G.R. No.
175002 February 18, 2013 On July 19, 1999, LEPCEU-ALU filed a Notice of Strike before the National Conciliation
PEPSI-COLA PRODUCTS PHILIPPINES, INC., Petitioner,
vs.
ANECITO MOLON, AUGUSTO TECSON, JONATHAN VILLONES, BIENVENIDO
LAGARTOS, JAIME CADION, EDUARDO TROYO, RODULFO MENDIGO, AURELIO
MORALITA, ESTANISLAO MARTINEZ, REYNALDO VASQUEZ, ORLANDO
GUANTERO, EUTROPIO MERCADO, FRANCISCO GABON, ROLANDO ARANDIA,
REYNALDO TALBO, ANTONIO DEVARAS, HONORATO ABARCA, SALVADOR
MAQUILAN, REYNALDO ANDUYAN, VICENTE CINCO, FELIX RAPIZ, ROBERTO
CATAROS, ROMEO DOROTAN, RODOLFO ARROPE, DANILO CASILAN, and
SAUNDER SANTIAGO REMANDABAN III, Respondents.
DECISION
PERLAS-BERNABE, J.:
Assailed in this Petition for Review on Certiorari1 are the March 31, 2006 Decision2 and
September 18, 2006 Resolution3 of the Court of Appeals (CA) in CA-G.R. S.P. No.
82354 which reversed and set aside the September 11, 2002 Decision4 of the National
Labor Relations Commission (NLRC) in NLRC Certified Case No. V-000001-2000.5 The
assailed CA issuances declared the illegality of respondents’ retrenchment as well as
held petitioner guilty of unfair labor practice (ULP), among others.
The Facts
Petitioner Pepsi-Cola Products Philippines, Inc. (Pepsi) is a domestic corporation
engaged in the manufacturing, bottling and distribution of soft drink products. In view of
its business, Pepsi operates plants all over the Philippines, one of which is located in
Sto. Niño, Tanauan, Leyte (Tanauan Plant).
Respondents, on the other hand, are members of the Leyte Pepsi-Cola Employees
Union-Associated Labor Union (LEPCEU-ALU), a legitimate labor organization
composed of rank-and-file employees in Pepsi's Tanauan Plant, duly registered with the
Department of Labor and Employment (DOLE) Regional Office No. 8.6
In 1999, Pepsi adopted a company-wide retrenchment program denominated as
Corporate Rightsizing Program.7 To commence with its program, it sent a notice of
retrenchment to the DOLE8 as well as individual notices to the affected employees
informing them of their termination from work.9 Subsequently, on July 13, 1999, Pepsi
notified the DOLE of the initial batch of forty-seven (47) workers to be
retrenched.10 Among these employees were six (6) elected officers and twenty-nine (29)
active members of the LEPCEU-ALU, including herein respondents.11
and Mediation Board (NCMB) due to Pepsi’s alleged acts of union busting/ULP.12 It
claimed that Pepsi’s adoption of the retrenchment program was designed solely to bust
their union so that come freedom period, Pepsi’s company union, the Leyte Pepsi-Cola
Employees Union-Union de Obreros de Filipinas #49 (LEPCEU-UOEF#49) – which was
also the incumbent bargaining union at that time – would garner the majority vote to
retain its exclusive bargaining status.13 Hence, on July 23, 1999, LEPCEU-ALU went on
strike.14
On July 27, 1999, Pepsi filed before the NLRC a petition to declare the strike illegal with
a prayer for the loss of employment status of union leaders and some union
members.15 On even date, then DOLE Secretary Bienvenido A. Laguesma certified the
labor dispute to the NLRC for compulsory arbitration.16 A return-to-work order was also
issued.17
Incidentally, one of the respondents, respondent Saunder Santiago Remandaban III
(Remandaban), failed to report for work within twenty-four (24) hours from receipt of the
said order. Because of this, he was served with a notice of loss of employment status
(dated July 30, 1999) which he challenged before the NLRC, asserting that his absence
on that day was justified because he had to consult a physician regarding the persistent
and excruciating pain of the inner side of his right foot.18
Eventually, Pepsi and LEPCEU-ALU agreed to settle their labor dispute arising from the
company’s retrenchment program and thus, executed the Agreement dated September
17, 1999 which contained the following stipulations:
1. The union will receive 100% of the separation pay based on the employees’
basic salary and the remaining 50% shall be released by Management after the
necessary deductions are made from the concerned employees;
2. Both parties agree that the release of these benefits is without prejudice to the
filing of the case by the Union with the National Labor Relations Commission;
3. The Union undertakes to sign the Quitclaim but subject to the 2nd paragraph
of this Agreement.19
Pursuant thereto, respondents signed individual release and quitclaim forms in
September 1999 (September 1999 quitclaims)20 stating that Pepsi would be released
and discharged from any action arising from their employment. Notwithstanding the
foregoing, respondents21 still filed separate complaints for illegal dismissal with the
NLRC.22
The NLRC Ruling
On September 11, 2002, the NLRC rendered a Decision23 in NLRC Certified Case No.
V-000001-2000. Among the cases subsumed and consolidated therein are the following
with the pertinent dispositions involving herein respondents:
(1) In NCMB RBVIII-NS-0710-99 and NCMB-RBVIIINS-07-14-99, the NLRC
absolved Pepsi of the charge of union busting/ULP as it was not shown that it
(Pepsi) had any design to bust the union;24
(2) In NLRC Case No. 7-0301-99, the NLRC declared LEPCEU-ALU’s July 23,
1999 strike as illegal for having been conducted without legal authority since
LEPCEU-ALU was not the certified bargaining agent of the company. It was also
observed that LEPCEU-ALU failed to comply with the seven (7)-day strike vote
notice requirement. However, the NLRC denied Pepsi’s prayer to declare loss of
employment status of the union officers and members who participated in the
strike for its failure to sufficiently establish the identity of the culpable union
officers as well as their illegal acts;25
(3) In NLRC RAB VIII Case No. 9-0459-00, the NLRC ordered Pepsi to reinstate
Remandaban to his former position without loss of seniority rights but without
backwages considering the lack of evidence showing that he willfully intended to
disregard the July 27, 1999 return-to-work order;26
and
(4) In NLRC RAB VIII Case Nos. 9-0432-99 to 9-0458-99, the NLRC dismissed
respondents’ complaints for illegal dismissal for having been finally settled by the
parties through the execution of quitclaim documents by the respondents in favor
of Pepsi.27
Respondents moved for reconsideration, mainly alleging that the NLRC erred when it
declared that Pepsi’s retrenchment program was valid.28 The motion was, however,
denied by the NLRC in its Resolution dated September 15, 2003.29
Aggrieved, respondents filed a petition for certiorari before the CA,30 imputing grave
abuse of discretion on the part of the NLRC when it upheld the validity of their
retrenchment. They argued that the fact that Pepsi hired new employees as
replacements right after retrenching forty-seven (47) of its workers negated the latter’s
claim of financial losses.31 In any event, the evidence was inadequate to prove that Pepsi
did suffer from any economic or financial loss to legitimize its conduct of retrenchment.32
In opposition, Pepsi pointed out that the respondents failed to assail the NLRC’s finding
that the controversy was not about the validity of the retrenchment program but only
about the underlying conflict regarding the selection of the employees to be
retrenched;33 hence, the latter fact should only remain at issue. Further, it claimed that its
financial/business losses were sufficiently substantiated by the audited financial
statements and other related evidence it submitted.34
The CA Ruling
On March 31, 2006, the CA issued a Decision35 which reversed and set aside the
NLRC’s ruling.
It observed that Pepsi could not have been in good faith when it retrenched the
respondents given that they were chosen because of their union membership with
LEPCEU-ALU. In this accord, it ruled that the subject retrenchment was invalid because
there was no showing that Pepsi employed fair and reasonable criteria in ascertaining
who among its employees would be retrenched.36
Moreover, the CA held that Pepsi was guilty of ULP in the form of union busting as its
retrenchment scheme only served to defeat LEPCEUALU’s right to self-organization. It
also pointed out that the fact that Pepsi hired twenty-six (26) replacements and sixty-five
(65) new employees right after they were retrenched contravenes Pepsi’s claim that the
retrenchment was necessary to prevent further losses.37
Further, the CA pronounced that the respondents’ signing of the individual release and
quitclaims did not have the effect of settling all issues between them and Pepsi
considering that the same should have been read in conjunction with the September 17,
1999 Agreement.38
Finally, the CA upheld the validity of LEPCEU-ALU’s July 23, 1999 strike, ruling that
LEPCEU-ALU "was sure to be the certified collective bargaining agent in the event that a
certification election will be conducted" and thus, was authorized to conduct the
aforesaid strike.39 It added that there was no need for LEPCEU-ALU to comply with the
fifteen (15) day cooling off period requirement given that the July 23, 1999 strike was
conducted on account of union busting.40 In support thereof, the CA noted41 that in a
related case involving the same retrenchment incident affecting, however, other
members of LEPCEU-ALU – entitled "George C. Beraya, Arsenio B. Mercado, Romulo A.
Orongan, Pio V. Dado and Primo C. Palana v. Pepsi Cola Products Philippines, Inc.
(PCPPI), Pres. Jorge G. Sevilla and Area GM Edgar D. Del Mar" (Beraya)42 – the NLRC
issued a Decision dated November 24, 200343 finding Pepsi guilty of union busting/ULP.
Notably, in Beraya, the NLRC ruled that Pepsi’s retrenchment program and the
consequent dismissal of the retrenched employees were valid.44
Dissatisfied with the CA’s ruling, Pepsi moved for reconsideration which was, however,
denied by the CA in its September 18, 2006 Resolution.45 Hence, the instant petition.
Issues Before the Court
As culled from the records, the following issues have been raised for the Court’s
resolution: (1) whether the CA may reverse the factual findings of the NLRC; (2) whether
respondents’ retrenchment was valid; (3) whether Pepsi committed ULP in the form of
union busting; (4) whether respondents’ execution of quitclaims amounted to a final
settlement of the case; and (5) whether Remandaban was illegally dismissed.
The Court’s Ruling
The petition is meritorious.
A. Appellate Court’s Evaluation
of the NLRC’s Findings
Pepsi contends that the CA erred in evaluating and examining anew the evidence and in
making its own finding of facts when the findings of the NLRC have been fully supported
by substantial evidence. It therefore claims that the validity of the corporate rightsizing
program, integrity and binding effect of the executed quitclaims as well as the issues
relating to union busting and ULP constitute factual matters which have already been
resolved by the NLRC and are now beyond the authority of the CA to pass upon
on certiorari.
In contrast, respondents aver that the CA was clothed with ample authority to review the
factual findings and conclusions of the NLRC, especially in this case where the latter
misappreciated the factual circumstances and misapplied the law.
Pepsi’s arguments are untenable.
Parenthetically, in a special civil action for certiorari, the CA is authorized to make its own
factual determination when it finds that the NLRC gravely abused its discretion in
overlooking or disregarding evidence which are material to the controversy. The Court, in
turn, has the same authority to sift through the factual findings of both the CA and the
NLRC in the event of their conflict. Thus, in Plastimer Industrial Corporation v.
Gopo,46 the Court explained:
In a special civil action for certiorari, the Court of Appeals has ample authority to make its
own factual determination. Thus, the Court of Appeals can grant a petition for certiorari
when it finds that the NLRC committed grave abuse of discretion by disregarding
evidence material to the controversy. To make this finding, the Court of Appeals
necessarily has to look at the evidence and make its own factual determination. In the
same manner, this Court is not precluded from reviewing the factual issues when there
are conflicting findings by the Labor Arbiter, the NLRC and the Court of Appeals. x x x x
(Citations omitted.)
In this light, given the conflicting findings of the CA and NLRC in this case, the Court
finds it necessary to examine the same in order to resolve the substantive issues.
Separately, it must be pointed out that the CA erred in resolving the issues pertaining to
LEPCEU-ALU’s July 23, 1999 strike in its March 31, 2006 Decision47 and September 18,
2006 Resolution48 (in CA-G.R. SP No. 82354) considering that the parties therein – now,
the respondents in this case – do not have any legal interest in the said issue. To be
clear, NLRCRAB VIII Case Nos. 9-0432-99 to 9-0458-99 are the cases which involve
herein respondents; their concern in those cases was the illegality of their retrenchment.
On the other hand, the strike issue was threshed out in RAB Case No. VIII-7-0301-
99 which involved other members of LEPCEU-ALU. Although all these cases were
subsumed under NLRC Certified Case No. V-000001-2000, the legality of the July 23,
1999 strike was not raised by the respondents in NLRC-RAB VIII Case Nos. 9-0432-99
to 9-0458-99. In view of these incidents, given that the CA has taken cognizance of a
matter (i.e., the legality of the strike) where the parties (i.e., respondents) are devoid of
any legal interest, the Court sees no reason to perpetuate the misstep and delve upon
the same.
B. Validity of Retrenchment
Retrenchment is defined as the termination of employment initiated by the employer
through no fault of the employee and without prejudice to the latter, resorted by
management during periods of business recession, industrial depression or seasonal
fluctuations or during lulls over shortage of materials. It is a reduction in manpower, a
measure utilized by an employer to minimize business losses incurred in the operation of
its business.49
Under Article 297 of the Labor Code,50 retrenchment is one of the authorized causes to
validly terminate an employment. It reads:
ART. 297. Closure of Establishment and Reduction of Personnel. – The employer may
also terminate the employment of any employee due to the installation of labor
saving devices, redundancy, retrenchment to prevent losses or the closing or
cessation of operation of the establishment or undertaking unless the closing is for the
purpose of circumventing the provisions of this Title, by serving a written notice on the
workers and the Ministry of Labor and Employment at least one (1) month before the
intended date thereof. In case of termination due to the installation of labor saving
devices or redundancy, the worker affected thereby shall be entitled to a separation pay
equivalent to at least his one (1) month pay or to at least one (1) month pay for every
year of service, whichever is higher. In case of retrenchment to prevent losses and in
cases of closure or cessation of operations of establishment or undertaking not due to
serious business losses or financial reverses, the separation pay shall be equivalent to
one (1) month pay or to at least one-half (1/2) month pay for every year of service,
whichever is higher. A fraction of at least six (6) months shall be considered one (1)
whole year. (Emphasis supplied.)
As may be gleaned from the afore-cited provision, to properly effect a retrenchment, the
employer must: (a) serve a written notice both to the employees and to the DOLE at least
one (1) month prior to the intended date of retrenchment; and (b) pay the retrenched
