CAPITOL MEDICAL CENTER VS.

MERIS (470
SCRA 125, SEPTEMBER 16, 2005)
APRIL 6, 2015 | YUMMY
FACTS:

1. Capitol Medical Center hired Dr. Meris in 1974 as Chief of its Industrial
Service Unit (ISU).
2. In 1992, however, or after about 18 years of service, Dr. Meris was
notified that the ISU will be abolished and that his services will be
terminated. He, however, doubted the closure.
3. The ISU was not, in fact, abolished. It continued to operate with Dr.
Clemente as head.
4. Dr. Meris believed it was a mere ploy for his ouster due to his refusal to
retire. He sought reinstatement but was unheeded.
5. Dr. Meris then filed a complaint for illegal dismissal but the Labor Arbiter
dismissed the same and was only granted his hospital retirement plan.
6. On appeal, the NLRC set aside the retirement plan on the ground that Dr.
Meris did not, in fact, retire. It ordered payment of separation pay
instead.
7. The CA, however, ruled that Dr. Meris was illegally dismissed. Hence,
present action by Capitol.
ISSUE: Was there illegal dismissal?

RULING: Yes.

1. Although employers have management prerogatives, including the right to

close the operation of an establishment or undertaking, they must comply
with the legal requirements and not offend the protected rights of labor.
2. Requisites: (a) done in good faith to advance the company’s interest; and
(b) not for the purpose of defeating or circumventing the rights of
employees under the law.
3. Capitol failed to prove its good faith in closing the ISU.
4. The “Analysis of Income and Expenses” which showed there were losses
was doubtful since it was prepared by the internal auditor who happened
to be a relative of Dr. Clemente.
5. The accounting records, in fact, showed increasing revenues from 1989 to
1991.
Javier vs fly ace

This is a petition under Rule 45 of the Rules of Civil Procedure assailing the
March 18, 2010 Decision[1] of the Court of Appeals (CA) and its June 7, 2010
Resolution,[2] in CA-G.R. SP No. 109975, which reversed the May 28, 2009
Decision[3] of the National Labor Relations Commission (NLRC) in the case
entitled Bitoy Javier v. Fly Ace/Flordelyn Castillo,[4] holding that petitioner Bitoy
Javier (Javier) was illegally dismissed from employment and ordering Fly Ace
Corporation (Fly Ace) to pay backwages and separation pay in lieu of reinstatement.

Antecedent Facts

On May 23, 2008, Javier filed a complaint before the NLRC for
underpayment of salaries and other labor standard benefits. He alleged that he was
an employee of Fly Ace since September 2007, performing various tasks at the
respondents warehouse such as cleaning and arranging the canned items before their
delivery to certain locations, except in instances when he would be ordered to
accompany the companys delivery vehicles, as pahinante; that he reported for work
from Monday to Saturday from 7:00 oclock in the morning to 5:00 oclock in the
afternoon; that during his employment, he was not issued an identification card and
payslips by the company; that on May 6, 2008, he reported for work but he was no
longer allowed to enter the company premises by the security guard upon the
instruction of Ruben Ong (Mr. Ong), his superior;[5] that after several minutes of
begging to the guard to allow him to enter, he saw Ong whom he approached and
asked why he was being barred from entering the premises; that Ong replied by
saying, Tanungin mo anak mo; [6] that he then went home and discussed the matter
with his family; that he discovered that Ong had been courting his daughter Annalyn
after the two met at a fiesta celebration in Malabon City; that Annalyn tried to talk
to Ong and convince him to spare her father from trouble but he refused to accede;
that thereafter, Javier was terminated from his employment without notice; and that
he was neither given the opportunity to refute the cause/s of his dismissal from work.
 To support his allegations, Javier presented an affidavit of one Bengie
Valenzuela who alleged that Javier was a stevedore or pahinante of Fly Ace from
September 2007 to January 2008. The said affidavit was subscribed before the Labor
Arbiter (LA).[7]

For its part, Fly Ace averred that it was engaged in the business of importation
and sales of groceries. Sometime in December 2007, Javier was contracted by its
employee, Mr. Ong, as extra helper on a pakyaw basis at an agreed rate of ₱300.00
per trip, which was later increased to ₱325.00 in January 2008. Mr. Ong contracted
Javier roughly 5 to 6 times only in a month whenever the vehicle of its contracted
hauler, Milmar Hauling Services, was not available. On April 30, 2008, Fly Ace no
longer needed the services of Javier. Denying that he was their employee, Fly Ace
insisted that there was no illegal dismissal.[8] Fly Ace submitted a copy of its
agreement with Milmar Hauling Services and copies of acknowledgment receipts
evidencing payment to Javier for his contracted services bearing the words, daily
manpower (pakyaw/piece rate pay) and the latters signatures/initials.

Ruling of the Labor Arbiter

On November 28, 2008, the LA dismissed the complaint for lack of merit on
the ground that Javier failed to present proof that he was a regular employee of Fly
Ace. He wrote:

Complainant has no employee ID showing his employment with the

Respondent nor any document showing that he received the benefits
accorded to regular employees of the Respondents. His contention that
Respondent failed to give him said ID and payslips implies that indeed he
was not a regular employee of Fly Ace considering that complainant was a
helper and that Respondent company has contracted a regular trucking for
the delivery of its products.
Respondent Fly Ace is not engaged in trucking business but in the
importation and sales of groceries. Since there is a regular hauler to deliver
 its products, we give credence to Respondents claim that complainant was
contracted on pakiao basis.
As to the claim for underpayment of salaries, the payroll presented
by the Respondents showing salaries of workers on pakiao basis has
evidentiary weight because although the signature of the complainant
appearing thereon are not uniform, they appeared to be his true signature.
xxxx
Hence, as complainant received the rightful salary as shown by the
above described payrolls, Respondents are not liable for salary
differentials. [9]

Ruling of the NLRC

On appeal with the NLRC, Javier was favored. It ruled that the LA skirted the
argument of Javier and immediately concluded that he was not a regular employee
simply because he failed to present proof. It was of the view that a pakyaw-basis
arrangement did not preclude the existence of employer-employee relationship.
Payment by result x x x is a method of compensation and does not define the essence
of the relation. It is a mere method of computing compensation, not a basis for
determining the existence or absence of an employer-employee relationship.[10] The
NLRC further averred that it did not follow that a worker was a job contractor and
not an employee, just because the work he was doing was not directly related to the
employers trade or business or the work may be considered as extra helper as in this
case; and that the relationship of an employer and an employee was determined by
law and the same would prevail whatever the parties may call it. In this case, the
NLRC held that substantial evidence was sufficient basis for judgment on the
existence of the employer-employee relationship. Javier was a regular employee of
Fly Ace because there was reasonable connection between the particular activity
performed by the employee (as a pahinante) in relation to the usual business or trade
of the employer (importation, sales and delivery of groceries). He may not be
considered as an independent contractor because he could not exercise any judgment
in the delivery of company products. He was only engaged as a helper.

Finding Javier to be a regular employee, the NLRC ruled that he was entitled
to a security of tenure. For failing to present proof of a valid cause for his
termination, Fly Ace was found to be liable for illegal dismissal of Javier who was
likewise entitled to backwages and separation pay in lieu of reinstatement. The
NLRC thus ordered:
WHEREFORE, premises considered, complainants appeal is
partially GRANTED. The assailed Decision of the labor arbiter is VACATED
and a new one is hereby entered holding respondent FLY ACE
CORPORATION guilty of illegal dismissal and non-payment of 13th month
pay. Consequently, it is hereby ordered to pay complainant DANILO Bitoy
JAVIER the following:

1. Backwages -₱45,770.83
2. Separation pay, in lieu of reinstatement - 8,450.00
3. Unpaid 13th month pay (proportionate) - 5,633.33
TOTAL -₱59,854.16

All other claims are dismissed for lack of merit.

SO ORDERED.[11]

Ruling of the Court of Appeals

On March 18, 2010, the CA annulled the NLRC findings that Javier was
indeed a former employee of Fly Ace and reinstated the dismissal of Javiers
complaint as ordered by the LA. The CA exercised its authority to make its own
factual determination anent the issue of the existence of an employer-employee
relationship between the parties. According to the CA:

xxx

In an illegal dismissal case the onus probandi rests on the employer

to prove that its dismissal was for a valid cause. However, before a case for
illegal dismissal can prosper, an employer-employee relationship must first
be established. x x x it is incumbent upon private respondent to prove the
employee-employer relationship by substantial evidence.

xxx
 It is incumbent upon private respondent to prove, by substantial
evidence, that he is an employee of petitioners, but he failed to discharge
his burden. The non-issuance of a company-issued identification card to
private respondent supports petitioners contention that private respondent
was not its employee.[12]

The CA likewise added that Javiers failure to present salary vouchers, payslips, or
other pieces of evidence to bolster his contention, pointed to the inescapable
conclusion that he was not an employee of Fly Ace. Further, it found that Javiers
work was not necessary and desirable to the business or trade of the company, as it
was only when there were scheduled deliveries, which a regular hauling service
could not deliver, that Fly Ace would contract the services of Javier as an extra
helper. Lastly, the CA declared that the facts alleged by Javier did not pass the
control test.

He contracted work outside the company premises; he was not required to observe
definite hours of work; he was not required to report daily; and he was free to accept
other work elsewhere as there was no exclusivity of his contracted service to the
company, the same being co-terminous with the trip only.[13] Since no substantial
evidence was presented to establish an employer-employee relationship, the case
for illegal dismissal could not prosper.

The petitioners moved for reconsideration, but to no avail.

