
the motion, even after it remained unresolved for more than two years from its supposed filing.
Granting that such motion to reconsider was filed with the NLRC, the labor tribunal shall first be
given the opportunity to review its findings and rulings on the issue of the legality of Daabays
dismissal, and then correct them should it find that it erred in its disposition. The Court cannot,
by this petition, pre-empt the action which the NLRC, and the CA in case of an appeal, may take
on the matter.
Even as we limit our present review to the lone issue that was involved in the assailed CA
decision and resolution, the Court finds no cogent reason to reverse the ruling of the CA.
Daabay was declared by the NLRC to have been lawfully dismissed by Coca-Cola on the grounds
of serious misconduct, breach of trust and loss of confidence. Our pronouncement in Philippine
Airlines, Inc. v. NLRC31 on the issue of whether an employee who is dismissed for just cause may
still claim retirement benefits equally applies to this case. We held:
At the risk of stating the obvious, private respondent was not separated from petitioners
employ due to mandatory or optional retirement but, rather, by termination of employment for
a just cause. Thus, any retirement pay provided by PALs "Special Retirement & Separation
Program" dated February 15, 1988 or, in the absence or legal inadequacy thereof, by Article 287
of the Labor Code does not operate nor can be made to operate for the benefit of private
respondent. Even private respondents assertion that, at the time of her lawful dismissal, she
was already qualified for retirement does not aid her case because the fact remains that private
respondent was already terminated for cause thereby rendering nugatory any entitlement to
mandatory or optional retirement pay that she might have previously possessed.32 (Citation
omitted and emphasis ours)
In ruling against the grant of the retirement benefits, we also take note of the NLRCs lone
justification for the award, to wit:
Where from the facts obtaining, as in this case, there is a need to humanize the severe effects of
dismissal and where complainants entitlement to retirement benefits are even admitted in
[Coca-Colas] motion to reduce bond, [w]e can do no less but tilt the scales of justice in favor of
labor as a measure of equity and compassionate social justice, taking into consideration the
circumstances obtaining in this case.33 (Emphasis ours)
Being intended as a mere measure of equity and social justice, the NLRCs award was then akin
to a financial assistance or separation pay that is granted to a dismissed employee
notwithstanding the legality of his dismissal. Jurisprudence on such financial assistance and
separation pay then equally apply to this case. The Court has ruled, time and again, that
financial assistance, or whatever name it is called, as a measure of social justice is allowed only
in instances where the employee is validly dismissed for causes other than serious misconduct
or those reflecting on his moral character.34 We explained in Philippine Long Distance Telephone
Company v. NLRC35:
[S]eparation pay shall be allowed as a measure of social justice only in those instances where
the employee is validly dismissed for causes other than serious misconduct or those reflecting
on his moral character. Where the reason for the valid dismissal is, for example, habitual
intoxication or an offense involving moral turpitude, like theft or illicit sexual relations with a
fellow worker, the employer may not be required to give the dismissed employee separation
pay, or financial assistance, or whatever other name it is called, on the ground of social justice.
A contrary rule would, as the petitioner correctly argues, have the effect, of rewarding rather
than punishing the erring employee for his offense. And we do not agree that the punishment is
his dismissal only and that the separation pay has nothing to do with the wrong he has
committed. Of course it has. Indeed, if the employee who steals from the company is granted
separation pay even as he is validly dismissed, it is not unlikely that he will commit a similar
offense in his next employment because he thinks he can expect a like leniency if he is again
found out. This kind of misplaced compassion is not going to do labor in general any good as it
will encourage the infiltration of its ranks by those who do not deserve the protection and
concern of the Constitution.36 (Emphasis ours)
Clearly, considering that Daabay was dismissed on the grounds of serious misconduct, breach of
trust and loss of confidence, the award based on equity was unwarranted.1wphi1
Even the NLRCs reliance on the alleged admission by Coca-Cola in its motion to reduce bond
that Daabay is entitled to retirement benefits is misplaced. Apparently, the supposed admission
by Coca-Cola was based on the following:
In support of its motion to reduce bond, Coca-cola seeks leniency for its failure to include in the
posting of the bond the monetary award for [Daabays] retirement benefits which, as directed
by the Executive Labor Arbiter, should be computed in accordance with the latest Collective
Bargaining Agreement prior to his termination. Coca-Cola explains that the amount of the
retirement benefits has not been determined and there is a need to compute the same on
appeal. x x x.37
It is patent that the statements made by Coca-Cola were in light of ELA Magbanuas ruling that
Daabay was illegally dismissed. Furthermore, any admission was only for the purpose of
explaining the non-inclusion of the amount of retirement benefits in the computation of the
appeal bond posted with the NLRC. Coca-Colas statements should be taken in such context, and
could not be deemed to bind the company even after the NLRC had reversed the finding of
illegal dismissal. And although retirement benefits, where not mandated by law, may still be
granted by agreement of the employees and their employer or as a voluntary act of the
employer,38 there is no proof that any of these incidents attends the instant case.
WHEREFORE, the petition is DENIED. The Decision dated June 24, 2011 and Resolution dated
December 9, 2011 of the Court of Appeals in CA-G.R. SP No. 03369-MIN are AFFIRMED.
SO ORDERED.
BIENVENIDO L. REYES
Associate Justice
Footnotes
*
Acting Member per Special Order No. 1502 dated August 8, 2013.
Rollo, pp. 3-38.
Penned by Associate Justice Edgardo A. Camello, with Associate Justices Abraham B.

Borreta and Melchor Quirino C. Sadang, concurring; id. at 39-48.
3
Id. at 49-53.
Id. at 41.
Id. at 81.
Id. at 40.
Id.
Id. at 40, 54.
Id. at 40-41.
10
Id.
11
Id. at 81.
12
Id. at 54-79.
13
Id. at 79.
14
Id. at 80-91.
15
Id. at 89-90.
16
Id. at 86-87.
17
Id. at 88.
18
Id. at 91.
19
Id. at 92-94.
20
Id. at 93.
21
Id.
22
Id. at 11, 42.
23
Id. at 46.
24
Id. at 48.
25
Id. at 49-53.
26
502 Phil. 151 (2005).
27
Id. at 159, citing Policarpio v. CA, 336 Phil. 329, 341 (1997).
28
G.R. No. 186640, February 11, 2010, 612 SCRA 347.
29
Id. at 358.
30
Unilever Philippines, Inc. v. Maria Ruby M. Rivera, G.R. No. 201701, June 3, 2013.
31
G.R. No. 123294, October 20, 2010, 634 SCRA 18.
32
Id. at 44-46; See also Aquino v. NLRC, 283 Phil. 118 (1992).
33
Rollo, p. 93.
34
Eastern Shipping Lines, Inc., and/or Chiongbian v. Sedan, 521 Phil. 61, 71 (2006); San
Miguel Corporation v. Lao, 433 Phil. 890, 898-899 (2002); Eastern Paper Mills, Inc. v.
NLRC, 252 Phil. 618, 620 (1989).
35
247 Phil. 641 (1988).
36
Id. at 649.
37
Rollo, pp. 83-84.
38
Aquino v. NLRC, G.R. No. 87653, February 11, 1992, 206 SCRA 118.

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 169712
March 14, 2008
MA. WENELITA TIRAZONA, Petitioner,

vs.
COURT OF APPEALS, PHILIPPINE EDS-TECHNO SERVICE INC. (PET INC.) AND/OR KEN KUBOTA,
MAMORU ONO and JUNICHI HIROSE, Respondents.
DECISION
CHICO-NAZARIO, J.:
Assailed in this Special Civil Action for Certiorari1 under Rule 65 of the Rules of Court are the
Decision2 and Resolution3 of the Court of Appeals dated 24 May 2005 and 7 September 2005,
respectively, in CA-G.R. SP No. 85065. The appellate courts Decision dismissed petitioner Ma.
Wenelita Tirazonas Special Civil Action forCertiorari and affirmed the Decision4 dated 30
January 2004 of the National Labor Relations Commission (NLRC) in NLRC CA No. 034872-03,
which ruled that petitioners dismissal from employment was legal; and its Resolution which
denied petitioners Motion for Reconsideration.
The factual and procedural antecedents of the case are as follows:
Private respondent Philippine EDS-Techno Services Inc. (PET) is a corporation duly registered
under Philippine laws and is engaged in the business of designing automotive wiring harnesses
for automobile manufacturers. Private respondents Ken Kubota, Mamoru Ono and Junichi
Hirose are all Japanese nationals, the first being the President and the latter two being the
directors of PET.
On 21 July 1999, PET employed Ma. Wenelita S. Tirazona (Tirazona) as Administrative Manager.
Being the top-ranking Filipino Manager, she acted as the liaison between the Japanese
management and the Filipino staff.
On 15 January 2002, Fe Balonzo, a rank-and-file employee, wrote a letter5 that was addressed to
nobody in particular, but was later acquired by PET management. In her letter, Balonzo
complained that Tirazona humiliated her while she was reporting back to work after
recuperating from a bout of tuberculosis. Balonzo explained that Tirazona insinuated, in a
manner loud enough to be heard from the outside, that Balonzo still had the disease. This
allegedly occurred despite Balonzos possession of a medical clearance that proved her fitness
to return to work. Balonzo thus requested that the necessary action be undertaken to address
the said incident.
Upon receiving the letter, the PET management directed Tirazona to file her comment. Tirazona
replied accordingly in a letter6 wherein she denied the accusations against her. Tirazona stated
that her only intention was to orient Balonzo about the latters rights as a sick employee, i.e.,
that under the law, if the latter planned to resign, the company can give her separation pay.
Tirazona likewise asked for an independent investigation and threatened to file a libel case
against Balonzo for allegedly trying to destroy her reputation and credibility.
After weighing the situation, PET director Ono sent a memorandum to Tirazona, which reads:
February 8, 2002
To: Mrs. W. Tirazona
Re: Letter-Complaint of Fe S. Balonzo
This is to advise you that Management is satisfied that you did not intend to humiliate
or embarrass Ms. Balonzo during the incident on January 14, 2002. It also appreciates
the concern you profess for the welfare of PET employees.
Nonetheless, Management finds your handling of the situation less than ideal.
Considering the sensitive nature of the issue, a little more circumspection could have
readily avoided the incident which it cannot be denied caused unnecessary discomfort
and hurt feelings to Ms. Balonzo. Certainly, you could have discussed the matter in
private and allowed her to first deliver her piece rather than pre-empt her declaration.
As it turned out, your assumption (that Ms. Balonzo would request for a leave
extension) was in fact wrong and she had a medical certificate attesting her fitness to
return to work.
Management therefore would like to remind you of the high expectations of your
position.
Management considers this matter closed, and finds it appropriate to convey to you
that it does not view with favor your notice to file legal action. Management believes
that you share the idea that issues regarding employee relations are best threshed out
within the Company. Resorting to legal action is unlikely to solve but on the contrary
would only exacerbate such problems.
We trust that, after emotions have calmed down, you would still see it that way.
(Sgd.)
Mamoru Ono
Director7
On 6 March 2002, Tirazonas counsels sent demand letters8 to PETs business address, directed
separately to Ono and Balonzo. The letter to Ono states:
February 27, 2002

MR. MAMORU ONO
Director
PET, Inc.
20/F 6788 Ayala Avenue
Oledan Square, Makati City
Dear Mr. Ono:
We are writing in [sic] behalf of our client, Ms. MA. WENELITA S. TIRAZONA,
Administrative Manager of your corporation.
We regret that on February 8, 2002, you delivered to our client a letter containing
among others, your conclusion that Ms. Tirazona was guilty of the unfounded and
baseless charges presented by Ms. Fe Balonzo in her letter-complaint dated January 15,
2002. You may please recall that in Ms. Tirazonas letter to Mr. Junichi Hirose, she
presented point by point, her side on the allegations made by the complainant. In the
same letter, Ms. Tirazona requested for an independent investigation of the case in
order to thresh out all issues, ferret out the truth and give her the opportunity to be
heard and confront her accuser. These were all denied our client.
As a result of the foregoing, Ms. Tirazonas constitutional right to due process was
violated and judgment was rendered by you on mere allegations expressed in a lettercomplaint to an unknown addressee.
Considering the position and stature of Mrs. Tirazona in the community and business
circles, we are constrained to formally demand payment of P2,000,000.00 in damages,
injured feelings, serious anxiety and besmirched reputation that she is now suffering.
We are giving you five (5) days from receipt hereof to make favorable response,
otherwise, much to our regret, we will institute legal procedures to protect our clients
interests.
Please give this matter the attention it deserves.
Very truly yours,
PRINCIPE, VILLANO, VILLACORTA & CLEMENTE
By:
(Sgd.)
PEDRO S. PRINCIPE
(Sgd.)
GLICERIO E. VILLANO
The letter sent to Balonzo likewise sought the same amount of damages for her allegedly
baseless and unfounded accusations against Tirazona.
Because of Tirazonas obstinate demand for compensation, PET sent her a Notice of
Charge,9 which informed her that they were considering her termination from employment by
reason of serious misconduct and breach of trust. According to the management, they found her
letter libelous, since it falsely accused the company of finding her guilty of the charges of
Balonzo and depriving her of due process.
On 26 March 2002, Tirazona explained in a letter10 that her counsels demand letter was
brought about by the denial of her repeated requests for reinvestigation of the Balonzo incident,
and that the same was personally addressed to Mamoru Ono and not to the company. She also
reiterated her request for an investigation and/or an open hearing to be conducted on the
matter.
The PET management replied11 that the Balonzo incident was already deemed a closed matter,
and that the only issue for consideration was Tirazonas "ill-advised response to the
Managements disposition to the Fe Balonzo incident," for which an administrative hearing was
scheduled on 4 April 2002.
On 3 April 2002, Tirazona submitted a written demand12 to PET that the Balonzo incident be
included in the scheduled hearing. She further stated that since the management had already
prejudged her case, she would only participate in the proceedings if the investigating panel
would be composed of three employees, one each from the rank-and-file, supervisory, and
managerial levels, plus a representative from the Department of Labor and Employment (DOLE).
The PET management rejected Tirazonas demands in a letter 13 and informed her that the
hearing was reset to 10 April 2002, which would be presided by PETs external counsel.
On 10 April 2002, Tirazona and her counsel did not appear at the administrative hearing. The
PET management informed them through a memorandum14 dated 12 April 2002 that the
hearing was carried out despite their absence. Nevertheless, Tirazona was granted a final
chance to submit a supplemental written explanation or additional documents to substantiate
her claims.
Tirazonas written explanation15 dated 17 April 2002 merely reiterated, without further details,
her previous claims, to wit: that Balonzos charges were unfounded and baseless; that she had
been denied due process; and that she would not submit herself to an investigating panel that
had already prejudged her case. Tirazona also stated that her claim for damages would be
justified at the proper forum, and that she admitted to reading a confidential letter addressed to
PET directors Ono and Fukuoka, containing the legal opinion of PETs counsel regarding her case.
After finding the explanations unsatisfactory, PET sent Tirazona a Notice of Termination,16 which
found her guilty of serious misconduct and breach of trust because of her demand against the
company and her invasion of PETs right to privileged communication.
Tirazona then instituted with the NLRC a complaint for illegal dismissal, non-payment of salaries,
and damages against PET, docketed as NLRC-CA No. 034872-03.
In the Decision17 dated 22 January 2003, Labor Arbiter Veneranda C. Guerrero ruled in favor of
Tirazona, holding that the latters termination from employment was illegal.
The Arbiter declared that there was no breach of trust when Tirazona sent the demand letter, as
the same was against Ono in his personal capacity, not against the company. The decision also
ruled that PET failed to discharge the burden of proving that the alleged breach of trust was
fraudulent and willful, and that the company was careless in handling its communications. The
Arbiter further stated that Tirazona was deprived of her right to due process when she was
denied a fair hearing.
On appeal by PET, the NLRC reversed the rulings of the Labor Arbiter in a Decision dated 30
January 2004, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered SETTING ASIDE the Decision of the Labor Arbiter
dated January 27, 2003 and a new one is entered DISMISSING the complaint for lack of merit.18
Contrary to the Labor Arbiters findings, the NLRC concluded that Tirazonas termination from
employment was in accordance with law. It ruled that Tirazonas demand letter addressed to
Ono constituted a just cause for dismissal, as the same was "an openly hostile act" by a highranking managerial employee against the company.19The NLRC likewise found that PET complied
with the notice and hearing requirements of due process, inasmuch as Tirazonas demand for a
special panel was without any legal basis. Furthermore, petitioner breached the companys trust
when she read the confidential legal opinion of PETs counsel without permission.
The Motion for Reconsideration filed by Tirazona was denied by the NLRC in a Resolution dated
31 May 2004, the dispositive portion of which reads:
WHEREFORE, in view of the foregoing, Complainant-Appellees Motion for Reconsideration is
hereby DISMISSED for lack of merit and our Decision dated 30 January 2004 is thus AFFIRMED
with finality.20
Aggrieved, Tirazona instituted with the Court of Appeals a Special Civil Action
for Certiorari under Rule 65, alleging grave abuse of discretion on the part of the NLRC, docketed
as CA-G.R. SP No. 85065.
In a Decision dated 24 May 2005, the appellate court affirmed the NLRC and ruled thus:
WHEREFORE, in consideration of the foregoing, the petition is perforce dismissed.21
Her Motion for Reconsideration having been denied by the appellate court in a Resolution dated
7 September 2005, Tirazona now impugns before this Court the Court of Appeals Decision dated
24 May 2005, raising the following issues:
I.
WHETHER THERE WAS BREACH OF TRUST ON THE PART OF PETITIONER TIRAZONA WHEN SHE
WROTE THE TWO MILLION PESO DEMAND LETTER FOR DAMAGES, WARRANTING HER
DISMISSAL FROM EMPLOYMENT.
II.
WHETHER DUE PROCESS WAS SUFFICIENTLY AND FAITHFULLY OBSERVED BY RESPONDENTS IN
THE DISMISSAL OF PETITIONER TIRAZONA FROM EMPLOYMENT.
In essence, the issue that has been brought before this Court for consideration is whether or not
Tirazona was legally dismissed from employment.
Prefatorily, the Court notes that Tirazona elevated her case to this Court via a Petition
for Certiorari under Rule 65 of the Rules of Court. The appropriate remedy would have been for
Tirazona to file an appeal through a Petition for Review on Certiorari under Rule 45.
For a Petition for Certiorari under Rule 65 of the Rules of Court to prosper, the following
requisites must be present: (1) the writ is directed against a tribunal, a board or an officer
exercising judicial or quasi-judicial functions: (2) such tribunal, board or officer has acted
without or in excess of jurisdiction or with grave abuse of discretion amounting to lack or excess
of jurisdiction; and (3) there is no appeal or any plain, speedy and adequate remedy in the
ordinary course of law.22
There is grave abuse of discretion "when there is a capricious and whimsical exercise of
judgment as is equivalent to lack of jurisdiction, such as where the power is exercised in an
arbitrary or despotic manner by reason of passion or personal hostility, and it must be so patent
and gross so as to amount to an evasion of positive duty or to a virtual refusal to perform the
duty enjoined or to act at all in contemplation of law."23
The Petition for Certiorari shall be filed not later than sixty (60) days from notice of the
judgment, order or resolution. In case a motion for reconsideration is timely filed, the sixty (60)day period shall be counted from notice of the denial of the said motion.24
On the other hand, Rule 45 of the Rules of Court pertains to a Petition for Review
on Certiorari whereby "a party desiring to appeal by certiorari from a judgment or final order or
resolution of the Court of Appeals x x x may file with the Supreme Court a verified petition for
review on certiorari. The petition shall raise only questions of law which must be distinctly set
forth."25
The petition shall be filed within fifteen (15) days from notice of the judgment or final order or
resolution appealed from, or of the denial of the petitioners motion for new trial or
reconsideration filed in due time after notice of the judgment.26
In the present case, the assailed Decision is the dismissal by the Court of Appeals of Tirazonas
Petition forCertiorari under Rule 65. Said Decision partakes of the nature of a judgment or final
order, thus, is reviewable only through an appeal by certiorari under Rule 45.
As aptly declared by the Court in National Irrigation Administration v. Court of Appeals27:

[s]ince the Court of Appeals had jurisdiction over the petition under Rule 65, any alleged errors
committed by it in the exercise of its jurisdiction would be errors of judgment which are
reviewable by timely appeal and not by a special civil action of certiorari. If the aggrieved party
fails to do so within the reglementary period, and the decision accordingly becomes final and
executory, he cannot avail himself of the writ of certiorari, his predicament being the effect of
his deliberate inaction. [Emphasis ours.]
Even just a cursory glance at the issues raised by Tirazona before this Court readily reveals that
these pertain to purported errors of judgment committed by the appellate court in its
appreciation of the allegations, evidence, and arguments presented by the parties. There is no
question here of the Court of Appeals acting on Tirazonas Petition in CA-G.R. No. 85065 without
or in excess of jurisdiction or with grave abuse of discretion amounting to lack or excess of
jurisdiction.
A review of the rollo of the Petition at bar divulges even further that Tirazonas resort to a
wrong remedy was not an innocent mistake but a deliberate choice.
On 5 October 2005, Tirazona filed with this Court a Petition for Extension of Time to File a
Petition for Review onCertiorari.28 Tirazona stated therein that she received the notice of the
Court of Appeals Resolution denying her Motion for Reconsideration on 23 September 2005.
Since she only had fifteen (15) days after the said date to file a Petition for Review on Certiorari,
or until 8 October 2005, Tirazona prayed for an extension of thirty (30) days, with her counsel
citing extreme pressures of work.
In a Resolution29 dated 19 October 2005, the Court granted Tirazonas Motion for Extension. The
extended period was to end on 7 November 2005. However, Tirazona failed to file a Petition for
Review on Certiorari within the said period. Instead, she filed the present Petition
for Certiorari on 5 December 2005, seventy-three (73) days after notice of the Court of Appeals
Resolution denying her Motion for Reconsideration.
From the foregoing, it is fairly obvious that Tirazona was aware that she was supposed to file an
appeal through a Petition for Review on Certiorari under Rule 45. That she filed the instant
Petition for Certiorari under Rule 65 and only after an inexplicably long period of time leads to
the inescapable conclusion that the same was merely an afterthought, nothing more than a
desperate attempt to revive a lost appeal.
The special civil action of certiorari under Rule 65 is an independent action that cannot be
availed of as a substitute for the lost remedy of an ordinary appeal, including that under Rule 45,
especially if such loss or lapse was occasioned by ones own neglect or error in the choice of
remedies.30 It also bears to stress the well-settled principle that the remedies of appeal
and certiorari are mutually exclusive and not alternative or successive. Under Rule 56, Sec. 5(f)
of the Revised Rules of Court, a wrong or inappropriate mode of appeal merits an outright
dismissal.31
Tirazona, in her Reply32 before this Court, even admits that although the instant Petition is one
of special civil action of certiorari under Rule 65, her petition is in reality an appeal under Rule
45 as her petition raises pure questions of law. Tirazona herself acknowledges the formal
defects of her own Petition and attributes the same to the haste and inadvertence of her former
counsel, who allegedly prepared the instant Petition without her participation.33 She thus urges
this Court to suspend the application of its own rules on grounds of equity and substantial
justice, considering that it is her employment that is at stake in this case.
In this regard, it needs to be emphasized that before the Court may treat the present petition as
having been filed under Rule 45, the same must comply with the reglementary period for filing
an appeal. This requirement is not only mandatory but also jurisdictional such that failure to do
so renders the assailed decision final and executory, and deprives this Court of jurisdiction to
alter the final judgment, much less to entertain the appeal.34 Since the instant petition was filed
after the lapse of the extended period for filing an appeal, the same should be dismissed
outright.
Nevertheless, the Court finds it essential that we discuss the case on its merits, bearing in mind
that the paramount consideration in this case is an employees right to security of tenure, and in
order to provide Tirazona the amplest opportunity to know how the Court arrived at a proper
and just determination of her case.
Even if the Court were to ignore the conspicuous procedural defects committed by Tirazona and
treat her Petition as an appeal under Rule 45, it still finds that the Petition must be denied for
lack of merit.
Petitioner contends that, contrary to the findings of the Court of Appeals, her dismissal from
employment was illegal for having lacked both a legal basis and the observance of due process.
In employee termination cases, the well-entrenched policy is that no worker shall be dismissed
except for a just or authorized cause provided by law and after due process. Clearly, dismissals
have two facets: first, the legality of the act of dismissal, which constitutes substantive due
process; and second, the legality in the manner of dismissal, which constitutes procedural due
process.35
Under Article 282(c)36 of the Labor Code, loss of trust and confidence is one of the just causes
for dismissing an employee. It is an established principle that loss of confidence must be
premised on the fact that the employee concerned holds a position of trust and confidence. This
situation obtains where a person is entrusted with confidence on delicate matters, such as care
and protection, handling or custody of the employers property. But, in order to constitute a just
cause for dismissal, the act complained of must be "work-related" such as would show the
employee concerned to be unfit to continue working for the employer. Besides, for loss of
confidence to be a valid ground for dismissal, such loss of confidence must arise from particular
proven facts.37
Tirazona claims that her demand letter was merely an expression of indignation by a disgruntled
employee against a director, not against the company and, by itself, cannot constitute a breach
of trust and confidence. The companys notice of charge allegedly insinuated Tirazonas guilt in
the Balonzo incident; hence, the need to defend herself. Tirazona likewise asserts that she is an
ordinary rank-and-file employee as she is not vested with the powers and prerogatives stated in
Article 212(m)38 of the Labor Code. As such, her alleged hostility towards her co-workers and the
PET management is not a violation of trust and confidence that would warrant her termination
from employment.
At the outset, the Court notes that the issues set forth above are factual in nature. As the Court
is asked to consider the instant Petition as an appeal under Rule 45, then only pure questions of
law will be entertained.39
A question of law arises when there is doubt as to what the law is on a certain state of facts,
while there is a question of fact when the doubt arises as to the truth or falsity of the alleged
facts. For a question to be one of law, the same must not involve an examination of the
probative value of the evidence presented by the litigants or any of them. The resolution of the
issue must rest solely on what the law provides on the given set of circumstances. Once it is
clear that the issue invites a review of the evidence presented, the question posed is one of
fact.40
In the instant case, Tirazona would have the Court examine the actual wording, tenor, and
contextual background of both her demand letter and the PETs notice of charge against her.
Similarly, the determination of whether Tirazona is a managerial or rank-and-file employee
would require the Court to review the evidence that pertains to Tirazonas duties and
obligations in the company. Also, in order to ascertain whether the breach of trust was clearly
established against Tirazona, the Court will have to sift through and evaluate the respective
evidence of the parties as well. These tasks are not for the Court to accomplish.
The Court is not a trier of facts. It is not the function of this Court to analyze or weigh evidence
all over again, unless there is a showing that the findings of the lower court are totally devoid of
support or are glaringly erroneous as to constitute palpable error or grave abuse of discretion.41
In its assailed decision, the Court of Appeals affirmed the ruling of the NLRC and adopted as its
own the latters factual findings. Long established is the doctrine that findings of fact of quasijudicial bodies like the NLRC are accorded with respect, even finality, if supported by substantial
evidence. When passed upon and upheld by the Court of Appeals, they are binding and
conclusive upon the Supreme Court and will not normally be disturbed.42Though this doctrine is
not without exceptions,43 the Court finds that none are applicable to the present case.
Thus, on the matter of Tirazonas demand letter, this Court is bound by the following findings of
the Court of Appeals:
Clearly, petitioner Tirazonas letter to respondent Ono dated 27 February 2002, as
DIRECTOR of PET was addressed to an officer and representative of the corporation. The
accusations in the aforesaid demand letter were directed against respondent Onos
official act as a representative of respondent PET. Suffice it to stress, an attack on the
integrity of his (Ono) corporate act is necessarily aimed at respondent PET because a
corporation can only act through its officers, agents and representatives.
xxxx
A thorough and judicious examination of the facts and evidence obtaining in the instant
case as could be found in the records, would clearly show that petitioner Tirazona has
absolutely no basis for a P2 million demand, coupled with lawsuit if the same was not
paid within the five (5) days [sic] period. Her justification for the demand of money is
that she was allegedly found by the respondent PET through respondent Ono guilty of
the charges filed by Ms. Balonzo. As the records would indubitably show, petitioner
Tirazona was never charged of any offense with respect to the Fe Balonzos [sic]
incident. She was never issued a Notice of Charge, much less a Notice of Disciplinary
Action. What was issued to her by respondent Ono in his letter x x x was a gentle and
sound reminder to be more circumspect in handling the incident or situation like this
[sic]. As fully evidenced in the last paragraph of the said letter, it states that:
xxxx
Management considers this matter closed, and finds it appropriate to convey to you
that it does not view with favor your notice to file legal action. Management believes
that you share the idea that issues regarding employee relations are best threshed out
within the Company. Resorting to legal action is unlikely to solve but on the contrary
would only exacerbate such problems.
But for reasons only known to petitioner Tirazona, she treated respondent Onos letter
as an affront to her honor and dignity. This, instead of seeking a dialogue with
respondent PET on her felt grievance, petitioner Tirazona through her lawyer sent the
questioned demand letter to respondent Ono. Suffice it to state, this act of petitioner
bared animosity in the company and was definitely not a proper response of a top level
manager like her over a trivial matter.
xxxx
In fine, the confluence of events and circumstances surrounding the petitioner
Tirazonas actions or omissions affecting her employers rights and interest, would
undoubtedly show that she is no longer worthy of being a recipient of the trust and
confidence of her employer. x x x.44
Likewise conclusive upon this Court is the Court of Appeals pronouncement that
Tirazona is in fact a managerial employee, to wit:
The records would indubitably show that it is only now that petitioner Tirazona is
asserting that she is not a managerial employee of respondent PET. From the very start,
her dismissal was premised on the fact that she is a managerial and confidential
employee, and she never denied that fact. It was never an issue at all before the Labor
Arbiter and the public respondent NLRC. Therefore, she is estopped to claim now that
she is [just a] rank and file employee of respondent PET, especially that she herself
admitted in her pleading that she is a managerial employee:
xxxx
If the respondent Company has to protect Respondent Mamoru Ono, the Complainant
[petitioner] has also the right to be protected from the baseless accusations of a Rank
and File Employee for she [petitioner] is a part of the management like Mr. Mamoru
Ono" (par. 5, Complainants Rejoinder [to Respondents Reply] dated 2 September 2002
(note: unattached to the petitioner [sic]) [attached as Annex "1" hereof]. (p. 263,
Rollo).45
Tirazona next argues that she was deprived of procedural due process as she was neither served
with two written notices, nor was she afforded a hearing with her participation prior to her
dismissal.
Tirazonas arguments are baseless.
Procedural due process is simply defined as giving an opportunity to be heard before judgment
is rendered. The twin requirements of notice and hearing constitute the essential elements of
due process, and neither of those elements can be eliminated without running afoul of the
constitutional guaranty.46
The employer must furnish the employee two written notices before termination may be
effected. The first notice apprises the employee of the particular acts or omissions for which his
dismissal is sought, while the second notice informs the employee of the employers decision to
dismiss him.47
It is fairly obvious in this case that Tirazona was served with the required twin notices. The first
was embodied in the Notice of Charge dated 25 March 2002 where PET informed Tirazona that
it was considering her termination from employment and required her to submit a written
explanation. In the said Notice, PET apprised Tirazona of the ground upon which it was
considering her dismissal: (1) her letter that contained false accusations against the company,
and (2) her demand for two million pesos in damages, with a threat of a lawsuit if the said
amount was not paid. The Notice of Termination dated 22 April 2002 given to Tirazona
constitutes the second notice whereby the company informed her that it found her guilty of
breach of trust warranting her dismissal from service.
Equally bereft of merit is Tirazonas allegation that she was not given the benefit of a fair
hearing before she was dismissed.
It needs to be pointed out that it was Tirazona herself and her counsel who declined to take part
in the administrative hearing set by PET 10 April 2002. Tirazona rejected the companys
appointment of its external counsel as the investigating panels presiding officer, because her
own demands on the panels composition were denied. As correctly held by the NLRC and the
Court of Appeals, Tirazonas stance is without any legal basis. On the contrary, this Courts ruling
in Foster Parents Plan International/Bicol v. Demetriou48 is controlling:
The right to dismiss or otherwise impose disciplinary sanctions upon an employee for just and
valid cause, pertains in the first place to the employer, as well as the authority to determine the
existence of said cause in accordance with the norms of due process. In the very nature of
things, any investigation by the employer of any alleged cause for disciplinary punishment of an
employee will have to be conducted by the employer himself or his duly designated
representative; and the investigation cannot be thwarted or nullified by arguing that it is the
employer who is accuser, prosecutor and judge at the same time. x x x Of course, the decision
of the employer meting out sanctions against an employee and the evidentiary and procedural
bases thereof may subsequently be passed upon by the corresponding labor arbiter (and the
NLRC on appeal) upon the filing by the aggrieved employee of the appropriate complaint.
[Emphasis ours.]1avvphi1
This Court has held that there is no violation of due process even if no hearing was conducted,
where the party was given a chance to explain his side of the controversy. What is frowned
upon is the denial of the opportunity to be heard.49 Tirazona in this case has been afforded a
number of opportunities to defend her actions. Even when Tirazona failed to attend the
scheduled hearing, PET still informed Tirazona about what happened therein and gave her the
chance to submit a supplemental written explanation. Only when Tirazona again failed to
comply with the same did PET terminate her employment.
As a final plea for her case, Tirazona asserts that her dismissal from employment was too harsh
and arbitrary a penalty to mete out for whatever violation that she has committed, if indeed
there was one.
Tirazona ought to bear in mind this Courts pronouncement in Metro Drug Corporation v.
NLRC50 that:
When an employee accepts a promotion to a managerial position or to an office requiring full
trust and confidence, she gives up some of the rigid guaranties available to ordinary workers.
Infractions which if committed by others would be overlooked or condoned or penalties
mitigated may be visited with more severe disciplinary action. A companys resort to acts of selfdefense would be more easily justified. x x x.
Tirazona, in this case, has given PET more than enough reasons to distrust her. The arrogance
and hostility she has shown towards the company and her stubborn, uncompromising stance in
almost all instances justify the companys termination of her employment. Moreover, Tirazonas
reading of what was supposed to be a confidential letter between the counsel and directors of
the PET, even if it concerns her, only further supports her employers view that she cannot be
trusted. In fine, the Court cannot fault the actions of PET in dismissing petitioner.
WHEREFORE, premises considered, the instant petition is hereby DENIED for lack of merit and
the Decision of the Court of Appeals dated 24 May 2005 is hereby AFFIRMED. Costs against the
petitioner.
SO ORDERED.
MINITA V. CHICO-NAZARIO
Associate Justice
Footnotes
1
Rollo, pp. 8-18; dated 5 December 2005.
Penned by Associate Justice Bienvenido L. Reyes with Associate Justices Godardo A.

Jacinto and Rosalinda Asuncion-Vicente, concurring; id. at 20-46.
3
Id. at 47-49.
CA rollo, pp. 25-35.
Id. at 91.
Id. at 92-94.
Records, p. 62.
Id. at 63.
The Notice of Charge states:

To: Ma. Wenelita S. Tirazona
From: Management
Re: Notice of Charge
Date: March 25, 2002
This is to inform you that Management is considering your termination from
employment, for serious misconduct and breach of trust, arising from your
counsels demand letter dated 27 February 2002 x x x wherein you falsely
accused the Company of:
Finding you guilty of the charges laid by Ms. Fe S. Balonzo
Depriving you of due process
-and demanding from the Company P2,000,000.00 in damages with threat of an
inevitable lawsuit if your baseless demands are not satisfied within five (5) days
from receipt of the demand letter.
The Company finds your letter libelous. Your rash action is a serious misconduct
and an open display of disloyalty. Being part of the management, you as an
officer is [sic] required not to assert any adverse interest against the Company.
Your position demands utmost trust and confidence. Your ill-advised action is a
flagrant breach of your fiduciary duty and is highly prejudicial to the Companys
interest.
You are hereby given thirty six (36) hours from receipt of this memo to submit a
written explanation and justify why your services should not be terminated for
serious misconduct and breach of trust.
Be guided accordingly.
(SGD.) MAMORO ONO
(DIRECTOR)
Noted by:
(SGD.) Mr. Ken Kubota
President (Records, p. 67.)
10
11
Id. at 246-249.
12
Id. at 250.
13
Id. at 251.
14
Id. at 253.
15
Id. at 242.
16
Id. at 61.
17
Id. at 95-104.
18
Id. at 34.
19
Id. at 31.
20
Id. at 42.
21
Id. at 45.
22
Manila Memorial Park Cemetery, Inc. v. Panado, G.R. No. 167118, 15 June 2006, 490
SCRA 751, 762.
23
Id. at 762-763.
24
Rules of Court, Rule 65, Sec. 4.
25
26
27
376 Phil. 362, 371 (1999) cited in San Miguel Corporation v. Court of Appeals, 425 Phil.
951, 955 (2002).
28
Rollo, pp. 3-4.
29
Id. at 6.
30
National Irrigation Administration v. Court of Appeals, supra note 27, cited in Chua v.
Santos, G.R. No. 132467, 18 October 2004, 440 SCRA 365, 373.
31
Chua v. Santos, id.
32
Rollo, pp. 121-123.
33
Id. at 122.
34
People v. Sandiganbayan, G.R. No. 156394, 21 January 2005, 449 SCRA 205, 217.
35
Shoemart, Inc. v. National Labor Relations Commission, G.R. No. 74229, 11 August
1989, 176 SCRA 385, 390, cited in Asian Construction And Development Corporation v.
National Labor Relations Commission, G.R. No. 142407, 12 March 2007.
36
Art. 282. TERMINATION BY EMPLOYER. An employer may terminate an employment

for any of the following causes:
xxxx
c) Fraud or willful breach by the employee of the trust reposed in him by his
employer or duly authorized representative.
37
Jardine Davies, Inc. v. National Labor Relations Commission, 370 Phil. 310, 318-319
(1999).
38
Art. 212(m) partially states:

"Managerial employee" is one who is vested with powers or prerogatives to lay
down and execute management policies and/or to hire, transfer, suspend, layoff, recall, discharge, assign or discipline employees.
39
The rule that only questions of law may be raised in a petition for review under Rule
45 admits of certain exceptions, though none of which are present in the instant
petition, namely: (1) the conclusion is a finding grounded entirely on speculation,
surmise and conjecture; (2) the inference made is manifestly mistaken; (3) there is grave
abuse of discretion; (4) the judgment is based on a misapprehension of facts; (5) the
findings of fact are conflicting; (6) the CA went beyond the issues of the case and its
findings are contrary to the admissions of both appellant and appellees; (7) the findings
of fact of the CA are contrary to those of the trial court; (8) said findings of fact are
conclusions without citation of specific evidence on which they are based; (9) the facts
set forth in the petition as well as in the petitioners main and reply briefs are not
disputed by the respondents; and (10) the findings of fact of the CA are premised on the
supposed absence of evidence and contradicted by the evidence on record. [Rosario v.
PCI Leasing and Finance, Inc., G.R. No. 139233, 11 November 2005, citing Sarmiento v.
Court of Appeals, 353 Phil. 834, 846 (1998)].
40
Velayo-Fong v. Velayo, G.R. No. 155488, 6 December 2006, 510 SCRA 320, 329-330,
cited in Binay v. Odea, G.R. No. 163683, 8 June 2007, 524 SCRA 248, 255-256.
41
De Jesus v. Court of Appeals, G.R. No. 127857, 20 June 2006, 491 SCRA 325, 333, citing
Potenciano v. Reynoso, 449 Phil. 396, 405 (2003).
42
San Juan De Dios Educational Foundation Employees Union-Alliance of Filipino

Workers v. San Juan De Dios Educational Foundation, Inc., G.R. No. 143341, 28 May
2004, 430 SCRA 193, 205-206.
43
Almendrala v. Ngo, G.R. No. 142408, 30 September 2005, 471 SCRA 311, 322.
44
Rollo, pp. 38-44.
45
Id. at 39-40.
46
Cruz v. Coca-Cola Bottlers Phils., Inc., G.R. No. 165586, 15 June 2005, 460 SCRA 340,
351.
47
Pono v. National Labor Relations Commission, 341 Phil. 615, 621 (1997), cited in
Landtex Industries v. Court of Appeals, G.R. No. 150278, 9 August 2007, 529 SCRA 631,
652.
48
226 Phil. 421, 426 (1986).
49
Philippine Airlines, Inc. v. National Labor Relations Commission, G.R. No. 87353, 3 July
1991, 198 SCRA 748, 761.
50
227 Phil. 121, 127 (1986), cited in Villanueva v. National Labor Relations Commission
(Third Division), 354 Phil. 1056, 1063 (1998).

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 147719
January 27, 2006
HA YUAN RESTAURANT, Petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION and JUVY SORIA, Respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
Respondent Juvy Soria worked as a cashier in petitioners establishment located inside the SM
Food Court Makati. On January 11, 1998, respondent assaulted her co-worker Ma. Teresa
Sumalague resulting in a scuffle between the two. Despite the intervention of their supervisor
Fiderlie Recide, they were not pacified, prompting Recide to call for security assistance. The two
were then brought to the SM Food Court Administration Office where they continued to cast
tirades at each other notwithstanding the request of the SM Food Court Manager to stop.
Because they refused to be mollified, they were brought to the Customer Relations Office for
further investigation. As a result of the incident, the SM Food Court Manager banned the two
from working within the SM Food Courts premises.
Respondent then filed with the Labor Arbiter a complaint for illegal dismissal, salary
differentials, service incentive leave, separation pay and damages. It was dismissed by the Labor
Arbiter for lack of merit in a Decision dated December 4, 1998.1
On appeal to the National Labor Relations Commission (NLRC), the Labor Arbiters decision was
affirmed with the modification that respondent was awarded separation pay. The dispositive
portion of NLRC Decision dated September 30, 1999, reads:
WHEREFORE, the foregoing premises considered, the Decision of the Labor Arbiter is hereby
AFFIRMED with the modification that the respondents are hereby ordered to pay complainant
her separation pay equivalent to one (1) month salary per year of service, based on her last
salary of P196.00/day and counted from 10 December 1984 until the finality of this Decision.
SO ORDERED.2lavvphil.ne+
This prompted petitioner to file a special civil action for certiorari with the Court of Appeals (CA),
and in its Decision dated March 30, 2001, it affirmed the NLRCs decision and dismissed the
petition for lack of merit.
Hence, herein petition for review on certiorari under Rule 45 of the Rules of Court on the
following grounds:
THE PUBLIC RESPONDENT COURT OF APPEALS DEPARTED FROM ESTABLISHED JURISPRUDENCE

AND ERRED AND GRAVELY ABUSED ITS DISCRETION IN AFFIRMING THE NLRC AWARD TO
PRIVATE RESPONDENT JOVY SORIA SEPARATION PAY EVEN AS HER DISMISSAL ON GROUNDS OF
SERIOUS MISCONDUCT WAS SUSTAINED
CORROLARY (sic) TO THIS GROUND THE LEGAL ISSUE RAISED IS WHETHER AN AWARD OF
SEPARATION PAY IS PROPER TO AN EMPLOYEE WHO IS FOUND TO HAVE BEEN VALIDLY
DISMISSED ON THE GROUND OF SERIOUS MISCONDUCT 3
The sole issue in this case --- whether a validly dismissed employee like respondent is entitled to
an award of separation pay --- has already been squarely settled as early as 1988 in the leading
case of Philippine Long Distance Telephone Co. vs. NLRC,4 wherein it was stated, viz.:
We hold that henceforth separation pay shall be allowed as a measure of social justice only in
those instanceswhere the employee is validly dismissed for causes other than serious
misconduct or those reflecting on his moral character. Where the reason for the valid dismissal
is, for example, habitual intoxication or an offense involving moral turpitude, like theft or illicit
sexual relations with a fellow worker, the employer may not be required to give the dismissed
employee separation pay, or financial assistance, or whatever other name it is called, on the
ground of social justice. (Emphasis supplied)
Separation pay therefore, depends on the cause of dismissal, and may be accordingly awarded
provided that the dismissal does not fall under either of two circumstances: (1) there was
serious misconduct, or (2) the dismissal reflected on the employees moral character.5
The question that now arises in this case is whether the cause of respondents dismissal falls
under the two circumstances, i.e., serious misconduct or the dismissal reflected on the
employees moral character.lavvphil.ne+
The Court holds that respondents cause of dismissal in this case amounts as a serious
misconduct and as such, separation pay should not have been awarded to her. Thus, the
petition should be granted.
Misconduct is improper or wrongful conduct. It is the transgression of some established and
definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies
wrongful intent and not mere error of judgment. To be a valid cause for termination, the
misconduct must be serious.6
While it is true, as respondent contends, that the Labor Arbiter did not tag her cause of dismissal
as serious misconduct, nevertheless, it is its nature, not its label that characterizes the cause as
serious misconduct. There is no question as regards the incident that caused respondents
dismissal. While respondents co-worker Sumalague was eating at the back of the store,
respondent rushed toward Sumalague and hit the latter on the face causing injuries. A scuffle
ensued and despite their supervisor Recides pleas, the two continued to fight, prompting
Recide to call the mall security. When the two were brought to the administration office, they
continued bickering and did not heed the request of the manager to stop, and thus they were
brought to the Customer Relations Office. Because of the incident, the two were banned from
working within the premises. The fact that Sumalague sustained injuries is a matter that cannot
be taken lightly. Moreover, the incident disturbed the peace in the work place, not to mention
that respondent and Sumalague committed a breach of its discipline.7 Clearly, respondent
committed serious misconduct within the meaning of Art. 282 of the Labor Code, providing for
the dismissal of employees.
Her cause of dismissal amounting to a serious misconduct, respondent is not entitled to an
award of separation pay. As further stated in Philippine Long Distance Telephone Co. vs. NLRC:
The policy of social justice is not intended to countenance wrongdoing simply because it is
committed by the underprivileged. At best it may mitigate the penalty but it certainly will not
condone the offense. Compassion for the poor is an imperative of every humane society but
only when the recipient is not a rascal claiming an undeserved privilege. Social justice cannot be
permitted to be refuge of scoundrels any more than can equity be an impediment to the
punishment of the guilty. Those who invoke social justice may do so only if their hands are clean
and their motives blameless and not simply because they happen to be poor. This great policy of
our Constitution is not meant for the protection of those who have proved they are not worthy
of it, like the workers who have tainted the cause of labor with the blemishes of their own
character.8
WHEREFORE, the petition is GRANTED. The Court of Appeals Decision dated March 30, 2001 in
CA-G.R. SP No. 58219 is MODIFIED to the effect that the NLRC Decision dated September 30,
1999 is AFFIRMED with MODIFICATION in that the award of separation pay in favor of
respondent Juvy Soria is DELETED.
SO ORDERED.
MA. ALICIA AUSTRIA-MARTINEZ
Associate Justice
Footnotes
1
Id., p. 24.
Rollo, p. 21.
164 SCRA 671, 682 (1988).
Philippine Commercial International Bank v. Abad, G.R. No. 158045, February 28, 2005,
citing San Miguel Corporation v. Lao, 433 Phil. 890, 898 (2002).
6
Colegio de San Juan de Letran - Calamba v. Villas, 447 Phil. 692, 699 (2003).
Flores v. NLRC, 326 Phil. 750, 761 (1996).
Supra, note 4, at 682-683.

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 162053
March 7, 2007
ST. LUKE'S MEDICAL CENTER EMPLOYEE'S ASSOCIATION-AFW (SLMCEA-AFW) AND MARIBEL S.

SANTOS, Petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC) AND ST. LUKE'S MEDICAL CENTER,
INC.,Respondents.
DECISION
AZCUNA, J.:
Challenged in this petition for review on certiorari is the Decision1 of the Court of Appeals (CA)
dated January 29, 2004 in CA-G.R. SP No. 75732 affirming the decision2 dated August 23, 2002
rendered by the National Labor Relations Commission (NLRC) in NLRC CA No. 026225-00.
The antecedent facts are as follows:
Petitioner Maribel S. Santos was hired as X-Ray Technician in the Radiology department of
private respondent St. Luke's Medical Center, Inc. (SLMC) on October 13, 1984. She is a graduate
of Associate in Radiologic Technology from The Family Clinic Incorporated School of Radiologic
Technology.
On April 22, 1992, Congress passed and enacted Republic Act No. 7431 known as the "Radiologic
Technology Act of 1992." Said law requires that no person shall practice or offer to practice as a
radiology and/or x-ray technologist in the Philippines without having obtained the proper
certificate of registration from the Board of Radiologic Technology.
On September 12, 1995, the Assistant Executive Director-Ancillary Services and HR Director of
private respondent SLMC issued a final notice to all practitioners of Radiologic Technology to
comply with the requirement of Republic Act No. 7431 by December 31, 1995; otherwise, the
unlicensed employee will be transferred to an area which does not require a license to practice
if a slot is available.
On March 4, 1997, the Director of the Institute of Radiology issued a final notice to petitioner
Maribel S. Santos requiring the latter to comply with Republic Act. No. 7431 by taking and
passing the forthcoming examination scheduled in June 1997; otherwise, private respondent
SLMC may be compelled to retire her from employment should there be no other position
available where she may be absorbed.
On May 14, 1997, the Director of the Institute of Radiology, AED-Division of Ancillary Services
issued a memorandum to petitioner Maribel S. Santos directing the latter to submit her PRC
Registration form/Examination Permit per Memorandum dated March 4, 1997.
On March 13, 1998, the Director of the Institute of Radiology issued another memorandum to
petitioner Maribel S. Santos advising her that only a license can assure her of her continued
employment at the Institute of Radiology of the private respondent SLMC and that the latter is
giving her the last chance to take and pass the forthcoming board examination scheduled in
June 1998; otherwise, private respondent SLMC shall be constrained to take action which may
include her separation from employment.
On November 23, 1998, the Director of the Institute of Radiology issued a notice to petitioner
Maribel S. Santos informing the latter that the management of private respondent SLMC has
approved her retirement in lieu of separation pay.
On November 26, 1998, the Personnel Manager of private respondent SLMC issued a "Notice of
Separation from the Company" to petitioner Maribel S. Santos effective December 30, 1998 in
view of the latter's refusal to accept private respondent SLMC's offer for early retirement. The
notice also states that while said private respondent exerted its efforts to transfer petitioner
Maribel S. Santos to other position/s, her qualifications do not fit with any of the present vacant
positions in the hospital.
In a letter dated December 18, 1998, a certain Jack C. Lappay, President of the Philippine
Association of Radiologic Technologists, Inc., wrote Ms. Judith Betita, Personnel Manager of
private respondent SLMC, requesting the latter to give "due consideration" to the organization's
three (3) regular members of his organization (petitioner Maribel S. Santos included) "for not
passing yet the Board of Examination for X-ray Technology," "by giving them an assignment in
any department of your hospital awaiting their chance to pass the future Board Exam."
On January 6, 1999, the Personnel Manager of private respondent SLMC again issued a "Notice
of Separation from the Company" to petitioner Maribel S. Santos effective February 5, 1999
after the latter failed to present/ submit her appeal for rechecking to the Professional
Regulation Commission (PRC) of the recent board examination which she took and failed.
On March 2, 1999, petitioner Maribel S. Santos filed a complaint against private respondent
SLMC for illegal dismissal and non-payment of salaries, allowances and other monetary benefits.
She likewise prayed for the award of moral and exemplary damages plus attorney's fees.
In the meantime, petitioner Alliance of Filipino Workers (AFW), through its President and Legal
Counsel, in a letter dated September 22, 1999 addressed to Ms. Rita Marasigan, Human
Resources Director of private respondent SLMC, requested the latter to accommodate
petitioner Maribel S. Santos and assign her to the vacant position of CSS Aide in the hospital
arising from the death of an employee more than two (2) months earlier.
In a letter dated September 24, 1999, Ms. Rita Marasigan replied thus:
Gentlemen:
Thank you for your letter of September 22, 1999 formally requesting to fill up the vacant
regular position of a CSS Aide in Ms. Maribel Santos' behalf.
The position is indeed vacant. Please refer to our Recruitment Policy for particulars
especially on minimum requirements of the job and the need to meet said
requirements, as well as other pre-employment requirements, in order to be considered
for the vacant position. As a matter of fact, Ms. Santos is welcome to apply for any
vacant position on the condition that she possesses the necessary qualifications.
As to the consensus referred to in your letter, may I correct you that the agreement is,
regardless of the vacant position Ms. Santos decides to apply, she must go through the
usual application procedures. The formal letter, I am afraid, will not suffice for purposes
of recruitment processing. As you know, the managers requesting to fill any vacancy has
a say on the matter and correctly so. The manager's inputs are necessarily factored into
the standard recruitment procedures. Hence, the need to undergo the prescribed steps.
Indeed we have gone through the mechanics to accommodate Ms. Santos' transfer
while she was employed with SLMC given the prescribed period. She was given 30 days
from issuance of the notice of termination to look for appropriate openings which
incidentally she wittingly declined to utilize. She did this knowing fully well that the
consequences would be that her application beyond the 30-day period or after the
effective date of her termination from SLMC would be considered a re-application with
loss of seniority and shall be subjected to the pertinent application procedures.
Needless to mention, one of the 3 X-ray Technologists in similar circumstances as Ms.
Santos at the time successfully managed to get herself transferred to E.R. because she
opted to apply for the appropriate vacant position and qualified for it within the
prescribed 30-day period. The other X-ray Technologist, on the other hand, as you may
recall, was eventually terminated not just for his failure to comply with the licensure
requirement of the law but for cause (refusal to serve a customer).
Why Ms. Santos opted to file a complaint before the Labor Courts and not to avail of the
opportunity given her, or assuming she was not qualified for any vacant position even if
she tried to look for one within the prescribed period, I simply cannot understand why
she also refused the separation pay offered by Management in an amount beyond the
minimum required by law only to re-apply at SLMC, which option would be available to
her anyway even (if she) chose to accept the separation pay!
Well, here's hoping that our Union can timely influence our employees to choose their
options well as it has in the past.
(Signed)
RITA MARASIGAN
Subsequently, in a letter dated December 27, 1999, Ms. Judith Betita, Personnel Manager of
private respondent SLMC wrote Mr. Angelito Calderon, President of petitioner union as follows:
Dear Mr. Calderon:

This is with regard to the case of Ms. Maribel Santos. Please recall that last Oct. 8, 1999,
Ms. Rita Marasigan, HR Director, discussed with you and Mr. Greg Del Prado the terms
regarding the re-hiring of Ms. Maribel Santos. Ms. Marasigan offered Ms. Santos the
position of Secretary at the Dietary Department. In that meeting, Ms. Santos replied
that she would think about the offer. To date, we still have no definite reply from her.
Again, during the conference held on Dec. 14, 1999, Atty. Martir promised to talk to Ms.
Santos, and inform us of her reply by Dec. 21, 1999. Again we failed to hear her reply
through him.
Please be informed that said position is in need of immediate staffing. The Dietary
Department has already been experiencing serious backlog of work due to the said
vacancy. Please note that more than 2 months has passed since Ms. Marasigan offered
this compromise. Management cannot afford to wait for her decision while the
operation of the said department suffers from vacancy.
Therefore, Management is giving Ms. Santos until the end of this month to give her
decision. If we fail to hear from her or from you as her representatives by that time, we
will consider it as a waiver and we will be forced to offer the position to other applicants
so as not to jeopardize the Dietary Department's operation.
For your immediate action.
(Signed)
JUDITH BETITA
Personnel Manager
On September 5, 2000, the Labor Arbiter came out with a Decision ordering private respondent
SLMC to pay petitioner Maribel S. Santos the amount of One Hundred Fifteen Thousand Five
Hundred Pesos (P115,500.00) representing her separation pay. All other claims of petitioner
were dismissed for lack of merit.
Dissatisfied, petitioner Maribel S. Santos perfected an appeal with the public respondent NLRC.
On August 23, 2002, public respondent NLRC promulgated its Decision affirming the Decision of
the Labor Arbiter. It likewise denied the Motion for Reconsideration filed by petitioners in its
Resolution promulgated on December 27, 2002.
Petitioner thereafter filed a petition for certiorari with the CA which, as previously mentioned,
affirmed the decision of the NLRC.
Hence, this petition raising the following issues:
I. Whether the CA overlooked certain material facts and circumstances on petitioners'
legal claim in relation to the complaint for illegal dismissal.
II. Whether the CA committed grave abuse of discretion and erred in not resolving with
clarity the issues on the merit of petitioner's constitutional right of security of tenure.3
For its part, private respondent St. Luke's Medical Center, Inc. (SLMC) argues in its
comment4 that: 1) the petition should be dismissed for failure of petitioners to file a motion for
reconsideration; 2) the CA did not commit grave abuse of discretion in upholding the NLRC and
the Labor Arbiter's ruling that petitioner was legally dismissed; 3) petitioner was legally and
validly terminated in accordance with Republic Act Nos. 4226 and 7431; 4) private respondent's
decision to terminate petitioner Santos was made in good faith and was not the result of unfair
discrimination; and 5) petitioner Santos' non-transfer to another position in the SLMC was a
valid exercise of management prerogative.
The petition lacks merit.
Generally, the Court has always accorded respect and finality to the findings of fact of the CA
particularly if they coincide with those of the Labor Arbiter and the NLRC and are supported by
substantial evidence.5 True this rule admits of certain exceptions as, for example, when the
judgment is based on a misapprehension of facts, or the findings of fact are not supported by
the evidence on record6 or are so glaringly erroneous as to constitute grave abuse of
discretion.7 None of these exceptions, however, has been convincingly shown by petitioners to
apply in the present case. Hence, the Court sees no reason to disturb such findings of fact of the
CA.
Ultimately, the issue raised by the parties boils down to whether petitioner Santos was illegally
dismissed by private respondent SLMC on the basis of her inability to secure a certificate of
registration from the Board of Radiologic Technology.
The requirement for a certificate of registration is set forth under R.A. No. 74318 thus:
Sec. 15. Requirement for the Practice of Radiologic Technology and X-ray Technology. - Unless
exempt from the examinations under Sections 16 and 17 hereof, no person shall practice or
offer to practice as a radiologic and/or x-ray technologist in the Philippines without having
obtained the proper certificate of registration from the Board.
It is significant to note that petitioners expressly concede that the sole cause for petitioner
Santos' separation from work is her failure to pass the board licensure exam for X-ray
technicians, a precondition for obtaining the certificate of registration from the Board. It is
argued, though, that petitioner Santos' failure to comply with the certification requirement did
not constitute just cause for termination as it violated her constitutional right to security of
tenure. This contention is untenable.
While the right of workers to security of tenure is guaranteed by the Constitution, its exercise
may be reasonably regulated pursuant to the police power of the State to safeguard health,
morals, peace, education, order, safety, and the general welfare of the people. Consequently,
persons who desire to engage in the learned professions requiring scientific or technical
knowledge may be required to take an examination as a prerequisite to engaging in their chosen
careers.9 The most concrete example of this would be in the field of medicine, the practice of
which in all its branches has been closely regulated by the State. It has long been recognized
that the regulation of this field is a reasonable method of protecting the health and safety of the
public to protect the public from the potentially deadly effects of incompetence and ignorance
among those who would practice medicine.10 The same rationale applies in the regulation of the
practice of radiologic and x-ray technology. The clear and unmistakable intention of the
legislature in prescribing guidelines for persons seeking to practice in this field is embodied in
Section 2 of the law:
Sec. 2. Statement of Policy. - It is the policy of the State to upgrade the practice of radiologic
technology in the Philippines for the purpose of protecting the public from the hazards posed by
radiation as well as to ensure safe and proper diagnosis, treatment and research through the
application of machines and/or equipment using radiation.11
In this regard, the Court quotes with approval the disquisition of public respondent NLRC in its
decision dated August 23, 2002:
The enactment of R.A. (Nos.) 7431 and 4226 are recognized as an exercise of the State's
inherent police power. It should be noted that the police power embraces the power to
prescribe regulations to promote the health, morals, educations, good order, safety or general
welfare of the people. The state is justified in prescribing the specific requirements for x-ray
technicians and/or any other professions connected with the health and safety of its citizens.
Respondent-appellee being engaged in the hospital and health care business, is a proper subject
of the cited law; thus, having in mind the legal requirements of these laws, the latter cannot
close its eyes and [let] complainant-appellant's private interest override public interest.
Indeed, complainant-appellant cannot insist on her "sterling work performance without any
derogatory record" to make her qualify as an x-ray technician in the absence of a proper
certificate of Registration from the Board of Radiologic Technology which can only be obtained
by passing the required examination. The law is clear that the Certificate of Registration cannot
be substituted by any other requirement to allow a person to practice as a Radiologic
Technologist and/or X-ray Technologist (Technician).12
No malice or ill-will can be imputed upon private respondent as the separation of petitioner
Santos was undertaken by it conformably to an existing statute. It is undeniable that her
continued employment without the required Board certification exposed the hospital to
possible sanctions and even to a revocation of its license to operate. Certainly, private
respondent could not be expected to retain petitioner Santos despite the inimical threat posed
by the latter to its business. This notwithstanding, the records bear out the fact that petitioner
Santos was given ample opportunity to qualify for the position and was sufficiently warned that
her failure to do so would result in her separation from work in the event there were no other
vacant positions to which she could be transferred. Despite these warnings, petitioner Santos
was still unable to comply and pass the required exam. To reiterate, the requirement for Board
certification was set by statute. Justice, fairness and due process demand that an employer
should not be penalized for situations where it had no participation or control.13
It would be unreasonable to compel private respondent to wait until its license is cancelled and
it is materially injured before removing the cause of the impending evil. Neither can the courts
step in to force private respondent to reassign or transfer petitioner Santos under these
circumstances. Petitioner Santos is not in the position to demand that she be given a different
work assignment when what necessitated her transfer in the first place was her own fault or
failing. The prerogative to determine the place or station where an employee is best qualified to
serve the interests of the company on the basis of the his or her qualifications, training and
performance belongs solely to the employer.14 The Labor Code and its implementing Rules do
not vest in the Labor Arbiters nor in the different Divisions of the NLRC (nor in the courts)
managerial authority.15
While our laws endeavor to give life to the constitutional policy on social justice and the
protection of labor, it does not mean that every labor dispute will be decided in favor of the
workers. The law also recognizes that management has rights which are also entitled to respect
and enforcement in the interest of fair play.16 Labor laws, to be sure, do not authorize
interference with the employer's judgment in the conduct of the latter's business. Private
respondent is free to determine, using its own discretion and business judgment, all elements of
employment, "from hiring to firing" except in cases of unlawful discrimination or those which
may be provided by law. None of these exceptions is present in the instant case.
The fact that another employee, who likewise failed to pass the required exam, was allowed by
private respondent to apply for and transfer to another position with the hospital does not
constitute unlawful discrimination. This was a valid exercise of management prerogative,
petitioners not having alleged nor proven that the reassigned employee did not qualify for the
position where she was transferred. In the past, the Court has ruled that an objection founded
on the ground that one has better credentials over the appointee is frowned upon so long as the
latter possesses the minimum qualifications for the position.17 Furthermore, the records show
that Ms. Santos did not even seriously apply for another position in the company.
WHEREFORE, the petition is DENIED for lack of merit. Costs against petitioners.
SO ORDERED.
ADOLFO S. AZCUNA
Associate Justice
Footnotes
1
Rollo, pp. 37-50.
Id. at 26-36.
Id. at 5.
Id. at 59-167.
Lopez v. National Steel Corporation, G.R. No. 149674, February 16, 2004, 423 SCRA
109.
6
JAT General Services v. NLRC, G.R. No. 148340, January 26, 2004, 421 SCRA 78.
Suan v. NLRC, G.R. No. 141441, June 19, 2001, 358 SCRA 819.
Otherwise known as the "fadiologic Technology Act of 1992."
PRC v. De Guzman, G.R. No. 144681, June 21, 2004, 432 SCRA 505.
10
DECS v. San Diego, G.R. No. 89572, December 21, 1989, 180 SCRA 533.
11
Supra note 8.
12
Rollo, pp. 32-33.
13
Superstar Security Agency, Inc. v. NLRC, G.R. No. 81493 April 3, 1990, 184 SCRA
74; M.F Violago Oiler Tank Trucks v. NLRC, G.R. Nos. 56950-51, September 30, 1982, 117
SCRA 544.
14
Benguet Electric Cooperative v. Fianza, G.R. No. 158606, March 9, 2004, 425 SCRA 41.
15
Almodiel v. NLRC, G.R. No. 100641, June 14, 1993, 223 SCRA 341.
16
Duncan Association of Detailman-PTGWO v. Glaxo Wellcome Philippines, Inc., G.R. No.

162994, September 17, 2004, 438 SCRA 343.
17
Supra note 15.

