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SMART v.

SOLIDUM  January 26, 2009, The NLRC reversed the labor arbiter's
decision. It ruled that the seriousness of Solidum 's infractions
Doctrine: justified the additional period of suspension. It added that the
Preventive suspension cannot go beyond 30 days for the same labor arbiter erred in declaring Solidum' s dismissal illegal.
offense, but the company can validly issue another preventive  April 4, 2011, CA declared the dismissal not illegal while the
suspension upon uncovering another offense. extended suspension is illegal thus entitling Solidum for
Facts: backwages.
 April 26, 2004, Solidum was hired by Smart Communications, Issue and Holding:
Inc. as Department Head of Smart Prepaid/Buddy Activations 1. WON the 2nd preventive suspension is illegal.
under the Product Marketing Group The 2nd preventive suspension is legal on all basis, since
 September 21, 2005, Solidum was charged with acts of it is not an extension to penalize the same offense,
dishonesty and breach of trust and confidence, wherein he rather the suspension is a result of the discovery of
supposedly created fictitious marketing events and submitting another offense, and as such, Smart can validly issue
fraudulent document to prove that the events have transpired another preventive suspension.
in the goal of defrauding Smart. Pending investigation, Solidum Smart: Respondent was validly placed under second preventive
will be suspended for 30 days. suspension for the reason that pending investigation of separate and
 October 21, 2005, Solidum was charged again with different distinct set of offenses committed by the respondent as contained in
cases, thus suspending him for another 20 days the second Notice to Explain, his continued presence in the company
 October 28, 2005, after Solidum requested pertinent premises during the investigation poses serious and imminent threat
documents, he is now declaring that he shall no longer receive to the life or property of the employer and co-workers.
or entertain notices or memorandum, except the final decision Solidum: that his preventive suspension of 20 days is an extension of
resolving the administrative charges against him. his initial 30-day suspension and, hence, illegal and constitutes
 November 11, 2005, Company decided to dismiss Solidum for constructive dismissal.
breach of trust. SC: The relevant provisions regarding preventive suspensions are

 July 3, 2006, Labor Arbiter decided that the extended found in Sections 8 and 9 of Rule XXIII, Book V of the Omnibus Rules

suspension without pay was illegal and that Solidum was Implementing the Labor Code (Omnibus Rules), as amended by

unjustly dismissed from work without observance of procedural Department Order No. 9, Series of 1997, which read as follows:

due process. Ordered reinstatement with backwages. Section 8. Preventive suspension. The employer may place the worker
concerned under preventive suspension only if his continued
employment poses a serious and imminent threat to the life or property As Applied: petitioner was acting well within its rights when it imposed
of the employer or of his co-workers. a 10-day preventive suspension on Esteban. While it may be that the
Section 9. Period of suspension. No preventive suspension shall last acts complained of were committed by Esteban almost a year
longer than thirty (30) days. The employer shall thereafter reinstate before the investigation was conducted, still, it should be pointed
the worker in his former or in a substantially equivalent position or the out that Esteban was performing functions that involve handling
employer may extend the period of suspension provided that during of the petitioner's property and funds, and the petitioner had
the period of extension, he pays the wages and other benefits due to every right to protect its assets and operations pending Esteban's
the worker. In such case, the worker shall not be bound to reimburse investigation.
the amount paid to him during the extension if the employer decides, While the Omnibus Rules limits the period of preventive suspension to
after completion of the hearing, to dismiss the worker thirty (30) days, such time frame pertains only to one offense by the
By a preventive suspension an employer protects itself from further employee. For an offense, it cannot go beyond 30 days.
harm or losses because of the erring employee. This concept was However, if the employee is charged with another offense, then the
explained by the Court in Gatbonton v. National Labor Relations employer is entitled to impose a preventive suspension not to exceed
Commission 30 days specifically for the new infraction. Indeed, a fresh preventive
Preventive suspension is a disciplinary measure for the protection suspension can be imposed for a separate or distinct offense. Thus, an
of the company's property pending investigation of any alleged employer is well within its rights to preventively suspend an employee
malfeasance or misfeasance committed by the employee. The for other wrongdoings that may be later discovered while the first
employer may place the worker concerned under preventive investigation is ongoing.
suspension if his continued employment poses a serious and imminent As in this case, Smart was able to uncover other wrongdoings
threat to the life or property of the employer or of his co-workers. committed by Solidum during the investigation for the initial charges
However, when it is determined that there is no sufficient basis lo against him. These newly discovered transgressions would, thus,
justify an employee's preventive suspension, the latter is entitled to the require an additional period to investigate. The first batch of offenses
payment of salaries during the time of preventive suspension. was captured in the September 21, 2005 Notice to Explain issued by
Such principle was applied by the Court in Bluer Than Blue Joint Smart. The notice covers fraud or willful breach of trust in relation to
Ventures/Mary Ann Dela Vega v. Esteban, where it was ruled: transactions was issued a preventive suspension without pay for 30
“Preventive suspension is a measure allowed by law and afforded to days.
the employer if an employee's continued employment poses a serious On October 21, 2005, Smart, however, issued another notice to explain
and imminent threat to the employer's life or property or of his co- to Solidum this time involving additional CEs. Solidum was again
workers. It may be legally imposed against an employee whose alleged preventively suspended for twenty (20) days. The preventive
violation is the subject of an investigation.” suspension of 20 days is not an extension of the suspension issued in
relation to the September 21, 2005 Notice to Explain but is a totally evidenced by an SPA.) The compromise amount was paid to Gestiada
separate preventive suspension for the October 21, 2005 Notice to by check.
Explain. As earlier pointed out, the transactions covered by the 30-day Relying on the quitclaim and release, Powertech filed a motion for the
preventive suspension are different from that covered by the 20-day withdrawal of the appeal and cash bond. The NLRC granted the
preventive suspension. Such being the case the court a quo was motion, dismissed the appeal and ordered the release of the cash bond.
incorrect when it treated said suspension as an "extension" and, The check of Gestiada, however, bounced due to a stop payment order
consequently, it is a miscue to award Solidum the payment of back of Powertech.
salaries and benefits corresponding to the 20-day preventive Aggrieved, petitioners moved to nullify the release and quitclaim for
suspension of Solidum lack of consideration. In a Resolution, the NLRC declared the
Ruling: This court affirmed the decision of the CA with modification, quitclaim, release and waiver void for lack of consideration,
that the award of salaries and benefits that accrued during the period reinstated the appeal and ordered Powertech to post a cash or surety
of extended preventive suspension is deleted. bond for the monetary judgment less the amount it had previously
posted.
ARELLANO et al, vs. POWERTECH DIGEST Then, Gestiada terminated the services of their counsel,
DECEMBER 21, 2016 ~ VBDIAZ Atty. Evangelista and, instead, retained Atty. Felipe of the Public
ARELLANO et al, vs. POWERTECH Attorney’s Office.
G.R. No. 150861 A day later, Powertech paid 150k to Gestiada purportedly as
January 22, 2008 compromise amount for all of petitioners. That same day, Gestiada,