Hence, this appeal anchored on the following grounds:

I.
WHETHER THE HONORABLE COURT OF APPEALS ERRED IN
HOLDING THAT THE PETITIONER WAS NOT A REGULAR
EMPLOYEE OF FLY ACE.
II.
WHETHER THE HONORABLE COURT OF APPEALS ERRED IN
HOLDING THAT THE PETITIONER IS NOT ENTITLED TO HIS
MONETARY CLAIMS.[14]
 The petitioner contends that other than its bare allegations and self-serving
affidavits of the other employees, Fly Ace has nothing to substantiate its claim that
Javier was engaged on a pakyaw basis. Assuming that Javier was indeed hired on
a pakyaw basis, it does not preclude his regular employment with the company. Even
the acknowledgment receipts bearing his signature and the confirming receipt of his
salaries will not show the true nature of his employment as they do not reflect the
necessary details of the commissioned task. Besides, Javiers tasks as pahinante are
related, necessary and desirable to the line of business by Fly Ace which is engaged
in the importation and sale of grocery items. On days when there were no scheduled
deliveries, he worked in petitioners warehouse, arranging and cleaning the stored
cans for delivery to clients.[15] More importantly, Javier was subject to the control
and supervision of the company, as he was made to report to the office from Monday
to Saturday, from 7:00 oclock in the morning until 5:00 oclock in the afternoon. The
list of deliverable goods, together with the corresponding clients and their respective
purchases and addresses, would necessarily have been prepared by Fly Ace. Clearly,
he was subjected to compliance with company rules and regulations as regards
working hours, delivery schedule and output, and his other duties in the
warehouse.[16]

The petitioner chiefly relied on Chavez v. NLRC,[17] where the Court ruled that
payment to a worker on a per trip basis is not significant because this is merely a
method of computing compensation and not a basis for determining the existence of
employer-employee relationship. Javier likewise invokes the rule that, in
controversies between a laborer and his master, x x x doubts reasonably arising from
the evidence should be resolved in the formers favour. The policy is reflected is no
less than the Constitution, Labor Code and Civil Code.[18]

Claiming to be an employee of Fly Ace, petitioner asserts that he was illegally

dismissed by the latters failure to observe substantive and procedural due process.
Since his dismissal was not based on any of the causes recognized by law, and was
implemented without notice, Javier is entitled to separation pay and backwages.

In its Comment,[19] Fly Ace insists that there was no substantial evidence to
prove employer-employee relationship. Having a service contract with Milmar
Hauling Services for the purpose of transporting and delivering company products
to customers, Fly Ace contracted Javier as an extra helper or pahinante on a mere
per trip basis. Javier, who was actually a loiterer in the area, only accompanied and
assisted the company driver when Milmar could not deliver or when the exigency of
extra deliveries arises for roughly five to six times a month. Before making a
delivery, Fly Ace would turn over to the driver and Javier the delivery vehicle with
its loaded company products. With the vehicle and products in their custody, the
driver and Javier would leave the company premises using their own means, method,
best judgment and discretion on how to deliver, time to deliver, where and [when]
to start, and manner of delivering the products.[20]

Fly Ace dismisses Javiers claims of employment as baseless assertions. Aside

from his bare allegations, he presented nothing to substantiate his status as an
employee. It is a basic rule of evidence that each party must prove his affirmative
allegation. If he claims a right granted by law, he must prove his claim by competent
evidence, relying on the strength of his own evidence and not upon the weakness of
his opponent.[21] Invoking the case of Lopez v. Bodega City,[22] Fly Ace insists that
in an illegal dismissal case, the burden of proof is upon the complainant who claims
to be an employee. It is essential that an employer-employee relationship be proved
by substantial evidence. Thus, it cites:

In an illegal dismissal case, the onus probandi rests on the employer

to prove that its dismissal of an employee was for a valid cause. However,
before a case for illegal dismissal can prosper, an employer-employee
relationship must first be established.
Fly Ace points out that Javier merely offers factual assertions that he was an
employee of Fly Ace, which are unfortunately not supported by proof, documentary
or otherwise.[23]Javier simply assumed that he was an employee of Fly Ace, absent
any competent or relevant evidence to support it. He performed his contracted work
outside the premises of the respondent; he was not even required to report to work at
regular hours; he was not made to register his time in and time out every time he was
contracted to work; he was not subjected to any disciplinary sanction imposed to
other employees for company violations; he was not issued a company I.D.; he was
not accorded the same benefits given to other employees; he was not registered with
the Social Security System (SSS) as petitioners employee; and, he was free to leave,
accept and engage in other means of livelihood as there is no exclusivity of his
contracted services with the petitioner, his services being co-terminus with the trip
only. All these lead to the conclusion that petitioner is not an employee of the
respondents.[24]
Moreover, Fly Ace claims that it had no right to control the result, means,
manner and methods by which Javier would perform his work or by which the same
is to be accomplished.[25] In other words, Javier and the company driver were given
a free hand as to how they would perform their contracted services and neither were
they subjected to definite hours or condition of work.

Fly Ace likewise claims that Javiers function as a pahinante was not directly
related or necessary to its principal business of importation and sales of groceries.
Even without Javier, the business could operate its usual course as it did not involve
the business of inland transportation. Lastly, the acknowledgment receipts bearing
Javiers signature and words pakiao rate, referring to his earned salaries on a per trip
basis, have evidentiary weight that the LA correctly considered in arriving at the
conclusion that Javier was not an employee of the company.

The Court affirms the assailed CA decision.

It must be noted that the issue of Javiers alleged illegal dismissal is anchored
on the existence of an employer-employee relationship between him and Fly Ace.
This is essentially a question of fact. Generally, the Court does not review errors that
raise factual questions. However, when there is conflict among the factual findings
of the antecedent deciding bodies like the LA, the NLRC and the CA, it is proper, in
the exercise of Our equity jurisdiction, to review and re-evaluate the factual issues
and to look into the records of the case and re-examine the questioned findings.[26] In
dealing with factual issues in labor cases, substantial evidence that amount of
relevant evidence which a reasonable mind might accept as adequate to justify a
conclusion is sufficient.[27]

As the records bear out, the LA and the CA found Javiers claim of
employment with Fly Ace as wanting and deficient. The Court is constrained to
agree. Although Section 10, Rule VII of the New Rules of Procedure of the
NLRC[28] allows a relaxation of the rules of procedure and evidence in labor cases,
this rule of liberality does not mean a complete dispensation of proof. Labor officials
are enjoined to use reasonable means to ascertain the facts speedily and objectively
with little regard to technicalities or formalities but nowhere in the rules are they
provided a license to completely discount evidence, or the lack of it. The quantum
of proof required, however, must still be satisfied. Hence, when confronted with
conflicting versions on factual matters, it is for them in the exercise of discretion to
determine which party deserves credence on the basis of evidence received, subject
only to the requirement that their decision must be supported by substantial
evidence.[29] Accordingly, the petitioner needs to show by substantial evidence that
he was indeed an employee of the company against which he claims illegal
dismissal.

Expectedly, opposing parties would stand poles apart and proffer allegations
as different as chalk and cheese. It is, therefore, incumbent upon the Court to
determine whether the party on whom the burden to prove lies was able to hurdle
the same. No particular form of evidence is required to prove the existence of such
employer-employee relationship. Any competent and relevant evidence to prove the
relationship may be admitted. Hence, while no particular form of evidence is
required, a finding that such relationship exists must still rest on some substantial
evidence. Moreover, the substantiality of the evidence depends on its quantitative as
well as its qualitative aspects.[30] Although substantial evidence is not a function of
quantity but rather of quality, the x x x circumstances of the instant case demand that
something more should have been proffered. Had there been other proofs of
employment, such as x x x inclusion in petitioners payroll, or a clear exercise of
control, the Court would have affirmed the finding of employer-employee
relationship.[31]

In sum, the rule of thumb remains: the onus probandi falls on petitioner to
establish or substantiate such claim by the requisite quantum of
evidence.[32] Whoever claims entitlement to the benefits provided by law should
establish his or her right thereto x x x.[33] Sadly, Javier failed to adduce substantial
evidence as basis for the grant of relief.

In this case, the LA and the CA both concluded that Javier failed to establish
his employment with Fly Ace. By way of evidence on this point, all that Javier
presented were his self-serving statements purportedly showing his activities as an
employee of Fly Ace. Clearly, Javier failed to pass the substantiality requirement to
support his claim. Hence, the Court sees no reason to depart from the findings of the
CA.

While Javier remains firm in his position that as an employed stevedore of Fly
Ace, he was made to work in the company premises during weekdays arranging and
cleaning grocery items for delivery to clients, no other proof was submitted to fortify
his claim. The lone affidavit executed by one Bengie Valenzuela was unsuccessful
in strengthening Javiers cause. In said document, all Valenzuela attested to was that
he would frequently see Javier at the workplace where the latter was also hired as
stevedore.[34] Certainly, in gauging the evidence presented by Javier, the Court
cannot ignore the inescapable conclusion that his mere presence at the workplace
falls short in proving employment therein. The supporting affidavit could have, to
an extent, bolstered Javiers claim of being tasked to clean grocery items when there
were no scheduled delivery trips, but no information was offered in this subject
simply because the witness had no personal knowledge of Javiers employment status
in the company. Verily, the Court cannot accept Javiers statements, hook, line and
sinker.

The Court is of the considerable view that on Javier lies the burden to pass the
well-settled tests to determine the existence of an employer-employee
relationship, viz: (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. Of these elements, the most important criterion is whether the employer
controls or has reserved the right to control the employee not only as to the result of
the work but also as to the means and methods by which the result is to be
accomplished.[35]

In this case, Javier was not able to persuade the Court that the above elements
exist in his case. He could not submit competent proof that Fly Ace engaged his
services as a regular employee; that Fly Ace paid his wages as an employee, or that
Fly Ace could dictate what his conduct should be while at work. In other words,
Javiers allegations did not establish that his relationship with Fly Ace had the
attributes of an employer-employee relationship on the basis of the above-mentioned
four-fold test. Worse, Javier was not able to refute Fly Aces assertion that it had an
agreement with a hauling company to undertake the delivery of its goods. It was also
baffling to realize that Javier did not dispute Fly Aces denial of his services
exclusivity to the company. In short, all that Javier laid down were bare allegations
without corroborative proof.

Fly Ace does not dispute having contracted Javier and paid him on a per trip
rate as a stevedore, albeit on a pakyaw basis. The Court cannot fail to note that Fly
Ace presented documentary proof that Javier was indeed paid on a pakyaw basis per
the acknowledgment receipts admitted as competent evidence by the
LA. Unfortunately for Javier, his mere denial of the signatures affixed therein cannot
automatically sway us to ignore the documents because forgery cannot be presumed
and must be proved by clear, positive and convincing evidence and the burden of
proof lies on the party alleging forgery.[36]
 Considering the above findings, the Court does not see the necessity to resolve
the second issue presented.

One final note. The Courts decision does not contradict the settled rule that
payment by the piece is just a method of compensation and does not define the
essence of the relation.[37]Payment on a piece-rate basis does not negate regular
employment. The term wage is broadly defined in Article 97 of the Labor Code as
remuneration or earnings, capable of being expressed in terms of money whether
fixed or ascertained on a time, task, piece or commission basis. Payment by the piece
is just a method of compensation and does not define the essence of the relations.
Nor does the fact that the petitioner is not covered by the SSS affect the employer-
employee relationship. However, in determining whether the relationship is that of
employer and employee or one of an independent contractor, each case must be
determined on its own facts and all the features of the relationship are to be
considered.[38] Unfortunately for Javier, the attendant facts and circumstances of the
instant case do not provide the Court with sufficient reason to uphold his claimed
status as employee of Fly Ace.