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 184885
March 7, 2012
ERNESTO G. YMBONG, Petitioner,

vs.
ABS-CBN BROADCASTING CORPORATION, VENERANDA SY AND DANTE LUZON, Respondents.
DECISION
VILLARAMA, JR., J.:
Before us is a Rule 45 Petition seeking to set aside the August 22, 2007 Decision1 and September
18, 2008 Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 86206 declaring petitioner to
have resigned from work and not illegally dismissed.
The antecedent facts follow:
Petitioner Ernesto G. Ymbong started working for ABS-CBN Broadcasting Corporation (ABS-CBN)
in 1993 at its regional station in Cebu as a television talent, co-anchoring Hoy Gising and TV
Patrol Cebu. His stint in ABS-CBN later extended to radio when ABS-CBN Cebu launched its AM
station DYAB in 1995 where he worked as drama and voice talent, spinner, scriptwriter and
public affairs program anchor.
Like Ymbong, Leandro Patalinghug also worked for ABS-CBN Cebu. Starting 1995, he worked as
talent, director and scriptwriter for various radio programs aired over DYAB.
On January 1, 1996, the ABS-CBN Head Office in Manila issued Policy No. HR-ER-016 or the
"Policy on Employees Seeking Public Office." The pertinent portions read:
1. Any employee who intends to run for any public office position, must file his/her
letter of resignation, at least thirty (30) days prior to the official filing of the certificate of
candidacy either for national or local election.
xxxx
3. Further, any employee who intends to join a political group/party or even with no
political affiliation but who intends to openly and aggressively campaign for a candidate
or group of candidates (e.g. publicly speaking/endorsing candidate, recruiting campaign
workers, etc.) must file a request for leave of absence subject to managements
approval. For this particular reason, the employee should file the leave request at least
thirty (30) days prior to the start of the planned leave period.
x x x x3 [Emphasis and underscoring supplied.]

Because of the impending May 1998 elections and based on his immediate recollection of the
policy at that time, Dante Luzon, Assistant Station Manager of DYAB issued the following
memorandum:
TO : ALL CONCERNED
FROM : DANTE LUZON
DATE : MARCH 25, 1998
SUBJECT : AS STATED
Please be informed that per company policy, any employee/talent who wants to run for
any position in the coming election will have to file a leave of absence the moment
he/she files his/her certificate of candidacy.
The services rendered by the concerned employee/talent to this company will then be
temporarily suspended for the entire campaign/election period.
For strict compliance.4 [Emphasis and underscoring supplied.]
Luzon, however, admitted that upon double-checking of the exact text of the policy and
subsequent confirmation with the ABS-CBN Head Office, he saw that the policy actually required
suspension for those who intend to campaign for a political party or candidate and resignation
for those who will actually run in the elections.5
After the issuance of the March 25, 1998 Memorandum, Ymbong got in touch with Luzon. Luzon
claims that Ymbong approached him and told him that he would leave radio for a couple of
months because he will campaign for the administration ticket. It was only after the elections
that they found out that Ymbong actually ran for public office himself at the eleventh hour.
Ymbong, on the other hand, claims that in accordance with the March 25, 1998 Memorandum,
he informed Luzon through a letter that he would take a few months leave of absence from
March 8, 1998 to May 18, 1998 since he was running for councilor of Lapu-Lapu City.
As regards Patalinghug, Patalinghug approached Luzon and advised him that he will run as
councilor for Naga, Cebu. According to Luzon, he clarified to Patalinghug that he will be
considered resigned and not just on leave once he files a certificate of candidacy. Thus,
Patalinghug wrote Luzon the following letter on April 13, 1998:
Dear Mr. Luzon,
Im submitting to you my letter of resignation as your Drama Production Chief and
Talent due to your companys policy that every person connected to ABS-CBN that
should seek an elected position in the government will be forced to resigned (sic) from
his position. So herewith Im submitting my resignation with a hard heart. But Im still
hoping to be connected again with your prestigious company after the election[s]
should you feel that Im still an asset to your drama production department. Im looking
forward to that day and Im very happy and proud that I have served for two and a half
years the most stable and the most prestigious Radio and TV Network in the Philippines.
As a friend[,] wish me luck and Pray for me. Thank you.
Very Truly Yours,
(Sgd.)
Leandro "Boy" Patalinghug6
Unfortunately, both Ymbong and Patalinghug lost in the May 1998 elections.
Later, Ymbong and Patalinghug both tried to come back to ABS-CBN Cebu. According to Luzon,
he informed them that they cannot work there anymore because of company policy. This was
stressed even in subsequent meetings and they were told that the company was not allowing
any exceptions. ABS-CBN, however, agreed out of pure liberality to give them a chance to wind
up their participation in the radio drama, Nagbabagang Langit, since it was rating well and to
avoid an abrupt ending. The agreed winding-up, however, dragged on for so long prompting
Luzon to issue to Ymbong the following memorandum dated September 14, 1998:
TO : NESTOR YMBONG
FROM : DANTE LUZON
SUBJECT : AS STATED
DATE : 14 SEPT. 1998
Please be reminded that your services as drama talent had already been automatically
terminated when you ran for a local government position last election.
The Management however gave you more than enough time to end your drama
participation and other involvement with the drama department.
It has been decided therefore that all your drama participation shall be terminated
effective immediately. However, your involvement as drama spinner/narrator of the
drama "NAGBA[BA]GANG LANGIT" continues until its writer/director Mr. Leandro
Patalinghug wraps it up one week upon receipt of a separate memo issued to him.7
Ymbong in contrast contended that after the expiration of his leave of absence, he reported
back to work as a regular talent and in fact continued to receive his salary. On September 14,
1998, he received a memorandum stating that his services are being terminated immediately,
much to his surprise. Thus, he filed an illegal dismissal complaint8 against ABS-CBN, Luzon and
DYAB Station Manager Veneranda Sy. He argued that the ground cited by ABS-CBN for his
dismissal was not among those enumerated in the Labor Code, as amended. And even granting
without admitting the existence of the company policy supposed to have been violated, Ymbong
averred that it was necessary that the company policy meet certain requirements before willful
disobedience of the policy may constitute a just cause for termination. Ymbong further argued
that the company policy violates his constitutional right to suffrage.9
Patalinghug likewise filed an illegal dismissal complaint10 against ABS-CBN.
ABS-CBN prayed for the dismissal of the complaints arguing that there is no employer-employee
relationship between the company and Ymbong and Patalinghug. ABS-CBN contended that they
are not employees but talents as evidenced by their talent contracts. However, notwithstanding
their status, ABS-CBN has a standing policy on persons connected with the company whenever
they will run for public office.11
On July 14, 1999, the Labor Arbiter rendered a decision12 finding the dismissal of Ymbong and
Patalinghug illegal, thus:
WHEREFORE, in the light of the foregoing, judgment is rendered finding the dismissal of
the two complainants illegal. An order is issued directing respondent ABS[-]CBN to
immediately reinstate complainants to their former positions without loss of seniority
rights plus the payment of backwages in the amount of P200,000.00 to each
complainant.
All other claims are dismissed.
SO ORDERED.13
The Labor Arbiter found that there exists an employer-employee relationship between ABS-CBN
and Ymbong and Patalinghug considering the stipulations in their appointment letters/talent
contracts. The Labor Arbiter noted particularly that the appointment letters/talent contracts
imposed conditions in the performance of their work, specifically on attendance and
punctuality, which effectively placed them under the control of ABS-CBN. The Labor Arbiter
likewise ruled that although the subject company policy is reasonable and not contrary to law,
the same was not made known to Ymbong and Patalinghug and in fact was superseded by
another one embodied in the March 25, 1998 Memorandum issued by Luzon. Thus, there is no
valid or authorized cause in terminating Ymbong and Patalinghug from their employment.
In its memorandum of appeal14 before the National Labor Relations Commission (NLRC), ABSCBN contended that the Labor Arbiter has no jurisdiction over the case because there is no
employer-employee relationship between the company and Ymbong and Patalinghug, and that
Sy and Luzon mistakenly assumed that Ymbong and Patalinghug could just file a leave of
absence since they are only talents and not employees. In its Supplemental Appeal,15 ABS-CBN
insisted that Ymbong and Patalinghug were engaged as radio talents for DYAB dramas and
personality programs and their contract is one between a self-employed contractor and the
hiring party which is a standard practice in the broadcasting industry. It also argued that the
Labor Arbiter should not have made much of the provisions on Ymbongs attendance and
punctuality since such requirement is a dictate of the programming of the station, the slating of
shows at regular time slots, and availability of recording studios not an attempt to exercise
control over the manner of his performance of the contracted anchor work within his scheduled
spot on air. As for the pronouncement that the company policy has already been superseded by
the March 25, 1998 Memorandum issued by Luzon, the latter already clarified that it was the
very policy he sought to enforce. This matter was relayed by Luzon to Patalinghug when the
latter disclosed his plans to join the 1998 elections while Ymbong only informed the company
that he was campaigning for the administration ticket and the company had no inkling that he
will actually run until the issue was already moot and academic. ABS-CBN further contended
that Ymbong and Patalinghugs "reinstatement" is legally and physically impossible as the talent
positions they vacated no longer exist. Neither is there basis for the award of back wages since
they were not earning a monthly salary but paid talent fees on a per production/per script basis.
Attached to the Supplemental Appeal is a Sworn Statement16 of Luzon.
On March 8, 2004, the NLRC rendered a decision17 modifying the labor arbiters decision.
The fallo of the NLRC decision reads:
WHEREFORE, premises considered, the decision of Labor Arbiter Nicasio C. Aninon
dated 14 July 1999 is MODIFIED, to wit:
Ordering respondent ABS-CBN to reinstate complainant Ernesto G. Ymbong and to pay
his full backwages computed from 15 September 1998 up to the time of his actual
reinstatement.
SO ORDERED.18
The NLRC dismissed ABS-CBNs Supplemental Appeal for being filed out of time. The NLRC ruled
that to entertain the same would be to allow the parties to submit their appeal on piecemeal
basis, which is contrary to the agencys duty to facilitate speedy disposition of cases. The NLRC
also held that ABS-CBN wielded the power of control over Ymbong and Patalinghug, thereby
proving the existence of an employer-employee relationship between them.
As to the issue of whether they were illegally dismissed, the NLRC treated their cases differently.
In the case of Patalinghug, it found that he voluntarily resigned from employment on April 21,
1998 when he submitted his resignation letter. The NLRC noted that although the tenor of the
resignation letter is somewhat involuntary, he knew that it is the policy of the company that
every person connected therewith should resign from his employment if he seeks an elected
position in the government. As to Ymbong, however, the NLRC ruled otherwise. It ruled that the
March 25, 1998 Memorandum merely states that an employee who seeks any elected position
in the government will only merit the temporary suspension of his services. It held that under
the principle of social justice, the March 25, 1998 Memorandum shall prevail and ABS-CBN is
estopped from enforcing the September 14, 1998 memorandum issued to Ymbong stating that
his services had been automatically terminated when he ran for an elective position.
ABS-CBN moved to reconsider the NLRC decision, but the same was denied in a Resolution
dated June 21, 2004.19
Imputing grave abuse of discretion on the NLRC, ABS-CBN filed a petition for certiorari20 before
the CA alleging that:
I.
RESPONDENT NLRC COMMITTED A GRAVE ABUSE OF DISCRETION AND SERIOUSLY
MISAPPRECIATED THE FACTS IN NOT HOLDING THAT RESPONDENT YMBONG IS A FREELANCE
RADIO TALENT AND MEDIA PRACTITIONERNOT A "REGULAR EMPLOYEE" OF PETITIONERTO
WHOM CERTAIN PRODUCTION WORK HAD BEEN OUTSOURCED BY ABS-CBN CEBU UNDER AN
INDEPENDENT CONTRACTORSHIP SITUATION, THUS RENDERING THE LABOR COURTS WITHOUT
JURISDICTION OVER THE CASE IN THE ABSENCE OF EMPLOYMENT RELATIONS BETWEEN THE
PARTIES.
II.
RESPONDENT NLRC COMMITTED A GRAVE ABUSE OF DISCRETION IN DECLARING RESPONDENT
YMBONG TO BE A REGULAR EMPLOYEE OF PETITIONER AS TO CREATE A CONTRACTUAL
EMPLOYMENT RELATION BETWEEN THEM WHEN NONE EXISTS OR HAD BEEN AGREED UPON OR
OTHERWISE INTENDED BY THE PARTIES.
III.
EVEN ASSUMING THE ALLEGED EMPLOYMENT RELATION TO EXIST FOR THE SAKE OF
ARGUMENT, RESPONDENT NLRC IN ANY CASE COMMITTED A GRAVE ABUSE OF DISCRETION IN
NOT SIMILARLY UPHOLDING AND APPLYING COMPANY POLICY NO. HR-ER-016 IN THE CASE OF
RESPONDENT YMBONG AND DEEMING HIM AS RESIGNED AND DISQUALIFIED FROM FURTHER
ENGAGEMENT AS A RADIO TALENT IN ABS-CBN CEBU AS A CONSEQUENCE OF HIS CANDIDACY IN
THE 1998 ELECTIONS, AS RESPONDENT NLRC HAD DONE IN THE CASE OF PATALINGHUG.
IV.
RESPONDENT NLRC COMMITTED A GRAVE ABUSE OF DISCRETION AND DENIED DUE PROCESS
TO PETITIONER IN REFUSING TO CONSIDER ITS SUPPLEMENTAL APPEAL, DATED OCTOBER 18,
1999, "FOR BEING FILED OUT OF TIME" CONSIDERING THAT THE FILING OF SUCH A PLEADING IS
NOT IN ANY CASE PROSCRIBED AND RESPONDENT NLRC IS AUTHORIZED TO CONSIDER
ADDITIONAL EVIDENCE ON APPEAL; MOREOVER, TECHNICAL RULES OF EVIDENCE DO NOT
APPLY IN LABOR CASES.
V.
RESPONDENT NLRC COMMITTED A GRAVE ABUSE OF DISCRETION IN GRANTING THE RELIEF OF
REINSTATEMENT AND BACKWAGES TO RESPONDENT YMBONG SINCE HE NEVER OCCUPIED ANY
"REGULAR" POSITION IN PETITIONER FROM WHICH HE COULD HAVE BEEN "ILLEGALLY
DISMISSED," NOR ARE ANY OF THE RADIO PRODUCTIONS IN WHICH HE HAD DONE TALENT
WORK FOR PETITIONER STILL EXISTING. INDEED, THERE IS NO BASIS WHATSOEVER FOR THE
AWARD OF BACKWAGES TO RESPONDENT YMBONG IN THE AMOUNT OF P200,000.00
CONSIDERING THAT, AS SHOWN BY THE UNCONTROVERTED EVIDENCE, HE WAS NOT EARNING
A MONTHLY "SALARY" OF "P20,000.00," AS HE FALSELY CLAIMS, BUT WAS PAID TALENT FEES ON
A "PER PRODUCTION/PER SCRIPT" BASIS WHICH AVERAGED LESS THAN P10,000.00 PER MONTH
IN TALENT FEES ALL IN ALL.21
On August 22, 2007, the CA rendered the assailed decision reversing and setting aside the
March 8, 2004 Decision and June 21, 2004 Resolution of the NLRC. The CA declared Ymbong
resigned from employment and not to have been illegally dismissed. The award of full back
wages in his favor was deleted accordingly.
The CA ruled that ABS-CBN is estopped from claiming that Ymbong was not its employee after
applying the provisions of Policy No. HR-ER-016 to him. It noted that said policy is entitled
"Policy on Employees Seeking Public Office" and the guidelines contained therein specifically
pertain to employees and did not even mention talents or independent contractors. It held that
it is a complete turnaround on ABS-CBNs part to later argue that Ymbong is only a radio talent
or independent contractor and not its employee. By applying the subject company policy on
Ymbong, ABS-CBN had explicitly recognized him to be an employee and not merely an
independent contractor.
The CA likewise held that the subject company policy is the controlling guideline and therefore,
Ymbong should be considered resigned from ABS-CBN. While Luzon has policy-making power as
assistant radio manager, he had no authority to issue a memorandum that had the effect of
repealing or superseding a subsisting policy. Contrary to the findings of the Labor Arbiter, the
subject company policy was effective at that time and continues to be valid and subsisting up to
the present. The CA cited Patalinghugs resignation letter to buttress this conclusion, noting that
Patalinghug openly admitted in his letter that his resignation was in line with the said company
policy. Since ABS-CBN applied Policy No. HR-ER-016 to Patalinghug, there is no reason not to
apply the same regulation to Ymbong who was on a similar situation as the former. Thus, the CA
found that the NLRC overstepped its area of discretion to a point of grave abuse in declaring
Ymbong to have been illegally terminated. The CA concluded that there is no illegal dismissal to
speak of in the instant case as Ymbong is considered resigned when he ran for an elective post
pursuant to the subject company policy.
Hence, this petition.
Petitioner argues that the CA gravely erred: (1) in upholding Policy No. HR-ER-016; (2) in
upholding the validity of the termination of Ymbongs services; and (3) when it reversed the
decision of the NLRC 4th Division of Cebu City which affirmed the decision of Labor Arbiter
Nicasio C. Anion.22
Ymbong argues that the subject company policy is a clear interference and a gross violation of
an employees right to suffrage. He is surprised why it was easy for the CA to rule that Luzons
memorandum ran counter to an existing policy while on the other end, it did not see that it was
in conflict with the constitutional right to suffrage. He also points out that the issuance of the
March 25, 1998 Memorandum was precisely an exercise of the management power to which an
employee like him must respect; otherwise, he will be sanctioned for disobedience or worse,
even terminated. He was not in a position to know which between the two issuances was
correct and as far as he is concerned, the March 25, 1998 Memorandum superseded the subject
company policy. Moreover, ABS-CBN cannot disown acts of its officers most especially since it
prejudiced his property rights.23
As to the validity of his dismissal, Ymbong contends that the ground relied upon by ABS-CBN is
not among the just and authorized causes provided in the Labor Code, as amended. And even
assuming the subject company policy passes the test of validity under the pretext of the right of
the management to discipline and terminate its employees, the exercise of such right is not
without bounds. Ymbong avers that his automatic termination was a blatant disregard of his
right to due process. He was never asked to explain why he did not tender his resignation before
he ran for public office as mandated by the subject company policy.24
Ymbong likewise asseverates that both the Labor Arbiter and the NLRC were consistent in their
findings that he was illegally dismissed. It is settled that factual findings of labor administrative
officials, if supported by substantial evidence, are accorded not only great respect but even
finality.25
ABS-CBN, for its part, counters that the validity of policies such as Policy No. HR-ER-016 has long
been upheld by this Court which has ruled that a media company has a right to impose a policy
providing that employees who file their certificates of candidacy in any election shall be
considered resigned.26 Moreover, case law has upheld the validity of the exercise of
management prerogatives even if they appear to limit the rights of employees as long as there is
no showing that management prerogatives were exercised in a manner contrary to law.27 ABSCBN contends that being the largest media and entertainment company in the country, its
reputation stems not only from its ability to deliver quality entertainment programs but also
because of neutrality and impartiality in delivering news.28
ABS-CBN further argues that nothing in the company policy prohibits its employees from either
accepting a public appointive position or from running for public office. Thus, it cannot be
considered as violative of the constitutional right of suffrage. Moreover, the Supreme Court has
recognized the employers right to enforce occupational qualifications as long as the employer is
able to show the existence of a reasonable business necessity in imposing the questioned policy.
Here, Policy No. HR-ER-016 itself states that it was issued "to protect the company from any
public misconceptions" and "[t]o preserve its objectivity, neutrality and credibility." Thus, it
cannot be denied that it is reasonable under the circumstances.29
ABS-CBN likewise opposes Ymbongs claim that he was terminated. ABS-CBN argues that on the
contrary, Ymbongs unilateral act of filing his certificate of candidacy is an overt act tantamount
to voluntary resignation on his part by virtue of the clear mandate found in Policy No. HR-ER016. Ymbong, however, failed to file his resignation and in fact misled his superiors by making
them believe that he was going on leave to campaign for the administration candidates but in
fact, he actually ran for councilor. He also claims to have fully apprised Luzon through a letter of
his intention to run for public office, but he failed to adduce a copy of the same.30
As to Ymbongs argument that the CA should not have reversed the findings of the Labor Arbiter
and the NLRC, ABS-CBN asseverates that the CA is not precluded from making its own findings
most especially if upon its own review of the case, it has been revealed that the NLRC, in
affirming the findings of the Labor Arbiter, committed grave abuse of discretion amounting to
lack or excess of jurisdiction when it failed to apply the subject company policy in Ymbongs case
when it readily applied the same to Patalinghug.31
Essentially, the issues to be resolved in the instant petition are: (1) whether Policy No. HR-ER016 is valid; (2) whether the March 25, 1998 Memorandum issued by Luzon superseded Policy
No. HR-ER-016; and (3) whether Ymbong, by seeking an elective post, is deemed to have
resigned and not dismissed by ABS-CBN.
Policy No. HR-ER-016 is valid.
This is not the first time that this Court has dealt with a policy similar to Policy No. HR-ER-016. In
the case of Manila Broadcasting Company v. NLRC,32 this Court ruled:
What is involved in this case is an unwritten company policy considering any employee who files
a certificate of candidacy for any elective or local office as resigned from the company. Although
11(b) of R.A. No. 6646 does not require mass media commentators and announcers such as
private respondent to resign from their radio or TV stations but only to go on leave for the
duration of the campaign period, we think that the company may nevertheless validly require
them to resign as a matter of policy. In this case, the policy is justified on the following grounds:
Working for the government and the company at the same time is clearly disadvantageous and
prejudicial to the rights and interest not only of the company but the public as well. In the event
an employee wins in an election, he cannot fully serve, as he is expected to do, the interest of
his employer. The employee has to serve two (2) employers, obviously detrimental to the
interest of both the government and the private employer.
In the event the employee loses in the election, the impartiality and cold neutrality of an
employee as broadcast personality is suspect, thus readily eroding and adversely affecting the
confidence and trust of the listening public to employers station.33
ABS-CBN, like Manila Broadcasting Company, also had a valid justification for Policy No. HR-ER016. Its rationale is embodied in the policy itself, to wit:
Rationale:
ABS-CBN BROADCASTING CORPORATION strongly believes that it is to the best interest
of the company to continuously remain apolitical. While it encourages and supports its
employees to have greater political awareness and for them to exercise their right to
suffrage, the company, however, prefers to remain politically independent and
unattached to any political individual or entity.
Therefore, employees who [intend] to run for public office or accept political
appointment should resign from their positions, in order to protect the company from
any public misconceptions. To preserve its objectivity, neutrality and credibility, the
company reiterates the following policy guidelines for strict implementation.
x x x x34 [Emphasis supplied.]
We have consistently held that so long as a companys management prerogatives are

exercised in good faith for the advancement of the employers interest and not for the
purpose of defeating or circumventing the rights of the employees under special laws or
under valid agreements, this Court will uphold them.35 In the instant case, ABS-CBN
validly justified the implementation of Policy No. HR-ER-016. It is well within its rights to
ensure that it maintains its objectivity and credibility and freeing itself from any
appearance of impartiality so that the confidence of the viewing and listening public in it
will not be in any way eroded. Even as the law is solicitous of the welfare of the
employees, it must also protect the right of an employer to exercise what are clearly
management prerogatives. The free will of management to conduct its own business
affairs to achieve its purpose cannot be denied.361wphi1
It is worth noting that such exercise of management prerogative has earned a stamp of approval
from no less than our Congress itself when on February 12, 2001, it enacted Republic Act No.
9006, otherwise known as the "Fair Election Act." Section 6.6 thereof reads:
6.6. Any mass media columnist, commentator, announcer, reporter, on-air
correspondent or personality who is a candidate for any elective public office or is a
campaign volunteer for or employed or retained in any capacity by any candidate or
political party shall be deemed resigned, if so required by their employer, or shall take
a leave of absence from his/her work as such during the campaign
period: Provided, That any media practitioner who is an official of a political party or a
member of the campaign staff of a candidate or political party shall not use his/her time
or space to favor any candidate or political party. [Emphasis and underscoring supplied.]
Policy No. HR-ER-016 was not superseded by the March 25, 1998 Memorandum
The CA correctly ruled that though Luzon, as Assistant Station Manager for Radio of ABS-CBN,
has policy-making powers in relation to his principal task of administering the networks radio
station in the Cebu region, the exercise of such power should be in accord with the general rules
and regulations imposed by the ABS-CBN Head Office to its employees. Clearly, the March 25,
1998 Memorandum issued by Luzon which only requires employees to go on leave if they intend
to run for any elective position is in absolute contradiction with Policy No. HR-ER-016 issued by
the ABS-CBN Head Office in Manila which requires the resignation, not only the filing of a leave
of absence, of any employee who intends to run for public office. Having been issued beyond
the scope of his authority, the March 25, 1998 Memorandum is therefore void and did not
supersede Policy No. HR-ER-016.
Also worth noting is that Luzon in his Sworn Statement admitted the inaccuracy of his
recollection of the company policy when he issued the March 25, 1998 Memorandum and
stated therein that upon double-checking of the exact text of the policy statement and
subsequent confirmation with the ABS-CBN Head Office in Manila, he learned that the policy
required resignation for those who will actually run in elections because the company wanted to
maintain its independence. Since the officer who himself issued the subject memorandum
acknowledged that it is not in harmony with the Policy issued by the upper management, there
is no reason for it to be a source of right for Ymbong.
Ymbong is deemed resigned when he ran for councilor.
As Policy No. HR-ER-016 is the subsisting company policy and not Luzons March 25, 1998
Memorandum, Ymbong is deemed resigned when he ran for councilor.
We find no merit in Ymbongs argument that "[his] automatic termination x x x was a blatant
[disregard] of [his] right to due process" as he was "never asked to explain why he did not
tender his resignation before he ran for public office as mandated by [the subject company
policy]."37 Ymbongs overt act of running for councilor of Lapu-Lapu City is tantamount to
resignation on his part. He was separated from ABS-CBN not because he was dismissed but
because he resigned. Since there was no termination to speak of, the requirement of due
process in dismissal cases cannot be applied to Ymbong. Thus, ABS-CBN is not duty-bound to ask
him to explain why he did not tender his resignation before he ran for public office as mandated
by the subject company policy.
In addition, we do not subscribe to Ymbongs claim that he was not in a position to know which
of the two issuances was correct. Ymbong most likely than not, is fully aware that the subsisting
policy is Policy No. HR-ER-016 and not the March 25, 1998 Memorandum and it was for this
reason that, as stated by Luzon in his Sworn Statement, he only told the latter that he will only
campaign for the administration ticket and not actually run for an elective post. Ymbong claims
he had fully apprised Luzon by letter of his plan to run and even filed a leave of absence but
records are bereft of any proof of said claim. Ymbong claims that the letter stating his intention
to go on leave to run in the election is attached to his Position Paper as Annex "A," a perusal of
said pleading attached to his petition before this Court, however, show that Annex "A" was not
his letter to Luzon but the September 14, 1998 Memorandum informing Ymbong that his
services had been automatically terminated when he ran for a local government position.
Moreover, as pointed out by ABS-CBN, had Ymbong been truthful to his superiors, they would
have been able to clarify to him the prevailing company policy and inform him of the
consequences of his decision in case he decides to run, as Luzon did in Patalinghugs case.
WHEREFORE, the petition for review on certiorari is DENIED for lack of merit.
With costs against petitioner.
SO ORDERED.
MARTIN S. VILLARAMA, JR.
Associate Justice
Footnotes
*
Designated additional member per Special Order No. 1207 dated February 23, 2012.
Rollo, pp. 150-161. Penned by Associate Justice Agustin S. Dizon with Associate Justices
Francisco P. Acosta and Stephen C. Cruz concurring.
2
Id. at 169-170. Penned by Associate Justice Francisco P. Acosta with Associate Justices
Priscilla Baltazar-Padilla and Stephen C. Cruz concurring.
3
Id. at 54.
4
CA rollo, p. 168.
1
Id. at 157.
Id. at 171.
7
Id. at 172.
8
Id. at 65.
9
Id. at 67-70.
10
Id. at 64.
11
Id. at 76.
12
Id. at 86-93.
13
Id. at 92-93.
14
Rollo, pp. 268-272.
15
16
Id. at 147-161.
17
Rollo, pp. 74-82.
18
Id. at 82.
19
20
Id. at 2-48.
21
Id. at 13-14.
22
Rollo, p. 19.
23
Id. at 21-23.
24
Id. at 27-32.
25
Id. at 33.
26
Id. at 212-213.
27
Id. at 213.
28
Id. at 217.
29
Id. at 217-218.
30
Id. at 219-220.
31
Id. at 231.
32
G.R. No. 121975, August 20, 1998, 294 SCRA 486.
33
Id. at 490-491.
34
Rollo, p. 54.
35
San Miguel Brewery Sales Force Union (PTGWO) v. Ople, G.R. No. 53515, February 8,
1989, 170 SCRA 25, 28, citing LVN Pictures Employees and Workers Asso. v. LVN
Pictures, Inc., Nos. L-23495 & L-26432, September 30, 1970, 35 SCRA 147; Phil.
American Embroideries, Inc. v. Embroidery and Garment Workers Union, No. L-20143,
January 27, 1969, 26 SCRA 634; and Phil. Refining Co., Inc. v. Garcia, Nos. L-21871 & L21962, September 27, 1966, 18 SCRA 107.
36
Abbot Laboratories (Phils.) Inc. v. NLRC, No. L-76959, October 12, 1987, 154 SCRA 713,
717, citing Dangan v. National Labor Relations Commission, Nos. 63127-28, February 20,
1984, 127 SCRA 706.
37
Rollo, pp. 31-32.
6

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 187122
February 22, 2012
NEGROS SLASHERS, INC., RODOLFO C. ALVAREZ AND VICENTE TAN, Petitioners,

vs.
ALVIN L. TENG, Respondent.
DECISION
VILLARAMA, JR., J.:
Before us is a petition for review on certiorari assailing the Decision1 dated September 17, 2008
and Resolution2dated February 11 2009 of the Court of Appeals (CA) in CA-G.R. SP No. 00817.
The appellate court had reversed and set aside the September 10, 2004 Decision3 and March 21,
2005 Resolution4 of the National Labor Relations Commission (NLRC) and reinstated with
modification the Decision5 of the Labor Arbiter finding respondent to have been illegally
dismissed.
The facts are undisputed.
Respondent Alvin Teng is a professional basketball player who started his career as such in the
Philippine Basketball Association and then later on played in the Metropolitan Basketball
Association (MBA).
On February 4, 1999, Teng signed a 3-year contract6 (which included a side contract and
agreement for additional benefits and bonuses) with the Laguna Lakers. Before the expiration of
his contract with the Laguna Lakers on December 31, 2001, the Lakers traded and/or transferred
Teng to petitioner Negros Slashers, with the latter assuming the obligations of Laguna Lakers
under Tengs unexpired contract, including the monthly salary ofP250,000, P50,000 of which
remained to be the obligation of the Laguna Lakers. On March 28, 2000, the management of the
Laguna Lakers formally informed Teng of his transfer to the Negros Slashers.7 Teng executed
with the Negros Slashers the Players Contract of Employment.8
On Game Number 4 of the MBA Championship Round for the year 2000 season, Teng had a
below-par playing performance. Because of this, the coaching staff decided to pull him out of
the game. Teng then sat on the bench, untied his shoelaces and donned his practice jersey. On
the following game, Game Number 5 of the Championship Round, Teng called-in sick and did
not play.
On November 21, 2000, Vicente Tan, Finance Head of Negros Slashers, wrote9 Teng requiring
him to explain in writing why no disciplinary action should be taken against him for his
precipitated absence during the crucial Game 5 of the National Championship Round. He was
further informed that a formal investigation would be conducted on November 28, 2000. The
hearing, however, did not push through because Teng was absent on the said scheduled
investigation. Hearing was rescheduled for December 11, 2000. On said date, the investigation
proceeded, attended by Tengs representatives, Atty. Arsenio Yulo and Atty. Jose Aspiras.10 A
subsequent meeting was also conducted attended by the management, coaching staff and
players of the Negros Slashers team, wherein the team members and coaching staff
unanimously expressed their sentiments against Teng and their opposition against the
possibility of Teng joining back the team.11
On March 16, 2001, the management of Negros Slashers came up with a decision, and through
its General Manager, petitioner Rodolfo Alvarez, wrote12 Teng informing him of his termination
from the team.
On July 28, 2001, Teng filed a complaint before the Office of the Commissioner of the MBA
pursuant to the provision of the Uniform Players Contract which the parties had executed.
Subsequently, on November 6, 2001, Teng also filed an illegal dismissal case with the Regional
Arbitration Branch No. VI of the NLRC.13
On July 16, 2002, the Labor Arbiter issued a decision finding Tengs dismissal illegal and ordering
petitioner Negros Slashers, Inc. to pay Teng P2,530,000 representing his unpaid salaries,
separation pay and attorneys fees. The Labor Arbiter ruled that the penalty of dismissal was not
justified since the grounds relied upon by petitioners did not constitute serious misconduct or
willful disobedience or insubordination that would call for the extreme penalty of dismissal from
service. The dispositive portion of the Labor Arbiters decision reads:
WHEREFORE, premises considered, judgment is hereby rendered declaring the dismissal of
complainant illegal and respondents Negros Slashers, Inc. are hereby ordered to PAY
complainant the total sum of TWO MILLION FIVE HUNDRED THIRTY THOUSAND (P2,530,000.00)
PESOS representing complainants unpaid salaries, separation pay and attorneys fee, the award
to be deposited with this Office within ten (10) days from receipt of this Decision.
All other claims are hereby DISMISSED for lack of merit.
SO ORDERED.14
The case was then appealed to the NLRC. On September 10, 2004, the NLRC issued a Decision
setting aside the July 16, 2002 Decision of the Labor Arbiter and entering a new one dismissing
the complaint for being premature since the arbitration proceedings before the Commissioner
of the MBA were still pending when Teng filed his complaint for illegal dismissal. The dispositive
portion of the NLRC Decision reads:
WHEREFORE, premises considered, the decision of the Executive Labor Arbiter a quo is hereby
REVERSED and SET ASIDE. A new one is entered, dismissing the instant case for being
premature.
SO ORDERED.15
Teng filed a motion for reconsideration, but it was denied for being filed beyond the ten-day
reglementary period provided for in Section 15,16 Rule VII of the NLRC Rules of Procedure.
Aggrieved, Teng filed a petition for certiorari with the CA assailing the NLRC Decision dated
September 10, 2004 and the Resolution dated March 21, 2005 denying his motion for
reconsideration.
On September 17, 2008 the CA rendered the assailed Decision setting aside the September 10,
2004 Decision and March 21, 2005 Resolution of the NLRC and reinstating with modification the
Labor Arbiters Decision.
The CA reinstated the findings of the Labor Arbiter that Teng was illegally dismissed because the
grounds relied upon by petitioners were not enough to merit the supreme penalty of dismissal.
The CA held that there was no serious misconduct or willful disobedience or insubordination on
Tengs part. On the issue of jurisdiction, the CA ruled that the Labor Arbiter had jurisdiction over
the case notwithstanding the pendency of arbitration proceedings in the Office of the
Commissioner of the MBA.
Petitioners sought reconsideration of the above ruling, but their motion was denied by the CA in
a Resolution17dated February 11, 2009.
Petitioners now come to this Court assailing the Decision dated September 17, 2008 and
Resolution dated February 11, 2009 of the CA.
Firstly, petitioners argue that respondent Teng and his counsel committed a blatant violation of
the rule against forum shopping. Petitioners aver that on July 28, 2001, Teng filed a complaint
before the MBA pursuant to the voluntary arbitration provision of the Uniform Players Contract
he executed with Negros Slashers, Inc. During the pendency of said complaint, Teng filed
another complaint for illegal dismissal with the Labor Arbiter. It is petitioners position that Teng
lied by certifying under oath that there is no similar case pending between him and Negros
Slashers, Inc., when in fact, months before he had filed a complaint with the MBA alleging the
same factual antecedents and raising the same issues.
Secondly, petitioners argue that the CA erred in ruling that Tengs offenses were just minor
lapses and irresponsible action not warranting the harsh penalty of dismissal. Petitioners allege
that the CA paid scant attention to two very important pieces of evidence which would clearly
show the gravity and seriousness of the offenses committed by Teng. Petitioners claim that
these two documents, i.e., the minutes of the meeting18 of players, management, and
coordinating staff, and a petition19 by the players to the management not to allow Teng to come
back to the team, would show that Teng should not have been treated as an ordinary working
man who merely absented himself by feigning sickness when called upon to work. Petitioners
argue that the nature of the work and team atmosphere should have been considered and given
credence. By neglecting these two documents, the CA failed to appreciate the gravity of the
misconduct committed by Teng and the effects it had on the basketball organization.
Petitioners also argue that respondents petition for certiorari with the CA should have been
dismissed outright because it was filed beyond the reglementary period. Petitioners point out
that Teng received the NLRC Decision on October 15, 2004 and therefore had ten days20 or until
October 25, 2004 within which to file a motion for reconsideration. But he filed his motion for
reconsideration only on October 26, 2004 and said motion was denied21 on March 21, 2005 for
being filed late. Thereafter he filed his petition for certiorari22 with the CA on June 20, 2005.
Petitioners contend that the petition for certiorari was filed beyond the period allowed by
the Rules of Court because the 60-day period to file the petition for certiorari should have
started to run from the receipt of the NLRC decision on October 15, 2004. And it should have
expired on December 14, 2004 because it was as if no motion for reconsideration was filed in
the NLRC. Further, petitioners argue that the CA could not take cognizance of the case because
it is a settled rule that certiorari as a special civil action will not lie unless a motion for
reconsideration is first filed before the NLRC to allow it an opportunity to correct its errors. In
this case, since the motion for reconsideration was filed late, it should have been treated as if no
motion for reconsideration was filed.
Teng, on the other hand, maintains that there is no violation of the rule against forum shopping.
He submits that he indeed filed his complaint before the MBA as early as July 28, 2001.
Unfortunately, for more than three months, the supposed voluntary arbitration failed to yield
any result until the MBA itself was dissolved. It was only on November 2001, after exhausting
the arbitration process, did he file his complaint before the Labor Arbiter. In other words, it was
only after the MBA failed to come up with a resolution on the matter did he opt to seek legal
redress elsewhere.
On the merits, Teng relies on the reasoning of the Labor Arbiter in finding that his alleged lapses
and misconduct were too minor to justify the extreme penalty of dismissal from service. In large
part, he quotes the Labor Arbiters decision, and emphasizes the Labor Arbiters statements that
(1) loosening of the shoe laces and the donning of the practice jersey are not indicative of
serious misconduct that would justify dismissal from employment; (2) it cannot be concluded
that he merely feigned sickness when he informed the Coach of his inability to play during Game
No. 5; and (3) there is no showing of any bad faith or ill motive on his part that would qualify his
actions as serious, severe and grave as to warrant termination from service.
Teng also argues that the CA aptly clarified and explained the legal reason why the petition for
certiorari was given due course despite some procedural lapses regarding the motion for
reconsideration with the NLRC. Teng stresses that jurisprudence allows the relaxation of
procedural rules even of the most mandatory character in the interest of substantial justice. In
this particular case, justice and equity calls for the relaxation of the reglementary period for
filing a motion for reconsideration as well as the rule prohibiting the filing of a petition for
certiorari without first filing a motion for reconsideration.
Simply put, the basic issues for our resolution are as follows: (1) whether the CA erred in giving
due course to respondent Tengs petition for certiorari despite its late filing; (2) whether Teng
violated the rule on forum shopping when he filed a complaint for illegal dismissal with the
Regional Arbitration Branch of the NLRC while a similar complaint was pending in the Office of
the Commissioner of the MBA; and (3) whether the CA erred in ruling that Tengs dismissal from
the Negros Slashers Team was unjustified and too harsh considering his misconduct.
The petition is bereft of merit.
On the first issue raised by petitioners, we rule that the CA did not commit a reversible error in
giving due course to Tengs petition for certiorari although said petition was filed late.
Ordinarily, rules of procedure are strictly enforced by courts in order to impart stability in the
legal system. However, in not a few instances, we relaxed the rigid application of the rules of
procedure to afford the parties the opportunity to fully ventilate their cases on the merits. This
is in line with the time honored principle that cases should be decided only after giving all the
parties the chance to argue their causes and defenses. In that way, the ends of justice would be
better served. For indeed, the general objective of procedure is to facilitate the application of
justice to the rival claims of contending parties, bearing always in mind that procedure is not to
hinder but to promote the administration of justice.23 In Ong Lim Sing, Jr. v. FEB Leasing and
Finance Corporation,24 we ruled:
Courts have the prerogative to relax procedural rules of even the most mandatory character,
mindful of the duty to reconcile both the need to speedily put an end to litigation and the
parties right to due process. In numerous cases, this Court has allowed liberal construction of
the rules when to do so would serve the demands of substantial justice and equity. x x x
Indeed the prevailing trend is to accord party litigants the amplest opportunity for the proper
and just determination of their causes, free from the constraints of needless technicalities.
Here, besides the fact that a denial of the recourse to the CA would serve more to perpetuate
an injustice and violation of Tengs rights under our labor laws, we find that as correctly held by
the CA, no intent to delay the administration of justice could be attributed to Teng. The CA
therefore did not commit reversible error in excusing Tengs one-day delay in filing his motion
for reconsideration and in giving due course to his petition for certiorari.
As regards the second issue, we likewise find no merit in petitioners claim that respondents act
of filing a complaint with the Labor Arbiter while the same case was pending with the Office of
the Commissioner of the MBA constituted forum shopping.
For forum shopping to exist, it is necessary that (a) there be identity of parties or at least such
parties that represent the same interests in both actions; (b) there be identity of rights asserted
and relief prayed for, the relief being founded on the same facts; and (c) the identity of the two
preceding particulars is such that any judgment rendered in one action will, regardless of which
party is successful, amount to res judicata in the other action.25
Petitioners are correct as to the first two requisites of forum shopping. First, there is identity of
parties involved: Negros Slashers Inc. and respondent Teng. Second, there is identity of rights
asserted i.e., the right of management to terminate employment and the right of an employee
against illegal termination. However, the third requisite of forum shopping is missing in this
case. Any judgment or ruling of the Office of the Commissioner of the MBA will not amount to
res judicata. As defined in Agustin v. Delos Santos,26
Res Judicata is defined as "a matter adjudged; a thing judicially acted upon or decided; a thing or
matter settled by judgment." According to the doctrine of res judicata, an existing final
judgment or decree rendered on the merits, and without fraud or collusion, by a court of
competent jurisdiction, upon any matter within its jurisdiction, is conclusive of the rights of the
parties or their privies, in all other actions or suits in the same or any other judicial tribunal of
concurrent jurisdiction on the points and matters in issue in the first suit. To state simply, a final
judgment or decree on the merits by a court of competent jurisdiction is conclusive of the rights
of the parties or their privies in all later suits on all points and matters determined in the former
suit. (Emphasis supplied.)
To clarify, res judicata is defined in jurisprudence as to have four basic elements: (1) the
judgment sought to bar the new action must be final; (2) the decision must have been rendered
by a court having jurisdiction over the subject matter and the parties; (3) the disposition of the
case must be a judgment on the merits; and (4) there must be as between the first and second
action, identity of parties, subject matter, and causes of action.27
Here, although contractually authorized to settle disputes, the Office of the Commissioner of the
MBA is not a court of competent jurisdiction as contemplated by law with respect to the
application of the doctrine of res judicata. At best, the Office of the Commissioner of the MBA is
a private mediator or go-between as agreed upon by team management and a player in the
MBA Players Contract of Employment.28 Any judgment that the Office of the Commissioner of
the MBA may render will not result in a bar for seeking redress in other legal venues. Hence,
respondents action of filing the same complaint in the Regional Arbitration Branch of the NLRC
does not constitute forum shopping.
On the third issue, we find that the penalty of dismissal handed out against Teng was indeed too
harsh.
We understand petitioners in asserting that a basketball organization is a "team-based"
enterprise and that a harmonious working relationship among team players is essential to the
success of the organization. We also take into account the petition of the other team members
voicing out their desire to continue with the team without Teng. We note likewise the
sentiments of the players and coaching staff during the meeting of February 4, 2001 stating how
they felt when Teng "abandoned" them during a crucial Game Number 5 in the MBA
championship round.
Petitioners rely heavily on the alleged effects of Tengs actions on the rest of the team.
However, such reaction from team members is expected after losing a game, especially a
championship game. It is also not unlikely that the team members looked for someone to blame
after they lost the championship games and that Teng happened to be the closest target of the
teams frustration and disappointment. But all these sentiments and emotions from Negros
Slashers players and staff must not blur the eyes of the Court from objectively assessing Tengs
infraction in order to determine whether the same constitutes just ground for dismissal. The
incident in question should be clear: Teng had a below-par performance during Game Number 4
for which he was pulled out from the game, and then he untied his shoelaces and donned his
practice jersey. In Game Number 5, he did not play.
As an employee of the Negros Slashers, Teng was expected to report for work regularly. Missing
a team game is indeed a punishable offense. Untying of shoelaces when the game is not yet
finished is also irresponsible and unprofessional. However, we agree with the Labor Arbiter that
such isolated foolishness of an employee does not justify the extreme penalty of dismissal from
service. Petitioners could have opted to impose a fine or suspension on Teng for his
unacceptable conduct. Other forms of disciplinary action could also have been taken after the
incident to impart on the team that such misconduct will not be tolerated.
In Sagales v. Rustans Commercial Corporation,29 this Court ruled:
Truly, while the employer has the inherent right to discipline, including that of dismissing its
employees, this prerogative is subject to the regulation by the State in the exercise of its police
power.
In this regard, it is a hornbook doctrine that infractions committed by an employee should
merit only the corresponding penalty demanded by the circumstance. The penalty must be
commensurate with the act, conduct or omission imputed to the employee and must be
imposed in connection with the disciplinary authority of the employer. (Emphasis in the
original.)
In the case at bar, the penalty handed out by the petitioners was the ultimate penalty of
dismissal. There was no warning or admonition for respondents violation of team rules, only
outright termination of his services for an act which could have been punished appropriately
with a severe reprimand or suspension.
WHEREFORE, the petition for review on certiorari is DENIED for lack of merit and the Decision of
the Court of Appeals dated September 17, 2008 and Resolution dated February 11, 2009, in CAG.R. SP No. 00817 are hereby AFFIRMED.
With costs against the petitioners.
SO ORDERED.
Associate Justice
Footnotes
*
Designated additional member per Special Order No. 1203 dated February 17, 2012.
Rollo, pp. 87-99. Penned by Associate Justice Francisco P. Acosta with Associate
Justices Amy C. Lazaro-Javier and Edgardo L. Delos Santos concurring.
2
Id. at 100.
3
Id. at 70-79.
4
Id. at 80-81.
5
Id. at 54-69.
6
7
Id. at 56.
8
Id. at 96-99.
9
Id. at 101.
10
Id. at 104-109.
11
Id. at 108-112.
12
Id. at 60-61.
1
13
Rollo, pp. 45-46, 89; CA rollo, p. 186.

Id. at 68-69.
15
Id. at 78.
16
Section 15. Motions for Reconsideration. - Motion for reconsideration of any
decision/resolution/order of the Commission shall not be entertained except when
based on palpable or patent errors, provided that the motion is under oath and filed
within ten (10) calendar days from receipt of decision/resolution/order, with proof of
service that a copy of the same has been furnished, within the reglementary period, the
adverse party, and provided further, that only one such motion from the same party
shall be entertained.
xxxx
17
Rollo, pp. 100-102.
18
19
Id. at 113.
20
Section 15, Rule VII of the NLRC Rules of Procedure, supra note 15.
21
Rollo, p. 80.
22
CA rollo, pp. 2-20.
23
Republic Cement Corporation v. Guinmapang, G.R. No. 168910, August 24, 2009, 596
SCRA 688, 695.
24
G.R. No. 168115, June 8, 2007, 524 SCRA 333, 343, citing Barnes v. Padilla, G. R. No.
160753, June 28, 2005, 461 SCRA 533, 539.
25
Korea Exchange Bank v. Gonzales, G.R. Nos. 142286-87, April 15, 2005, 456 SCRA 224,
243, citingBenedicto v. Court of Appeals, G.R. No. 125359, September 4, 2001, 364 SCRA
334, 345.
26
G.R. No. 168139, January 20, 2009, 576 SCRA 576, 585, citing Oropeza Marketing
Corporation v. Allied Banking Corporation, G.R. No. 129788, December 3, 2002, 393
SCRA 278, 285-286, quoting Blacks Law Dictionary, 4th Ed. (1968) 1470, Philippine
National Bank v. Barreto, 52 Phil. 818, 823-824 (1929), Taganas v. Emuslan, G.R.
No.146980, September 2, 2003, 410 SCRA 237, 241-242.
27
Social Security Commission v. Rizal Poultry and Livestock Association, Inc., G.R. No.
167050, June 1, 2011, 650 SCRA 50, 57-58, citing Oropeza Marketing Corporation v.
Allied Banking Corporation, id. at 287.
28
Rollo, p. 47.
29
G.R. No. 166554, November 27, 2008, 572 SCRA 89, 104, citing Manila Trading and
Supply Co. v. Zulueta, 69 Phil. 485, 486 (1940), Caltex Refinery Employees Association
(CREA) v. National Labor Relations Commission (Third Division) G.R. No. 102993, July 14,
1995, 246 SCRA 271, 279; Radio Communications of the Phils., Inc. v. NLRC, G.R. No.
102958, June 25, 1993, 223 SCRA 656, 667.
14

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 149433
December 15, 2010
THE COCA-COLA EXPORT CORPORATION, Petitioner,