FACTS: The case stems from a complaint for illegal dismissal and through Atty. Felipe, and Powertech filed a joint MTD with the NLRC
other money claims filed by the Nagkakaisang Manggagawa Ng based on the compromise agreement. Atty. Evangelista opposed the
Powertech Corporation in behalf of its individual members and non- motion, alleging that the compromise agreement is unconscionable,
union members against their employer, Powertech. that he was illegally terminated as counsel for the other petitioners
The Labor Arbiter rendered a Decision declaring illegal the without their consent, and that the 150k was received by Gestiada as
termination of 20 of petitioners and granting their monetary payment solely for his backwages and other monetary claims.
claims of 2.5M. Powertech appealed to the NLRC. The NLRC issued a resolution denying the joint MTD. In denying the
During its pendency, Gestiada, for himself and on behalf of other joint motion to dismiss, the NLRC held that the amount received by
petitioners, executed a quitclaim, release and waiver in favor of Gestiada did not cover the monetary claim of petitioners against
Powertech in consideration of 150k. (Earlier, Gestiada was appointed Powertech. For failure of Powertech to post the required cash or surety
by his co-petitioners as their attorney-in-fact. The appointment was bond, the NLRC ruled that the Labor Arbiter decision had attained
finality.
Undaunted, Powertech elevated the matter to the CA via petition for capitalized on the vulnerable position of Gestiada in entering into the
certiorari under Rule 65 of the 1997 Rules of Civil Procedure. agreement and took advantage of the situation to the disadvantage of
The CA rendered a decision in favor of Powertech, ordering that the petitioners.
Resolution of the NLRC declaring the Quitclaim and Release void ab To give effect to the collusion, Gestiada had to get rid of
initio and denying the Joint MTD and dismissing the appeal of the Atty. Evangelista, who had previously succeeded in nullifying the
petitioners is ANNULLED and SET ASIDE. compromise agreement. He fired Atty. Evangelista without cause
The CA upheld the validity of the compromise agreement between basing his dismissal on his plenary authority as agent of
petitioners and Powertech petitioners. He then procured the services of another lawyer,
Petitioners moved to reconsider the CA decision but their motion was Atty. Felipe.
denied. Hence, the present recourse. In line with Our conclusion that Powertech colluded with Gestiada, the
ISSUE: WON THE COMPROMISE AGREEMENT IS VOID CA gravely erred in upholding the compromise agreement. The
HELD: WHEREFORE, the petition is GRANTED. The Decision of the appellate court decision was premised on the compromise agreement
CA is REVERSED and SET ASIDE. The Resolution of the NLRC is being entered into by Powertech and Gestiada in good faith. It is now
REINSTATED. clear that there is ample evidence indicating that Powertech was
YES negotiating in bad faith and, worse, it colluded with Gestiada in
We give credence to the admission of Gestiada that he received the shortchanging, nay, fraudulently depriving petitioners of their just
150k as payment for his own backwages. In his letter to share in the award.
Atty. Evangelista, Gestiada said that he was pressured by Powertech Collusion is a species of fraud. Article 227 of the Labor Code empowers
to sign the waiver and quitclaim for petitioners in order to receive his the NLRC to void a compromise agreement for fraud, thus:
share in the P2.5 million judgment. Having no stable job after his Any compromise settlement, including those involving labor standard
dismissal, Gestiada had no other choice but to breach his fiduciary laws, voluntarily agreed upon by the parties with the assistance of the
obligation to petitioners. He succumbed to the pressure of Powertech Bureau or the regional office of the Department of Labor, shall be final
in signing the waiver, release and quitclaim in exchange for the and binding upon the parties. The National Labor Relations
150k. In short, he colluded with Powertech to the detriment of Commission or any court shall not assume jurisdiction over issues
petitioners. involved therein except in case of non-compliance thereof or if there is
Powertech knew that Gestiada had plenary authority to act for prima facie evidence that the settlement was obtained through fraud,
petitioners in the labor case. It had prior dealings with him. It also misrepresentation, or coercion.[28] (Underscoring supplied)
knew that Gestiada was authorized to negotiate for any amount “he In fine, We find that the CA erred in upholding the compromise
may deem just and reasonable” and to sign waivers and quitclaims on agreement between Powertech and Gestiada. The
behalf of petitioners. Powertech obviously used that knowledge, NLRC justifiably declared the compromise agreement as void.
NOTES:
Addressing petitioners’ contention on the failure of Powertech to post
a surety bond, We agree with the NLRC resolution dismissing its
appeal. Said the NLRC on this point:
An appeal is neither a natural right nor is it part of due process but
purely a statutory privilege and may be exercised only in the manner
and in accordance with the provisions of law x x x Considering that
the Joint MTD remains unacted upon at the time respondents received
a copy of Our Resolution… respondents, in accordance with said
Resolution and with Article 223 Labor Code and with Section 6, Rule
VI, NLRC New Rules of Procedure should have posted a cash and
surety bond. Hence failing to do so the appealed Decision is
deemed final and executory…
The posting of a surety bond is mandatory and jurisdictional.