While the Constitution is committed to the policy of social justice and the
protection of the working class, it should not be supposed that every labor dispute
will be automatically decided in favor of labor. Management also has its rights which
are entitled to respect and enforcement in the interest of simple fair play. Out of its
concern for the less privileged in life, the Court has inclined, more often than not,
toward the worker and upheld his cause in his conflicts with the employer. Such
favoritism, however, has not blinded the Court to the rule that justice is in every case
for the deserving, to be dispensed in the light of the established facts and the
applicable law and doctrine.[39]

WHEREFORE, the petition is DENIED. The March 18, 2010 Decision of

the Court of Appeals and its June 7, 2010 Resolution, in CA-G.R. SP No. 109975,
are hereby AFFIRMED.
SO ORDERED.
Price Case

CHICO-NAZARIO, J.:

This Petition for Review on Certiorari under Rule 45 of the Rules of Court
assails the Decision1 dated 25 September 2006 and Resolution2 dated 15
June 2007 of the Court of Appeals in CA-G.R. SP No. 72795, which affirmed
the Decision dated 14 December 2001 of the National Labor Relations
Commission (NLRC) in NLRC NCR Case No. 30-03-01274-2000 finding that
petitioners were not illegally dismissed by respondents.

The factual antecedents of the case are as follows:

Respondent Innodata Philippines, Inc./Innodata Corporation (INNODATA)

was a domestic corporation engaged in the data encoding and data
conversion business. It employed encoders, indexers, formatters,
programmers, quality/quantity staff, and others, to maintain its business and
accomplish the job orders of its clients. Respondent Leo Rabang was its
Human Resources and Development (HRAD) Manager, while respondent
Jane Navarette was its Project Manager. INNODATA had since ceased
operations due to business losses in June 2002.

Petitioners Cherry J. Price, Stephanie G. Domingo, and Lolita Arbilera were

employed as formatters by INNODATA. The parties executed an employment
contract denominated as a "Contract of Employment for a Fixed Period,"
stipulating that the contract shall be for a period of one year,3 to wit:

CONTRACT OF EMPLOYMENT FOR A FIXED PERIOD

xxxx

WITNESSETH: That

WHEREAS, the EMPLOYEE has applied for the position of FORMATTER and
in the course thereof and represented himself/herself to be fully qualified and
skilled for the said position;

WHEREAS, the EMPLOYER, by reason of the aforesaid representations, is

desirous of engaging that the (sic) services of the EMPLOYEE for a fixed
period;
NOW, THEREFORE, for and in consideration of the foregoing premises, the
parties have mutually agreed as follows:

TERM/DURATION

The EMPLOYER hereby employs, engages and hires the EMPLOYEE and
the EMPLOYEE hereby accepts such appointment as FORMATTER effective
FEB. 16, 1999 to FEB. 16, 2000 a period of ONE YEAR.

xxxx

TERMINATION

6.1 In the event that EMPLOYER shall discontinue operating its business, this
CONTRACT shall also ipso facto terminate on the last day of the month on
which the EMPLOYER ceases operations with the same force and effect as is
such last day of the month were originally set as the termination date of this
Contract. Further should the Company have no more need for the
EMPLOYEE’s services on account of completion of the project, lack of work
(sic) business losses, introduction of new production processes and
techniques, which will negate the need for personnel, and/or overstaffing, this
contract maybe pre-terminated by the EMPLOYER upon giving of three (3)
days notice to the employee.

6.2 In the event period stipulated in item 1.2 occurs first vis-à-vis the
completion of the project, this contract shall automatically terminate.

6.3 COMPANY’s Policy on monthly productivity shall also apply to the

EMPLOYEE.

6.4 The EMPLOYEE or the EMPLOYER may pre-terminate this CONTRACT,

with or without cause, by giving at least Fifteen – (15) notice to that effect.
Provided, that such pre-termination shall be effective only upon issuance of
the appropriate clearance in favor of the said EMPLOYEE.

6.5 Either of the parties may terminate this Contract by reason of the breach
or violation of the terms and conditions hereof by giving at least Fifteen (15)
days written notice. Termination with cause under this paragraph shall be
effective without need of judicial action or approval.4

During their employment as formatters, petitioners were assigned to handle

jobs for various clients of INNODATA, among which were CAS, Retro,
Meridian, Adobe, Netlib, PSM, and Earthweb. Once they finished the job for
one client, they were immediately assigned to do a new job for another client.

On 16 February 2000, the HRAD Manager of INNODATA wrote petitioners

informing them of their last day of work. The letter reads:

RE: End of Contract

Date: February 16, 2000

Please be informed that your employment ceases effective at the end of the
close of business hours on February 16, 2000.5

According to INNODATA, petitioners’ employment already ceased due to the

end of their contract.

On 22 May 2000, petitioners filed a Complaint6 for illegal dismissal and

damages against respondents. Petitioners claimed that they should be
considered regular employees since their positions as formatters were
necessary and desirable to the usual business of INNODATA as an encoding,
conversion and data processing company. Petitioners also averred that the
decisions in Villanueva v. National Labor Relations Commission7 and
Servidad v. National Labor Relations Commission,8 in which the Court already
purportedly ruled "that the nature of employment at Innodata Phils., Inc. is
regular,"9 constituted stare decisis to the present case. Petitioners finally
argued that they could not be considered project employees considering that
their employment was not coterminous with any project or undertaking, the
termination of which was predetermined.

On the other hand, respondents explained that INNODATA was engaged in

the business of data processing, typesetting, indexing, and abstracting for its
foreign clients. The bulk of the work was data processing, which involved data
encoding. Data encoding, or the typing of data into the computer, included
pre-encoding, encoding 1 and 2, editing, proofreading, and scanning. Almost
half of the employees of INNODATA did data encoding work, while the other
half monitored quality control. Due to the wide range of services rendered to
its clients, INNODATA was constrained to hire new employees for a fixed
period of not more than one year. Respondents asserted that petitioners were
not illegally dismissed, for their employment was terminated due to the
expiration of their terms of employment. Petitioners’ contracts of employment
with INNODATA were for a limited period only, commencing on 6 September
1999 and ending on 16 February 2000.10 Respondents further argued that
petitioners were estopped from asserting a position contrary to the contracts
which they had knowingly, voluntarily, and willfully agreed to or entered into.
There being no illegal dismissal, respondents likewise maintained that
petitioners were not entitled to reinstatement and backwages.

On 17 October 2000, the Labor Arbiter11 issued its Decision12 finding

petitioners’ complaint for illegal dismissal and damages meritorious. The
Labor Arbiter held that as formatters, petitioners occupied jobs that were
necessary, desirable, and indispensable to the data processing and encoding
business of INNODATA. By the very nature of their work as formatters,
petitioners should be considered regular employees of INNODATA, who were
entitled to security of tenure. Thus, their termination for no just or authorized
cause was illegal. In the end, the Labor Arbiter decreed:

FOREGOING PREMISES CONSIDERED, judgment is hereby rendered

declaring complainants’ dismissal illegal and ordering respondent INNODATA
PHILS. INC./INNODATA CORPORATION to reinstate them to their former or
equivalent position without loss of seniority rights and benefits. Respondent
company is further ordered to pay complainants their full backwages plus ten
percent (10%) of the totality thereof as attorney’s fees. The monetary awards
due the complainants as of the date of this decision are as follows:

A. Backwages

1. Cherry J. Price

2/17/2000 – 10/17/2000 at 223.50/day

P5,811.00/mo/ x 8 mos. P46,488.00

2. Stephanie Domingo 46,488.00

(same computation)

3. Lolita Arbilera 46,488.00

(same computation)

Total Backwages P139,464.00

B. Attorney’s fees (10% of total award) 13,946.40

Total Award P153,410.40

Respondent INNODATA appealed the Labor Arbiter’s Decision to the NLRC.
The NLRC, in its Decision dated 14 December 2001, reversed the Labor
Arbiter’s Decision dated 17 October 2000, and absolved INNODATA of the
charge of illegal dismissal.

The NLRC found that petitioners were not regular employees, but were fixed-
term employees as stipulated in their respective contracts of employment. The
NLRC applied Brent School, Inc. v. Zamora13 and St. Theresa’s School of
Novaliches Foundation v. National Labor Relations Commission,14 in which
this Court upheld the validity of fixed-term contracts. The determining factor of
such contracts is not the duty of the employee but the day certain agreed
upon by the parties for the commencement and termination of the
employment relationship. The NLRC observed that the petitioners freely and
voluntarily entered into the fixed-term employment contracts with INNODATA.
Hence, INNODATA was not guilty of illegal dismissal when it terminated
petitioners’ employment upon the expiration of their contracts on 16 February
2000.

The dispositive portion of the NLRC Decision thus reads:

WHEREFORE, premises considered, the decision appealed from is hereby

REVERSED and SET ASIDE and a new one entered DISMISSING the instant
complaint for lack of merit.15

The NLRC denied petitioners’ Motion for Reconsideration in a Resolution

dated 28 June 2002.16

In a Petition for Certiorari under Rule 65 of the Rules of Court filed before the
Court of Appeals, petitioners prayed for the annulment, reversal, modification,
or setting aside of the Decision dated 14 December 2001 and Resolution
dated 28 June 2002 of the NLRC.lawphil.net

On 25 September 2006, the Court of Appeals promulgated its Decision

sustaining the ruling of the NLRC that petitioners were not illegally dismissed.

The Court of Appeals ratiocinated that although this Court declared in

Villanueva and Servidad that the employees of INNODATA working as data
encoders and abstractors were regular, and not contractual, petitioners
admitted entering into contracts of employment with INNODATA for a term of
only one year and for a project called Earthweb. According to the Court of
Appeals, there was no showing that petitioners entered into the fixed-term
contracts unknowingly and involuntarily, or because INNODATA applied force,
duress or improper pressure on them. The appellate court also observed that
INNODATA and petitioners dealt with each other on more or less equal terms,
with no moral dominance exercised by the former on latter. Petitioners were
therefore bound by the stipulations in their contracts terminating their
employment after the lapse of the fixed term.