employees separation pay equivalent to one (1) month pay or at least one-half (½) month
pay for every year of service, whichever is higher.
Essentially, the prerogative of an employer to retrench its employees must be exercised
only as a last resort, considering that it will lead to the loss of the employees' livelihood. It
is justified only when all other less drastic means have been tried and found insufficient
or inadequate.51 Corollary thereto, the employer must prove the requirements for a valid
retrenchment by clear and convincing evidence; otherwise, said ground for termination
would be susceptible to abuse by scheming employers who might be merely feigning
losses or reverses in their business ventures in order to ease out employees.52 These
requirements are:
(1) That retrenchment is reasonably necessary and likely to prevent business
losses which, if already incurred, are not merely de minimis, but substantial,
serious, actual and real, or if only expected, are reasonably imminent as
perceived objectively and in good faith by the employer;
(2) That the employer served written notice both to the employees and to the
Department of Labor and Employment at least one month prior to the intended
date of retrenchment;
(3) That the employer pays the retrenched employees separation pay equivalent
to one (1) month pay or at least one-half (½) month pay for every year of service,
whichever is higher;
(4) That the employer exercises its prerogative to retrench employees in good
faith for the advancement of its interest and not to defeat or circumvent the
employees’ right to security of tenure; and
(5) That the employer used fair and reasonable criteria in ascertaining who would
be dismissed and who would be retained among the employees, such as status,
efficiency, seniority, physical fitness, age, and financial hardship for certain
workers.53
In due regard of these requisites, the Court observes that Pepsi had validly implemented
its retrenchment program:
(1) Records disclose that both the CA and the NLRC had already determined that Pepsi
complied with the requirements of substantial loss and due notice to both the DOLE and
the workers to be retrenched. The pertinent portion of the CA’s March 31, 2006 Decision
reads:
In the present action, the NLRC held that PEPSI-COLA’s financial statements are
substantial evidence which carry great credibility and reliability viewed in light of the
financial crisis that hit the country which saw multinational corporations closing shops
and walking away, or adapting [sic] their own corporate rightsizing program. Since these
findings are supported by evidence submitted before the NLRC, we resolve to respect
the same. x x x x The notice requirement was also complied with by PEPSI-COLA when
it served notice of the corporate rightsizing program to the DOLE and to the fourteen (14)
employees who will be affected thereby at least one (1) month prior to the date of
retrenchment. (Citations omitted)54
It is axiomatic that absent any clear showing of abuse, arbitrariness or capriciousness,
the findings of fact by the NLRC, especially when affirmed by the CA – as in this case –
are binding and conclusive upon the Court.55 Thus, given that there lies no discretionary
abuse with respect to the foregoing findings, the Court sees no reason to deviate from
the same.
(2) Records also show that the respondents had already been paid the requisite
separation pay as evidenced by the September 1999 quitclaims signed by them.
Effectively, the said quitclaims serve inter alia the purpose of acknowledging receipt of
their respective separation pays.56 Appositely, respondents never questioned that
separation pay arising from their retrenchment was indeed paid by Pepsi to them. As
such, the foregoing fact is now deemed conclusive.
(3) Contrary to the CA’s observation that Pepsi had singled out members of the
LEPCEU-ALU in implementing its retrenchment program,57 records reveal that the
members of the company union (i.e., LEPCEUUOEF#49) were likewise among those
retrenched.58
Also, as aptly pointed out by the NLRC, Pepsi’s Corporate Rightsizing Program was a
company-wide program which had already been implemented in its other plants in
Bacolod, Iloilo, Davao, General Santos and Zamboanga.59 Consequently, given the
general applicability of its retrenchment program, Pepsi could not have intended to
decimate LEPCEUALU’s membership, much less impinge upon its right to self-
organization, when it employed the same.
In fact, it is apropos to mention that Pepsi and its employees entered into a collective
bargaining agreement on October 17, 1995 which contained a union shop clause
requiring membership in LEPCEU-UOEF#49, the incumbent bargaining union, as a
condition for continued employment. In this regard, Pepsi had all the reasons to assume
that all employees in the bargaining unit were all members of LEPCEU-UOEF#49;
otherwise, the latter would have already lost their employment. In other words, Pepsi
need not implement a retrenchment program just to get rid of LEPCEU-ALU members
considering that the union shop clause already gave it ample justification to terminate
them. It is then hardly believable that union affiliations were even considered by Pepsi in
the selection of the employees to be retrenched.60
Moreover, it must be underscored that Pepsi’s management exerted conscious efforts to
incorporate employee participation during the implementation of its retrenchment
program. Records indicate that Pepsi had initiated sit-downs with its employees to review
the criteria on which the selection of who to be retrenched would be based. This is
evidenced by the report of NCMB Region VIII Director Juanito Geonzon which states that
"[Pepsi’s] [m]anagement conceded on the proposal to review the criteria and to sit down
for more positive steps to resolve the issue."61
Lastly, the allegation that the retrenchment program was a mere subterfuge to dismiss
the respondents considering Pepsi’s subsequent hiring of replacement workers cannot
be given credence for lack of sufficient evidence to support the same.
Verily, the foregoing incidents clearly negate the claim that the retrenchment was
undertaken by Pepsi in bad faith.
(5) On the final requirement of fair and reasonable criteria for determining who would or
would not be dismissed, records indicate that Pepsi did proceed to implement its
rightsizing program based on fair and reasonable criteria recommended by the company
supervisors.62
Therefore, as all the requisites for a valid retrenchment are extant, the Court finds
Pepsi’s rightsizing program and the consequent dismissal of respondents in accord with
law.
At this juncture, it is noteworthy to mention that in the related case of Beraya – which
involved the same retrenchment incident affecting the respondents, although litigated by
other LEPCEU-ALU employees – the NLRC in a Decision dated November 24, 2003 had
already pronounced that Pepsi’s retrenchment program was valid.63 Subsequently, the
petitioners in Beraya elevated the case via petition for certiorari to the CA64 which was,
however, denied in a Decision dated November 28, 2006.65 They appealed the said
ruling to the Court66 which was equally denied through the Resolutions dated April 24,
200867 and August 4, 2008.68 The fact that the validity of the same Pepsi retrenchment
program had already been passed upon and thereafter sustained in a related case, albeit
involving different parties, behooves the Court to accord a similar disposition and thus,
finally uphold the legality of the said program altogether.
C. Union Busting and ULP
Under Article 276(c) of the Labor Code, there is union busting when the existence of the
union is threatened by the employer’s act of dismissing the former’s officers who have
been duly-elected in accordance with its constitution and by-laws.69
On the other hand, the term unfair labor practice refers to that gamut of offenses defined
in the Labor Code70 which, at their core, violates the constitutional right of workers and
employees to self-organization,71 with the sole exception of Article 257(f) (previously
Article 248[f]).72 As explained in the case of Philcom Employees Union v. Philippine
Global Communications:73
Unfair labor practice refers to acts that violate the workers' right to organize. The
prohibited acts are related to the workers' right to selforganization and to the observance
of a CBA. Without that element, the acts, no matter how unfair, are not unfair labor
practices. The only exception is Article 248(f) [now Article 257(f)]. (Emphasis and
underscoring supplied)
Mindful of their nature, the Court finds it difficult to attribute any act of union busting or
ULP on the part of Pepsi considering that it retrenched its employees in good faith. As
earlier discussed, Pepsi tried to sit-down with its employees to arrive at mutually
beneficial criteria which would have been adopted for their intended retrenchment. In the
same vein, Pepsi’s cooperation during the NCMB-supervised conciliation conferences
can also be gleaned from the records. Furthermore, the fact that Pepsi’s rightsizing
program was implemented on a company-wide basis dilutes respondents’ claim that
Pepsi’s retrenchment scheme was calculated to stymie its union activities, much less
diminish its constituency. Therefore, absent any perceived threat to LEPCEU-ALU’s
existence or a violation of respondents’ right to self-organization – as demonstrated by
the foregoing actuations –Pepsi cannot be said to have committed union busting or ULP
in this case.
D. Execution of Quitclaims
A waiver or quitclaim is a valid and binding agreement between the parties, provided that
it constitutes a credible and reasonable settlement and the one accomplishing it has
done so voluntarily and with a full understanding of its import.74 The applicable provision
is Article 232 of the Labor Code which reads in part:
ART. 232. Compromise Agreements. — Any compromise settlement, including those
involving labor standard laws, voluntarily agreed upon by the parties with the assistance
of the Bureau or the regional office of the Department of Labor, shall be final and
binding upon the parties. x x x (Emphasis and underscoring supplied)
In Olaybar v. National Labor Relations Commission,75 the Court, recognizing the
conclusiveness of compromise settlements as a means to end labor disputes, held that
Article 2037 of the Civil Code, which provides that "[a] compromise has upon the parties
the effect and authority of res judicata," applies suppletorily to labor cases even if the
compromise is not judicially approved.76
In the present case, Pepsi claims that respondents have long been precluded from filing
cases before the NLRC to assail their retrenchment due to their execution of the
September 1999 quitclaims. In this regard, Pepsi advances the position that all issues
arising from the foregoing must now be considered as conclusively settled by the parties.
The Court is unconvinced.
As correctly observed by the CA, the September 1999 quitclaims must be read in
conjunction with the September 17, 1999 Agreement, to wit:
2. Both parties agree that the release of these benefits is without prejudice to the filing
of the case by the Union with the National Labor Relations Commission;
3. The Union undertakes to sign the Quitclaim but subject to the 2nd paragraph of
this Agreement. x x x (Emphasis and underscoring supplied)77
The language of the September 17, 1999 Agreement is straightforward. The use of the
term "subject" in the 3rd clause of the said agreement clearly means that the signing of
the quitclaim documents was without prejudice to the filing of a case with the NLRC.
Hence, when respondents signed the September 1999 quitclaims, they did so with the
reasonable impression that that they were not precluded from instituting a subsequent
action with the NLRC. Accordingly, it cannot be said that the signing of the September
1999 quitclaims was tantamount to a full and final settlement between Pepsi and
respondents.
E. Dismissal of Remandaban
An illegally dismissed employee is entitled to either reinstatement, if viable, or separation
pay if reinstatement is no longer viable, and backwages.78 In certain cases, however, the
Court has ordered the reinstatement of the employee without backwages considering the
fact that (1) the dismissal of the employee would be too harsh a penalty; and (2) the
employer was in good faith in terminating the employee. For instance, in the case of Cruz
v. Minister of Labor and Employment79 the Court ruled as follows:
The Court is convinced that petitioner's guilt was substantially
established.1âwphi1 Nevertheless, we agree with respondent Minister's order of
reinstating petitioner without backwages instead of dismissal which may be too
drastic. Denial of backwages would sufficiently penalize her for her infractions.
The bank officials acted in good faith. They should be exempt from the burden of paying
backwages. The good faith of the employer, when clear under the circumstances,
may preclude or diminish recovery of backwages. Only employees discriminately
dismissed are entitled to backpay. x x x (Emphasis and underscoring supplied)
Likewise, in the case of Itogon-Suyoc Mines, Inc. v. National Labor Relations
Commission,80 the Court pronounced that "the ends of social and compassionate justice
would therefore be served if private respondent is reinstated but without backwages in
view of petitioner's good faith." The factual similarity of these cases to Remandaban’s
situation deems it appropriate to render the same disposition.
As may be gathered from the September 11, 2002 NLRC Decision, while Remandaban
was remiss in properly informing Pepsi of his intended absence, the NLRC ruled that the
penalty of dismissal would have been too harsh for his infractions considering that his
failure to report to work was clearly prompted by a medical emergency and not by any
intention to defy the July 27, 1999 return-to-work order.81 On the other hand, Pepsi's
good faith is supported by the NLRC's finding that "the return-to-work-order of the
Secretary was taken lightly by .Remandaban."82 In this regard, considering Remandaban
's ostensible dereliction of the said order, Pepsi could not be blamed for sending him a
notice of termination and eventually proceeding to dismiss him. At any rate, it must be
hoted that while Pepsi impleaded Remandaban as party to the case, it failed to challenge
the NLRC ruling ordering his reinstateme:ot to his former position without backwages. As
such, the foregoing issue is now settled with finality.
All told, the NLRC's directive to reinstate Remandaban without backwages is upheld.
WHEREFORE, the petition is GRANTED. The assailed March 31, 2006 Decision and
September 18, 2006 Resolution of the Court of Appeals in CA-G.R. S.P. No. 82354 are
hereby REVERSED and SET ASIDE. Accordingly, the September 11, 2002 Decision of
the National Labor Relations Commission is hereby REINSTATED insofar as (1) it
dismissed subsumed cases NLRC-RAB VIII Case Nos. 9-0432-99 to 9-0458-99 and; (2)
ordered the reinstatement of respondent Saunder Santiago Remandaban III without loss
of seniority rights but without backwages in NLRC-RAB VIII Case No. 9-0459-99.
SO ORDERED.
FIRST DIVISION
March 11, 2015
G.R. No. 212054
ST. LUKE'S MEDICAL CENTER, INC., Petitioner,
vs.
MARIA THERESA V. SANCHEZ, Respondent.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the Decision2 dated November 21,
2013 and the Resolution3 dated April 4, 2014 of the Court of Appeals (CA) in CA-G.R.
SP No. 129108 which affirmed the Decision4 dated November 19, 2012 and the
Resolution5 dated January 14, 2013 of the National Labor Relations Commission (NLRC)