vs.
CLARITA P. GACAYAN, Respondent.
DECISION
LEONARDO-DE CASTRO, J.:
Before the Court is a Petition for Review on Certiorari filed by petitioner The Coca Cola Export
Corporation against respondent Clarita P. Gacayan, assailing the Decision1 dated May 30, 2001
and the subsequent Resolution2 dated August 9, 2001 of the Court of Appeals in CA-G.R. SP No.
49192. The Court of Appeals reversed and set aside the Resolutions dated April 14, 19983 and
June 19, 19984 of the National Labor Relations Commission (NLRC), and ordered the immediate
reinstatement of respondent to her former position or to a substantially equivalent position
without loss of seniority rights and with full backwages.
The attendant facts are as follows:
Petitioner The Coca Cola Export Corporation, duly organized and existing under the laws of the
Philippines, is engaged in the manufacture, distribution and export of beverage base,
concentrate, and other products bearing its trade name.
Respondent Clarita P. Gacayan began working with petitioner on October 8, 1985. At the time
her employment was terminated on April 6, 1995, for alleged loss of trust and confidence,
respondent was holding the position of Senior Financial Accountant.
Under petitioners company policy, one of the benefits enjoyed by its employees was the
reimbursement of meal and transportation expenses incurred while rendering overtime work.
This reimbursement was allowed only when the employee worked overtime for at least four
hours on a Saturday, Sunday or holiday, and for at least two hours on weekdays. The maximum
amount allowed to be reimbursed was one hundred fifty (P150.00) pesos. It was in connection
with this company policy that petitioner called the attention of respondent and required her to
explain the alleged alterations in three receipts which she submitted to support her claim for
reimbursement of meal expenses, to wit: 1) McDonalds Receipt No. 875493 dated October 1,
1994 for P111.00;5 2) Shakeys Pizza Parlor Receipt No. 122658 dated November 20, 1994
for P174.06;6 and 3) Shakeys Pizza Parlor Receipt No. 41274 dated July 19, 1994 for P130.50.
On November 21, 1994, petitioner issued a memorandum7 to respondent informing her of the
alteration in the date of the McDonalds Receipt No. 875493, which she submitted in support of
her claim for meal allowance allegedly consumed on October 1, 1994, and requiring her to
explain the said alteration.
Respondent wrote her explanation on the same note and stated that the alteration may have
been made by the staff from McDonalds as they sometimes make mistakes in issuing receipts.
Respondent also narrated that her sister, Odette, sometimes buys food for her and that she is
not quite sure if the receipt in question was the correct one which Odette gave her.
Upon verification with the Assistant Branch Manager of the McDonalds Makati Cinema Square
outlet which issued the subject receipt, petitioner discovered that the date of issuance of the
receipt was altered. The receipt was actually issued for a meal bought on October 2, 1994 and
not on October 1, 1994.8
On December 9, 1994, petitioner sent another memorandum9 to respondent and required her
to explain in writing why her November 21, 1994 claim for reimbursement of meal expense
should not be considered fraudulent since there was an alteration in the receipt which she
submitted. The second receipt contained a handwritten alteration which read "1 PF extra
mojos" which was superimposed on the computer generated print-out of the food item actually
purchased.
On December 19, 1994, respondent submitted her explanation10 and claimed that what she
ordered for lunch was a "buddy pack and an extra mojos." Respondent explained that the
delivery staff brought a wrong receipt as it did not correspond to the food that she actually
ordered. Respondent added that she asked the delivery staff to alter the receipt thinking that he
could just write the correct items ordered and sign the said receipt to authenticate the
alterations made thereon. She further stated that there was no intention on her part to commit
fraud since she was just avoiding the hassle of waiting for a replacement receipt.
Petitioner then referred respondents explanation to the Assistant Manager of the Shakeys
Pizza Parlor which issued the subject receipt. Upon verification,11 it was discovered that the
receipt was actually for three orders of Bunch of Lunch, and not for Buddy Pack which has an
item code of CH5, not BP, as claimed by respondent. The Assistant Manager also denied
respondents claim that it was their representative, specifically their delivery staff, who made
the alteration on the receipt.12
On January 3, 1995, petitioner sent respondent a letter13 directing her to explain why she should
not be subjected to disciplinary sanctions for violating Section II, No. 15, paragraph (d) of the
companys rules and regulations which punishes with dismissal the submission of any fraudulent
item of expense.
Consequently, respondent submitted her explanation14 on January 4, 1995, and denied any
personal knowledge in the commission of the alterations in the subject receipts. Respondent
asserted that she did not notice the alteration in the McDonalds receipt since she "did not give
close attention to it." She further stated that her sisters driver/messenger may have caused the
alteration, but she could not be certain about it. With regard to the Shakeys receipt,
respondent maintained that what she ordered was a buddy pack with extra mojos.
On January 12, 1995, petitioner sent respondent a memorandum15 inviting her to a hearing and
formal investigation on January 17, 1995, to give her an opportunity to explain the issues against
her. Respondent was also advised that she was free to bring along a counsel of her choice.
On January 17, 1995, respondent appeared at the hearing. She was reminded of her right to
have her own lawyer present at the proceedings of the investigation and was extensively
questioned regarding the alterations on the McDonalds and Shakeys Pizza Parlor receipts
which she submitted in support of her claim for reimbursement of meal expenses.16
On January 19, 1995, petitioner notified17 respondent that the continuation of the investigation
was set on January 23, 1995 for the presentation of the delivery personnel of Shakeys Pizza
Parlor. Petitioner also informed respondent of a third receipt with an alteration which she
submitted in support of her claim for reimbursement for meal allowance - Shakeys Pizza Parlor
Receipt No. 41274 dated July 19, 1994,18 which contained an annotation "w/ CAV 50% only
P130.50." Such annotation meant that respondent was claiming only half of the total amount
indicated in the receipt as the said meal was supposedly shared with another employee,
Corazon A. Varona. Said employee, however, denied that she ordered and shared the food
covered by the receipt in question.19
Upon verification by petitioner with the restaurant supervisor of the Las Pias branch of the
Shakeys Pizza Parlor which issued the subject receipt, it was discovered that said receipt was
issued for food purchased on July 17, 1994 and not for July 19, 1994,20 as claimed by
respondent.
Respondent did not attend the January 23, 1995 hearing, citing her doctors advice21 to rest
since she was suffering from "severe mixed migraine and muscle contraction headache."
Respondent also complained of the alleged partiality of the investigating committee against her.
At the said hearing, the delivery personnel of Shakeys Pizza Parlor was presented. He
maintained that what he delivered to respondent was her order for three Bunch of Lunch packs
and not one order of Buddy Pack with extra mojos.22
On January 24, 1995, respondent filed an application for leave23 from January 13, 1995 up to
February 3, 1995. Again on January 31, 1995, respondent filed another application for leave24 for
the period February 6, 1995 to February 24, 1995.
On February 23, 1995, petitioner sent another notice25 to respondent informing her of the resetting of the continuation of the formal investigation on March 15, 1995. Respondent was also
advised that the said scheduled hearing was her last opportunity to fully explain her side, and
that she had the option of bringing a lawyer at the hearing.
Respondent did not attend the March 15, 1995 hearing. Petitioner then concluded the formal
investigation.
Thereafter, in a letter26 dated April 4, 1995, petitioner dismissed respondent for fraudulently
submitting tampered and/or altered receipts in support of her petty cash reimbursements in
gross violation of the companys rules and regulations.
On June 6, 1995, respondent filed a complaint27 for illegal dismissal, non-payment of service
incentive leave, sick leave and vacation leave with prayer for reinstatement, payment of
backwages as well as for damages and attorneys fees, against petitioner with the NLRC,
docketed as NLRC-NCR Case No. 00-06-04000-95. After the mandatory conciliation proceedings
failed, the parties were required to submit their respective position papers.
In her position paper, respondent averred that, assuming arguendo that she altered the receipts
in question, dismissal was too harsh a penalty for her considering that: "(a) it was her first
offense in her 9 years of service; (b) the offense imputed was minor, as only the dates and
items, not the amounts, were altered or the amounts involved were very minimal; (c) the
company did not suffer material damage, as she was really entitled to theP150.00 allowance
even without accompanying receipt; and (d) respondent acted without malice, as she really
rendered (unpaid) overtime work on those three dates."28
On the other hand, petitioner maintained in its position paper that respondent was dismissed
for cause, that of "tampering official receipts to substantiate her claim for (meal)
reimbursement which reflects her questionable integrity and honesty."29 Petitioner added that
in terminating the services of an employee for breach of trust, "it is enough that the misconduct
of the employee tends to prejudice the employers interest since it would be unreasonable to
require the employer to wait until he is materially injured before removing the cause of the
impending evil."30
In a Decision31 dated June 17, 1996, Labor Arbiter Ramon Valentin C. Reyes ruled in favor of
petitioner and dismissed respondents complaint for lack of merit. The relevant portions of the
Decision read:
[T]he termination of complainant is clearly valid.
Respondent [herein petitioner] complied with the notice requirement strictly to the
letter. Complainant [herein respondent] was given the first notice which the Supreme
Court amply termed in the foregoing jurisprudence as the "proper charge". This Office
further notes that more than one notice was given to the complainant [respondent]. In
fact, complainant [respondent] was repeatedly directed to answer the charges against
her. As she in fact did.
xxxx
It was only after the evidence against complainant [respondent] was received and her
fraudulent participation morally ascertained that respondent [petitioner] finally decided
to terminate his (sic) services. And after arriving at a conclusion, complainant
[respondent] was consequently informed of her termination which was the sanction
imposed on her.
Again, following the yardstick laid down by the Tiu doctrine cited above, the procedure
in terminating complainant [respondent] was definitely followed. Her termination is
therefore valied (sic) and must be upheld for all intents and purposes.
xxxx
Going now to the substantive aspect of complainants [respondents] termination, this
Office likewise finds that there existed just cause to terminate her services.
Complainant [Respondent] was terminated for repeatedly submitting fraudulent items
of expense, clearly in violation of respondents [petitioners] company rules and
regulations which consequently resulted in loss of trust and confidence.32
Undaunted, respondent appealed the Labor Arbiters decision to the NLRC.
In a Resolution33 dated April 14, 1998, the NLRC affirmed the ruling of the Labor Arbiter, thus:
After a careful review of the evidences presented before Us, including the jurisprudence
cited, We decided to look deeper into what led or motivated herein complainant
[respondent] to do as she did.
It had been established that three (3) receipts were altered/tampered with and were
subsequently submitted by complainant [respondent] to the company so that she could
claim her allowed meal allowance of P150.00 per meal on days she rendered overtime
work. Complainant [Respondent] admitted the alterations were done by her but she
was quick to retort and tries to justify why she should not be held guilty of a fraudulent
act.
As if the company owes her so much for rendering overtime work gratuitously, she now
tries to "collect", so to speak, from the company by way of emphasizing the benefits it
gets from her (in terms of the alleged savings of about more than P900.00, had it paid
her overtime pay and basic and premium pay). She now hastens to conclude that since
the company had greatly benefitted from her overtime services, she did not violate
company rules and regulations when she tampered the receipts which she attached as
her justification for reimbursement for meal allowance.
This line of reasoning is absurd, if not utterly dangerous. Admitting the commission of
the act but at the same breath denying any fraudulent intent is inconsistent. Under no
circumstances was her misconduct excusable. Here the amount becomes immaterial,
her position irrelevant. As correctly ruled by the Labor Arbiter a quo, the disciplinary
action taken by respondent company [petitioner] on complainant [respondent] applies
to all employees regardless of rank. We also agree with the findings of the Labor Arbiter
below that complainant [respondent] was afforded due process.
In fine, in the absence of showing that the decision was rendered whimsically and
capriciously, We Affirm.
WHEREFORE, in the light of the foregoing, the assailed Decision dated 17 June 1996 is
hereby AFFIRMED.34
Respondent filed a Motion for Reconsideration which was denied in the Resolution35 dated June
19, 1998.
Aggrieved, respondent elevated the case to the Court of Appeals via certiorari in CA-G.R. SP No.
49192.
As stated at the threshold hereof, the Court of Appeals, in its assailed Decision dated May 30,
2001, reversed and set aside the Resolutions dated April 14, 1998 and June 19, 1998 of the
NLRC. The Court of Appeals ruled that the penalty of dismissal imposed on respondent was too
harsh and further directed petitioner to immediately reinstate respondent to her former
position, if possible, or a substantially equivalent position without loss of seniority rights and
with full backwages. The Court of Appeals ratiocinated thus:
We consider the penalty of dismissal imposed on the petitioner to be too harsh.
Petitioner [Respondent] has held an unblemished record for nine-and-a-half (9 ) years and the
respondent company [petitioner], in the same period, found her performance satisfactory, as
evidenced by the promotions she received over the years and her being tasked to train in other
countries. The offenses she allegedly committed did not cause any prejudice or loss to the
company since the amounts were actually due her as part of her compensation for overtime. On
the other hand, petitioner [respondent] sufficiently explained that in submitting the falsified
receipts, she was acting on the belief that the said requirement was merely for record-keeping
purposes for she was already entitled to the money equivalent thereof as consideration for
services already rendered. Hence, the presence of good faith on the part of petitioner
[respondent], her long years of exemplary service and the absence of loss on the part of the
employer, taken together, justify the application of Yap vs. NLRC, supra. In the aforecited case,
the Supreme Court considered the employees long years of unblemished service, the return of
the funds borrowed from the employer and the employees lack of intent to deviate from the
rules, as circumstances justifying the award of separation pay, in lieu of reinstatement.
Considering however, that there was no evidence of strained relations between the parties in
the case at bench precluding a harmonious working relationship should reinstatement be
decreed, then the reinstatement of petitioner [respondent] is proper. With respect to the
allegation of dishonesty on the part of private respondent, the Court considers the "ignominy
and mental torture" suffered by petitioner throughout the proceedings, in view of her high
position with respondent company, to be practically punishment for said misdeed. (Philippine
Airlines vs. Philippine Air Lines Employees Association, supra.)
Finally, the private respondent [petitioner] raised in issue the timeliness of the filing of the
herein petition. Based on their computation, the petition was only filed four days after [the]
sixty-day period prescribed in the Section 4, Rule 65 of the Rules of Court. Considering however,
that jurisprudence is replete with instances where the Supreme Court has relaxed the technical
rules in the exercise of equity jurisdiction when there are strong considerations of substantial
justice that are manifest in the petition, (Soriano vs. Court of Appeals, 222 SCRA 545, 553
[1993]; Orata vs. Intermediate Appellate Court, 185 SCRA 148, 152 [1990]; Laginlin vs.
Workmens Compensation Commission, 159 SCRA 91, 96 [1988]; and, Serrano vs. Court of
Appeals, 139 SCRA 179, 186 [1985]). Our finding that there was grave abuse of discretion in the
issuance of the assailed resolutions of public respondent merit the allowance of the herein
petition.
WHEREFORE, the petition is GRANTED and the Resolutions, dated April 14, 1998 and June 19,
1998, both issued by public respondent NLRC, are hereby SET ASIDE. Private respondent
[Petitioner] Coca Cola Export Corporation is hereby directed to immediately reinstate petitioner
[respondent] to her former position, if possible, otherwise, to a substantially equivalent position
without loss of seniority rights and with full backwages, based on her last monthly salary, to be
computed from the date of her dismissal from the service up to the date of finality of this
decision, without any qualifications or deductions. No costs.36
Its motion for reconsideration having been denied by the Court of Appeals in its second
impugned Resolution dated August 9, 2001, petitioner is now before us via the present recourse
with the following assignment of errors:
I
BY BEING TOO LIBERAL IN FAVOR OF THE RESPONDENT, THE COURT OF APPEALS HAD
DECIDED A QUESTION OF SUBSTANCE NOT IN ACCORD WITH LAW.
II
IN DOING SO, THE COURT OF APPEALS DEVIATED FROM ESTABLISHED DOCTRINES LONG
SETTLED BY CONSISTENT JURISPRUDENCE ENUNCIATED BY THIS HONORABLE COURT.
On the procedural issue, petitioner asserts that the Court of Appeals should have dismissed
outright the petition for certiorari for being filed out of time and for failure to comply with the
requirements set forth in Rule 42 of the Rules of Civil Procedure mandating that the petition be
accompanied by clear copies of "all pleadings and other material portions of the record as would
support the material allegations of the petition."
Moreover, petitioner contends that the Court of Appeals gave due course to respondents
petition purely on the basis of liberality, and that it anchored its decision on the general
principle that doubts must be interpreted in favor of labor.
In her Comment dated February 10, 2002, respondent alleges that the Court of Appeals
correctly gave due course to her petition as it was actually filed on time. Respondent states that
when her petition was still pending with the Court of Appeals, Section 4, Rule 65 of the Rules of
Court was amended by Supreme Court Resolution A.M. No. 00-2-03-SC, which took effect on
September 1, 2000, whereby the 60-day period within which to file a petition forcertiorari shall
now be counted from receipt of the notice of the denial of the motion for reconsideration.
According to respondent, she received the Order denying her motion for reconsideration on
August 10, 1998, thus, her filing of the petition with the Court of Appeals on October 2, 1998,
was well within the 60-day period.
The Court agrees with respondent.
At the time of the filing of the petition for certiorari before the Court of Appeals on September
1, 1998, Supreme Court Circular No. 39-98, which amended Section 4, Rule 65 of the 1997 Rules
of Civil Procedure, had already taken effect on September 1, 1998, after publication in several
newspapers of general circulation. The amended provision reads:
SEC. 4. Where and when petition to be filed. The petition may be filed not later than sixty (60)
days from notice of the judgment, order or resolution sought to be assailed in the Supreme
Court or, if it relates to the acts or omissions of a lower court or of a corporation, board, officer
or person, in the Regional Trial Court exercising jurisdiction over the territorial area as defined
by the Supreme Court. It may also be filed in the Court of Appeals whether or not the same is in
aid of its appellate jurisdiction, or in the Sandiganbayan if it is in aid of its jurisdiction. If it
involves the acts or omissions of a quasi-judicial agency, and unless otherwise provided by law
or these Rules, the petition shall be filed in and cognizable only by the Court of Appeals.
If the petitioner had filed a motion for new trial or reconsideration in due time after notice of
said judgment, order or resolution, the period herein fixed shall be interrupted. If the motion is
denied, the aggrieved party may file the petition within the remaining period, but which shall
not be less than five (5) days in any event, reckoned from notice of such denial. No extension of
time to file the petition shall be granted except for the most compelling reason and in no case to
exceed fifteen (15) days. (Emphasis supplied.)
The records of the instant case show that respondent timely filed on June 8, 1998, a motion for
reconsideration of the NLRC Resolution dated April 14, 1998, which respondent received on May
28, 1998. A copy of the Resolution dated June 19, 1998 on the denial of the said motion for
reconsideration was received by respondent on August 10, 1998. Applying the aforequoted
amendment to the given set of dates, 11 days had already elapsed from the date when
respondent received the NLRC Resolution dated June 19, 1998. Thus, respondent had a
remaining period of 49 days reckoned from August 11, 1998 or until September 28, 1998 within
which to file the petition forcertiorari.
The Court, however, takes note that further amendments were made on the reglementary
period for filing a petition for certiorari under Rule 65. On September 1, 2000, Supreme Court
Circular No. 56-200037 took effect. The latest amendment of Section 4, Rule 65 of the 1997 Rules
of Civil Procedure reads:
SEC. 4. When and where petition filed. The petition shall be filed not later than sixty (60) days
from notice of the judgment, order or resolution. In case a motion for reconsideration or new
trial is timely filed, whether such motion is required or not, the sixty (60) day period shall be
counted from notice of the denial of the said motion.
The petition shall be filed in the Supreme Court or, if it relates to the acts or omissions of a
lower court or of a corporation, board, officer or person, in the Regional Trial Court exercising
jurisdiction over the territorial area as defined by the Supreme Court. It may also be filed in the
Court of Appeals whether or not the same is in the aid of its appellate jurisdiction, or in the
Sandiganbayan if it is in aid of its appellate jurisdiction. If it involves the acts or omissions of a
quasi-judicial agency, unless otherwise provided by law or these rules, the petition shall be filed
in and cognizable only by the Court of Appeals.
No extension of time to file the petition shall be granted except for compelling reason and in no
case exceeding fifteen (15) days. (Emphasis supplied.)
From the foregoing, it is clear that the 60-day period to file a petition for certiorari should be
reckoned from the date of receipt of the notice of the denial of the motion for reconsideration
or new trial, if one was filed.
In a number of cases,38 this Court applied retroactively Circular No. 56-2000. We ruled that a
petition for certiorariwhich had been filed past the 60-day period under Section 4 of Rule 65, as
amended by Circular No. 39-98, was deemed seasonably filed provided it was filed within the
60-day period counted from the date of receipt of the notice of the denial of the motion for
reconsideration or new trial.
Instructive on this point is the discussion of the Court in Narzoles v. National Labor Relations
Commission,39 viz:
The Court has observed that Circular No. 39-98 has generated tremendous confusion resulting in
the dismissal of numerous cases for late filing. This may have been because, historically, i.e.,
even before the 1997 revision to the Rules of Civil Procedure, a party had a fresh period from
receipt of the order denying the motion for reconsideration to file a petition for certiorari. Were
it not for the amendments brought about by Circular No. 39-98, the cases so dismissed would
have been resolved on the merits. Hence, the Court deemed it wise to revert to the old rule
allowing a party a fresh 60-day period from notice of the denial of the motion for
reconsideration to file a petition for certiorari. Earlier this year, the Court resolved, in A.M. No.
00-2-03-SC, to further amend Section 4, Rule 65 x x x.
xxxx
The latest amendments took effect on September 1, 2000, following its publication in the
Manila Bulletin on August 4, 2000 and in the Philippine Daily Inquirer on August 7, 2000, two
newspapers of general circulation.
In view of its purpose, the Resolution further amending Section 4, Rule 65 can only be described
as curative in nature, and the principles governing curative statutes are applicable.
Curative statutes are enacted to cure defects in a prior law or to validate legal proceedings
which would otherwise be void for want of conformity with certain legal requirements. They are
intended to supply defects, abridge superfluities and curb certain evils. They are intended to
enable persons to carry into effect that which they have designed or intended, but has failed of
expected legal consequence by reason of some statutory disability or irregularity in their own
action. They make valid that which, before the enactment of the statute was invalid. Their
purpose is to give validity to acts done that would have been invalid under existing laws, as if
existing laws have been complied with. Curative statutes, therefore, by their very essence, are
retroactive.
Accordingly, while the Resolution states that the same "shall take effect on September 1, 2000,
following its publication in two (2) newspapers of general circulation," its retroactive application
cannot be denied. In short, the filing of the petition for certiorari in this Court on 17 December
1998 is deemed to be timely, the same having been made within the 60-day period provided
under the curative Resolution. We reach this conclusion bearing in mind that the substantive
aspects of this case involves the rights and benefits, even the livelihood, of petitioneremployees.1avvphi1
Given the above, respondent had a fresh 60-day period from August 10, 1998, the date she
received a copy of the NLRC Resolution dated June 19, 1998, denying her motion for
reconsideration. Accordingly, respondent had 60 days from August 10, 1998 within which to file
the petition for certiorari. Thus, when respondent filed the petition with the Court of Appeals on
October 2, 1998, said petition was seasonably filed within the reglementary period provided by
the latest amendment to Section 4, Rule 65 of the 1997 Rules of Civil Procedure.
We now proceed to the main issue for resolution in this case, which is whether the Court of
Appeals committed a reversible error in reversing and setting aside the Resolutions dated April
14, 1998 and June 19, 1998 of the NLRC.
According to the petitioner, respondents repeated submission of altered or tampered receipts
to support her claim for reimbursement constitutes a betrayal of the employers trust and
confidence and a serious misconduct, thus, giving cause for the termination of her employment
with petitioner.
Petitioner also questions the Court of Appeals finding that the termination of respondent was
too harsh. Petitioner maintains that respondent "had clearly been established to have authored
and caused the submission of not only one but three different receipts which she intentionally
altered to justify her claimed reimbursement," thus warranting her dismissal from the company.
We are not convinced.
The Labor Code mandates that before an employer may validly dismiss an employee from the
service, the requirement of substantial and procedural due process must be complied with.
Under the requirement of substantial due process, the grounds for termination of employment
must be based on just or authorized causes. Article 282 of the Labor Code enumerates the just
causes for the termination of employment, thus:
ART. 282. Termination by employer. - An employer may terminate an employment for any of the
following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of
his employer or representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer
or duly authorized representative;
(d) Commission of a crime or offense by the employee against the person of his
employer or any immediate member of his family or his duly authorized representative;
and
(e) Other causes analogous to the foregoing.
In termination cases, the burden of proof rests on the employer to show that the dismissal was
for just cause. Otherwise, an employee who is illegally dismissed "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."40
After examining the records of the case, this Court finds that respondents dismissal from
employment was not grounded on any of the just causes enumerated under Article 282 of the
Labor Code.
At the outset, it is important to note that the term "trust and confidence" is restricted to
managerial employees.41In Samson v. National Labor Relations Commission,42 the Court, citing
Section 2(b), Rule I, Book III of the Omnibus Rules Implementing the Labor Code, enumerated
the conditions for one to be properly considered a managerial employee:
(1) Their primary duty consists of the management of the establishment in which they
are employed or of a department or sub-division thereof;
(2) They customarily and regularly direct the work of two or more employees therein;
[and]
(3) They have the authority to hire or fire other employees of lower rank; or their
suggestions and recommendations as to the hiring and firing and as to the promotion or
any other change of status of other employees are given particular weight.
In the instant case, respondent was the Senior Financial Accountant with the Job Description of
a Financial Project Analyst. Respondent, among others, "provides support in the form of
financial analyses and evaluation of alternative strategies or action plans to assist management
in strategic and operational decision-making, x x x liaises with the Bottler to comply with
Corporate Bottler financial reporting requirements and to ensure Bottlers plans are aligned
with TCCECs, x x x and assists management on various initiatives on ad hoc basis."43
In Nokom v. National Labor Relations Commission,44 this Court set the guidelines for the
application of the doctrine of loss of confidence
(a) Loss of confidence should not be simulated;
(b) It should not be used as a subterfuge for causes which are improper, illegal or
unjustified;
(c) It may not be arbitrarily asserted in the face of overwhelming evidence to the
contrary; and
(d) It must be genuine, not a mere afterthought to justify earlier action taken in bad
faith.
In the instant case, the basis for terminating the employment of respondent was for gross
violation of the companys rules and regulations, as specified in the termination letter dated
April 4, 1998, to wit:
Based on the facts gathered during the investigation vis-avis (sic) the contradictory explanations
you have given when you testified, the testimony of the person who delivered the Shakeys
products you ordered as well as McDonalds and Shakeys certifications to the effect that the
items and the dates appearing on the receipt/invoices issued to you were the actual items and
dates of said invoices and that the alteration on the face of said invoice were not done at their
respective establishments or by any of their employees, morally convinced us that you were the
one who caused such alterations for personal gain. You have thereby knowingly, willingly,
deliberately and fraudulently submitted tampered and/or altered receipts to support your petty
cash reimbursements in gross violation of the companys rules and regulations which punishes
with immediate dismissal the "fraudulent submission of any item of expense" (Rule II, No
15(d).45
Evidently, no mention was made regarding petitioners alleged loss of trust and confidence in
respondent. Neither was there any explanation nor discussion of the alleged sensitive and
delicate position of respondent requiring the utmost trust of petitioner.
It bears emphasizing that the right of an employer to dismiss its employees on the ground of
loss of trust and confidence must not be exercised arbitrarily. For loss of trust and confidence to
be a valid ground for dismissal, it must be substantial and founded on clearly established facts.
Loss of confidence must not be used as a subterfuge for causes which are improper, illegal or
unjustified; it must be genuine, not a mere afterthought, to justify earlier action taken in bad
faith. Because of its subjective nature, this Court has been very scrutinizing in cases of dismissal
based on loss of trust and confidence because the same can easily be concocted by an abusive
employer.46 Thus, when the breach of trust or loss of confidence theorized upon is not borne by
clearly established facts, as in the instant case, such dismissal on the ground of loss and
confidence cannot be countenanced.
In the instant case, it was only in the Reply to Respondents Comment47 dated October 11, 2002,
that petitioner made mention of another ground for the dismissal of respondent, that of serious
misconduct, when she submitted altered or tampered receipts to support her claim for
reimbursement. Such allegation appears to be a mere afterthought, being tardily raised only in
the Reply.
In Marival Trading, Inc. v. National Labor Relations Commission,48 we held, thus:
Misconduct has been defined as improper or wrong conduct. It is the transgression of some
established and definite rule of action, a forbidden act, a dereliction of duty, willful character,
and implies wrongful intent and not mere error of judgment. The misconduct to be serious must
be of such grave and aggravated character and not merely trivial and unimportant. Such
misconduct, however serious, must nevertheless be in connection with the employees work to
constitute just cause for his separation. Thus, for misconduct or improper behavior to be a just
cause for dismissal, (a) it must be serious; (b) must relate to the performance of the employees
duties; and (c) must show that the employee has become unfit to continue working for the
employer. Indeed, an employer may not be compelled to continue to employ such person
whose continuance in the service would be patently inimical to his employers business.49
In this light, the alleged infractions of respondent could hardly be considered serious
misconduct. It is well to stress that in order to constitute serious misconduct which will warrant
the dismissal of an employee, it is not sufficient that the act or conduct complained of has
violated some established rules or policies. It is equally important and required that the act or
conduct must have been done with wrongful intent. Such is, however, lacking in the instant
case.
While this Court does not condone respondents act of submitting altered and/or tampered
receipts to support her claim for reimbursement, we nevertheless agree with the finding of the
Court of Appeals that, under the attendant facts, the dismissal meted out on respondent
appears to be too harsh a penalty.
The employers right to conduct the affairs of its business, according to its own discretion and
judgment, is well-recognized. An employer has a free reign and enjoys wide latitude of
discretion to regulate all aspects of employment, including the prerogative to instill discipline in
its employees and to impose penalties, including dismissal, upon erring employees. This is a
management prerogative, where the free will of management to conduct its own affairs to
achieve its purpose takes form. The only criterion to guide the exercise of its management
prerogative is that the policies, rules and regulations on work-related activities of the employees
must always be fair and reasonable and the corresponding penalties, when prescribed,
commensurate to the offense involved and to the degree of the infraction.50
As respondents employer, petitioner has the right to regulate, according to its discretion and
best judgment, work assignments, work methods, work supervision, and work regulations,
including the hiring, firing and discipline of its employees. Indeed, petitioner has the
management prerogative to discipline its employees, like herein respondent, and to impose
appropriate penalties on erring workers pursuant to company rules and regulations.51 This Court
upholds these management prerogatives so long as they are exercised in good faith for the
advancement of the employers interest and not for the purpose of defeating or circumventing
the rights of the employees under special laws and valid agreements.52
In the instant case, petitioner alleged that under its rules and regulations, respondents
submission of fraudulent items of expense is punishable by dismissal. However, petitioners
rules cannot preclude the State from inquiring whether the strict and rigid application or
interpretation thereof would be harsh to the employee. Even when an employee is found to
have transgressed the employers rules, in the actual imposition of penalties upon the erring
employee, due consideration must still be given to his length of service and the number of
violations committed during his employ.53 Respondent had no previous record in her 9 years of
service; this would have been her first offense. Respondent had also been a recipient of various
commendations attesting to her competence and diligence in the performance of her duties,
not only from petitioner, but also from petitioners counterparts in Poland54 and
Thailand.55 Respondent also countered that she acted in good faith and with no wrongful intent
when she submitted the receipts in support of her claim for reimbursement of meal allowance.
According to respondent, only the dates or items were altered on the receipts. She did not claim
more than what was allowed as meal expense for the days that she rendered overtime work.
She believed that the submission of receipts was simply for records-keeping, since she actually
rendered overtime work on the dates that she claimed for meal allowance. All told, this Court
holds that the penalty of dismissal imposed on respondent is unduly oppressive and
disproportionate to the infraction which she committed. A lighter penalty would have been
more just.
As correctly held by the Court of Appeals, by mandate of the law itself, the provisions of the
Labor Code are to be construed liberally in favor of labor. Thus, in Fujitsu Computer Products
Corporation of the Phils. v. Court of Appeals,56 we held:
The Court is wont to reiterate that while an employer has its own interest to protect, and
pursuant thereto, it may terminate a managerial employee for a just cause, such prerogative to
dismiss or lay-off an employee must be exercised without abuse of discretion. Its
implementation should be tempered with compassion and understanding. The employer should
bear in mind that, in the execution of the said prerogative, what is at stake is not only the
employees position, but his very livelihood. The Constitution does not condone wrongdoing by
the employee; nevertheless, it urges moderation of the sanction that may be applied to him.
Where a penalty less punitive would suffice, whatever missteps may have been committed by
the worker ought not be visited with a consequence so severe as dismissal from employment.
Indeed, the consistent rule is that if doubts exist between the evidence presented by the
employer and the employee, the scales of justice must be tilted in favor of the latter. The
employer must affirmatively show rationally adequate evidence that the dismissal was for
justifiable cause.
Under Article 279 of the Labor Code, an employee who is unjustly dismissed from work shall be
entitled to reinstatement without loss of seniority rights and other privileges 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.
After a finding of illegal dismissal herein, we apply the foregoing provision entitling respondent
Clarita P. Gacayan to reinstatement without loss of seniority rights and other privileges and full
backwages, inclusive of allowances and other benefits or their monetary equivalent computed
from the time the compensation was not paid up to the time of her reinstatement. Thus, the
award of backwages by the Court of Appeals is in order. However, the Court of Appeals period
of computation of the award of backwages must be modified. The Court of Appeals ruled that:
WHEREFORE, the petition is GRANTED and the Resolutions, dated April 14, 1998 and June 19,
1998, both issued by public respondent NLRC, are hereby SET ASIDE. [Petitioner] Coca Cola
Export Corporation is hereby directed to immediately reinstate [respondent] to her former
position, if possible, otherwise, to a substantially equivalent position without loss of seniority
rights and with full backwages, based on her last monthly salary, to be computed from the date
of her dismissal from the service up to the date of finality of this decision, without any
qualifications or deductions. No costs.57
In line with Article 279 of the Labor Code and prevailing jurisprudence,58 the award of
backwages should be modified in the sense that backwages should be computed from the time
the compensation was not paid up to the time of reinstatement.
WHEREFORE, the petition is hereby DENIED. The Decision dated May 30, 2001 and subsequent
Resolution dated August 9, 2001 of the Court of Appeals are hereby AFFIRMED WITH
MODIFICATION that backwages be awarded from the time the compensation was not paid up to
the time of her actual reinstatement.
SO ORDERED.
TERESITA J. LEONARDO-DE CASTRO
Associate Justice
Footnotes
*
Per Raffle dated December 15, 2010.

Rollo, pp. 9-26; penned by Associate Justice Teodoro P. Regino with Associate Justices
Delilah Vidallon-Magtolis and Josefina Guevara-Salonga, concurring.
2
Id. at 27.
3
Id. at 321-341.
4
Id. at 356-357.
5
Id. at 139.
6
Id. at 141.
7
Id. at 142.
8
Id. at 144.
9
Id. at 145.
10
Id. at 146.
11
Id. at 147.
12
Id. at 148.
13
Id. at 149-150.
14
Id. at 115.
15
Id. at 152.
16
Id. at 153-160.
17
Id. at 161.
18
Id. at 162.
19
Id. at 163.
20
Id. at 164.
21
Id. at 119.
22
Id. at 166-167.
23
Id. at 117.
24
Id. at 118.
25
Id. at 168.
26
Id. at 169-170.
27
Id. at 88-89.
1
28
Id. at 95-96.
Id. at 121.
30
Id.
31
Id. at 266-289.
32
Id. at 282-284.
33
Id. at 321-341.
34
Id. at 339-341.
35
Id. at 356-357.
36
Id. at 23-25.
37
Per Supreme Court En Banc Resolution dated August 1, 2000 in A.M. No. 00-2-03-SC.
38
Lascano v. Universal Steel Smelting Co., Inc., G.R. No. 146019, June 8, 2004, 431 SCRA
248; Ong v. Mazo, G.R. No. 145542, June 4, 2004, 431 SCRA 56; Webb v. Secretary of
Justice, 455 Phil. 307 (2003);Unity Fishing Development Corporation v. Court of
Appeals, 403 Phil. 876 (2001).
39
395 Phil. 758, 763-765 (2000).
40
Labor Code, Article 279.
41
Dela Cruz v. National Labor Relations Commission, 335 Phil. 932, 943 (1997).
42
386 Phil. 669, 687 (2000).
43
Rollo, p. 196.
44
390 Phil. 1228, 1244 (2000), citing Vitarich Corporation v. National Labor Relations
Commission, 367 Phil. 1, 12 (1999).
45
Rollo, p. 170.
46
Labor v. National Labor Relations Commission, G.R. No. 110388, September 14, 1995,
248 SCRA 183, 199-200.
47
Rollo, pp. 511-527.
48
G.R. No. 169600, June 26, 2007, 525 SCRA 708.
49
Id. at 726-727.
50
St. Michaels Institute v. Santos, 422 Phil. 723, 732-733 (2001).
51
Deles, Jr. v. National Labor Relations Commission, 384 Phil. 271, 281-282 (2000).
52
Challenge Socks Corporation v. Court of Appeals, G.R. No. 165268, November 8, 2005,
474 SCRA 356, 362-363.
53
Philippine Long Distance Telephone Company v. National Labor Relations Commission,
362 Phil. 352, 358 (1999).
54
Rollo, p. 111.
55
Id. at 113.
56
494 Phil. 697, 728 (2005), citing Maglutac v. National Labor Relations Commission,
G.R. No. 78345, September 21, 1990, 189 SCRA 767, 778; Austria v. National Labor
Relations Commission, 371 Phil. 340, 361 (1999); Asuncion v. National Labor Relations
Commission, 414 Phil. 329, 341-342 (2001).
57
Rollo, p. 25.
58
Cocomangas Hotel Beach Resort v. Visca, G.R. No. 167045, August 29, 2008, 563 SCRA
705, 722; Marival Trading, Inc. v. National Labor Relations Commission, supra note 48 at
731-732; Kay Products, Inc. v. Court of Appeals, 502 Phil. 783, 797-798 (2005).
29

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 163431
August 28, 2013
NATHANIEL N. DONGON, PETITIONER,

vs.
RAPID MOVERS AND FORWARDERS CO., INC., AND/OR NICANOR E. JAO, JR., RESPONDENTS.
DECISION
BERSAMIN, J.:
The prerogative of the employer to dismiss an employee on the ground of willful disobedience
to company policies must be exercised in good faith and with due regard to the rights of labor.
The Case
By petition for review on certiorari, petitioner appeals the adverse decision promulgated on
October 24, 2003,1whereby the Court of Appeals (CA) set aside the decision dated June 17, 2002
of the National Labor Relations Commission (NLRC) in his favor.2 The NLRC had thereby reversed
the ruling dated September 10, 2001 of the Labor Arbiter dismissing his complaint for illegal
dismissal.3
Antecedents
The following background facts of this case are stated in the CAs assailed decision, viz:
From the records, it appears that petitioner Rapid is engaged in the hauling and trucking
business while private respondent Nathaniel T. Dongon is a former truck helper leadman.
Private respondents area of assignment is the Tanduay Otis Warehouse where he has a job of
facilitating the loading and unloading [of the] petitioners trucks. On 23 April 2001, private
respondent and his driver, Vicente Villaruz, were in the vicinity of Tanduay as they tried to get
some goods to be distributed to their clients.
Tanduays security guard called the attention of private respondent as to the fact that Mr.
Villaruz[s] was not wearing an Identification Card (I.D. Card). Private respondent, then, assured
the guard that he will secure a special permission from the management to warrant the orderly
release of goods.
Instead of complying with his compromise, private respondent lent his I.D. Card to Villaruz; and
by reason of such misrepresentation , private respondent and Mr. Villaruz got a clearance from
Tanduay for the release of the goods. However, the security guard, who saw the
misrepresentation committed by private respondent and Mr. Villaruz, accosted them and
reported the matter to the management of Tanduay.
On 23 May 2001, after conducting an administrative investigation, private respondent was
dismissed from the petitioning Company.
On 01 June 2001, private respondent filed a Complaint for Illegal Dismissal. x x x4
In his decision, the Labor Arbiter dismissed the complaint, and ruled that respondent Rapid
Movers and Forwarders Co., Inc. (Rapid Movers) rightly exercised its prerogative to dismiss
petitioner, considering that: (1) he had admitted lending his company ID to driver Vicente
Villaruz; (2) his act had constituted mental dishonesty and deceit amounting to breach of trust;
(3) Rapid Movers relationship with Tanduay had been jeopardized by his act; and (4) he had
been banned from all the warehouses of Tanduay as a result, leaving Rapid Movers with no
available job for him.5
On appeal, however, the NLRC reversed the Labor Arbiter, and held that Rapid Movers had not
discharged its burden to prove the validity of petitioners dismissal from his employment. It
opined that Rapid Movers did not suffer any pecuniary damage from his act; and that his
dismissal was a penalty disproportionate to the act of petitioner complained of. It awarded him
backwages and separation pay in lieu of reinstatement, to wit:
WHEREFORE, the decision appealed from is REVERSED and SET ASIDE and a new one ENTERED
ordering the payment of his backwages from April 25, 2001 up to the finality of this decision and
in lieu of reinstatement, he should be paid his separation pay from date of hire on May 2, 1994
up to the finality hereof.
SO ORDERED.6
Rapid Movers brought a petition for certiorari in the CA, averring grave abuse of discretion on
the part of the NLRC, to wit:
I.
x x x IN STRIKING DOWN THE DISMISSAL OF THE PRIVATE RESPONDENT [AS] ILLEGAL ALLEGEDLY
FOR BEING GROSSLY DISPROPORTIONATE TO THE OFFENSE COMMITTED IN THAT NEITHER THE
PETITIONERS NOR ITS CLIENT TANDUAY SUFFERED ANY PECUNIARY DAMAGE THEREFROM
THEREBY IMPLYING THAT FOR A DISHONEST ACT/MISCONDUCT TO BE A GROUND FOR
DISMISSAL OF AN EMPLOYEE, THE SAME MUST AT LEAST HAVE RESULTED IN PECUNIARY
DAMAGE TO THE EMPLOYER;
II.
x x x IN EXPRESSING RESERVATION ON THE GUILT OF THE PRIVATE RESPONDENT IN THE LIGHT
OF ITS PERCEIVED CONFLICTING DATES OF THE LETTER OF TANDUAY TO RAPID MOVERS
(JANUARY 25, 2001) AND THE OCCURRENCE OF THE INCIDENT ON APRIL 25, 2001 WHEN SAID
CONFLICT OF DATES CONSIDERING THE EVIDENCE ON RECORD, WAS MORE APPARENT THAN
REAL.7
Ruling of the CA
On October 24, 2003, the CA promulgated its assailed decision reinstating the decision of the
Labor Arbiter, and upholding the right of Rapid Movers to discipline its workers, holding thusly:
There is no dispute that the private respondent lent his I.D. Card to another employee who used
the same in entering the compound of the petitioner customer, Tanduay. Considering that this
amounts to dishonesty and is provided for in the petitioning Companys Manual of Discipline, its
imposition is but proper and appropriate.
It is basic in any enterprise that an employee has the obligation of following the rules and
regulations of its employer. More basic further is the elementary obligation of an employee to
be honest and truthful in his work. It should be noted that honesty is one of the foremost
criteria of an employer when hiring a prospective employee. Thus, we see employers requiring
an NBI clearance or police clearance before formally accepting an applicant as their employee.
Such rules and regulations are necessary for the efficient operation of the business.
Employees who violate such rules and regulations are liable for the penalties and sanctions so
provided, e.g., the Companys Manual of Discipline (as in this case) and the Labor Code.
The argument of the respondent commission that no pecuniary damage was sustained is offtangent with the facts of the case. The act of lending an ID is an act of dishonesty to which no
pecuniary estimate can be ascribed for the simple reason that no monetary equation is involved.
What is involved is plain and simple adherence to truth and violation of the rules. The act of
uttering or the making of a falsehood does not need any pecuniary estimate for the act to
gestate to one punishable under the labor laws. In this case, the illegal use of the I.D. Card while
it may appear to be initially trivial is of crucial relevance to the petitioners customer, Tanduay,
which deals with drivers and leadmen withdrawing goods and merchandise from its warehouse.
For those with criminal intentions can use anothers ID to asport goods and merchandise.
Hence, while it can be conceded that there is no pecuniary damage involved, the fact remains
that the offense does not only constitute dishonesty but also willful disobedience to the lawful
order of the Company, e.g., to observe at all time the terms and conditions of the Manual of
Discipline. Article 282 of the Labor Code provides:
"Termination by Employer An employer may terminate an employment for any of the
following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his
employer or representative in connection with his work;
x x x." (Emphasis, supplied)
The constitutional protection afforded to labor does not condone wrongdoings by the
employee; and an employers power to discipline its workers is inherent to it. As honesty is
always the best policy, the Court is convinced that the ruling of the Labor Arbiter is more in
accord with the spirit of the Labor Code. "The Constitutional policy of providing full protection
to labor is not intended to oppress or destroy management (Capili vs. NLRC, 270 SCRA
488[1997]." Also, in Atlas Fertilizer Corporation vs. NLRC, 273 SCRA 549 [1997], the Highest
Magistrate declared that "The law, in protecting the rights of the laborers, authorizes neither
oppression nor self-destruction of the employer."
WHEREFORE, premises considered, the Petition is GRANTED. The assailed 17 June 2002 Decision
of respondent Commission in NLRC CA-029937-01 is hereby SET ASIDE and the 10 September
2001 Decision of Labor Arbiter Vicente R. Layawen is ordered REINSTATED. No costs.
SO ORDERED.8
Petitioner moved for a reconsideration, but the CA denied his motion on March 22, 2004.9
Undaunted, the petitioner is now on appeal.
Issue
Petitioner still asserts the illegality of his dismissal, and denies being guilty of willful
disobedience. He contends that:
THE HONORABLE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION IN SUSTAINING THE
DECISION DATED 10 SEPTEMBER 2001 OF LABOR ARBITER VICENTE R. LAYAWEN WHERE THE
LATTER RULED THAT BY LENDING HIS ID TO VILLARUZ, PETITIONER (COMPLAINANT)
COMMITTED MISREPRESENTATION AND DECEIT CONSTITUTING MENTAL DISHONESTY WHICH
CANNOT BE DISCARDED AS INSIGNIFICANT OR TRIVIAL.10
Petitioner argues that his dismissal was discriminatory because Villaruz was retained in his
employment as driver; and that the CA gravely abused its discretion in disregarding his showing
that he did not violate Rapid Movers rules and regulations but simply performed his work in line
with the duties entrusted to him, and in not appreciating his good faith and lack of any intention
to willfully disobey the companys rules.
In its comment,11 Rapid Movers prays that the petition for certiorari be dismissed for being an
improper remedy and apparently resorted to as a substitute for a lost appeal; and insists that
the CA did not commit grave abuse of discretion.1wphi1
In his reply,12 petitioner submits that his dismissal was a penalty too harsh and disproportionate
to his supposed violation; and that his dismissal was inappropriate due to the violation being his
first infraction that was even committed in good faith and without malice.
Based on the parties foregoing submissions, the issues to be resolved are, firstly: Was the
petition improper and dismissible?; and, secondly: If the petition could prosper, was the
dismissal of petitioner on the ground of willful disobedience to the company regulation lawful?
Ruling
The petition has merit.
1.Petition should not be dismissed
In St. Martin Funeral Home v. National Labor Relations Commission,13 the Court has clarified
that parties seeking the review of decisions of the NLRC should file a petition for certiorari in the
CA on the ground of grave abuse of discretion amounting to lack or excess of jurisdiction on the
part of the NLRC. Thereafter, the remedy of the aggrieved party from the CA decision is an
appeal via petition for review on certiorari.14
The petition filed here is self-styled as a petition for review on certiorari, but Rapid Movers
points out that the petition was really one for certiorari under Rule 65 of the Rules of Court due
to its basis being the commission by the CA of a grave abuse of its discretion and because the
petition was filed beyond the reglementary period of appeal under Rule 45. Hence, Rapid
Movers insists that the Court should dismiss the petition because certiorari under Rule 65 could
not be a substitute of a lost appeal under Rule 45.
Ordinarily, an original action for certiorari will not prosper if the remedy of appeal is available,
for an appeal by petition for review on certiorari under Rule 45 of the Rules of Court and an
original action for certiorari under Rule 65 of the Rules of Court are mutually exclusive, not
alternative nor successive, remedies.15 On several occasions, however, the Court has treated a
petition for certiorari as a petition for review on certiorari when: (a) the petition has been filed
within the 15-day reglementary period;16 (b) public welfare and the advancement of public
policy dictate such treatment; (c) the broader interests of justice require such treatment; (d) the
writs issued were null and void; or (e) the questioned decision or order amounts to an
oppressive exercise of judicial authority.17
The Court deems it proper to allow due course to the petition as one for certiorari under Rule 65
in the broader interest of substantial justice, particularly because the NLRCs appellate
adjudication was set aside by the CA, and in order to put at rest the doubt that the CA, in so
doing, exercised its judicial authority oppressively. Whether the petition was proper or not
should be of less importance than whether the CA gravely erred in undoing and setting aside the
determination of the NLRC as a reviewing forum vis--vis the Labor Arbiter. We note in this
regard that the NLRC had declared the dismissal of petitioner to be harsh and not
commensurate to the infraction committed. Given the spirit and intention underlying our labor
laws of resolving a doubtful situation in favor of the working man, we will have to review the
judgment of the CA to ascertain whether the NLRC had really committed grave abuse of its
discretion. This will settle the doubts on the propriety of terminating petitioner, and at the same
time ensure that justice is served to the parties.18
2. Petitioner was not guilty of willful disobedience; hence, his dismissal was illegal
Petitioner maintains that willful disobedience could not be a ground for his dismissal because he
had acted in good faith and with the sole intention of facilitating deliveries for Rapid Movers
when he allowed Villaruz to use his company ID.
Willful disobedience to the lawful orders of an employer is one of the valid grounds to terminate
an employee under Article 296 (formerly Article 282) of the Labor Code.19 For willful
disobedience to be a ground, it is required that: (a) the conduct of the employee must be willful
or intentional; and (b) the order the employee violated must have been reasonable, lawful,
made known to the employee, and must pertain to the duties that he had been engaged to
discharge.20 Willfulness must be attended by a wrongful and perverse mental attitude rendering
the employees act inconsistent with proper subordination.21 In any case, the conduct of the
employee that is a valid ground for dismissal under the Labor Code constitutes harmful behavior
against the business interest or person of his employer.22 It is implied that in every act of willful
disobedience, the erring employee obtains undue advantage detrimental to the business
interest of the employer.
Under the foregoing standards, the disobedience attributed to petitioner could not be justly
characterized as willful within the contemplation of Article 296 of the Labor Code. He neither
benefitted from it, nor thereby prejudiced the business interest of Rapid Movers. His
explanation that his deed had been intended to benefit Rapid Movers was credible. There could
be no wrong or perversity on his part that warranted the termination of his employment based
on willful disobedience.
Rapid Movers argues, however, that the strict implementation of company rules and regulations
should be accorded respect as a valid exercise of its management prerogative. It posits that it
had the prerogative to terminate petitioner for violating its following company rules and
regulations, to wit:
(a) "Pagpayag sa paggamit ng iba o paggamit ng maling rekord ng kumpanya kaugnay sa
operations, maintenance or materyales o trabaho" (Additional Rules and Regulations
No. 2); and
(b) "Pagkutsaba sa pagplano o pagpulong sa ibang tao upang labagin ang anumang
alituntunin ng kumpanya" (Article 5.28).23
We cannot sustain the argument of Rapid Movers.
It is true that an employer is given a wide latitude of discretion in managing its own affairs. The
broad discretion includes the implementation of company rules and regulations and the
imposition of disciplinary measures on its employees. But the exercise of a management
prerogative like this is not limitless, but hemmed in by good faith and a due consideration of the
rights of the worker.24 In this light, the management prerogative will be upheld for as long as it is
not wielded as an implement to circumvent the laws and oppress labor.25
To us, dismissal should only be a last resort, a penalty to be meted only after all the relevant
circumstances have been appreciated and evaluated with the goal of ensuring that the ground
for dismissal was not only serious but true. The cause of termination, to be lawful, must be a
serious and grave malfeasance to justify the deprivation of a means of livelihood. This
requirement is in keeping with the spirit of our Constitution and laws to lean over backwards in
favor of the working class, and with the mandate that every doubt must be resolved in their
favor.26
Although we recognize the inherent right of the employer to discipline its employees, we should
still ensure that the employer exercises the prerogative to discipline humanely and
considerately, and that the sanction imposed is commensurate to the offense involved and to
the degree of the infraction. The discipline exacted by the employer should further consider the
employees length of service and the number of infractions during his employment.27The
employer should never forget that always at stake in disciplining its employee are not only his
position but also his livelihood,28 and that he may also have a family entirely dependent on his
earnings.29
Considering that petitioners motive in lending his company ID to Villaruz was to benefit Rapid
Movers as their employer by facilitating the loading of goods at the Tanduay Otis Warehouse for
distribution to Rapid Movers clients, and considering also that petitioner had rendered seven
long unblemished years of service to Rapid Movers, his dismissal was plainly unwarranted. The
NLRCs reversal of the decision of the Labor Arbiter by holding that penalty too harsh and
disproportionate to the wrong attributed to him was legally and factually justified, not arbitrary
or whimsical. Consequently, for the CA to pronounce that the NLRC had thereby gravely abused
its discretion was not only erroneous but was itself a grave abuse of discretion amounting to
lack of jurisdiction for not being in conformity with the pertinent laws and jurisprudence. We
have held that a conclusion or finding derived from erroneous considerations is not a mere error
of judgment but one tainted with grave abuse of discretion.30
WHEREFORE, the Court GRANTS the petition; REVERSES and SETS ASIDE the decision
promulgated by the Court of Appeals on October 24, 2003; REINSTATES the decision of the
National Labor Relations Commission rendered on June 17, 2002; and ORDERS respondents to
pay the costs of suit.
SO ORDERED.
LUCAS P. BERSAMIN
Associate Justice
Footnotes
*
Vice Associate Justice Martin S. Villarama, Jr., who is on leave, per Special Order No.
1502 dated August 8, 2013.
1
Rollo, at 21-30; penned by Associate Justice Andres B. Reyes, Jr. (now Presiding
Justice), and concurred in by Associate Justice Buenaventura J. Guerrero
(retired/deceased) and Associate Justice Regalado E. Maambong (retired/deceased).
2
Id. at 46-55; penned by Commissioner Victoriano R. Calaycay, and concurred in by
Presiding Commissioner Raul T. Aquino and Commissioner Angelita A. Gacutan (now a
Member of the Court of Appeals).
3
Id. at 62-70.
4
Id. at 22-23.
5
Id. at 62-70.
6
Id. at 54.
7
Id. at 39-40.
8
Id. at 27-30.
9
Id. at 31.
10
Id. at 9.
Id. at 145-150.
12
Id. at 152-158.
13
G.R. No. 130866, September 16, 1998, 295 SCRA 494, 503-504.
14
See Talidano v. Falcon Maritime & Allied Services, Inc., G.R. No. 172031, July 14, 2008,
558 SCRA 279, 291; Iloilo La Filipina Uygongco Corporation v. Court of Appeals, G.R. No.
170244, November 28, 2007, 539 SCRA 178, 187-188; Hanjin Engineering and
Construction Co., Ltd., v. Court of Appeals, G.R. No. 165910, April 10, 2006, 487 SCRA 78,
96.
15
Tible & Tible Company, Inc. v. Royal Savings and Loan Association, G.R. No. 155806,
April 8, 2008, 550 SCRA 562, 575; Madrigal Transport, Inc. v. Lapanday Holdings
Corporation, G.R. No. 156067, August 11, 2004, 436 SCRA 123, 136.
16
Nuez v. GSIS Family Bank, G.R. No. 163988, November 17, 2005, 475 SCRA 305, 316;
Tichangco v. Enriquez, G.R. No. 150629, June 30, 2004, 433 SCRA 324, 333.
17
Leyte IV Electric Cooperative, Inc. v. Leyeco IV Employees Union-ALU, G.R. No.
157775, October 19, 2007, 537 SCRA 154, 166.
18
Dalton-Reyes v. Court of Appeals, G.R. No. 149580, March 16, 2005, 453 SCRA 498,
509-510.
19
Renumbered pursuant to Republic Act No. 10151 (An Act Allowing The Employment of
Night Workers, Thereby Repealing Articles 130 and 131 of Presidential Decree Number
Four Hundred Forty-Two, As Amended, Otherwise Known As The Labor Code of the
Philippines).
20
Coca-Cola Bottlers, Phils., Inc. v. Kapisanan ng Malayang Manggagawa sa Coca-ColaFFW, G.R. No. 148205, February 28, 2005, 452 SCRA 480, 497; Dimabayao v. National
Labor Relations Commission, G.R. No. 122178, February 25, 1999, 303 SCRA 655, 659;
Carlos A. Gothong Lines, Inc. v. NLRC, G.R. No. 96685, February 15, 1999, 303 SCRA 164,
170; Lagatic v. National Labor Relations Commission, G.R. No. 121004, January 28, 1998,
285 SCRA 251, 257.
21
Lakpue Drug, Inc. v. Belga, G.R. No. 166379, October 20, 2005, 473 SCRA 617, 624; St.
Michaels Institute v. Santos, G.R. No. 145280, December 4, 2001, 371 SCRA 383, 393;
Escobin v. National Labor Relations Commission, G.R. No. 118159, April 15, 1998, 289
SCRA 48, 67.
22
Separate Opinion of J. Tinga in Agabon v. National Labor Relations Commission, G.R.
No. 158693, November 17, 2004, 442 SCRA 573, 693.
23
Rollo, p. 78.
24
Julies Bakeshop v. Arnaiz, G.R. No. 173882, February 15, 2012, 666 SCRA 101, 115.
25
Mendiola v. Court of Appeals, G.R. No. 159333, July 31, 2006, 497 SCRA 346, 360;
Unicorn Safety Glass, Inc. v. Basarte, G.R. No. 154689, November 25, 2004, 444 SCRA
287, 297.
26
Hongkong and Shanghai Banking Corp. v. National Labor Relations Commission, G.R.
No. 116542, July 30, 1996, 260 SCRA 49, 56.
27
Coca-Cola Bottlers Phils., Inc. v. Daniel, G.R. No. 156893, June 21, 2005, 460 SCRA 494,
509-510.
28
Pioneer Texturizing Corp. v. National Labor Relations Commission, G.R. No. 118651,
October 16, 1997, 280 SCRA 806, 816.
29
Almira v. B.F. Goodrich Philippines, Inc., No. L-34974, July 25, 1974, 58 SCRA 120, 131.
30
Varias v. Commission on Elections, G.R. No. 189078, March 30, 2010, 617 SCRA 214,
229.
11

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 190724
March 12, 2014
DIAMOND TAXI and/or BRYAN ONG, Petitioners,

vs.
FELIPE LLAMAS, JR., Respondent.
DECISION
BRION, J.:
In this petition for review on certiorari,1 we resolve the challenge to the August 13, 2008
decision2 and the November 27, 2009 resolution3 of the Court of Appeals (CA) in CA-G.R. CEBS.P. No. 02623. This CA decision reversed and set aside the May 30, 2006 resolution4 of the
National Labor Relations Commission (NLRC) in NLRC Case No. V-000294-06 (RAB VII-07-157405) that dismissed respondent Felipe Llamas, Jr.'s appeal for non-perfection.
The Factual Antecedents
Llamas worked as a taxi driver for petitioner Diamond Taxi, owned and operated by petitioner
Bryan Ong. On July 18, 2005, Llamas filed before the Labor Arbiter (LA) a complaint for illegal
dismissal against the petitioners.
In their position paper, the petitioners denied dismissing Llamas. They claimed that Llamas had
been absent without official leave for several days, beginning July 14, 2005 until August 1, 2005.
The petitioners submitted a copy of the attendance logbook to prove that Llamas had been
absent on these cited dates. They also pointed out that Llamas committed several traffic
violations in the years 2000-2005 and that they had issued him several memoranda for acts of
insubordination and refusal to heed management instructions. They argued that these acts
traffic violations, insubordination and refusal to heed management instructions constitute
grounds for the termination of Llamas employment.
Llamas failed to seasonably file his position paper.
On November 29, 2005, the LA rendered a decision5 dismissing Llamas complaint for lack of
merit. The LA held that Llamas was not dismissed, legally or illegally. Rather, the LA declared
that Llamas left his job and had been absent for several days without leave.
Llamas received a copy of this LA decision on January 5, 2006. Meanwhile, he filed his position
paper6 on December 20, 2005.
In his position paper, Llamas claimed that he failed to seasonably file his position paper because
his previous counsel, despite his repeated pleas, had continuously deferred compliance with the
LAs orders for its submission. Hence, he was forced to secure the services of another counsel on
December 19, 2005 in order to comply with the LAs directive.
On the merits of his complaint, Llamas alleged that he had a misunderstanding with Aljuver Ong,
Bryans brother and operations manager of Diamond Taxi, on July 13, 2005 (July 13, 2005
incident). When he reported for work on July 14, 2005, Bryan refused to give him the key to his
assigned taxi cab unless he would sign a prepared resignation letter. He did not sign the
resignation letter. He reported for work again on July 15 and 16, 2005, but Bryan insisted that he
sign the resignation letter prior to the release of the key to his assigned taxi cab. Thus, he filed
the illegal dismissal complaint.
On January 16, 2006, Llamas filed before the LA a motion for reconsideration of its November
29, 2005 decision. The LA treated Llamas motion as an appeal per Section 15, Rule V of the
2005 Revised Rules of Procedure of the NLRC (2005 NLRC Rules) (the governing NLRC Rules of
Procedure at the time Llamas filed his complaint before the LA).
In its May 30, 2006 resolution,7 the NLRC dismissed for non-perfection Llamas motion for
reconsideration treated as an appeal. The NLRC pointed out that Llamas failed to attach the
required certification of non-forum shopping per Section 4, Rule VI of the 2005 NLRC Rules.
Llamas moved to reconsider the May 30, 2006 NLRC resolution; he attached the required
certification of non-forum shopping.
When the NLRC denied his motion for reconsideration8 in its August 31, 2006 resolution,9 Llamas
filed before the CA a petition for certiorari.10
The CAs ruling
In its August 13, 2008 decision,11 the CA reversed and set aside the assailed NLRC resolution.
Citing jurisprudence, the CA pointed out that non-compliance with the requirement on the filing
of a certificate of non-forum shopping, while mandatory, may nonetheless be excused upon
showing of manifest equitable grounds proving substantial compliance. Additionally, in order to
determine if cogent reasons exist to suspend the rules of procedure, the court must first
examine the substantive aspect of the case.
The CA pointed out that the petitioners failed to prove overt acts showing Llamas clear
intention to abandon his job. On the contrary, the petitioners placed Llamas in a situation where
he was forced to quit as his continued employment has been rendered impossible,
unreasonable or unlikely, i.e., making him sign a resignation letter as a precondition for giving
him the key to his assigned taxi cab. To the CA, the petitioners act amounted to constructive
dismissal. The CA additionally noted that Llamas immediately filed the illegal dismissal case that
proved his desire to return to work and negates the charge of abandonment.
Further, the CA brushed aside the petitioners claim that Llamas committed several infractions
that warranted his dismissal. The CA declared that the petitioners should have charged Llamas
for these infractions to give the latter an opportunity to explain his side. As matters then stood,
they did not charge him for these infractions; hence, the petitioners could not have successfully
used these as supporting grounds to justify Llamas dismissal on the ground of abandonment.
As the CA found equitable grounds to take exception from the rule on certificate of non-forum
shopping, it declared that the NLRC had acted with grave abuse of discretion when it dismissed
Llamas appeal purely on a technicality. To the CA, the NLRC should have considered as
substantially compliant with this rule Llamas subsequent submission of the required certificate
with his motion for reconsideration (of the NLRCs May 30, 2006 resolution).
Accordingly, the CA ordered the petitioners to pay Llamas separation pay, full backwages and
other benefits due the latter from the time of the dismissal up to the finality of the decision. The
CA awarded separation pay in lieu of reinstatement because of the resulting strained work
relationship between Llamas and Bryan following the altercation between the former and the
latters brother.
The petitioners filed the present petition after the CA denied their motion for
reconsideration12 in the CAs November 27, 2009 resolution.13
The Petition
The petitioners argue that the CA erred when it encroached on the NLRCs exclusive jurisdiction
to review the merits of the LAs decision. To the petitioners, the CA should have limited its
action in determining whether grave abuse of discretion attended the NLRCs dismissal of
Llamas appeal; finding that it did, the CA should have remanded the case to the NLRC for
further proceedings.
Moreover, the petitioners point out that the NLRC did not gravely abuse its discretion when it
rejected Llamas appeal. They argue that the NLRCs action conformed with its rules and with
this Courts decisions that upheld the dismissal of an appeal for failure to file a certificate of
non-forum shopping.
Directly addressing the CAs findings on the dismissal issue, the petitioners argue that they did
not constructively dismiss Llamas. They maintain that Llamas no longer reported for work
because of the several liabilities he incurred that would certainly have, in any case, warranted
his dismissal.
The Case for the Respondent
Llamas argues in his comment14 that the CA correctly found that the NLRC acted with grave
abuse of discretion when it maintained its dismissal of his appeal despite his subsequent filing of
the certificate of non-forum shopping. Quoting the CAs ruling, Llamas argues that the NLRC
should have given due course to his appeal to avoid miscarriage of substantial justice.
On the issue of dismissal, Llamas argues that the CA correctly reversed the LAs ruling that found
him not dismissed, legally or illegally. Relying on the CAs ruling, Llamas points out that the
petitioners bore the burden of proving the abandonment charge. In this case, the petitioners
failed to discharge their burden; hence, his dismissal was illegal.
The Courts Ruling
We do not find the petition meritorious.
Preliminary considerations: factual-issue-bar-rule
In this Rule 45 petition for review on certiorari, we review the legal errors that the CA may have
committed in the assailed decision, in contrast with the review for jurisdictional error
undertaken in an original certiorari action. In reviewing the legal correctness of the CA decision
in a labor case made under Rule 65 of the Rules of Court, we examine the CA decision in the
context that it determined the presence or the absence of grave abuse of discretion in the NLRC
decision before it and not on the basis of whether the NLRC decision, on the merits of the case,
was correct. In other words, we have to be keenly aware that the CA undertook a Rule 65
review, not a review on appeal, of the challenged NLRC decision. In question form, the question
that we ask is: Did the CA correctly determine whether the NLRC committed grave abuse of
discretion in ruling on the case?15
In addition, the Courts jurisdiction in a Rule 45 petition for review on certiorari is limited to
resolving only questions of law. A question of law arises when the doubt or controversy
concerns the correct application of law or jurisprudence to a certain set of facts. In contrast, a
question of fact exists when the doubt or controversy concerns the truth or falsehood of facts.16
As presented by the petitioners, the petition before us involves mixed questions of fact and law,
with the core issue being one of fact. Whether the CA, in ruling on the labor case before it under
an original certiorari action, can make its own factual determination requires the consideration
and application of law and jurisprudence; it is essentially a question of law that a Rule 45
petition properly addresses.
In the context of this case, however, this legal issue is inextricably linked with and cannot be
resolved without the definitive resolution of the core factual issue whether Llamas abandoned
his work or had been constructively dismissed. As a proscribed question of fact, we generally
cannot address this issue, except to the extent necessary to determine whether the CA correctly
found that the NLRC acted with grave abuse of discretion in dismissing Llamas appeal on purely
technical grounds.
For raising mixed questions of fact and law, we deny the petition outright. Even if this error
were to be disregarded, however, we would still deny the petition as we find the CA legally
correct in reversing the NLRCs resolution on the ground of grave abuse of discretion.
The CA has ample authority to make its
own factual determination
We agree that remanding the case to the NLRC for factual determination and decision of the
case on the merits would have been, ordinarily, a prudent approach. Nevertheless, the CAs
action on this case was not procedurally wrong and was not without legal and jurisprudential
basis.
In this jurisdiction, courts generally accord great respect and finality to factual findings of
administrative agencies, i.e., labor tribunals, in the exercise of their quasi-judicial
function.17 These findings, however, are not infallible. This doctrine espousing comity to
administrative findings of facts cannot preclude the courts from reviewing and, when proper,
disregarding these findings of facts when shown that the administrative body committed grave
abuse of discretion by capriciously, whimsically or arbitrarily disregarding evidence or
circumstances of considerable importance that are crucial or decisive of the controversy.18
Hence, in labor cases elevated to it via petition for certiorari, the CA can grant this prerogative
writ when it finds that the NLRC acted with grave abuse of discretion in arriving at its factual
conclusions. To make this finding, the CA necessarily has to view the evidence if only to
determine if the NLRC ruling had basis in evidence. It is in the sense and manner that the CA, in
a Rule 65 certiorari petition before it, had to determine whether grave abuse of discretion on
factual issues attended the NLRCs dismissal of Llamas appeal. Accordingly, we do not find
erroneous the course that the CA took in resolving Llamas certiorari petition. The CA may
resolve factual issues by express legal mandate and pursuant to its equity jurisdiction.
The NLRC committed grave abuse of
discretion in dismissing Llamas appeal on
mere technicality
Article 223 (now Article 229)19 of the Labor Code states that decisions (or awards or orders) of
the LA shall become final and executory unless appealed to the NLRC within ten (10) calendar
days from receipt of the decision. Consistent with Article 223, Section 1, Rule VI of the 2005
NLRC Rules also provides for a ten (10)-day period for appealing the LAs decision. Under Section
4(a), Rule VI20 of the 2005 NLRC Rules, the appeal shall be in the form of a verified memorandum
of appeal and accompanied by proof of payment of the appeal fee, posting of cash or surety
bond (when necessary), certificate of non-forum shopping, and proof of service upon the other
parties. Failure of the appealing party to comply with any or all of these requisites within the
reglementary period will render the LAs decision final and executory.
Indisputably, Llamas did not file a memorandum of appeal from the LAs decision. Instead, he
filed, within the ten (10)-day appeal period, a motion for reconsideration. Under Section 15,
Rule V of the 2005 NLRC Rules, motions for reconsideration from the LAs decision are not
allowed;
they may, however, be treated as an appeal provided they comply with the requirements for
perfecting an appeal. The NLRC dismissed Llamas motion for reconsideration treated as an
appeal for failure to attach the required certificate of non-forum shopping per Section 4(a), Rule
VI of the 2005 NLRC Rules.
The requirement for a sworn certification of non-forum shopping was prescribed by the Court
under Revised Circular 28-91,21 as amended by Administrative Circular No. 04-94,22 to prohibit
and penalize the evils of forum shopping. Revised Circular 28-91, as amended by Administrative
Circular No. 04-94, requires a sworn certificate of non-forum shopping to be filed with every
petition, complaint, application or other initiatory pleading filed before the Court, the CA, or the
different divisions thereof, or any other court, tribunal or agency.
Ordinarily, the infirmity in Llamas appeal would have been fatal and would have justified an end
to the case. A careful consideration of the circumstances of the case, however, convinces us that
the NLRC should, indeed, have given due course to Llamas appeal despite the initial absence of
the required certificate. We note that in his motion for reconsideration of the NLRCs May 30,
2006 resolution, Llamas attached the required certificate of non-forum shopping.
Moreover, Llamas adequately explained, in his motion for reconsideration, the inadvertence and
presented a clear justifiable ground to warrant the relaxation of the rules. To recall, Llamas was
able to file his position paper, through his new counsel, only on December 20, 2005. He hired
the new counsel on December 19, 2005 after several repeated, albeit failed, pleas to his former
counsel to submit, on or before October 25, 2005 per the LAs order, the required position
paper. On November 29, 2005, however, the LA rendered a decision that Llamas and his new
counsel learned and received a copy of only on January 5, 2006. Evidently, the LAs findings and
conclusions were premised solely on the petitioners pleadings and evidence. And, while not the
fault of the LA, Llamas, nevertheless, did not have a meaningful opportunity to present his case,
refute the contents and allegations in the petitioners position paper and submit controverting
evidence.
Faced with these circumstances, i.e., Llamas subsequent compliance with the certificationagainst-forum-shopping requirement; the utter negligence and inattention of Llamas former
counsel to his pleas and cause, and his vigilance in immediately securing the services of a new
counsel; Llamas filing of his position paper before he learned and received a copy of the LAs
decision; the absence of a meaningful opportunity for Llamas to present his case before the LA;
and the clear merits of his case (that our subsequent discussion will show), the NLRC should
have relaxed the application of procedural rules in the broader interests of substantial justice.
Indeed, while the requirement as to the certificate of non-forum shopping is mandatory, this
requirement should not, however, be interpreted too literally and thus defeat the objective of
preventing the undesirable practice of forum-shopping.23
Under Article 221 (now Article 227)24 of the Labor Code, "the Commission and its members and
the Labor Arbiters shall use every and all reasonable means to ascertain the facts in each case
speedily and objectively and without regard to technicalities of law or procedure, all in the
interest of due process."25 Consistently, we have emphasized that "rules of procedure are mere
tools designed to facilitate the attainment of justice. A strict and rigid application which would
result in technicalities that tend to frustrate rather than promote substantial justice should not
be allowed x x x. No procedural rule is sacrosanct if such shall result in subverting
justice."26 Ultimately, what should guide judicial action is that a party is given the fullest
opportunity to establish the merits of his action or defense rather than for him to lose life,
honor, or property on mere technicalities.27
Then, too, we should remember that "the dismissal of an employees appeal on purely technical
ground is inconsistent with the constitutional mandate on protection to labor."28 Under the
Constitution29 and the Labor Code,30 the State is bound to protect labor and assure the rights of
workers to security of tenure tenurial security being a preferred constitutional right that,
under these fundamental guidelines, technical infirmities in labor pleadings cannot defeat.31
In this case, Llamas action against the petitioners concerned his job, his security of
tenure.1wphi1 This is a property right of which he could not and should not be deprived of
without due process.32 But, more importantly, it is a right that assumes a preferred position in
our legal hierarchy.33
Under these considerations, we agree that the NLRC committed grave abuse of discretion when,
in dismissing Llamas appeal, it allowed purely technical infirmities to defeat Llamas tenurial
security without full opportunity to establish his cases merits.
Llamas did not abandon his work; he was
constructively dismissed
"Abandonment is the deliberate and unjustified refusal of an employee to resume his
employment."34 It is a form of neglect of duty that constitutes just cause for the employer to
dismiss the employee.35
To constitute abandonment of work, two elements must concur: "(1) x x x the employee must
have failed to report for work or must have been absent without valid or justifiable reason; and
(2) x x x there must have been a clear intention [on the part of the employee] to sever the
employer-employee relationship manifested by some overt act."36 The employees absence
must be accompanied by overt acts that unerringly point to the employees clear intention to
sever the employment relationship.37 And, to successfully invoke abandonment, whether as a
ground for dismissing an employee or as a defense, the employer bears the burden of proving
the employees unjustified refusal to resume his employment.38 Mere absence of the employee
is not enough.39
Guided by these parameters, we agree that the petitioners unerringly failed to prove the alleged
abandonment. They did not present proof of some overt act of Llamas that clearly and
unequivocally shows his intention to abandon his job. We note that, aside from their bare
allegation, the only evidence that the petitioners submitted to prove abandonment were the
photocopy of their attendance logbook and the July 15, 2005 memorandum40 that they served
on Llamas regarding the July 13, 2005 incident. These pieces of evidence, even when considered
collectively, indeed failed to prove the clear and unequivocal intention, on Llamas part, that the
law requires to deem as abandonment Llamas absence from work. Quite the contrary, the
petitioners July 15, 2005 memorandum, in fact, supports, if not strengthens, Llamas' version of
the events that led to his filing of the complaint, i.e., that as a result of the July 13, 2005
incident, the petitioners refused to give him the key to his assigned taxi cab unless he would sign
the resignation letter.
Moreover, and as the CA pointed out, Llamas lost no time in filing the illegal dismissal case
against them. To recall, he filed the complaint on July 18, 2005 or only two days from the third
time he was refused access to his assigned taxi cab on July 16, 2005. Clearly, Llamas could not be
deemed to have abandoned his work for, as we have previously held, the immediate filing by
the employee of an illegal dismissal complaint is proof enough of his intention to return to work
and negates the employer's charge of abandonment.41
To reiterate and emphasize, abandonment is a matter of intention that cannot lightly be
presumed from certain equivocal acts of the employee.42
The CA, therefore, correctly regarded Llamas as constructively dismissed for the petitioners'
failure to prove the alleged just cause -abandonment - for his dismissal. Constructive dismissal
exists when there is cessation of work because continued employment is rendered impossible,
unreasonable or unlikely. Constructive dismissal is a dismissal in disguise or an act amounting to
dismissal but made to appear as if it were not. In constructive dismissal cases, the employer is,
concededly, charged with the burden of proving that its conduct and action were for valid and
legitimate grounds.43 The petitioners' persistent refusal to give Llamas the key to his assigned
taxi cab, on the condition that he should first sign the resignation letter, rendered, without
doubt, his continued employment impossible, unreasonable and unlikely; it, thus, constituted
constructive dismissal.
In sum, the CA correctly found equitable grounds to warrant relaxation of the rule on perfection
of appeal (filing of the certificate of non-forum shopping) as there was patently absent sufficient
proof for the charge of abandonment. Accordingly, we find the CA legally correct in reversing
and setting aside the NLRC's resolution rendered in grave abuse of discretion.
WHEREFORE, in light of these considerations, we hereby DENY the petition. We AFFIRM the
decision dated August 13, 2008 and the resolution dated November 27, 2009 of the Court of
Appeals in CA-G.R. CEB-S.P. No. 02623.
SO ORDERED.
ARTURO D. BRION
Associate Justice
Footnotes
1
Rollo, pp. 9-29.

Penned by Associate Justice Franchito N. Diamante, and concurred in by Associate
Justices Priscilla Baltazar-Padilla and Edgardo L. delos Santos; id. at 31-42.
3
Id. at 44-45.
4
Penned by Commissioner Aurelio D. Menzon, and concurred in by Commissioner Oscar
S. Uy and Presiding Commissioner Gerardo C. Nograles; id. at 57-59.
5
Penned by LA Jose Gutierrez; id. at 46-47.
6
Id. at 48-51.
7
Supra note 4.
8
Rollo, pp. 60-69.
9
Id. at 71-72.
10
Id. at 73-90.
11
Supra note 2.
12
Rollo, pp. 103-124.
2
13
Supra note 3.
Rollo, pp. 129-134.
15
Montoya v. Transmed Manila Corporation, G.R. No. 183329, August 27, 2009, 597
SCRA 334, 342-343.
16
Baguio Central University v. Ignacio Gallente, G.R. No. 188267, December 2, 2013.
17
See Cosmos Bottling Corp. v. Nagrama, Jr., 571 Phil. 281, 300 (2008).
18
See Norkis Trading Corporation v. Buenavista, G.R. No. 182018, October 10, 2012, 683
SCRA 406, 422; citation omitted.
19
As directed by Republic Act No. 10151, entitled "An Act Allowing the Employment of
Night Workers, thereby Repealing Articles 130 and 131 of Presidential Decree Number
Four Hundred Forty-Two, as amended, Otherwise Known as the Labor Code of the
Philippines," approved on June 21, 2011, the Labor Code articles beginning with Article
130 are renumbered.
20
Section 4. Requisites for Perfection of Appeal. - a) The appeal shall be: 1) filed within
the reglementary period provided in Section 1 of this Rule; 2) verified by the appellant
himself in accordance with Section 4, Rule 7 of the Rules of Court, as amended; 3) in the
form of a memorandum of appeal which shall state the grounds relied upon and the
arguments in support thereof, the relief prayed for, and with a statement of the date
the appellant received the appealed decision, resolution or order; 4) in three (3) legibly
typewritten or printed copies; and 5) accompanied by i) proof of payment of the
required appeal fee; ii) posting of a cash or surety bond as provided in Section 6 of this
Rule; iii) a certificate of non-forum shopping; and iv) proof of service upon the other
parties.
21
Issued on February 8, 1994 and made effective on April 1, 1994.
22
Effective April 1, 1994.
23
Caa v. Evangelical Free Church of the Phils., 568 Phil. 205, 213-214 (2008), citing
Vicar International Construction, Inc. v. FEB Leasing and Finance Corporation, G.R. No.
157195, April 22, 2005, 456 SCRA 588.
24
Supra note 19.
25
See also Section 10, Rule VI of the 2005 NLRC Rules.
26
Phil. Commercial Intl Bank v. Cabrera, 494 Phil. 735, 743 (2005); citations omitted.
27
Id. at 743-744; and Caa v. Evangelical Free Church of the Phils., supra note 23, at 215.
28
Polsotin, Jr. v. De Guia Enterprises, Inc., G.R. No. 172624, December 5, 2011, 661 SCRA
523, 529.
29
See Article II, Section 18 and Article XIII, Section 3.
30
Under Article 4 of the Labor Code, all doubts in the implementation and
interpretation of [its] provisions x x x, including its implementing rules and regulations,
shall be resolved in favor of labor."
31
See Spic N Span Services Corporation v. Paje, G.R. No. 174084, August 25, 2010, 629
SCRA 261, 270.
32
Polsotin, Jr. v. De Guia Enterprises, Inc., supra note 28, at 530.
33
See Spic N Span Services Corporation v. Paje, supra note 31, at 269.
34
NEECO II v. NLRC, 499 Phil. 777, 789 (2005).
35
See Article 282 (now Article 296) of the Labor Code.
36
Samarca v. Arc-Men Industries, Inc., 459 Phil. 506, 515 (2003). See also Harpoon
Marine Services, Inc. v. Francisco, G.R. No. 167751, March 2, 2011, 644 SCRA 394, 405406; and Aliten v. U-Need Lumber & Hardware, 533 Phil. 213, 223 (2006).
14
37
See ACD Investigation Security Agency, Inc. v. Daquera, G.R. No. 147473, March 30,
2004, 426 SCRA 494, 499.
38
See Samarca v. Arc-Men Industries, Inc., supra note 36, at 515; and Harpoon Marine
Services, Inc. v. Francisco, supra note 36, at 406.
39
See Aliten v. U-Need Lumber & Hardware, supra note 36 at 222; and Functional, Inc. v.
Granfil, G.R. No. 176377, November 16, 2011, 660 SCRA 279, 286-287.
40
Rollo, p. 112.
41
Labor v. National labor Relations Commission, G.R. No. 110388, September 14, 1995,
248 SCRA 183, 198.
42
Josan, .JPS, Santiago Cargo Movers v. Aduna, G.R. No. 190794, February 22, 2012, 666
SCRA 679, 686; and Aliten v. U-Need Lumber & Hardware, supra note 36, at 223.
43
Galangv. Malasugui, G.R. No. 174173, March 7, 2012, 667 SCRA622, 634-635.