The Court of Appeals further expounded that in fixed-term contracts, the

stipulated period of employment is governing and not the nature thereof.
Consequently, even though petitioners were performing functions that are
necessary or desirable in the usual business or trade of the employer,
petitioners did not become regular employees because their employment was
for a fixed term, which began on 16 February 1999 and was predetermined to
end on 16 February 2000.

The appellate court concluded that the periods in petitioners’ contracts of

employment were not imposed to preclude petitioners from acquiring security
of tenure; and, applying the ruling of this Court in Brent, declared that
petitioners’ fixed-term employment contracts were valid. INNODATA did not
commit illegal dismissal for terminating petitioners’ employment upon the
expiration of their contracts.

The Court of Appeals adjudged:

WHEREFORE, the instant petition is hereby DENIED and the Resolution

dated December 14, 2001 of the National Labor Relations Commission
declaring petitioners were not illegally dismissed is AFFIRMED.17

The petitioners filed a Motion for Reconsideration of the afore-mentioned

Decision of the Court of Appeals, which was denied by the same court in a
Resolution dated 15 June 2007.

Petitioners are now before this Court via the present Petition for Review
on Certiorari, based on the following assignment of errors:

I.

THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS

ERROR OF LAW AND GRAVE ABUSE OF DISCRETION WHEN IT
DID NOT APPLY THE SUPREME COURT RULING IN THE CASE OF
NATIVIDAD & QUEJADA THAT THE NATURE OF EMPLOYMENT OF
RESPONDENTS IS REGULAR NOT FIXED, AND AS SO RULED IN
AT LEAST TWO OTHER CASES AGAINST INNODATA PHILS. INC.
 II.

THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS

ERROR OF LAW IN RULING THAT THE STIPULATION OF
CONTRACT IS GOVERNING AND NOT THE NATURE OF
EMPLOYMENT AS DEFINED BY LAW.

III.

THE HONORABLE COURT OF APPEALS COMMITTED GRAVE

ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION
WHEN IT DID NOT CONSIDER THE EVIDENCE ON RECORD
SHOWING THAT THERE IS CLEAR CIRCUMVENTION OF THE LAW
ON SECURITY OF TENURE THROUGH CONTRACT
MANIPULATION.18

The issue of whether petitioners were illegally dismissed by respondents is

ultimately dependent on the question of whether petitioners were hired by
INNODATA under valid fixed-term employment contracts.

After a painstaking review of the arguments and evidences of the parties, the
Court finds merit in the present Petition. There were no valid fixed-term
contracts and petitioners were regular employees of the INNODATA who
could not be dismissed except for just or authorized cause.

The employment status of a person is defined and prescribed by law and not
by what the parties say it should be.19 Equally important to consider is that a
contract of employment is impressed with public interest such that labor
contracts must yield to the common good.20 Thus, 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.21

Regular employment has been defined by Article 280 of the Labor Code, as
amended, which reads:

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
engagement of the employee or where the work or services to be performed is
seasonal in nature and employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by the

preceding paragraph. Provided, That, any employee who has rendered at
least one year of service, whether such service is continuous or broken, shall
be considered a regular employee with respect to the activity in which he is
employed and his employment shall continue while such activity exists.
(Underscoring ours).

Based on the afore-quoted provision, the following employees are accorded

regular status: (1) those who are engaged to perform activities which are
necessary or desirable in the usual business or trade of the employer,
regardless of the length of their employment; and (2) those who were initially
hired as casual employees, but have rendered at least one year of service,
whether continuous or broken, with respect to the activity in which they are
employed.

Undoubtedly, petitioners belong to the first type of regular employees.

Under Article 280 of the Labor Code, the applicable test to determine whether
an employment should be considered regular or non-regular is the reasonable
connection between the particular activity performed by the employee in
relation to the usual business or trade of the employer.22

In the case at bar, petitioners were employed by INNODATA on 17 February

1999 as formatters. The primary business of INNODATA is data encoding,
and the formatting of the data entered into the computers is an essential part
of the process of data encoding. Formatting organizes the data encoded,
making it easier to understand for the clients and/or the intended end users
thereof. Undeniably, the work performed by petitioners was necessary or
desirable in the business or trade of INNODATA.

However, it is also true that while certain forms of employment require the
performance of usual or desirable functions and exceed one year, these do
not necessarily result in regular employment under Article 280 of the Labor
Code.23 Under the Civil Code, fixed-term employment contracts are not
limited, as they are under the present Labor Code, to those by nature
seasonal or for specific projects with predetermined dates of completion; they
also include those to which the parties by free choice have assigned a specific
date of termination.24
The decisive determinant in term employment is the day certain agreed upon
by the parties for the commencement and termination of their employment
relationship, a day certain being understood to be that which must necessarily
come, although it may not be known when. Seasonal employment and
employment for a particular project are instances of employment in which a
period, where not expressly set down, is necessarily implied.25

Respondents maintain that the contracts of employment entered into by

petitioners with INNDOATA were valid fixed-term employment contracts which
were automatically terminated at the expiry of the period stipulated
therein, i.e., 16 February 2000.

The Court disagrees.

While this Court has recognized the validity of fixed-term employment

contracts, it has consistently held that this is the exception rather than the
general rule. More importantly, a fixed-term employment is valid only under
certain circumstances. In Brent, the very same case invoked by respondents,
the Court identified several circumstances wherein a fixed-term is
an essential and natural appurtenance, to wit:

Some familiar examples may be cited of employment contracts which may be

neither for seasonal work nor for specific projects, but to which a fixed term is
an essential and natural appurtenance: overseas employment contracts, for
one, to which, whatever the nature of the engagement, the concept of regular
employment with all that it implies does not appear ever to have been applied,
Article 280 of the Labor Code notwithstanding; also appointments to the
positions of dean, assistant dean, college secretary, principal, and other
administrative offices in educational institutions, which are by practice or
tradition rotated among the faculty members, and where fixed terms are a
necessity without which no reasonable rotation would be possible. Similarly,
despite the provisions of Article 280, Policy Instructions No. 8 of the Minister
of Labor implicitly recognize that certain company officials may be elected for
what would amount to fixed periods, at the expiration of which they would
have to stand down, in providing that these officials, "x x may lose their jobs
as president, executive vice-president or vice president, etc. because the
stockholders or the board of directors for one reason or another did not reelect
them."26

As a matter of fact, the Court, in its oft-quoted decision in Brent, also issued a
stern admonition that where, from the circumstances, it is apparent that the
period was imposed to preclude the acquisition of tenurial security by the
employee, then it should be struck down as being contrary to law, morals,
good customs, public order and public policy.27

After considering petitioners’ contracts in their entirety, as well as the

circumstances surrounding petitioners’ employment at INNODATA, the Court
is convinced that the terms fixed therein were meant only to circumvent
petitioners’ right to security of tenure and are, therefore, invalid.

The contracts of employment submitted by respondents are highly suspect for

not only being ambiguous, but also for appearing to be tampered with.

Petitioners alleged that their employment contracts with INNODATA became

effective 16 February 1999, and the first day they reported for work was on 17
February 1999. The Certificate of Employment issued by the HRAD Manager
of INNODATA also indicated that petitioners Price and Domingo were
employed by INNODATA on 17 February 1999.

However, respondents asserted before the Labor Arbiter that petitioners’

employment contracts were effective only on 6 September 1999. They later on
admitted in their Memorandum filed with this Court that petitioners were
originally hired on 16 February 1999 but the project for which they were
employed was completed before the expiration of one year. Petitioners were
merely rehired on 6 September 1999 for a new project. While respondents
submitted employment contracts with 6 September 1999 as beginning date of
effectivity, it is obvious that in one of them, the original beginning date of
effectivity, 16 February 1999, was merely crossed out and replaced with 6
September 1999. The copies of the employment contracts submitted by
petitioners bore similar alterations.

The Court notes that the attempt to change the beginning date of effectivity of
petitioners’ contracts was very crudely done. The alterations are very obvious,
and they have not been initialed by the petitioners to indicate their assent to
the same. If the contracts were truly fixed-term contracts, then a change in the
term or period agreed upon is material and would already constitute a
novation of the original contract.

Such modification and denial by respondents as to the real beginning date of

petitioners’ employment contracts render the said contracts ambiguous. The
contracts themselves state that they would be effective until 16 February 2000
for a period of one year. If the contracts took effect only on 6 September 1999,
then its period of effectivity would obviously be less than one year, or for a
period of only about five months.
Obviously, respondents wanted to make it appear that petitioners worked for
INNODATA for a period of less than one year. The only reason the Court can
discern from such a move on respondents’ part is so that they can preclude
petitioners from acquiring regular status based on their employment for one
year. Nonetheless, the Court emphasizes that it has already found that
petitioners should be considered regular employees of INNODATA by the
nature of the work they performed as formatters, which was necessary in the
business or trade of INNODATA. Hence, the total period of their employment
becomes irrelevant.

Even assuming that petitioners’ length of employment is material, given

respondents’ muddled assertions, this Court adheres to its pronouncement in
Villanueva v. National Labor Relations Commission,28 to the effect that where
a contract of employment, being a contract of adhesion, is ambiguous, any
ambiguity therein should be construed strictly against the party who prepared
it. The Court is, thus, compelled to conclude that petitioners’ contracts of
employment became effective on 16 February 1999, and that they were
already working continuously for INNODATA for a year.

Further attempting to exonerate itself from any liability for illegal dismissal,
INNODATA contends that petitioners were project employees whose
employment ceased at the end of a specific project or undertaking. This
contention is specious and devoid of merit.

In Philex Mining Corp. v. National Labor Relations Commission,29 the Court

defined "project employees" as those workers hired (1) for a specific project or
undertaking, and wherein (2) the completion or termination of such project has
been determined at the time of the engagement of the employee.

Scrutinizing petitioners’ employment contracts with INNODATA, however,

failed to reveal any mention therein of what specific project or undertaking
petitioners were hired for. Although the contracts made general references to
a "project," such project was neither named nor described at all therein. The
conclusion by the Court of Appeals that petitioners were hired for the
Earthweb project is not supported by any evidence on record. The one-year
period for which petitioners were hired was simply fixed in the employment
contracts without reference or connection to the period required for the
completion of a project. More importantly, there is also a dearth of evidence
that such project or undertaking had already been completed or terminated to
justify the dismissal of petitioners. In fact, petitioners alleged - and
respondents failed to dispute that petitioners did not work on just one project,
but continuously worked for a series of projects for various clients of
INNODATA.