in NLRC LAC No. 06-001858-12, declaring the dismissal of respondent Maria Theresa V.
Sanchez (Sanchez) illegal.
The Facts
On June 29, 2009, Sanchez was hired by petitioner St. Luke's Medical Center, Inc.
(SLMC) as a Staff Nurse, and was eventually assigned at SLMC, Quezon City's Pediatric
Unit until her termination on July 6, 2011 for her purported violation of SLMC's Code of
Discipline, particularly Section 1, Rule 1 on Acts of Dishonesty, i.e., Robbery, Theft,
Pilferage, and Misappropriation of Funds.6
Records reveal that at the end of her shift on May 29, 2011, Sanchez passed through the
SLMC Centralization Entrance/Exit where she was subjected to the standard inspection
procedure by the security personnel. In the course thereof, the Security Guard on-duty,
Jaime Manzanade (SG Manzanade), noticed a pouch in her bag and asked her to open
the same.7 When opened, said pouch contained the following assortment of medical
stocks which were subsequently confiscated: (a) Syringe 10cl [4 pieces]; (b) Syringe 5cl
[3 pieces]; (c) Syringe 3cl [3 pieces]; (d) Micropore [1 piece]; (e) Cotton Balls [1 pack]; (f)
Neoflon g26 [1 piece]; (g) Venofix 25 [2 pieces]; and (h) Gloves [4 pieces] (questioned
items).8 Sanchez asked SG Manzanade if she could just return the pouch inside the
treatment room; however, she was not allowed to do so.9 Instead, she was brought to the
SLMC In-House Security Department (IHSD) where she was directed to write an Incident
Report explaining why she had the questioned items in her possession.10 She
complied11 with the directive and also submitted an undated handwritten letter of
apology12 (handwritten letter) which reads as follows:
To In-House Security,
I am very sorry for bringing things from [SLMC] inside my bag.
Pasensya na po. Taos-puso po akong humihingi ng tawad sa aking pagkakasala, Alam
ko po na ako ay nagkamali. Hindi ko po dapat dinala yung mga gamit sa hospital. Hindi
ko po alam kung [paano] ako magsisimulang humingi ng patawad. Kahit alam kong
bawal ay nagawa kong makapag uwi ng gamit. Marami pang gamit dahil sa naipon po.
Paisa-isa nagagawa kong makakuha pag nakakalimutan kong isoli. Hindi ko na po
naiwan sa nurse station dahil naisip kong magagamit ko rin po pag minsang
nagkakaubusan ng stocks at talagang may kailangan.
Humihingi po ako ng tawad sa aking ginawa. Isinakripisyo ko ang hindi pagiging "toxic"
sa pagkuha ng gamit para sa bagay na alam kong mali. Inaamin ko na ako'y naging
madamot, pasuway at makasalanan. Inuna ko ang comfort ko keysa gumawa ng tama.
Manikluhod po akong humihingi ng tawad.
Sorry po. Sorry po. Sorry po talaga.13
In a memorandum14 of even date, the IHSD, Customer Affairs Division, through Duty
Officer Hernani R. Janayon, apprised SLMC of the incident, highlighting that Sanchez
expressly admitted that she intentionally brought out the questioned items.1awp++i1
An initial investigation was also conducted by the SLMC Division of Nursing15 which
thereafter served Sanchez a notice to explain.16
On May 31, 2011, Sanchez submitted an Incident Report Addendum17 (May 31, 2011
letter), explaining that the questioned items came from the medication drawers of
patients who had already been discharged, and, as similarly practiced by the other staff
members, she started saving these items as excess stocks in her pouch, along with
other basic items that she uses during her shift.18 She then put the pouch inside the
lowest drawer of the bedside table in the treatment room for use in immediate
procedures in case replenishment of stocks gets delayed. However, on the day of the
incident, she failed to return the pouch inside the medication drawer upon getting her tri-
colored pen and calculator and, instead, placed it inside her bag. Eventually, she forgot
about the same as she got caught up in work, until it was noticed by the guard on duty on
her way out of SMLC's premises.
Consequently, Sanchez was placed under preventive suspension effective June 3, 2011
until the conclusion of the investigation by SLMC's Employee and Labor Relations
Department (ELRD)19 which, thereafter, required her to explain why she should not be
terminated from service for "acts of dishonesty" due to her possession of the questioned
items in violation of Section 1, Rule I of the SLMC Code of Discipline. 20 In response, she
submitted a letter21 dated June 13, 2011, which merely reiterated her claims in her
previous May 31, 2011 letter. She likewise requested for a case conference,22 which
SLMC granted.23 After hearing her side, SLMC, on July 4, 2011, informed Sanchez of its
decision to terminate her employment effective closing hours of July 6, 2011.24 This
prompted her to file a complaint for illegal dismissal before the NLRC, docketed as NLRC
NCR Case No. 07-11042-11.
In her position paper,25 Sanchez maintained her innocence, claiming that she had no
intention of bringing outside the SLMC's premises the questioned items since she merely
inadvertently left the pouch containing them in her bag as she got caught up in work that
day. She further asserted that she could not be found guilty of pilferage since the
questioned items found in her possession were neither SLMC's nor its employees'
property. She also stressed the fact that SLMC did not file any criminal charges against
her. Anent her supposed admission in her handwritten letter, she claimed that she was
unassisted by counsel when she executed the same and, thus, was inadmissible for
being unconstitutional.26
For its part,27 SLMC contended that Sanchez was validly dismissed for just cause as she
had committed theft in violation of Section 1,28 Rule I of the SLMC Code of
Discipline,29 which punishes acts of dishonesty, i.e., robbery, theft, pilferage, and
misappropriation of funds, with termination from service.
The LA Ruling
In a Decision30 dated May 27, 2012, the Labor Arbiter (LA) ruled that Sanchez was
validly dismissed31 for intentionally taking the property of SLMC's clients for her own
personal benefit,32 which constitutes an act of dishonesty as provided under SLMC's
Code of Discipline.
According to the LA, Sanchez's act of theft was evinced by her attempt to bring the
questioned items that did not belong to her out of SLMC's premises; this was found to be
analogous to serious misconduct which is a just cause to dismiss her.33 The fact that the
items she took were neither SLMC's nor her co-employees' property was not found by
the LA to be material since the SLMC Code of Discipline clearly provides that acts of
dishonesty committed to SLMC, its doctors, its employees, as well as its customers, are
punishable by a penalty of termination from service.34 To this, the LA opined that "[i]t is
rather illogical to distinguish the persons with whom the [said] acts may be committed as
SLMC is also answerable to the properties of its patients."35 Moreover, the LA observed
that Sanchez was aware of SLMC's strict policy regarding the taking of hospital/medical
items as evidenced by her handwritten letter,36 but nonetheless committed the said
misconduct. Finally, the LA pointed out that SLMC's non-filing of a criminal case against
Sanchez did not preclude a determination of her serious misconduct, considering that the
filing of a criminal case is entirely separate and distinct from the determination of just
cause for termination of employment.37
Aggrieved, Sanchez appealed38 to the NLRC.
The NLRC Ruling
In a Decision39 dated November 19, 2012, the NLRC reversed and set aside the LA
ruling, and held that Sanchez was illegally dismissed.
The NLRC declared that the alleged violation of Sanchez was a unique case, considering
that keeping excess hospital stocks or "hoarding" was an admitted practice amongst
nurses in the Pediatric Unit which had been tolerated by SLMC management for a long
time.40 The NLRC held that while Sanchez expressed remorse for her misconduct in her
handwritten letter, she manifested that she only "hoarded" the questioned items for future
use in case their medical supplies are depleted, and not for her personal benefit.41 It
further held that SLMC failed to establish that Sanchez was motivated by ill-will when she
brought out the questioned items, noting: (a) the testimony of SG Manzanade during the
conference before the ELRD of Sanchez's demeanor when she was apprehended, i.e.,
"[d]i naman siya masyado nataranta,"42 and her consequent offer to return the
pouch;43 and (b) that the said pouch was not hidden underneath the bag.44 Finally, the
NLRC concluded that the punishment of dismissal was too harsh and the one
(1) month preventive suspension already imposed on and served by Sanchez
was the appropriate penalty.45 Accordingly, the NLRC ordered her reinstatement,
and the payment of backwages, other benefits, and attorney's fees.46
Unconvinced, SLMC moved for reconsideration47 which was, however, denied in a
Resolution48 dated January 14, 2013. Thus, it filed a petition for certiorari49 before the
CA.
The CA Ruling
In a Decision50 dated November 21, 2013, the CA upheld the NLRC, ruling that the latter
did not gravely abuse its discretion in finding that Sanchez was illegally dismissed.
It ruled that Sanchez's offense did not qualify as serious misconduct, given that: (a) the
questioned items found in her possession were not SLMC property since said items were
paid for by discharged patients, thus discounting any material or economic damage on
SLMC's part; (b) the retention of excess medical supplies was an admitted practice
amongst nurses in the Pediatric Unit which was tolerated by SLMC; (c) it was illogical for
Sanchez to leave the pouch in her bag since she would be subjected to a routine
inspection; (d) Sanchez's lack of intention to bring out the pouch was manifested by her
composed demeanor upon apprehension and offer to return the pouch to the treatment
room; and (e) had SLMC honestly believed that Sanchez committed theft or pilferage, it
should have filed the appropriate criminal case, but failed to do so.51 Moreover, while the
CA recognized that SLMC had the management prerogative to discipline its erring
employees, it, however, declared that such right must be exercised humanely. As such,
SLMC should only impose penalties commensurate with the degree of infraction.
Considering that there was no indication that Sanchez's actions were perpetrated for
self-interest or for an unlawful objective, the penalty of dismissal imposed on her was
grossly oppressive and disproportionate to her offense.52
Dissatisfied, SLMC sought for reconsideration,53 but was denied in a Resolution54 dated
April 4, 2014, hence, this petition.
The Issue Before the Court
The core issue to be resolved is whether or not Sanchez was illegally dismissed by
SLMC.
The Court's Ruling
The petition is meritorious.
The right of an employer to regulate all aspects of employment, aptly called
"management prerogative," gives employers the freedom to regulate, according to their
discretion and best judgment, all aspects of employment, including work assignment,
working methods, processes to be followed, working regulations, transfer of employees,
work supervision, lay-off of workers and the discipline, dismissal and recall of
workers.55 In this light, courts often decline to interfere in legitimate business decisions of
employers. In fact, labor laws discourage interference in employers' judgment concerning
the conduct of their business.56
Among the employer's management prerogatives is the right to prescribe reasonable
rules and regulations necessary or proper for the conduct of its business or concern, to
provide certain disciplinary measures to implement said rules and to assure that the
same would be complied with. At the same time, the employee has the corollary duty to
obey all reasonable rules, orders, and instructions of the employer; and willful or
intentional disobedience thereto, as a general rule, justifies termination of the contract of
service and the dismissal of the employee.57 Article 296 (formerly Article 282) of the
Labor Code provides:58
Article 296. Termination by Employer. - An employer may terminate an employment for
any of the following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his
employer or his representative in connection with his work;
xxxx
Note that for an employee to be validly dismissed on this ground, the employer's orders,
regulations, or instructions must be: (1) reasonable and lawful, (2) sufficiently known to
the employee, and (3) in connection with the duties which the employee has been
engaged to discharge."59
Tested against the foregoing, the Court finds that Sanchez was validly dismissed by
SLMC for her willful disregard and disobedience of Section 1, Rule I of the SLMC Code
of Discipline, which reasonably punishes acts of dishonesty, i.e., "theft, pilferage of
hospital or co-employee property, x x x or its attempt in any form or manner from the
hospital, co-employees, doctors, visitors, [and] customers (external and internal)" with
termination from employment.60 Such act is obviously connected with Sanchez's work,
who, as a staff nurse, is tasked with the proper stewardship of medical supplies.
Significantly, records show that Sanchez made a categorical admission61 in her
handwritten letter62 - i.e., "[k]ahit alam kong bawal ay nagawa kong [makapag-uwi] ng
gamit"63 - that despite her knowledge of its express prohibition under the SLMC Code of
Discipline, she still knowingly brought out the subject medical items with her. It is apt to
clarify that SLMC cannot be faulted in construing the taking of the questioned items as
an act of dishonesty (particularly, as theft, pilferage, or its attempt in any form or manner)
considering that the intent to gain may be reasonably presumed from the furtive taking of
useful property appertaining to another.64 Note that Section 1, Rule 1 of the SLMC Code
of Discipline is further supplemented by the company policy requiring the turn-over of
excess medical supplies/items for proper handling65 and providing a restriction on taking
and bringing such items out of the SLMC premises without the proper authorization or
"pass" from the official concerned,66 which Sanchez was equally aware
thereof.67 Nevertheless, Sanchez failed to turn-over the questioned items and, instead,
"hoarded" them, as purportedly practiced by the other staff members in the Pediatric
Unit. As it is clear that the company policies subject of this case are reasonable and
lawful, sufficiently known to the employee, and evidently connected with the latter's work,
the Court concludes that SLMC dismissed Sanchez for a just cause.
On a related point, the Court observes that there lies no competent basis to support the
common observation of the NLRC and the CA that the retention of excess medical
supplies was a tolerated practice among the nurses at the Pediatric Unit. While there
were previous incidents of "hoarding," it appears that such acts were - in similar fashion -
furtively made and the items secretly kept, as any excess items found in the concerned
nurse's possession would have to be confiscated.68 Hence, the fact that no one was
caught and/or sanctioned for transgressing the prohibition therefor does not mean that
the so-called "hoarding" practice was tolerated by SLMC. Besides, whatever maybe the
justification behind the violation of the company rules regarding excess medical supplies
is immaterial since it has been established that an infraction was deliberately
committed.69 Doubtless, the deliberate disregard or disobedience of rules by the
employee cannot be countenanced as it may encourage him or her to do even worse
and will render a mockery of the rules of discipline that employees are required to
observe.70