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 157010
June 21, 2005
PHILIPPINE NATIONAL BANK, petitioner,

vs.
FLORENCE O. CABANSAG, respondent.
DECISION
PANGANIBAN, J.:
The Court reiterates the basic policy that all Filipino workers, whether employed locally or
overseas, enjoy the protective mantle of Philippine labor and social legislations. Our labor
statutes may not be rendered ineffective by laws or judgments promulgated, or stipulations
agreed upon, in a foreign country.
The Case
Before us is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Court, seeking to
reverse and set aside the July 16, 2002 Decision2 and the January 29, 2003 Resolution3 of the
Court of Appeals (CA) in CA-GR SP No. 68403. The assailed Decision dismissed the CA Petition
(filed by herein petitioner), which had sought to reverse the National Labor Relations
Commission (NLRC)s June 29, 2001 Resolution,4 affirming Labor Arbiter Joel S. Lustrias January
18, 2000 Decision.5
The assailed CA Resolution denied herein petitioners Motion for Reconsideration.
The Facts
The facts are narrated by the Court of Appeals as follows:
"In late 1998, [herein Respondent Florence Cabansag] arrived in Singapore as a tourist. She
applied for employment, with the Singapore Branch of the Philippine National Bank, a private
banking corporation organized and existing under the laws of the Philippines, with principal
offices at the PNB Financial Center, Roxas Boulevard, Manila. At the time, the Singapore PNB
Branch was under the helm of Ruben C. Tobias, a lawyer, as General Manager, with the rank of
Vice-President of the Bank. At the time, too, the Branch Office had two (2) types of employees:
(a) expatriates or the regular employees, hired in Manila and assigned abroad including
Singapore, and (b) locally (direct) hired. She applied for employment as Branch Credit Officer, at
a total monthly package of $SG4,500.00, effective upon assumption of duties after approval.
Ruben C. Tobias found her eminently qualified and wrote on October 26, 1998, a letter to the
President of the Bank in Manila, recommending the appointment of Florence O. Cabansag, for
the position.
xxxxxxxxx
"The President of the Bank was impressed with the credentials of Florence O. Cabansag that he
approved the recommendation of Ruben C. Tobias. She then filed an Application, with the
Ministry of Manpower of the Government of Singapore, for the issuance of an Employment
Pass as an employee of the Singapore PNB Branch. Her application was approved for a period of
two (2) years.
"On December 7, 1998, Ruben C. Tobias wrote a letter to Florence O. Cabansag offering her a
temporary appointment, as Credit Officer, at a basic salary of Singapore Dollars 4,500.00, a
month and, upon her successful completion of her probation to be determined solely, by the
Bank, she may be extended at the discretion of the Bank, a permanent appointment and that
her temporary appointment was subject to the following terms and conditions:
1. You will be on probation for a period of three (3) consecutive months from the date
of your assumption of duty.
2. You will observe the Banks rules and regulations and those that may be adopted
from time to time.
3. You will keep in strictest confidence all matters related to transactions between the
Bank and its clients.
4. You will devote your full time during business hours in promoting the business and
interest of the Bank.
5. You will not, without prior written consent of the Bank, be employed in anyway for
any purpose whatsoever outside business hours by any person, firm or company.
6. Termination of your employment with the Bank may be made by either party after
notice of one (1) day in writing during probation, one month notice upon confirmation
or the equivalent of one (1) days or months salary in lieu of notice.
"Florence O. Cabansag accepted the position and assumed office. In the meantime, the
Philippine Embassy in Singapore processed the employment contract of Florence O. Cabansag
and, on March 8, 1999, she was issued by the Philippine Overseas Employment Administration,
an Overseas Employment Certificate, certifying that she was a bona fide contract worker for
Singapore.
xxxxxxxxx
"Barely three (3) months in office, Florence O. Cabansag submitted to Ruben C. Tobias, on
March 9, 1999, her initial Performance Report. Ruben C. Tobias was so impressed with the
Report that he made a notation and, on said Report: GOOD WORK. However, in the evening
of April 14, 1999, while Florence O. Cabansag was in the flat, which she and Cecilia Aquino, the
Assistant Vice-President and Deputy General Manager of the Branch and Rosanna Sarmiento,
the Chief Dealer of the said Branch, rented, she was told by the two (2) that Ruben C. Tobias has
asked them to tell Florence O. Cabansag to resign from her job. Florence O. Cabansag was
perplexed at the sudden turn of events and the runabout way Ruben C. Tobias procured her
resignation from the Bank. The next day, Florence O. Cabansag talked to Ruben C. Tobias and
inquired if what Cecilia Aquino and Rosanna Sarmiento had told her was true. Ruben C. Tobias
confirmed the veracity of the information, with the explanation that her resignation was
imperative as a cost-cutting measure of the Bank. Ruben C. Tobias, likewise, told Florence O.
Cabansag that the PNB Singapore Branch will be sold or transformed into a remittance office
and that, in either way, Florence O. Cabansag had to resign from her employment. The more
Florence O. Cabansag was perplexed. She then asked Ruben C. Tobias that she be furnished with
a Formal Advice from the PNB Head Office in Manila. However, Ruben C. Tobias flatly refused.
Florence O. Cabansag did not submit any letter of resignation.
"On April 16, 1999, Ruben C. Tobias again summoned Florence O. Cabansag to his office and
demanded that she submit her letter of resignation, with the pretext that he needed a Chinesespeaking Credit Officer to penetrate the local market, with the information that a Chinesespeaking Credit Officer had already been hired and will be reporting for work soon. She was
warned that, unless she submitted her letter of resignation, her employment record will be
blemished with the notation DISMISSED spread thereon. Without giving any definitive answer,
Florence O. Cabansag asked Ruben C. Tobias that she be given sufficient time to look for another
job. Ruben C. Tobias told her that she should be out of her employment by May 15, 1999.
"However, on April 19, 1999, Ruben C. Tobias again summoned Florence O. Cabansag and
adamantly ordered her to submit her letter of resignation. She refused. On April 20, 1999, she
received a letter from Ruben C. Tobias terminating her employment with the Bank.
xxxxxxxxx
"On January 18, 2000, the Labor Arbiter rendered judgment in favor of the Complainant and
against the Respondents, the decretal portion of which reads as follows:
WHEREFORE, considering the foregoing premises, judgment is hereby rendered finding
respondents guilty of Illegal dismissal and devoid of due process, and are hereby ordered:
1. To reinstate complainant to her former or substantially equivalent position without
loss of seniority rights, benefits and privileges;
2. Solidarily liable to pay complainant as follows:
a) To pay complainant her backwages from 16 April 1999 up to her actual
reinstatement. Her backwages as of the date of the promulgation of this
decision amounted to SGD 40,500.00 or its equivalent in Philippine Currency at
the time of payment;
b) Mid-year bonus in the amount of SGD 2,250.00 or its equivalent in Philippine

Currency at the time of payment;
c) Allowance for Sunday banking in the amount of SGD 120.00 or its equivalent
in Philippine Currency at the time of payment;
d) Monetary equivalent of leave credits earned on Sunday banking in the
amount of SGD 1,557.67 or its equivalent in Philippine Currency at the time of
payment;
e) Monetary equivalent of unused sick leave benefits in the amount of SGD
1,150.60 or its equivalent in Philippine Currency at the time of payment.
f) Monetary equivalent of unused vacation leave benefits in the amount of SGD
319.85 or its equivalent in Philippine Currency at the time of payment.
g) 13th month pay in the amount of SGD 4,500.00 or its equivalent in Philippine
Currency at the time of payment;
3. Solidarily to pay complainant actual damages in the amount of SGD 1,978.00 or its
equivalent in Philippine Currency at the time of payment, and moral damages in the
amount of PhP 200,000.00, exemplary damages in the amount of PhP 100,000.00;
4. To pay complainant the amount of SGD 5,039.81 or its equivalent in Philippine
Currency at the time of payment, representing attorneys fees.
SO ORDERED." 6 [Emphasis in the original.]
PNB appealed the labor arbiters Decision to the NLRC. In a Resolution dated June 29, 2001, the
Commission affirmed that Decision, but reduced the moral damages to P100,000 and the
exemplary damages to P50,000. In a subsequent Resolution, the NLRC denied PNBs Motion for
Reconsideration.
Ruling of the Court of Appeals
In disposing of the Petition for Certiorari, the CA noted that petitioner bank had failed to adduce
in evidence the Singaporean law supposedly governing the latters employment Contract with
respondent. The appellate court found that the Contract had actually been processed by the
Philippine Embassy in Singapore and approved by the Philippine Overseas Employment
Administration (POEA), which then used that Contract as a basis for issuing an Overseas
Employment Certificate in favor of respondent.
According to the CA, even though respondent secured an employment pass from the Singapore
Ministry of Employment, she did not thereby waive Philippine labor laws, or the jurisdiction of
the labor arbiter or the NLRC over her Complaint for illegal dismissal. In so doing, neither did she
submit herself solely to the Ministry of Manpower of Singapores jurisdiction over disputes
arising from her employment. The appellate court further noted that a cursory reading of the
Ministrys letter will readily show that no such waiver or submission is stated or implied.
Finally, the CA held that petitioner had failed to establish a just cause for the dismissal of
respondent. The bank had also failed to give her sufficient notice and an opportunity to be
heard and to defend herself. The CA ruled that she was consequently entitled to reinstatement
and back wages, computed from the time of her dismissal up to the time of her reinstatement.
Hence, this Petition.7
Issues
Petitioner submits the following issues for our consideration:
"1. Whether or not the arbitration branch of the NLRC in the National Capital Region has
jurisdiction over the instant controversy;
"2. Whether or not the arbitration of the NLRC in the National Capital Region is the most
convenient venue or forum to hear and decide the instant controversy; and
"3. Whether or not the respondent was illegally dismissed, and therefore, entitled to
recover moral and exemplary damages and attorneys fees."8
In addition, respondent assails, in her Comment,9 the propriety of Rule 45 as the procedural
mode for seeking a review of the CA Decision affirming the NLRC Resolution. Such issue
deserves scant consideration. Respondent miscomprehends the Courts discourse in St. Martin
Funeral Home v. NLRC,10 which has indeed affirmed that the proper mode of review of NLRC
decisions, resolutions or orders is by a special civil action for certiorari under Rule 65 of the
Rules of Court. The Supreme Court and the Court of Appeals
have concurrent original jurisdiction over such petitions for certiorari. Thus, in observance of the
doctrine on the hierarchy of courts, these petitions should be initially filed with the CA.11
Rightly, the bank elevated the NLRC Resolution to the CA by way of a Petition for Certiorari. In
seeking a review by this Court of the CA Decision -- on questions of jurisdiction, venue and
validity of employment termination -- petitioner is likewise correct in invoking Rule 45.12
It is true, however, that in a petition for review on certiorari, the scope of the Supreme Courts
judicial review of decisions of the Court of Appeals is generally confined only to errors of law. It
does not extend to questions of fact. This doctrine applies with greater force in labor cases.
Factual questions are for the labor tribunals to resolve. 13 In the present case, the labor arbiter
and the NLRC have already determined the factual issues. Their findings, which are supported by
substantial evidence, were affirmed by the CA. Thus, they are entitled to great respect and are
rendered conclusive upon this Court, absent a clear showing of palpable error or arbitrary
disregard of evidence.14
The Courts Ruling
The Petition has no merit.

First Issue:
Jurisdiction
The jurisdiction of labor arbiters and the NLRC is specified in Article 217 of the Labor Code as
follows:
"ART. 217. Jurisdiction of Labor Arbiters and the Commission. (a) Except as otherwise provided
under this Code the Labor Arbiters shall have original and exclusive jurisdiction to hear and
decide, within thirty (30) calendar days after the submission of the case by the parties for
decision without extension, even in the absence of stenographic notes, the following cases
involving all workers, whether agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers may file
involving wage, rates of pay, hours of work and other terms and conditions of
employment
4. Claims for actual, moral, exemplary and other forms of damages arising from the
employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code, including questions
involving the legality of strikes and lockouts; and
6. Except claims for Employees Compensation, Social Security, Medicare and maternity
benefits, all other claims, arising from employer-employee relations, including those of
persons in domestic or household service, involving an amount of exceeding five
thousand pesos (P5,000.00) regardless of whether accompanied with a claim for
reinstatement.
(b) The commission shall have exclusive appellate jurisdiction over all cases decided by Labor
Arbiters.
x x x x x x x x x."
More specifically, Section 10 of RA 8042 reads in part:
"SECTION 10. Money Claims. Notwithstanding any provision of law to the contrary, the Labor
Arbiters of the National Labor Relations Commission (NLRC) shall have the original and exclusive
jurisdiction to hear and decide, within ninety (90) calendar days after the filing of the complaint,
the claims arising out of an employer-employee relationship or by virtue of any law or contract
involving Filipino workers for overseas deployment including claims for actual, moral, exemplary
and other forms of damages.
x x x x x x x x x"
Based on the foregoing provisions, labor arbiters clearly have original and exclusive jurisdiction
over claims arising from employer-employee relations, including termination
disputes involving all workers, among whom are overseas Filipino workers (OFW).15
We are not unmindful of the fact that respondent was directly hired, while on a tourist status in
Singapore, by the PNB branch in that city state. Prior to employing respondent, petitioner had to
obtain an employment pass for her from the Singapore Ministry of Manpower. Securing the pass
was a regulatory requirement pursuant to the immigration regulations of that country.16
Similarly, the Philippine government requires non-Filipinos working in the country to first obtain
a local work permit in order to be legally employed here. That permit, however, does not
automatically mean that the non-citizen is thereby bound by local laws only, as averred by
petitioner. It does not at all imply a waiver of ones national laws on labor. Absent any clear and
convincing evidence to the contrary, such permit simply means that its holder has a legal status
as a worker in the issuing country.1avvphil.zw+
Noteworthy is the fact that respondent likewise applied for and secured an Overseas
Employment Certificate from the POEA through the Philippine Embassy in Singapore. The
Certificate, issued on March 8, 1999, declared her a bona fide contract worker for Singapore.
Under Philippine law, this document authorized her working status in a foreign country and
entitled her to all benefits and processes under our statutes. Thus, even assuming arguendothat
she was considered at the start of her employment as a "direct hire" governed by and subject to
the laws, common practices and customs prevailing in Singapore17 she subsequently became a
contract worker or an OFW who was covered by Philippine labor laws and policies upon
certification by the POEA. At the time her employment was illegally terminated, she already
possessed the POEA employment Certificate.
Moreover, petitioner admits that it is a Philippine corporation doing business through a branch
office in Singapore.18 Significantly, respondents employment by the Singapore branch office had
to be approved by Benjamin P. Palma Gil,19 the president of the bank whose principal offices
were in Manila. This circumstance militates against petitioners contention that respondent was
"locally hired"; and totally "governed by and subject to the laws, common practices and
customs" of Singapore, not of the Philippines. Instead, with more reason does this fact reinforce
the presumption that respondent falls under the legal definition of migrant worker, in this case
one deployed in Singapore. Hence, petitioner cannot escape the application of Philippine laws or
the jurisdiction of the NLRC and the labor arbiter.
In any event, we recall the following policy pronouncement of the Court in Royal Crown
Internationale v. NLRC:20
"x x x. Whether employed locally or overseas, all Filipino workers enjoy the protective mantle of
Philippine labor and social legislation, contract stipulations to the contrary notwithstanding. This
pronouncement is in keeping with the basic public policy of the State to afford protection to
labor, promote full employment, ensure equal work opportunities regardless of sex, race or
creed, and regulate the relations between workers and employers.1awphi1.net For the State
assures the basic rights of all workers to self-organization, collective bargaining, security of
tenure, and just and humane conditions of work [Article 3 of the Labor Code of the
Philippines; See also Section 18, Article II and Section 3, Article XIII, 1987 Constitution]. This
ruling is likewise rendered imperative by Article 17 of the Civil Code which states that laws
which have for their object public order, public policy and good customs shall not be rendered
ineffective by laws or judgments promulgated, or by determination or conventions agreed upon
in a foreign country."
Second Issue:
Proper Venue
Section 1(a) of Rule IV of the NLRC Rules of Procedure reads:
"Section 1. Venue (a) All cases which Labor Arbiters have authority to hear and decide may be
filed in the Regional Arbitration Branch having jurisdiction over the workplace of the
complainant/petitioner; Provided, however that cases of Overseas Filipino Worker (OFW) shall
be filed before the Regional Arbitration Branch where the complainant resides or where the
principal office of the respondent/employer is situated, at the option of the complainant.
"For purposes of venue, workplace shall be understood as the place or locality where the
employee is regularly assigned when the cause of action arose. It shall include the place where
the employee is supposed to report back after a temporary detail, assignment or travel. In the
case of field employees, as well as ambulant or itinerant workers, their workplace is where they
are regularly assigned, or where they are supposed to regularly receive their salaries/wages or
work instructions from, and report the results of their assignment to their employers."
Under the "Migrant Workers and Overseas Filipinos Act of 1995" (RA 8042), a migrant
worker "refers to a person who is to be engaged, is engaged or has been engaged in a
remunerated activity in a state of which he or she is not a legal resident; to be used
interchangeably with overseas Filipino worker."21 Undeniably, respondent was employed by
petitioner in its branch office in Singapore. Admittedly, she is a Filipino and not a legal resident
of that state. She thus falls within the category of "migrant worker" or "overseas Filipino
worker."
As such, it is her option to choose the venue of her Complaint against petitioner for illegal
dismissal. The law gives her two choices: (1) at the Regional Arbitration Branch (RAB) where she
resides or (2) at the RAB where the principal office of her employer is situated. Since her
dismissal by petitioner, respondent has returned to the Philippines -- specifically to her
residence at Filinvest II, Quezon City. Thus, in filing her Complaint before the RAB office in
Quezon City, she has made a valid choice of proper venue.
Third Issue:
Illegal Dismissal
The appellate court was correct in holding that respondent was already a regular employee at
the time of her dismissal, because her three-month probationary period of employment had
already ended. This ruling is in accordance with Article 281 of the Labor Code: "An employee
who is allowed to work after a probationary period shall be considered a regular employee."
Indeed, petitioner recognized respondent as such at the time it dismissed her, by giving her one
months salary in lieu of a one-month notice, consistent with provision No. 6 of her employment
Contract.
Notice and Hearing Not Complied With
As a regular employee, respondent was entitled to all rights, benefits and privileges provided
under our labor laws. One of her fundamental rights is that she may not be dismissed without
due process of law. The twin requirements of notice and hearing constitute the essential
elements of procedural due process, and neither of these elements can be eliminated without
running afoul of the constitutional guarantee.22
In dismissing employees, the employer must furnish them two written notices: 1) one to apprise
them of the particular acts or omissions for which their dismissal is sought; and 2) the other to
inform them of the decision to dismiss them. As to the requirement of a hearing, its essence lies
simply in the opportunity to be heard.23
The evidence in this case is crystal-clear. Respondent was not notified of the specific act or
omission for which her dismissal was being sought. Neither was she given any chance to be
heard, as required by law. At any rate, even if she were given the opportunity to be heard, she
could not have defended herself effectively, for she knew no cause to answer to.
All that petitioner tendered to respondent was a notice of her employment termination
effective the very same day, together with the equivalent of a one-month pay. This Court has
already held that nothing in the law gives an employer the option to substitute the required
prior notice and opportunity to be heard with the mere payment of 30 days salary.24
Well-settled is the rule that the employer shall be sanctioned for noncompliance with the
requirements of, or for failure to observe, due process that must be observed in dismissing an
employee.25
No Valid Cause for Dismissal
Moreover, Articles 282,26 28327 and 28428 of the Labor Code provide the valid grounds or causes
for an employees dismissal. The employer has the burden of proving that it was done for any of
those just or authorized causes. The failure to discharge this burden means that the dismissal
was not justified, and that the employee is entitled to reinstatement and back wages.29
Notably, petitioner has not asserted any of the grounds provided by law as a valid reason for
terminating the employment of respondent. It merely insists that her dismissal was validly
effected pursuant to the provisions of her employment Contract, which she had voluntarily
agreed to be bound to.
Truly, the contracting parties may establish such stipulations, clauses, terms and conditions as
they want, and their agreement would have the force of law between them. However,
petitioner overlooks the qualification that those terms and conditions agreed upon must not be
contrary to law, morals, customs, public policy or public order.30 As explained earlier, the
employment Contract between petitioner and respondent is governed by Philippine labor laws.
Hence, the stipulations, clauses, and terms and conditions of the Contract must not contravene
our labor law provisions.
Moreover, a contract of employment is imbued with public interest. The Court has time and
time again reminded parties that they "are not at liberty to insulate themselves and their
relationships from the impact of labor laws and regulations by simply contracting with each
other."31 Also, while a contract is the law between the parties, the provisions of positive law that
regulate such contracts are deemed included and shall limit and govern the relations between
the parties.32
Basic in our jurisprudence is the principle that when there is no showing of any clear, valid, and
legal cause for the termination of employment, the law considers the matter a case of illegal
dismissal.33
Awards for Damages Justified
Finally, moral damages are recoverable when the dismissal of an employee is attended by bad
faith or constitutes an act oppressive to labor or is done in a manner contrary to morals, good
customs or public policy.34 Awards for moral and exemplary damages would be proper if the
employee was harassed and arbitrarily dismissed by the employer.35
In affirming the awards of moral and exemplary damages, we quote with approval the following
ratiocination of the labor arbiter:
"The records also show that [respondents] dismissal was effected by [petitioners] capricious
and high-handed manner, anti-social and oppressive, fraudulent and in bad faith, and contrary
to morals, good customs and public policy. Bad faith and fraud are shown in the acts committed
by [petitioners] before, during and after [respondents] dismissal in addition to the manner by
which she was dismissed. First, [respondent] was pressured to resign for two different and
contradictory reasons, namely, cost-cutting and the need for a Chinese[-]speaking credit officer,
for which no written advice was given despite complainants request. Such wavering stance or
vacillating position indicates bad faith and a dishonest purpose. Second, she was employed on
account of her qualifications, experience and readiness for the position of credit officer and
pressured to resign a month after she was commended for her good work. Third, the demand
for [respondents] instant resignation on 19 April 1999 to give way to her replacement who was
allegedly reporting soonest, is whimsical, fraudulent and in bad faith, because on 16 April 1999
she was given a period of [sic] until 15 May 1999 within which to leave. Fourth, the pressures
made on her to resign were highly oppressive, anti-social and caused her absolute torture, as
[petitioners] disregarded her situation as an overseas worker away from home and family, with
no prospect for another job. She was not even provided with a return trip fare. Fifth, the notice
of termination is an utter manifestation of bad faith and whim as it totally disregards
[respondents] right to security of tenure and due process. Such notice together with the
demands for [respondents] resignation contravenes the fundamental guarantee and public
policy of the Philippine government on security of tenure.
"[Respondent] likewise established that as a proximate result of her dismissal and prior
demands for resignation, she suffered and continues to suffer mental anguish, fright, serious
anxiety, besmirched reputation, wounded feelings, moral shock and social humiliation. Her
standing in the social and business community as well as prospects for employment with other
entities have been adversely affected by her dismissal. [Petitioners] are thus liable for moral
damages under Article 2217 of the Civil Code.
xxxxxxxxx
"[Petitioners] likewise acted in a wanton, oppressive or malevolent manner in terminating
[respondents] employment and are therefore liable for exemplary damages. This should served
[sic] as protection to other employees of [petitioner] company, and by way of example or
correction for the public good so that persons similarly minded as [petitioners] would be
deterred from committing the same acts."36
The Court also affirms the award of attorneys fees. It is settled that when an action is instituted
for the recovery of wages, or when employees are forced to litigate and consequently incur
expenses to protect their rights and interests, the grant of attorneys fees is legally justifiable.37
WHEREFORE, the Petition is DENIED and the assailed Decision and Resolution AFFIRMED. Costs
against petitioner.
SO ORDERED.
Sandoval-Gutierrez, Corona, Carpio-Morales, and Garcia, JJ., concur.
Footnotes
1
Rollo, pp. 9-31.
Id., pp. 33-56. Tenth Division. Penned by Justice Romeo J. Callejo Sr. (chairman and
now a member of this Court), with the concurrence of Justices Remedios SalazarFernando and Danilo B. Pine (members).
3
Id., pp. 59-60.
Id., pp. 75-91.
Id., pp. 62-74.
Assailed Decision, pp. 2-7; rollo, pp. 34-39.
This case was deemed submitted for decision on December 5, 2003, upon this Courts
receipt of respondents Memorandum -- signed by Atty. Elvira de Vera Bitonio.
Petitioners Memorandum, signed by Attys. Benilda V. Abrasia-Tejada, Irahlyn P.
Sacupayo-Lariba and Marino M. Buban Jr. -- was received by this Court on November 7,
2003.
8
Petition, p. 8; rollo, p. 16.
Rollo, pp. 100-110.
10
356 Phil. 811, September 16, 1998.
11
Id., p. 824.
12
See Retuya v. Dumarpa, 408 SCRA 315, August 5, 2003.
13
Alfaro v. CA, 416 Phil. 310, August 28, 2001.
14
Ibid. See also PNOC Dockyard & Engineering Corp. v. NLRC, 353 Phil. 431, June 26,
1998; KAMADA v.Ferrer-Calleja, 344 Phil. 67, September 5, 1997; Caurdanetaan Piece
Workers Union v. Laguesma, 350 Phil. 35, February 24, 1998; Tan v. NLRC, 359 Phil. 499,
November 24, 1998.
15
3(a) of RA 8042 defines migrant worker as "a person who is to be engaged, is

engaged or has been engaged in a remunerated activity in a state in which he or she is
not a legal resident; to be used interchangeably with overseas Filipino worker."
(Emphasis ours.)
16
Paragraph 8 of the employment pass states:

"If there is a change in the Designation or Duties as declared in the application
form for an Employment Pass, a fresh application is required. It is an offence
under the Immigration Regulations for failing to do so." (Annex "5-a" to
Comment; rollo, p. 120.)
17
Petition, p. 3; rollo, p. 11.
18
Petitioners Memorandum, p. 22; rollo, p. 178.
19
Annex "2" to Comment; rollo, pp. 113-114.
20
178 SCRA 569, 580-581, October 16, 1989, per Cortes, J.
21
3(a), RA 8042; also 2(a) and (e), Rule II of the Omnibus Rules and Regulations
Implementing the Migrant Workers and Overseas Filipinos Act.
22
Vinta Maritime Co., Inc. v. NLRC, 348 Phil. 714, January 23, 1998.
23
Paguio Transport Corp. v. NLRC, 356 Phil. 158, August 28, 1998; Tan v. NLRC, supra;
Pascua v. NLRC, 351 Phil. 48, March 13, 1998; Vinta Maritime Co., Inc. v. NLRC, supra.
24
Serrano v. NLRC, 387 Phil. 345, May 4, 2000.
25
Fernandez, v. NLRC, 349 Phil. 65, January 28, 1998.
26
"Art. 282. Termination by employer. An employer may terminate an employment for

any of the following causes: (a) serious misconduct or willful disobedience by the
employee of the lawful orders of his employer or representative in connection with his
work; (b) gross and habitual neglect by the employee of his duties; (c) fraud or willful
breach by the employee of the trust reposed in him by his employer or duly authorized
representative; (d) commission of a crime or offense by the employee against the
person of his employer or any immediate member of his family or his duly authorized
representative; and (e) other causes analogous to the foregoing."
27
"Art. 283. Closure of establishment and reduction of personnel. The employer may
also terminate the employment of any employee due to the installation of labor saving
devices, redundancy, retrenchment to prevent losses or the closing or cessation of
operation of the establishment or undertaking unless the closing is for the purpose of
circumventing the provisions of this title, by serving a written notice on the workers and
the [Department] of Labor and Employment at least one (1) month before the intended
date thereof. In case of termination due to the installation of labor saving devices or
redundancy, the worker affected thereby shall be entitled to a separation pay
equivalent to at least his one (1) month pay or to at least one (1) month pay for every
year of service, whichever is higher. In case of retrenchment to prevent losses and in
cases of closures or cessation of operations of establishment or undertaking not due to
serious business losses or financial reverses, the separation pay shall be equivalent to
one (1) month pay or to at least one-half (1/2) month pay for every year of service,
whichever is higher. A fraction of at least six (6) months shall be considered one (1)
whole year."
28
"Art. 284. Disease as ground for termination. An employer may terminate the
services of an employee who has been found to be suffering from any disease and
whose continued employment is prohibited by law or is prejudicial to his health as well
as to the health of his co-employees: Provided, that he is paid separation pay equivalent
to at least one (1) month salary or to one-half month salary for every year or service,
whichever is greater, a fraction of at least six (6) months being considered as one (1)
whole year."
29
Paguio Transport Corp. v. NLRC, supra; Caurdanetaan Piece Workers

Union v. Laguesma, supra; Vinta Maritime Co., Inc. v. NLRC, supra; Anino v. NLRC, 352
Phil. 1098, May 21, 1998.
30
Solid Homes, Inc. v. CA, 341 Phil. 261, 280, July 8, 1997.
31
Pakistan International Airlines Corp. v. Ople, 190 SCRA 90, 99, September 28, 1990,
per Feliciano, J. (cited in Bernardo v. NLRC, 369 Phil. 443, July 12,
1999; Magsalin v. National Organization of Working Men, 403 SCRA 199, May 9, 2003).
32
Asia World Recruitment, Inc. v. NLRC, 371 Phil. 745, August 24, 1999.
33
Vinta Maritime Co., Inc. v. NLRC, supra.
34
Pascua v. NLRC, supra; Nueva Ecija I Electric Cooperative, Inc. v. NLRC, 380 Phil. 44,
January 24, 2000.
35
Cruz v. NLRC, 381 Phil. 775, February 7, 2000 (cited in Asia Pacific Chartering (Phils.),
Inc. v. Farolan, 441 Phil. 776, December 4, 2002).
36
Labor Arbiter Joel S. Lustrias Decision, pp. 9-12; rollo, pp. 70-73. (Citations omitted)
37
PNCC v. NLRC, 342 Phil. 769, August 11, 1997.

SUPREME COURT
Manila
SECOND DIVISION
G.R. Nos. 191288 & 191304
March 7, 2012
MANILA ELECTRIC COMPANY, Petitioner,

vs.
JAN CARLO GALA, Respondent.
DECISION
BRION, J.:
We resolve the petition for review on certiorari,1 seeking to annul the decision2 dated August
25, 2009 and the resolution3 dated February 10, 2010 of the Court of Appeals (CA) rendered in
CA-G.R. SP. Nos. 105943 and 106021.
The Antecedents
The facts are summarized below.
On March 2, 2006, respondent Jan Carlo Gala commenced employment with the petitioner
Meralco Electric Company (Meralco) as a probationary lineman. He was assigned at Meralcos
Valenzuela Sector. He initially served as member of the crew of Meralcos Truck No. 1823
supervised by Foreman Narciso Matis. After one month, he joined the crew of Truck No. 1837
under the supervision of Foreman Raymundo Zuiga, Sr.
On July 27, 2006, barely four months on the job, Gala was dismissed for alleged complicity in
pilferages of Meralcos electrical supplies, particularly, for the incident which took place on May
25, 2006. On that day, Gala and other Meralco workers were instructed to replace a worn-out
electrical pole at the Pacheco Subdivision in Valenzuela City. Gala and the other linemen were
directed to join Truck No. 1891, under the supervision of Foreman Nemecio Hipolito.
When they arrived at the worksite, Gala and the other workers saw that Truck No. 1837,
supervised by Zuiga, was already there. The linemen of Truck No. 1837 were already at work.
Gala and the other members of the crew of Truck No. 1891 were instructed to help in the
digging of a hole for the pole to be installed.
While the Meralco crew was at work, one Noberto "Bing" Llanes, a non-Meralco employee,
arrived. He appeared to be known to the Meralco foremen as they were seen conversing with
him. Llanes boarded the trucks, without being stopped, and took out what were later found as
electrical supplies. Aside from Gala, the foremen and the other linemen who were at the
worksite when the pilferage happened were later charged with misconduct and dishonesty for
their involvement in the incident.
Unknown to Gala and the rest of the crew, a Meralco surveillance task force was monitoring
their activities and recording everything with a Sony video camera. The task force was
composed of Joseph Aguilar, Ariel Dola and Frederick Riano.
Meralco called for an investigation of the incident and asked Gala to explain. Gala denied
involvement in the pilferage, contending that even if his superiors might have committed a
wrongdoing, he had no participation in what they did. He claimed that: (1) he was at some
distance away from the trucks when the pilferage happened; (2) he did not have an inkling that
an illegal activity was taking place since his supervisors were conversing with Llanes, giving him
the impression that they knew him; (3) he did not call the attention of his superiors because he
was not in a position to do so as he was a mere lineman; and (4) he was just following
instructions in connection with his work and had no control in the disposition of company
supplies and materials. He maintained that his mere presence at the scene of the incident was
not sufficient to hold him liable as a conspirator.
Despite Galas explanation, Meralco proceeded with the investigation and eventually
terminated his employment on July 27, 2006.4 Gala responded by filing an illegal dismissal
complaint against Meralco.5
The Compulsory Arbitration Rulings
In a decision dated September 7, 2007,6 Labor Arbiter Teresita D. Castillon-Lora dismissed the
complaint for lack of merit. She held that Galas participation in the pilferage of Meralcos
property rendered him unqualified to become a regular employee.
Gala appealed to the National Labor Relations Commission (NLRC). In its decision of May 2,
2008,7 the NLRC reversed the labor arbiters ruling. It found that Gala had been illegally
dismissed, since there was "no concrete showing of complicity with the alleged
misconduct/dishonesty[.]"8 The NLRC, however, ruled out Galas reinstatement, stating that his
tenure lasted only up to the end of his probationary period. It awarded him backwages and
attorneys fees.
Both parties moved for partial reconsideration; Gala, on the ground that he should have been
reinstated with full backwages, damages and interests; and Meralco, on the ground that the
NLRC erred in finding that Gala had been illegally dismissed. The NLRC denied the motions.
Relying on the same grounds, Gala and Meralco elevated the case to the CA through a petition
for certiorari under Rule 65 of the Rules of Court.
The CA Decision
In its decision of August 25, 2009,9 the CA denied Meralcos petition for lack of merit and
partially granted Galas petition. It concurred with the NLRC that Gala had been illegally
dismissed, a ruling that was supported by the evidence. It opined that nothing in the records
show Galas knowledge of or complicity in the pilferage. It found insufficient the joint
affidavit10 of the members of Meralcos task force testifying that Gala and two other linemen
knew Llanes.
The CA modified the NLRC decision of May 2, 200811 and ordered Galas reinstatement with full
backwages and other benefits. The CA also denied Meralcos motion for reconsideration. Hence,
the present petition for review on certiorari.12
The Petition
The petition is anchored on the ground that the CA seriously erred and gravely abused its
discretion in 1. ruling that Gala was illegally dismissed; and
2. directing Galas reinstatement despite his probationary status.
Meralco faults the CA for not giving credit to its witnesses Aguilar, Dola and Riano, and instead
treated their joint affidavit (Samasamang Sinumpaang Salaysay) as inconclusive to establish
Galas participation in the pilferage of company property on May 25, 2006. It submits that the
affidavit of the three Meralco employees disproves the CAs findings, considering that their
statements were based on their first-hand account of the incident during their day-long
surveillance on May 25, 2006. It points out that the three Meralco employees categorically
stated that all of the companys foremen and linemen present at that time, including Gala, had
knowledge of the pilferage that was happening at the time. According to Aguilar, Dola and
Riano, the trucks crew, including Gala, was familiar with Llanes who acted as if his presence
particularly, that of freely collecting materials and supplies was a regular occurrence during
their operations.
Meralco maintains that Gala himself admitted in his own testimony13 that he had been familiar
with Llanes even before the May 25, 2006 incident where he saw Zuiga, the foreman of Truck
No. 1837, conversing with Llanes. Meralco submits that Galas admission, instead of
demonstrating "his feigned innocence,"14 even highlights his guilt, especially considering that by
design, his misfeasance assisted Llanes in pilfering company property; Gala neither intervened
to stop Llanes, nor did he report the incident to the Meralco management.
Meralco posits that because of his undeniable knowledge of, if not participation in, the pilferage
activities done by their group, the company was well within its right in terminating his
employment as a probationary employee for his failure to meet the basic standards for his
regularization. The standards, it points out, were duly explained to him and outlined in his
probationary employment contract. For this reason and due to the expiration of Galas
probationary employment, the CA should not have ordered his reinstatement with full
backwages.
Finally, Meralco argues that even if Gala was illegally dismissed, he was entitled to just his
backwages for the unexpired portion of his employment contract with the company.
Galas Case
By way of his Comment (to the Petition) dated September 2, 2010,15 Gala asks for a denial of the
petition because of (1) serious and fatal infirmities in the petition; (2) unreliable statements of
Meralcos witnesses; and (3) clear lack of basis to support the termination of his employment.
Gala contends, in regard to the alleged procedural defects of the petition, that the "Verification
and Certification," "Secretarys Certificate" and "Affidavit of Service" do not contain the details
of the Community or Residence Tax Certificates of the affiants, in violation of Section 6 of
Commonwealth Act No. 465 (an Act to Impose a Residence Tax). Additionally, the lawyers who
signed the petition failed to indicate their updated Mandatory Continuing Legal Education
(MCLE) certificate numbers, in violation of the rules.
With respect to the merits of the case, Gala bewails Meralcos reliance on the joint affidavit16 of
Aguilar, Dola and Riano not only because it was presented for the first time on appeal to the CA,
but also because it was a mere afterthought. He explains that Aguilar and Dola were the very
same persons who executed a much earlier sworn statement or transcription dated July 7, 2006.
This earlier statement did not even mention Gala, but the later joint affidavit "splashes GALAs
name in a desperate attempt to link him to an imagined wrongdoing."17
Zeroing in on what he believes as lack of credibility of Meralcos evidence, Gala posits that there
is clear lack of basis for the termination of his employment. Thus, he wonders why Meralco did
not present as evidence the video footage of the entire incident which it claims exists. He
suspects that the footage was adverse to Meralcos position in the case.
Gala adds that the allegations of a "reported pilferage" or "rampant theft or pilferage"
committed prior to May 25, 2006 by his superiors were not established, for even the labor
arbiter did not make a finding on the foremens involvement in the incident. He stresses that the
same is true in his case as there is no proof of his participation in the pilferage.
Gala further submits that even if he saw Llanes on May 25, 2006 at about the time of the
occurrence of the pilferage near or around the Meralco trucks, he was not aware that a
wrongdoing was being committed or was about to be committed. He points out at that precise
time, his superiors were much nearer to the trucks than he as he was among the crew digging a
hole. He presumed at the time that his own superiors, being the more senior employees, could
be trusted to protect company property.
Finally, Gala posits that his reinstatement with full backwages is but a consequence of the
illegality of his dismissal. He argues that even if he was on probation, he is entitled to security of
tenure. Citing Philippine Manpower Services, Inc. v. NLRC,18 he claims that in the absence of any
justification for the termination of his probationary employment, he is entitled to continued
employment even beyond the probationary period.
The Courts Ruling
The procedural issue
Gala would want the petition to be dismissed outright on procedural grounds, claiming that the
"Verification and Certification," "Secretarys Certificate" and "Affidavit of Service" accompanying
the petition do not contain the details of the Community Tax Certificates of the affiants, and
that the lawyers who signed the petition failed to indicate their updated MCLE certificate
numbers, in violation of existing rules.
We stress at this point that it is the spirit and intention of labor legislation that the NLRC and the
labor arbiters shall use every reasonable means to ascertain the facts in each case speedily and
objectively, without regard to technicalities of law or procedure, provided due process is duly
observed.19 In keeping with this policy and in the interest of substantial justice, we deem it
proper to give due course to the petition, especially in view of the conflict between the findings
of the labor arbiter, on the one hand, and the NLRC and the CA, on the other. As we said in S.S.
Ventures International, Inc. v. S.S. Ventures Labor Union,20 "the application of technical rules of
procedure in labor cases may be relaxed to serve the demands of substantial justice."
The substantive aspect of the case
We find merit in the petition.
Contrary to the conclusions of the CA and the NLRC, there is substantial evidence supporting
Meralcos position that Gala had become unfit to continue his employment with the company.
Gala was found, after an administrative investigation, to have failed to meet the standards
expected of him to become a regular employee and this failure was mainly due to his
"undeniable knowledge, if not participation, in the pilferage activities done by their group, all to
the prejudice of the Companys interests."21
Gala insists that he cannot be sanctioned for the theft of company property on May 25, 2006.
He maintains that he had no direct participation in the incident and that he was not aware that
an illegal activity was going on as he was at some distance from the trucks when the alleged
theft was being committed. He adds that he did not call the attention of the foremen because
he was a mere lineman and he was focused on what he was doing at the time. He argues that in
any event, his mere presence in the area was not enough to make him a conspirator in the
commission of the pilferage.
Gala misses the point. He forgets that as a probationary employee, his overall job performance
and his behavior were being monitored and measured in accordance with the standards (i.e.,
the terms and conditions) laid down in his probationary employment agreement.22 Under
paragraph 8 of the agreement, he was subject to strict compliance with, and non-violation of
the Company Code on Employee Discipline, Safety Code, rules and regulations and existing
policies. Par. 10 required him to observe at all times the highest degree of transparency,
selflessness and integrity in the performance of his duties and responsibilities, free from any
form of conflict or contradicting with his own personal interest.
The evidence on record established Galas presence in the worksite where the pilferage of
company property happened.1wphi1 It also established that it was not only on May 25, 2006
that Llanes, the pilferer, had been seen during a Meralco operation. He had been previously
noticed by Meralco employees, including Gala (based on his admission),23 in past operations. If
Gala had seen Llanes in earlier projects or operations of the company, it is incredulous for him
to say that he did not know why Llanes was there or what Zuiga and Llanes were talking about.
To our mind, the Meralco crew (the foremen and the linemen) allowed or could have even
asked Llanes to be there during their operations for one and only purpose to serve as their
conduit for pilfered company supplies to be sold to ready buyers outside Meralco worksites.
The familiarity of the Meralco crew with Llanes, a non-Meralco employee who had been present
in Meralco field operations, does not contradict at all but rather support the Meralco
submission that there had been "reported pilferage" or "rampant theft," by the crew, of
company property even before May 25, 2006. Gala downplays this particular point with the
argument that the labor arbiter made no such finding as she merely assumed it to be a
fact,24 her only "basis" being the statement that "may natanggap na balita na ang mga crew na
ito ay palagiang hindi nagsasauli ng mga electric facilities na kanilang ginagamit o pinapalitan
bagkus ito ay ibinenta palabas."25Gala impugns the statement as hearsay. He also wonders why
Meralcos supposed "video footage" of the incident on May 25, 2006 was never presented in
evidence.
The established fact that Llanes, a non-Meralco employee, was often seen during company
operations, conversing with the foremen, for reason or reasons connected with the ongoing
company operations, gives rise to the question: what was he doing there? Apparently, he had
been visiting Meralco worksites, at least in the Valenzuela Sector, not simply to socialize, but to
do something else. As testified to by witnesses, he was picking up unused supplies and materials
that were not returned to the company. From these factual premises, it is not hard to conclude
that this activity was for the mutual pecuniary benefit of himself and the crew who tolerated the
practice. For one working at the scene who had seen or who had shown familiarity with Llanes
(a non-Meralco employee), not to have known the reason for his presence is to disregard the
obvious, or at least the very suspicious.
We consider, too, and we find credible the company submission that the Meralco crew who
worked at the Pacheco Subdivision in Valenzuela City on May 25, 2006 had not been returning
unused supplies and materials, to the prejudice of the company. From all these, the allegedly
hearsay evidence that is not competent in judicial proceedings (as noted above), takes on
special meaning and relevance.
With respect to the video footage of the May 25, 2006 incident, Gala himself admitted that he
viewed the tape during the administrative investigation, particularly in connection with the
accusation against him that he allowed Llanes (binatilyong may kapansanan sa bibig) to board
the Meralco trucks.26 The choice of evidence belongs to a party and the mere fact that the video
was shown to Gala indicates that the video was not an evidence that Meralco was trying to
suppress. Gala could have, if he had wanted to, served a subpoena for the production of the
video footage as evidence. The fact that he did not does not strengthen his case nor weaken the
case of Meralco.
On the whole, the totality of the circumstances obtaining in the case convinces us that Gala
could not but have knowledge of the pilferage of company electrical supplies on May 25, 2006;
he was complicit in its commission, if not by direct participation, certainly, by his inaction while
it was being perpetrated and by not reporting the incident to company authorities. Thus, we
find substantial evidence to support the conclusion that Gala does not deserve to remain in
Meralcos employ as a regular employee. He violated his probationary employment agreement,
especially the requirement for him "to observe at all times the highest degree of transparency,
selflessness and integrity in the performance of their duties and responsibilities[.]"27 He failed to
qualify as a regular employee.28
For ignoring the evidence in this case, the NLRC committed grave abuse of discretion and, in
sustaining the NLRC, the CA committed a reversible error.
WHEREFORE, premises considered, the petition is GRANTED. The assailed decision and
resolution of the Court of Appeals are SET ASIDE. The complaint is DISMISSED for lack of merit.
SO ORDERED.
ARTURO D. BRION
Associate Justice
Footnotes
1
Rollo, pp. 10-44.
Id. at 52-64; penned by Associate Justice Ricardo R. Rosario, and concurred in by

Associate Justices Martin S. Villarama, Jr. and Magdangal M. de Leon.
3
Id. at 66-67.
Id. at 80.
Id. at 81-82.
Id. at 149-159.
Id. at 171-175.
Id. at 174.
Supra note 2.
10
Rollo, pp. 72-76.
11
Supra note 7.
12
Supra note 1.
13
Rollo, pp. 78-79.
14
Id. at 31.
15
Id. at 357-374.
16
Supra note 10.
17
Rollo, p. 360.
18
G.R. No. 98450, July 21, 1993, 224 SCRA 691.
19
LABOR CODE, Article 221.
20
G.R. No. 161690, July 23, 2008, 559 SCRA 435, 447 citing Fiel v. Kris Security Systems,
Inc., G.R. No. 155875, April 3, 2003, 400 SCRA 533, 536, and El Toro Security Agency, Inc.
v. NLRC, G.R. No. 114308, April 18, 1996, 256 SCRA 363, 366.
21
Supra note 1, at 34.
22
Rollo, pp. 68-71.
23
Supra note 13.
24
25
Ibid.
26
27
28
LABOR CODE, Article 281.

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 164518
January 25, 2006
INDUSTRIAL TIMBER CORPORATION, INDUSTRIAL PLYWOOD GROUP CORPORATION, TOMAS

TANGSOC, JR., LORENZO TANGSOC and TOMAS TAN, Petitioners
vs.
VIRGILIO ABABON, IGNACIO ABACAJEN, ANGELINA ABAY-ABAY, EDITH ABREA, SAMUEL
ABREA, BIENVENIDO ACILO, RODRIGO ACILO, VICTOR ACILO, ARTURO ADVINCULA,
GERTRUDES AMPARO, VIRGILIO ANTONIO, MILA ARQUITA, PRUDENCIO ARQUITA, ALBERT
ATON, WARLITA AUTIDA, ALICIA AWITAN, LEOPOLDO AYATON, ARTURO BALBOTEN, DANILO
BANATE, LOLITA BATAN, RAMIL BUTALON, CARMILITA CAINGLES, VICENTE CAHARIAN,
BENEDICTA CAJIPE, FELIPE CALLANO, ALFREDO CARILLO, NILA CARILLO, ALGER CORBETA,
GREGORIO DABALOS, TERESITA DABALOS, VENERANDO DALAUTA, RICARDO DANGCULOS,
MONTANO DAPROSA, LUISITO DIAZ, FELIZARDO DUMULAO, EDITHA DUMANON, ALFREDO
FAELNAR, RAUL FORTUN, MAXIMO GALLA, ANGELES GALUPO, PERFECTO GAMBE, VERGINITA
GANGCA, RUPERTO GORGONIO, ROMEO HERRERO, SERGIO HORO-HORO, FRANCISCO IBARRA,
ABRAHAM JALE, DANDY LABITAD, ANTONINA LAMBANG, ERNESTO LAUSA, VICTORIA LOOD,
NEMESIO LOPE, JR., ESCARLITO MADLOS, MARCOS MAKINANO, REMEGIO MAKINANO,
VICENTE MAKINANO, REYNALDO MASUHAY, HELEN MARATAS, ELIZABETH MENDOZA,
GUILBERTA MONTEROSO, GILDA NAVALTA, PILAR NAVARRO, SIMPORIANO NUEZ, JR.,
ELISEO ORONGAN, ARMANDO OROPA, ASUNCION OROPA, JOSE EDWIN OROPA, BALDEMAR
PAGALAN, BARTOLOME PAGALAN, DAMASO PALOMA, MANALO PLAZA, JEREMIAS PELAEZ,
FRANCISCO PICARDAL, HERMINIA PUBLICO, ROMULO QUINTOS, FIDEL QUITA, FELICIANO
RANADA, RODOLFO RARU, LEAN CILDRIC RODRIGUEZ, SAMUEL SAROMINES, NATIVIDAD
SIGNAR, CHERRIE SON, SAMUEL TAGUPA, VICTOR TAGUPA, BRIGIDA TABANAO, PEDRO
TABANAO, ROBERTO TABANAO, MARIA TAN, RONNIE TAN, TOLENTINO TEE, ROGELIO
TAMADA, MINDA TUMAOB and ROBERTO TUTOR, Respondents.
x--------------------------------------x
G.R. No. 164965
January 25, 2006

GERTRUDES AMPARO, MILA ARQUITA, VIRGILIO ANTONIO, PRUDENCIO ARQUITA, ALBERT
ATON, WARLITA AUDITA, ALICIA AWITAN, LEOPOLDO AYATON, ARTURO BALBOTEN, DANILO
BANATE, LOLITA BATAN, RAMIL BUTALON, CARMELITA CAINGLES, VICENTE CAHARIAN,
BENEDICTA CAJIPE, FELIPE CALLANO, ALFREDO CARILLO, NILA CARILLO, ALGIER CORBETA,
FAELNAR, RAUL FORTUN, MAXIMO GALLA, ANGELES GALUPO, PERFECTO GAMBE, VIRGINITA
GANGCA, RUPERTO GORGONIO, ROMEO HERRERO, SERGIO HOR-HORO, FRANCISCO IBARRA,

VICENTE MAKINANO, REYNALDO MAHUSAY, HELEN MARATAS, ELIZABETH MENDOZA,
TAMADA, MINDA TUMAOB, and ROBERTO TUTOR, Petitioners,
vs.
THE HONORABLE COURT OF APPEALS, INDUSTRIAL TIMBER CORPORATION, INDUSTRIAL
PLYWOOD GROUP CORPORATION, TOMAS TANGSOC, JR., LORENZO TANGSOC and TOMAS
TAN, Respondents.
DECISION
YNARES-SANTIAGO, J.:
Before us are two petitions for review under Rule 45 of the Rules of Court. G.R. No. 164518
assails the October 21, 2002 Decision1 of the Court of Appeals, in CA-GR. SP No. 51966, which
set aside the May 24, 1995 Decision2 of the National Labor Relations Commission (NLRC), as well
as the July 16, 2004 Resolution3 denying its motion for reconsideration. G.R. No. 164965 assails
only the July 16, 2004 Resolution of the Court of Appeals which denied their partial motion for
reconsideration. These cases were consolidated because they arose out of the same facts set
forth below.
Industrial Plywood Group Corporation (IPGC) is the owner of a plywood plant located at Agusan,
Pequeo, Butuan City, leased to Industrial Timber Corporation (ITC) on August 30, 1985 for a
period of five years.4 Thereafter, ITC commenced operation of the plywood plant and hired 387
workers.
On March 16, 1990, ITC notified the Department of Labor and Employment (DOLE) and its
workers that effective March 19, 1990 it will undergo a "no plant operation" due to lack of raw
materials and will resume only after it can secure logs for milling.5
Meanwhile, IPGC notified ITC of the expiration of the lease contract in August 1990 and its
intention not to renew the same.
On June 26, 1990, ITC notified the DOLE and its workers of the plants shutdown due to the nonrenewal of anti-pollution permit that expired in April 1990.6 This fact and the alleged lack of logs
for milling constrained ITC to lay off all its workers until further notice. This was followed by a
final notice of closure or cessation of business operations on August 17, 1990 with an advice for
all the workers to collect the benefits due them under the law and CBA.7
On October 15, 1990, IPGC took over the plywood plant after it was issued a Wood Processing
Plant Permit No. WPR-1004-081791-042,8 which included the anti-pollution permit, by the
Department of Environment and Natural Resources (DENR) coincidentally on the same day the
ITC ceased operation of the plant.
This prompted Virgilio Ababon, et al. to file a complaint against ITC and IPGC for illegal dismissal,
unfair labor practice and damages. They alleged, among others, that the cessation of ITCs
operation was intended to bust the union and that both corporations are one and the same
entity being controlled by one owner.
On January 20, 1992, after requiring both parties to submit their respective position papers,
Labor Arbiter Irving A. Petilla rendered a decision which refused to pierce the veil of corporate
fiction for lack of evidence to prove that it was used to perpetuate fraud or illegal act; upheld
the validity of the closure; and ordered ITC to pay separation pay of month for every year of
service. The dispositive portion of the decision reads:
PREMISES CONSIDERED, judgment is hereby rendered ordering respondent Industrial Timber
Corporation (ITC) to pay herein ninety-seven individual complainants their separation pay at the
rate of one-half (1/2) months pay for every year of service, a fraction of at least six (6) months
to be considered as one whole year, reckoned until August 1990.
All other claims of complainants are hereby ordered DISMISSED for want of merit.
SO ORDERED.9
Ababon, et al. appealed to the NLRC. On May 20, 1993, the NLRC set aside the decision of the
Labor Arbiter and ordered the reinstatement of the employees to their former positions, and
the payment of full back wages, damages and attorneys fees.10
ITC and IPGC filed a Motion for Reconsideration through JRS, a private courier, on June 24,
1993.11 However, it was dismissed for being filed out of time having been filed only on the date
of actual receipt by the NLRC on June 29, 1993, three days after the last day of the reglamentary
period.12 Thus, they filed a Petition for Relief from Resolution,13 which was treated as a second
motion for reconsideration by the NLRC and dismissed for lack of merit in a Resolution dated
September 29, 1994.14
From said dismissal, petitioners filed a Notice of Appeal with the Supreme
Court.15 Subsequently, they filed a Motion for Reconsideration/Second Petition for Relief with
the NLRC.16
On December 7, 1994, the Supreme Court dismissed the Notice of Appeal for being a wrong
mode of appeal from the NLRC decision.17 On the other hand, the NLRC granted the Second
Petition for Relief and set aside all its prior decision and resolutions. The dispositive portion of
the May 24, 1995 decision reads:
WHEREFORE, the decision of this Commission dated May 10, 1993 and its subsequent
resolutions dated June 22, 1994 and September 29, 1994 are Set Aside and Vacated.
Accordingly, the appeal of complainants is Dismissed for lack of merit and the decision of the
Labor Arbiter dated January 20, 1992 is Reinstated and hereby Affirmed.
SO ORDERED.18
On October 2, 1995, Virgilio Ababon, et al. filed a Petition for Certiorari with the Supreme Court,
which was docketed as G.R. No. 121977.19 However, pursuant to our ruling in St. Martins
Funeral Home v. NLRC, we referred the petition to the Court of Appeals for appropriate action
and disposition.20
On October 21, 2002, the Court of Appeals rendered a decision setting aside the May 24, 1995
decision of the NLRC and reinstated its May 20, 1993 decision and September 29, 1993
resolution, thus:
WHEREFORE, the petition is GRANTED. The decision dated May 24, 1995 of the National Labor
Relations Commission is ANNULLED and SET ASIDE, with the result that its decision dated May
20, 1993 and resolution dated September 29, 1994 are REINSTATED.
SO ORDERED.21
Both parties filed their respective motions for reconsideration which were denied, hence, the
present consolidated petitions for review based on the following assigned errors:
In G.R. No. 164518
THE COURT OF APPEALS ERRED IN LIBERALLY APPLYING THE RULES OF PROCEDURE WITH
RESPECT TO RESPONDENTS BUT BEING RIGID IN ITS APPLICATION AS REGARDS PETITIONERS.22
In G.R. No. 164965
WITH DUE RESPECT, THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR WHEN IT
REFUSED TO APPLY SECTION 279 OF THE LABOR CODE AS AMENDED BY RA 6715 TO MODIFY
THE DECISION OF 20 MAY 1993 WITH RESPECT TO BACKWAGES FOR PETITIONERS.23
ITC and IPGC contend that the Court of Appeals erred in reversing the May 24, 1995 decision of
the NLRC since its May 20, 1993 decision had become immutable for their failure to file motion
for reconsideration within the reglementary period. While they admit filing their motion for
reconsideration out of time due to excusable negligence of their counsels secretary, however,
they advance that the Court of Appeals should have relaxed the rules of technicality in the
paramount interest of justice, as it had done so in favor of the employees, and ruled on the
merits of the case; after all, the delay was just three days.
Ordinarily, once a judgment has become final and executory, it can no longer be disturbed,
altered or modified. However, this rule admits of exceptions in cases of special and exceptional
nature as we held in Industrial Timber Corporation v. National Labor Relations Commission:24
It is true that after a judgment has become final and executory, it can no longer be modified or
otherwise disturbed. However, this principle admits of exceptions, as where facts and
circumstances transpire which render its execution impossible or unjust and it therefore
becomes necessary, in the interest of justice, to direct its modification in order to harmonize
the disposition with the prevailing circumstances.
A careful scrutiny of the facts and circumstances of these consolidated cases warrants liberality
in the application of technical rules and procedure. We agree with the NLRC that substantial
justice is best served by allowing the petition for relief despite procedural defect of filing the
motion for reconsideration three days late, for to rule otherwise, a greater injustice would be
done to ITC by ordering it to reinstate the employees to their former positions that no longer
exist due to valid and legitimate cessation of business and pay huge judgment award.25
Moreover, under Article 218 (c) of the Labor Code, the NLRC may, in the exercise of its appellate
powers, correct, amend, or waive any error, defect or irregularity whether in substance or in
form. Further, Article 221 of the same code provides that in any proceeding before the
Commission or any of the Labor Arbiters, the rules of evidence prevailing in courts of law or
equity shall not be controlling and it is the spirit and intention of this Code that the Commission
and its members and the Labor Arbiters shall use every and all reasonable means to ascertain
the facts in each case speedily and objectively and without regard to technicalities of law or
procedure, all in the interest of due process.26
Also, the rule under Section 14 of Rule VII of the New Rules of Procedure of the NLRC that
a motion for reconsideration of any order, resolution or decision of the Commission shall not be
entertained except when based on palpable or patent errors, provided that the motion is under
oath and filed within 10 calendar days from receipt of the order, resolution or decision should
not be interpreted as to sacrifice substantial justice to technicality. It should be borne in mind
that the real purpose behind the limitation of the period is to forestall or avoid an unreasonable
delay in the administration of justice, from which the NLRC absolved ITC and IPGC because the
filing of their motion for reconsideration three days later than the prescribed period was due to
excusable negligence. Indeed, the "Court has the power to except a particular case from the
operation of the rule whenever the purposes of justice requires it because what should guide
judicial action is that a party is given the fullest opportunity to establish the merits of his action
or defense rather than for him to lose life, honor, or property on mere technicalities."27
We now come to the main issues of whether Ababon, et al. were illegally dismissed due to the
closure of ITCs business; and whether they are entitled to separation pay, backwages, and other
monetary awards.
Work is a necessity that has economic significance deserving legal protection. The social justice
and protection to labor provisions in the Constitution dictate so. On the other hand, employers
are also accorded rights and privileges to assure their self-determination and independence, and
reasonable return of capital. This mass of privileges comprises the so-called management
prerogatives. Although they may be broad and unlimited in scope, the State has the right to
determine whether an employer's privilege is exercised in a manner that complies with the legal
requirements and does not offend the protected rights of labor. One of the rights accorded an
employer is the right to close an establishment or undertaking.28
The right to close the operation of an establishment or undertaking is one of the authorized
causes in terminating employment of workers, the only limitation being that the closure must
not be for the purpose of circumventing the provisions on termination of employment

embodied in the Labor Code.
Article 283 of the Labor Code provides:
ART. 283. Closure of establishment and reduction of personnel. The employer may also
terminate the employment of any employee due to the installation of labor saving devices,
redundancy, retrenchment to prevent losses or the closing or cessation of operation of the
establishment or undertaking unless the closing is for the purpose of circumventing the
provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and
Employment at least one (1) month before the intended date thereof. In case of termination
due to the installation of labor saving devices or redundancy, the worker affected thereby shall
be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1)
month pay for every year of service, whichever is higher.1awphi1.net In case of retrenchment to
prevent losses and in cases of closures or cessation of operations of establishment or
undertaking not due to serious business losses or financial reverses, the separation pay shall be
equivalent to one (1) month pay or to at least one-half (1/2) month pay for every year of service,
whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year.
A reading of the foregoing law shows that a partial or total closure or cessation of operations of
establishment or undertaking may either be due to serious business losses or financial reverses
or otherwise. Under the first kind, the employer must sufficiently and convincingly prove its
allegation of substantial losses,29 while under the second kind, the employer can lawfully close
shop anytime30 as long as cessation of or withdrawal from business operations was bona fide in
character and not impelled by a motive to defeat or circumvent the tenurial rights of
employees,31 and as long as he pays his employees their termination pay in the amount
corresponding to their length of service.32 Just as no law forces anyone to go into business, no
law can compel anybody to continue the same. It would be stretching the intent and spirit of the
law if a court interferes with management's prerogative to close or cease its business operations
just because the business is not suffering from any loss or because of the desire to provide the
workers continued employment.33
In sum, under Article 283 of the Labor Code, three requirements are necessary for a valid
cessation of business operations: (a) service of a written notice to the employees and to the
DOLE at least one month before the intended date thereof; (b) the cessation of business must
be bona fide in character; and (c) payment to the employees of termination pay amounting to
one month pay or at least one-half month pay for every year of service, whichever is higher.
In these consolidated cases, we find that ITCs closure or cessation of business was done in good
faith and for valid reasons.
The records reveal that the decision to permanently close business operations was arrived at
after a suspension of operation for several months precipitated by lack of raw materials used for
milling operations, the expiration of the anti-pollution permit in April 1990, and the termination
of the lease contract with IPGC in August 1990 over the plywood plant at Agusan, Pequeo,
Butuan City. We quote with approval the observation of the Labor Arbiter:
As borne out from the records, respondent ITC actually underwent no plant operation since 19
March 1990 due to lack of log supply. This fact is admitted by complainants (Minutes of hearing,
28 October 1991). Since then several subsequent incidents prevented respondent ITC to resume
its business operations e.g. expiration and non-renewal of the wood processing plant permit,
anti-pollution permit, and the lease contract on the plywood plant. Without the raw materials
respondent ITC has nothing to produce. Without the permits it cannot lawfully operate the plant.
And without the contract of lease respondent ITC has no option but to cease operation and turn
over the plant to the lessor.34 (Emphasis supplied)
Moreover, the lack of raw materials used for milling operations was affirmed in Industrial
Timber Corporation v. National Labor Relations Commission35 as one of the reasons for the valid
closure of ITCs Butuan Logs Plant in 1989. In said case, we upheld the management prerogative
to close the plant as the only remedy available in order to prevent imminent heavy losses on
account of high production costs, erratic supply of raw materials, depressed prices and poor
market conditions for its wood products.
In Shoppers Gain Supermarket v. National Labor Relations Commission,36 we held that the nonrenewal of petitioner corporations lease contract and its consequent closure and cessation of
operations may be considered an event beyond petitioners control, in the nature of a
force majeure situation. As such, it amounts to an authorized cause for termination of the
private respondents.
Having established that ITCs closure of the plywood plant was done in good faith and that it was
due to causes beyond its control, the conclusion is inevitable that said closure is valid.
Consequently, Ababon, et al. could not have been illegally dismissed to be entitled to full
backwages. Thus, we find it no longer necessary to discuss the issue regarding the computation
of their backwages. However, they are entitled to separation pay equivalent to one month pay
or at least one-half month pay for every year of service, whichever is higher.
Although the closure was done in good faith and for valid reasons, we find that ITC did not
comply with the notice requirement. While an employer is under no obligation to conduct
hearings before effecting termination of employment due to authorized cause,37 however, the
law requires that it must notify the DOLE and its employees at least one month before the
intended date of closure.
In the case at bar, ITC notified its employees and the DOLE of the no plant operation on March
16, 1990 due to lack of raw materials. This was followed by a shut down notice dated June 26,
1990 due to the expiration of the anti-pollution permit. However, this shutdown was only
temporary as ITC assured its employees that they could return to work once the renewal is
acted upon by the DENR. On August 17, 1990, the ITC sent its employees a final notice of closure
or cessation of business operations to take effect on the same day it was released. We find that
this falls short of the notice requirement for termination of employment due to authorized
cause considering that the DOLE was not furnished and the notice should have been furnished
both the employees and the DOLE at least one month before the intended date of
closure.1awphi1.net
In Ariola v. Philex Mining Corporation,38 we held:
In Agabon v. National Labor Relations Commission and Jaka Food Processing Corporation v.
Pacot, the Court sustained the dismissals for just cause under Article 282 and for authorized
cause under Article 283 of the Labor Code, respectively, despite non-compliance with the
statutory requirement of notice and hearing. The grounds for the dismissals in those cases,
namely, neglect of duty and retrenchment, remained valid because the non-compliance with the
notice and hearing requirement in the Labor Code did not undermine the validity of the grounds
for the dismissals. Indeed, to invalidate a dismissal merely because of a procedural defect
creates absurdity and runs counter to public interest. We explained in Agabon:
The unfairness of declaring illegal or ineffectual dismissals for valid or authorized causes but not
complying with statutory due process may have far-reaching consequences.
This would encourage frivolous suits, where even the most notorious violators of company
policy are rewarded by invoking due process. This also creates absurd situations where there is a
just or authorized cause for dismissal but a procedural infirmity invalidates the termination. Let
us take for example a case where the employee is caught stealing or threatens the lives of his
co-employees or has become a criminal, who has fled and cannot be found, or where serious
business losses demand that operations be ceased in less than a month. Invalidating the
dismissal would not serve public interest. It could also discourage investments that can generate
employment in the local economy.
Where the dismissal is based on an authorized cause under Article 283 of the Labor Code but
the employer failed to comply with the notice requirement, the sanction should be stiff as the
dismissal process was initiated by the employers exercise of his management prerogative, as
opposed to a dismissal based on a just cause under Article 282 with the same procedural
infirmity where the sanction to be imposed upon the employer should be tempered as the
dismissal process was, in effect, initiated by an act imputable to the employee.39
In light of the factual circumstances of the cases at bar, we deem it wise and reasonable to
award P50,000.00 to each employee as nominal damages.
WHEREFORE, in view of the foregoing, the October 21, 2002 Decision of the Court of Appeals in
CA-GR. SP No. 51966, which set aside the May 24, 1995 Decision of the NLRC, as well as the July
16, 2004 Resolution denying ITCs motion for reconsideration, are hereby REVERSED. The May
24, 1995 Decision of the NLRC reinstating the decision of the Labor Arbiter finding the closure or
cessation of ITCs business valid, is AFFIRMED with the MODIFICATIONS that ITC is ordered to
pay separation pay equivalent to one month pay or to at least one-half month pay for every year
of service, whichever is higher, and P50,000.00 as nominal damages to each employee.
SO ORDERED.
CONSUELO YNARES-SANTIAGO
Associate Justice
Footnotes
Rollo (G.R. No. 164518), pp. 41-52. Penned by Associate Justice Edgardo P. Cruz and
concurred in by Associate Justices Oswaldo D. Agcaoili and Amelita G. Tolentino.
2
Id. at 85-101. Penned by Commissioner Musib M. Buat and concurred in by Leon G.