In Magcalas v. National Labor Relations Commission,30 the Court struck down

a similar claim by the employer therein that the dismissed employees were
fixed-term and project employees. The Court here reiterates the rule that all
doubts, uncertainties, ambiguities and insufficiencies should be resolved in
favor of labor. It is a well-entrenched doctrine that in illegal dismissal cases,
the employer has the burden of proof. This burden was not discharged in the
present case.

As a final observation, the Court also takes note of several other provisions in
petitioners’ employment contracts that display utter disregard for their security
of tenure. Despite fixing a period or term of employment, i.e., one year,
INNODATA reserved the right to pre-terminate petitioners’ employment under
the following circumstances:

6.1 x x x Further should the Company have no more need for the
EMPLOYEE’s services on account of completion of the project, lack of work
(sic) business losses, introduction of new production processes and
techniques, which will negate the need for personnel, and/or overstaffing, this
contract maybe pre-terminated by the EMPLOYER upon giving of three (3)
days notice to the employee.

xxxx

6.4 The EMPLOYEE or the EMPLOYER may pre-terminate this CONTRACT,

with or without cause, by giving at least Fifteen – (15) [day] notice to that
effect. Provided, that such pre-termination shall be effective only upon
issuance of the appropriate clearance in favor of the said EMPLOYEE.
(Emphasis ours.)

Pursuant to the afore-quoted provisions, petitioners have no right at all to

expect security of tenure, even for the supposedly one-year period of
employment provided in their contracts, because they can still be pre-
terminated (1) upon the completion of an unspecified project; or (2) with or
without cause, for as long as they are given a three-day notice. Such contract
provisions are repugnant to the basic tenet in labor law that no employee may
be terminated except for just or authorized cause.

Under Section 3, Article XVI of the Constitution, it is the policy of the State to
assure the workers of security of tenure and free them from the bondage of
uncertainty of tenure woven by some employers into their contracts of
employment. This was exactly the purpose of the legislators in drafting Article
280 of the Labor Code – to prevent the circumvention by unscrupulous
employers 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.

In all, respondents’ insistence that it can legally dismiss petitioners on the

ground that their term of employment has expired is untenable. To reiterate,
petitioners, being regular employees of INNODATA, are entitled to security of
tenure. In the words of Article 279 of the Labor Code:

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.

By virtue of the foregoing, an illegally dismissed employee is entitled to

reinstatement without loss of seniority rights and other privileges, with full
back wages computed from the time of dismissal up to the time of actual
reinstatement.

Considering that reinstatement is no longer possible on the ground that

INNODATA had ceased its operations in June 2002 due to business losses,
the proper award is separation pay equivalent to one month pay31 for every
year of service, to be computed from the commencement of their employment
up to the closure of INNODATA.

The amount of back wages awarded to petitioners must be computed from the
time petitioners were illegally dismissed until the time INNODATA ceased its
operations in June 2002.32

Petitioners are further entitled to attorney’s fees equivalent to 10% of the total
monetary award herein, for having been forced to litigate and incur expenses
to protect their rights and interests herein.

Finally, unless they have exceeded their authority, corporate officers are, as a
general rule, not personally liable for their official acts, because a corporation,
by legal fiction, has a personality separate and distinct from its officers,
stockholders and members. Although as an exception, corporate directors and
officers are solidarily held liable with the corporation, where terminations of
employment are done with malice or in bad faith,33 in the absence of evidence
that they acted with malice or bad faith herein, the Court exempts the
individual respondents, Leo Rabang and Jane Navarette, from any personal
liability for the illegal dismissal of petitioners.

WHEREFORE, the Petition for Review on Certiorari is GRANTED. The

Decision dated 25 September 2006 and Resolution dated 15 June 2007 of the
Court of Appeals in CA-G.R. SP No. 72795are hereby REVERSED and SET
ASIDE. RespondentInnodata Philippines, Inc./Innodata Corporation
is ORDERED to pay petitioners Cherry J. Price, Stephanie G. Domingo, and
Lolita Arbilera: (a) separation pay, in lieu of reinstatement, equivalent to one
month pay for every year of service, to be computed from the commencement
of their employment up to the date respondent Innodata Philippines,
Inc./Innodata Corporation ceased operations; (b) full backwages, computed
from the time petitioners’ compensation was withheld from them up to the time
respondent Innodata Philippines, Inc./Innodata Corporation ceased
operations; and (3) 10% of the total monetary award as attorney’s fees. Costs
against respondent Innodata Philippines, Inc./Innodata Corporation.

SO ORDERED.
AsiaPro Cooperative

Facts:
Respondent Asiapro Cooperative is composed of owners-members with
primary objectives of providing them savings and credit facilities and
livelihood services. In discharge of said objectives, Asiapro entered into
several service contracts with Stanfilco. Sometime later, the cooperative
owners-members requested Stanfilco’s help in registering them with SSS and
remitting their contributions. Petitioner SSS informed Asiapro that being
actually a manpower contractor supplying employees to Stanfilco, it must be
the one to register itself with SSS as an employer and remit the contributions.
Respondent continuously ignoring the demand of SSS the latter filed before
the SSC. Asiapro alleges that there exists no employer-employee relationship
between it and its owners-members. SSC ruled in favor of SSS. On appeal, CA
reversed the decision.
Issue:
Whether or not there is employer-employee relationship between Asiapro and
its owners-members.
Ruling: YES.
In determining the existence of an employer-employee relationship, the
following elements are considered: (1) the selection and engagement of the
workers; (2) the payment of wages by whatever means; (3) the power of
dismissal; and (4) the power to control the worker‘s conduct, with the latter
assuming primacy in the overall consideration. All the aforesaid elements are
present in this case.
First. It is expressly provided in the Service Contracts that it is the respondent
cooperative which has the exclusive discretion in the selection and engagement
of the owners-members as well as its team leaders who will be assigned at
Stanfilco.
Second. It cannot be doubted then that those stipends or shares in the service
surplus are indeed wages, because these are given to the owners-members as
compensation in rendering services to respondent cooperative‘s client,
Stanfilco.
Third. It is also stated in the above-mentioned Service Contracts that it is the
respondent cooperative which has the power to investigate, discipline and
remove the owners-members and its team leaders who were rendering services
at Stanfilco.
Fourth. In the case at bar, it is the respondent cooperative which has the sole
control over the manner and means of performing the services under the
Service Contracts with Stanfilco as well as the means and methods of work.
Also, the respondent cooperative is solely and entirely responsible for its
owners-members, team leaders and other representatives at Stanfilco. All these
clearly prove that, indeed, there is an employer-employee relationship between
the respondent cooperative and its owners-members.
BEST WEAR GARMENTS and/or WARREN PARDILLA, Petitioners,
vs.
ADELAIDA B. DE LEMOS and CECILE M. OCUBILLO, Respondents.

DECISION

VILLARAMA, J.:

This is a petition for review on certiorari under Rule 45 assailing the Decision1 dated February 24,
2009 and Resolution2 dated February 10, 2010 of the Court of Appeals (CA) in CA-G.R. SP No.
102002. TheCA reversed the Decision3 dated August 28, 2007 of the National Labor Relations
Commission (NLRC) and reinstated the September 5, 2005 Decision 4 of the Labor Arbiter.

Petitioner Best Wear Garments is a sole proprietorship represented by its General Manager Alex
Sitosta. Respondents Cecile M. Ocubillo and Adelaida B. De Lemos were hired as sewers on piece-
rate basis by petitioners on October 27, 1993 andJuly 12, 1994, respectively.

On May 20, 2004, De Lemos filed a complaint5 for illegal dismissal with prayer for backwages and
other accrued benefits, separation pay, service incentive leave pay and attorney’s fees. A similar
complaint6 was filed by Ocubillo on June 10, 2004. Both alleged in their position paper that in August
2003, Sitosta arbitrarily transferred them to other areas of operation of petitioner’s garments
company, which they said amounted to constructive dismissal as it resulted in less earnings for
them.

De Lemos claimed that after two months in her new assignment, she was able to adjust but Sitosta
again transferred her to a "different operation where she could not earn [as] much as before because
by-products require long period of time to finish." She averred that the reason for her transfer was
her refusal "to render [overtime work] up to 7:00 p.m." Her request to be returned to her previous
assignment was rejected and she was "constrained not to report for work as Sitosta had become
indifferent to her since said transfer of operation." She further alleged that her last salary was
withheld by petitioner company.7

On her part, Ocubillo alleged that her transfer was precipitated by her having "incurred excessive
absences since 2001." Her absences were due to the fact that her father became very sick since
2001 until his untimely demise on November 9, 2003; aside from this, she herself became very
sickly. She claimed that from September to October 2003, Sitosta assigned her to different machines
"whichever is available" and that "there were times, she could not earn for a day because there was
no available machine to work for [sic]." Sitosta also allegedly required her to render overtime work up
to 7:00 p.m. which she refused "because she was only paid up to 6:25 p.m."8

Petitioners denied having terminated the employment of respondents who supposedly committed
numerous absences without leave (AWOL). They claimed that sometime in February 2004, De
Lemos informed Sitosta that due to personal problem, she intends to resign from the company. She
then demanded the payment of separation pay. In March 2004, Ocubillo likewise intimated her
intention to resign and demanded separation pay. Sitosta explained to both De Lemos and Ocubillo
that the company had no existing policy on granting separation pay, and hence he could not act on
their request. De Lemos never reported back to work since March 2004, while Ocubillo failed to
report for work from October 2004 to the present.

As to the allegation of respondents that the reason for their transfer was their refusal to render
overtime work until 7:00 p.m., petitioners asserted that respondents are piece-rate workers and
hence they are not paid according to the number of hours worked.
On September 5, 2005, Labor Arbiter Arden S. Anni rendered a Decision granting respondents’
claims, as follows:

WHEREFORE, ALL THE FOREGOING CONSIDERED, judgment is rendered, as follows:

1. Declaring that complainants were constructively, nay, illegally dismissed from

employment;

2. Ordering respondents to pay each of the complainants SEPARATION PAY equivalent to

one-month salary for every year of service, a fraction of at least six (6) months being
considered as one (1) whole year;

3. Ordering respondents to pay each of the complainants BACKWAGES computed from the
time of their dismissal up to the finality of this decision.

For this purpose, both parties are directed to submit their respective computations of the total
amount awarded for approval by this office.

All other claims are dismissed for lack of merit.