Finally, the Court finds it inconsequential that SLMC has not suffered any actual damage.
While damage aggravates the charge, its absence does not mitigate nor negate the
employee's liability.71 Neither is SLMC's non- filing of the appropriate criminal charges
relevant to this analysis. An employee's guilt or innocence in a criminal case is not
determinative of the existence of a just or authorized cause for his or her dismissal.72 It is
well- settled that conviction in a criminal case is not necessary to find just cause for
termination of employment,73 as in this case. Criminal and labor cases involving an
employee arising from the same infraction are separate and distinct proceedings which
should not arrest any judgment from one to the other.

As it stands, the Court thus holds that the dismissal of Sanchez was for a just cause,
supported by substantial evidence, and is therefore in order. By declaring otherwise,
bereft of any substantial bases, the NLRC issued a patently and grossly erroneous ruling
tantamount to grave abuse of discretion, which, in turn, means that the CA erred when it
affirmed the same. In consequence, the grant of the present petition is warranted.

WHEREFORE, the petition is GRANTED. The Decision dated November 21, 2013 and
the Resolution dated April 4, 2014 of the Court of Appeals in CA-G.R. SP No. 129108
are REVERSED and SET ASIDE. The Labor Arbiter's Decision dated May 27, 2012 in
NLRC Case No. NCR 07-11042-11 finding respondent Maria Theresa V. Sanchez to
have been validly dismissed by petitioner St. Luke's Medical Center, Inc. is hereby
REINSTATED.

SO ORDERED.