Gonzaga, Jr. Commissioner Oscar N. Abella, dissented.
3
Id. at 53-54.
Id. at 121.
Id. at 122.
Id. at 123.
Id. at 124.
Rollo (G.R. No. 164518), p. 68.
10
Id. at 83-84. Penned by Commissioner Oscar N. Abella and concurred in by

Commissioners Leon G. Gonzaga, Jr. and Musib M. Buat.
11
12
Id. at 223-225.
13
Id. at 227-235.
14
Id. at 236-240.
15
Id. at 256-259, docketed as G.R. No. 117825.
16
Id. at 241.
17
Id. at 260.
18
Rollo (G.R. No. 164518), p. 100.
19
CA rollo, pp. 4-26.
20
Id. at 610.
21
Rollo (G.R. No. 164518), p. 52.
22
Id. at 21.
23
Rollo (G.R. No. 164965), p. 22.
24
G.R. No. 111985, June 30, 1994, 233 SCRA 597, 601.
25
Rollo (G.R. No. 164518), p. 93.
26
See Mayon Hotel & Restaurant v. Adana, G.R. No. 157634, May 16, 2005, 458 SCRA
609, 628.
27
Philippine Commercial Industrial Bank v. Cabrera, G.R. No. 160368, March 31, 2005,
454 SCRA 792, 801.
28
Capitol Medical Center, Inc. v. Meris, G.R. No. 155098, September 16, 2005, SC ELibrary.
29
Alabang Country Club, Inc. v. National Labor Relations Commission, G.R. No. 157611,
August 9, 2005,SC E-Library.
30
Id.
31
Danzas Intercontinental, Inc. v. Daguman, G.R. No. 154368, April 15, 2005, 456 SCRA
382, 393.
32
Capitol Medical Center, Inc. v. Meris, supra note 28.
33
Alabang Country Club, Inc. v. NLRC, supra note 29.
34
Rollo (G.R. No. 164518), p. 64.
35
339 Phil. 395, 401, 404-405 (1997).
36
328 Phil. 756, 771 (1996).
37
See Wiltshire File Co., Inc. v. National Labor Relations Commission, G.R. No. 82249,
February 7, 1991, 193 SCRA 665, 676.
38
G.R. No. 147756, August 9, 2005, SC E-Library.
39
San Miguel Corporation v. Aballa, G.R. No. 149011, June 28, 2005, 461 SCRA 392, 431.

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 164518
March 30, 2006
INDUSTRIAL TIMBER CORPORATION, INDUSTRIAL PLYWOOD GROUP CORPORATION, TOMAS

TANGSOC, JR., LORENZO TANGSOC and TOMAS TAN, Petitioners,
vs.
GERTRUDES AMPARO, VIRGILIO ANTONIO, MILA ARQUITA, PRUDENCIO ARQUITA, ALBERT
ATON, WARLITA AUTIDA, ALICIA AWITAN, LEOPOLDO AYATON, ARTURO BALBOTEN, DANILO
BANATE, LOLITA BATAN, RAMIL BUTALON, CARMILITA CAINGLES, VICENTE CAHARIAN,
BENEDICTA CAJIPE, FELIPE CALLANO, ALFREDO CARILLO, NILA CARILLO, ALGER CORBETA,
FAELNAR, RAUL FORTUN, MAXIMO GALLA, ANGELES GALUPO, PERFECTO GAMBE, VERGINITA
GANGCA, RUPERTO GORGONIO, ROMEO HERRERO, SERGIO HORO-HORO, FRANCISCO IBARRA,
VICENTE MAKINANO, REYNALDO MASUHAY, HELEN MARATAS, ELIZABETH MENDOZA,
TAMADA, MINDA TUMAOB and ROBERTO TUTOR, Respondents.
x----------------x
G.R. No. 164965
March 30, 2006

GERTRUDES AMPARO, MILA ARQUITA, VIRGILIO ANTONIO, PRUDENCIO ARQUITA, ALBERT
ATON, WARLITA AUDITA, ALICIA AWITAN, LEOPOLDO AYATON, ARTURO BALBOTEN, DANILO
BANATE, LOLITA BATAN, RAMIL BUTALON, CARMELITA CAINGLES, VICENTE CAHARIAN,
BENEDICTA CAJIPE, FELIPE CALLANO, ALFREDO CARILLO, NILA CARILLO, ALGIER CORBETA,
FAELNAR, RAUL FORTUN, MAXIMO GALLA, ANGELES GALUPO, PERFECTO GAMBE, VIRGINITA
GANGCA, RUPERTO GORGONIO, ROMEO HERRERO, SERGIO HOR-HORO, FRANCISCO IBARRA,

VICENTE MAKINANO, REYNALDO MAHUSAY, HELEN MARATAS, ELIZABETH MENDOZA,
TAMADA, MINDA TUMAOB, and ROBERTO TUTOR, Petitioners,
vs.
THE HONORABLE COURT OF APPEALS, INDUSTRIAL TIMBER CORPORATION, INDUSTRIAL
PLYWOOD GROUP CORPORATION, TOMAS TANGSOC, JR., LORENZO TANGSOC and TOMAS
TAN, Respondents.
RESOLUTION
On January 25, 2006, the Court rendered judgment disposing of the case as follows:
WHEREFORE, in view of the foregoing, the October 21, 2002 Decision of the Court of Appeals in
CA-G.R. SP No. 51966, which set aside the May 24, 1995 Decision of the NLRC, as well as the July
16, 2004 Resolution denying ITCs motion for reconsideration, are hereby REVERSED. The May
24, 1995 Decision of the NLRC reinstating the decision of the Labor Arbiter finding the closure or
cessation of ITCs business valid, is AFFIRMED with the MODIFICATIONS that ITC is ordered to
pay separation pay equivalent to one month pay or at least one-half month pay for every year of
service, whichever is higher, and P50,000.00 as nominal damages to each employee.
SO ORDERED.1
On March 14, 2006, respondents in G.R. No. 164518 who are also petitioners in G.R. No. 164965
filed a Motion for Reconsideration seeking to set aside the above-stated Decision and reinstate
the October 21, 2002 Decision of the Court of Appeals, with the modification that they be
awarded full backwages, with the additional award of P50,000.00 as nominal damages for each
worker.
They insist that the holding in International Timber Corporation v. National Labor Relations
Commission2 that the closure of ITCs Butuan Plant was valid should not have been applied in
the instant cases which pertain to ITCs Stanply Plant. They further claim that the findings by the
Labor Arbiter that there was a shortage of raw materials; that the wood processing plaint permit
has expired; that the lease contract with IPGC was terminated; and that ITC and IPGC were not
business conduits, were all debunked by the NLRC.
The arguments raised have been amply discussed; at any rate, they are inconsequential as to
affect the assailed Decision.
On the other hand, petitioners in G.R. No. 164518 who are also respondents in G.R. No. 164965
also filed a Motion for Partial Reconsideration seeking to delete or reduce the nominal damages
awarded to each employee, considering that since August 17, 1990 it had ceased operation of its
business and that the award involves a huge amount considering that there are 97 workers.3
While we ruled in this case that the sanction should be stiffer in a dismissal based on authorized
cause where the employer failed to comply with the notice requirement than a dismissal based
on just cause with the same procedural infirmity, however, in instances where the execution of
a decision becomes impossible, unjust, or too burdensome, modification of the decision
becomes necessary in order to harmonize the disposition with the prevailing circumstances.
In the determination of the amount of nominal damages which is addressed to the sound
discretion of the court, several factors are taken into account: (1) the authorized cause invoked,
whether it was a retrenchment or a closure or cessation of operation of the establishment due
to serious business losses or financial reverses or otherwise; (2) the number of employees to be
awarded; (3) the capacity of the employers to satisfy the awards, taken into account their
prevailing financial status as borne by the records; (4) the employers grant of other termination
benefits in favor of the employees; and (5) whether there was a bona fide attempt to comply
with the notice requirements as opposed to giving no notice at all.
In the case at bar, there was valid authorized cause considering the closure or cessation of ITCs
business which was done in good faith and due to circumstances beyond ITCs control.
Moreover, ITC had ceased to generate any income since its closure on August 17, 1990. Several
months prior to the closure, ITC experienced diminished income due to high production costs,
erratic supply of raw materials, depressed prices, and poor market conditions for its wood
products. It appears that ITC had given its employees all benefits in accord with the CBA upon
their termination.
Thus, considering the circumstances obtaining in the case at bar, we deem it wise and just to
reduce the amount of nominal damages to be awarded for each employee to P10,000.00 each
instead of P50,000.00 each.
WHEREFORE, premises considered, the Motion for Reconsideration of respondents in G.R. No.
164518 who are also petitioners in G.R. No. 164965 is DENIED. The Motion for Partial
Reconsideration of petitioners in G.R. No. 164518 who are also respondents in G.R. No. 164965
is GRANTED. The amount of nominal damages awarded to each employee is reduced from
P50,000.00 to P10,000.00.
SO ORDERED.
CONSUELO YNARES-SANTIAGO
Associate Justice
Footnotes
1
Rollo (G.R No. 164518), p. 279.
339 Phil. 395 (1997).
Id. at 281-283.

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 170646
June 22, 2011
MA. LIGAYA B. SANTOS, Petitioner,

vs.
LITTON MILLS INCORPORATED and/or ATTY. RODOLFO MARIO,** Respondents.
DECISION
DEL CASTILLO, J.:
"Once again, we must stress that the technical rules of procedure should be used to promote,
not frustrate, the cause of justice. While the swift unclogging of court dockets is a laudable aim,
the just resolution of cases on their merits, however, cannot be sacrificed merely in order to
achieve that objective. Rules of procedure are tools designed not to thwart but to facilitate the
attainment of justice; thus, their strict and rigid application may, for good and deserving
reasons, have to give way to, and be subordinated by, the need to aptly dispense substantial
justice in the normal course."1
This Petition for Review on Certiorari2 assails the March 10, 2005 Resolution3 of the Court of
Appeals (CA) in CA-G.R. SP No. 88601, which dismissed petitioner Ma. Ligaya B. Santos
(petitioner) Petition for Certiorari filed therewith for being defective in form, as well as the
November 29, 2005 Resolution4 which denied her Motion for Reconsideration. Likewise sought
to be set aside are the August 27, 2004 and November 30, 2004 Resolutions5of the National
Labor Relations Commission (NLRC) and the November 28, 2003 Decision6 of Labor Arbiter Pablo
C. Espiritu, Jr. in NLRC NCR Case No. 00-02-01560-2003, which dismissed petitioners complaint
for illegal dismissal against respondents Litton Mills, Inc. (respondent Litton Mills) and/or Atty.
Rodolfo Mario (respondent Atty. Mario).
Factual Antecedents
Petitioner was hired on December 5, 1989 by respondent Litton Mills, a company engaged in the
business of manufacturing textile materials. It used to sell its used sludge oil and other waste
materials through its Plant Administration and Services Department, wherein petitioner was
assigned as clerk.
On September 28, 2002,7 respondent Atty. Mario, personnel manager of respondent Litton
Mills, directed petitioner to explain in writing why no disciplinary action should be imposed on
her after having been caught engaging in an unauthorized arrangement with a waste buyer.
Allegedly, petitioner has been demanding money from a certain Leonardo A. Concepcion
(Concepcion) every time he purchases scrap and sludge oil from the company and threatening
to withhold the release of the purchased materials by delaying the release of official delivery
receipt and gate pass if he would not oblige. Respondent Atty. Mario also informed petitioner
that she will be placed under preventive suspension for 15 days pending investigation of her
case.
In her letter-reply,8 petitioner denied the accusation and explained that her
job is merely clerical in nature and that she has no authority to hold the release of purchased
waste items. Petitioner averred that the P2,000.00 she obtained from Concepcion was in
payment for the loan she had extended to Concepcions wife; and, that her practice of lending
money to increase her income cannot be considered as an irregularity against her employer.
Meanwhile, a criminal complaint for robbery/extortion was lodged before the City Prosecutor of
Pasig City against petitioner which was eventually filed in court.9
On October 1, 2002, respondent Atty. Mario notified petitioner that an administrative
investigation is scheduled on October 4, 2002 and requested her to appear and present her
defenses on the charges. During the hearing, petitioner, represented by three officers of the
union of which she was a member, submitted a Motion for Reinvestigation10 (which she also
filed in the criminal case for extortion), with a Counter-Affidavit11 attached therein. She pointed
out that it is not within her power to intimidate or threaten any buyer regarding the release of
the companys waste items. Petitioner also presented a copy of her handwritten
notes12 showing a list of entries representing the debts owed to her by different debtors
including Concepcions wife.
On October 11, 2002, petitioner received a Letter of Termination13 from respondents for
obtaining or accepting money as a result of an unauthorized arrangement with a waste buyer,
an act considered as affecting company interests, in violation of Section 2.04 of the companys
Code of Conduct for Employee Discipline.14 On February 4, 2003, petitioner filed a
Complaint15 for illegal dismissal against respondents which was later amended to include a
prayer for moral and exemplary damages and attorneys fees.
Ruling of the Labor Arbiter
In a Decision dated November 28, 2003, the Labor Arbiter dismissed the complaint after finding
that there was just cause for dismissal and proper observance of due process. The Labor Arbiter
ruled that the pendency of the criminal case for extortion is an indication that there is sufficient
evidence that petitioner is responsible for the offense charged, and that only substantial
evidence and not proof beyond reasonable doubt is necessary for a valid dismissal. The Labor
Arbiter was not convinced that the money which petitioner received from Concepcion was
intended as payment for a loan and even if it was, it is still unauthorized and prohibited by the
company rules. The claim for damages was likewise dismissed for lack of merit.
Ruling of the National Labor Relations Commission
On appeal, petitioner argued that the Labor Arbiter erred in relying on the pending criminal case
in finding her dismissal as valid and claimed that the charge should first be proven. She
thereafter filed an Urgent Manifestation16 to inform the tribunal that on April 20, 2004, the
Regional Trial Court of Pasig City, Branch 167 has rendered a Decision17 acquitting her of the
criminal charge and declaring that she merely demanded payment for a loan and thus did not
illegally exact money from Concepcion.
The NLRC, however, affirmed the findings of the Labor Arbiter in its Resolution dated August 27,
2004.18 It held that petitioners acquittal in the criminal case has no bearing on the illegal
dismissal case since she was dismissed for accepting money by reason of an unauthorized
arrangement with a client. This, according to the NLRC, is an infraction of the companys Code of
Conduct for employees punishable by dismissal even for the first violation.
In its Resolution dated November 30, 2004,19 the NLRC denied petitioners Motion for
Reconsideration.
Ruling of the Court of Appeals
Petitioner filed a Petition for Certiorari20 with the CA. However, in a Resolution dated March 10,
2005, the CA dismissed the petition for failure of the petitioner to indicate in the petition the
actual addresses of the parties and to state in the Verification and Certification of non-forum
shopping that there were no other pending cases between the parties at the time of filing. The
March 10, 2005 Resolution reads:
Petition is hereby DISMISSED due to the following jurisdictional flaws:
1. Actual addresses of the parties were not disclosed in the petition in contravention of
Sec. 3, Rule 46, 1997 Rules of Civil Procedure;
2. Non-conformity to the required verification and certification of non-forum shopping
by failure to state that there were no other pending cases between the parties at the
time of filing (See Sections 4 and 5, Rule 7 and Sec. 1, Rule 65 in relation to Sec. 3, Rule
46 of the 1997 Rules of Civil Procedure). Deficiency is equivalent to the non-filing
thereof.
SO ORDERED.21
Petitioner filed a Motion for Reconsideration22 explaining that her petition substantially
complied with the provisions of Section 3, Rule 46 of the Rules of Court because it indicated that
the parties may be served with notices and processes of the Court through their respective
counsels whose addresses were specifically mentioned therein. She also insisted that although
the Verification and Certification attached to the petition was an abbreviated version, the same
still substantially complied with the Rules. Nonetheless, she submitted her faithful compliance
with the Rules by indicating the complete addresses of the parties and of their counsels and
submitting a revised Verification and Certification of non-forum shopping. At the same time, she
contended that her excusable lapse is not enough reason to dismiss her meritorious petition.
On November 29, 2005,23 the CA rendered its Resolution denying the motion for
reconsideration. The said Resolution reads:
Instead of [rectifying] the deficiencies of the petition, the petitioner chose to avoid compliance,
arguing more than revising the mistakes explicitly pointed out.
WHEREFORE, for lack of merit, petitioners March 31, 2005 Motion for Reconsideration is
hereby DENIED.
SO ORDERED.24
Issues
Hence, this petition anchored on the following grounds:
WITH DUE RESPECT, THE COURT OF APPEALS HAD SHOWN HOSTILITY AGAINST THE
PETITIONER AND ACTED DESPOTICALLY BECAUSE THE DEFICIENCIES IN THE PETITION
WERE DULY CORRECTED AND THE EXPLANATION MADE FOR THE ALLOWANCE OF THE
PETITION IS MERELY TO POINT OUT THAT THIS HONORABLE SUPREME COURT HAD
SHOWN LENIENCY EVEN IN MORE SERIOUS CASES AND THAT PETITIONER HAS A
MERITORIOUS CASE.
WITH DUE RESPECT, THE NLRC AND THE LABOR ARBITER COMMITTED A SERIOUS ERROR
AND ABUSED THEIR DISCRETION IN FINDING THAT PETITIONER OBTAINED OR ACCEPTED
MONEY CONSEQUENT OF AN UNAUTHORIZED ARRANGEMENT WITH A WASTE BUYER
DESPITE CLEAR EVIDENCE TO THE CONTRARY AND THE FINDINGS OF THE REGIONAL
TRIAL COURT THAT THEP2,000.00 DEMANDED BY THE PETITIONER IS FOR THE PAYMENT
OF A LOAN.25
Petitioner questions the propriety of the CAs dismissal of her petition despite correction of the
deficiencies in faithful compliance with the rules. She prays for liberality and leniency for the
minor lapses she committed so that substantial justice would not be sacrificed at the altar of
technicalities.
Petitioner also questions the propriety of the labor tribunals declaration that her dismissal from
employment was legal. She contends that her act of extending a loan to a person and
consequently demanding payment for the same should not be considered as sufficient ground
for the imposition of the supreme penalty of dismissal.
Our Ruling
We partly grant the petition.
Rules of procedure should be relaxed when there is substantial and subsequent compliance.
Under Section 3, Rule 46 of the Rules of Court, petitions for certiorari shall contain, among
others, the full names and actual addresses of all the petitioners and respondents. The
petitioner should also submit together with the petition a sworn certification that (a) he has not
theretofore commenced any other action involving the same issues in any court, tribunal or
quasi-judicial agency and, to the best of his knowledge, no such other action or claim is pending
therein; (b) if there is such other pending action or claim, he must state the status of the same;
and (c) if he should thereafter learn that the same or similar action or claim has been filed or is
pending, he shall promptly inform the court within five days therefrom. The Rule explicitly
provides that failure to comply with these requirements shall be sufficient ground to dismiss the
petition.
In the petition for certiorari filed before the CA, petitioner indeed failed to indicate the actual
addresses of the parties. However, she clearly mentioned that the parties may be served with
the Courts notices or processes through their respective counsels whose addresses were clearly
specified, viz:
Petitioner is of legal age, married, Filipino and may be served with notices, resolutions, decisions
and other processes at the office address of the undersigned counsel.
Public respondent National Labor Relations Commission (NLRC) is a quasi-judicial government
agency clothed by law with exclusive appellate jurisdiction over all cases decided by labor
arbiters (Article 217, b, P.D. 442, as amended). Respondent Labor Arbiter Pablo Espiritu, Jr. is a
Labor Arbiter at the National Capital Region of the NLRC and clothed by law [with] the authority
to hear and decide termination disputes and all claims arising from employer-employee
relations (Article 217, Labor Code, as amended). They may be served with notices, resolutions,
decisions and other processes at PPSTA Building, Banawe Street, Quezon City.lawphi1
Private respondent Litton Mills, Inc. (Company for short) is a domestic corporation engaged in
the business of manufacturing textile materials. Individual respondent Atty. Rodolfo Marino is
its personnel manager. They may be served with notices, resolutions, decisions and other
processes through their counsel, Baizas Magsino Recinto Law Offices, Suite 212 Cityland
Pioneer, 128 Pioneer Street, Highway Hills, Mandaluyong City.26
To us, the mention of the parties respective counsels addresses constitutes substantial
compliance with the requirements of Section 3, Rule 46 of the Rules of Court which provides in
part that "[t]he petition shall contain the full names and actual addresses of all the petitioners
and respondents." Our observation further finds support in Section 2, Rule 13 which pertinently
provides that "[i]f any party has appeared by counsel, service upon him shall be made upon his
counsel or one of them, unless service upon the party himself is ordered by the Court." As we
held in Garrucho v. Court of Appeals,27 "[n]otice or service made upon a party who is
represented by counsel is a nullity. Notice to the client and not to his counsel of record is not
notice in law."
Moreover, in her motion for reconsideration, petitioner explained that she was of the honest
belief that the mention of the counsels address was sufficient compliance with the rules. At any
rate, she fully complied with the same when she indicated in her Motion for Reconsideration the
actual addresses of the parties.28 Hence, we are at a loss why the CA still proceeded to deny
petitioners petition for certiorari and worse, even declared that: "Instead of [rectifying] the
deficiencies of the petition, the petitioner chose to avoid compliance, arguing more than
revising the mistakes explicitly pointed out."29
The second ground for the CAs denial of petitioners petition for certiorari was her alleged
failure to indicate in her Verification and Certification of non-forum shopping that there were no
other pending cases between the parties at the time of filing thereof. For reference, we
reproduce below the pertinent portions of the said petition for certiorari, viz:
Verification With Certification
I, LIGAYA B. SANTOS, subscribing under oath, depose and state:
1. I am the petitioner in the above-entitled case;
2. I have caused the preparation and filing of the foregoing petition;
3. I have read the contents of the same and declare that they are true and
correct of my personal knowledge;
4. I certify that I have not caused the filing to the Court of Appeals, to the
Supreme Court or to any other Court or body of a case similar to the instant
petition and should I learn that the existence or pendency of a similar case at
the Court of Appeals, the Supreme Court or any other Court or body, I
undertake to inform this Court within five (5) days from knowledge.
(Sgd.) LIGAYA B. SANTOS30
A reading of said Verification with Certification reveals that petitioner nonetheless certified
therein that she has not filed a similar case before any other court or tribunal and that she
would inform the court if she learns of a pending case similar to the one she had filed therein.
This, to our mind is more than substantial compliance with the requirements of the Rules. It has
been held that "with respect to the contents of the certification[,] x x x the rule on substantial
compliance may be availed of."31 Besides, in her Motion for Reconsideration, petitioner rectified
the deficiency in said Verification with Certification, viz:
VERIFICATION & CERTIFICATION
OF NON-FORUM SHOPPING
I, LIGAYA SANTOS, resident of 261 B Rodriguez Avenue, Manggahan, Pasig City, after being
sworn in accordance with law, depose and state:
I am the petitioner in the above-entitled case;
I have caused the preparation and filing of the foregoing Motion for Reconsideration;
I have read the contents of the same and declare that they are true and correct of my personal
knowledge;
I certify that I have not theretofore commenced any action or filed any claim involving the same
issues in any court, tribunal or quasi-judicial agency and to the best of my knowledge, no such
other action is pending therein and should I learn that the same or similar action or claim has
been filed or is pending, I [shall] immediately inform this Honorable Court within five (5) days
from knowledge or notice.
(Sgd.) LIGAYA B. SANTOS
Affiant32
It is settled that "subsequent and substantial compliance may call for the relaxation of the rules
of procedure."33The Court has time and again relaxed the rigid application of the rules to offer
full opportunity for parties to ventilate their causes and defenses in order to promote rather
than frustrate the ends of justice.34 Because there was substantial and subsequent compliance
in this case, we resolve to apply the liberal construction of the rules if only to secure the greater
interest of justice. Thus, the CA should have given due course to the petition.
Anent the arguments raised by petitioner pertaining to the merits of the case, we deem it
proper to remand the adjudication thereof to the CA.
WHEREFORE, the Petition for Review on Certiorari is PARTLY GRANTED. The assailed March 10,
2005 and November 29, 2005 Resolutions of the Court of Appeals in CA-G.R. SP No. 88601, are
hereby SET ASIDE. The case is REMANDED to the Court of Appeals which is directed to give due
course to the petition and adjudicate the same on the merits with dispatch.
SO ORDERED.
MARIANO C. DEL CASTILLO
Associate Justice
Footnotes
*
Per Special Order No. 1022 dated June 10, 2011.

Also referred as Atty. Rodolfo Marino in some parts of the records.
1
Fiel v. Kris Security Systems, Inc., 448 Phil.657, 662 (2003).
2
Rollo, pp. 10-25.
3
CA rollo, pp. 148-149; penned by Associate Justice Vicente Q. Roxas and concurred in
by Associate Justices Portia Alio-Hormachuelos and Juan Q. Enriquez, Jr.
4
Id. at 159.
5
Id. at 18-27 and 28-29, respectively; penned by Presiding Commissioner Raul T. Aquino
and concurred in by Commissioners Victoriano R. Calaycay and Angelita A. Gacutan.
6
Id. at 30-41.
7
Id. at 94.
8
Dated September 29, 2002, id. at 95-96.
9
See Investigation Report of Police dated September 30, 2002, id. at 97.
10
Id at 107-109.
11
Id. at 110-112.
12
Id. at 113-115.
13
Id. at 117.
14
Id. at 121.
**
15
Id. at 119-120.
Id. at 143-146.
17
Id. at 142-146.
18
Id. at 18-27.
19
Id. at 28-29.
20
Id. at 2-17.
21
Id. at 148.
22
Id. at 152-158.
23
Id. at 159.
24
Id.
25
Rollo, p. 19.
26
CA rollo, pp. 4-5.
27
489 Phil. 150, 156 (2005).
28
CA rollo, p. 154.
29
See Resolution of November 29, 2005, id. at 177.
30
Id. at 16.
31
Ching v. The Secretary of Justice, 517 Phil. 151, 166 (2006). See also Ateneo de Naga
University v. Manalo, 497 Phil. 635, 646 (2005); MC Engineering Inc. v. National Labor
Relations Commission, 412 Phil. 614, 622 (2001).
32
CA rollo, p. 157.
33
Security Bank Corporation v. Indiana Aerospace University, 500 Phil. 51, 60 (2005).
34
Quintano v. National Labor Relations Commission, 487 Phil. 412, 426 (2004).
16

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 186621
March 12, 2014
SOUTH EAST INTERNATIONAL RATTAN, INC. and/or ESTANISLAO1 AGBAY, Petitioners,

vs.
JESUS J. COMING, Respondent.
DECISION
VILLARAMA, JR., J.:
Before the Court is a petition for review on certiorari under Rule 45 to reverse and set aside the
Decision2 dated February 21, 2008 and Resolution3 dated February 9, 2009 of the Court of
Appeals (CA) in CA-GR. CEB-SP No. 02113.
Petitioner South East International Rattan, Inc. (SEIRI) is a domestic corporation engaged in the
business of manufacturing and exporting furniture to various countries with principal place of
business at Paknaan, Mandaue City, while petitioner Estanislao Agbay, as per records, is the
President and General Manager of SEIRI.4
On November 3, 2003, respondent Jesus J. Coming filed a complaint5 for illegal dismissal,
underpayment of wages, non-payment of holiday pay, 13th month pay and service incentive
leave pay, with prayer for reinstatement, back wages, damages and attorneys fees.
Respondent alleged that he was hired by petitioners as Sizing Machine Operator on March 17,
1984. His work schedule is from 8:00 a.m. to 5:00 p.m. Initially, his compensation was on
"pakiao" basis but sometime in June 1984, it was fixed at P150.00 per day which was paid
weekly. In 1990, without any apparent reason, his employment was interrupted as he was told
by petitioners to resume work in two months time. Being an uneducated person, respondent
was persuaded by the management as well as his brother not to complain, as otherwise
petitioners might decide not to call him back for work. Fearing such consequence, respondent
accepted his fate. Nonetheless, after two months he reported back to work upon order of
management.6
Despite being an employee for many years with his work performance never questioned by
petitioners, respondent was dismissed on January 1, 2002 without lawful cause. He was told
that he will be terminated because the company is not doing well financially and that he would
be called back to work only if they need his services again. Respondent waited for almost a year
but petitioners did not call him back to work. When he finally filed the complaint before the
regional arbitration branch, his brother Vicente was used by management to persuade him to
withdraw the case.7
On their part, petitioners denied having hired respondent asserting that SEIRI was incorporated
only in 1986, and that respondent actually worked for SEIRIs furniture suppliers because when
the company started in 1987 it was engaged purely in buying and exporting furniture and its
business operations were suspended from the last quarter of 1989 to August 1992. They
stressed that respondent was not included in the list of employees submitted to the Social
Security System (SSS). Moreover, respondents brother, Vicente Coming, executed an
affidavit8 in support of petitioners position while Allan Mayol and Faustino Apondar issued
notarized certifications9 that respondent worked for them instead.10
With the denial of petitioners that respondent was their employee, the latter submitted an
affidavit11 signed by five former co-workers stating that respondent was one of the pioneer
employees who worked in SEIRI for almost twenty years.
In his Decision12 dated April 30, 2004, Labor Arbiter Ernesto F. Carreon ruled that respondent is
a regular employee of SEIRI and that the termination of his employment was illegal. The
dispositive portion of the decision reads:
WHEREFORE, premises considered, judgment is hereby rendered ordering the respondent South
East (Intl.) Rattan, Inc. to pay complainant Jesus J. Coming the following:
1. Separation pay
P114,400.00
2. Backwages
P 30,400.00
3. Wage differential
P 15,015.00
4. 13th month pay
P 5,958.00
5. Holiday pay
P 4,000.00
6. Service incentive leave pay
P 2,000.00
Total award
P171,773.00
The other claims and the case against respondent Estanislao Agbay are dismissed for lack of
merit.
SO ORDERED.13
Petitioners appealed to the National Labor Relations Commission (NLRC)-Cebu City where they
submitted the following additional evidence: (1) copies of SEIRIs payrolls and individual pay
records of employees;14 (2) affidavit15 of SEIRIs Treasurer, Angelina Agbay; and (3) second
affidavit16 of Vicente Coming.
On July 28, 2005, the NLRCs Fourth Division rendered its Decision,17 the dispositive portion of
which states:
WHEREFORE, premises considered, the decision of the Labor Arbiter is hereby SET ASIDE and
VACATED and a new one entered DISMISSING the complaint.
SO ORDERED.18
The NLRC likewise denied respondents motion for reconsideration.19
Respondent elevated the case to the CA via a petition for certiorari under Rule 65.
By Decision dated February 21, 2008, the CA reversed the NLRC and ruled that there existed an
employer-employee relationship between petitioners and respondent who was dismissed
without just and valid cause.
The CA thus decreed:
WHEREFORE, in view of the foregoing, the petition is hereby GRANTED. The assailed Decision
dated July 28, 2005 issued by the National Labor Relations Commission (NLRC), Fourth Division,
Cebu City in NLRC Case No. V-000625-2004 is REVERSED and SET ASIDE. The Decision of the
Labor Arbiter dated April 30, 2004 is REINSTATED with MODIFICATION on the computation of
backwages which should be computed from the time of illegal termination until the finality of
this decision.
Further, the Labor Arbiter is directed to make the proper adjustment in the computation of the
award of separation pay as well as the monetary awards of wage differential, 13th month pay,
holiday pay and service incentive leave pay.
SO ORDERED.20
Petitioners filed a motion for reconsideration but the CA denied it under Resolution dated
February 9, 2009.
Hence, this petition raising the following issues:
6.1 WHETHER UNDER THE FACTS AND EVIDENCE ON RECORD, THE FINDING OF THE
HONORABLE COURT OF APPEALS THAT THERE EXISTS EMPLOYER-EMPLOYEE
RELATIONSHIP BETWEEN PETITIONERS AND RESPONDENT IS IN ACCORD WITH LAW AND
APPLICABLE DECISIONS OF THIS HONORABLE COURT.
6.2 WHETHER THE HONORABLE COURT OF APPEALS CORRECTLY APPRECIATED IN
ACCORDANCE WITH APPLICABLE LAW AND JURISPRUDENCE THE EVIDENCE PRESENTED
BY BOTH PARTIES.
6.3 WHETHER UNDER THE FACTS AND EVIDENCE PRESENTED, THE FINDING OF THE
HONORABLE COURT OF APPEALS THAT PETITIONERS ARE LIABLE FOR ILLEGAL DISMISSAL
OF RESPONDENT IS IN ACCORD WITH APPLICABLE LAW AND JURISPRUDENCE.
6.4 WHETHER UNDER THE FACTS PRESENTED, THE RULING OF THE HONORABLE COURT
OF APPEALS THAT THE BACKWAGES DUE THE RESPONDENT SHOULD BE COMPUTED
FROM THE TIME OF ILLEGAL TERMINATION UNTIL THE FINALITY OF THE DECISION IS
SUPPORTED BY PREVAILING JURISPRUDENCE.21
Resolution of the first issue is paramount in view of petitioners denial of the existence of
employer-employee relationship.
The issue of whether or not an employer-employee relationship exists in a given case is
essentially a question of fact. As a rule, this Court is not a trier of facts and this applies with
greater force in labor cases.22 Only errors of law are generally reviewed by this Court.23 This rule
is not absolute, however, and admits of exceptions. For one, the Court may look into factual
issues in labor cases when the factual findings of the Labor Arbiter, the NLRC, and the CA are
conflicting.24 Here, the findings of the NLRC differed from those of the Labor Arbiter and the CA,
which compels the Courts exercise of its authority to review and pass upon the evidence
presented and to draw its own conclusions therefrom.25
To ascertain the existence of an employer-employee relationship jurisprudence has invariably
adhered to the four-fold test, to wit: (1) the selection and engagement of the employee; (2) the
payment of wages; (3) the power of dismissal; and (4) the power to control the employees
conduct, or the so-called "control test."26 In resolving the issue of whether such relationship
exists in a given case, substantial evidence that amount of relevant evidence which a
reasonable mind might accept as adequate to justify a conclusion is sufficient. Although no
particular form of evidence is required to prove the existence of the relationship, and any
competent and relevant evidence to prove the relationship may be admitted, a finding that the
relationship exists must nonetheless rest on substantial evidence.27
In support of their claim that respondent was not their employee, petitioners presented
Employment Reports to the SSS from 1987 to 2002, the Certifications issued by Mayol and
Apondar, two affidavits of Vicente Coming, payroll sheets (1999-2000), individual pay envelopes
and employee earnings records (1999-2000) and affidavit of Angelina Agbay (Treasurer and
Human Resources Officer). The payroll and pay records did not include the name of respondent.
The affidavit of Ms. Agbay stated that after SEIRI started its business in 1986 purely on export
trading, it ceased operations in 1989 as evidenced by Certification dated January 18, 1994 from
the Securities and Exchange Commission (SEC); that when business resumed in 1992, SEIRI
undertook only a little of manufacturing; that the company never hired any workers for
varnishing and pole sizing because it bought the same from various suppliers, including Faustino
Apondar; respondent was never hired by SEIRI; and while it is true that Mr. Estanislao Agbay is
the company President, he never dispensed the salaries of workers.28
In his first affidavit, Vicente Coming averred that:
6. [Jesus Coming] is a furniture factory worker. In 1982 to 1986, he was working with
Ben Mayol as round core maker/splitter.
7. Thereafter, we joined Okay Okay Yard owned by Amelito Montececillo. This is a rattan
trader with business address near Cebu Rattan Factory on a "Pakiao" basis.
8. However, Jesus and I did not stay long at Okay Okay Yard and instead we joined
Eleuterio Agbay in Labogon, Cebu in 1989. In 1991, we went back to Okay Okay located
near the residence of Atty. Vicente de la Serna in Mandaue City. We were on a "pakiao"
basis. We stayed put until 1993 when we resigned and joined Dodoy Luna in Labogon,
Mandaue City as classifier until 1995. In 1996[,] Jesus rested. It was only in 1997 that he
worked back. He replaced me, as a classifier in Rattan Traders owned by Allan Mayol.
But then, towards the end of the year, he left the factory and relaxed in our place of
birth, in Sogod, Cebu.
9. It was only towards the end of 1999 that Jesus was taken back by Allan Mayol as
sizing machine operator. However, the work was off and on basis. Not regular in nature,
he was harping a side line job with me knowing that I am now working with Faustino
Apondar that supplies rattan furnitures [sic] to South East (Intl) Rattan, Inc. As a
brother, I allowed Jesus to work with me and collect the proceeds of his services as part
of my collectibles from Faustino Apondar since I was on a "pakiao" basis. He was
working at his pleasure. Which means, he works if he likes to? That will be until 10:00
oclock in the evening.
x x x x29
The Certification dated January 20, 2004 of Allan Mayol reads:
This is to certify that I personally know Jesus Coming, the brother of Vicente Coming. Jesus is a
rattan factory worker and he was working with me as rattan pole sizing/classifier of my business
from 1997 up to part of 1998 when he left my factory at will. I took him back towards the end of
1999, this time as a sizing machine operator. In all these years, his services are not regular. He
works only if he likes to.30
Faustino Apondar likewise issued a Certification which states:
This is to certify that I am a maker/supplier of finished Rattan Furniture. As such, I have several
rattan furniture workers under me, one of whom is Vicente Coming, the brother of Jesus
Coming.
That sometime in 1999, Vicente pleaded to me for a side line job of his brother, Jesus who was
already connected with Allan Mayol. Having vouched for the integrity of his brother and
knowing that the job is temporary in character, I allowed Jesus to work with his brother Vicente.
However, the proceeds will be collected together with his brother Vicente since it was the latter
who was working with me. He renders services to his brother work only after the regular
working hours but off and on basis.31
On the other hand, respondent submitted the affidavit executed by Eleoterio Brigoli, Pedro
Brigoli, Napoleon Coming, Efren Coming and Gil Coming who all attested that respondent was
their co-worker at SEIRI.
Their affidavit reads:
We, the undersigned, all of legal ages, Filipino, and resident[s] of Cebu, after having been duly
sworn to in accordance with law, depose and say:
That we are former employees of SOUTH EAST RATTAN which is owned by Estan Eslao Agbay;
That we personally know JESUS COMING considering that we worked together in one company
SOUTH EAST RATTANT [sic];
That we together with JESUS COMING are all under the employ of ESTAN ESLAO AGBAY
considering that the latter is the one directly paying us and holds the absolute control of all
aspects of our employment;
That it is not true that JESUS COMING is under the employ of one person other than ESTAN
ESLAO AGBAY OF SOUTH EAST RATTAN;
That Jesus Coming is one of the pioneer employees of SOUTH EAST RATTAN and had been
employed therein for almost twenty years;
That we executed this affidavit to attest to the truth of the foregoing facts and to deny any
contrary allegation made by the company against his employment with SOUTH EAST RATTAN.32
In his decision, Labor Arbiter Carreon found that respondents work as sizing machine operator
is usually necessary and desirable to the rattan furniture business of petitioners and their failure
to include respondent in the employment report to SSS is not conclusive proof that respondent
is not their employee. As to the affidavit of Vicente Coming, Labor Arbiter Carreon did not give
weight to his statement that respondent is not petitioners employee but that of one Faustino
Apondar. Labor Arbiter Carreon was not convinced that Faustino Apondar is an independent
contractor who has a contractual relationship with petitioners.
In reversing the Labor Arbiter, the NLRC reasoned as follows:
First complainant alleged that he worked continuously from March 17, 1984 up to January 21,
2002.1wphi1 Records reveal however that South East (Intl.) Rattan, Inc. was incorporated only
last July 18, 1986 (p. 55 records)[.] Moreover, when they started to actually operate in 1987, the
company was engaged purely on "buying and exporting rattan furniture" hence no
manufacturing employees were hired. Furthermore, from the last quarter of 1989 up to August
of 1992, the company suspended operations due to economic reverses as per Certification
issued by the Securities and Exchange Commission (p. 56 records)[.]
Second, for all his insistence that he was a regular employee, complainant failed to present a
single payslip, voucher or a copy of a company payroll showing that he rendered service during
the period indicated therein. x x x
From the above established facts we are inclined to give weight and credence to the
Certifications of Allan Mayol and Faustino Apondar, both suppliers of finished Rattan Furniture
(pp. 442-43, records). It appears that complainant first worked with Allan Mayol and later with
Faustino Apondar upon the proddings of his brother Vicente. Vicentes affidavit as to
complainants employment history was more detailed and forthright. x x x
xxxx
In the case at bar, there is likewise substantial evidence to support our findings that
complainant was not an employee of respondents. Thus:
1. Complainants name does not appear in the list of employees reported to the SSS.
2. His name does not also appear in the sample payrolls of respondents employees.
3. The certification of Allan Mayol and Fasutino Apondar[,] supplier of finished rattan
products[,] that complainant had at one time or another worked with them.
4. The Affidavit of Vicente Coming, complainants full brother[,] attesting that
complainant had never been an employee of respondent. The only connection was that
their employer Faustino Apondar supplies finished rattan products to respondents.33
On the other hand, the CA gave more credence to the declarations of the five former employees
of petitioners that respondent was their co-worker in SEIRI. One of said affiants is Vicente
Comings own son, Gil Coming. Vicente averred in his second affidavit that when he confronted
his son, the latter explained that he was merely told by their Pastor to sign the affidavit as it will
put an end to the controversy. Vicente insisted that his son did not know the contents and
implications of the document he signed. As to the absence of respondents name in the payroll
and SSS employment report, the CA observed that the payrolls submitted were only from
January 1, 1999 to December 29, 2000 and not the entire period of eighteen years when
respondent claimed he worked for SEIRI. It further noted that the names of the five affiants,
whom petitioners admitted to be their former employees, likewise do not appear in the
aforesaid documents. According to the CA, it is apparent that petitioners maintained a separate
payroll for certain employees or willfully retained a portion of the payroll.
x x x As to the "control test", the following facts indubitably reveal that respondents wielded
control over the work performance of petitioner, to wit: (1) they required him to work within
the company premises; (2) they obliged petitioner to report every day of the week and tasked
him to usually perform the same job; (3) they enforced the observance of definite hours of work
from 8 oclock in the morning to 5 oclock in the afternoon; (4) the mode of payment of
petitioners salary was under their discretion, at first paying him on pakiao basis and thereafter,
on daily basis; (5) they implemented company rules and regulations; (6) [Estanislao] Agbay
directly paid petitioners salaries and controlled all aspects of his employment and (7) petitioner
rendered work necessary and desirable in the business of the respondent company.34
We affirm the CA.
In Tan v. Lagrama,35 the Court held that the fact that a worker was not reported as an employee
to the SSS is not conclusive proof of the absence of employer-employee relationship. Otherwise,
an employer would be rewarded for his failure or even neglect to perform his obligation.36
Nor does the fact that respondents name does not appear in the payrolls and pay envelope
records submitted by petitioners negate the existence of employer-employee relationship. For a
payroll to be utilized to disprove the employment of a person, it must contain a true and
complete list of the employee.37 In this case, the exhibits offered by petitioners before the NLRC
consisting of copies of payrolls and pay earnings records are only for the years 1999 and 2000;
they do not cover the entire 18-year period during which respondent supposedly worked for
SEIRI.
In their comment to the petition filed by respondent in the CA, petitioners emphasized that in
the certifications issued by Mayol and Apondar, it was shown that respondent was employed
and working for them in those years he claimed to be working for SEIRI. However, a reading of
the certification by Mayol would show that while the latter claims to have respondent under his
employ in 1997, 1998 and 1999, respondents services were not regular and that he works only
if he wants to. Apondars certification likewise stated that respondent worked for him since
1999 through his brother Vicente as "sideline" but only after regular working hours and "off and
on" basis. Even assuming the truth of the foregoing statements, these do not foreclose
respondents regular or full-time employment with SEIRI. In effect, petitioners suggest that
respondent was employed by SEIRIs suppliers, Mayol and Apondar but no competent proof was
presented as to the latters status as independent contractors.
In the same comment, petitioners further admitted that the five affiants who attested to
respondents employment with SEIRI are its former workers whom they describe as "disgruntled
workers of SEIRI" with an axe to grind against petitioners, and that their execution of affidavit in
support of respondents claim is "their very way of hitting back the management of SEIRI after
disciplinary measures were meted against them."38 This allegation though was not substantiated
by petitioners. Instead, after the CA rendered its decision reversing the NLRCs ruling,
petitioners subsequently changed their theory by denying the employment relationship with the
five affiants in their motion for reconsideration, thus:
x x x Since the five workers were occupying and working on a leased premises of the private
respondent, they were called workers of SEIRI (private respondent). Such admission however,
does not connote employment. For the truth of the matter, all of the five employees of the
supplier assigned at the leased premises of the private respondent. Because of the
recommendation of the private respondent with regards to the disciplinary measures meted on
the five workers, they wanted to hit back against the private respondent. Their motive to
implicate private respondent was to vindicate. Definitely, they have an axe to grind against the
private respondent. Mention has to be made that despite the dismissal of these five (5)
witnesses from their service, none of them ever went to the National Labor [Relations]
Commission and invoked their rights, if any, against their employer or at the very least against
the respondent. The reason is obvious, since they knew pretty well that they were not
employees of SEIRI but rather under the employ of Allan Mayol and Faustino Apondar, working
on a leased premise of respondent. x x x39
Petitioners admission that the five affiants were their former employees is binding upon them.
While they claim that respondent was the employee of their suppliers Mayol and Apondar, they
did not submit proof that the latter were indeed independent contractors; clearly, petitioners
failed to discharge their burden of proving their own affirmative allegation.40 There is thus no
showing that the five former employees of SEIRI were motivated by malice, bad faith or any illmotive in executing their affidavit supporting the claims of respondent.
In any controversy between a laborer and his master, doubts reasonably arising from the
evidence are resolved in favor of the laborer.41
As a regular employee, respondent enjoys the right to security of tenure under Article 27942 of
the Labor Code and may only be dismissed for a just43 or authorized44 cause, otherwise the
dismissal becomes illegal.
Respondent, whose employment was terminated without valid cause by petitioners, is entitled
to reinstatement without loss of seniority rights and other privileges and to his full back wages,
inclusive of allowances and other benefits or their monetary equivalent, computed from the
time his compensation was withheld from him up to the time of his actual reinstatement. Where
reinstatement is no longer viable as an option, back wages shall be computed from the time of
the illegal termination up to the finality of the decision. Separation pay equivalent to one month
salary for every year of service should likewise be awarded as an alternative in case
reinstatement in not possible.45
WHEREFORE, the petition for review on certiorari is DENIED. The Decision dated February 21,
2008 and Resolution dated February 9, 2009 of the Court of Appeals in CA-G.R. No. CEB-SP No.
02113 are hereby AFFIRMED and UPHELD. Petitioners to pay the costs of suit.
SO ORDERED.
Associate Justice
Footnotes
1
Estaneslao and Estan Eslao in some parts of the records.

Rollo, pp. 37-46. Penned by Associate Justice Priscilla J. Baltazar-Padilla with Associate
Justices Isaias P. Dicdican and Franchito N. Diamante concurring.
3
Id. at 47-48. Penned by Associate Justice Priscilla J. Baltazar-Padilla with Associate
Justices Francisco P. Acosta and Franchito N. Diamante concurring.
4
Records, pp. 21, 27-37 and 56.
5
Id. at 1.
6
Id. at 1, 47.
7
Id. at 47.
8
Id. at 44-45.
9
Id. at 42-43.
10
Id. at 23, 51.
11
Id. at 62.
12
Id. at 63-68.
13
Id. at 67.
14
Id. at 101-282.
15
Id. at 283-284.
2
16
Id. at 285.
Id. at 313-318.
18
Id. at 318.
19
Id. at 345-347.
20
Rollo, p. 46.
21
Id. at 16.
22
Manila Water Co., Inc. v. Pena, 478 Phil. 68, 77 (2004), citing Fleischer Co., Inc. v.
NLRC, 407 Phil. 391, 399 (2001).
23
Basay v. Hacienda Consolacion, G.R. No. 175532, April 19, 2010, 618 SCRA 422, 434,
citing Lopez v. Bodega City (Video-Disco Kitchen of the Phils.) and/or Torres-Yap, 558
Phil. 666, 673 (2007).
24
Jao v. BCC Products Sales, Inc., G.R. No. 163700, April 18, 2012, 670 SCRA 38, 44.
25
Id. at 45.
26
Atok Big Wedge Company, Inc. v. Gison, G.R. No. 169510, August 8, 2011, 655 SCRA
193, 202, citing Philippine Global Communications, Inc. v. De Vera, 498 Phil. 301, 308309 (2005).
27
Masing and Sons Development Corporation v. Rogelio, G.R. No. 161787, July 27, 2011,
654 SCRA 490, 498, citing Section 5, Rule 133 of the Rules of Court, Peoples
Broadcasting (Bombo Radyo Phils., Inc.) v. Secretary of the Department of Labor and
Employment, G.R. No. 179652, May 8, 2009, 587 SCRA 724, 753 and Opulencia Ice Plant
and Storage v. NLRC, G.R. No. 98368, December 15, 1993, 228 SCRA 473, 478.
28
Records, pp. 27-43, 56, 101-287.
29
Id. at 44.
30
Id. at 42.
31
Id. at 43.
32
Id. at 62.
33
Id. at 314-315, 317-318.
34
Rollo, p. 43.
35
436 Phil. 190, 204-205 (2002), citing Lambo v. NLRC, 375 Phil. 855, 862 (1999).
36
Id. at 205, citing Spouses Santos v. NLRC, 354 Phil. 918, 932 (1998).
37
Opulencia Ice Plant and Storage v. NLRC, supra note 27.
38
CA rollo, p. 205.
39
Id. at 241-242.
40
Masing and Sons Development Corporation v. Rogelio, supra note 27, at 502.
41
Id.
42
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.
43
LABOR CODE OF THE PHILIPPINES, Art. 282.
44
Id., Arts. 283 and 284.
45
CRC Agricultural Trading v. National Labor Relations Commission, G.R. No. I 77664,
December 23, 2009, 609 SCRA 138, 151, citing RBC Cable Master System v. Baluyot, G.R.
No. 172670, January 20, 2009, 576 SCRA 668, 679 and Mt. Carmel College v. Resuena,
561 Phil. 620, 644 (2007).
17

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 169757
November 23, 2011
CESAR C. LIRIO, doing business under the name and style of CELKOR AD SONICMIX, Petitioner,
vs.
WILMER D. GENOVIA, Respondent.
DECISION
PERALTA, J.:
This is a petition for review on certiorari of the decision of the Court of Appeals in CA-G.R. SP
No. 88899 dated August 4, 2005 and its Resolution dated September 21, 2005, denying
petitioners motion for reconsideration.
The Court of Appeals reversed and set aside the resolution of the NLRC, and reinstated the
decision of the Labor Arbiter with modification, finding that respondent is an employee of
petitioner, and that respondent was illegally dismissed and entitled to the payment of
backwages and separation pay in lieu of reinstatement.
The facts are as follows:
On July 9, 2002, respondent Wilmer D. Genovia filed a complaint against petitioner Cesar Lirio
and/or Celkor Ad Sonicmix Recording Studio for illegal dismissal, non-payment of commission
and award of moral and exemplary damages.
In his Position Paper,1 respondent Genovia alleged, among others, that on August 15, 2001, he
was hired as studio manager by petitioner Lirio, owner of Celkor Ad Sonicmix Recording Studio
(Celkor). He was employed to manage and operate Celkor and to promote and sell the recording
studio's services to music enthusiasts and other prospective clients. He received a monthly
salary of P7,000.00. They also agreed that he was entitled to an additional commission
of P100.00 per hour as recording technician whenever a client uses the studio for recording,
editing or any related work. He was made to report for work from Monday to Friday from 9:00
a.m. to 6 p.m. On Saturdays, he was required to work half-day only, but most of the time, he still
rendered eight hours of work or more. All the employees of petitioner, including respondent,
rendered overtime work almost everyday, but petitioner never kept a daily time record to avoid
paying the employees overtime pay.
Respondent stated that a few days after he started working as a studio manager, petitioner
approached him and told him about his project to produce an album for his 15-year-old
daughter, Celine Mei Lirio, a former talent of ABS-CBN Star Records. Petitioner asked
respondent to compose and arrange songs for Celine and promised that he (Lirio) would draft a
contract to assure respondent of his compensation for such services. As agreed upon, the
additional services that respondent would render included composing and arranging musical
scores only, while the technical aspect in producing the album, such as digital editing, mixing
and sound engineering would be performed by respondent in his capacity as studio manager for
which he was paid on a monthly basis. Petitioner instructed respondent that his work on the
album as composer and arranger would only be done during his spare time, since his other work
as studio manager was the priority. Respondent then started working on the album.
Respondent alleged that before the end of September 2001, he reminded petitioner about his
compensation as composer and arranger of the album. Petitioner verbally assured him that he
would be duly compensated. By mid-November 2001, respondent finally finished the
compositions and musical arrangements of the songs to be included in the album. Before the
month ended, the lead and back-up vocals in the ten (10) songs were finally recorded and
completed. From December 2001 to January 2002, respondent, in his capacity as studio
manager, worked on digital editing, mixing and sound engineering of the vocal and instrumental
audio files.
Thereafter, respondent was tasked by petitioner to prepare official correspondence, establish
contacts and negotiate with various radio stations, malls, publishers, record companies and
manufacturers, record bars and other outlets in preparation for the promotion of the said
album. By early February 2002, the album was in its manufacturing stage. ELECTROMAT,
manufacturer of CDs and cassette tapes, was tapped to do the job. The carrier single of the
album, which respondent composed and arranged, was finally aired over the radio on February
22, 2002.
On February 26, 2002, respondent again reminded petitioner about the contract on his
compensation as composer and arranger of the album. Petitioner told respondent that since he
was practically a nobody and had proven nothing yet in the music industry, respondent did not
deserve a high compensation, and he should be thankful that he was given a job to feed his
family. Petitioner informed respondent that he was entitled only to 20% of the net profit, and
not of the gross sales of the album, and that the salaries he received and would continue to
receive as studio manager of Celkor would be deducted from the said 20% net profit share.
Respondent objected and insisted that he be properly compensated. On March 14, 2002,
petitioner verbally terminated respondents services, and he was instructed not to report for
work.
Respondent asserts that he was illegally dismissed as he was terminated without any valid
grounds, and no hearing was conducted before he was terminated, in violation of his
constitutional right to due process. Having worked for more than six months, he was already a
regular employee. Although he was a so called "studio manager," he had no managerial powers,
but was merely an ordinary employee.
Respondent prayed for his reinstatement without loss of seniority rights, or, in the alternative,
that he be paid separation pay, backwages and overtime pay; and that he be awarded unpaid
commission in the amount ofP2,000.00 for services rendered as a studio technician as well as
moral and exemplary damages.
Respondents evidence consisted of the Payroll dated July 31, 2001 to March 15, 2002, which
was certified correct by petitioner,2 and Petty Cash Vouchers3 evidencing receipt of payroll
payments by respondent from Celkor.
In defense, petitioner stated in his Position Paper4 that respondent was not hired as studio
manager, composer, technician or as an employee in any other capacity of Celkor. Respondent
could not have been hired as a studio manager, since the recording studio has no personnel
except petitioner. Petitioner further claimed that his daughter Celine Mei Lirio, a former
contract artist of ABS-CBN Star Records, failed to come up with an album as the latter aborted
its project to produce one. Thus, he decided to produce an album for his daughter and
established a recording studio, which he named Celkor Ad Sonicmix Recording Studio. He looked
for a composer/arranger who would compose the songs for the said album. In July 2001, Bob
Santiago, his son-in-law, introduced him to respondent, who claimed to be an amateur
composer, an arranger with limited experience and musician without any formal musical
training. According to petitioner, respondent had no track record as a composer, and he was not
known in the field of music. Nevertheless, after some discussion, respondent verbally agreed
with petitioner to co-produce the album based on the following terms and conditions: (1)
petitioner shall provide all the financing, equipment and recording studio; (2) Celine Mei Lirio
shall sing all the songs; (3) respondent shall act as composer and arranger of all the lyrics and
the music of the five songs he already composed and the revival songs; (4) petitioner shall have
exclusive right to market the album; (5) petitioner was entitled to 60% of the net profit, while
respondent and Celine Mei Lirio were each entitled to 20% of the net profit; and (6) respondent
shall be entitled to draw advances of P7,000.00 a month, which shall be deductible from his
share of the net profits and only until such time that the album has been produced.
According to petitioner, they arrived at the foregoing sharing of profits based on the mutual
understanding that respondent was just an amateur composer with no track record whatsoever
in the music industry, had no definite source of income, had limited experience as an arranger,
had no knowledge of the use of sound mixers or digital arranger and that petitioner would help
and teach him how to use the studio equipment; that petitioner would shoulder all the expenses
of production and provide the studio and equipment as well as his knowledge in the use
thereof; and Celine Mei Lirio would sing the songs. They embarked on the production of the
album on or about the third week of August 2002.
Petitioner asserted that from the aforesaid terms and conditions, his relationship with
respondent is one of an informal partnership under Article 17675 of the New Civil Code, since
they agreed to contribute money, property or industry to a common fund with the intention of
dividing the profits among themselves. Petitioner had no control over the time and manner by
which respondent composed or arranged the songs, except on the result thereof. Respondent
reported to the recording studio between 10:00 a.m. and 12:00 noon. Hence, petitioner
contended that no employer-employee relationship existed between him and the respondent,
and there was no illegal dismissal to speak of.
On October 31, 2003, Labor Arbiter Renaldo O. Hernandez rendered a decision,6 finding that an
employer-employee relationship existed between petitioner and respondent, and that
respondent was illegally dismissed. The dispositive portion of the decision reads:
WHEREFORE, premises considered, we find that respondents CELKOR AD SONICMIX RECORDING