SO ORDERED.9

Labor Arbiter Anni ruled that since respondents neither resigned nor abandoned their jobs, the
ambiguities in the circumstances surrounding their dismissal are resolved in favor of the workers. It
was emphasized that respondents could no longer be deemed terminated for reason of AWOL
because this prerogative should have been exercised before the dismissals have been effected.
Moreover, it would have been illogical for respondents to resign and then file a complaint for illegal
dismissal.

Petitioners appealed to the NLRC which reversed the Labor Arbiter’s decision and dismissed
respondents’ complaints. The NLRC found no basis for the charge of constructive dismissal, thus:

Complainants’ alleged demotion is vague. They simply allege that by reason of their transfer in
August 2003, they did not earn as much as they earned in their previous assignments. They failed to
state how much they earned before and after their transfer, if only to determine whether or not there
was indeed a diminution in their earnings. Further, it is to be stressed that complainants were paid
on a piece rate basis, which simply means that the more output, they produced the more earnings
they will have. In other words, the earning is dependent upon complainants.

We find more credible respondents’ assertion that complainants’ transfer was a valid exercise of
management prerogative. Respondent company points out that it is engaged in the business of
garments manufacturing as a sub-contractor. That, the kind of work it performs is dependent into
with its client which specifies the work it has to perform. And, that corollary thereto, the work to
be performed by its employees will depend on the work specifications in the contract. Thus, if
complainants have been assigned to different operations, it was pursuant to the
requirements of its contracts. x x x.

In furtherance of their defense that complainants were not dismissed, either actual or constructive in
August 2003, respondents allege that complainants continued to report for work until February 2004
for complainant De Lemos and August 2004 for complainant Ocubillo. We lend credence to this
allegation of respondents because it remains unrebutted by complainants.
It is to be noted that it was only [on] May 20, 2004 and June 10, 2004 that the instant
consolidated cases were filed by complainant De Lemos and Ocubillo, respectively. It may not be
amiss to state that the date of filing jibe with respondents’ allegation that sometime in February and
March 2004, complainants intimated their intention to resign and demanded for payment of
separation pay but was not favorably acted upon by management.

Be that as it may, considering that complainants were not dismissed by respondents, they should be
ordered to report back to work without backwages and for the respondents to accept them.

WHEREFORE, premises considered, the Decision dated September 5, 2005 is hereby SET ASIDE
and a new one entered dismissing complainants’ charge of illegal dismissal for lack of merit.
However, there being no dismissal, complainants Adelaida B. De Lemos and Cecile M. Ocubillo are
hereby directed to report back to work without backwages within ten (10) days from receipt of this
Resolution and for the respondent Company to accept them under the same terms and conditions at
the time of their employment.

SO ORDERED.10 (Italics in the original; emphasis supplied)

Respondents filed a motion for reconsideration which the NLRC denied. Thus, they elevated the
case to the CA alleging grave abuse of discretion on the part of the NLRC.

By Decision dated February 24, 2009, the CA granted the petition for certiorari, reversed the ruling of
the NLRC and reinstated the Labor Arbiter’s decision with modification that the service incentive
leave pay shall be excluded in the computation of the monetary award. The CA found no valid and
legitimate business reason for the transfer order which entailed the reduction of respondents’
earnings. Because respondents’ plea to be returned to their former posts was not heeded by
petitioners, no other conclusion "is discernible from the attendant circumstances except the fact that
[respondents’] transfer was unreasonable, inconvenient and prejudicial to them which [is] tantamount
to a constructive dismissal."11 Moreover, the unauthorized absences of respondents did not warrant a
finding of abandonment in view of the length of their service with petitioner company and the
difficulty in finding similar employment. The CA further invoked the rule that an employee who
forthwith takes steps to protest his layoff cannot by any logic be said to have abandoned his work.

Petitioners filed a motion for partial reconsideration which was denied by the CA.

Hence, this petition alleging that the CA has glaringly overlooked and clearly erred in its findings of
fact and in applying the law on constructive dismissal.

At the outset, it must bestated that the main issue in this case involves a question of fact. It is an
established rule that the jurisdiction of the Supreme Court in cases brought before it from the CA via
Rule 45 of the 1997 Rules of Civil Procedure is generally limited to reviewing errors of law. This
Court is not a trier of facts. In the exercise of its power of review, the findings of fact of the CA are
conclusive and binding and consequently, it is not our function to analyze or weigh evidence all over
again.12

There are, however, recognized exceptions13 to this rule such as when there is a divergence between
the findings of facts of the NLRC and that of the CA.14 In this case, the CA’s findings are contrary to
those of the NLRC. There is, therefore, a need to review the records to determine which of them
should be preferred as more conformable to evidentiary facts.15

The right of employees to security of tenure does not give them vested rights to their positions to the
extent of depriving management of its prerogative to change their assignments or to transfer them.
Thus, an employer may transfer or assign employees from one office or area of operation to another,
provided there is no demotion in rank or diminution of salary, benefits, and other privileges, and the
action is not motivated by discrimination, made in bad faith, or effected as a form of punishment or
demotion without sufficient cause.16

In Blue Dairy Corporation v. NLRC,17 we held that:

x x x. The managerial prerogative to transfer personnel must be exercised without grave abuse of
discretion, bearing in mind the basic elements of justice and fair play. Having the right should not be
confused with the manner in which that right is exercised. Thus, it cannot be used as a subterfuge by
the employer to rid himself of an undesirable worker. In particular, the employer must be able to
show that the transfer is not unreasonable, inconvenient or prejudicial to the employee; nor does it
involve a demotion in rank or a diminution of his salaries, privileges and other benefits. Should the
employer fail to overcome this burden of proof, the employee’s transfer shall be tantamount to
constructive dismissal, which has been defined as a quitting because continued employment is
rendered impossible, unreasonable or unlikely; as an offer involving a demotion in rank and
diminution in pay. Likewise, constructive dismissal exists when an act of clear discrimination,
insensibility or disdain by an employer has become so unbearable to the employee leaving him with
no option but to forego with his continued employment.18

With the foregoing as guidepost, we hold that the CA erred in reversing the NLRC’s ruling that
respondents were not constructively dismissed.

Being piece-rate workers assigned to individual sewing machines, respondents’ earnings depended
on the quality and quantity of finished products. That their work output might have been affected by
the change in their specific work assignments does not necessarily implythat any resultingreduction
in payis tantamount to constructive dismissal. Workers under piece-rate employment have no fixed
salaries and their compensation is computed on the basis of accomplished tasks. As admitted by
respondent De Lemos, some garments or by-products took a longer time to finish so they could not
earn as much as before. Also,the type of sewing jobs available would depend on the specifications
made by the clients of petitioner company. Under these circumstances, it cannot be said that the
transfer was unreasonable, inconvenient or prejudicial to the respondents. Such deployment of
sewers to work on different types of garments as dictated by present business necessity is within the
ambit of management prerogative which, in the absence of bad faith, ill motive or discrimination,
should not be interfered with by the courts.

The records are bereft of any showing of clear discrimination, insensibility or disdain on the part of
petitioners in transferring respondents to perform a different type of sewing job.It is unfair to charge
petitioners with constructive dismissal simply because the respondents insist that their transfer to a
new work assignment was against their will. We have long stated that "the objection to the transfer
being grounded on solely upon the personal inconvenience or hardship that will be caused to the
employee by reason of the transfer is not a valid reason to disobey an order of transfer."19 That
respondents eventually discontinued reporting for work after their plea to be returned to their former
work assignment was their personal decision, for which the petitioners should not be held liable
particularly as the latter did not, in fact, dismiss them.

Indeed, there was no evidence that respondents were dismissed from employment. In fact,1âw phi 1

petitioners expressed willingness to accept them back to work. There being no termination of
employment by the employer, the award of backwages cannot be sustained. It is well settled that
backwages may be granted only when there is a finding of illegal dismissal.20 In cases where there is
no evidence of dismissal, the remedy is reinstatement but without backwages.21
The constitutional policy of providing full protection to labor is not intended to oppress or destroy
management.22While the Constitution is committed to the policy of social justice and the protection of
the working class, it should not be supposed that every labor dispute will be automatically decided in
favor of labor. Management also has its rights which are entitled to respect and enforcement in the
interest of simple fair play.23 Thus, where management prerogative to transfer employees is validly
exercised, as in this case, courts will decline to interfere.

WHEREFORE, the petition for review on certiorari is GRANTED. The Decision dated February 24,
2009 and Resolution dated February 10, 2010 of the Court of Appeals in CA-G.R. SP No. 102002
are SET ASIDE. The Decision dated August 28, 2007 of the National Labor Relations Commission is
hereby REINSTATED and UPHELD.

No pronouncement as to costs.

SO ORDERED.
Toyota Motors

FACTS: The Union filed a petition for certification election among the
Toyota rank and file employees with the National Conciliation and Mediation Board
(NCMB). The Med-Arbiter denied the petition, but, on appeal, the DOLE
Secretary granted the Union’s prayer, and, through an Order, directed the
immediate holding of the certification election.
After Toyota’s plea for reconsideration was denied, the certification election was
conducted. The Med-Arbiter’s Order certified the Union as the sole and exclusive
bargaining agent of all the Toyota rank and file employees. Toyota challenged
said Order via an appeal to the DOLE Secretary.
-STRIKE-