ESTELA M. PERLAS-BERNABE
Associate Justice
FIRST DIVISION
March 11, 2015
G.R. No. 212054
ST. LUKE'S MEDICAL CENTER, INC., Petitioner,
vs.
MARIA THERESA V. SANCHEZ, Respondent.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the Decision2 dated November 21,
2013 and the Resolution3 dated April 4, 2014 of the Court of Appeals (CA) in CA-G.R.
SP No. 129108 which affirmed the Decision4 dated November 19, 2012 and the
Resolution5 dated January 14, 2013 of the National Labor Relations Commission (NLRC)
in NLRC LAC No. 06-001858-12, declaring the dismissal of respondent Maria Theresa V.
Sanchez (Sanchez) illegal.
The Facts
On June 29, 2009, Sanchez was hired by petitioner St. Luke's Medical Center, Inc.
(SLMC) as a Staff Nurse, and was eventually assigned at SLMC, Quezon City's Pediatric
Unit until her termination on July 6, 2011 for her purported violation of SLMC's Code of
Discipline, particularly Section 1, Rule 1 on Acts of Dishonesty, i.e., Robbery, Theft,
Pilferage, and Misappropriation of Funds.6
Records reveal that at the end of her shift on May 29, 2011, Sanchez passed through the
SLMC Centralization Entrance/Exit where she was subjected to the standard inspection
procedure by the security personnel. In the course thereof, the Security Guard on-duty,
Jaime Manzanade (SG Manzanade), noticed a pouch in her bag and asked her to open
the same.7 When opened, said pouch contained the following assortment of medical
stocks which were subsequently confiscated: (a) Syringe 10cl [4 pieces]; (b) Syringe 5cl
[3 pieces]; (c) Syringe 3cl [3 pieces]; (d) Micropore [1 piece]; (e) Cotton Balls [1 pack]; (f)
Neoflon g26 [1 piece]; (g) Venofix 25 [2 pieces]; and (h) Gloves [4 pieces] (questioned
items).8 Sanchez asked SG Manzanade if she could just return the pouch inside the
treatment room; however, she was not allowed to do so.9 Instead, she was brought to the
SLMC In-House Security Department (IHSD) where she was directed to write an Incident
Report explaining why she had the questioned items in her possession.10 She
complied11 with the directive and also submitted an undated handwritten letter of
apology12 (handwritten letter) which reads as follows:
To In-House Security,
I am very sorry for bringing things from [SLMC] inside my bag.
Pasensya na po. Taos-puso po akong humihingi ng tawad sa aking pagkakasala, Alam
ko po na ako ay nagkamali. Hindi ko po dapat dinala yung mga gamit sa hospital. Hindi
ko po alam kung [paano] ako magsisimulang humingi ng patawad. Kahit alam kong
bawal ay nagawa kong makapag uwi ng gamit. Marami pang gamit dahil sa naipon po.
Paisa-isa nagagawa kong makakuha pag nakakalimutan kong isoli. Hindi ko na po
naiwan sa nurse station dahil naisip kong magagamit ko rin po pag minsang
nagkakaubusan ng stocks at talagang may kailangan.
Humihingi po ako ng tawad sa aking ginawa. Isinakripisyo ko ang hindi pagiging "toxic"
sa pagkuha ng gamit para sa bagay na alam kong mali. Inaamin ko na ako'y naging
madamot, pasuway at makasalanan. Inuna ko ang comfort ko keysa gumawa ng tama.
Manikluhod po akong humihingi ng tawad.
Sorry po. Sorry po. Sorry po talaga.13
In a memorandum14 of even date, the IHSD, Customer Affairs Division, through Duty
Officer Hernani R. Janayon, apprised SLMC of the incident, highlighting that Sanchez
expressly admitted that she intentionally brought out the questioned items.1awp++i1
An initial investigation was also conducted by the SLMC Division of Nursing15 which
thereafter served Sanchez a notice to explain.16
On May 31, 2011, Sanchez submitted an Incident Report Addendum17 (May 31, 2011
letter), explaining that the questioned items came from the medication drawers of
patients who had already been discharged, and, as similarly practiced by the other staff
members, she started saving these items as excess stocks in her pouch, along with
other basic items that she uses during her shift.18 She then put the pouch inside the
lowest drawer of the bedside table in the treatment room for use in immediate
procedures in case replenishment of stocks gets delayed. However, on the day of the
incident, she failed to return the pouch inside the medication drawer upon getting her tri-
colored pen and calculator and, instead, placed it inside her bag. Eventually, she forgot
about the same as she got caught up in work, until it was noticed by the guard on duty on
her way out of SMLC's premises.
Consequently, Sanchez was placed under preventive suspension effective June 3, 2011
until the conclusion of the investigation by SLMC's Employee and Labor Relations
Department (ELRD)19 which, thereafter, required her to explain why she should not be
terminated from service for "acts of dishonesty" due to her possession of the questioned
items in violation of Section 1, Rule I of the SLMC Code of Discipline. 20 In response, she
submitted a letter21 dated June 13, 2011, which merely reiterated her claims in her
previous May 31, 2011 letter. She likewise requested for a case conference,22 which
SLMC granted.23 After hearing her side, SLMC, on July 4, 2011, informed Sanchez of its
decision to terminate her employment effective closing hours of July 6, 2011.24 This
prompted her to file a complaint for illegal dismissal before the NLRC, docketed as NLRC
NCR Case No. 07-11042-11.
In her position paper,25 Sanchez maintained her innocence, claiming that she had no
intention of bringing outside the SLMC's premises the questioned items since she merely
inadvertently left the pouch containing them in her bag as she got caught up in work that
day. She further asserted that she could not be found guilty of pilferage since the
questioned items found in her possession were neither SLMC's nor its employees'
property. She also stressed the fact that SLMC did not file any criminal charges against
her. Anent her supposed admission in her handwritten letter, she claimed that she was
unassisted by counsel when she executed the same and, thus, was inadmissible for
being unconstitutional.26
For its part,27 SLMC contended that Sanchez was validly dismissed for just cause as she
had committed theft in violation of Section 1,28 Rule I of the SLMC Code of
Discipline,29 which punishes acts of dishonesty, i.e., robbery, theft, pilferage, and
misappropriation of funds, with termination from service.
The LA Ruling
In a Decision30 dated May 27, 2012, the Labor Arbiter (LA) ruled that Sanchez was
validly dismissed31 for intentionally taking the property of SLMC's clients for her own
personal benefit,32 which constitutes an act of dishonesty as provided under SLMC's
Code of Discipline.
According to the LA, Sanchez's act of theft was evinced by her attempt to bring the
questioned items that did not belong to her out of SLMC's premises; this was found to be
analogous to serious misconduct which is a just cause to dismiss her.33 The fact that the
items she took were neither SLMC's nor her co-employees' property was not found by
the LA to be material since the SLMC Code of Discipline clearly provides that acts of
dishonesty committed to SLMC, its doctors, its employees, as well as its customers, are
punishable by a penalty of termination from service.34 To this, the LA opined that "[i]t is
rather illogical to distinguish the persons with whom the [said] acts may be committed as
SLMC is also answerable to the properties of its patients."35 Moreover, the LA observed
that Sanchez was aware of SLMC's strict policy regarding the taking of hospital/medical
items as evidenced by her handwritten letter,36 but nonetheless committed the said
misconduct. Finally, the LA pointed out that SLMC's non-filing of a criminal case against
Sanchez did not preclude a determination of her serious misconduct, considering that the
filing of a criminal case is entirely separate and distinct from the determination of just
cause for termination of employment.37
Aggrieved, Sanchez appealed38 to the NLRC.
The NLRC Ruling
In a Decision39 dated November 19, 2012, the NLRC reversed and set aside the LA
ruling, and held that Sanchez was illegally dismissed.
The NLRC declared that the alleged violation of Sanchez was a unique case, considering
that keeping excess hospital stocks or "hoarding" was an admitted practice amongst
nurses in the Pediatric Unit which had been tolerated by SLMC management for a long
time.40 The NLRC held that while Sanchez expressed remorse for her misconduct in her
handwritten letter, she manifested that she only "hoarded" the questioned items for future
use in case their medical supplies are depleted, and not for her personal benefit.41 It
further held that SLMC failed to establish that Sanchez was motivated by ill-will when she
brought out the questioned items, noting: (a) the testimony of SG Manzanade during the
conference before the ELRD of Sanchez's demeanor when she was apprehended, i.e.,
"[d]i naman siya masyado nataranta,"42 and her consequent offer to return the
pouch;43 and (b) that the said pouch was not hidden underneath the bag.44 Finally, the
NLRC concluded that the punishment of dismissal was too harsh and the one
(1) month preventive suspension already imposed on and served by Sanchez
was the appropriate penalty.45 Accordingly, the NLRC ordered her reinstatement,
and the payment of backwages, other benefits, and attorney's fees.46
Unconvinced, SLMC moved for reconsideration47 which was, however, denied in a
Resolution48 dated January 14, 2013. Thus, it filed a petition for certiorari49 before the
CA.
The CA Ruling
In a Decision50 dated November 21, 2013, the CA upheld the NLRC, ruling that the latter
did not gravely abuse its discretion in finding that Sanchez was illegally dismissed.
It ruled that Sanchez's offense did not qualify as serious misconduct, given that: (a) the
questioned items found in her possession were not SLMC property since said items were
paid for by discharged patients, thus discounting any material or economic damage on
SLMC's part; (b) the retention of excess medical supplies was an admitted practice
amongst nurses in the Pediatric Unit which was tolerated by SLMC; (c) it was illogical for
Sanchez to leave the pouch in her bag since she would be subjected to a routine
inspection; (d) Sanchez's lack of intention to bring out the pouch was manifested by her
composed demeanor upon apprehension and offer to return the pouch to the treatment
room; and (e) had SLMC honestly believed that Sanchez committed theft or pilferage, it
should have filed the appropriate criminal case, but failed to do so.51 Moreover, while the
CA recognized that SLMC had the management prerogative to discipline its erring
employees, it, however, declared that such right must be exercised humanely. As such,
SLMC should only impose penalties commensurate with the degree of infraction.
Considering that there was no indication that Sanchez's actions were perpetrated for
self-interest or for an unlawful objective, the penalty of dismissal imposed on her was
grossly oppressive and disproportionate to her offense.52
Dissatisfied, SLMC sought for reconsideration,53 but was denied in a Resolution54 dated
April 4, 2014, hence, this petition.
The Issue Before the Court
The core issue to be resolved is whether or not Sanchez was illegally dismissed by
SLMC.
The Court's Ruling
The petition is meritorious.
The right of an employer to regulate all aspects of employment, aptly called
"management prerogative," gives employers the freedom to regulate, according to their
discretion and best judgment, all aspects of employment, including work assignment,
working methods, processes to be followed, working regulations, transfer of employees,
work supervision, lay-off of workers and the discipline, dismissal and recall of
workers.55 In this light, courts often decline to interfere in legitimate business decisions of
employers. In fact, labor laws discourage interference in employers' judgment concerning
the conduct of their business.56
Among the employer's management prerogatives is the right to prescribe reasonable
rules and regulations necessary or proper for the conduct of its business or concern, to
provide certain disciplinary measures to implement said rules and to assure that the
same would be complied with. At the same time, the employee has the corollary duty to
obey all reasonable rules, orders, and instructions of the employer; and willful or
intentional disobedience thereto, as a general rule, justifies termination of the contract of
service and the dismissal of the employee.57 Article 296 (formerly Article 282) of the
Labor Code provides:58
Article 296. Termination by Employer. - An employer may terminate an employment for
any of the following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his
employer or his representative in connection with his work;
xxxx
Note that for an employee to be validly dismissed on this ground, the employer's orders,
regulations, or instructions must be: (1) reasonable and lawful, (2) sufficiently known to
the employee, and (3) in connection with the duties which the employee has been
engaged to discharge."59
Tested against the foregoing, the Court finds that Sanchez was validly dismissed by
SLMC for her willful disregard and disobedience of Section 1, Rule I of the SLMC Code
of Discipline, which reasonably punishes acts of dishonesty, i.e., "theft, pilferage of
hospital or co-employee property, x x x or its attempt in any form or manner from the
hospital, co-employees, doctors, visitors, [and] customers (external and internal)" with
termination from employment.60 Such act is obviously connected with Sanchez's work,
who, as a staff nurse, is tasked with the proper stewardship of medical supplies.
Significantly, records show that Sanchez made a categorical admission61 in her
handwritten letter62 - i.e., "[k]ahit alam kong bawal ay nagawa kong [makapag-uwi] ng
gamit"63 - that despite her knowledge of its express prohibition under the SLMC Code of
Discipline, she still knowingly brought out the subject medical items with her. It is apt to
clarify that SLMC cannot be faulted in construing the taking of the questioned items as
an act of dishonesty (particularly, as theft, pilferage, or its attempt in any form or manner)
considering that the intent to gain may be reasonably presumed from the furtive taking of
useful property appertaining to another.64 Note that Section 1, Rule 1 of the SLMC Code
of Discipline is further supplemented by the company policy requiring the turn-over of
excess medical supplies/items for proper handling65 and providing a restriction on taking
and bringing such items out of the SLMC premises without the proper authorization or
"pass" from the official concerned,66 which Sanchez was equally aware
thereof.67 Nevertheless, Sanchez failed to turn-over the questioned items and, instead,
"hoarded" them, as purportedly practiced by the other staff members in the Pediatric
Unit. As it is clear that the company policies subject of this case are reasonable and
lawful, sufficiently known to the employee, and evidently connected with the latter's work,
the Court concludes that SLMC dismissed Sanchez for a just cause.
On a related point, the Court observes that there lies no competent basis to support the
common observation of the NLRC and the CA that the retention of excess medical
supplies was a tolerated practice among the nurses at the Pediatric Unit. While there
were previous incidents of "hoarding," it appears that such acts were - in similar fashion -
furtively made and the items secretly kept, as any excess items found in the concerned
nurse's possession would have to be confiscated.68 Hence, the fact that no one was
caught and/or sanctioned for transgressing the prohibition therefor does not mean that
the so-called "hoarding" practice was tolerated by SLMC. Besides, whatever maybe the
justification behind the violation of the company rules regarding excess medical supplies
is immaterial since it has been established that an infraction was deliberately
committed.69 Doubtless, the deliberate disregard or disobedience of rules by the
employee cannot be countenanced as it may encourage him or her to do even worse
and will render a mockery of the rules of discipline that employees are required to
observe.70

Finally, the Court finds it inconsequential that SLMC has not suffered any actual damage.
While damage aggravates the charge, its absence does not mitigate nor negate the
employee's liability.71 Neither is SLMC's non- filing of the appropriate criminal charges
relevant to this analysis. An employee's guilt or innocence in a criminal case is not
determinative of the existence of a just or authorized cause for his or her dismissal.72 It is
well- settled that conviction in a criminal case is not necessary to find just cause for
termination of employment,73 as in this case. Criminal and labor cases involving an
employee arising from the same infraction are separate and distinct proceedings which
should not arrest any judgment from one to the other.