STUDIO and/ or CESAR C. LIRIO (Owner), have illegally dismissed complainant in his status as
regular employee and, consequently, ORDERING said respondents:
1) To pay him full backwages from date of illegal dismissal on March 14, 2002 until
finality of this decision and, in lieu of reinstatement, to [pay] his separation pay of one
(1) month pay per year of service reckoned from [the] date of hire on August 15, 2001
until finality of this decision, which as of date amounts to full backwages total of
145,778.6 (basic P7,000.00 x 19.6 mos.=P133,000.00 + 1/12 thereof as 13th month pay
of P11,083.33 + SILP P7,000/32.62 days=P214.59/day x 5=P1,072.96 x 1.58
yrs.=P1,695.27);separation pay of P22,750.00 (P7,000.00 x 3.25 yrs.);
2) To pay complainant's unpaid commission of P2,000.00;
3) To pay him moral and exemplary damages in the combined amount of P75,000.00.
Other monetary claims of complainant are dismissed for lack of merit.7
The Labor Arbiter stated that petitioners denial of the employment relationship cannot
overcome respondents positive assertion and documentary evidence proving that petitioner
hired respondent as his employee.8
Petitioner appealed the decision of the Labor Arbiter to the National Labor Relations
Commission (NLRC).
In a Resolution7 dated October 14, 2004, the NLRC reversed and set aside the decision of the
Labor Arbiter. The dispositive portion of the Resolution reads:
WHEREFORE, premises considered, the Appeal is GRANTED. Accordingly, the Decision appealed
from is REVERSED and, hence, SET ASIDE and a new one ENTERED dismissing the instant case for
lack of merit.9
The NLRC stated that respondent failed to prove his employment tale with substantial evidence.
Although the NLRC agreed that respondent was able to prove that he received gross pay less
deduction and net pay, with the corresponding Certification of Correctness by petitioner,
covering the period from July 31, 2001 to March 15, 2002, the NLRC held that respondent failed
to proved with substantial evidence that he was selected and engaged by petitioner, that
petitioner had the power to dismiss him, and that they had the power to control him not only as
to the result of his work, but also as to the means and methods of accomplishing his work.
Respondents motion for reconsideration was denied by the NLRC in a Resolution9 dated
December 14, 2004.
Respondent filed a petition for certiorari before the Court of Appeals.
On August 4, 2005, the Court of Appeals rendered a decision10 reversing and setting aside the
resolution of the NLRC, and reinstating the decision of the Labor Arbiter, with modification in
regard to the award of commission and damages. The Court of Appeals deleted the award of
commission, and moral and exemplary damages as the same were not substantiated. The
dispositive portion of the Court of Appeals decision reads:
WHEREFORE, the petition is GRANTED and the assailed resolutions dated October 14, 2004 and
December 14, 2004 are hereby REVERSED and SET ASIDE. Accordingly, the decision dated
October 31, 2003 of the Labor Arbiter is REINSTATED, with the modification that the awards of
commission and damages are deleted.11(Emphasis supplied.)
Petitioners motion for reconsideration was denied for lack of merit by the Court of Appeals in
its Resolution12dated September 21, 2005.
Hence, petitioner Lirio filed this petition.
Petitioner states that respondent appealed to the Court of Appeals via a petition for certiorari
under Rule 65, which will prosper only if there is a showing of grave abuse of discretion or an act
without or in excess of jurisdiction on the part of the NLRC.13 However, petitioner contends that
the Court of Appeals decided the case not in accordance with law and applicable rulings of this
Court as petitioner could not find any portion in the Decision of the Court of Appeals ruling that
the NLRC acted without or in excess of jurisdiction or with grave abuse of discretion amounting
to lack or excess of jurisdiction. Petitioner submits that the Court of Appeals could not review an
error of judgment by the NLRC raised before it on a petition for certiorari under Rule 65 of the
1997 Rules of Civil Procedure. Moreover, petitioner contends that it was error on the part of the
Court of Appeals to review the finding of facts of the NLRC on whether there exists an employeremployee relationship between the parties.
Petitioners argument lacks merit.
It is noted that respondent correctly sought judicial review of the decision of the NLRC via a
petition for certiorari under Rule 65 of the Rules of Court filed before the Court of Appeals in
accordance with the decision of the Court in St. Martin Funeral Home v. NLRC,14 which held:
Therefore, all references in the amended Section 9 of B.P. No. 129 to supposed appeals from the
NLRC to the Supreme Court are interpreted and hereby declared to mean and refer to petitions
for certiorari under Rule 65. Consequently, all such petitions should henceforth be initially filed
in the Court of Appeals in strict observance of the doctrine on the hierarchy of courts as the
appropriate forum for the relief desired.15
The Court of Appeals stated in its decision that the issue it had to resolve was "whether or not
the public respondent [NLRC] committed grave abuse of discretion when it declared that no
employer-employee relationship exists between the petitioner and the private respondents,
since the petitioner failed to prove such fact by substantial evidence."16
Errors of judgment, as distinguished from errors of jurisdiction, are not within the province of a
special civil action for certiorari, which is merely confined to issues of jurisdiction or grave abuse
of discretion.17 By grave abuse of discretion is meant such capricious and whimsical exercise of
judgment as is equivalent to lack of jurisdiction, and it must be shown that the discretion was
exercised arbitrarily or despotically.18
The Court of Appeals, therefore, could grant the petition for certiorari if it finds that the NLRC, in
its assailed decision or resolution, committed grave abuse of discretion by capriciously,
whimsically, or arbitrarily disregarding evidence that is material to or decisive of the
controversy; and it cannot make this determination without looking into the evidence of the
parties.19 Necessarily, the appellate court can only evaluate the materiality or significance of the
evidence, which is alleged to have been capriciously, whimsically, or arbitrarily disregarded by
the NLRC, in relation to all other evidence on record.20 Thus, contrary to the contention of
petitioner, the Court of Appeals can review the finding of facts of the NLRC and the evidence of
the parties to determine whether the NLRC gravely abused its discretion in finding that no
employer-employee relationship existed between petitioner and respondent.21
Respondent raised before the Court of Appeals the following issues:
I. RESPONDENT NATIONAL LABOR RELATIONS COMMISSION COMMITTED GRAVE ABUSE OF
DISCRETION IN SHIFTING THE BURDEN OF PROVING THAT EMPLOYMENT RELATIONS EXISTED
BETWEEN THE PETITIONER AND THE PRIVATE RESPONDENTS TO THE FORMER, IN VIOLATION OF
ESTABLISHED PROVISION OF LAWS AND JURISPRUDENCE.
II. RESPONDENT NATIONAL LABOR RELATIONS COMMISSION COMMITTED GRAVE ABUSE OF
DISCRETION IN HOLDING THAT NO EMPLOYER-EMPLOYEE RELATIONSHIP EXISTED BETWEEN THE
PETITIONER AND THE PRIVATE RESPONDENTS.
III. RESPONDENT NATIONAL LABOR RELATIONS COMMISSION COMMITTED GRAVE ABUSE OF
DISCRETION IN DISREGARDING THE PETITIONER'S PAYROLL AND THE PETTY CASH VOUCHERS AS
AN INDICIA OF EMPLOYMENT RELATIONS BETWEEN PETITIONER AND THE PRIVATE
RESPONDENTS.22
Between the documentary evidence presented by respondent and the mere allegation of
petitioner without any proof by way of any document evincing their alleged partnership
agreement, the Court of Appeals agreed with the Labor Arbiter that petitioner failed to
substantiate his claim that he had a partnership with respondent, citing the Labor Arbiters
finding, thus:
In this case, complainant's evidence is substantial enough to prove the employment relationship
that on August 14, 2001, he was hired as 'Studio manager' by respondent Lirio to manage and
operate the recording studio and to promote and sell its services to music enthusiasts and
clients, proven by his receipt for this purpose from said respondent a fixed monthly
compensation of P7,000.00, with commission of P100.00 per hour when serving as recording
technician, shown by the payroll from July 31, 2001-March 15, 2002. The said evidence points to
complainant's hiring as employee so that the case comes within the purview of our jurisdiction
on labor disputes between an employer and an employee. x x x.
Respondent Lirio's so-called existence of a partnership agreement was not substantiated and
his assertion thereto, in the face of complainant's evidence, constitute but a self-serving
assertion, without probative value, a mere invention to justify the illegal dismissal.
xxxx
Indeed, we find credible that what caused complainant's dismissal on March 14, 2002 was due
to his refusal to respondent's Lirio's insistences on merely giving him 20% based on net profit on
sale of the album which he composed and arranged during his free time and, moreover, that
salaries which he received would be deducted therefrom, which obviously, soured the relations
from the point of view of respondent Lirio.23
Hence, based on the finding above and the doctrine that "if doubt exists between the evidence
presented by the employer and the employee, the scales of justice must be tilted in favor of the
latter,"24 the Court of Appeals reversed the resolution of the NLRC and reinstated the decision of
the Labor Arbiter with modification. Even if the Court of Appeals was remiss in not stating it in
definite terms, it is implied that the Court of Appeals found that the NLRC gravely abused its
discretion in finding that no employer-employee relationship existed between petitioner and
respondent based on the evidence on record.
We now proceed to the main issue raised before this Court: Whether or not the decision of the
Court of Appeals is in accordance with law, or whether or not the Court of Appeals erred in
reversing and setting aside the decision of the NLRC, and reinstating the decision of the Labor
Arbiter with modification.
In petitions for review, only errors of law are generally reviewed by this Court. This rule,
however, is not ironclad.25Where the issue is shrouded by a conflict of factual perceptions by the
lower court or the lower administrative body, in this case, the NLRC, this Court is constrained to
review the factual findings of the Court of Appeals.26
Before a case for illegal dismissal can prosper, it must first be established that an employeremployee relationship existed between petitioner and respondent.27
The elements to determine the existence of an employment relationship are: (a) the selection
and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d)
the employers power to control the employees conduct. The most important element is the
employers control of the employees conduct, not only as to the result of the work to be done,
but also as to the means and methods to accomplish it.28
It is settled that no particular form of evidence is required to prove the existence of an
employer-employee relationship.29 Any competent and relevant evidence to prove the
relationship may be admitted.30
In this case, the documentary evidence presented by respondent to prove that he was an
employee of petitioner are as follows: (a) a document denominated as "payroll" (dated July 31,
2001 to March 15, 2002) certified correct by petitioner,31 which showed that respondent
received a monthly salary of P7,000.00 (P3,500.00 every 15th of the month and
another P3,500.00 every 30th of the month) with the corresponding deductions due to absences
incurred by respondent; and (2) copies of petty cash vouchers,32 showing the amounts he
received and signed for in the payrolls.
The said documents showed that petitioner hired respondent as an employee and he was paid
monthly wages ofP7,000.00. Petitioner wielded the power to dismiss as respondent stated that
he was verbally dismissed by petitioner, and respondent, thereafter, filed an action for illegal
dismissal against petitioner. The power of control refers merely to the existence of the
power.33 It is not essential for the employer to actually supervise the performance of duties of
the employee, as it is sufficient that the former has a right to wield the power.34Nevertheless,
petitioner stated in his Position Paper that it was agreed that he would help and teach
respondent how to use the studio equipment. In such case, petitioner certainly had the power
to check on the progress and work of respondent.
On the other hand, petitioner failed to prove that his relationship with respondent was one of
partnership.1wphi1 Such claim was not supported by any written agreement. The Court notes
that in the payroll dated July 31, 2001 to March 15, 2002,35 there were deductions from the
wages of respondent for his absence from work, which negates petitioners claim that the wages
paid were advances for respondents work in the partnership. In Nicario v. National Labor
Relations Commission,36 the Court held:
It is a well-settled doctrine, that if doubts exist between the evidence presented by the
employer and the employee, the scales of justice must be tilted in favor of the latter. It is a timehonored rule that in controversies between a laborer and his master, doubts reasonably arising
from the evidence, or in the interpretation of agreements and writing should be resolved in the
formers favor. The policy is to extend the doctrine to a greater number of employees who can
avail of the benefits under the law, which is in consonance with the avowed policy of the State
to give maximum aid and protection of labor. This rule should be applied in the case at bar,
especially since the evidence presented by the private respondent company is not convincing. x
x x37
Based on the foregoing, the Court agrees with the Court of Appeals that the evidence presented
by the parties showed that an employer-employee relationship existed between petitioner and
respondent.
In termination cases, the burden is upon the employer to show by substantial evidence that the
termination was for lawful cause and validly made.38 Article 277 (b) of the Labor Code39 puts the
burden of proving that the dismissal of an employee was for a valid or authorized cause on the
employer, without distinction whether the employer admits or does not admit the
dismissal.40 For an employees dismissal to be valid, (a) the dismissal must be for a valid cause,
and (b) the employee must be afforded due process.41 Procedural due process requires the
employer to furnish an employee with two written notices before the latter is dismissed: (1) the
notice to apprise the employee of the particular acts or omissions for which his dismissal is
sought, which is the equivalent of a charge; and (2) the notice informing the employee of his
dismissal, to be issued after the employee has been given reasonable opportunity to answer and
to be heard on his defense.42 Petitioner failed to comply with these legal requirements; hence,
the Court of Appeals correctly affirmed the Labor Arbiters finding that respondent was illegally
dismissed, and entitled to the payment of backwages, and separation pay in lieu of
reinstatement.
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. SP No.
88899, dated August 4, 2005, and its Resolution dated September 21, 2005, are AFFIRMED.
No costs.
SO ORDERED.
DIOSDADO M. PERALTA
Associate Justice
Footnotes
*
Designated as an additional member in lieu of Associate Justice Estela M. PerlasBernabe, per Special Order No. 1152, dated November 11, 2011.
1
CA rollo, p. 49.
2
Annex "A," id. at 61.
3
4
Id. at 66.
5
Art. 1767. By the contract of partnership two or more persons bind themselves to
contribute money, property, or industry to a common fund, with the intention of
dividing the profits among themselves.
6
CA rollo, p. 115.
7
Id. at 120-121.
8
Labor Arbiters Decision, id. at 118.
9
Rollo, pp. 53-54.
10
Id. at 30-41.
11
Id. at 41.
12
Id. at 42.
13
Id. at 24, citing Philtranco Service Enterprises, Inc. v. National Labor Relations
Commission, 351 Phil. 827, 834 (1998).
14
356 Phil. 811 (1998).
15
Id. at 824. (Emphasis supplied.)
16
Emphasis supplied.
17
Leonis Navigation Co., Inc. v. Villamater, G.R. No. 179169, March 3, 2010, 614 SCRA
182, 192.
18
Id.
19
Id.
20
Id.
21
See St. Martin Funeral Home v. NLRC, supra note 14.
22
CA Decision, rollo, pp. 36-37.
23
Rollo, pp. 39-40.
24
Sy v. Court of Appeals, G.R. No. 142293, February 27, 2003, 398 SCRA 301, 309.
25
Alay sa Kapatid International Foundation, Inc. (AKAP) v. Dominguez, G.R. No. 164198,
June 15, 2007, 524 SCRA 719, 723.
26
Id. See also Philemploy Services and Resources, Inc. v. Rodriguez, G.R. No. 152616,
March 31, 2006, 486 SCRA 302, 314; Filipinas Pre-Fabricated Building Systems, Inc. v.
Puente, 493 Phil. 923, 930 (2005); Go v. Court of Appeals, G.R. No. 158922, May 28,
2004, 430 SCRA 358, 365.
27
Sy v. Court of Appeals, supra note 23, at 306.
28
Id.
29
Opulencia Ice Plant and Storage v. NLRC, G.R. No. 98368, December 15, 1993, 228
SCRA 473, 478.
30
Id.
31
CA rollo, p. 61.
32
Id. at 62-65.
33
Social Security System v. Court of Appeals, 401 Phil. 132, 151 (2000).
34
Id.
35
CA rollo, p. 61
36
356 Phil. 936 (1998).
37
Id. at 943.
38
39
Article 277. Miscellaneous provisions. x x x
(b) Subject to the constitutional right of workers to security of tenure and their
right to be protected against dismissal except for a just and authorized cause
and without prejudice to the requirement of notice under Article 283 of this
Code, the employer shall furnish the worker whose employment is sought to be
terminated a written notice containing a statement of the causes for
termination and shall afford the latter ample opportunity to be heard and to
defend himself with the assistance of his representative if he so desires in
accordance with company rules and regulations promulgated pursuant to
guidelines set by the Department of Labor and Employment. Any decision taken
by the employer shall be without prejudice to the right of the worker to contest
the validity or legality of his dismissal by filing a complaint with the regional
branch of the National Labor Relations Commission. The burden of proving that
the termination was for a valid or authorized cause shall rest on the employer. x
x x (Emphasis supplied.)
40
41
Id.
42
Id. at 312.

SUPREME COURT
Manila
G.R. No. L-66598 December 19, 1986
PHILIPPINE BANK OF COMMUNICATIONS, petitioner,
vs.
THE NATIONAL LABOR RELATIONS COMMISSION, HONORABLE ARBITER TEODORICO L.
DOGELIO and RICARDO ORPIADA respondents.
Marcelino Lontok, Jr. for respondents.
FELICIANO, J.:
Petitioner Philippine Bank of Communications and the Corporate Executive Search Inc. (CESI)
entered into a letter agreement dated January 1976 under which (CESI) undertook to provide
"Tempo[rary] Services" to petitioner Consisting of the "temporary services" of eleven (11)
messengers. The contract period is described as being "from January 1976." The petitioner in
truth undertook to pay a "daily service rate of P18, " on a per person basis.
Attached to the letter agreement was a "List of Messengers assigned at Philippine Bank of
Communications" which list included, as item No. 5 thereof, the name of private respondent
Ricardo Orpiada.
Ricardo Orpiada was thus assigned to work with the petitioner bank. As such, he rendered
services to the bank, within the premises of the bank and alongside other people also rendering
services to the bank. There was some question as to when Ricardo Orpiada commenced
rendering services to the bank. As noted above, the letter agreement was dated January 1976.
However, the position paper submitted by (CESI) to the National Labor Relations Commission
stated that (CESI) hired Ricardo Orpiada on 25 June 1975 as a Tempo Service employee, and
assigned him to work with the petitioner bank "as evidenced by the appointment memo issued
to him on 25 June 1975. " Be that as it may, on or about October 1976, the petitioner requested
(CESI) to withdraw Orpiada's assignment because, in the allegation of the bank, Orpiada's
services "were no longer needed."
On 29 October 1976, Orpiada instituted a complaint in the Department of Labor (now Ministry
of Labor and Employment) against the petitioner for illegal dismissal and failure to pay the 13th
month pay provided for in Presidential Decree No. 851. This complaint was docketed as Case
No. R04-1010184-76-E. After investigation, the Office of the Regional Director, Regional Office
No. IV of the Department of Labor, issued an order dismissing Orpiada's complaint for failure of
Mr. Orpiada to show the existence of an employer-employee relationship between the bank and
himself.
Despite the foregoing order, Orpiada succeeded in having his complaint certified for compulsory
arbitration in Case No. RB-IV-11187-77 entitled "Ricardo Orpiada, complaint vs. Philippine Bank
of Communications, respondent."During the compulsory arbitration proceedings, CE SI was
brought into the picture as an additional respondent by the bank. Both the bank and (CESI)
stoutly maintained that (CESI) (and not the bank) was the employer of Orpiada.
On 12 September 1977, respondent Labor Arbiter Dogelio rendered a decision in Case No. RBIV-11187-77, the dispositive portion of which read as follows:
WHEREFORE, premises considered, respondent bank is hereby ordered to reinstate
complainant to the same or equivalent position with full back wages and to pay the
latter's 13th month pay for the year 1976.
On 26 October 1977, the bank appealed the decision of the Labor Arbiter to the respondent
NLRC. More than six years laterand the record is silent on why the proceeding in the NLRC
should have taken more than six years to resolve the NLRC promulgated its decision affirming
the award of the Labor Arbiter and stating as follows:
WHEREFORE, except for the modification reducing the complainant's back wages to two
(2) years without qualification, the Decision appealed from is hereby AFFIRMED in an
other respects.
Accordingly, on 2 April 1984, the bank filed the present petition for certiorari with this Court
seeking to annul and set aside (a) the decision of respondent Labor Arbiter Dogelio dated 12
September 1977 in Labor Case No. RB-IV-1118-77 and (b) the decision of the NLRC promulgated
on 29 December 1983 affirming with some modifications the decision of the Labor Arbiter. This
Court granted a temporary restraining order on 11 April 1984. The main issue as litigated by the
parties in this case relates to whether or not an employer-employee relationship existed
between the petitioner bank and private respondent Ricardo Orpiada. The petitioner bank
maintains that no employer-employee relationship was established between itself and Ricardo
Orpiada and that Ricardo Orpiada was an employee of (CESI) and not of the bank. The bank
documents its position by pointing to the following provisions of its letter agreement with CE SI
1. The individual/s you i.e. (CESI) will assign to us i.e. petitioner) will be subject to our
acceptance and will observe work-days, hours, and methods of work (sic); on the other
hand, they will not be asked to perform job (sic) not normally related to the position/s
for which Tempo Services were contracted.
2. Such individuals will nevertheless remain your own employees and you will therefore,
retain all liabilities arising from the new Labor Code as amended Social Security Act and
other applicable Governmental decrees, rules and regulations, provided that, on our
part, we shaIl
a. Require your employers assigned to us to properly accomplish your daily time
record, to faithfully reflect all hours worked in our behalf whether such work be
within or beyond eight hours of any day.
b. Notify you of any change in the work assignment or contract period affecting
any of your employers assigned to us within 24 hours, after such change is
made.
(Emphasis supplied)
The above language of the agreement between the bank and CE SI is of course relevant and
important as manifesting an intent to refrain from constituting an employer-employee
relationship between the bank and the persons assigned or seconded to the bank by (CESI) That
extent to which the parties were successful in realizing their intent is another matter, one that is
dependent upon applicable law and not merely upon the terms of their contract.
In the case of Viana vs. AI-Lagdan and Pica, 99 Phil. 408 (1956), this Court listed certain factors
to be taken into account in determining the existence of an employer-employee relationship.
These factors are:
1) The selection and engagement of the putative employee;
2) The payment of wages;
3) The power of dismissal- and
4) The power to control the putative employees' conduct, although the latter is the
most important element. ... (99 Phil. at 411- 412; Emphasis supplied)
In the present case, Orpiada was not previously selected by the bank. Rather, Orpiada was
assigned to work in the bank by (CESI) Orpiada could not have found his way to the bank's
offices had he not been first hired by (CESI) and later assigned to work in the bank's offices. The
selection of Orpiada by (CESI) was, however, subject to the acceptance of the bank and the bank
did accept him As will be seen shortly, (CESI) had hired Orpiada from the outside world precisely
for the purpose of assigning or seconding him to the bank.
With respect to the payment of Orpiada's wages, the bank remitted to CE SI amounts
corresponding to the "daily service rate" of Orpiada and the others similarly assigned by (CESI)
to the bank, and (CESI) paid to Orpiada and the others the wages pertaining to to them. It is not
clear from the record whether the amounts remitted to (CESI) included some factor for CESIs
fees; it seems safe to assume that (CESI) had required some amount in excess of the wages paid
by (CESI) to Orpiada and the others to cover its own overhead expenses and provide some
contribution to profit. The bank alleged that Orpiada did not appear in its payroll and this
allegation was not denied by Orpiada. Indeed, the Labor Arbiter in Case No. R04-184-76-B found
that Orpiada was listed in the payroll of (CESI) with (CESI) deducting amounts representing his
Medicare and Social Security System premiums. A copy of the (CESI) payroll was presented,
strangely enough, by Orpiada himself to Regional Office No. IV.
In respect of the power of dismissal we note that the bank requested (CESI) to withdraw
Orpiada's assignment and that (CESI) did, in fact, withdraw such assignment. Upon such
withdrawal from his assignment with the bank, Orpiada was also terminated by (CESI) Indeed, it
appears clear that Orpiada was hired by (CESI) specifically for assignment with the bank and that
upon his withdrawal from such assignment upon request of the bank, Orpiada's employment
with (CESI) was also severed, until some other client of (CESI) showed up in the horizon to which
Orpiada could once more be assigned. In the position paper dated August 5, 1977 submitted by
(CESI) before the NLRC, (CESI) explained the relationship between itself and Orpiada in lucid
terms:
5. That as Petitioner herein was very well aware of from the very beginning, he was
hired by Corporate Executive Search, Inc. as a temporary employee and as such, was
being assigned to work with the latter's client Respondent herein that the rationale
behind his hiring was the existence of a service contract between Corporate Executive
Search Inc. and its client-company, the Philippine Bank of Communications, the herein
Respondent, and that when this service contract was 0terminated, then the reason for
his employment with Corporate Executive Search, Inc., ceased to exist and that therefore
Corporate Executive Search Inc. had no alternative but to discontinue his employment
until another opportune time for his hiring would present itself;
6. That Petitioner was not given his 13th-month pay under P.D. 851, because Corporate
Executive Search Inc. gave the 13th month pay for 1976 to its employees in December
1976, and since the company had lost contact with the Petitioner by reason of his
having ceased to be connected with it as of 22 October 1976, he was not among those
given the 13th-month pay. (Emphasis supplied)
Turning to the power to control Orpiada's conduct, it should be noted immediately that Orpiada
performed his sections within the bank's premises, and not within the office premises of (CESI)
As such, Orpiada must have been subject to at least the same control and supervision that the
bank exercises over any other person physically within its premises and rendering services to or
for the bank, in other words, any employee or staff member of the bank. It seems unreasonable
to suppose that the bank would have allowed Orpiada and the other persons assigned to the
bank by CE SI to remain within the bank's premises and there render services to the bank,
without subjecting them to a substantial measure of control and supervision, whether in respect
of the manner in which they discharged their functions, or in respect of the end results of their
functions or activities, or both.
Application of the above factors in the specific context of this case appears to yield mixed results
so far as concerns the existence of an employer- employer relationship between the bank and
Orpiada. The second ("payment of wages") and third ("power of dismissal") factors suggest that
the relevant relationship was that subsisting between (CESI) and Orpiada, a relationship
conceded by (CESI) to be one between employer and employee. Upon the other hand, the first
("selection and engagement") and fourth ("control of employee's conduct") factors indicate that
some direct relationship did exist between Orpiada and the bank and that such relationship may
be assimilated to employment. Perhaps the most important circumstance which emerges from
an examination of the facts of the tri-lateral relationship between the bank, (CESI) and Orpiada
is that the employer-employee relationship between (CESI) and Orpiada was established
precisely in anticipation of, and for the very purpose of making possible, the secondment of
Orpiada to the bank. It is therefore necessary to confront the task of determining the
appropriate characterization of the relationship between the bank and (CESI) was that
relationship one of employer and job (independent) contractor or one of employer and "laboronly" contractor?
Articles 106 and 107 of the Labor Code of the Philippines (Presidential Decree No. 442, as
amended) provides as follows:
ART. 106. Contractor or sub-contractor.Whenever an employer enters into a contract

with another person for the performance of the former's work, the employees of the
contractor and of the latter's subcontractor, if any, shall be paid in accordance with the
provisions in this Code.
In the event that the contractor or sub-contractor fails to pay the wages of his
employees in accordance with this Code, the employer shall be jointly and severally
liable with his contractor or sub-contructor to such employees to the extent of the work
performed under the contract in the same manner and extent that he is liable to
employees directly employed by him
The Secretary of Labor may, by appropriate regulations, restrict or prohibit the
contracting out of labor to protect the rights of workers established under this Code. In
so prohibiting or restricting, he may make appropriate distinctions between labor-only
contracting and job contracting as well as differentiations within these types of
contracting and determine who among the parties involved shall be considered the
employer for purposes of this Code, to prevent any violation or circumvention of any
provisions of this Code.
There is "labor-only" contracting where the person supplying workers to an employer
does not have substantial capital or investment in the form of tools, equipment,
machineries, work premises, among others, and the workers recruited and placed by
such person are performing activities which are directly related to the principal business
of such employer. In such cases, the person or intermediary shall be considered merely
as an agent of the employer who shall be responsible to the workers in the same manner
and extent as if the latter were directly employed by him.
ART. 107. Indirect employer. The provisions of the immediately preceding Article shall
likewise apply to any person, part, nership association or corporation which, not being
an employer, contracts with an independent contractor for the performance of any
work, task, job or project. (Emphasis supplied)
Under the general rule set out in the first and second paragraphs of Article 106, an employer
who enters into a contract with a contractor for the performance of work for the employer,
does not thereby create an employer-employes relationship between himself and the
employees of the contractor. Thus, the employees of the contractor remain the contractor's
employees and his alone. Nonetheless when a contractor fails to pay the wages of his
employees in accordance with the Labor Code, the employer who contracted out the job to the
contractor becomes jointly and severally liable with his contractor to the employees of the latter
"to the extent of the work performed under the contract" as such employer were the employer
of the contractor's employees. The law itself, in other words, establishes an employer-employee
relationship between the employer and the job contractor's employees for a limited purpose,
i.e., in order to ensure that the latter get paid the wages due to them.
A similar situation obtains where there is "labor only" contracting. The "labor-only" contractori.e "the person or intermediary" is considered "merely as an agent of the employer. " The
employer is made by the statute responsible to the employees of the "labor only" contractor as
if such employees had been directly employed by the employer. Thus, where "labor only"
contracting exists in a given case, the statute itself implies or establishes an employer-employee
relationship between the employer (the owner of the project) and the employees of the "labor
only" contractor, this time for a comprehensive purpose: "employer for purposes of this Code, to
prevent any violation or circumvention of any provision of this Code. " The law in effect holds
both the employer and the "labor-only" contractor responsible to the latter's employees for the
more effective safeguarding of the employees' rights under the Labor Code.
Both the petitioner bank and (CESI) have insisted that (CESI) was not a "labor only" contractor.
Section 9 of Rule VIII of Book III entitled "Conditions of Employment," of the Omnibus Rules
Implementing the Labor Code provides as follows:
Sec. 9. Labor-only contracting. (a) Any person who undertakes to supply workers to an
employer shag be deemed to be engaged in labor-only contracting where such person:
(1) Does not have substantial capital or investment in the form of tools,
equipment, machineries, work premises and other materials; and
(2) The workers recruited and placed by such person are performing activities
which are to the principal business or operations of the c workers are habitually
employed,
(b) Labor-only contracting as defined herein is hereby prohibited and the person acting
as contractor shall be considered merely as an agent or intermediary of the employer
who shall be responsible to the workers in the same manner and extent as if the latter
were directly employed by him
(c) For cases not file under this Article, the Secretary of Labor shall determine through
appropriate orders whether or not the contracting out of labor is permissible in the light
of the circumstances of each case and after considering the operating needs of the
employer and the rights of the workers involved. In such case, he may prescribe
conditions and restrictions to insure the protection and welfare of the workers.
(Emphasis supplied)
In contrast, job contracting-contracting out a particular job to an independent contractor is
defined by the Implementing Rules as follows:
Sec. 8. Job contracting. There is job contracting permissible under the Code if the
following conditions are met:
(1) The contractor carries on an independent business and undertakes the contract
work on his own account under his own responsibility according to his own manner and
method free from the control and direction of his employer or principal in all matters
connected with the performance of the work except as to the results thereof; and
(2) The contractor has substantial capital or investment in the form of tools, equipment,
machineries, work premises, and other materials which are necessary in the conduct of
his business. (Emphasis supplied)
The bank and (CESI) urge that (CESI) is not properly regarded as a "labor-only" contractor upon n
the ground that (CESI) is possessed of substantial capital or investment in the form of office
equipment, tools and trained service personnel.
We are unable to agree with the bank and (CESI) on this score. The definition of "labor-only"
contracting in Rule VIII, Book III of the Implementing Rules must be read in conjunction with the
definition of job contracting given in Section 8 of the same Rules. The undertaking given by CESI
in favor of the bank was not the performance of a specific job for instance, the carriage and
delivery of documents and parcels to the addresses thereof. There appear to be many
companies today which perform this discrete service, companies with their own personnel who
pick up documents and packages from the offices of a client or customer, and who deliver such
materials utilizing their own delivery vans or motorcycles to the addresses. In the present case,
the undertaking of (CESI) was toprovide its client-thebank-with a certain number of persons able
to carry out the work of messengers. Such undertaking of CESI was complied with when the
requisite number of persons were assigned or seconded to the petitioner bank. Orpiada utilized
the premises and office equipment of the bank and not those of (CESI) Messengerial work-the
delivery of documents to designated persons whether within or without the bank premises is
of course directly related to the day-to-day operations of the bank. Section 9(2) quoted above
does notrequire for its applicability that the petitioner must be engaged in the delivery of items
as a distinct and separate line of business.
Succinctly put, CESI is not a parcel delivery company: as its name indicates, it is a recruitment
and placement corporation placing bodies, as it were, in d ifferent client companies for longer or
shorter periods of time. It is this factor that, to our mind, distinguishes this case from American
President v. Clave et al, 114 SCRA 826 (1982) if indeed distinguishing way is needed.
The bank urged that the letter agreement entered into with CESI was designed to enable the
bank to obtain the temporary services of people necessary to enable the bank to cope with peak
loads, to replace temporary workers who were out on vacation or sick leave, and to handle
specialized work. There is, of course, nothing illegal about hiring persons to carry out "a specific
project or undertaking the completion or termination of which [was] determined at the time of
the engagement of [the] employee, or where the work or service to be performed is seasonal in
nature and the employment is for the duration of the season" (Article 281, Labor
Code).<re||an1w> The letter agreement itself, however, merely required (CESI) to furnish
the bank with eleven 11) messengers for " a contract period from January 19, 1976 ." The
eleven (11) messengers were thus supposed to render "temporary" services for an indefinite or
unstated period of time. Ricardo Orpiada himself was assigned to the bank's offices from 25
June 1975 and rendered services to the bank until sometime in October 1976, or a period of
about sixteen months. Under the Labor Code, however, any employee who has rendered at
least one year of service, whether such service is continuous or not, shall be considered a
regular employee (Article 281, Second paragraph). Assuming, therefore, that Orpiada could
properly be regarded as a casual (as distinguished from a regular) employee of the bank, he
became entitled to be regarded as a regular employee of the bank as soon as he had completed
one year of service to the bank. Employers may not terminate the service of a regular employee
except for a just cause or when authorized under the Labor Code (Article 280, Labor Code). It is
not difficult to see that to uphold the contractual arrangement between the bank and (CESI)
would in effect be to permit employers to avoid the necessity of hiring regular or permanent
employees and to enable them to keep their employees indefinitely on a temporary or casual
status, thus to deny them security of tenure in their jobs. Article 106 of the Labor Code is
precisely designed to prevent such a result.
We hold that, in the circumstances 'instances of this case, (CESI) was engaged in "labor-only" or
attracting vis-a-vis the petitioner and in respect c Ricardo Orpiada, and that consequently, the
petitioner bank is liable to Orpiada as if Orpiada had been directly, employed not only by (CESI)
but also by the bank. It may well be that the bank may in turn proceed against (CESI) to obtain
reimbursement of, or some contribution to, the amounts which the bank will have to pay to
Orpiada; but this it is not necessary to determine here.
WHEREFORE, the petition for certiorari is DENIED and the decision promulgated on 29
December 1983 of the National Labor Relations Commission is AFFIRMED. The Temporary
Restraining Order issued by this Court on 11 April 1984 is hereby lifted. Costs against petitioner.
SO ORDERED.
Yap (Chairman), Narvasa, Melencio-Herrera and Cruz, JJ., concur.

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 164257
July 5, 2010
SAN MIGUEL CORPORATION, Petitioner,

vs.
VICENTE B. SEMILLANO, NELSON MONDEJAR, JOVITO REMADA, ALILGILAN MULTI-PURPOSE
COOP (AMPCO) and MERLYN V. POLIDARIO, Respondents.
DECISION
MENDOZA, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Court assailing (i) the
February 19, 2004 Decision1 of the Court of Appeals in CA-G.R. SP. No. 75209 which reversed
and set aside the February 28, 2002 and September 27, 2002 Resolutions of the National Labor
Relations Commission in NLRC Case No. V-000588-98; and (ii) its May 28, 2004
Resolution2 denying petitioners motion for the reconsideration thereof.
The facts of the case, as found by the Court of Appeals,3 are as follows:
"xxx It appears that AMPCO hired the services of Vicente et al. [Vicente Semillano, Nelson
Mondejar, Jovito Remada and Alex Hawod,4 respondents herein] on different dates in December
[of 1991 and] 1994. All of them were assigned to work in SMCs Bottling Plant situated at Brgy.
Granada Sta. Fe, Bacolod City, in order to perform the following tasks: segregating bottles,
removing dirt therefrom, filing them in designated places, loading and unloading the bottles to
and from the delivery trucks, and performing other tasks as may be ordered by SMCs officers.
[They] were required to work inside the premises of SMC using [SMCs] equipment. [They]
rendered service with SMC for more than 6 months.
Subsequently, SMC entered into a Contract of Services5 with AMPCO designating the latter as
the employer of Vicente, et al. As a result, Vicente et al. failed to claim the rights and benefits
ordinarily accorded a regular employee of SMC. In fact, they were not paid their 13th month
pay. On June 6, 1995, they were not allowed to enter the premises of SMC. The project manager
of AMPCO, Merlyn Polidario, told them to wait for further instructions from the SMCs
supervisor. Vicente et al. waited for one month, unfortunately, they never heard a word from
SMC.
Consequently, Vicente et al., as complainants, filed on July 17, 1995 a COMPLAINT FOR ILLEGAL
DISMISSAL with the Labor Arbiter against AMPCO, Merlyn V. Polidario, SMC and Rufino I. Yatar
[SMC Plant Manager], as respondents. xxx Complainants alleged that they were fillers of SMC
Bottling Plant xxx assigned to perform activities necessary and desirable in the usual business of
SMC. xxx They claim that they were under the control and supervision of SMC personnel and
have worked for more than 6 months in the company. As such, they assert that they are regular
employees of SMC.
However, SMC utilized AMPCO making it appear that the latter was their employer, so that SMC
may evade the responsibility of paying the benefits due them under the law. Finally,
complainants contend that AMPCO and SMC failed to give their 13th month pay and that they
were prevented from entering the SMCs premises. Hence, complainants contend that they
were illegally dismissed from service.
On the other hand, respondent SMC raised the defense that it is not the employer of the
complainants. According to SMC, AMPCO is their employer because the latter is an independent
contractor xxx. Also SMC alleged that it was AMPCO that directly paid their salaries and remitted
their contributions to the SSS. Finally, SMC assails the jurisdiction of the Labor Arbiter
contending that the instant dispute is intra-cooperative in nature falling within the jurisdiction
of the Arbitration Committee of the Cooperative Development Authority.
On April 30, 1998, the Labor Arbiter (LA) rendered his decision.6 The dispositive portion of which
reads:
Wherefore, premises considered, judgment is hereby rendered declaring herein complainants as
regular employees of San Miguel Corporation and the latter is ordered:
1. To reinstate complainants to their previous or equivalent positions without loss of
seniority rights with payment of full backwages from the time of their illegal dismissal
up to the time of their actual reinstatement; and
2. To pay complainants counsel attorneys fees 10% of the total award or P36,625.76.
Per our computation complainants Vicente Semillano, Nelson Mondejar and Jovito Remada are
entitled to the amount of P122,085.88 each as full backwages covering the period June 6, 1995
up to April 30, 1998.
SO ORDERED.7
Accordingly, respondents filed a motion for partial execution of the decision of the Labor Arbiter
praying for their immediate reinstatement.8 Petitioner San Miguel Corporation (SMC) filed its
Opposition to the motion.9 The LA, however, rendered no ruling thereon.10
Petitioner appealed the LA Decision to the NLRC. Initially, the NLRC Fourth Division affirmed
with modifications the findings of the LA as follows:
WHEREFORE, premises considered, the appeals of respondents AMPCO and SMC are denied for
lack of merit and the decision appealed from is affirmed with a modification in the following:
a. Respondent SMC to pay complainants their backwages from June 6, 1995 up to and
until July 22, 1998;
b. Respondent SMC to pay complainants their accrued salaries and allowances from July
23, 1998 up to the present; and
c. Respondent SMC to pay complainants ten percent (10%) of the total award as
attorneys fees.
Complainants, to restate, are regular employees of San Miguel Corporation and the latter is
ordered to reinstate complainants to their former position as pilers/segregators.
Petitioner SMC moved for a reconsideration of the foregoing decision. In a Resolution dated
February 28, 2002, the NLRC acted on the motion and reversed its earlier ruling. It absolved
petitioner from liability and instead held AMPCO, as employer of respondents, liable to pay for
respondents backwages, accrued salaries, allowances, and attorneys fees. In holding that
AMPCO was an independent contractor, NLRC was of the view that the law only required
substantial capital or investment. Since AMPCO had "substantial capital of nearly one (1)
million" then it qualified as an independent contractor. The NLRC added that even under the
control test, AMPCO would be the real employer of the respondents, since it had assumed the
entire charge and control of respondents services. Hence, an employer-employee relationship
existed between AMPCO and the respondents.
Respondents timely filed their motion for reconsideration of the NLRC resolution but it was
denied.11
Feeling aggrieved over the turnaround by the NLRC, the respondents filed a petition for review
on certiorari under Rule 65 with the Court of Appeals (CA), which favorably acted on it.
In overturning the commissions ruling, the Court of Appeals ironically applied the same control
test that the NLRC used to resolve the issue of who the actual employer was. The CA, however,
found that petitioner SMC wielded (i) the power of control over respondent, as SMC personnel
supervised respondents performance of loading and unloading of beer bottles, and (ii) the
power of dismissal, as respondents were refused entry by SMC to its premises and were
instructed by the AMPCO manager "to wait for further instructions from the SMCs supervisor."
The CA added that AMPCO was a labor-only contractor since "a capital of nearly one million
pesos" was insufficient for it to qualify as an independent contractor. Thus, the decretal portion
reads:
WHEREFORE, premises considered, the instant petition is GRANTED. The assailed Resolutions
dated February 28, 2002 and September 27, 2002 both issued by the public respondent National
Labor Relations Commission in the case docketed as RAB CASE NO. 06-07-10298-95 are hereby
SET ASIDE and a new one entered reinstating its original Decision dated June 30, 2000, which
affirmed with modification the decision of the Labor Arbiter dated April 30, 1998. No
pronouncement as to costs.
SO ORDERED.
SMC filed a motion for reconsideration but it was denied by the CA in its May 28, 2004
Resolution.12
Hence, this petition for review on certiorari.

Petitioner SMC argues that the CA wrongly assumed that it exercised power of control over the
respondents just because they performed their work within SMCs premises. In advocacy of its
claim that AMPCO is an independent contractor, petitioner relies on the provisions of the
service contract between petitioner and AMPCO, wherein the latter undertook to provide the
materials, tools and equipment to accomplish the services contracted out by petitioner. The
same contract provides that AMPCO shall have exclusive discretion in the selection, engagement
and discharge of its employees/personnel or otherwise in the direction and control thereof.
Petitioner also adds that AMPCO determines the wages of its employees/personnel who shall be
within its full control.
Petitioner further argues that respondents action is essentially one for "regularization" (as
employees of SMC) which is nowhere recognized or allowed by law. Lastly, petitioner contends
that the case involves an intra-cooperative dispute, which is within the original and exclusive
jurisdiction of the Arbitration Committee of the Cooperative and, thereafter, the Cooperative
Development Authority.
In its Comment,13 respondent AMPCO essentially advanced the same arguments in support of its
claim as a legitimate job contractor.
The only issue that needs to be resolved is whether or not AMPCO is a legitimate job contractor.
A claim that an action for regularization has no legal basis and is violative of petitioners
constitutional and statutory rights is, therefore, dependent upon the resolution of the issue
posed above.
The petition fails.
Generally, the findings of fact made by the Labor Arbiter and the NLRC, as the specialized
agencies presumed to have the expertise on matters within their respective fields, are accorded
much respect and even finality, when supported by ample evidence14 and affirmed by the CA.
The fact that the NLRC, in its subsequent resolution, reversed its original decision does not
render the foregoing inapplicable where the resolution itself is not supported by substantial
evidence.
Department of Labor and Employment (DOLE) Department Order No. 10, Series of 1997, defines
"job contracting" and "labor-only contracting" as follows:
Sec. 8. Job contracting. There is job contracting permissible under the Code if the following
conditions are met:
(1) The contractor carries on an independent business and undertakes the contract work
on his own account under his own responsibility according to his own manner and
method, free from the control and direction of his employer or principal in all matters
connected with the performance of the work except as to the results thereof; and
(2) The contractor has substantial capital or investment in the form of tools, equipment,
machineries, work premises, and other materials which are necessary in the conduct of
his business.
Sec. 9. Labor-only contracting. (a) Any person who undertakes to supply workers to an
employer shall be deemed to be engaged in labor-only contracting where such person:
(1) Does not have substantial capital or investment in the form of tools,
equipment, machineries, work premises and other materials; and
(2) The workers recruited and placed by such persons are performing activities
which are directly related to the principal business or operations of the
employer in which workers are habitually employed.
(b) Labor-only contracting as defined herein is hereby prohibited and the person acting
as contractor shall be considered merely as an agent or intermediary of the employer
who shall be responsible to the workers in the same manner and extent as if the latter
were directly employed by him.
(c) For cases not falling under this Article, the Secretary of Labor shall determine
through appropriate orders whether or not the contracting out of labor is permissible in
the light of the circumstances of each case and after considering the operating needs of
the employer and the rights of the workers involved. In such case, he may prescribe
conditions and restrictions to insure the protection and welfare of the workers.
Section 5 of Department Order No. 18-02 (Series of 2002) of the Rules Implementing Articles
106 to 109 of the Labor Code further provides that:
"Substantial capital or investment" refers to capital stocks and subscribed capitalization in the
case of corporations, tools, equipment, implements, machineries and work premises, actually
and directly used by the contractor or subcontractor in the performance or completion of
the job work or service contracted out. (emphasis supplied)
The "right to control" shall refer to the right reserved to the person for whom the services of the
contractual workers are performed, to determine not only the end to be achieved, but also the
manner and means to be used in reaching that end.
The test to determine the existence of independent contractorship is whether or not the one
claiming to be an independent contractor has contracted to do the work according to his own
methods and without being subject to the control of the employer, except only as to the results
of the work.15
The existence of an independent and permissible contractor relationship is generally established
by the following criteria: whether or not the contractor is carrying on an independent business;
the nature and extent of the work; the skill required; the term and duration of the relationship;
the right to assign the performance of a specified piece of work; the control and supervision of
the work to another; the employer's power with respect to the hiring, firing and payment of the
contractor's workers; the control of the premises; the duty to supply the premises, tools,
appliances, materials, and labor; and the mode, manner and terms of payment.16
Although there may be indications of an independent contractor arrangement between
petitioner and AMPCO, the most determinant of factors exists which indicate otherwise.
Petitioners averment that AMPCO had total assets amounting to P932,599.22 and income
of P2,777,603.46 in 1994 was squarely debunked by the LA. Thus:
Furthermore, there are no pieces of evidence that AMPCO has substantial capital or investment.
An examination its "Statement of Income and Changes in Undivided Savings" show that its
income for the year 1994 wasP2,777,603.46 while its operating expenses for said year
is P2,718,315.33 or a net income of P59,288.13 for the year 1994; that its cash on hand for 1994
is P22,154.80.
In fact, the NLRC in its original decision likewise stated as follows:
In contrast, the (sic) AMPCOs main business activity is trading, maintaining a store catering to
members and the public. Its job contracting with SMC is only a minor activity or sideline. The
component of AMPCOs substantial capital are [sic]in fact invested and used in the trading
business. This is palpably shown in the sizable amount of its accounts receivables amounting to
more than P.6M out of its members capital of only P.47M in 1994.
Neither did petitioner prove that AMPCO had substantial equipment, tools, machineries, and
supplies actually and directly used by it in the performance or completion of the segregation
and piling job. In fact, as correctly pointed out by the NLRC in its original decision, there is
nothing in AMPCOs list17 of fixed assets, machineries, tools, and equipment which it could have
used, actually and directly, in the performance or completion of its contracted job, work or
service with petitioner. For said reason, there can be no other logical conclusion but that the
tools and equipment utilized by respondents are owned by petitioner SMC. It is likewise
noteworthy that neither petitioner nor AMPCO has shown that the latter had clients other than
petitioner. Therefore, AMPCO has no independent business.
In connection therewith, DOLE Department Order No. 10 also states that an independent
contractor carries on an independent business and undertakes the contract work on his own
account, under his own responsibility, according to his own manner and method, and free from
the control and direction of his employer or principal in all matters connected with the
performance of the work except as to the results thereof. This embodies what has long been
jurisprudentially recognized as the control test18 to determine the existence of employeremployee relationship.
In the case at bench, petitioner faults the CA for holding that the respondents were under the
control of petitioner whenever they performed the task of loading in the delivery trucks and
unloading from them. It, however, fails to show how AMPCO took "entire charge, control and
supervision of the work and service agreed upon." AMPCOs Comment on the Petition is likewise
utterly silent on this point. Notably, both petitioner and AMPCO chose to ignore the uniform
finding of the LA, NLRC (in its original decision) and the CA that one of the assigned jobs of
respondents was to "perform other acts as may be ordered by SMCs officers." Significantly,
AMPCO, opted not to challenge the original decision of the NLRC that found it a mere labor-only
contractor.1avvphi1
Moreover, the Court is not convinced that AMPCO wielded "exclusive discretion in the
discharge"19 of respondents. As the CA correctly pointed out, Merlyn Polidario, AMPCOs project
manager, even told respondents to "wait for further instructions from the SMCs supervisor"
after they were prevented from entering petitioner SMCs premises. Based on the foregoing, no
other logical conclusion can be reached than that it was petitioner, not AMPCO, who wielded
power of control.
Despite the fact that the service contracts20 contain stipulations which are earmarks of
independent contractorship, they do not make it legally so. The language of a contract is neither
determinative nor conclusive of the relationship between the parties. Petitioner SMC and
AMPCO cannot dictate, by a declaration in a contract, the character of AMPCOs business, that
is, whether as labor-only contractor, or job contractor. AMPCOs character should be measured
in terms of, and determined by, the criteria set by statute.21 At a closer look, AMPCOs actual
status and participation regarding respondents employment clearly belie the contents of the
written service contract.
Petitioner cannot rely either on AMPCOs Certificate of Registration as an Independent
Contractor issued by the proper Regional Office of the DOLE to prove its claim. It is not
conclusive evidence of such status. The fact of registration simply prevents the legal
presumption of being a mere labor-only contractor from arising.22 In distinguishing between
permissible job contracting and prohibited labor-only contracting, the totality of the facts and
the surrounding circumstances of the case are to be considered.23
Petitioner also argues that among the permissible contracting arrangements include "work or
services not directly related or not integral to the main business or operation of the principal
including work related to manufacturing processes of manufacturing establishments."24 The
Court is not persuaded. The evidence is clear that respondents performed activities which were
directly related to petitioners main line of business. Petitioner is primarily engaged in
manufacturing and marketing of beer products, and respondents work of segregating and
cleaning bottles is unarguably an important part of its manufacturing and marketing process.
Lastly, petitioner claims that the present case is outside the jurisdiction of the labor tribunals
because respondent Vicente Semillano is a member of AMPCO, not SMC. Precisely, he has
joined the others in filing this complaint because it is his position that petitioner SMC is his true
employer and liable for all his claims under the Labor Code.
Thus, petitioner SMC, as principal employer, is solidarily liable with AMPCO, the labor-only
contractor, for all the rightful claims of respondents. Under this set-up, AMPCO, as the "laboronly" contractor, is deemed an agent of the principal (SMC). The law makes the principal
responsible over the employees of the "labor-only" contractor as if the principal itself directly
hired the employees.25
WHEREFORE, the petition is DENIED. The February 19, 2004 Decision of the Court of Appeals,
reversing the decision of the National Labor Relations Commission and reinstating the decision
of the Labor Arbiter, is AFFIRMED.
SO ORDERED.
JOSE CATRAL MENDOZA
Associate Justice
Footnotes
1
Penned by Associate Justice Mercedes Gozo-Dadole with Associate Justice Eugenio S.

Labitoria and Associate Justice Rosmari D. Carandang concurring.
2
Id.
Rollo, pp. 34-43.
Complainant Alex Hawods complaint was dismissed by the Labor Arbiter because his
signature does not appear in complainants position paper as well as in the Joint
Affidavit submitted.
5
It appears from the records that there are two (2) Service Contracts material to the
controversy. The first is dated April 1992. The contractual period is for six (6) months
commencing February 1, 1992. The other is dated May 1993. The contractual period is
for 12 months commencing April 16, 1993. Both contracts stipulate that it is deemed
renewed on a month-to-month basis.
6
Penned by Labor Arbiter Jesus N. Rodriguez, Jr.
Rollo, p. 209.
Id. at 210-211.
Id. at 212-214.
10
Nothing in the records indicates that there was execution of the reinstatement aspect,
whether by actual or by payroll reinstatement.
11
Rollo, pp. 106-109.
12
Id. at 63.
13
Id. at 335-342.
14
Aboitiz Haulers Inc. v. Dimapatoi, G.R. No. 148619, September 19, 2006, 502 SCRA
281.
15
San Miguel Corporation v. Aballa, G.R. No. 149011, June 28, 2005, 461 SCRA 421.
16
DOLE Philippines Inc. v. Esteva, G.R. No. 161115, November 30, 2006, 509 SCRA 376;
and Brotherhood Labor Unity Movement of the Philippines v. Zamora, 231 Phil. 53
(1987).
17
Attached as Annex 4 of AMPCOs Comment reveals the following:

1. Transportation Equipment.
a. 1 unit custom van
b. 1 motor Ford 350 (Gasoline)
2. Land and Building
3. Furniture and Fixtures
a. 3 pcs. office tables
b. 3 pcs Monobloc Chairs
4. Office Equipment
a. 5 pcs. Casio electronic Calculator (12 digit)
b. 1 unit Laminating Machine (ID)
c. 1 Printing Calculator
d. Dry Cell
5. Communication equipment
a. 2 pcs. ICOM ( Hand Set ) with Anthena
6. Store Equipment
a. Nutex Temperature Compensated Capacity (kg.) / Weighing scale
b. 1 Cash Box
c. 1 Charmaster
d. 80 empty cases w/ bottles Coke litro
90 -do- Coke regular
13 -do- Coke 500 ml

e. 2 pcs. Emergency light.
18
The existence of an employer-employee relationship is determined on the basis of

four standards, namely: (a) the manner of selection and engagement of the putative
employee; (b) the mode of payment of wages; (c) the presence or absence of power of
dismissal; and (d) the presence or absence of control of the putative employees
conduct. Most determinative among these factors is the so-called "control test." Gallego
v. Bayer Philippines, Inc., G.R. No. 179807, July 31, 2009, 594 SCRA 736.
19
See Service Contract.
20
Certificate of Registration as independent contractor issued by the Regional Director

of Department of Labor Regional Office No. VI; Articles of Incorporation, under which
providing services and other requirements of members, and engaging in utility services
are among its main objectives; Certificate of Confirmation as a registered cooperative
with the Bureau of Agricultural Cooperatives Development; Mayors permit to engage in
business as a contractor; Registration with the SSS as member.
21
De Los Santos and Buklod Manggagawa ng Camara v. National Labor Relations

Commission, 423 Phil. 1020, 1034 (2001).
22
"Section 11. Registration of contractor or subcontractors.xxx

Failure to register shall give rise to the presumption that the contractor is
engaged in labor-only contracting." Department Order No. 18-02 Series of
2002.
23
Supra note 18.
24
Petition for Review on Certiorari, p. 19; rollo, p. 23 citing Department Order No. 10,
Series of 1997.
25
San Miguel Corporation v. MAERC Integrated Services, Inc., 453 Phil. 543 (2003).

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 120969 January 22, 1998

ALEJANDRO MARAGUINOT, JR. and PAULINO ENERO, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (SECOND DIVISION) composed of Presiding
Commissioner RAUL T. AQUINO, Commissioner ROGELIO I. RAYALA and Commissioner
VICTORIANO R. CALAYCAY (Ponente), VIC DEL ROSARIO and VIVA FIMS, respondents.
DAVIDE, JR., J.:
By way of this special civil action for certiorari under Rule 65 of the Rules of Court, petitioners
seek to annul the 10 February 1995 Decision 1 of the National Labor Relations Commission
(hereafter NLRC), and its 6 April 1995 Resolution 2 denying the motion to reconsider the former
in NLRC-NCR-CA No. 006195-94. The decision reversed that of the Labor Arbiter in NLRC-NCRCase No. 00-07-03994-92.
The parties present conflicting sets of facts.
Petitioner Alejandro Maraguinot, Jr. maintains that he was employed by private respondents on
18 July 1989 as part of the filming crew with a salary of P375.00 per week. About four months
later, he was designated Assistant Electrician with a weekly salary of P400.00, which was
increased to P450.00 in May 1990. In June 1991, he was promoted to the rank of Electrician with
a weekly salary of P475.00, which was increased to P539.00 in September 1991.
Petitioner Paulino Enero, on his part, claims that private respondents employed him in June
1990 as a member of the shooting crew with a weekly salary of P375.00, which was increased to
P425.00 in May 1991, then to P475.00 on 21 December 1991. 3
Petitioners' tasks consisted of loading, unloading and arranging movie equipment in the
shooting area as instructed by the cameraman, returning the equipment to Viva Films'
warehouse, assisting in the "fixing" of the lighting system, and performing other tasks that the
cameraman and/or director may assign. 4
Sometime in May 1992, petitioners sought the assistance of their supervisors, Mrs. Alejandria
Cesario, to facilitate their request that private respondents adjust their salary in accordance
with the minimum wage law. In June 1992, Mrs. Cesario informed petitioners that Mr. Vic del
Rosario would agree to increase their salary only if they signed a blank employment contract. As
petitioners refused to sign, private respondents forced Enero to go on leave in June 1992, then
refused to take him back when he reported for work on 20 July 1992. Meanwhile, Maraguinot
was dropped from the company payroll from 8 to 21 June 1992, but was returned on 22 June
1992. He was again asked to sign a blank employment contract, and when he still refused,
private respondents terminated his services on 20 July 1992. 5 Petitioners thus sued for illegal
dismissal 6 before the Labor Arbiter.
On the other hand, private respondents claim that Viva Films (hereafter VIVA) is the trade name
of Viva Productions, Inc., and that it is primarily engaged in the distribution and exhibition of
movies but not in the business of making movies; in the same vein, private respondent Vic del
Rosario is merely an executive producer,i.e., the financier who invests a certain sum of money
for the production of movies distributed and exhibited by VIVA. 7
Private respondents assert that they contract persons called "producers" also referred to as
"associate producers" 8 to "produce" or make movies for private respondents; and contend
that petitioners are project employees of the association producers who, in turn, act as
independent contractors. As such, there is no employer-employee relationship between
petitioners and private respondents.
Private respondents further contend that it was the associate producer of the film "Mahirap
Maging Pogi," who hired petitioner Maraguinot. The movie shot from 2 July up to 22 July 1992,
and it was only then that Maraguinot was released upon payment of his last salary, as his
services were no longer needed. Anent petitioner Enero, he was hired for the movie entitled
"Sigaw ng Puso," later re-tired "Narito and Puso." He went on vacation on 8 June 1992, and by
the time he reported for work on 20 July 1992, shooting for the movie had already been
completed. 9
After considering both versions of the facts, the Labor Arbiter found as follows:
On the first issue, this Office rules that complainants are the employees of the
respondents. The producer cannot be considered as an independent contractor
but should be considered only as a labor-only contractor and as such, acts as a
mere agent of the real employer, the herein respondent. Respondents even
failed to name and specify who are the producers. Also, it is an admitted fact
that the complainants received their salaries from the respondents. The case
cited by the respondents,Rosario Brothers, Inc. vs. Ople, 131 SCRA 72 does not
apply in this case.
It is very clear also that complainants are doing activities which are necessary
and essential to the business of the respondents, that of movie-making.
Complainant Maraguinot worked as an electrician while complainant Enero
worked as a crew [member]. 10
Hence, the Labor Arbiter, in his decision of 20 December 1993, decreed as follows:
WHEREFORE, judgment is hereby rendered declaring that complainants were
illegally dismissed.
Respondents are hereby ordered to reinstate complainant to their former

positions without loss [of] seniority rights and pay their backwages starting July
21, 1992 to December 31, 1993 temporarily computed in the amount of
P38,000.00 for complainant Paulino Enero and P46,000.00 for complainant
Alejandro Maraguinot, Jr. and thereafter until actually reinstated.
Respondents are ordered to pay also attorney's fees equivalent to ten (10%)
and/or P8,400.00 on top of the award. 11
Private respondents appealed to the NLRC (docketed as NLRC NCR-CA No. 006195-94). In its
decision 12 of 10 February 1995, the NLRC found the following circumstances of petitioners'
work "clearly established:"
1. Complainants [petitioners herein] were hired for specific movie projects and
their employment wasco-terminus with each movie project the
completion/termination of which are pre-determined, such fact being made
known to complainants at the time of their engagement.
xxx xxx xxx
2 Each shooting unit works on one movie project at a time. And the work of the
shooting units, which work independently from each other, are not continuous
in nature but depends on the availability of movie projects.
3. As a consequence of the non-continuous work of the shooting units, the total
working hours logged by complainants in a month show extreme variations. . .
For instance, complainant Maraguinot worked for only 1.45 hours in June 1991
but logged a total of 183.25 hours in January 1992. Complainant Enero logged a
total of only 31.57 hours in September 1991 but worked for 183.35 hours the
next month, October 1991.
4. Further shown by respondents is the irregular work schedule of complainants
on a daily basis. Complainant Maraguinot was supposed to report on 05 August
1991 but reported only on 30 August 1991, or a gap of 25 days. Complainant
Enero worked on 10 September 1991 and his next scheduled working day was
28 September 1991, a gap of 18 days.
5. The extremely irregular working days and hours of complainants' work
explain the lump sum payment for complainants' services for each movie
project. Hence, complainants were paid a standard weekly salary regardless of
the number of working days and hours they logged in. Otherwise, if the
principle of "no work no pay" was strictly applied, complainants' earnings for
certain weeks would be very negligible.
6. Respondents also alleged that complainants were not prohibited from
working with such movie companies like Regal, Seiko and FPJ Productions
whenever they are not working for the independent movie producers engaged
by respondents . . . This allegation was never rebutted by complainants and

should be deemed admitted.
The NLRC, in reversing the Labor Arbiter, then concluded that these circumstances,
taken together, indicated that complainants (herein petitioners) were "project
employees."
After their motion for reconsideration was denied by the NLRC in its Resolution 13 of 6 April
1995, petitioners filed the instant petition, claiming that the NLRC committed grave abuse of
discretion amounting to lack or excess of jurisdiction in: (1) finding that petitioners were project
employees; (2) ruling that petitioners were not illegally dismissed; and (3) reversing the decision
of the Labor Arbiter.
To support their claim that they were regular (and not project) employees of private
respondents, petitioners cited their performance of activities that were necessary or desirable in
the usual trade or business of private respondents and added that their work was
continuous, i.e., after one project was completed they were assigned to another project.
Petitioners thus considered themselves part of a work pool from which private respondents
drew workers for assignment to different projects. Petitioners lamented that there was no basis
for the NLRC's conclusion that they were project employees, while the associate producers were
independent contractors; and thus reasoned that as regular employees, their dismissal was
illegal since the same was premised on a "false cause," namely, the completion of a project,
which was not among the causes for dismissal allowed by the Labor Code.
Private respondents reiterate their version of the facts and stress that their evidence supports
the view that petitioners are project employees; point to petitioners' irregular work load and
work schedule; emphasize the NLRC's finding that petitioners never controverted the allegation
that they were not prohibited from working with other movie companies; and ask that the facts
be viewed in the context of the peculiar characteristics of the movie industry.
The Office of the Solicitor General (OSG) is convinced that this petition is improper since
petitioners raise questions of fact, particularly, the NLRC's finding that petitioners were project
employees, a finding supported by substantial evidence; and submits that petitioners' reliance
on Article 280 of the Labor Code to support their contention that they should be deemed
regular employees is misplaced, as said section "merely distinguishes between two types of
employees, i.e., regular employees and casual employees, for purposes of determining the right
of an employee to certain benefits."
The OSG likewise rejects petitioners' contention that since they were hired not for one project,
but for a series of projects, they should be deemed regular employees. Citing Mamansag
v. NLRC, 14 the OSG asserts that what matters is that there was a time-frame for each movie
project made known to petitioners at the time of their hiring. In closing, the OSG disagrees with
petitioners' claim that the NLRC's classification of the movie producers as independent
contractors had no basis in fact and in law, since, on the contrary, the NLRC "took pains in
explaining its basis" for its decision.
As regards the propriety of this action, which the Office of the Solicitor General takes issue with,
we rule that a special civil action for certiorari under Rule 65 of the Rules of Court is the proper
remedy for one who complains that the NLRC acted in total disregard of evidence material to or
decisive of the controversy. 15 In the instant case, petitioners allege that the NLRC's conclusions
have no basis in fact and in law, hence the petition may not be dismissed on procedural or
jurisdictional grounds.
The judicious resolution of this case hinges upon, first, the determination of whether an
employer-employee relationship existed between petitioners and private respondents or any
one of private respondents. If there was none, then this petition has no merit; conversely, if the
relationship existed, then petitioners could have been unjustly dismissed.
A related question is whether private respondents are engaged in the business of making
motion pictures. Del Rosario is necessarily engaged in such business as he finances the
production of movies. VIVA, on the other hand, alleges that it does not "make" movies, but
merely distributes and exhibits motion pictures. There being no further proof to this effect, we
cannot rely on this self-serving denial. At any rate, and as will be discussed below, private
respondents' evidence even supports the view that VIVA is engaged in the business of making
movies.
We now turn to the critical issues. Private respondents insist that petitioners are project
employees of associate producers who, in turn, act as independent contractors. It is settled that
the contracting out of labor is allowed only in case of job contracting. Section 8, Rule VIII, Book
III of the Omnibus Rules Implementing the Labor Code describes permissible job contracting in
this wise:
Sec. 8. Job contracting. There is job contracting permissible under the Code if
the following conditions are met:
(1) The contractor carries on an independent
business and undertakes the contract work on
his own account under his own responsibility
according to his own manner and method, free
from the control and direction of his employer
or principal in all matters connected with the
performance of the work except as to the
results thereof; and
(2) The contractor has substantial capital or
investment in the form of tools, equipment,
machineries, work premises, and other
materials which are necessary in the conduct of
his business.
Assuming that the associate producers are job contractors, they must then be engaged in the
business of making motion pictures. As such, and to be a job contractor under the preceding
description, associate producers must have tools, equipment, machinery, work premises, and
other materials necessary to make motion pictures. However, the associate producers here have
none of these. Private respondents' evidence reveals that the movie-making equipment are
supplied to the producers and owned by VIVA. These include generators, 16 cables and wooden
platforms, 17 cameras and "shooting equipment;" 18 in fact, VIVA likewise owns the trucks used
to transport the equipment. 19 It is thus clear that the associate producer merely leases the
equipment from VIVA. 20 Indeed, private respondents' Formal Offer of Documentary Evidence
stated one of the purposes of Exhibit "148" as:
To prove further that the independent Producers rented Shooting Unit No. 2
from Viva to finish their films. 21
While the purpose of Exhibits "149," "149-A" and "149-B" was:
[T]o prove that the movies of Viva Films were contracted out to the different
independent Producers who rented Shooting Unit No. 3 with a fixed budget and
time-frame of at least 30 shooting days or 45 days whichever comes first. 22
Private respondent further narrated that VIVA's generators broke down during petitioners' last
movie project, which forced the associate producer concerned to rent generators, equipment
and crew from another company. 23 This only shows that the associate producer did not have
substantial capital nor investment in the form of tools, equipment and other materials
necessary for making a movie. Private respondents in effect admit that their producers,
especially petitioners' last producer, are not engaged in permissible job contracting.
If private respondents insist that the associate producers are labor contractors, then these
producers can only be "labor-only" contractors, defined by the Labor Code as follows:
Art. 106. Contractor or subcontractor. . . .
There is "labor-only" contracting where the person supplying workers to an
employer does not have substantial capital or investment in the form of tools,
equipment, machineries, work premises, among others, and the workers
recruited and placed by such persons are performing activities which are
directly related to the principal business of such employer. In such cases, the
person or intermediary shall be considered merely as an agent of the employer
who shall be responsible to the workers in the same manner and extent as if the
latter were directly employed by him.
A more detailed description is provided by Section 9, Rule VIII, Book III of the Omnibus
Rules Implementing the Labor Code:
Sec. 9. Labor-only contracting. (a) Any person who undertakes to supply
workers to an employer shall be deemed to be engaged in labor-only
contracting where such person:
(1) Does not have substantial capital or investment in the form

of tools, equipment, machineries, work premises and other
materials; and
(2) The workers recruited and placed by such person are
performing activities which are directly related to the principal
business or operations of the employer in which workers are
habitually employed.
(b) Labor-only contracting as defined herein is
hereby prohibited and the person acting as
contractor shall be considered merely as an
agent or intermediary of the employer who
shall be responsible to the workers in the same
manner and extent as if the latter were directly
employed by him.
(c) For cases not falling under this Article, the
Secretary of Labor shall determine through
appropriate orders whether or not the
contracting out of labor is permissible in the
light of the circumstances of each case and after
considering the operating needs of the
employer and the rights of the workers
involved. In such case, he may prescribe
conditions and restrictions to insure the
protection and welfare of the workers.
As labor-only contracting is prohibited, the law considers the person or entity engaged in the
same a mere agent or intermediary of the direct employer. But even by the preceding
standards, the associate producers of VIVA cannot be considered labor-only contractors as they
did not supply, recruit nor hire the workers. In the instant case, it was Juanita Cesario, Shooting
Unit Supervisor and an employee of VIVA, who recruited crew members from an "available
group of free-lance workers which includes the complainants Maraguinot and Enero." 24 And in
their Memorandum, private respondents declared that the associate producer "hires the
services of . . . 6) camera crew which includes (a) cameraman; (b) the utility crew; (c) the
technical staff; (d) generator man and electrician; (e) clapper; etc. . . . ." 25 This clearly showed
that the associate producers did not supply the workers required by the movie project.
The relationship between VIVA and its producers or associate producers seems to be that of
agency, 26 as the latter make movies on behalf of VIVA, whose business is to "make" movies. As
such, the employment relationship between petitioners and producers is actually one between
petitioners and VIVA, with the latter being the direct employer.
The employer-employee relationship between petitioners and VIVA can further be established
by the "control test." While four elements are usually considered in determining the existence
of an employment relationship, namely: (a) the selection and engagement of the employee; (b)
the payment of wages; (c) the power of dismissal; and (d) the employer's power to control of
the employee's conduct, the most important element is the employer's control of the
employee's conduct, not only as to the result of the work to be done but also as to the means
and methods to accomplish the same. 27 These four elements are present here. In their position
paper submitted to the Labor Arbiter, private respondents narrated the following
circumstances:
[T]he PRODUCER has to work within the limits of the budget he is given by the
company, for as long as the ultimate finish[ed] product is acceptable to the
company . . .
The ensure that qualify films are produced by the PRODUCER who is an
independent contractor, the company likewise employs a Supervising
PRODUCER, a Project accountant and a Shooting unit supervisor. The Company's
Supervising PRODUCER is Mr. Eric Cuatico, the Project accountant varies from
time to time, and the Shooting Unit Supervisor is Ms. Alejandria Cesario.
The Supervising PRODUCER acts as the eyes and ears of the company and of the
Executive Producer to monitor the progress of the PRODUCER's work
accomplishment. He is there usually in the field doing the rounds of inspection
to see if there is any problem that the PRODUCER is encountering and to assist
in threshing out the same so that the film project will be finished on schedule.
He supervises about 3 to 7 movie projects simultaneously [at] any given time by
coordinating with each film "PRODUCER". The Project Accountant on the other
hand assists the PRODUCER in monitoring the actual expenses incurred because
the company wants to insure that any additional budget requested by the
PRODUCER is really justified and warranted especially when there is a change of
original plans to suit the tast[e] of the company on how a certain scene must be
presented to make the film more interesting and more commercially viable.
(emphasis supplied).
VIVA's control is evident in its mandate that the end result must be a "quality film acceptable to
the company." The means and methods to accomplish the result are likewise controlled by
VIVA, viz., the movie project must be finished within schedule without exceeding the budget,
and additional expenses must be justified; certain scenes are subject to change to suit the taste
of the company; and the Supervising Producer, the "eyes and ears" of VIVA and del Rosario,
intervenes in the movie-making process by assisting the associate producer in solving problems
encountered in making the film.
It may not be validly argued then that petitioners are actually subject to the movie director's
control, and not VIVA's direction. The director merely instructs petitioners on how to better
comply with VIVA's requirements to ensure that a quality film is completed within schedule and
without exceeding the budget. At bottom, the director is akin to a supervisor who merely
oversees the activities of rank-and-file employees with control ultimately resting on the
employer.
Moreover, appointment slips 28 issued to all crew members state:
During the term of this appointment you shall comply with the duties and
responsibilities of your position as well as observe the rules and regulations
promulgated by your superiors and by Top Management.
The words "supervisors" and "Top Management" can only refer to the "supervisors" and "Top
Management" of VIVA. By commanding crew members to observe the rules and regulations
promulgated by VIVA, the appointment slips only emphasize VIVA's control over petitioners.
Aside from control, the element of selection and engagement is likewise present in the instant
case and exercised by VIVA. A sample appointment slip offered by private respondents "to prove
that members of the shooting crew except the driver are project employees of the Independent
Producers" 29 reads as follows:
VIVA PRODUCTIONS, INC.
16 Sct. Albano St.
Diliman, Quezon City
PEDRO NICOLAS Date: June 15, 1992
APPOINTMENT SLIP
You are hereby appointed as SOUNDMAN for the film project entitled
"MANAMBIT". This appointment shall be effective upon the commencement of
the said project and shall continue to be effective until the completion of the
same.
For your services you shall receive the daily/weekly/monthly compensation of
P812.50.
During the term of this appointment you shall comply with the duties and
responsibilities of your position as well as observe the rules and regulations
promulgated by your superiors and by Top Management.
Very truly yours,
(an illegible signature)
CONFORME:
_________________
Name of appointee
Signed in the presence of:
___________________
Notably, nowhere in the appointment slip does it appear that it was the producer or associate
producer who hired the crew members; moreover, it is VIVA's corporate name which appears
on the heading of the appointment slip. What likewise tells against VIVA is that it paid
petitioners' salaries as evidenced by vouchers, containing VIVA's letterhead, for that purpose. 30
All the circumstances indicate an employment relationship between petitioners and VIVA alone,
thus the inevitable conclusion is that petitioners are employees only of VIVA.
The next issue is whether petitioners were illegally dismissed. Private respondents contend that
petitioners were project employees whose employment was automatically terminated with the
completion of their respective projects. Petitioners assert that they were regular employees
who were illegally dismissed.
It may not be ignored, however, that private respondents expressly admitted that petitioners
were part of a work pool; 31 and, while petitioners were initially hired possibly as project
employees, they had attained the status of regular employees in view if VIVA's conduct.
A project employee or a member of a work pool may acquire the status of a regular employee
when the following concur:
1) There is a continuous rehiring of project employees even after cessation of a project; 32 and
2) The tasks performed by the alleged "project employee" are vital, necessary and indispensable
to the usual business or trade of the employer. 33
However, the length of time during which the employee was continuously re-hired is not
controlling, but merely serves as a badge of regular employment. 34
In the instant case, the evidence on record shows that petitioner Enero was employed for a total
of two (2) years and engaged in at least eighteen (18) projects, while petitioner Maraguinot was
employed for some three (3) years and worked on at least twenty-three (23)
projects. 35 Moreover, as petitioners' tasks involved, among other chores, the loading, unloading
and
FILM
LOVE AT FIRST SIGHT
DATE
STARTED
DATE
COMPLETED
ASSOCIATE PRODUCER
1/3/90
2/16/90 MARIVIC ONG
PAIKOT-IKOT
1/26/90
3/11/90 EDITH MANUEL
ROCKY & ROLLY
2/13/90
3/29/90 M. ONG
PAIKOT-IKOT (addl. 1/2)
3/12/90
ROCKY & ROLLY (2nd contract)
4/6/90
4/3/90 E. MANUEL
5/20/90 M. ONG
NARDONG TOOTHPICK
4/4/90
5/18/90 JUN CHING
BAKIT KAY TAGAL NG SANDALI
6/26/90
10/20/90 E. MANUEL
BAKIT KAY TAGAL (2nd contract)
8/10/90
9/23/90 E. MANUEL
9/6/90
10/20/90 JUN CHING
HINUKAY KO NA ANG LIBINGAN MO