In the meantime, the Union submitted its CBA proposals to Toyota, but the latter
refused to negotiate in view of its pending appeal. Consequently, the
Union filed a notice of strike with the NCMB based on Toyota’s refusal to
bargain. In connection with Toyota’s appeal, Toyota and the Union were required to
attend a hearing on before the Bureau of Labor Relations (BLR). The February 21,
2001 hearing was cancelled and reset to February 22.
STRIKE 1: On February 21, 135 Union officers and members failed to render the
required overtime work, and instead marched to and staged a picket in front of the
BLR office. The Union, in a letter of the same date, also requested that its
members be allowed to be absent on February 22 to attend the hearing and instead
work on their next scheduled rest day. This request however was denied by Toyota.
Despite denial of the Union’s request, more than 200 employees staged mass
actions on February 22 and 23 in front of the BLR and the DOLE offices, to protest
the partisan and anti-union stance of Toyota. Due to the deliberate absence of a
considerable number of employees on February 22 to 23, Toyota experienced acute
lack of manpower in its manufacturing and production lines, and was unable to meet
its production goals resulting in huge losses.
On February 27, Toyota sent individual letters to some 360 employees requiring them
to explain within 24 hours why they should not be dismissed for their obstinate
defiance of the company’s directive to render overtime work on February 21, for their
failure to report for work on February 22 and 23, and for their participation in the
concerted actions which severely disrupted and paralyzed the plant’s operations.
These letters specifically cited Section D, paragraph 6 of the Company’s Code of
Conduct, to wit:
xx
Inciting or participating in riots, disorders, alleged strikes, or concerted actions
detrimental to [Toyota’s] interest.
1st offense – dismissal.11
xx
On the next day, the Union filed with the NCMB another notice of strike for
union busting amounting to unfair labor practice.
On March 1, the Union nonetheless submitted an explanation in compliance with the
February 27 notices sent by Toyota to the erring employees. Consequently, on March
2 and 5, Toyota issued 2 memoranda to the concerned employees to clarify whether or
not they are adopting the March 1, 2001 Union’s explanation as their own. The
employees were also required to attend an investigative interview, but they refused to
do so.
On March 16, Toyota terminated the employment of 227 employees for
participation in concerted actions in violation of its Code of Conduct and for
misconduct under Article 282 of the Labor Code.
STRIKE 2: In reaction to the dismissal of its union members and officers, the Union
went on strike on March 17. Subsequently, from March 28 to April 12, the Union
intensified its strike by barricading the gates of Toyota’s Bicutan and Sta. Rosa plants.
The strikers prevented workers who reported for work from entering the plants.
On March 29, Toyota filed a petition for injunction with a prayer for the issuance of a
TRO with the NLRC. It sought free ingress to and egress from its Bicutan and Sta.
Rosa manufacturing plants. Acting on said petition, the NLRC issued a TRO against
the Union, ordering its leaders and members as well as its sympathizers to remove
their barricades and all forms of obstruction to ensure free ingress to and egress from
the company’s premises.
Meanwhile, Toyota filed a petition to declare the strike illegal with the NLRC
arbitration branch, , and prayed that the erring Union officers, directors, and members
be dismissed.
On April 10, the DOLE Secretary assumed jurisdiction over the
labor dispute and issued an Order certifying the labor dispute to
the NLRC. In said Order, the DOLE Secretary directed all striking workers
to return to work at their regular shifts by April 16. On the other hand, it ordered
Toyota to accept the returning employees under the same terms and conditions
obtaining prior to the strike or at its option, put them under payroll
reinstatement. The parties were also enjoined from committing acts
that may worsen the situation.
The Union ended the strike on April 12. The union members and officers tried to
return to work on April 16 but were told that Toyota opted for payroll-reinstatement
authorized by the Order of the DOLE Secretary.
STRIKE 3: Meanwhile, on May 23, despite the issuance of the DOLE
Secretary’s certification Order, several payroll-reinstated members of the
Union staged a protest rally in front of Toyota’s Bicutan Plant bearing placards
and streamers in defiance of the April 10 Order. Then, on May 28, around
Union members staged another protest action in front of the Bicutan Plant. At the
same time, some payroll-reinstated employees picketed in front of the Santa Rosa
Plant’s main entrance, and were later joined by other Union members.
On June 5, notwithstanding the certification Order, the Union filed another notice of
strike.
—
In the meantime, the NLRC ordered both parties to submit their respective position
papers on June 8. The union, however, requested for abeyance of the proceedings
considering that there is a pending petition for certiorari with the CA
assailing the validity of the DOLE Secretary’s Assumption of
Jurisdiction Order.
Thereafter, on June 19, the NLRC issued an Order, reiterating its previous order for
both parties to submit their respective position papers on or before June 2, 2001. Only
Toyota submitted its position paper. During the August 3, 2001 hearing, the Union,
despite several accommodations, still failed to submit its position paper. Later that
day, the Union claimed it filed its position paper by registered mail.
NLRC decision
Subsequently, the NLRC, in its August 9 Decision, declared the strikes staged by the
Union on February 21 to 23 (as the Union failed to comply with the procedural
requirements of a valid strike under Art. 263 of the Labor Code) and May 23 and
28 as illegal and Declared that the dismissal of the 227 who participated in the
illegal strike on February 21-23 is legal. Lastly, award of severance compensation
was given to the dismissed Union members
After the DOLE Secretary assumed jurisdiction over the Toyota dispute on April 10,
the Union again staged strikes on May 23 and 28. The NLRC found the strikes
illegal as they violated Art. 264 of the Labor Code which proscribes any strike or
lockout after jurisdiction is assumed over the dispute by the President or the
DOLE Secretary.
The NLRC held that both parties must have maintained the status quo after the DOLE
Secretary issued the assumption/certification Order, and ruled that the Union did not
respect the DOLE Secretary’s directive.
Accordingly, both Toyota and the Union filed MRs, which the NLRC denied.
Consequently, both parties questioned the Resolutions of the NLRC in separate
petitions for certiorari filed with the CA. The CA then consolidated the petitions.
[In its February 27, 2003 Decision, the CA ruled that the Union’s petition is defective
in form for its failure to append a proper verification and certificate of non-forum
shopping, given that, out of the 227 petitioners, only 159 signed the verification and
certificate of non-forum shopping. Despite the flaw, the CA proceeded to resolve the
petitions on the merits and affirmed the assailed NLRC Decision and Resolution with
a modification, however, of deleting the award of severance compensation to the
dismissed Union members.
However, in its June 20, 2003 Resolution, the CA modified its February 27, 2003
Decision by reinstating severance compensation to the dismissed employees based on
social justice.]
ISSUE:

(1) Whether the mass actions committed by the Union on different occasions are
illegal strikes; and
(2) Whether separation pay should be awarded to the Union members who
participated in the illegal strikes.
HELD: WHEREFORE, the petitions in G.R. Nos. 158786 and 158789 are DENIED
while those in G.R. Nos. 158798-99 are GRANTED.
The June 20, 2003 CA Resolution restoring the grant of severance compensation is
ANNULLED and SET ASIDE.
The February 27, 2003 CA Decision which affirmed the August 9, 2001 Decision of
the NLRC but deleted the grant of severance compensation, is REINSTATED and
AFFIRMED.
1. YES, THERE IS ILLEGAL STRIKE
A strike means any temporary stoppage of work by the concerted
action of employees as a result of an industrial or labor dispute. A
labor dispute, in turn, includes any controversy or matter
concerning terms or conditions of employment or the association
or representation of persons in negotiating, fixing, maintaining,
changing, or arranging the terms and conditions of employment,
regardless of whether the disputants stand in the proximate
relation of the employer and the employee

Noted authority on labor law, Ludwig Teller, lists six (6) categories of an illegal
strike, viz:
(1) [when it] is contrary to a specific prohibition of law, such as strike by employees
performing governmental functions; or
(2) [when it] violates a specific requirement of law[, such as Article 263 of the Labor
Code on the requisites of a valid strike]; or
(3) [when it] is declared for an unlawful purpose, such as inducing the employer to
commit an unfair labor practice against non-union employees; or
(4) [when it] employs unlawful means in the pursuit of its objective, such as a
widespread terrorism of non-strikers [for example, prohibited acts under Art. 264(e)
of the Labor Code]; or
(5) [when it] is declared in violation of an existing injunction[, such as injunction,
prohibition, or order issued by the DOLE Secretary and the NLRC under Art. 263 of
the Labor Code]; or
(6) [when it] is contrary to an existing agreement, such as a no-strike clause or
conclusive arbitration clause
Petitioner Union contends that the protests or rallies conducted on February 21 and 23
are not within the ambit of strikes as defined in the Labor Code, since they were
legitimate exercises of their right to peaceably assemble and petition the government
for redress of grievances. The Union’s position fails to convince us.
Applying pertinent legal provisions and jurisprudence, we rule that the protest actions
undertaken by the Union officials and members on February 21 to 23 are not valid
and proper exercises of their right to assemble and ask government for redress of their
complaints, but are illegal strikes in breach of the Labor Code. The Union’s position is
weakened by the lack of permit from the City of Manila to hold “rallies.” Shrouded as
demonstrations, they were in reality temporary stoppages of work perpetrated through
the concerted action of the employees who deliberately failed to report for work on
the convenient excuse that they will hold a rally at the BLR and DOLE offices on
February 21 to 23. The purported reason for these protest actions was to safeguard
their rights against any abuse which the med-arbiter may commit against their cause.
However, the Union failed to advance convincing proof that the med-arbiter was
biased against them. The acts of the med-arbiter in the performance of his duties are
presumed regular. Sans ample evidence to the contrary, the Union was unable to
justify the February 2001 mass actions. What comes to the fore is that the decision not
to work for two days was designed and calculated to cripple the
manufacturing arm of Toyota. It becomes obvious that the real and ultimate
goal of the Union is to coerce Toyota to finally acknowledge the Union as the sole
bargaining agent of the company. This is not a legal and valid exercise of the right of
assembly and to demand redress of grievance.
It is obvious that the February 21 to 23 concerted actions were undertaken
without satisfying the prerequisites for a valid strike under Art. 263 of
the Labor Code. The Union failed to comply with the following requirements:
(1) a notice of strike filed with the DOLE 30 days before the intended date of strike,
or 15 days in case of unfair labor practice;
(2) strike vote approved by a majority of the total union membership in the bargaining
unit concerned obtained by secret ballot in a meeting called for that purpose; and
(3) notice given to the DOLE of the results of the voting at least seven days before the
intended strike. These requirements are mandatory and the failure of a union to
comply with them renders the strike illegal.
The evident intention of the law in requiring the strike notice and the strike-vote
report is to reasonably regulate the right to strike, which is essential to the attainment
of legitimate policy objectives embodied in the law. As they failed to conform to the
law, the strikes on February 21, 22, and 23 (STRIKE 1) were illegal.
With respect to the strikes committed from March 17 to April 12 (STRIKE 2), those
were initially legal as the legal requirements were met. However, on March 28 to
April 12, the Union barricaded the gates of the Bicutan and Sta. Rosa plants and
blocked the free ingress to and egress from the company premises. Toyota employees,
customers, and other people having business with the company were intimidated and
were refused entry to the plants. As earlier explained, these strikes were illegal
because unlawful means were employed. The acts of the Union officers and members
are in palpable violation of Art. 264(e), which proscribes acts of violence, coercion, or
intimidation, or which obstruct the free ingress to and egress from the company
premises. Undeniably, the strikes from March 28 to April 12 (STRIKE 2)
were illegal.
Petitioner Union also posits that strikes were not committed on May 23 and 28
(STRIKE 3). The Union asserts that the rallies held on May 23 and 28 could not be
considered strikes, as the participants were the dismissed employees who were on
payroll reinstatement. It concludes that there was no work stoppage.
This contention has no basis. It is clear that once the DOLE Secretary assumes
jurisdiction over the labor dispute and certifies the case for compulsory arbitration
with the NLRC, the parties have to revert to the status quo ante (the state of things as
it was before).
This was not heeded by the Union and the individual respondents who staged illegal
concerted actions on May 23 and 28, in contravention of the Order of the DOLE
Secretary that no acts should be undertaken by them to aggravate the “already
deteriorated situation.”
2. Anent the grant of severance compensation to legally dismissed union members:
The general rule is that when just causes for terminating the services of an employee
under Art. 282 of the Labor Code exist, the employee is not entitled to separation
pay.
As in any rule, there are exceptions. One exception where separation pay is given
even though an employee is validly dismissed is when the court finds justification in
applying the principle of social justice well entrenched in the 1987 Constitution. In
one case, the Court laid down the rule that severance compensation shall be
allowed only when the cause of the dismissal is other than serious misconduct or
that which reflects adversely on the employee’s moral character.
Explicit in PLDT ase are two exceptions when the NLRC or the courts should not
grant separation pay based on social justice:
1. serious misconduct (which is the first ground for dismissal under Art. 282) or
2. acts that reflect on the moral character of the employee.
Considering that the dismissal of the employees was due to their participation in the
illegal strikes as well as violation of the Code of Conduct of the company, the same
constitutes serious misconduct. A serious misconduct is a transgression of some
established and definite rule of action, a forbidden act, a dereliction of duty, willful in
character, and implies wrongful intent and not mere error in judgment.
Based on existing jurisprudence, the award of separation pay to the Union officials
and members in the instant petitions cannot be sustained.
NOTES:

1. The Union contends that the NLRC violated its right to due process when it
disregarded its position paper in deciding Toyota’s petition to declare the strike
illegal.
We rule otherwise.
It is entirely the Union’s fault that its position paper was not considered by the NLRC.
Records readily reveal that the NLRC was even too generous in affording due process
to the Union. It issued no less than 3 orders for the parties to submit its position
papers, which the Union ignored until the last minute. No sufficient justification was
offered why the Union belatedly filed its position paper. In Datu Eduardo Ampo v.
The Hon. Court of Appeals, it was explained that a party cannot complain of
deprivation of due process if he was afforded an opportunity to participate in the
proceedings but failed to do so. If he does not avail himself of the chance to be heard,
then it is deemed waived or forfeited without violating the constitutional guarantee.
Thus, there was no violation of the Union’s right to due process on the part of the
NLRC.
2. CIVIL PROCEDURE GUYS! HEHE
On a procedural aspect, the Union faults the CA for treating its petition as an unsigned
pleading and posits that the verification signed by 159 out of the 227 petitioners has
already substantially complied with and satisfied the requirements under Secs. 4 and 5
of Rule 7 of the ROC.
The Union’s proposition is partly correct.
Sec. 4 of Rule 7 of the ROC states:
Sec. 4. Verification.—Except when otherwise specifically required by law or rule,
pleadings need not be under oath, verified or accompanied by affidavit.
A pleading is verified by an affidavit that the affiant has read the pleading and that the
allegations therein are true and correct of his personal knowledge or based on
authentic records.
A pleading required to be verified which contains a verification based on “information
and belief” or upon “knowledge, information and belief,” or lacks a proper
verification, shall be treated as an unsigned pleading.
The verification requirement is significant, as it is intended to secure an assurance that
the allegations in the pleading are true and correct and not the product of the
imagination or a matter of speculation.30 This requirement is simply a condition
affecting the form of pleadings, and noncompliance with the requirement does not
necessarily render it fatally defective. Indeed, verification is only a formal and not a
jurisdictional requirement.
In this case, the problem is not the absence but the adequacy of the Union’s
verification, since only 159 out of the 227 petitioners executed the verification.
Undeniably, the petition meets the requirement on the verification with respect to the
159 petitioners who executed the verification, attesting that they have sufficient
knowledge of the truth and correctness of the allegations of the petition. However,
their signatures cannot be considered as verification of the petition by the other 68
named petitioners unless the latter gave written authorization to the 159 petitioners to
sign the verification on their behalf. Thus, in Loquias v. Office of the Ombudsman,
we ruled that the petition satisfies the formal requirements only with regard to the
petitioner who signed the petition but not his co-petitioner who did not sign nor
authorize the other petitioner to sign it on his behalf. The proper ruling in this
situation is to consider the petition as compliant with the formal requirements with
respect to the parties who signed it and, therefore, can be given due course only with
regard to them. The other petitioners who did not sign the verification and certificate
against forum shopping cannot be recognized as petitioners have no legal standing
before the Court. The petition should be dismissed outright with respect to the non-
conforming petitioners.
In the case at bench, however, the CA, in the exercise of sound discretion,
did not strictly apply the ruling in Loquias and instead proceeded to decide the case
on the merits.
3. Union officers are liable for unlawful strikes or illegal acts during a strike. Art.
264(a) sanctions the dismissal of a union officer who knowingly participates in an
illegal strike or who knowingly participates in the commission of illegal acts
during a lawful strike.
4. The rule is well entrenched in this jurisdiction that factual findings of the labor
tribunal, when affirmed by the appellate court, are generally accorded great
respect, even finality
5. Member’s liability depends on participation in illegal acts. Art. 264(a) of the
Labor Code provides that a member is liable when he knowingly participates in
an illegal act “during a strike.” While the provision is silent on whether the strike
is legal or illegal, we find that the same is irrelevant.
Now, what are considered “illegal acts” under Art. 264(a)?
No precise meaning was given to the phrase “illegal acts.” It may encompass a
number of acts that violate existing labor or criminal laws, such as the following:
(1) Violation of Art. 264(e) of the Labor Code which provides that “[n]o person
engaged in picketing shall commit any act of violence, coercion or intimidation or
obstruct the free ingress to or egress from the employer’s premises for lawful
purposes, or obstruct public thoroughfares”;
(2) Commission of crimes and other unlawful acts in carrying out the strike;54 and
(3) Violation of any order, prohibition, or injunction issued by the DOLE Secretary or
NLRC in connection with the assumption of jurisdiction/certification Order under Art.
263(g) of the Labor Code.
As earlier explained, this enumeration is not exclusive and it may cover other
breaches of existing laws.
However, There must be proof that he committed illegal acts during the strike and the
striker who participated in the commission of illegal act[s] must be identified. But
proof beyond reasonable doubt is not required. Substantial evidence available under
the circumstances, which may justify the imposition of the penalty of dismissal, may
suffice.
6. Noted labor law expert, Professor Cesario A. Azucena, Jr., traced the history
relating to the liability of a union member in an illegal strike, starting with the
“rule of vicarious liability,” thus:
Under [the rule of vicarious liability], mere membership in a labor union serves as
basis of liability for acts of individuals, or for a labor activity, done on behalf of the
union. The union member is made liable on the theory that all the members are
engaged in a general conspiracy, and the unlawful acts of the particular members are
viewed as necessary incidents of the conspiracy. It has been said that in the absence of
statute providing otherwise, the rule of vicarious liability applies.
Even the Industrial Peace Act, however, which was in effect from 1953 to 1974,
did not adopt the vicarious liability concept. It expressly provided that:
No officer or member of any association or organization, and no association or
organization participating or interested in a labor dispute shall be held responsible or
liable for the unlawful acts of individual officers, members, or agents, except upon
proof of actual participation in, or actual authorization of, such acts or of ratifying of
such acts after actual knowledge thereof.
Replacing the Industrial Peace Act, the Labor Code has not adopted the vicarious
liability rule
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 court’s Decision dismissed petitioner Ma.
Wenelita Tirazona’s Special Civil Action for Certiorariand affirmed the Decision4 dated 30 January
2004 of the National Labor Relations Commission (NLRC) in NLRC CA No. 034872-03, which ruled
that petitioner’s dismissal from employment was legal; and its Resolution which denied petitioner’s
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 Balonzo’s 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 latter’s 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, Tirazona’s counsels sent demand letters8 to PET’s 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.
Tirazona’s 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. Tirazona’s constitutional right to due process was violated and
judgment was rendered by you on mere allegations expressed in a letter-complaint 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 client’s 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 Tirazona’s 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 Tirazona’s "ill-advised response to the Management’s
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 Tirazona’s demands in a letter 13 and informed her that the hearing
was reset to 10 April 2002, which would be presided by PET’s 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.

Tirazona’s written explanation15 dated 17 April 2002 merely reiterated, without further details, her
previous claims, to wit: that Balonzo’s 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 PET’s 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 PET’s 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 latter’s 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 Arbiter’s findings, the NLRC concluded that Tirazona’s termination from
employment was in accordance with law. It ruled that Tirazona’s demand letter addressed to Ono
constituted a just cause for dismissal, as the same was "an openly hostile act" by a high-ranking
managerial employee against the company.19 The NLRC likewise found that PET complied with the
notice and hearing requirements of due process, inasmuch as Tirazona’s demand for a special panel
was without any legal basis. Furthermore, petitioner breached the company’s trust when she read
the confidential legal opinion of PET’s 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-Appellee’s 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 petitioner’s 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 Tirazona’s
Petition for Certiorari 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 Tirazona’s 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 Tirazona’s 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 on Certiorari.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 Tirazona’s 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 one’s 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 employee’s 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 employer’s property. But, in order to constitute a just cause for dismissal,
the act complained of must be "work-related" such as would show the employee concerned to be
unfit to continue working for the employer. 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 company’s notice of charge allegedly insinuated Tirazona’s 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 PET’s 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 Tirazona’s 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 latter’s factual findings. Long established is the doctrine that findings of fact of quasi-judicial
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 Tirazona’s demand letter, this Court is bound by the following findings of the
Court of Appeals:

Clearly, petitioner Tirazona’s 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 Ono’s 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
Balonzo’s [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 Ono’s 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 Tirazona’s actions or
omissions affecting her employer’s 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, Complainant’s Rejoinder
[to Respondent’s 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.

Tirazona’s 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 employer’s 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 Tirazona’s 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 company’s appointment
of its external counsel as the investigating panel’s presiding officer, because her own demands on
the panel’s composition were denied. As correctly held by the NLRC and the Court of Appeals,
Tirazona’s stance is without any legal basis. On the contrary, this Court’s 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.] 1avvphi 1

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 Court’s 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 company’s resort to acts of self-defense 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 company’s termination of her employment. Moreover, Tirazona’s 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 employer’s 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.