As it stands, the Court thus holds that the dismissal of Sanchez was for a just cause,
supported by substantial evidence, and is therefore in order. By declaring otherwise,
bereft of any substantial bases, the NLRC issued a patently and grossly erroneous ruling
tantamount to grave abuse of discretion, which, in turn, means that the CA erred when it
affirmed the same. In consequence, the grant of the present petition is warranted.

WHEREFORE, the petition is GRANTED. The Decision dated November 21, 2013 and
the Resolution dated April 4, 2014 of the Court of Appeals in CA-G.R. SP No. 129108
are REVERSED and SET ASIDE. The Labor Arbiter's Decision dated May 27, 2012 in
NLRC Case No. NCR 07-11042-11 finding respondent Maria Theresa V. Sanchez to
have been validly dismissed by petitioner St. Luke's Medical Center, Inc. is hereby
REINSTATED.

SO ORDERED.

ESTELA M. PERLAS-BERNABE
Associate Justice
G.R. No. 164860 February 2, 2010
HILTON HEAVY EQUIPMENT CORPORATION and PETER LIM, Petitioners,
vs.
ANANIAS P. DY, Respondent.
DECISION
CARPIO, J.:
The Case
This is a petition for review1 assailing the Decision2 promulgated on 30 May 2003 of the
Court of Appeals (appellate court) in CA-G.R. SP No. 72454 as well as the
Resolution3 promulgated on 6 August 2004. The appellate court partly granted the
petition filed by respondent Ananias P. Dy (Dy) and ruled that Dy was dismissed for just
cause but was not entitled to reinstatement and separation pay. The appellate court
ordered Hilton Heavy Equipment Corporation and its President, Peter Lim, (petitioners)
to pay Dy backwages from the time of Dy’s termination on 19 May 2000 up to the time of
the finality of the decision less the amount of ₱120,000 which Dy received as separation
pay.
The Facts
The appellate court narrated the facts as follows:
Ananias Dy (hereafter, "DY") was employed at Hilton Heavy Equipment Corporation
(hereafter, the "CORPORATION"). In the course of his employment, he was assigned as
the personal bodyguard of Peter Lim (hereafter, "LIM"), the President of the said
Corporation. On 19 April 2000, in the presence of the Corporation’s employees and Lim,
Dy mauled Duke Echiverri, a co-employee, within the premises of the principal office of
the Corporation. Dy defied orders of Lim to stop mauling Duke Echiverri. Dy also
threatened to kill the latter, and uttered that if he will be given monetary consideration, he
will cease working in the company. Geraldine Chan, Secretary of the Corporation,
executed an affidavit attesting to the fact of Dy’s utterance of his intention to resign from
his job. Thereafter, Dy stopped reporting to work. Subsequently, Duke Echiverri filed
criminal complaints against Dy for grave threats and less serious physical injuries and
the corresponding Informations were filed before the Municipal Trial Court in Cities,
Mandaue City. These cases were later dismissed upon motion filed by Duke Echiverri. A
month after the mauling incident, on 19 May 2000, Lim requested Dy to come to the
office where he was confronted by Lim and Wellington Lim, Lim’s brother. Thereat, Dy
was paid by Wellington Lim the amount of ₱120,000.00 as may be shown by Solidbank
Mandaue Branch Check No. CD 0590750 dated 19 May 2000 payable to cash, as
separation pay.4
On 19 June 2000, Dy filed a complaint before the National Labor Relations Commission
(NLRC) Regional Arbitration Branch VII in Cebu City against petitioners for illegal
dismissal and non-payment of labor standard benefits with claim for damages and
attorney’s fees. The case was docketed as NLRC RAB-VIII Case No. 06-1003-2000.
The Labor Arbiter’s Ruling
In his Decision dated 25 August 2000, Labor Arbiter Ernesto F. Carreon (Arbiter
Carreon) dismissed Dy’s complaint for illegal dismissal because Dy stopped working
when he was given separation pay of ₱120,000 Arbiter Carreon explained thus:
Complainant Dy was not terminated from the service. The record reveals that
complainant Dy mauled one Duke Echiverri even in the presence of respondent Lim who
was his superior. Complainant Dy apparently possesses violent character that even with
the pacification made by his superior he continued on delivering fistic blows to his victim
and even threatened him with death. At present complainant Dy is facing criminal
charges in the Municipal Trial Court of Mandaue City for his criminal acts. Complainant
Dy could have been validly dismissed for the said mauling incident because fighting in
the company premises and disorderly or violent behavior are just causes for termination
of employment. But complainant Dy instead opted to stop working when given separation
benefits in the amount of P120,000.00. In a nutshell we find that in case of complainant
Dy there is no dismissal let alone illegal dismissal to speak of.5
The Fourth Division of the NLRC affirmed the ruling of Arbiter Carreon. In its
Decision6 promulgated on 6 July 2001, the NLRC stated that:
Thus as correctly found by the Labor Arbiter, the mauling incident by itself was a valid
ground to terminate complainant’s services considering that the victim was a manager
and therefore a duly authorized representative of respondents. It does not matter later on
that the case was settled by the execution of an affidavit of desistance because
"conviction of an employee in a criminal case is not indispensable to warrant his
dismissal by his employer and that the fact that a criminal complaint against the
employee has been dropped by the City Fiscal is not binding and conclusive upon a
labor tribunal." (Starlite Plastic Industrial Corp. vs. NLRC, 171 SCRA 315)
Moreover, records reveal that after the mauling incident which occurred on a Holy
Wednesday, complainant did not report to the office anymore. But because he earlier
intimated that he was willing to accept a separation pay, he was called to the office last
May 19, 2000 and was given a check in the amount of One Hundred Twenty Thousand
(₱120,000.00) Pesos. This was testified to by Geraldine Chan, Secretary of respondent
Hilton Heavy Equipment Corporation who executed a sworn statement to that effect (pp. backwages. The appellate court subsequently denied the motion for reconsideration filed
39-40, Records). A copy of Solid Bank Check No. CD 059750 dated 19 May 2000 in the by petitioners in a Resolution promulgated on 6 August 2004.10
amount of One Hundred Twenty Thousand (₱120,000.00) somehow validated her
statement (p. 41, Records). Under these circumstances, We find that the Labor Arbiter The Issues
did not err in ruling that there was no illegal dismissal.7
Petitioners raise the following issues in their petition:
In its Resolution promulgated on 20 June 2002, the NLRC further stated:
1. The Honorable Court of Appeals committed a reversible error in finding that
Resignation is the voluntary act of an employee who finds himself in a situation where he [Dy] did not resign from his employment.
believes that personal reason cannot be sacrificed in favor of the exigency of the service,
then he has no other choice but to dissociate himself from his employment. Resignation 2. The Honorable Court of Appeals committed a reversible error in ordering the
may be express or implied. By Dy’s acceptance of the amount of ₱120,000.00 on 19 May petitioners to pay [Dy] his backwages from the time of his termination on May 19,
2000, he is deemed to have opted to terminate voluntarily his services with the 2000 up to the time that its Decision becomes final.11
respondent company.
The Ruling of the Court
Thus, complainant Ananias Dy was not illegally dismissed.8
The petition has partial merit. Although petitioners failed to show that the appellate court
Dy assailed the NLRC’s decision and resolution before the appellate court. Dy imputed arbitrarily made factual findings and disregarded the evidence on record, the amount of
grave abuse of discretion amounting to lack or excess of jurisdiction upon the NLRC for ₱120,000 paid by petitioners to Dy constitutes a sufficient award of nominal damages.
the following reasons:
The pertinent Articles of the Labor Code read as follows:
1. There is not a single substantial evidence to prove that petitioner [Dy] had
actually resigned from his employment with private respondents;
Art. 282. Termination by Employer. — An employer may terminate an employment for
any of the following causes:
2. There is likewise not a single evidence to prove that petitioner [Dy] had
actually received the so-called separation pay of ₱120,000.00;1avvphi1
(a) Serious misconduct or willful disobedience by the employee of the lawful
orders of his employer or representative in connection with his work;
3. As there is no substantial evidence to show petitioner [Dy] had resigned from
employment, public respondents therefore gravely abused their discretion in
(b) Gross and habitual neglect by the employee of his duties;
finding the contrary. Truth is, petitioner [Dy] was actually illegally dismissed from
employment as petitioner’s rights to substantive and procedural due process
were grossly violated.9 (c) Fraud or willful breach by the employee of the trust reposed in him by his
employer or duly authorized representative;
The Decision of the Appellate Court
(d) Commission of a crime or offense by the employee against the person of his
employer or any immediate member of his family or his duly authorized
The appellate court ruled that Dy did not voluntarily resign from his employment, but
representative; and
there was a valid cause for Dy’s termination from employment. Petitioners, however,
failed to observe due process in terminating Dy’s services. The appellate court decided
that Dy was dismissed for just cause but was not entitled to reinstatement. The appellate (e) Other causes analogous to the foregoing.
court awarded Dy full backwages, computed from the time he was terminated until finality
of the present Decision, but did not award separation pay. The amount of ₱120,000 Art. 285. Termination by Employee. — (a) An employee may terminate without just cause
given to Dy as supposed separation pay should be treated as partial payment of Dy’s the employee-employer relationship by serving a written notice on the employer at least
one (1) month in advance. The employer upon whom no such notice was served may
hold the employee liable for damages.
(b) An employee may put an end to the relationship without serving any notice on the
employer for any of the following just causes:
1. Serious insult by the employer or his representative on the honor and person
of the employee;
2. Inhuman and unbearable treatment accorded the employee by the employer or
his representative;
3. Commission of a crime or offense by the employer or his representative
against the person of the employee or any of the immediate members of his
family; and
4. Other causes analogous to any of the foregoing.
We will not disturb the finding that Dy was the perpetrator in a mauling incident, as well
as the ruling that Dy’s act is a just cause for termination. However, we also observe that
petitioners failed to accord Dy due process.
Petitioners assert that Dy intended to sever the employer-employee relationship by his
mere failure to return to work. One month after the mauling incident, petitioners
summoned Dy to give him a check worth ₱120,000 as separation pay. Dy, on the other
hand, never gave a resignation letter to petitioners but instead filed a complaint for illegal
dismissal against them.
Petitioners assert that Dy abandoned his work. To constitute abandonment, two
elements must concur: (1) the failure to report for work or absence without valid or
justifiable reason, and (2) a clear intention to sever the employer-employee relationship,
with the second element as the more determinative factor and being manifested by some
overt acts.12 In the present case, Dy reported for work after the mauling incident only on
19 May 2000, after petitioner Lim called him to the office. On the other hand, apart from
Dy’s absence, petitioners failed to show any evidence of Dy’s clear intent to sever his
ties with petitioners.
Dy, on the other hand, asserts that petitioners are guilty of illegal dismissal for failure to
observe due process. Dy’s serious misconduct merited a written notice of termination
from petitioners in accordance with Section 2, Rule XXIII, Book V of the Omnibus Rules
Implementing the Labor Code.
Section 2. Standards of due process; requirements of due notice. — In all cases of
termination of employment, the following standards of due process shall be substantially
observed:
I. For termination of employment based on just causes as defined in Article 282 of the
Code:
(a) A written notice served on the employee specifying the ground or grounds for
termination, and giving to said employee reasonable opportunity within which to
explain his side;
(b) A hearing or conference during which the employee concerned, with the
assistance of counsel if the employee so desires, is given opportunity to respond
to the charge, present his evidence or rebut the evidence presented against him;
and
(c) A written notice of termination served on the employee indicating that upon
due consideration of all the circumstances, grounds have been established to
justify his termination.
In case of termination, the foregoing notices shall be served on the employee’s last
known address.
Moreover, the immediate filing of a complaint for illegal dismissal against the employer
with a prayer for reinstatement shows that the employee was not abandoning his work.
In an unlawful dismissal case, the employer has the burden of proving the lawful cause
sustaining the dismissal of the employee. The employer must affirmatively show
rationally adequate evidence that the dismissal was for a justifiable cause.13 Dy’s
behavior constituted just cause. However, petitioners cannot deny that they failed to
observe due process. The law requires that the employer must furnish the worker sought
to be dismissed with two written notices before termination of employment can be legally
effected: (1) notice which apprises the employee of the particular acts or omissions for
which his dismissal is sought; and (2) the subsequent notice which informs the employee
of the employer’s decision to dismiss him. Failure to comply with the requirements taints
the dismissal with illegality.14
Petitioners should thus indemnify Dy for their failure to observe the requirements of due
process. Dy is not entitled to reinstatement, backwages and attorney’s fees because
Dy’s dismissal is for just cause but without due process.15 In light of this Court’s ruling
in Agabon v. National Labor Relations Commission,16 the violation of Dy’s right to
statutory due process by petitioners, even if the dismissal was for a just cause, warrants
the payment of indemnity in the form of nominal damages. This indemnity is intended not
to penalize the employer but to vindicate or recognize the employee’s right to statutory
due process which was violated by the employer.17 Considering that both the Labor
Arbiter and the NLRC found that petitioners already gave Dy ₱120,000 of their own free
will, this amount should thus constitute the nominal damages due to Dy.