MAGING SINO KA MAN
10/25/90
12/8/90 SANDY STA. MARIA
M. SINO KA MAN (2nd contract)
12/9/90
1/22/91 SANDY S
NOEL JUICO
1/29/91
3/14/90 JUN CHING
NOEL JUICO (2nd contract)
3/15/91
4/6/91 JUN CHING
ROBIN GOOD
5/7/91
6/20/91 M. ONG
UTOL KONG HOODLUM # 1
6/23/91
8/6/91 JUN CHING
KAPUTOL NG ISANG AWIT
8/18/91
10/2/91 SANDY S.
DARNA
10/4/91
11/18/91 E. MANUEL
DARNA (addl. 1/2)
11/20/91
12/12/91 E. MANUEL
MAGNONG REHAS
12/13/91
1/27/92 BOBBY GRIMALT
M. REHAS (2nd contract)
1/28/92
3/12/92 B. GRIMALT
HIRAM NA MUKHA
3/15/92
4/29/92 M. ONG
HIRAM (2nd contract)
5/1/92
6/14/92 M. ONG
KAHIT AKO'Y BUSABOS
5/28/92
7/7/92 JERRY OHARA
SIGAW NG PUSO
7/1/92
8/4/92 M. ONG
SIGAW (addl. 1/2)
8/15/92
9/5/92 M. ONG
NGAYON AT KAILANMAN
9/6/92
10/20/92 SANDY STA. MARIA
While Maraguinot was a member of Shooting Unit III, which made the following movies (Annex
"4-A" of Respondents' Position Paper; OR, 29):
FILM
GUMAPANG KA SA LUSAK
PETRANG KABAYO
LUSAK (2nd contract)
DATE STARTED
DATE
ASSOCIATE PRODUCER
COMPLETED
1/27/90
3/12/90 JUN CHING
2/19/90
4/4/90 RUTH GRUTA
3/14/90
4/27/90 JUN CHING
P. KABAYO (Addl 1/2 contract)

BADBOY
BADBOY (2nd contract)
ANAK NI BABY AMA
A.B. AMA (addl 1/2)
A.B. AMA (addl 2nd 1/2)
BOYONG MANALAC
HUMANAP KA NG PANGET
H. PANGET(2nd contract)
B. MANALAC (2nd contract)
ROBIN GOOD (2nd contract)
PITONG GAMOL
P. GAMOL (2nd contract)
GREASE GUN GANG
ALABANG GIRLS (1/2 contract)
BATANG RILES
UTOL KONG HOODLUM (part 2)
UTOL (addl. 1/2 contract)
MANDURUGAS (2nd contract)
MAHIRAP MAGING POGI
4/21/90
6/15/90
7/30/90
9/2/90
10/17/90
11/9/90
11/30/90
1/20/91
3/10/91
5/22/91
7/7/91
8/30/91
10/14/91
12/28/91
3/4/92
3/9/92
3/22/92
5/7/92
5/25/92
7/2/92
5/13/90 RUTH GRUTA

7/29/90 EDITH MANUEL
8/21/90 E. MANUEL
10/16/90 RUTH GRUTA
11/8/90 RUTH GRUTA
12/1/90 R. GRUTA
1/14/91 MARIVIC ONG
3/5/91 EDITH MANUEL
4/23/91 E. MANUEL
7/5/91 M. ONG
8/20/91 M. ONG
10/13/91 M. ONG
11/27/91 M. ONG
2/10/92 E. MANUEL
3/26/92 M. ONG
3/30/92 BOBBY GRIMALT
5/6/92 B. GRIMALT
5/29/92 B. GRIMALT
7/8/92 JERRY OHARA
8/15/92 M. ONG
arranging of movie equipment in the shooting area as instructed by the cameramen,

returning the equipment to the Viva Films' warehouse, and assisting in the "fixing" of
the lighting system, it may not be gainsaid that these tasks were vital, necessary and
indispensable to the usual business or trade of the employer. As regards the underscored
phrase, it has been held that this is ascertained by considering the nature of the work
performed and its relation to the scheme of the particular business or trade in its
entirety. 36
A recent pronouncement of this Court anent project or work pool employees who had attained
the status of regular employees proves most instructive:
The denial by petitioners of the existence of a work pool in the company
because their projects were not continuous is amply belied by petitioners
themselves who admit that: . . .
A work pool may exist although the workers in the pool do not receive salaries
and are free to seek other employment during temporary breaks in the business,
provided that the worker shall be available when called to report of a
project. Although primarily applicable to regular seasonal workers, this set-up
can likewise be applied to project workers insofar as the effect of temporary
cessation of work is concerned. This is beneficial to both the employer and
employee for it prevents the unjust situation of "coddling labor at the expense of
capital" and at the same time enables the workers to attain the status of regular
employees. Clearly, the continuous rehiring of the same set of employees within
the framework of the Lao Group of Companies is strongly indicative that private
respondents were an integral part of a work pool from which petitioners drew
its workers for its various projects.
In a final attempt to convince the Court that private respondents were indeed
project employees, petitioners point out that the workers were not regularly
maintained in the payroll and were free to offer their services to other
companies when there were no on-going projects. This argument however
cannot defeat the workers' status of regularity. We apply by analogy the vase
of Industrial-Commercial-Agricultural Workers Organization v. CIR [16 SCRA 526,
567-568 (1966)] which deals with regular seasonal employees. There we held: . .
.
Truly, the cessation of construction activities at the end of every project is a
foreseeable suspension of work. Of course, no compensation can be demanded
from the employer because the stoppage of operations at the end of a project
and before the start of a new one is regular and expected by both parties to the
labor relations. Similar to the case of regular seasonal employees, the
employment relation is not severed by merely being suspended. [citing Manila
Hotel Co. v. CIR, 9 SCRA 186 (1963)] The employees are, strictly speaking, not
separated from services but merely on leave of absence without pay until they
are reemployed. Thus we cannot affirm the argument that non-payment of
salary or non-inclusion in the payroll and the opportunity to seek other
employment denote project employment. 37 (emphasis supplied)
While Lao admittedly involved the construction industry, to which Policy Instruction No.
20/Department Order No. 19 38 regarding work pools specifically applies, there seems to be no
impediment to applying the underlying principles to industries other than the construction
industry. 39 Neither may it be argued that a substantial distinction exists between the projects
undertaken in the construction industry and the motion picture industry. On the contrary,
the raison d' etre of both industries concern projects with a foreseeable suspension of work.
At this time, we wish to allay any fears that this decision unduly burdens an employer by
imposing a duty to re-hire a project employee even after completion of the project for which he
was hired. The import of this decision is not to impose a positive and sweeping obligation upon
the employer to re-hire project employees. What this decision merely accomplishes is a judicial
recognition of the employment status of a project or work pool employee in accordance with
what is fait accompli, i.e., the continuous re-hiring by the employer of project or work pool
employees who perform tasks necessary or desirable to the employer's usual business or trade.
Let it not be said that this decision "coddles" labor, for as Lao has ruled, project or work pool
employees who have gained the status of regular employees are subject to the "no work-no
pay" principle, to repeat:
A work pool may exist although the workers in the pool do not receive salaries and are free to
seek other employment during temporary breaks in the business, provided that the worker shall
be available when called to report for a project. Although primarily applicable to regular
seasonal workers, this set-up can likewise be applied to project workers insofar as the effect of
temporary cessation of work is concerned. This is beneficial to both the employer and employee
for it prevents the unjust situation of "coddling labor at the expense of capital" and at the same
time enables the workers to attain the status of regular employees.
The Court's ruling here is meant precisely to give life to the constitutional policy of
strengthening the labor sector,40 but, we stress, not at the expense of management. Lest it be
misunderstood, this ruling does not mean that simply because an employee is a project or work
pool employee even outside the construction industry, he is deemed, ipso jure, a regular
employee. All that we hold today is that once a project or work pool employee has been: (1)
continuously, as opposed to intermittently, re-hired by the same employer for the same tasks or
nature of tasks; and (2) these tasks are vital, necessary and indispensable to the usual business
or trade of the employer, then the employee must be deemed a regular employee, pursuant to
Article 280 of the Labor Code and jurisprudence. To rule otherwise would allow circumvention
of labor laws in industries not falling within the ambit of Policy Instruction No. 20/Department
Order No. 19, hence allowing the prevention of acquisition of tenurial security by project or
work pool employees who have already gained the status of regular employees by the
employer's conduct.
In closing then, as petitioners had already gained the status of regular employees, their dismissal
was unwarranted, for the cause invoked by private respondents for petitioners' dismissal, viz.:
completion of project, was not, as to them, a valid cause for dismissal under Article 282 of the
Labor Code. As such, petitioners are now entitled to back wages and reinstatement, without loss
of seniority rights and other benefits that may have accrued. 41 Nevertheless, following the
principles of "suspension of work" and "no pay" between the end of one project and the start of
a new one, in computing petitioners' back wages, the amounts corresponding to what could
have been earned during the periods from the date petitioners were dismissed until their
reinstatement when petitioners' respective Shooting Units were not undertaking any movie
projects, should be deducted.
Petitioners were dismissed on 20 July 1992, at a time when Republic Act No. 6715 was already in
effect. Pursuant to Section 34 thereof which amended Section 279 of the Labor Code of the
Philippines and Bustamante v. NLRC,42 petitioners are entitled to receive full back wages from
the date of their dismissal up to the time of their reinstatement, without deducting whatever
earnings derived elsewhere during the period of illegal dismissal, subject however, to the above
observations.
WHEREFORE, the instant petition is GRANTED. The assailed decision of the National Labor
Relations Commission in NLRC NCR CA No. 006195-94 dated 01 February 1995, as well as its
Resolution dated 6 April 1995, are hereby ANNULLED and SET ASIDE for having been rendered
with grave abuse of discretion, and the decision of the Labor Arbiter in NLRC NCR Case No. 0007-03994-92 is REINSTATED, subject, however, to the modification above mentioned in the
computation of back wages.
No pronouncement as to costs.
SO ORDERED.
Bellosillo, Vitug and Kapunan, JJ., concur.

Footnotes
1 Per Commissioner Victoriano R. Calaycat, with Commissioners Raul T. Aquino
and Rogelio I. Rayala, concurring. Annex "A" of Petition, Rollo, 20-29.
2 Rollo, 30.
3 Complaint, 1; Original Record (OR), 2; Rollo, 3-4.
4 Position Paper for Complainant, 1; OR, 37; Rollo, 4.
5 Position Paper for Complainant, 2; OR, 38; Petition, 3-4; Rollo, 4-5.
6 OR, 2-4.
7 Respondents' Position Paper, 1; OR, 8; Comment, 1; Rollo, 47.
8 Annexes 4 and 4-A, Private Respondents' Position Paper before the Labor
Arbiter; OR, 28-29.
9 Respondents' Position Paper, 5-6; OR, 12-13; Comment, 4-6; Rollo, 5-52.
10 Quoted from Petition, 7; Rollo, 8.
11 Quoted from NLRC decision, Annex "A" of Petition; Rollo, 20.
12 Supra, note 1.
13 Supra, note 2.
14 218 SCRA 722 [1993].
15 See Sajonas v. NLRC, 183 SCRA 182, 186 [1990].
16 TSN, 12 October 1992, 9-10; OR, 106-107; TSN, 25 January 1993, 12; OR, 246.
17 TSN, 25 January 1993, 54-55; OR, 288-289.
18 Id., 12, 14-15; Id., 246, 248-249.
19 Id., 12-13; Id., 246-247.
20 Respondent's Position Paper, 12; OR, 19.
21 OR, 340
22 Id., 341.
25 Memorandum, 3; Rollo, 118.
26 The Civil Code defines a contract of agency in this wise:
Art. 1868. By the contract of agency a person binds himself to render some
service or to do something in representation or on behalf of another, with the
consent or authority of the latter.
27 Encyclopedia Britannica (Phils.) v. NRLC, 264 SCRA 1, 7 [1996]; Aurora Land
Projects Corporation v. NLRC, G.R. No. 114733, 2 January 1997, 5-6.
28 Annexes "5," "5-A" to "5-D" of Respondents' Position Paper; OR, 30-34.
29 OR, 389.
30 Exhibits "155," "155-A," "155-B," "156," to "164," inclusive, OR, 351-356.
31 Respondents' Position Paper, 4; OR, 11; Supplemental Position Paper, 1; OR,
301.
32 Philippine National Construction Corp. v. NLRC, 174 SCRA 191, 193 [1989].
33 Capitol Industrial Construction Groups v. NLRC, 221 SCRA 469, 473-474
[1993].
34 Tomas Lao Construction, et al. v. NLRC, et al., G.R. No. 116781, 5 September
1997, at 7.
35 According to private respondents (Annex "4" of Respondents' Position Paper;

OR, 28), Enero was part of Shooting Unit II, which worked on the following films:
36 De Leon v. NLRC, 176 SCRA 615, 621 [1989].
37 Tomas Lao, supra note 34, at 7-9.
38 The former was issued by then Secretary of Labor Blas F. Ople, while the
latter, superseding the former, is dated 1 April 1993.
39 See for instance Chua v. Civil Service Commission, 206 SCRA 65, 76 [1992],
where the Court was ready to appreciate the badges of regular employment
even against Government as an employer.
40 Section 3, Article XIII, 1987 Constitution.
41 Section 3, Rule I, Book VI, Omnibus Rules Implementing the Labor Code.
42 265 SCRA 61 [1996].

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 122917 July 12, 1999
MARITES BERNARDO, ELVIRA GO DIAMANTE, REBECCA E. DAVID, DAVID P. PASCUAL, RAQUEL
ESTILLER, ALBERT HALLARE, EDMUND M. CORTEZ, JOSELITO O. AGDON GEORGE P. LIGUTAN
JR., CELSO M. YAZAR, ALEX G. CORPUZ, RONALD M. DELFIN, ROWENA M. TABAQUERO,
CORAZON C. DELOS REYES, ROBERT G. NOORA, MILAGROS O. LEQUIGAN, ADRIANA F.
TATLONGHARI, IKE CABANDUCOS, COCOY NOBELLO, DORENDA CANTIMBUHAN, ROBERT
MARCELO, LILIBETH Q. MARMOLEJO, JOSE E. SALES, ISABEL MAMAUAG, VIOLETA G. MONTES,
ALBINO TECSON, MELODY V. GRUELA, BERNADETH D. AGERO, CYNTHIA DE VERA, LANI R.
CORTEZ, MA. ISABEL B. CONCEPCION, DINDO VALERIO, ZENAIDA MATA, ARIEL DEL PILAR,
MARGARET CECILIA CANOZA, THELMA SEBASTIAN, MA. JEANETTE CERVANTES, JEANNIE
RAMIL, ROZAIDA PASCUAL, PINKY BALOLOA, ELIZABETH VENTURA, GRACE S. PARDO and
TIMOSA, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and FAR EAST BANK AND TRUST
COMPANY, respondents.
PANGANIBAN, J.:
The Magna Carta for Disabled Persons mandates that qualified disabled persons be granted the
same terms and conditions of employment as qualified able-bodied employees. Once they have
attained the status of regular workers, they should be accorded all the benefits granted by law,
notwithstanding written or verbal contracts to the contrary. This treatments is rooted not
merely on charity or accomodation, but on justice for all.
The Case
Challenged in the Petition for Certiorari 1 before us is the June 20, 1995 Decision 2 of the
National Labor Relations Commission (NLRC), 3 which affirmed the August, 22 1994 ruling of
Labor Arbiter Cornelio L. Linsangan. The labor arbiter's Decision disposed as follows: 4
WHEREFORE, judgment is hereby rendered dismissing the above-mentioned
complaint for lack of merit.
Also assailed is the August 4, 1995 Resolution 5 of the NLRC, which denied the Motion for
Reconsideration.
The Facts
The facts were summarized by the NLRC in this wise: 6
Complainants numbering 43 (p. 176, Records) are deaf-mutes who were hired
on various periods from 1988 to 1993 by respondent Far East Bank and Trust Co.
as Money Sorters and Counters through a uniformly worded agreement called
"Employment Contract for Handicapped Workers". (pp. 68 & 69, Records) The
full text of said agreement is quoted below:
EMPLOYMENT CONTRACT FOR
HANDICAPPED WORKERS
This Contract, entered into by and between:
FAR EAST BANK AND TRUST COMPANY, a universal banking
corporation duly organized and existing under and by virtue of
the laws of the Philippines, with business address at FEBTC
Building, Muralla, Intramuros, Manila, represented herein by its
Assistant Vice President, MR. FLORENDO G. MARANAN,
(hereinafter referred to as the "BANK");
-and, years old, of legal age, , and
residing at (hereinafter referred to as the ("EMPLOYEE").
WITNESSETH : That
WHEREAS, the BANK, cognizant of its social responsibility,
realizes that there is a need to provide disabled and
handicapped persons gainful employment and opportunities to
realize their potentials, uplift their socio-economic well being
and welfare and make them productive, self-reliant and useful
citizens to enable them to fully integrate in the mainstream of
society;
WHEREAS, there are certain positions in the BANK which may
be filled-up by disabled and handicapped persons, particularly
deaf-mutes, and the BANK ha[s] been approached by some
civic-minded citizens and authorized government agencies
[regarding] the possibility of hiring handicapped workers for
these positions;
WHEREAS, the EMPLOYEE is one of those handicapped workers
who [were] recommended for possible employment with the
BANK;
NOW, THEREFORE, for and in consideration of the foregoing
premises and in compliance with Article 80 of the Labor Code of
the Philippines as amended, the BANK and the EMPLOYEE have

entered into this Employment Contract as follows:
1. The BANK agrees to employ and train the EMPLOYEE, and the
EMPLOYEE agrees to diligently and faithfully work with the
BANK, as Money Sorter and Counter.
2. The EMPLOYEE shall perform among others, the following
duties and responsibilities:
i. Sort out bills according to
color;
ii. Count each denomination per
hundred, either manually or
with the aid of a counting
machine;
iii. Wrap and label bills per
hundred;
iv. Put the wrapped bills into
bundles; and
v. Submit bundled bills to the
bank teller for verification.
3. The EMPLOYEE shall undergo a training period of one (1)
month, after which the BANK shall determine whether or not
he/she should be allowed to finish the remaining term of this
Contract.
4. The EMPLOYEE shall be entitled to an initial compensation of
P118.00 per day, subject to adjustment in the sole judgment of
the BANK, payable every 15th and end of the
month.1wphi1.nt
5. The regular work schedule of the EMPLOYEE shall be five (5)
days per week, from Mondays thru Fridays, at eight (8) hours a
day. The EMPLOYEE may be required to perform overtime work
as circumstance may warrant, for which overtime work he/she
[shall] be paid an additional compensation of 125% of his daily
rate if performed during ordinary days and 130% if performed
during Saturday or [a] rest day.
6. The EMPLOYEE shall likewise be entitled to the following
benefits:
i. Proportionate 13th month

pay based on his basic daily
wage.
ii. Five (5) days incentive leave.
iii. SSS premium payment.
7. The EMPLOYEE binds himself/herself to abide [by] and
comply with all the BANK Rules and Regulations and Policies,
and to conduct himself/herself in a manner expected of all
employees of the BANK.
8. The EMPLOYEE acknowledges the fact that he/she had been
employed under a special employment program of the BANK,
for which reason the standard hiring requirements of the BANK
were not applied in his/her case. Consequently, the EMPLOYEE
acknowledges and accepts the fact that the terms and
conditions of the employment generally observed by the BANK
with respect to the BANK's regular employee are not applicable
to the EMPLOYEE, and that therefore, the terms and conditions
of the EMPLOYEE's employment with the BANK shall be
governed solely and exclusively by this Contract and by the
applicable rules and regulations that the Department of Labor
and Employment may issue in connection with the employment
ofdisabled and handicapped workers. More specifically, the
EMPLOYEE hereby acknowledges that the provisions of Book Six
of the Labor Code of the Philippines as amended, particularly on
regulation of employment and separation pay are not applicable
to him/her.
9. The Employment Contract shall be for a period of six (6)
months or from to unless earlier terminated by the
BANK for any just or reasonable cause. Any continuation or
extension of this Contract shall be in writing and therefore this
Contract will automatically expire at the end of its terms unless
renewed in writing by the BANK.
IN WITNESS WHEREOF, the parties, have hereunto affixed their
signature[s] this day of , at Intramuros,
Manila, Philippines.
In 1988, two (2) deaf-mutes were hired under this Agreement; in 1989 another
two (2); in 1990, nineteen (19); in 1991 six (6); in 1992, six (6) and in 1993,
twenty-one (21). Their employment[s] were renewed every six months such
that by the time this case arose, there were fifty-six (56) deaf-mutes who were
employed by respondent under the said employment agreement. The last one
was Thelma Malindoy who was employed in 1992 and whose contract expired
on July 1993.
xxx xxx xxx
Disclaiming that complainants were regular employees, respondent Far East
Bank and Trust Company maintained that complainants who are a special class
of workers the hearing impaired employees were hired temporarily under [a]
special employment arrangement which was a result of overtures made by
some civic and political personalities to the respondent Bank; that
complainant[s] were hired due to "pakiusap" which must be considered in the
light of the context career and working environment which is to maintain and
strengthen a corps of professionals trained and qualified officers and regular
employees who are baccalaureate degree holders from excellent schools which
is an unbending policy in the hiring of regular employees; that in addition to
this, training continues so that the regular employee grows in the corporate
ladder; that the idea of hiring handicapped workers was acceptable to them
only on a special arrangement basis; that it was adopted the special program to
help tide over a group of workers such as deaf-mutes like the complainants who
could do manual work for the respondent Bank; that the task of counting and
sorting of bills which was being performed by tellers could be assigned to deafmutes that the counting and sorting of money are tellering works which were
always logically and naturally part and parcel of the tellers' normal functions;
that from the beginning there have been no separate items in the respondent
Bank plantilla for sortes or counters; that the tellers themselves already did the
sorting and counting chore as a regular feature and integral part of their duties
(p. 97, Records); that through the "pakiusap" of Arturo Borjal, the tellers were
relieved of this task of counting and sorting bills in favor of deaf-mutes without
creating new positions as there is no position either in the respondent or in any
other bank in the Philippines which deals with purely counting and sorting of
bills in banking operations.
Petitioners specified when each of them was hired and dimissed, viz: 7
NAME OF PETITIONER
1. MARITES BERNARDO
2. ELVIRA GO DIAMANTE
3. REBECCA E. DAVID
4. DAVID P. PASCUAL
5. RAQUEL ESTILLER
6. ALBERT HALLARE
7. EDMUND M. CORTEZ
8. JOSELITO O. AGDON
9. GEORGE P. LIGUTAN JR.
10. CELSO M. YAZAR
WORKPLACE
Intramuros
Intramuros
Intramuros
Bel-Air
Intramuros
West
Bel-Air
Intramuros
Intramuros
Intramuros
Date Hired
Date Dismissed
12-Nov-90
17-Nov-93
24-Jan-90
11-Jan-94
16-Apr-90
23-Oct-93
15-Oct-88
21-Nov-94
2-Jul-92
4-Jan-94
4-Jan-91
9-Jan-94
15-Jan-91
3-Dec-93
5-Nov-90
17-Nov-93
6-Sep-89
19-Jan-94
8-Feb-93
8-Aug-93
11. ALEX G. CORPUZ

12. RONALD M. DELFIN
13. ROWENA M. TABAQUERO
14. CORAZON C. DELOS REYES
15. ROBERT G. NOORA
16. MILAGROS O. LEQUIGAN
17. ADRIANA F. TATLONGHARI
18. IKE CABUNDUCOS
19. COCOY NOBELLO
20. DORENDA CATIMBUHAN
21. ROBERT MARCELO
22. LILIBETH Q. MARMOLEJO
23. JOSE E. SALES
24. ISABEL MAMAUAG
25. VIOLETA G. MONTES
26. ALBINO TECSON
27. MELODY B. GRUELA
28. BERNADETH D. AGERO
29. CYNTHIA DE VERA
30. LANI R. CORTEZ
31. MARIA ISABEL B.CONCEPCION
32. DINDO VALERIO
33. ZENAIDA MATA
34. ARIEL DEL PILAR
35. MARGARET CECILIA CANOZA
36. THELMA SEBASTIAN
37. MA. JEANETTE CERVANTES
38. JEANNIE RAMIL
39. ROZAIDA PASCUAL
40. PINKY BALOLOA
41. ELIZABETH VENTURA
42. GRACE S. PARDO
43. RICO TIMOSA
Intramuros
Intramuros
Intramuros
Intramuros
Intramuros
Intramuros
Intramuros
Intramuros
Intramuros
Intramuros
West
West
West
West
Intramuros
Intramuros
West
West
Bel-Air
Bel-Air
West
Intramuros
Intramuros
Intramuros
Intramuros
Intramuros
West
Intramuros
Bel-Air
West
West
West
Intramuros
15-Feb-93
22-Feb-93
22-Feb-93
8-Feb-93
15-Feb-93
1-Feb-93
22-Jan-93
24-Feb-93
22-Feb-93
15-Feb-93
31 JUL 93 8
15-Jun-90
6-Aug-92
8-May-92
2-Feb-90
7-Nov-91
28-Oct-91
19-Dec-90
26-Jun-90
15-Oct-88
6-Sep-90
30-May-93
10-Feb-93
24-Feb-93
27-Jul-90
12-Nov-90
6-Jun-92
23-Apr-90
20-Apr-89
3-Jun-91
12-Mar-90
4-Apr-90
28-Apr-93
15-Aug-93
22-Aug-93
22-Aug-93
8-Aug-93
15-Aug-93
1-Aug-93
22-Jul-93
24-Aug-93
22-Aug-93
15-Aug-93
1-Aug-93
21-Nov-93
12-Oct-93
10-Nov-93
15-Jan-94
10-Nov-93
3-Nov-93
27-Dec-93
3-Dec-93
10-Dec-93
6-Feb-94
30-Nov-93
10-Aug-93
24-Aug-93
4-Feb-94
17-Nov-93
7-Dec-93
12-Oct-93
29-Oct-93
2-Dec-93
FEB 94 [sic]
13-Mar-94
28-Oct-93
As earlier noted, the labor arbiter and, on appeal, the NLRC ruled against herein petitioners.
Hence, this recourse to this Court. 9
The Ruling of the NLRC
In affirming the ruling of the labor arbiter that herein petitioners could not be deemed regular
employees under Article 280 of the Labor Code, as amended, Respondent Commission
ratiocinated as follows:
We agree that Art. 280 is not controlling herein. We give due credence to the
conclusion that complainants were hired as an accommodation to [the]
recommendation of civic oriented personalities whose employment[s] were
covered by . . . Employment Contract[s] with special provisions on duration of
contract as specified under Art. 80. Hence, as correctly held by the Labor
Arbiter a quo, the terms of the contract shall be the law between the parties. 10
The NLRC also declared that the Magna Carta for Disabled Persons was not applicable,
"considering the prevailing circumstances/milieu of the case."
Issues
In their Memorandum, petitioners cite the following grounds in support of their cause:
I. The Honorable Commission committed grave abuse of discretion in holding
that the petitioners money sorters and counters working in a bank were
not regular employees.
II. The Honorable Commission committed grave abuse of discretion in holding
that the employment contracts signed and renewed by the petitioners which
provide for a period of six (6) months were valid.
III. The Honorable Commission committed grave abuse of discretion in not
applying the provisions of the Magna Carta for the Disabled (Republic Act No.
7277), on proscription against discrimination against disabled persons. 11
In the main, the Court will resolve whether petitioners have become regular employees.
This Court's Ruling
The petition is meritorious. However, only the employees, who worked for more than six
months and whose contracts were renewed are deemed regular. Hence, their dismissal from
employement was illegal.
Preliminary Matter:
Propriety of Certiorari
Respondent Far East Bank and Trust Company argues that a review of the findings of facts of the
NLRC is not allowed in a petition for certiorari. Specifically, it maintains that the Court cannot
pass upon the findings of public respondent that petitioners were not regular employees.
True, the Court, as a rule, does not review the factual findings of public respondents in
a certiorari proceeding. In resolving whether the petitioners have become regular employees,
we shall not change the facts found by the public respondent. Our task is merely to determine
whether the NLRC committed grave abuse of discretion in applying the law to the established
facts, as above-quoted from the assailed Decision.
Main Issue
Are Petitioners Regular Employee?
Petitioners maintain that they should be considered regular employees, because their task as
money sorters and counters was necessary and desirable to the business of respondent bank.
They further allege that their contracts served merely to preclude the application of Article 280
and to bar them from becoming regular employees.
Private respondent, on the other hand, submits that petitioners were hired only as "special
workers and should not in any way be considered as part of the regular complement of the
Bank." 12 Rather, they were "special" workers under Article 80 of the Labor Code. Private
respondent contends that it never solicited the services of petitioners, whose employment was
merely an "accommodation" in response to the requests of government officials and civicminded citizens. They were told from the start, "with the assistance of government
representatives," that they could not become regular employees because there were no
plantilla positions for "money sorters," whose task used to be performed by tellers. Their
contracts were renewed several times, not because of need "but merely for humanitarian
reasons." Respondent submits that "as of the present, the "special position" that was created
for the petitioners no longer exist[s] in private respondent [bank], after the latter had decided
not to renew anymore their special employment contracts."
At the outset, let it be known that this Court appreciates the nobility of private respondent's
effort to provide employment to physically impaired individuals and to make them more
productive members of society. However, we cannot allow it to elude the legal consequences of
that effort, simply because it now deems their employment irrelevant. The facts, viewed in light
of the Labor Code and the Magna Carta for Disabled Persons, indubitably show that the
petitioners, except sixteen of them, should be deemed regular employees. As such, they have
acquired legal rights that this Court is duty-bound to protect and uphold, not as a matter of
compassion but as a consequence of law and justice.
The uniform employment contracts of the petitioners stipulated that they shall be trained for a
period of one month, after which the employer shall determine whether or not they should be
allowed to finish the 6-month term of the contract. Furthermore, the employer may terminate
the contract at any time for a just and reasonable cause. Unless renewed in writing by the
employer, the contract shall automatically expire at the end of the term.1wphi1.nt
According to private respondent, the employment contracts were prepared in accordance with
Article 80 of the Labor code, which provides;
Art. 80. Employment agreement. Any employer who employs handicapped

workers shall enter into an employment agreement with them, which
agreement shall include:
(a) The names and addresses of the handicapped workers to be
employed;
(b) The rate to be paid the handicapped workers which shall be
not less than seventy five (75%) per cent of the applicable legal
minimum wage;
(c) The duration of employment period; and
(d) The work to be performed by handicapped workers.
The employment agreement shall be subject to inspection by the Secretary of
Labor or his duly authorized representatives.
The stipulations in the employment contracts indubitably conform with the aforecited provision.
Succeeding events and the enactment of RA No. 7277 (the Magna Carta for Disabled
Persons), 13 however, justify the application of Article 280 of the Labor Code.
Respondent bank entered into the aforesaid contract with a total of 56 handicapped workers
and renewed the contracts of 37 of them. In fact, two of them worked from 1988 to 1993.
Verily, the renewal of the contracts of the handicapped workers and the hiring of others lead to
the conclusion that their tasks were beneficial and necessary to the bank. More important,
these facts show that they were qualified to perform the responsibilities of their positions. In
other words, their disability did not render them unqualified or unfit for the tasks assigned to
them.
In this light, the Magna Carta for Disabled Persons mandates that a qualified disabled employee
should be given the same terms and conditions of employment as a qualified able-bodied
person. Section 5 of the Magna Carta provides:
Sec. 5. Equal Opportunity for Employment. No disabled person shall be
denied access to opportunities for suitable employment. A qualified disabled
employee shall be subject to the same terms and conditions of employment and
the same compensation, privileges, benefits, fringe benefits, incentives or
allowances as a qualified able bodied person.
The fact that the employees were qualified disabled persons necessarily removes the
employment contracts from the ambit of Article 80. Since the Magna Carta accords them the
rights of qualified able-bodied persons, they are thus covered by Article 280 of the Labor Code,
which 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 as regular employee with respect to the activity in which he is
employed and his employment shall continue while such activity exists.
The test of whether an employee is regular was laid down in De Leon v. NLRC, 14 in which this
Court held:
The primary standard, therefore, of determining regular employment is the
reasonable connection between the particular activity performed by the
employee in relation to the usual trade or business of the employer. The test is
whether the former is usually necessary or desirable in the usual 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. Also if the employee has been performing the
job for at least one year, even if the performance is not continuous and merely
intermittent, the law deems repeated and continuing need for its performance
as sufficient evidence of the necessity if not indispensibility of that activity to
the business. Hence, the employment is considered regular, but only with
respect to such activity, and while such activity exist.
Without a doubt, the task of counting and sorting bills is necessary and desirable to the business
of respondent bank. With the exception of sixteen of them, petitioners performed these tasks
for more than six months. Thus, the following twenty-seven petitioners should be deemed
regular employees: Marites Bernardo, Elvira Go Diamante, Rebecca E. David, David P. Pascual,
Raquel Estiller, Albert Hallare, Edmund M. Cortez, Joselito O. Agdon, George P. Ligutan Jr.,
Lilibeth Q. Marmolejo, Jose E. Sales, Isabel Mamauag, Violeta G. Montes, Albino Tecson, Melody
V. Gruela, Bernadeth D. Agero, Cynthia de Vera, Lani R. Cortez, Ma. Isabel B. Concepcion,
Margaret Cecilia Canoza, Thelma Sebastian, Ma. Jeanette Cervantes, Jeannie Ramil, Rozaida
Pascual, Pinky Baloloa, Elizabeth Ventura and Grace S. Pardo.
As held by the Court, "Articles 280 and 281 of the Labor Code put an end to the pernicious
practice of making permanent casuals of our lowly employees by the simple expedient of
extending to them probationary appointments, ad infinitum." 15 The contract signed by
petitioners is akin to a probationary employment, during which the bank determined the
employees' fitness for the job. When the bank renewed the contract after the lapse of the sixmonth probationary period, the employees thereby became regular employees. 16 No employer
is allowed to determine indefinitely the fitness of its employees.
As regular employees, the twenty-seven petitioners are entitled to security of tenure; that is,
their services may be terminated only for a just or authorized cause. Because respondent failed
to show such cause, 17 these twenty-seven petitioners are deemed illegally dismissed and
therefore entitled to back wages and reinstatement without loss of seniority rights and other
privileges. 18 Considering the allegation of respondent that the job of money sorting is no longer
available because it has been assigned back to the tellers to whom it originally
belonged, 18 petitioners are hereby awarded separation pay in lieu of reinstatement. 20
Because the other sixteen worked only for six months, they are not deemed regular employees
and hence not entitled to the same benefits.
Applicability of the
Brent Ruling
Respondent bank, citing Brent School v. Zamora 21 in which the Court upheld the validity of an
employment contract with a fixed term, argues that the parties entered into the contract on
equal footing. It adds that the petitioners had in fact an advantage, because they were backed
by then DSWD Secretary Mita Pardo de Tavera and Representative Arturo Borjal.
We are not persuaded. The term limit in the contract was premised on the fact that the
petitioners were disabled, and that the bank had to determine their fitness for the position.
Indeed, its validity is based on Article 80 of the Labor Code. But as noted earlier, petitioners
proved themselves to be qualified disabled persons who, under the Magna Carta for Disabled
Persons, are entitled to terms and conditions of employment enjoyed by qualified able-bodied
individuals; hence, Article 80 does not apply because petitioners are qualified for their positions.
The validation of the limit imposed on their contracts, imposed by reason of their disability, was
a glaring instance of the very mischief sought to be addressed by the new law.
Moreover, it must be emphasized that a contract of employment is impressed with public
interest. 22 Provisions of applicable statutes are deemed written into the contract, and the
"parties are not at liberty to insulate themselves and their relationships from the impact of labor
laws and regulations by simply contracting with each other." 23 Clearly, the agreement of the
parties regarding the period of employment cannot prevail over the provisions of the Magna
Carta for Disabled Persons, which mandate that petitioners must be treated as qualified ablebodied employees.
Respondent's reason for terminating the employment of petitioners is instructive. Because the
Bangko Sentral ng Pilipinas (BSP) required that cash in the bank be turned over to the BSP during
business hours from 8:00 a.m. to 5:00 p.m., respondent resorted to nighttime sorting and
counting of money. Thus, it reasons that this task "could not be done by deaf mutes because of
their physical limitations as it is very risky for them to travel at night." 24 We find no basis for this
argument. Travelling at night involves risks to handicapped and able-bodied persons alike. This
excuse cannot justify the termination of their employment.
Other Grounds Cited by Respondent
Respondent argues that petitioners were merely "accommodated" employees. This fact does
not change the nature of their employment. As earlier noted, an employee is regular because of
the nature of work and the length of service, not because of the mode or even the reason for
hiring them.
Equally unavailing are private respondent's arguments that it did not go out of its way to recruit
petitioners, and that its plantilla did not contain their positions. In L. T. Datu v. NLRC, 25 the
Court held that "the determination of whether employment is casual or regular does not
depend on the will or word of the employer, and the procedure of hiring . . . but on the nature
of the activities performed by the employee, and to some extent, the length of performance and
its continued existence."
Private respondent argues that the petitioners were informed from the start that they could not
become regular employees. In fact, the bank adds, they agreed with the stipulation in the
contract regarding this point. Still, we are not persuaded. The well-settled rule is that the
character of employment is determined not by stipulations in the contract, but by the nature of
the work performed. 26 Otherwise, no employee can become regular by the simple expedient of
incorporating this condition in the contract of employment.
In this light, we iterate our ruling in Romares v. NLRC: 27
Art. 280 was emplaced in our statute books to prevent the circumvention of the
employee's right to be secure in his tenure by indiscriminately and completely
ruling out all written and oral agreements inconsistent with the concept of
regular employment defined therein. Where an employee has been engaged to
perform activities which are usually necessary or desirable in the usual business
of the employer, such employee is deemed a regular employee and is entitled to
security of tenure notwithstanding the contrary provisions of his contract of
employment.
xxx xxx xxx
At this juncture, the leading case of Brent School, Inc. v. Zamora proves
instructive. As reaffirmed in subsequent cases, this Court has upheld the legality
of fixed-term employment. It ruled that the decisive determinant in "term
employment" should not be the activities that the employee is called upon to
perform but the day certain agreed upon the parties for the commencement
and termination of their employment relationship. But this Court went on to say
that where from the circumstances it is apparent that the periods have been
imposed to preclude acquisition of tenurial security by the employee, they
should be struck down or disregarded as contrary to public policy and morals.
In rendering this Decision, the Court emphasizes not only the constitutional bias in favor of the
working class, but also the concern of the State for the plight of the disabled. The noble
objectives of Magna Carta for Disabled Persons are not based merely on charity or
accommodation, but on justice and the equal treatment of qualifiedpersons, disabled or not. In
the present case, the handicap of petitioners (deaf-mutes) is not a hindrance to their work. The
eloquent proof of this statement is the repeated renewal of their employment contracts. Why
then should they be dismissed, simply because they are physically impaired? The Court believes,
that, after showing their fitness for the work assigned to them, they should be treated and
granted the same rights like any other regular employees.
In this light, we note the Office of the Solicitor General's prayer joining the petitioners' cause. 28
WHEREFORE, premises considered, the Petition is hereby GRANTED. The June 20, 1995 Decision
and the August 4, 1995 Resolution of the NLRC are REVERSED and SET ASIDE. Respondent Far
East Bank and Trust Company is hereby ORDERED to pay back wages and separation pay to each
of the following twenty-seven (27) petitioners, namely, Marites Bernardo, Elvira Go Diamante,
Rebecca E. David, David P. Pascual, Raquel Estiller, Albert Hallare, Edmund M. Cortez, Joselito O.
Agdon, George P. Ligutan Jr., Liliberh Q. Marmolejo, Jose E. Sales, Isabel Mamauag, Violeta G.
Montes, Albino Tecson, Melody V. Gruela, Bernadeth D. Agero, Cynthia de Vera, Lani R. Cortez,
Ma. Isabel B. Concepcion, Margaret Cecilia Canoza, Thelma Sebastian, Ma. Jeanette Cervantes,
Jeannie Ramil, Rozaida Pascual, Pinky Baloloa, Elizabeth Ventura and Grace S. Pardo. The NLRC is
hereby directed to compute the exact amount due each of said employees, pursuant to existing
laws and regulations, within fifteen days from the finality of this Decision. No costs.1wphi1.nt
SO ORDERED.
Romero, Vitug, Purisima and Gonzaga-Reyes, JJ., concur.
Footnotes
1 Rollo, pp. 3-39.
2 Rollo, pp. 46-65.
3 Penned by Presiding Comm. Lourdes C. Javier and concurred in by Comm. Joaquin A.
Tanodra. The other member, Comm. Ireneo B. Bernardo, dissented.
4 Rollo, p. 113.
5 Rollo, pp. 73-74.
6 NLRC Decision, pp. 2-10; rollo, pp. 47-55.
7 Petition, p. 12; rollo, p. 14.
8 This is a typographical error on the part of the petitioner, for it is unlikely that the
Contract of Employment was terminated the day after it was executed. In fact, Annex
"C" of petitioners' Position Paper, which was submitted before the labor arbiter, shows
that Petitioner Robert Marcelo was hired on July 31, 1992, not 1993 (Rollo, p. 100.).
9 The case was deemed submitted for resolution on December 1, 1998, when the
Memorandum of the private respondent was received by the Court. The case was given
due course on December 8, 1997.
10 NLRC Decision, p. 18; rollo, p. 63.
11 Petitioners' Memorandum, p. 3; rollo, p. 474.
12 Respondent's Memorandum, p. 10; rollo, p. 523.
13 Approved on March 24, 1992.
14 176 SCRA 615, 621, August 21, 1989, per Fernan, CJ.
15 CENECO v. NLRC, 236 SCRA 108, September 1, 1994, per Puno, J.
16 Ibid,; Article 281, Labor Code.
17 Art. 282 to 284 of the Code.
18 Art. 279 of the Labor Code as amended.
20 Zarate v. Olegario, 263 SCRA 1, October 7, 1996.
21 181 SCRA 802, February 6, 1990.
22 Art. 1700 of the Civil Code provides: "The relations between capital and labor are not
merely contractual. They are so impressed with public interest that labor contracts must
yield to the common good. . . .."
23 Pakistan Airlines Corporation v. Ople, 190 SCRA 90, September 28, 1990, per
Feliciano, J. See alsoServidad v. NLRC, GR. No. 128682, March 18, 1999; Villa v. NLRC,
284 SCRA 105, January 14, 1998.
25 253 SCRA 440, 450, February 9, 1996, per Kapunan, J.
26 A.M. Oreta & Co. v. NLRC, 176 SCRA 208, August 10, 1989.
27 GR No. 122327, August 19, 1998, per Martinez, J.
28 Manifestation of the Office of the Solicitor General; rollo, pp. 354-375.

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 118978 May 23, 1997
PHILIPPINE TELEGRAPH AND TELEPHONE COMPANY, * petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and GRACE DE GUZMAN, respondents.
REGALADO, J.:
Seeking relief through the extraordinary writ of certiorari, petitioner Philippine Telegraph and
Telephone Company (hereafter, PT & T) invokes the alleged concealment of civil status and
defalcation of company funds as grounds to terminate the services of an employee. That
employee, herein private respondent Grace de Guzman, contrarily argues that what really
motivated PT & T to terminate her services was her having contracted marriage during her
employment, which is prohibited by petitioner in its company policies. She thus claims that she
was discriminated against in gross violation of law, such a proscription by an employer being
outlawed by Article 136 of the Labor Code.
Grace de Guzman was initially hired by petitioner as a reliever, specifically as a "Supernumerary
Project Worker," for a fixed period from November 21, 1990 until April 20, 1991 vice one C.F.
Tenorio who went on maternity leave.1 Under the Reliever Agreement which she signed with
petitioner company, her employment was to be immediately terminated upon expiration of the
agreed period. Thereafter, from June 10, 1991 to July 1, 1991, and from July 19, 1991 to August
8, 1991, private respondent's services as reliever were again engaged by petitioner, this time in
replacement of one Erlinda F. Dizon who went on leave during both periods. 2 After August 8,
1991, and pursuant to their Reliever Agreement, her services were terminated.
On September 2, 1991, private respondent was once more asked to join petitioner company as a
probationary employee, the probationary period to cover 150 days. In the job application form
that was furnished her to be filled up for the purpose, she indicated in the portion for civil status
therein that she was single although she had contracted marriage a few months earlier, that is,
on May 26, 1991. 3
It now appears that private respondent had made the same representation in the two
successive reliever agreements which she signed on June 10, 1991 and July 8, 1991. When
petitioner supposedly learned about the same later, its branch supervisor in Baguio City, Delia
M. Oficial, sent to private respondent a memorandum dated January 15, 1992 requiring her to
explain the discrepancy. In that memorandum, she was reminded about the company's policy of
not accepting married women for employment. 4
In her reply letter dated January 17, 1992, private respondent stated that she was not aware of
PT&T's policy regarding married women at the time, and that all along she had not deliberately
hidden her true civil status. 5Petitioner nonetheless remained unconvinced by her explanations.
Private respondent was dismissed from the company effective January 29, 1992, 6 which she
readily contested by initiating a complaint for illegal dismissal, coupled with a claim for nonpayment of cost of living allowances (COLA), before the Regional Arbitration Branch of the
National Labor Relations Commission in Baguio City.
At the preliminary conference conducted in connection therewith, private respondent
volunteered the information, and this was incorporated in the stipulation of facts between the
parties, that she had failed to remit the amount of P2,380.75 of her collections. She then
executed a promissory note for that amount in favor of petitioner 7. All of these took place in a
formal proceeding and with the agreement of the parties and/or their counsel.
On November 23, 1993, Labor Arbiter Irenarco R. Rimando handed down a decision declaring
that private respondent, who had already gained the status of a regular employee, was illegally
dismissed by petitioner. Her reinstatement, plus payment of the corresponding back wages and
COLA, was correspondingly ordered, the labor arbiter being of the firmly expressed view that
the ground relied upon by petitioner in dismissing private respondent was clearly insufficient,
and that it was apparent that she had been discriminated against on account of her having
contracted marriage in violation of company rules.
On appeal to the National Labor Relations Commission (NLRC), said public respondent upheld
the labor arbiter and, in its decision dated April 29, 1994, it ruled that private respondent had
indeed been the subject of an unjust and unlawful discrimination by her employer, PT & T.
However, the decision of the labor arbiter was modified with the qualification that Grace de
Guzman deserved to be suspended for three months in view of the dishonest nature of her acts
which should not be condoned. In all other respects, the NLRC affirmed the decision of the labor
arbiter, including the order for the reinstatement of private respondent in her employment with
PT & T.
The subsequent motion for reconsideration filed by petitioner was rebuffed by respondent NLRC
in its resolution of November 9, 1994, hence this special civil action assailing the aforestated
decisions of the labor arbiter and respondent NLRC, as well as the denial resolution of the latter.
1. Decreed in the Bible itself is the universal norm that women should be regarded with love and
respect but, through the ages, men have responded to that injunction with indifference, on the
hubristic conceit that women constitute the inferior sex. Nowhere has that prejudice against
womankind been so pervasive as in the field of labor, especially on the matter of equal
employment opportunities and standards. In the Philippine setting, women have traditionally
been considered as falling within the vulnerable groups or types of workers who must be
safeguarded with preventive and remedial social legislation against discriminatory and
exploitative practices in hiring, training, benefits, promotion and retention.
The Constitution, cognizant of the disparity in rights between men and women in almost all
phases of social and political life, provides a gamut of protective provisions. To cite a few of the
primordial ones, Section 14, Article II 8on the Declaration of Principles and State Policies,
expressly recognizes the role of women in nation-building and commands the State to ensure, at
all times, the fundamental equality before the law of women and men. Corollary thereto,
Section 3 of Article XIII 9 (the progenitor whereof dates back to both the 1935 and 1973
Constitution) pointedly requires the State to afford full protection to labor and to promote full
employment and equality of employment opportunities for all, including an assurance of
entitlement to tenurial security of all workers. Similarly, Section 14 of Article XIII 10 mandates
that the State shall protect working women through provisions for opportunities that would
enable them to reach their full potential.
2. Corrective labor and social laws on gender inequality have emerged with more frequency in
the years since the Labor Code was enacted on May 1, 1974 as Presidential Decree No. 442,
largely due to our country's commitment as a signatory to the United Nations Convention on the
Elimination of All Forms of Discrimination Against Women (CEDAW). 11
Principal among these laws are Republic Act No. 6727 12 which explicitly prohibits discrimination
against women with respect to terms and conditions of employment, promotion, and training
opportunities; Republic Act No. 6955 13 which bans the "mail-order-bride" practice for a fee and
the export of female labor to countries that cannot guarantee protection to the rights of women
workers; Republic Act No. 7192 14 also known as the "Women in Development and Nation
Building Act," which affords women equal opportunities with men to act and to enter into
contracts, and for appointment, admission, training, graduation, and commissioning in all
military or similar schools of the Armed Forces of the Philippines and the Philippine National
Police; Republic Act No. 7322 15 increasing the maternity benefits granted to women in the
private sector; Republic Act No. 7877 16 which outlaws and punishes sexual harassment in the
workplace and in the education and training environment; and Republic Act No. 8042, 17 or the
"Migrant Workers and Overseas Filipinos Act of 1995," which prescribes as a matter of
policy, inter alia, the deployment of migrant workers, with emphasis on women, only in
countries where their rights are secure. Likewise, it would not be amiss to point out that in the
Family Code, 18 women's rights in the field of civil law have been greatly enhanced and
expanded.
In the Labor Code, provisions governing the rights of women workers are found in Articles 130
to 138 thereof. Article 130 involves the right against particular kinds of night work while Article
132 ensures the right of women to be provided with facilities and standards which the Secretary
of Labor may establish to ensure their health and safety. For purposes of labor and social
legislation, a woman working in a nightclub, cocktail lounge, massage clinic, bar or other similar
establishments shall be considered as an employee under Article 138. Article 135, on the other
hand, recognizes a woman's right against discrimination with respect to terms and conditions of
employment on account simply of sex. Finally, and this brings us to the issue at hand, Article 136
explicitly prohibits discrimination merely by reason of the marriage of a female employee.
3. Acknowledged as paramount in the due process scheme is the constitutional guarantee of
protection to labor and security of tenure. Thus, an employer is required, as a condition sine qua
non prior to severance of the employment ties of an individual under his employ, to convincingly
establish, through substantial evidence, the existence of a valid and just cause in dispensing with
the services of such employee, one's labor being regarded as constitutionally protected
property.
On the other hand, it is recognized that regulation of manpower by the company falls within the
so-called management prerogatives, which prescriptions encompass the matter of hiring,
supervision of workers, work assignments, working methods and assignments, as well as
regulations on the transfer of employees, lay-off of workers, and the discipline, dismissal, and
recall of employees. 19 As put in a case, an employer is free to regulate, according to his
discretion and best business judgment, all aspects of employment, "from hiring to firing," except
in cases of unlawful discrimination or those which may be provided by law. 20
In the case at bar, petitioner's policy of not accepting or considering as disqualified from work
any woman worker who contracts marriage runs afoul of the test of, and the right against,
discrimination, afforded all women workers by our labor laws and by no less than the
Constitution. Contrary to petitioner's assertion that it dismissed private respondent from
employment on account of her dishonesty, the record discloses clearly that her ties with the
company were dissolved principally because of the company's policy that married women are
not qualified for employment in PT & T, and not merely because of her supposed acts of
dishonesty.
That it was so can easily be seen from the memorandum sent to private respondent by Delia M.
Oficial, the branch supervisor of the company, with the reminder, in the words of the latter, that
"you're fully aware that the company is not accepting married women employee (sic), as it was
verbally instructed to you." 21 Again, in the termination notice sent to her by the same branch
supervisor, private respondent was made to understand that her severance from the service
was not only by reason of her concealment of her married status but, over and on top of that,
was her violation of the company's policy against marriage ("and even told you that married
women employees are not applicable [sic] or accepted in our company.") 22 Parenthetically, this
seems to be the curious reason why it was made to appear in the initiatory pleadings that
petitioner was represented in this case only by its said supervisor and not by its highest ranking
officers who would otherwise be solidarily liable with the corporation. 23
Verily, private respondent's act of concealing the true nature of her status from PT & T could not
be properly characterized as willful or in bad faith as she was moved to act the way she did
mainly because she wanted to retain a permanent job in a stable company. In other words, she
was practically forced by that very same illegal company policy into misrepresenting her civil
status for fear of being disqualified from work. While loss of confidence is a just cause for
termination of employment, it should not be simulated. 24 It must rest on an actual breach of
duty committed by the employee and not on the employer's caprices. 25 Furthermore, it should
never be used as a subterfuge for causes which are improper, illegal, or unjustified. 26
In the present controversy, petitioner's expostulations that it dismissed private respondent, not
because the latter got married but because she concealed that fact, does have a hollow ring. Her
concealment, so it is claimed, bespeaks dishonesty hence the consequent loss of confidence in
her which justified her dismissal.
Petitioner would asseverate, therefore, that while it has nothing against marriage, it
nonetheless takes umbrage over the concealment of that fact. This improbable reasoning, with
interstitial distinctions, perturbs the Court since private respondent may well be minded to
claim that the imputation of dishonesty should be the other way around.
Petitioner would have the Court believe that although private respondent defied its policy
against its female employees contracting marriage, what could be an act of insubordination was
inconsequential. What it submits as unforgivable is her concealment of that marriage yet, at the
same time, declaring that marriage as a trivial matter to which it supposedly has no objection. In
other words, PT & T says it gives its blessings to its female employees contracting marriage,
despite the maternity leaves and other benefits it would consequently respond for and which
obviously it would have wanted to avoid. If that employee confesses such fact of marriage, there
will be no sanction; but if such employee conceals the same instead of proceeding to the
confessional, she will be dismissed. This line of reasoning does not impress us as reflecting its
true management policy or that we are being regaled with responsible advocacy.
This Court should be spared the ennui of strained reasoning and the tedium of propositions
which confuse through less than candid arguments. Indeed, petitioner glosses over the fact that
it was its unlawful policy against married women, both on the aspects of qualification and
retention, which compelled private respondent to conceal her supervenient marriage. It was,
however, that very policy alone which was the cause of private respondent's secretive conduct
now complained of. It is then apropos to recall the familiar saying that he who is the cause of
the cause is the cause of the evil caused.
Finally, petitioner's collateral insistence on the admission of private respondent that she
supposedly misappropriated company funds, as an additional ground to dismiss her from
employment, is somewhat insincere and self-serving. Concededly, private respondent admitted
in the course of the proceedings that she failed to remit some of her collections, but that is an
altogether different story. The fact is that she was dismissed solely because of her concealment
of her marital status, and not on the basis of that supposed defalcation of company funds. That
the labor arbiter would thus consider petitioner's submissions on this supposed dishonesty as a
mere afterthought, just to bolster its case for dismissal, is a perceptive conclusion born of
experience in labor cases. For, there was no showing that private respondent deliberately
misappropriated the amount or whether her failure to remit the same was through negligence
and, if so, whether the negligence was in nature simple or grave. In fact, it was merely agreed
that private respondent execute a promissory note to refund the same, which she did, and the
matter was deemed settled as a peripheral issue in the labor case.
Private respondent, it must be observed, had gained regular status at the time of her dismissal.
When she was served her walking papers on January 29, 1992, she was about to complete the
probationary period of 150 days as she was contracted as a probationary employee on
September 2, 1991. That her dismissal would be effected just when her probationary period was
winding down clearly raises the plausible conclusion that it was done in order to prevent her
from earning security of tenure. 27 On the other hand, her earlier stints with the company as
reliever were undoubtedly those of a regular employee, even if the same were for fixed periods,
as she performed activities which were essential or necessary in the usual trade and business of
PT & T. 28 The primary standard of determining regular employment is the reasonable
connection between the activity performed by the employee in relation to the business or trade
of the employer. 29
As an employee who had therefore gained regular status, and as she had been dismissed
without just cause, she is entitled to reinstatement without loss of seniority rights and other
privileges and to full back wages, inclusive of allowances and other benefits or their monetary
equivalent. 30 However, as she had undeniably committed an act of dishonesty in concealing her
status, albeit under the compulsion of an unlawful imposition of petitioner, the three-month
suspension imposed by respondent NLRC must be upheld to obviate the impression or inference
that such act should be condoned. It would be unfair to the employer if she were to return to its
fold without any sanction whatsoever for her act which was not totally justified. Thus, her
entitlement to back wages, which shall be computed from the time her compensation was
withheld up to the time of her actual reinstatement, shall be reduced by deducting therefrom
the amount corresponding to her three months suspension.
4. The government, to repeat, abhors any stipulation or policy in the nature of that adopted by
petitioner PT & T. The Labor Code state, in no uncertain terms, as follows:
Art. 136. Stipulation against marriage. It shall be unlawful for an employer to
require as a condition of employment or continuation of employment that a
woman shall not get married, or to stipulate expressly or tacitly that upon
getting married, a woman employee shall be deemed resigned or separated, or
to actually dismiss, discharge, discriminate or otherwise prejudice a woman
employee merely by reason of marriage.
This provision had a studied history for its origin can be traced to Section 8 of Presidential
Decree No. 148, 31better known as the "Women and
Child Labor Law," which amended paragraph (c), Section 12 of Republic Act No. 679, 32 entitled
"An Act to Regulate the Employment of Women and Children, to Provide Penalties for Violations
Thereof, and for Other Purposes." The forerunner to Republic Act No. 679, on the other hand,
was Act No. 3071 which became law on March 16, 1923 and which regulated the employment of
women and children in shops, factories, industrial, agricultural, and mercantile establishments
and other places of labor in the then Philippine Islands.
It would be worthwhile to reflect upon and adopt here the rationalization in Zialcita, et
al. vs. Philippine Air Lines,33 a decision that emanated from the Office of the President. There, a
policy of Philippine Air Lines requiring that prospective flight attendants must be single and that
they will be automatically separated from the service once they marry was declared void, it
being violative of the clear mandate in Article 136 of the Labor Code with regard to
discrimination against married women. Thus:
Of first impression is the incompatibility of the respondent's policy or regulation
with the codal provision of law. Respondent is resolute in its contention that
Article 136 of the Labor Code applies only to women employed in ordinary
occupations and that the prohibition against marriage of women engaged in
extraordinary occupations, like flight attendants, is fair and reasonable,
considering the pecularities of their chosen profession.
We cannot subscribe to the line of reasoning pursued by respondent. All along,
it knew that the controverted policy has already met its doom as early as March
13, 1973 when Presidential Decree No. 148, otherwise known as the Women
and Child Labor Law, was promulgated. But for the timidity of those affected or
their labor unions in challenging the validity of the policy, the same was able to
obtain a momentary reprieve. A close look at Section 8 of said decree, which
amended paragraph (c) of Section 12 of Republic Act No. 679, reveals that it is
exactly the same provision reproduced verbatim in Article 136 of the Labor
Code, which was promulgated on May 1, 1974 to take effect six (6) months
later, or on November 1, 1974.
It cannot be gainsaid that, with the reiteration of the same provision in the new
Labor Code, all policies and acts against it are deemed illegal and therefore
abrogated. True, Article 132 enjoins the Secretary of Labor to establish
standards that will ensure the safety and health of women employees and in
appropriate cases shall by regulation require employers to determine
appropriate minimum standards for termination in special occupations, such as
those of flight attendants, but that is precisely the factor that militates against
the policy of respondent. The standards have not yet been established as set
forth in the first paragraph, nor has the Secretary of Labor issued any regulation
affecting flight attendants.
It is logical to presume that, in the absence of said standards or regulations
which are as yet to be established, the policy of respondent against marriage is
patently illegal. This finds support in Section 9 of the New Constitution, which
provides:
Sec. 9. The State shall afford protection to labor, promote full employment and
equality in employment, ensure equal work opportunities regardless of sex,
race, or creed, and regulate the relations between workers and employees. The
State shall assure the rights of workers to self-organization, collective
bargaining, security of tenure, and just and humane conditions of work . . . .
Moreover, we cannot agree to the respondent's proposition that termination
from employment of flight attendants on account of marriage is a fair and
reasonable standard designed for their own health, safety, protection and
welfare, as no basis has been laid therefor. Actually, respondent claims that its
concern is not so much against the continued employment of the flight
attendant merely by reason of marriage as observed by the Secretary of Labor,
but rather on the consequence of marriage-pregnancy. Respondent discussed at
length in the instant appeal the supposed ill effects of pregnancy on flight
attendants in the course of their employment. We feel that this needs no
further discussion as it had been adequately explained by the Secretary of Labor
in his decision of May 2, 1976.
In a vain attempt to give meaning to its position, respondent went as far as
invoking the provisions of Articles 52 and 216 of the New Civil Code on the
preservation of marriage as an inviolable social institution and the family as a
basic social institution, respectively, as bases for its policy of non-marriage. In
both instances, respondent predicates absence of a flight attendant from her
home for long periods of time as contributory to an unhappy married life. This is
pure conjecture not based on actual conditions, considering that, in this modern
world, sophisticated technology has narrowed the distance from one place to
another. Moreover, respondent overlooked the fact that married flight
attendants can program their lives to adapt to prevailing circumstances and
events.
Article 136 is not intended to apply only to women employed in ordinary

occupations, or it should have categorically expressed so. The sweeping
intendment of the law, be it on special or ordinary occupations, is reflected in
the whole text and supported by Article 135 that speaks of non-discrimination
on the employment of women.
The judgment of the Court of Appeals in Gualberto, et al. vs. Marinduque Mining & Industrial
Corporation 34considered as void a policy of the same nature. In said case, respondent, in
dismissing from the service the complainant, invoked a policy of the firm to consider female
employees in the project it was undertaking as separated the moment they get married due to
lack of facilities for married women. Respondent further claimed that complainant was
employed in the project with an oral understanding that her services would be terminated when
she gets married. Branding the policy of the employer as an example of "discriminatory
chauvinism" tantamount to denying equal employment opportunities to women simply on
account of their sex, the appellate court struck down said employer policy as unlawful in view of
its repugnance to the Civil Code, Presidential Decree No. 148 and the Constitution.
Under American jurisprudence, job requirements which establish employer preference or
conditions relating to the marital status of an employee are categorized as a "sex-plus"
discrimination where it is imposed on one sex and not on the other. Further, the same should be
evenly applied and must not inflict adverse effects on a racial or sexual group which is protected
by federal job discrimination laws. Employment rules that forbid or restrict the employment of
married women, but do not apply to married men, have been held to violate Title VII of the
United States Civil Rights Act of 1964, the main federal statute prohibiting job discrimination
against employees and applicants on the basis of, among other things, sex. 35
Further, it is not relevant that the rule is not directed against all women but just against married
women. And, where the employer discriminates against married women, but not against
married men, the variable is sex and the discrimination is unlawful. 36 Upon the other hand, a
requirement that a woman employee must remain unmarried could be justified as a "bona fide
occupational qualification," or BFOQ, where the particular requirements of the job would justify
the same, but not on the ground of a general principle, such as the desirability of spreading
work in the workplace. A requirement of that nature would be valid provided it reflects an
inherent quality reasonably necessary for satisfactory job performance. Thus, in one case, a nomarriage rule applicable to both male and female flight attendants, was regarded as unlawful
since the restriction was not related to the job performance of the flight attendants. 37
5. Petitioner's policy is not only in derogation of the provisions of Article 136 of the Labor Code
on the right of a woman to be free from any kind of stipulation against marriage in connection
with her employment, but it likewise assaults good morals and public policy, tending as it does
to deprive a woman of the freedom to choose her status, a privilege that by all accounts inheres
in the individual as an intangible and inalienable right. 38 Hence, while it is true that the parties
to a contract may establish any agreements, terms, and conditions that they may deem
convenient, the same should not be contrary to law, morals, good customs, public order, or
public policy. 39 Carried to its logical consequences, it may even be said that petitioner's policy
against legitimate marital bonds would encourage illicit or common-law relations and subvert
the sacrament of marriage.
Parenthetically, the Civil Code provisions on the contract of labor state that the relations
between the parties, that is, of capital and labor, are not merely contractual, impressed as they
are with so much public interest that the same should yield to the common good. 40 It goes on to
intone that neither capital nor labor should visit acts of oppression against the other, nor impair
the interest or convenience of the public. 41 In the final reckoning, the danger of just such a
policy against marriage followed by petitioner PT & T is that it strikes at the very essence, ideals
and purpose of marriage as an inviolable social institution and, ultimately, of the family as the
foundation of the nation. 42 That it must be effectively interdicted here in all its indirect,
disguised or dissembled forms as discriminatory conduct derogatory of the laws of the land is
not only in order but imperatively required.
ON THE FOREGOING PREMISES, the petition of Philippine Telegraph and Telephone Company is
hereby DISMISSED for lack of merit, with double costs against petitioner.
SO ORDERED.
Romero, Puno, Mendoza and Torres, Jr., JJ., concur.
Footnotes
* The phrase "herein represented by DELIA M. OFICIAL", added hereto in the
title of this case as stated in the petition, has been deleted for being
unnecessary and violative of the rules on pleadings, and is commented upon in
the text of this opinion.
1 Rollo, 42; Annex D.
2 Ibid., 44-45, Annexes F and G
3 Ibid., 46-48; Annexes H and I.
4 Ibid., 49; Annex J.
5 Id., 50; Annex K.
6 Id., 51; Annex L.
7 Id., 53; Annex N.
8 The State recognizes the role of women in nation-building, and shall ensure
the fundamental equality before the law of women and men (Sec.14, Art. II).
9 The State shall afford full protection to labor, local and overseas, organized or
unorganized, and promote full employment and equality of employment
opportunities for all.
It shall guarantee the rights of all workers to self-organization, collective

bargaining and negotiations, and peaceful concerted activities, including the
right to strike in accordance with law. They shall be entitled to security of
tenure, humane conditions of work, and a living wage. They shall also
participate in policy and decision-making processes affecting their rights and
benefits as may be provided by law.
The State shall promote the principle of shared responsibility between workers
and employers and the preferential use of voluntary modes of settling disputes,
including conciliation, and shall enforce their mutual compliance therewith to
foster industrial peace.
The State shall regulate the relations between workers and employers,
recognizing the right of labor to its just share in the fruits of production and the
right of enterprises to reasonable returns on investment, and to expansion and
growth (Sec. 3, Art. XIII).
10 The State shall protect working women by providing safe and healthful
working conditions, taking into account their maternal functions, and such
facilities and opportunities that will enhance their welfare and enable them to
realize their full potential in the service of the nation (Sec. 14, Art. XIII).
11 Adopted in 1979 by the UN General Assembly, it is regarded as the most
comprehensive international treaty governing the rights of women. The
Philippines became a signatory thereto a year after its adoption by the UN and
in 1981, the country ratified it.
The Philippines had likewise been an active participant in all the four U.N. World
Conferences on Women, namely those held in Mexico in 1975, Copenhagen in
1980, Nairobi in 1985, and Beijing in 1995.
Other relevant international laws to which the Philippines adheres as a member
of the international community include the Universal Declaration of Human
Rights, the International Covenant on Civil and Political Rights, and the
International Covenant on Economic, Social and Cultural Rights.
12 Approved, June 9, 1989.
14 Approved, February 12, 1992.
15 Approved, March 30, 1992.
16 Approved, February 14, 1995.
18 Effective August 3, 1988.

19 Caltex Refinery Employees Association (CREA) vs. National Labor Relations
Commission, et al., G.R. No. 102993, July 14, 1995, 246 SCRA 271; Oriental
Mindoro Electric Cooperative, Inc. vs. National Labor Relations Commission, et
al., G.R. No. 111905, July 31, 1995, 246 SCRA 794; Nuez vs. National Labor
Relations Commission, et al., G.R. No. 107574, December 28, 1994, 239 SCRA
518; San Miguel Corporation vs. Ubaldo, et al., G.R. No. 92859, February 1,
1993, 218 SCRA 293.
20 NAFLU vs. National Labor Relations Commission, et al., G.R. No. 90739,
October 3, 1991, 202 SCRA 346.
21 Quoted in the Decision of the Third Division, NLRC, in NLRC Case No. RABCAR-02-0042-92, Annex B of petition, Rollo, 35. See also Annex J, supra, Fn. 4.
22 Annex L, id., Rollo, 51.
23 Art. 289, Labor Code; see AC Ransom Labor Union-ACLU vs. National Labor
Relations Commission, et al., G.R. No. 69494, June 10, 1986, 142 SCRA 269; Chua
vs. National Labor Relations Commission, et al., G.R. No. 81450, February 15,
1990, 182 SCRA 353.
24 Mapalo vs. National Labor Relations Commission, et al., G.R. No. 107940,
June 17, 1994, 233 SCRA 266; PNOC-Energy Development Corporation vs.
National Labor Relations Commission, et al., G.R. No. 79182, September 11,
1991, 201 SCRA 487.
25 San Antonio vs. National Labor Relations Commission, et al., G.R. No. 100829,
November 21, 1995, 250 SCRA 359; Labor vs. National Labor Relations
Commission, G.R. No. 110388, September 14, 1995, 248 SCRA 183.
26 Hospicio de San Jose de Basili vs. National Labor Relations Commission, et al.,
G.R. No. 75997, August 18, 1988, 164 SCRA 516.
27 Cielo vs. National Labor Relations Commission, et al G.R. No. 78693, January
28, 1991, 193 SCRA 410; Brent School, Inc. vs. Zamora, et al., G.R. No. 48494,
February 5, 1990, 181 SCRA 702.
28 Art. 280, Labor Code; see PLDT vs. Montemayor, et al., G.R. No. 88626,
October 12, 1990, 190 SCRA 427.
29 De Leon vs. National Labor Relations Commission, et al., G.R. No. 70705,
August 21, 1989, 176 SCRA 615.
30 Molave Tours Corp. vs. National Labor Relations Commission, et al., G.R. No.
112909, November 24, 1995, 250 SCRA 325; see Art. 279, Labor Code, as
amended by Republic Act No. 6715.
31 Promulgated on March 13, 1973.
32 Approved on April 15, 1952. It was later amended by Republic Act No. 1131,
which in turn was approved on June 16, 1954.
33 Case No. RO4-3-3398-76; February 20, 1977.
34 CA-G.R. No. 52753-R, June 28, 1978.
35 45A Am. Jur. 2d, Job Discrimination, Sec. 506, p. 486.
36 Ibid., id., id.
37 Ibid., id., Sec. 507.
38 Tolentino, A., Civil Code of the Philippines, Vol. III, 1979 ed., 235; see Art.
874, Civil Code.
39 Art. 1306, Civil Code.
40 Art. 1700, Civil Code; see Macleod &. Co. of the Philippines vs. Progressive
Federation of Labor, 97 Phil. 205 (1955).
41 Art. 1701, Civil Code.
42 The 1987 Constitution provides:
The State recognizes the sanctity of family life and shall protect and strengthen
the family as a basic autonomous social institution. . . . (Sec. 15, Art. II).
The State recognizes the Filipino family as the foundation of the nation.
Accordingly, it shall strengthen its solidarity and actively promote its total
development (Sec. 1, Art. XV).
Marriage, as an inviolable social institution, is the foundation of the family and
shall be protected by the State (Sec. 2, Art. XV).

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 162994
September 17, 2004
DUNCAN ASSOCIATION OF DETAILMAN-PTGWO and PEDRO A. TECSON, petitioners,

vs.
GLAXO WELLCOME PHILIPPINES, INC., Respondent.
RESOLUTION
TINGA, J.:
Confronting the Court in this petition is a novel question, with constitutional overtones,
involving the validity of the policy of a pharmaceutical company prohibiting its employees from
marrying employees of any competitor company.
This is a Petition for Review on Certiorari assailing the Decision1 dated May 19, 2003 and
the Resolution dated March 26, 2004 of the Court of Appeals in CA-G.R. SP No. 62434.2
Petitioner Pedro A. Tecson (Tecson) was hired by respondent Glaxo Wellcome Philippines, Inc.
(Glaxo) as medical representative on October 24, 1995, after Tecson had undergone training and
orientation.
Thereafter, Tecson signed a contract of employment which stipulates, among others, that he
agrees to study and abide by existing company rules; to disclose to management any existing or
future relationship by consanguinity or affinity with co-employees or employees of competing
drug companies. If management perceives a conflict of interest or a potential conflict between
such relationship and the employees employment with the company, the management and the
employee will explore the possibility of a "transfer to another department in a noncounterchecking position" or preparation for employment outside the company after six
months.
Tecson was initially assigned to market Glaxos products in the Camarines Sur-Camarines Norte
sales area.
Subsequently, Tecson entered into a romantic relationship with Bettsy, an employee of Astra
Pharmaceuticals3(Astra), a competitor of Glaxo. Bettsy was Astras Branch Coordinator in Albay.
She supervised the district managers and medical representatives of her company and prepared
marketing strategies for Astra in that area.
Even before they got married, Tecson received several reminders from his District Manager
regarding the conflict of interest which his relationship with Bettsy might engender. Still, love
prevailed, and Tecson married Bettsy in September 1998.
In January 1999, Tecsons superiors informed him that his marriage to Bettsy gave rise to a
conflict of interest. Tecsons superiors reminded him that he and Bettsy should decide which
one of them would resign from their jobs, although they told him that they wanted to retain him
as much as possible because he was performing his job well.
Tecson requested for time to comply with the company policy against entering into a
relationship with an employee of a competitor company. He explained that Astra, Bettsys
employer, was planning to merge with Zeneca, another drug company; and Bettsy was planning
to avail of the redundancy package to be offered by Astra. With Bettsys separation from her
company, the potential conflict of interest would be eliminated. At the same time, they would
be able to avail of the attractive redundancy package from Astra.
In August 1999, Tecson again requested for more time resolve the problem. In September 1999,
Tecson applied for a transfer in Glaxos milk division, thinking that since Astra did not have a
milk division, the potential conflict of interest would be eliminated. His application was denied
in view of Glaxos "least-movement-possible" policy.
In November 1999, Glaxo transferred Tecson to the Butuan City-Surigao City-Agusan del Sur
sales area. Tecson asked Glaxo to reconsider its decision, but his request was denied.
Tecson sought Glaxos reconsideration regarding his transfer and brought the matter to Glaxos
Grievance Committee. Glaxo, however, remained firm in its decision and gave Tescon until
February 7, 2000 to comply with the transfer order. Tecson defied the transfer order and
continued acting as medical representative in the Camarines Sur-Camarines Norte sales area.
During the pendency of the grievance proceedings, Tecson was paid his salary, but was not
issued samples of products which were competing with similar products manufactured by Astra.
He was also not included in product conferences regarding such products.
Because the parties failed to resolve the issue at the grievance machinery level, they submitted
the matter for voluntary arbitration. Glaxo offered Tecson a separation pay of one-half ()
month pay for every year of service, or a total of P50,000.00 but he declined the offer. On
November 15, 2000, the National Conciliation and Mediation Board (NCMB) rendered
its Decision declaring as valid Glaxos policy on relationships between its employees and persons
employed with competitor companies, and affirming Glaxos right to transfer Tecson to another
sales territory.
Aggrieved, Tecson filed a Petition for Review with the Court of Appeals assailing the
NCMB Decision.
On May 19, 2003, the Court of Appeals promulgated its Decision denying the Petition for
Review on the ground that the NCMB did not err in rendering its Decision. The appellate court
held that Glaxos policy prohibiting its employees from having personal relationships with
employees of competitor companies is a valid exercise of its management prerogatives.4
Tecson filed a Motion for Reconsideration of the appellate courts Decision, but the motion was
denied by the appellate court in its Resolution dated March 26, 2004.5
Petitioners filed the instant petition, arguing therein that (i) the Court of Appeals erred in
affirming the NCMBs finding that the Glaxos policy prohibiting its employees from marrying an
employee of a competitor company is valid; and (ii) the Court of Appeals also erred in not
finding that Tecson was constructively dismissed when he was transferred to a new sales
territory, and deprived of the opportunity to attend products seminars and training sessions.6
Petitioners contend that Glaxos policy against employees marrying employees of competitor
companies violates the equal protection clause of the Constitution because it creates invalid
distinctions among employees on account only of marriage. They claim that the policy restricts
the employees right to marry.7
They also argue that Tecson was constructively dismissed as shown by the following
circumstances: (1) he was transferred from the Camarines Sur-Camarines Norte sales area to the
Butuan-Surigao-Agusan sales area, (2) he suffered a diminution in pay, (3) he was excluded from
attending seminars and training sessions for medical representatives, and (4) he was prohibited
from promoting respondents products which were competing with Astras products.8
In its Comment on the petition, Glaxo argues that the company policy prohibiting its employees
from having a relationship with and/or marrying an employee of a competitor company is a valid
exercise of its management prerogatives and does not violate the equal protection clause; and
that Tecsons reassignment from the Camarines Norte-Camarines Sur sales area to the Butuan
City-Surigao City and Agusan del Sur sales area does not amount to constructive dismissal.9
Glaxo insists that as a company engaged in the promotion and sale of pharmaceutical products,
it has a genuine interest in ensuring that its employees avoid any activity, relationship or
interest that may conflict with their responsibilities to the company. Thus, it expects its
employees to avoid having personal or family interests in any competitor company which may
influence their actions and decisions and consequently deprive Glaxo of legitimate profits. The
policy is also aimed at preventing a competitor company from gaining access to its secrets,
procedures and policies.10
It likewise asserts that the policy does not prohibit marriage per se but only proscribes existing
or future relationships with employees of competitor companies, and is therefore not violative
of the equal protection clause. It maintains that considering the nature of its business, the
prohibition is based on valid grounds.11
According to Glaxo, Tecsons marriage to Bettsy, an employee of Astra, posed a real and
potential conflict of interest. Astras products were in direct competition with 67% of the
products sold by Glaxo. Hence, Glaxos enforcement of the foregoing policy in Tecsons case was
a valid exercise of its management prerogatives.12 In any case, Tecson was given several months
to remedy the situation, and was even encouraged not to resign but to ask his wife to resign
form Astra instead.13
Glaxo also points out that Tecson can no longer question the assailed company policy because
when he signed his contract of employment, he was aware that such policy was stipulated
therein. In said contract, he also agreed to resign from respondent if the management finds that
his relationship with an employee of a competitor company would be detrimental to the

interests of Glaxo.14
Glaxo likewise insists that Tecsons reassignment to another sales area and his exclusion from
seminars regarding respondents new products did not amount to constructive dismissal.
It claims that in view of Tecsons refusal to resign, he was relocated from the Camarines SurCamarines Norte sales area to the Butuan City-Surigao City and Agusan del Sur sales area. Glaxo
asserts that in effecting the reassignment, it also considered the welfare of Tecsons family.
Since Tecsons hometown was in Agusan del Sur and his wife traces her roots to Butuan City,
Glaxo assumed that his transfer from the Bicol region to the Butuan City sales area would be
favorable to him and his family as he would be relocating to a familiar territory and minimizing
his travel expenses.15
In addition, Glaxo avers that Tecsons exclusion from the seminar concerning the new antiasthma drug was due to the fact that said product was in direct competition with a drug which
was soon to be sold by Astra, and hence, would pose a potential conflict of interest for him.
Lastly, the delay in Tecsons receipt of his sales paraphernalia was due to the mix-up created by
his refusal to transfer to the Butuan City sales area (his paraphernalia was delivered to his new
sales area instead of Naga City because the supplier thought he already transferred to Butuan).16
The Court is tasked to resolve the following issues: (1) Whether the Court of Appeals erred in
ruling that Glaxos policy against its employees marrying employees from competitor companies
is valid, and in not holding that said policy violates the equal protection clause of the
Constitution; (2) Whether Tecson was constructively dismissed.
The Court finds no merit in the petition.
The stipulation in Tecsons contract of employment with Glaxo being questioned by petitioners
provides:
10. You agree to disclose to management any existing or future relationship you may
have, either by consanguinity or affinity with co-employees or employees of competing
drug companies. Should it pose a possible conflict of interest in management discretion,
you agree to resign voluntarily from the Company as a matter of Company policy.
17
The same contract also stipulates that Tescon agrees to abide by the existing company rules of
Glaxo, and to study and become acquainted with such policies.18 In this regard, the Employee
Handbook of Glaxo expressly informs its employees of its rules regarding conflict of interest:
1. Conflict of Interest
Employees should avoid any activity, investment relationship, or interest that may run
counter to the responsibilities which they owe Glaxo Wellcome.
Specifically, this means that employees are expected:
a. To avoid having personal or family interest, financial or otherwise, in any
competitor supplier or other businesses which may consciously or unconsciously
influence their actions or decisions and thus deprive Glaxo Wellcome of
legitimate profit.
b. To refrain from using their position in Glaxo Wellcome or knowledge of
Company plans to advance their outside personal interests, that of their
relatives, friends and other businesses.
c. To avoid outside employment or other interests for income which would
impair their effective job performance.
d. To consult with Management on such activities or relationships that may lead
to conflict of interest.
1.1. Employee Relationships
Employees with existing or future relationships either by consanguinity or affinity with
co-employees of competing drug companies are expected to disclose such relationship
to the Management. If management perceives a conflict or potential conflict of interest,
every effort shall be made, together by management and the employee, to arrive at a
solution within six (6) months, either by transfer to another department in a noncounter checking position, or by career preparation toward outside employment after
Glaxo Wellcome. Employees must be prepared for possible resignation within six (6)
months, if no other solution is feasible.19
No reversible error can be ascribed to the Court of Appeals when it ruled that Glaxos policy
prohibiting an employee from having a relationship with an employee of a competitor company
is a valid exercise of management prerogative.
Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing strategies and
other confidential programs and information from competitors, especially so that it and Astra
are rival companies in the highly competitive pharmaceutical industry.
The prohibition against personal or marital relationships with employees of competitor
companies upon Glaxos employees is reasonable under the circumstances because
relationships of that nature might compromise the interests of the company. In laying down the
assailed company policy, Glaxo only aims to protect its interests against the possibility that a
competitor company will gain access to its secrets and procedures.
That Glaxo possesses the right to protect its economic interests cannot be denied. No less than
the Constitution recognizes the right of enterprises to adopt and enforce such a policy to protect
its right to reasonable returns on investments and to expansion and growth.20 Indeed, while our
laws endeavor to give life to the constitutional policy on social justice and the protection of
labor, it does not mean that every labor dispute will be decided in favor of the workers. The law
also recognizes that management has rights which are also entitled to respect and enforcement
in the interest of fair play.21
As held in a Georgia, U.S.A case,22 it is a legitimate business practice to guard business
confidentiality and protect a competitive position by even-handedly disqualifying from jobs
male and female applicants or employees who are married to a competitor. Consequently, the
court ruled than an employer that discharged an employee who was married to an employee of
an active competitor did not violate Title VII of the Civil Rights Act of 1964.23The Court pointed
out that the policy was applied to men and women equally, and noted that the employers
business was highly competitive and that gaining inside information would constitute a
competitive advantage.
The challenged company policy does not violate the equal protection clause of the Constitution
as petitioners erroneously suggest. It is a settled principle that the commands of the equal
protection clause are addressed only to the state or those acting under color of its
authority.24 Corollarily, it has been held in a long array of U.S. Supreme Court decisions that the
equal protection clause erects no shield against merely private conduct, however,
discriminatory or wrongful.25 The only exception occurs when the state29 in any of its
manifestations or actions has been found to have become entwined or involved in the wrongful
private conduct.27 Obviously, however, the exception is not present in this case. Significantly,
the company actually enforced the policy after repeated requests to the employee to comply
with the policy. Indeed, the application of the policy was made in an impartial and even-handed
manner, with due regard for the lot of the employee.
In any event, from the wordings of the contractual provision and the policy in its employee
handbook, it is clear that Glaxo does not impose an absolute prohibition against relationships
between its employees and those of competitor companies. Its employees are free to cultivate
relationships with and marry persons of their own choosing. What the company merely seeks to
avoid is a conflict of interest between the employee and the company that may arise out of such
relationships. As succinctly explained by the appellate court, thus:
The policy being questioned is not a policy against marriage. An employee of the
company remains free to marry anyone of his or her choosing. The policy is not aimed at
restricting a personal prerogative that belongs only to the individual. However, an
employees personal decision does not detract the employer from exercising
management prerogatives to ensure maximum profit and business success. . .28
The Court of Appeals also correctly noted that the assailed company policy which forms part of
respondents Employee Code of Conduct and of its contracts with its employees, such as that
signed by Tescon, was made known to him prior to his employment. Tecson, therefore, was
aware of that restriction when he signed his employment contract and when he entered into a
relationship with Bettsy. Since Tecson knowingly and voluntarily entered into a contract of
employment with Glaxo, the stipulations therein have the force of law between them and, thus,
should be complied with in good faith."29 He is therefore estopped from questioning said policy.
The Court finds no merit in petitioners contention that Tescon was constructively dismissed
when he was transferred from the Camarines Norte-Camarines Sur sales area to the Butuan
City-Surigao City-Agusan del Sur sales area, and when he was excluded from attending the
companys seminar on new products which were directly competing with similar products
manufactured by Astra. Constructive dismissal is defined as a quitting, an involuntary
resignation resorted to when continued employment becomes impossible, unreasonable, or
unlikely; when there is a demotion in rank or diminution in pay; or when a clear discrimination,
insensibility or disdain by an employer becomes unbearable to the employee.30 None of these
conditions are present in the instant case. The record does not show that Tescon was demoted
or unduly discriminated upon by reason of such transfer. As found by the appellate court, Glaxo
properly exercised its management prerogative in reassigning Tecson to the Butuan City sales
area:
. . . In this case, petitioners transfer to another place of assignment was merely in
keeping with the policy of the company in avoidance of conflict of interest, and thus
validNote that [Tecsons] wife holds a sensitive supervisory position as Branch
Coordinator in her employer-company which requires her to work in close coordination
with District Managers and Medical Representatives. Her duties include monitoring
sales of Astra products, conducting sales drives, establishing and furthering relationship
with customers, collection, monitoring and managing Astras inventoryshe therefore
takes an active participation in the market war characterized as it is by stiff competition
among pharmaceutical companies. Moreover, and this is significant, petitioners sales
territory covers Camarines Sur and Camarines Norte while his wife is supervising a
branch of her employer in Albay. The proximity of their areas of responsibility, all in the
same Bicol Region, renders the conflict of interest not only possible, but actual, as
learning by one spouse of the others market strategies in the region would be
inevitable. [Managements] appreciation of a conflict of interest is therefore not merely
illusory and wanting in factual basis31
In Abbott Laboratories (Phils.), Inc. v. National Labor Relations Commission,32 which involved a
complaint filed by a medical representative against his employer drug company for illegal
dismissal for allegedly terminating his employment when he refused to accept his reassignment
to a new area, the Court upheld the right of the drug company to transfer or reassign its
employee in accordance with its operational demands and requirements. The ruling of the Court
therein, quoted hereunder, also finds application in the instant case:
By the very nature of his employment, a drug salesman or medical representative is
expected to travel. He should anticipate reassignment according to the demands of their
business. It would be a poor drug corporation which cannot even assign its
representatives or detail men to new markets calling for opening or expansion or to
areas where the need for pushing its products is great. More so if such reassignments
are part of the employment contract.33
As noted earlier, the challenged policy has been implemented by Glaxo impartially and
disinterestedly for a long period of time. In the case at bar, the record shows that Glaxo gave
Tecson several chances to eliminate the conflict of interest brought about by his relationship
with Bettsy. When their relationship was still in its initial stage, Tecsons supervisors at Glaxo
constantly reminded him about its effects on his employment with the company and on the
companys interests. After Tecson married Bettsy, Glaxo gave him time to resolve the conflict by
either resigning from the company or asking his wife to resign from Astra. Glaxo even expressed
its desire to retain Tecson in its employ because of his satisfactory performance and suggested
that he ask Bettsy to resign from her company instead. Glaxo likewise acceded to his repeated
requests for more time to resolve the conflict of interest. When the problem could not be
resolved after several years of waiting, Glaxo was constrained to reassign Tecson to a sales area
different from that handled by his wife for Astra. Notably, the Court did not terminate Tecson
from employment but only reassigned him to another area where his home province, Agusan
del Sur, was included. In effecting Tecsons transfer, Glaxo even considered the welfare of
Tecsons family. Clearly, the foregoing dispels any suspicion of unfairness and bad faith on the
part of Glaxo.34
WHEREFORE, the Petition is DENIED for lack of merit. Costs against petitioners.
SO ORDERED.
Puno, Austria-Martinez, Callejo, Sr., and Chico-Nazario*, JJ., concur.
Footnotes
1
Penned by Associate Justice Rosmari D. Carandang and concurred in by Justices

Conrado M. Vasquez, Jr. and Mercedes Gozo-Dadole. Rollo,pp. 22-32.
2
Duncan Association of Detailman-PTGWO and Pedro A. Tecson, petitioners, v. Glaxo

Wellcome Philippines, Inc., respondent.
3
Now Astra Zeneca Pharmaceuticals, Inc.
Rollo, pp. 28-32.
Id. at 55.
Id. at 9.
Id. at 9-11.
Id. at 14-17.
Id. at 96-112.
10
Id. at 99-100.
11
Id. at 101-102.
12
Id. at 102-103.
13
Id. at 102-104.
14
Id. at 104-105.
15
Id. at 64.
16
Id. at 106-110.
17
See Decision of the Court of Appeals; Rollo, pp. 23-24.
18
Item No. 6 of Tecsons employment contract cited by the Court of Appeals in its
Decision, Id.
19
Excerpt of Glaxos Employee Handbook, Annex "A" of respondents Comment, Id. at

114.
20
Section 3, Article XIII of the Constitution provides:

The State shall regulate the relations between workers and employers,
recognizing the right of labor to its just share in the fruits of production and the
right of enterprises to reasonable returns on investments, and to expansion and
growth.
21
Sta. Catalina College v. National Labor Relations Commission, G.R. No. 144483,
November 19, 2003.
22
Emory v. Georgia Hospital Service Association (1971), DC Ga., 4 CCH EPD 7785, 4
BNA FEP Cas 891, affd (CA5) 446 F2d 897, 4 CCH EPD 7786; Cited 45 Am Jr 2d Sec. 469.
23
42 USCS 2000e2002e17. Title VII prohibits certain employers, employment

agencies, labor organizations, and joint labor-management training committees from
discriminating against applicants and employees on the basis of race or color, religion,
sex, national origin, or opposition to discriminatory practices.
There is no similar legislation in the Philippines.
24
Avery v. Midland County, 390 US 474, 20 L. Ed 2d 45, 88 S Ct 1114, on remand (Tex)

430 SW2d 487; Cooper v. Aaron, 358 US 1, 3 L Ed 2d 5, 78 S Ct 1401.
25
District of Columbia v. Carter, 409 US 418, 34 L.Ed.2d 613, 93 S. Ct. 602, 35 L.Ed.2d
694, 93 S. Ct. 1411; Moose Lodge No. 107 v. Irvis, 407 US 163, 32 L.Ed.2d 627, 92 S. Ct.
1965; United States v. Price, 383 US 787, 16 L.Ed. 2d 267, 86 S. Ct. 1152; Burton v.
Wilmington Parking Authority, 365 US 715, 6 L.Ed.2d 45, 81 S. Ct. 856; Shelley v.
Kraemer, 334 US 1, 92 L.Ed.1161, 68 S. Ct. 836, 3 ALR2d 441; United States v. Classic,
313 US 299, 85 L.Ed 1368, 61 S. Ct. 1031, 86 L.Ed 565, 62 S. Ct. 51; Nixon v. Condon, 286
US 73, 76 L.Ed. 984, 52 S. Ct. 484, 88 ALR 458; Iowa-Des Moines Nat. Bank v. Bennet,
284 US 239, 76 L.Ed 265, 52 S. Ct. 133; Corrigan v. Buckley, 271 US 323, 70 L.Ed. 969, 46
S. Ct. 521; U.S. Adickes v. S. H. Kress & Co., N.Y., 90 S. Ct. 1598, 398 U.S. 144, 26 L. Ed.
2d 142.
26
The equal protection clause contained in the Fourteenth Amendment of the U.S.
Constitution is a restriction on the state governments and operates exclusively upon
them. It does not extend to authority exercised by the Government of the United States.
16 A Am Jur 2d 742.
27
Gilmore v. Montgomery, 417 US 556, 41 L Ed 2d 304, 94 S Ct 2416; Evans v. Newton,

382 US 296, 15 L Ed 2d 373, 86 S Ct 486; Anderson v. Martin, 375 US 399, 11 L Ed 2d
430, 84 S Ct 454; Peterson v. Greenville, 373 US 244, 10 L Ed 2d 323, 83 S Ct 1119;
Burton v. Wilmington Parking Authority, supra note 25.
28
Decision of the Court of Appeals, Rollo, p. 28.
29
Article 1159, Civil Code. See National Sugar Trading and/or the Sugar Regulatory
Administration v. Philippine National Bank, G.R. No. 151218, January 18, 2003, 396 SCRA
528; Pilipinas Hino, Inc. v. Court of Appeals, G.R. No. 126570, August 18, 2000, 338 SCRA
355.
30
Leonardo v. National Labor Relations Commission, et al., G.R. Nos. 125303, and
126937, June 16, 2000, 333 SCRA 589.
31
Rollo, pp. 30-31.
32
G.R. No. L-76959, October 12, 1987, 154 SCRA 713.
33
Id. at 719.
34
Decision of the Court of Appeals, Rollo, pp. 24-27.

SUPREME COURT
Manila
EN BANC
G.R. Nos. L-58674-77 July 11, 1990
PEOPLE OF THE PHILIPPINES, petitioner,
vs.
HON. DOMINGO PANIS, Presiding Judge of the Court of First Instance of Zambales & Olongapo
City, Branch III and SERAPIO ABUG, respondents.
CRUZ, J:
The basic issue in this case is the correct interpretation of Article 13(b) of P.D. 442, otherwise
known as the Labor Code, reading as follows:
(b) Recruitment and placement' refers to any act of canvassing, enlisting,
contracting, transporting, hiring, or procuring workers, and includes referrals,
contract services, promising or advertising for employment, locally or abroad,
whether for profit or not: Provided, That any person or entity which, in any
manner, offers or promises for a fee employment to two or more persons shall
be deemed engaged in recruitment and placement.
Four informations were filed on January 9, 1981, in the Court of First Instance of Zambales and
Olongapo City alleging that Serapio Abug, private respondent herein, "without first securing a
license from the Ministry of Labor as a holder of authority to operate a fee-charging
employment agency, did then and there wilfully, unlawfully and criminally operate a private fee
charging employment agency by charging fees and expenses (from) and promising employment
in Saudi Arabia" to four separate individuals named therein, in violation of Article 16 in relation
to Article 39 of the Labor Code. 1
Abug filed a motion to quash on the ground that the informations did not charge an offense
because he was accused of illegally recruiting only one person in each of the four informations.
Under the proviso in Article 13(b), he claimed, there would be illegal recruitment only
"whenever two or more persons are in any manner promised or offered any employment for a
fee. " 2
Denied at first, the motion was reconsidered and finally granted in the Orders of the trial court
dated June 24 and September 17, 1981. The prosecution is now before us on certiorari. 3
The posture of the petitioner is that the private respondent is being prosecuted under Article 39
in relation to Article 16 of the Labor Code; hence, Article 13(b) is not applicable. However, as the
first two cited articles penalize acts of recruitment and placement without proper authority,
which is the charge embodied in the informations, application of the definition of recruitment
and placement in Article 13(b) is unavoidable.
The view of the private respondents is that to constitute recruitment and placement, all the acts
mentioned in this article should involve dealings with two or mre persons as an indispensable
requirement. On the other hand, the petitioner argues that the requirement of two or more
persons is imposed only where the recruitment and placement consists of an offer or promise of
employment to such persons and always in consideration of a fee. The other acts mentioned in
the body of the article may involve even only one person and are not necessarily for profit.
Neither interpretation is acceptable. We fail to see why the proviso should speak only of an
offer or promise of employment if the purpose was to apply the requirement of two or more
persons to all the acts mentioned in the basic rule. For its part, the petitioner does not explain
why dealings with two or more persons are needed where the recruitment and placement
consists of an offer or promise of employment but not when it is done through "canvassing,
enlisting, contracting, transporting, utilizing, hiring or procuring (of) workers.
As we see it, the proviso was intended neither to impose a condition on the basic rule nor to
provide an exception thereto but merely to create a presumption. The presumption is that the
individual or entity is engaged in recruitment and placement whenever he or it is dealing with
two or more persons to whom, in consideration of a fee, an offer or promise of employment is
made in the course of the "canvassing, enlisting, contracting, transporting, utilizing, hiring or
procuring (of) workers. "
The number of persons dealt with is not an essential ingredient of the act of recruitment and
placement of workers. Any of the acts mentioned in the basic rule in Article 13(b) win constitute
recruitment and placement even if only one prospective worker is involved. The proviso merely
lays down a rule of evidence that where a fee is collected in consideration of a promise or offer
of employment to two or more prospective workers, the individual or entity dealing with them
shall be deemed to be engaged in the act of recruitment and placement. The words "shall be
deemed" create that presumption.
This is not unlike the presumption in article 217 of the Revised Penal Code, for example,
regarding the failure of a public officer to produce upon lawful demand funds or property
entrusted to his custody. Such failure shall beprima facie evidence that he has put them to
personal use; in other words, he shall be deemed to have malversed such funds or property. In
the instant case, the word "shall be deemed" should by the same token be given the force of a
disputable presumption or of prima facie evidence of engaging in recruitment and placement.
(Klepp vs. Odin Tp., McHenry County 40 ND N.W. 313, 314.)
It is unfortunate that we can only speculate on the meaning of the questioned provision for lack
of records of debates and deliberations that would otherwise have been available if the Labor
Code had been enacted as a statute rather than a presidential decree. The trouble with
presidential decrees is that they could be, and sometimes were, issued without previous public
discussion or consultation, the promulgator heeding only his own counsel or those of his close
advisers in their lofty pinnacle of power. The not infrequent results are rejection, intentional or
not, of the interest of the greater number and, as in the instant case, certain esoteric provisions
that one cannot read against the background facts usually reported in the legislative journals.
At any rate, the interpretation here adopted should give more force to the campaign against
illegal recruitment and placement, which has victimized many Filipino workers seeking a better
life in a foreign land, and investing hard- earned savings or even borrowed funds in pursuit of
their dream, only to be awakened to the reality of a cynical deception at the hands of theirown
countrymen.
WHEREFORE, the Orders of June 24, 1981, and September 17, 1981, are set aside and the four
informations against the private respondent reinstated. No costs.
SO ORDERED.
Teehankee, CJ, Abad Santos, Feria, Yap, Fernan, Narvasa, Melencio-Herrera, Alampay, Gutierrez,
Jr. and Paras, JJ., concur.
Footnotes
1 Rollo, p. 25
2 Rollo, p. 11.
3 Rollo, p.1, pp. 20-21, p. 24.

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 132376
April 11, 2002
PEOPLE OF THE PHILIPPINES, plaintiff-appellee,

vs.
SAMINA ANGELES Y CALMA, accused-appellant.
Accused-appellant Samina Angeles y Calma was charged with four (4) counts of estafa and one
(1) count of illegal recruitment in the following informations:1
Criminal Case No. 94-140585 (Estafa)
That on or about September 8, 1994 in the City of Manila, Philippines, the said accused
did then and there willfully, unlawfully and feloniously defraud MARIA TOLOSA DE
SARDEA Y TABLADA in the following manner to wit: the said accused, by means of false
manifestations and fraudulent representations which she made to said Maria Tolosa de
Sardea y Tablada to the effect that she had the power and capacity to recruit and
employ her as domestic helper in Paris, France, and could facilitate the processing of the
pertinent papers if given the necessary amount to meet the requirements thereof, and
by means of other similar deceits, induced and succeeded in inducing said Maria Tolosa
de Sardea y Tablada to give and deliver, as in fact she gave and delivered to said
accused the amount of P107,000.00 on the strength of said manifestations and
representations, accused well knowing that the same were false and fraudulent and
were made solely, to obtain, as in fact she did obtain the amount of P107,000.00 which
amount once in her possession, with intent to defraud, willfully, unlawfully and
feloniously misappropriated, misapplied and converted the same to her own personal
use and benefit to the damage and prejudice of said Maria Tolosa de Sardea y Tablada
in the aforesaid sum of P107,000.00 Philippine Currency.
did then and there willfully, unlawfully and feloniously defraud MARCELIANO T. TOLOSA
in the following manner, to wit: the said accused, by means of false manifestations and
fraudulent representations which she made to said MARCELIANO T. TOLOSA to the
effect that she had the power and capacity to recruit and employ him as contract
worker in Paris, France and could facilitate the processing of the pertinent papers if
given the necessary amount to meet the requirements thereof, and by means of other
similar deceits, induced and succeeded in inducing said Marceliano T. Tolosa accused
well knowing that the same were false and fraudulent and were made solely, to obtain,
as in fact she did obtain the amount of P190,000.00 which amount once in their
possession, with intent to defraud, willfully, unlawfully and feloniously misappropriated,
misapplied and converted the same to her own personal use and benefit, to the damage
and prejudice of said Marceliano T. Tolosa in the aforesaid sum of P190,000.00,
Philippine Currency.
did then and there willfully, unlawfully and feloniously defraud PRECILA P. OLPINDO in
the following manner to wit: the said accused, by means of false manifestations and
fraudulent representations which she made to said Precila P. Olpindo to the effect that
she had the power and capacity to recruit and employ her as contract worker in Canada
and could facilitate the processing of the pertinent papers if given the necessary amount
to meet the requirements thereof, and by means of other similar deceits, induced and
succeeded in inducing said Precila P. Olpindo to give and deliver, as in fact she delivered
to said accused the amount of $2,550.00 on the strength of said manifestations and
representations, said Precila P. Olpindo accused well knowing that the same were false
and fraudulent and were made solely, to obtain, as in fact she did obtain the amount of
$2,550.00 which amount once in her possession, with intent to defraud, willfully,
unlawfully and feloniously misappropriated, misapplied and converted the same to her
own personal use and benefit, to the damage and prejudice of said Precila P. Olpindo in
the aforesaid sum of $2,550.00 or its equivalent in Philippine Currency of P61,200.00.
That on or about the first week of September 1994 in the City of Manila, Philippines, the
said accused, did then and there willfully, unlawfully and feloniously defraud VILMA S.
BRINA in the following manner to wit: the said accused, by means of false
manifestations and fraudulent representations which she made to said Vilma S. Brina to
the effect that she had the power and capacity to recruit and employ her as contract
worker in Canada and could facilitate the processing of the pertinent papers if given the
necessary amount to meet the requirements thereof, and by means of other similar
deceits, induced and succeeded in inducing said Vilma S. Brina to give and deliver, as in
fact she gave and delivered to said accused the amount of $2,550.00 on the strength of
said manifestations and representations, accused well knowing that the same were false
and fraudulent and were made solely, to obtain, as in fact she did obtain the amount of
$2,550.00 which amount once in her possession, with intent to defraud, willfully,
unlawfully and feloniously misappropriated, misapplied and converted the same to her
own personal use and benefit, to the damage and prejudice of said Vilma S. Brina in the
aforesaid sum of $2,550.00 or its equivalent in Philippine Currency of P61,200.00.
Criminal Case No. 94-140489 (Illegal Recruitment)
The undersigned accuses SAMINA ANGELES y CALMA of violation of Art. 38 (a) Pres.
Decree No. 1412 amending certain provisions of Book 1, Pres. Decree No. 442 otherwise
known as the New Labor Code of the Philippines in relation to Article 13 (b) and (c) of
said Code, as further amended in a large scale, as follows:
That sometime during the month of September 1994 in the City of Manila,
Philippines, the said accused, representing herself to have the capacity to
contract, enlist and transport Filipino workers for employment abroad, did then
and there willfully and unlawfully for a fee, recruit and promise
employment/job placement abroad to the following persons:
1. Marceliano T. Tolosa
2. Precila P. Olpindo
3. Vilma S. Brina
4. Maria Tolosa de Sardea y Tablada
Without first having secured the required license or authority from the Department of
Labor and Employment.
The five (5) cases were consolidated and tried jointly by the Regional Trial Court of Manila,
Branch 50.
Maria Tolosa Sardea was working in Saudi Arabia when she received a call from her sister,
Priscilla Agoncillo, who was in Paris, France. Priscilla advised Maria to return to the Philippines
and await the arrival of her friend, accused-appellant Samina Angeles, who will assist in
processing her travel and employment documents to Paris, France. Heeding her sisters advice,
Maria immediately returned to the Philippines.
Marceliano Tolosa who at that time was in the Philippines likewise received instructions from his
sister Priscilla to meet accused-appellant who will also assist in the processing of his documents
for Paris, France.
Maria and Marceliano eventually met accused-appellant in September 1994 at Expert Travel
Agency on Mabini Street, Manila. During their meeting, accused-appellant asked if they had the
money required for the processing of their documents. On September 8, 1994, Maria gave
P107,000.00 to accused-appellant at Expert Travel Agency. Subsequently, she gave another
P46,000.00 and US$1,500.00 as additional payments to accused-appellant.
Marceliano, on the other hand, initially gave P100,000.00 to accused-appellant but on
September 28, 1994, he gave an additional P46,000.00 and US$1,500.00 to accused-appellant at
the United Coconut Planters Bank in Makati.
Analyn Olpindo met accused-appellant in Belgium. At that time, Analyn was working in Canada
but she went to Belgium to visit her in-laws. After meeting accused-appellant, Analyn Olpindo
called up her sister, Precila Olpindo, in the Philippines and told her to meet accused-appellant
upon the latters arrival in the Philippines because accused-appellant can help process her
documents for employment in Canada.
Precila Olpindo eventually met accused-appellant at the Expert Travel Agency on September 7,
1994. Accused-appellant asked for the amount of $4,500.00, but Precila was only able to give
$2,500.00.
No evidence was adduced in relation to the complaint of Vilma Brina since she did not testify in
court.
Accused-appellant told Precila Olpindo and Vilma Brina that it was easier to complete the
processing of their papers if they start from Jakarta, Indonesia rather than from Manila. Thus, on
September 23, 1994, Precila Olpindo, Vilma Brina and accused-appellant flew to Jakarta,
Indonesia. However, accused-appellant returned to the Philippines after two days, leaving
behind Precila and Vilma. They waited for accused-appellant in Jakarta but the latter never
returned. Precila and Vilma eventually came home to the Philippines on November 25, 1994.
When she arrived in the Philippines, Precila tried to get in touch with accused-appellant at the
Expert Travel Agency, but she could not reach her. Meanwhile, Maria and Marceliano Tolosa
also began looking for accused-appellant after she disappeared with their money.
Elisa Campanianos of the Philippine Overseas Employment Agency presented a certification to
the effect that accused-appellant was not duly licensed to recruit workers here and abroad.
In her defense, accused-appellant averred that, contrary to the prosecutions allegations, she
never represented to the complainants that she can provide them with work abroad. She
insisted that she was a marketing consultant and an international trade fair organizer. In June
1994, she went to Paris, France to organize a trade fair. There she met Priscilla Agoncillo, a
domestic helper, and they became friends. Priscilla asked her to assist her siblings, Maria and
Marceliano, particularly in the processing of their travel documents for France. Accusedappellant told Priscilla that she can only help in the processing of travel documents and nothing
more. It was Priscilla who promised employment to Maria and Marceliano. She received money
from complainants not in the form of placement fees but for the cost of tickets, hotel
accommodations and other travel requirements.
According to accused-appellant, she met Analyn Olpindo in Belgium while she was organizing a
trade fair. They also became friends and it was Analyn who asked her to help Precila. Just like in
the case of Maria and Marceliano, accused-appellant explained that her assistance shall only
entail the processing of Precilas travel documents to Canada.
After trial on the merits, the trial court found accused-appellant guilty of illegal recruitment and
four (4) counts of estafa and correspondingly sentenced her as follows:
WHEREFORE, in view of the aforementioned premises the accused SAMINA ANGELES is
hereby declared:
In Criminal Case No. 94-140489 for the crime of Illegal Recruitment, GUILTY (Art. 38
Labor Code) and is hereby sentenced to suffer the penalty of life imprisonment and a
fine of One Hundred Thousand Pesos (P100,000.00).
In Criminal Case No. 94-140485 for the crime of Estafa the accused is hereby declared
GUILTY and is hereby sentenced to suffer the penalty of from twelve (12) years and one
(1) day to twenty (20) years. In addition the accused is ordered to reimburse the amount
of One hundred seven thousand pesos (P107,000.00) to complainant Maria Tolosa de

Sardea. With costs.
of One hundred ninety thousand pesos (P190,000.00) to complainant Marceliano T.
Tolosa. With costs.
of Two thousand five hundred fifty dollars (US$2,550.00) or its equivalent in Philippine
currency of Sixty one thousand two hundred pesos (P61,200.00), to complainant Precila
P. Olpindo. With Costs.
of Two thousand five hundred fifty dollars (US$2,550.00) or its equivalent in Philippine
Currency of Sixty one thousand two hundred pesos (P61,200.00) to complainant Vilma
S. Brina. With costs.2
Accused-appellant is now before us on appeal, arguing that the prosecution failed to prove her
guilt for estafa and illegal recruitment by proof beyond reasonable doubt.
Accused-appellant points out that not one of the complainants testified on what kind of jobs
were promised to them, how much they would receive as salaries, the length of their
employment and even the names of their employers, which are basic subjects a prospective
employee would first determine.
In sum, accused-appellant posits that the prosecution did not present a single evidence to prove
that she promised or offered any of the complainants jobs abroad. Illegal recruitment is
committed when two (2) elements concur: 1) that the offender has no valid license or authority
required by law to enable one to lawfully engage in recruitment and placement of workers; and
2) that the offender undertakes either any activity within the meaning of recruitment and
placement defined under Article 13(b), or any prohibited practices enumerated under Article
34.3
Article 13(b), of the Labor Code provides, thus:
(b) "Recruitment and placement" refers to any act of canvassing, enlisting, contracting,
transporting, utilizing, hiring or procuring workers, and includes referrals, contract
services, promising or advertising for employment locally or abroad, whether for profit
or not: Provided, that any person or entity which, in any manner, offers or promises for a
fee employment to two or more persons shall be deemed engaged in recruitment and
placement.
To prove illegal recruitment, it must be shown that the accused-appellant gave complainants the
distinct impression that he had the power or ability to send complainants abroad for work such
that the latter were convinced to part with their money in order to be employed.4 To be
engaged in the practice of recruitment and placement, it is plain that there must at least be a
promise or offer of an employment from the person posing as a recruiter whether locally or
abroad.
In the case at bar, accused-appellant alleges that she never promised nor offered any job to the
complainants.
We agree.
A perusal of the records reveals that not one of the complainants testified that accusedappellant lured them to part with their hard-earned money with promises of jobs abroad. On
the contrary, they were all consistent in saying that their relatives abroad were the ones who
contacted them and urged them to meet accused-appellant who would assist them in
processing their travel documents. Accused-appellant did not have to make promises of
employment abroad as these were already done by complainants relatives. Thus, in the crossexamination of Maria Tolosa de Sardena:
Atty. Dinglasan:
Q:
And you would likewise agree that Priscilla informed you that she can find an
employment for you once you entered Paris, is that correct?
A:
Yes, because according to her that is what Samina Angeles said to her.
Q:
But during that time you would agree that you do not know personally or met in
person Samina Angeles?
A:
Not yet sir.
Q:
In fact, even when you arrived in the Philippines, and actually met in person
Samina Angeles, you did not know who is Samina Angeles and what her business was
then that time?
A:
I recognized because my sister sent me a picture of Samina Angeles.
Q:
So, it is clear that when you met Samina Angeles sometime on September 8,
1994, you were already decided to go to Paris because you were then relying on the
instruction from the advice of Priscilla?
A:
Yes, sir.
Q:
And that was the reason why you even terminated your employment contract in
Saudi?
A:
Yes, sir.5
Precila Olpindo, on cross-examination, admitted thus:

Q:
You would like to confirm that before you and Samina met in the Philippines
sometime in September of 1995, you were already decided to leave for Canada as per
advice of your sister?
A:
Yes, sir.
Q:
And you likewise agree madam witness that even before you met the accused
sometime in September of 1995, you were already directed and informed by your sister
Ana as to how much and she will pay the accused Samina for the facilitation of your
travel in going to Canada, is that correct?
A:
Yes, sir.6
In the cross-examination of Marceliano Tolosa, thus:

Q:
Now, would you agree that your sister is working in Paris?
A:
Yes, sir.
Q:
And for how many years working in Paris?
A:
Almost 5 years.
Q:
And how much was she earning or receiving in Paris, France?
A:
P20,000.00 or more, sir.
Q:
And it was for this reason she advised your sister then in Saudi Arabia and you to
also go to Paris because she will be receiving more in Paris, correct?
A:
She said when we follow to her office, sir.
Q:
So what your sister told you if youre also interested to go to Paris you can avail
of the help of Samina Angeles, so you can also leave for Paris and join her, is that
correct?
A:
Yes, sir.
Q:
And that was the reason why your sister wrote you a letter and gave instruction
to go to accused sometime on September, 1994, is that correct?
A:
Yes, sir.
Q:
Now you would agree with me Mr. Witness prior to that date September 8, 1994
you dont know personally the person of Samina Angeles and do not know anything
about the nature of her business or personal circumstances, is that correct?
A:
Yes, sir.7
Plainly, there is no testimony that accused-appellant offered complainants jobs abroad. Hence,
accused-appellant Samina Angeles cannot be lawfully convicted of illegal recruitment.
Anent the four charges of estafa, Samina Angeles argues that the element of deceit consisting in
the false statement or fraudulent representation of the accused made prior to or simultaneously
with the delivery of the sums of money is lacking in the instant case. She claims that she never
deceived complainants into believing that she had the authority and capability to send them
abroad for employment.
We are not persuaded.
Under Article 315, paragraph 2(a) of the Revised Penal Code, the elements of estafa are: (1) the
accused has defrauded another by abuse of confidence or by means of deceit and (2) damage or
prejudice capable of pecuniary estimation is caused to the offended party or third person.
Clearly, these elements are present in this case.8
Although Samina Angeles did not deceive complainants into believing that she could find
employment for them abroad, nonetheless, she made them believe that she was processing
their travel documents for France and Canada. They parted with their money believing that
Samina Angeles would use it to pay for their plane tickets, hotel accommodations and other
travel requirements. Upon receiving various amounts from complainants, Samina Angeles used
it for other purposes and then conveniently disappeared.
Complainants trusted Samina Angeles because she was referred to them by their own relatives.
She abused their confidence when she led them to believe that she can process their travel
documents abroad, thus inducing them to part with their money. When they demanded from
Samina their travel documents, she failed to produce them. Likewise, she failed to return the
amounts entrusted to her.
Clearly, Samina Angeles defrauded complainants by falsely pretending to possess the power and
capacity to process their travel documents.
Article 315 of the Revised Penal Code imposes the penalty of prision correccional in its maximum
period to prision mayor in its minimum period, if the amount of the fraud is over P12,000.00 but
does not exceed P22,000.00; if the amount exceeds P22,000.00, the penalty provided shall be
imposed in its maximum period, adding one year for each additional P10,000.00. However, the
total penalty which may be imposed shall not exceed twenty years.9
In People v. Ordono,10 it was held:
Under the Indeterminate Sentence Law, the maximum term of the penalty shall be "that
which, in view of the attending circumstances, could be properly imposed" under the
Revised Penal Code, and the minimum shall be "within the range of the penalty next
lower to that prescribed for the offense." The penalty next lower should be based on
the penalty prescribed by the Code for the offense, without first considering any
modifying circumstance attendant to the commission of the crime. The determination of
the minimum penalty is left by law to the sound discretion of the court and it can be
anywhere within the range of the penalty next lower without any reference to the
periods into which it might be subdivided. The modifying circumstances are considered
only in the imposition of the maximum term of the indeterminate sentence.
Thus, in Criminal Case No. 94-140485, Maria Tolosa testified that she gave P107,000.00,
P46,000.00 and US$1,500.00 to Samina Angeles. The Information, however, alleged that Maria
gave only P107,000.00. Samina Angeles could therefore be held accountable for only that
amount.
In Criminal Case No. 94-140486, Marceliano testified that he gave P100,000.00, P46,000.00 and
US$1,500.00 to Samina Angeles. The Information however alleged that Marceliano gave only a
total of P190,000.00; hence that is the only amount that Samina Angeles could be held
accountable for.
In Criminal Case No. 94-140487, Precila testified that she gave US$2,550.00 to Samina Angeles.
The Information alleged that the equivalent amount thereof in Philippine Currency is
P61,200.00. Samina Angeles is therefore criminally liable for P61,200.00.Complainant Vilma
Brina did not appear in court to testify. Thus, the damage in the amount of $2,550.00 alleged in
Criminal Case No. 94-140488 was not proved.
WHEREFORE, in view of the foregoing, the appealed Decision is MODIFIED as follows:
(1) In Criminal Case No. 94-140485, accused-appellant Samina Angeles is found GUILTY
beyond reasonable doubt of the crime of Estafa and sentenced to suffer a prison term
of four (4) years and two (2) months of prision correccional, as minimum, to sixteen (16)
years of reclusion temporal, as maximum, and is ORDERED to indemnify Maria Sardea
the amount of P107,000.00.
beyond reasonable doubt of the crime of Estafa and sentenced to suffer a prison term
of four (4) years and two (2) months of prision correccional, as minimum, to twenty (20)
years of reclusion temporal, as maximum, and is ORDERED to indemnify Marceliano
Tolosa the amount of P190,000.00.
beyond reasonable doubt of the crime of Estafa and sentenced to suffer a prision term
of four (4) years and two (2) months of prision correccional, as minimum, to eleven (11)
years of prision mayor, as maximum, and is ORDERED to indemnify Precila Olpindo the
amount of P61,200.00.
(4) In Criminal Case No. 94-140488 for Estafa, accused-appellant Samina Angeles is
ACQUITTED for failure of the prosecution to prove her guilt beyond reasonable doubt.
(5) In Criminal Case No. 94-140489 for Illegal Recruitment, accused-appellant Samina
Angeles is ACQUITTED for failure of the prosecution to prove her guilt beyond
reasonable doubt.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Puno, Kapunan, and Austria-Martinez, JJ., concur.
Footnotes
1
Records, pp. 24-30.
Penned by Judge Urbano C. Victorio Sr.
People v. Saley, 291 SCRA 715 [1998].
People v. Ong, 322 SCRA 38 [2000].
TSN, June 25, 1995, pp. 21-22.
TSN, July 27, 1995, p. 3.
TSN, September 5, 1995, pp. 20-21.
People v. Mercado, 304 SCRA 504 [1999].
People v. Ordono, 335 SCRA 331 [2000].
10
Ibid., citing People v. Gabres, 267 SCRA 581 [1997].

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Republic of the Philippines

August 19, 2013

JEROME M. DAABAY, PETITIONER,

Rollo, pp. 3-38.

Penned by Associate Justice Edgardo A. Camello, with Associate Justices Abraham B.

Id. at 40, 54.

Id. at 11, 42.

502 Phil. 151 (2005).

G.R. No. 186640, February 11, 2010, 612 SCRA 347.

G.R. No. 123294, October 20, 2010, 634 SCRA 18.

247 Phil. 641 (1988).

Rollo, pp. 83-84.

Republic of the Philippines

March 14, 2008

MA. WENELITA TIRAZONA, Petitioner,

February 27, 2002

As aptly declared by the Court in National Irrigation Administration v. Court of Appeals27:

Rollo, pp. 8-18; dated 5 December 2005.

Penned by Associate Justice Bienvenido L. Reyes with Associate Justices Godardo A.

CA rollo, pp. 25-35.

The Notice of Charge states:

CA rollo, pp. 64-65.

Rules of Court, Rule 65, Sec. 4.

Rules of Court, Rule 45, Sec. 1.

Rules of Court, Rule 45, Sec. 2.

Rollo, pp. 3-4.

Chua v. Santos, id.

Rollo, pp. 121-123.

Art. 282. TERMINATION BY EMPLOYER. An employer may terminate an employment

Art. 212(m) partially states:

San Juan De Dios Educational Foundation Employees Union-Alliance of Filipino

Rollo, pp. 38-44.

226 Phil. 421, 426 (1986).

Republic of the Philippines

January 27, 2006

HA YUAN RESTAURANT, Petitioner,

THE PUBLIC RESPONDENT COURT OF APPEALS DEPARTED FROM ESTABLISHED JURISPRUDENCE

CA rollo, pp. 27-31.

164 SCRA 671, 682 (1988).

Flores v. NLRC, 326 Phil. 750, 761 (1996).

Supra, note 4, at 682-683.

Republic of the Philippines

ST. LUKE'S MEDICAL CENTER EMPLOYEE'S ASSOCIATION-AFW (SLMCEA-AFW) AND MARIBEL S.

Dear Mr. Calderon:

Rollo, pp. 37-50.

Otherwise known as the "fadiologic Technology Act of 1992."

Rollo, pp. 32-33.

Duncan Association of Detailman-PTGWO v. Glaxo Wellcome Philippines, Inc., G.R. No.

Supra note 15.

Republic of the Philippines

ERNESTO G. YMBONG, Petitioner,

x x x x3 [Emphasis and underscoring supplied.]

We have consistently held that so long as a companys management prerogatives are

Republic of the Philippines

February 22, 2012

NEGROS SLASHERS, INC., RODOLFO C. ALVAREZ AND VICENTE TAN, Petitioners,

Rollo, pp. 45-46, 89; CA rollo, p. 186.

Republic of the Philippines

December 15, 2010

THE COCA-COLA EXPORT CORPORATION, Petitioner,

Per Raffle dated December 15, 2010.

Republic of the Philippines

August 28, 2013

NATHANIEL N. DONGON, PETITIONER,