WHEREFORE, we GRANT the petition. We AFFIRM with MODIFICATION the Decision

of the Court of Appeals promulgated on 30 May 2003 in CA-G.R. SP No. 72454 as well
as the Resolution promulgated on 6 August 2004. The amount of ₱120,000 previously
given by petitioners Hilton Heavy Equipment Corporation and Peter Lim to respondent
Ananias P. Dy constitutes the award of nominal damages. Although the amount of
₱120,000 exceeds the ₱30,000 normally given in similar cases, the excess paid by
Hilton Heavy Equipment Corporation and Peter Lim may be retained by Ananias P. Dy
as voluntary and discretionary gratuity.

SO ORDERED.
G.R. No. 214092
ECHO 2000 COMMERCIAL CORPORATION, EDWARD N. ENRIQUEZ, LEONORA K.
BENEDICTO and ATTY. GINA WENCESLAO, Petitioners,
vs.
OBRERO FILIPINO-ECHO 2000 CHAPTER-CLO, ARLO C. CORTES and DAVE
SOMIDO, Respondents.
DECISION
REYES, J.:
Before the Court is the petition for review on certiorari1 filed by Echo 2000 Commercial
Corporation (Echo) to assail the Decision2 rendered on September 24, 2013 and
Resolution3 issued on March 28, 2014 by the Court of Appeals (CA) in CA-G.R. SP No.
121393. The CA affirmed the Decision4 dated April 15, 2011 of the National Labor
Relations Commission's (NLRC) Fifth Division, which declared that Arlo C. Cortes
(Cortes) and Dave Somido (Somido) (respondents) were illegally dismissed from
employment by Echo. Edward N. Enriquez (Enriquez), Leonora K. Benedicto (Benedicto)
and Atty. Gina Wenceslao (Atty. Wenceslao) used to be Echo's General Manager,
Operations and Human Resources Officer, and External Counsel, respectively (Echo and
the three officers are to be referred collectively as the petitioners). The CA and NLRC's
rulings reversed the Decision5 of Labor Arbiter (LA) Renaldo O. Hernandez (Hernandez),
who found the respondents' termination from service as valid.
Antecedents
Echo is a provider of warehousing management and delivery services.
King 8 Commercial Corporation (King 8), Echo's predecessor, initially employed Cortes
on September 17, 2002, and Somido, on October 12, 2004. Echo thereafter absorbed
the respondents as employees on April 1, 2005. In 2008, Somido was made a
Warehouse Checker, while Cortes, a Forklift Operator.6
In January of 2009, the respondents and their co-workers formed Obrero Pilipino-Echo
2000 Commercial Chapter (Union). Cortes was elected as Vice-President while Somido
became an active member. The respondents claimed that the Union's President,
Secretary and one of the board members were subsequently harassed, discriminated
and eventually terminated from employment by Echo.7
In May of 2009, Echo received information about shortages in peso value arising from
the movement of products to and from its warehouse. After an immediate audit, Echo
suspected that there was a conspiracy among the employees in the warehouse. Since
an uninterrupted investigation was necessary, Echo, in the exercise of its management
prerogative, decided to re-assign the staff. The respondents were among those
affected.8
On July 7, 2009, Enriquez issued a memorandum informing the respondents of their
transfer to the Delivery Section, which was within the premises of Echo's warehouse.
The transfer would entail no change in ranks, status and salaries.9
On July 14, 2009, Somido wrote Echo a letter10 indicating his refusal to be promoted as a
"Delivery Supervisor." He explained that he was already happy as a Warehouse
Checker. Further, he was not ready to be a Delivery Supervisor since the position was
sensitive and required more expertise and training, which he did not have.
Cortes similarly declined Echo's offer of promotion claiming that he was contented in his
post then as a Forklift Operator. He also alleged that he would be more productive as an
employee if he remained in his post. He also lacked prior supervisory experience.11
On July 16, 2009, Enriquez, sans consent of the respondents, informed the latter of their
assignments/designations, effective July 17, 2009, as Delivery Supervisors with the
following duties: (a) act as delivery dispatchers of booked and planned deliveries for the
day; (b) ensure the early loading of goods to the delivery trucks to avoid late take-offs; (c)
man delivery teams for the trucks; (d) check the operational and cleanliness conditions of
the trucks; (e) attend to delivery concerns of account specialists of their outlets; and (f)
call the attention of other warehouse personnel and report the same to the Human
Resources Department regarding absences/tardiness, incomplete uniforms,
appearances, refusal to accept delivery trips and other matters affecting warehouse
productivity.12
Echo alleged that the respondents did not perform the new duties assigned to them.
Hence, they were each issued a memorandum, dated July 16, 2009, requiring them to
explain in writing their failure to abide with the new assignments.13
On July 18, 2009, Echo clarified through a memo that the respondents were designated
as "Delivery Coordinators" and not "Supervisors."14
Thereafter, successive memoranda were issued by Echo to the respondents, who
refused to acknowledge receipt and comply with the directives therein. The
Memoranda15 dated July 20, 2009 suspended them without pay for five days for their
alleged insubordination. The Memoranda16 dated August 8, 2009 informed them of their
termination from employment, effective August 15, 2009, by reason of their repeated
refusal to acknowledge receipt of Echo's memoranda and flagrant defiance to assume
the duties of Delivery Coordinators.
The Proceedings Before the LA
On August 17, 2009, the respondents filed before the NLRC a complaint against Echo for
unfair labor practice, illegal dismissal, illegal suspension, illegal deductions and payment
of money claims, damages and attorney's fees.17 The respondents claimed that they
were offered promotions, which were mere ploys to remove them as rank-and-file
employees, and oust them as Union members.18
The petitioners, on the other hand, insisted that the respondents were merely
transferred, and not promoted. Further, the respondents arrogantly refused to comply
with Enriquez's directives. Their insubordination constituted just cause to terminate them
from employment.19
On April 20, 2010, LA Hernandez dismissed the respondents' complaint for reasons
stated below: (a) the claims of union-busting, harassment and discrimination were not
supported by evidence;20 (b) no promotions occurred as the duties of the Delivery
Supervisors/Coordinators were merely reportorial in nature and not indicative of any
authority to hire, fire or change the status of other employees;21 and (c) Echo properly
exercised its management prerogative to order the transfer, and this was done without
intended changes in the ranks, salaries, status or places of assignment of the
respondents.22
The Proceedings Before the NLRC
The respondents filed an appeal assailing LA Hernandez's ruling. The dispositive portion
of the NLRC's Decision dated April 15, 2011 is quoted below:
WHEREFORE, premises considered, the appeal is GRANTED. The appealed decision
of the [LA] dated April 20, 2010 is REVERSED and SET ASIDE and a new one is
entered declaring [the petitioners] guilty of unfair labor practice and illegal dismissal of
the [respondents]. [The petitioners] are ordered to immediately reinstate [the
respondents] to their previous positions without loss of seniority rights and other
privileges/benefits and to pay [the respondents] the following:
1. full backwages from the time of their dismissal up to their actual reinstatement;
2. the sum of P20,000.00 as moral damages[;]
3. the sum of P20,000.00 as exemplary damages; and ten [percent (10%)] of the
monetary award as attorney's fees.
All other monetary claims are dismissed for lack of substantiation.
SO ORDERED.23
In sustaining the respondents' arguments, the NLRC explained that at the time of the
farmer's dismissal, they had been employed by Echo for several years since 2002 and
2004, respectively. There were no prior untoward incidents. However, things changed
when the Union was formed. When the two did not agree to be transferred, they were
terminated for insubordination, a mere ploy to lend a semblance of legality to a pre-
conceived management strategy.24
The NLRC denied the petitioners' motion for reconsideration.25
The Proceedings Before the CA
The petitioners thereafter filed a Petition for Certiorari.26 In the herein assailed Decision
dated September 24, 2013, the CA affirmed in toto the NLRC's ruling citing the following
as grounds:
A transfer is a movement from one position to another which is of equivalent rank, level
or salary, without break in service. Promotion, on the other hand, is the advancement
from one position to another with an increase in duties and responsibilities as authorized
by law, and usually accompanied by an increase in salary.
x x x There is no doubt that said position of Delivery Supervisor/Coordinator entails great
duties and responsibilities of overseeing ECHO's business and involves discretionary
powers. x x x What is important is the change in the nature of work which resulted in an
upgrade of their work condition and increase of duties and responsibilities which
constitute promotion and not a mere transfer.
A transfer that results in promotion cannot be done without the employee's consent since
there is no law that compels an employee to accept a promotion for the reason that a
promotion is in the nature of a gift or reward, which a person has a right to refuse. When
[the respondents] refused to accept their promotion as Delivery
Supervisors/Coordinators, they were exercising a right and they cannot be punished for
it. He who uses his own legal right injures no one. Thus, [the respondents'] refusal to be
promoted was not a valid cause for their dismissal.
Anent the award of moral damages, exemplary damages and attorney's fees, We agree
with the NLRC that [the respondents] are entitled to the same.
xxxx
x x x We agree with the NLRC that the dismissal of [the respondents] was tainted with
bad faith as they were dismissed by ECHO for refusing to accept their promotion as
Delivery Supervisor[s]/Coordinator[s]. x x x The NLRC also found that ECHO's act of
transferring [the respondents] from Forklift Operator and Warehouse Checker x x x to
Delivery Supervisors/Coordinators was aimed to remove them among the rank-and-file
employees which amounts to union interference. Without the leadership of Cortes, as
Vice-President, and Somido, as an active member, the union would be severely
weakened, especially since most of its officers were already terminated by ECHO. xx
x.27 (Citations omitted)
The petitioners filed a motion for reconsideration, which the CA denied through the
Resolution28 dated March 28, 2014.1âwphi1
Issues
Unperturbed, the petitioners are now before the Court raising the issues of whether or
not:
(1) the respondents were illegally suspended and terminated, hence, entitled to
payment of their money claims, damages and attorney's fees;
(2) Echo and its officers are guilty of unfair labor practice; and
(3) Echo's officers, who are sued as nominal parties, should be held liable to pay
the respondents their money claims.29
In support thereof, the petitioners claim that the respondents' refusal to comply with the
management's transfer order constitutes just cause to terminate the latter from
employment. Echo also points out that before it closed shop on July 6, 2011, the Union
continued existing despite the respondents' dismissal from service. Hence, there is no
factual basis in the NLRC and CA's ruling that the respondents' termination is intertwined
with union-busting.30
The petitioners further argue that the respondents failed to establish by substantial
evidence that Echo's officers, namely, Enriquez, Benedicto and Atty. Wenceslao, acted
with malice. Thus, they cannot be held liable as well.31
Corollarily, the dismissal being valid, there is no ground to grant the respondents' prayer
for reinstatement and payment of money claims and damages.32
In their Comment,33 the respondents reiterate that their transfer/promotion was
conceived to pave the way for their eventual termination from employment. Moreover,
even before the respondents could convey their acceptance or refusal to the
transfer/promotion, they were promptly replaced by newly-hired contractual employees.
Ruling of the Court
The Court partially grants the instant petition.
The first two issues, being interrelated, shall be discussed jointly.
The offer of transfer is, in legal contemplation, a promotion, which the
respondents validly refused. Such refusal cannot be the basis for the respondents'
dismissal from service. The finding of unfair labor practice and the award of moral
and exemplary damages do not however follow solely by reason of the dismissal.
Article 212(13) of the Labor Code distinguishes from each other as follows the concepts
of managerial, supervisory and rank-and-file employees:
"Managerial employee" is one who is vested with the powers or prerogatives to lay down
and execute management policies and/or to hire, transfer, suspend, lay-off, recall,
discharge, assign or discipline employees. Supervisory employees are those who, in the
interest of the employer, effectively recommend such managerial actions if the exercise
of such authority is not merely routinary or clerical in nature but requires the use of
independent judgment. All employees not falling within any of the above definitions are
considered rank-and-file employees for purposes of this Book. (Italics ours)
As to the extent of management prerogative to transfer/promote employees, and the
differences between transfer on one hand, and promotion, on the other, Coca-Cola
Bottlers Philippines, Inc. v. Del Villar34 is instructive, viz:
[L]abor laws discourage interference in employers' judgment concerning the conduct of
their business.
In the pursuit of its legitimate business interest, management has the prerogative to
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. xx x.
x x x In the case of Blue Dairy Corporation v. National Labor Relations Commission, we
described in more detail the limitations on the right of management to transfer
employees:
x x x [I]t 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. xxx.
xxxx
A transfer is a movement from one position to another which is of equivalent rank, level
or salary, without break in service. Promotion, on the other hand, is the advancement
from one position to another with an increase in duties and responsibilities as authorized
by law, and usually accompanied by an increase in
salary. Conversely, demotion involves a situation where an employee is relegated to a
subordinate or less important position constituting a reduction to a lower grade or rank,
with a corresponding decrease in duties and responsibilities, and usually accompanied
by a decrease in salary.35 (Citations omitted and emphasis and underscoring ours)
For promotion to occur, there must be an advancement from one position to another or
an upward vertical movement of the employee's rank or position. Any increase in salary
should only be considered incidental but never determinative of whether or not a
promotion is bestowed upon an employee.36
An employee is not bound to accept a promotion, which is in the nature of a gift or
reward. Refusal to be promoted is a valid exercise of a right.37 Such exercise cannot be
considered in law as insubordination, or willful disobedience of a lawful order of the
employer, hence, it cannot be the basis of an employee's dismissal from service.38
In the case at bench, a Warehouse Checker and a Forklift Operator are rank-and-file
employees. On the other hand, the job of a Delivery Supervisor/Coordinator requires the
exercise of discretion and judgment from time to time. Specifically, a Delivery
Supervisor/Coordinator assigns teams to man the trucks, oversees the loading of goods,
checks the conditions of the trucks, coordinates with account specialists in the outlets
regarding their delivery concerns, and supervises other personnel about their
performance in the warehouse. A Delivery Supervisor/Coordinator's duties and
responsibilities are apparently not of the same weight as those of a Warehouse Checker
or Forklift Operator. Hence, despite the fact that no salary increases were effected, the
assumption of the post of a Delivery Supervisor/Coordinator should be considered a
promotion. The respondents' refusal to accept the same was therefore valid.
Notwithstanding the illegality of the respondents' dismissal, the Court finds no sufficient
basis to award moral and exemplary damages.
A dismissal may be contrary to law but by itself alone, it does not establish bad faith to
entitle the dismissed employee to moral damages. The award of moral and exemplary
damages cannot be justified solely upon the premise that the employer dismissed his
employee without just or authorized cause.39
In the instant case, the right not to accept an offered promotion pertained to each of the
respondents. However, they exhibited disrespectful behavior by their repeated refusal to
receive the memoranda issued by Echo and by their continued presence in their
respective areas without any work output.40 The Court thus finds that although the
respondents' dismissal from service for just cause was unwarranted, there is likewise no
basis for the award of moral and exemplary damages in their favor. Echo expectedly
imposed disciplinary penalties upon the respondents for the latter's intransigence. Albeit
the Court is not convinced of the character and extent of the measures taken by Echo,
bad faith cannot be inferred solely from the said impositions.
Anent the NLRC and CA's conclusion that Echo committed unfair labor practice, the
Court disagrees.
Unfair labor practices violate the constitutional right of workers and employees to self-
organization, are inimical to the legitimate interests of both labor and management,
including their right to bargain collectively and otherwise deal with each other in an
atmosphere of freedom and mutual respect, disrupt industrial peace and hinder the
promotion of healthy and stable labor-management relations.41
The respondents allege that their transfer/promotion was intended to deprive the Union
of leadership and membership. They claim that other officers were already dismissed.
The foregoing, however, lacks substantiation. Unfair labor practice is a serious charge,
and the respondents failed to show that the petitioners conclusively interfered with,
restrained, or coerced employees in the exercise of their right to self-organization.
Enriquez, Benedicto and Atty. Wenceslao cannot be held personally liable for the
respondents' money claims.
Lambert Pawnbrokers and Jewelry Corporation, et al. v. Binamira42 expounds on the
liabilities of corporate officers to illegally dismissed employees. The Court declared:
As a general rule, only the employer-corporation, partnership or association or any other
entity, and not its officers, which may be held liable for illegal dismissal of employees or
for other wrongful acts. This is as it should be because a corporation is a juridical entity
with legal personality separate and distinct from those acting for and in its behalf and, in
general, from the people comprising it. A corporation, as a juridical entity, may act only
through its directors, officers and employees. Obligations incurred as a result of the
directors' and officers' acts as corporate agents, are not their personal liability but the
direct responsibility of the corporation they represent. It is settled that in the absence of
malice and bad faith, a stockholder or an officer of a corporation cannot be made
personally liable for corporate liabilities. They are only solidarily liable with the
corporation for the illegal termination of services of employees if they acted with malice
or bad faith. In Philippine American Life and General Insurance v. Gramaje, bad faith is
defined as a state of mind affirmatively operating with furtive design or with some motive
of self-interest or ill will or for ulterior purpose. It implies a conscious and intentional
design to do a wrongful act for a dishonest purpose or moral obliquity.43 (Citations (c) interest on all monetary awards at the rate of 6% per annum from the finality
omitted and underlining ours) of this Decision until full payment.

In the instant petition, the respondents failed to specify and sufficiently prove the alleged
acts of Enriquez, Benedicto and Atty. Wenceslao from which malice or bad faith can be
concluded. Hence, there is no reason to invoke the exception to the general rule on non-
liability of corporate officers.
In lieu of actual reinstatement, the respondents are entitled to separation pay.
The amounts awarded as moral and exemplary damages by the National Labor
Relations Commission to Arlo C. Cortes and Dave Somido are however deleted for lack
of basis.
The case is REMANDED to the Labor Arbiter, who is hereby DIRECTED to
COMPUTE the monetary benefits awarded in accordance with this Decision.

"In cases of illegal dismissal, the accepted doctrine is that separation pay is available SO ORDERED.
in lieu of reinstatement when the latter recourse is no longer practical or in the best
interest of the parties."44

The Court notes that the respondents were terminated from service on August 15, 2009,
or more than six years ago. Their reinstatement will not be practical and to the best
interest of the parties. The Court thus finds more prudence in awarding separation pay to
the respondents equivalent to one (1) month pay for every year of service, with a fraction
of at least six (6) months considered as one (1) whole year, from the time of their illegal
dismissal up to the finality of this Decision.

An annual interest of six percent (6%) is imposed on the monetary award.

In accordance with Nacar v. Gallery Frames,45 the Court now imposes an interest on the
monetary awards at the rate of six percent (6%) per annum from the date of finality of
this Decision until full payment

WHEREFORE, the instant petition is PARTIALLY GRANTED. The Decision and

Resolution of the Court of Appeals in CA-G.R. SP No. 121393, dated September 24,
2013 and March 28, 2014, respectively, are MODIFIED.

The petitioner, Echo 2000 Commercial Corporation, is hereby declared guilty of illegal
dismissal. In addition to the National Labor Relations Commission's award of attorney's
fees, Echo 2000 Commercial Corporation is likewise ORDERED to pay the respondents,
Arlo C. Cortes and Dave Somido, the following:

(a) separation pay in lieu of actual reinstatement equivalent to one (1) month pay
for every year of service, with a fraction of at least six (6) months considered as
one (1) whole year from the time of the dismissal up to the finality of this
Decision;

(b) full backwages from the time of the illegal dismissal up to the finality of this
Decision; and