1
GENERAL PRINCIPLES
Hubilla vs. HSY Marketing, Ltd., Co. G.R. No. 207354. January 10, 2018.*
Labor Law; Grave Abuse of Discretion; If the findings are arrived at arbitrarily, without resort to any
substantial evidence, the National Labor Relations Commission (NLRC) is deemed to have gravely
abused its discretion.—Factual findings of labor officials exercising quasi-judicial functions are
accorded great respect and even finality by the courts when the findings are supported by
substantial evidence. Substantial evidence is “the amount of relevant evidence which a reasonable
mind might accept as adequate to support a conclusion.” Thus, in labor cases, the issues in petitions
for certiorari before the Court of Appeals are limited only to whether the National Labor Relations
Commission committed grave abuse of discretion. However, this does not mean that the Court of
Appeals is conclusively bound by the findings of the National Labor Relations Commission. If the
findings are arrived at arbitrarily, without resort to any substantial evidence, the National Labor
Relations Commission is deemed to have gravely abused its discretion
Labor Law; Termination of Employment; Abandonment; The employer must show that the
employee unjustifiably refused to report for work and that the employee deliberately intended to
sever the employer-employee relation.—There is likewise no proof that petitioners abandoned
their employment. To constitute abandonment, the employer must prove that “first, the employee
must have failed to report for work or must have been absent without valid or justifiable reason;
and second, [that] there must have been a clear intention on the part of the employee to sever the
employer-employee relationship manifested by some overt act.” Abandonment is essentially a
matter of intent. It cannot be presumed from the occurrence of certain equivocal acts. There must
be a positive and overt act signifying an employee’s deliberate intent to sever his or her
employment. Thus, mere absence from work, even after a notice to return, is insufficient to prove
abandonment. The employer must show that the employee unjustifiably refused to report for work
and that the employee deliberately intended to sever the employer-employee relation.
Furthermore, there must be a concurrence of these two (2) elements. Absent this concurrence,
there can be no abandonment. Respondents have not presented any proof that petitioners
intended to abandon their employment. They merely alleged that petitioners have already
voluntarily terminated their employment due to their continued refusal to report for work.
However, this is insufficient to prove abandonment.
Same; Same; Same; Termination of Employment; Dismissing employees merely on the basis that
they complained about their employer in a radio show is not only invalid, it is unconstitutional.—
When laborers air out their grievances regarding their employment in a public forum, they do so in
the exercise of their right to free expression. They are “fighting for their very survival, utilizing only
the weapons afforded them by the Constitution — the untrammelled enjoyment of their basic
human rights.” Freedom and social justice afford them these rights and it is the courts’ duty to
uphold and protect their free exercise. Thus, dismissing employees merely on the basis that they
complained about their employer in a radio show is not only invalid, it is unconstitutional.
Same; Termination of Employment; Illegal Dismissals; Reinstatement; Doctrine of Strained
Relations; Separation Pay; If reinstatement proves to be impossible due to the strained relations
between the parties, the illegally dismissed employee is entitled instead to separation pay.—An
employee who is found to have been illegally dismissed is entitled to reinstatement without loss of
seniority rights and other privileges. If reinstatement proves to be impossible due to the strained
relations between the parties, the illegally dismissed employee is entitled instead to separation pay.
LEONEN, J.:
When the evidence in labor cases is in equipoise, doubt is resolved in favor of the employee.
This is a Petition for Review on Certiorari1 assailing the February 25, 2013 Decision2 and May 30,
2013 Resolution3of the Court of Appeals in CA-G.R. SP No. 126522, which upheld the Labor Arbiter's
finding that the employees voluntarily terminated their employment. The assailed judgments also
set aside the National Labor Relations Commission's application of the principle of equipoise on the
ground that the employees failed to present any evidence in their favor.
HSY Marketing Ltd., Co., Wantofree Oriental Trading, Inc., Coen Fashion House and General
Merchandise, Asia Consumer Value Trading, Inc., Fabulous Jeans & Shirt & General Merchandise,
LSG Manufacturing Corporation, Unite General Merchandise, Rosario Q. Co, Lucia Pun Lin Yeung,
and Alexander Arqueza (respondents) are engaged in manufacturing and selling goods under the
brand Novo Jeans & Shirt & General Merchandise (Novo Jeans).4
Sometime in May 2010 and June 2010, several Novo Jeans employees5 went to Raffy Tulfo's radio
program to air their grievances against their employers for alleged labor violations. They were
referred to the Department of Labor and Employment Camanava Regional Office.
These employees claimed that on June 7, 2010, they were not allowed to enter the Novo Jeans
branches they were employed in. They further averred that while Novo Jeans sent them a show
cause letter the next day, they were in truth already dismissed from employment. They sent a
demand letter on July 19, 2010 to amicably settle the case before the Department of Labor and
Employment but no settlement was reached. They alleged that upon learning that the Department
of Labor and Employment was not the proper forum to address their grievances, they decided to
file a notice of withdrawal and file their complaint with the Labor Arbiter.
On the other hand, Novo Jeans claimed that these employees voluntarily severed their employment
but that they filed complaints later with the Department of Labor and Employment. They alleged
that the employees' notice of withdrawal was not actually granted by the Department of Labor and
Employment but that the employees nonetheless filed their complaints before the Labor Arbiter.
On May 31, 2011, Labor Arbiter Arden S. Anni rendered a Decision9 dismissing the complaints. He
found that other than the employees' bare allegations that they were dismissed from June 6 to 9,
2010, they did not present any other evidence showing that their employment was terminated or
that they were prevented from reporting for work. 10 The Labor Arbiter likewise ruled that the

employees voluntarily severed their employment since the airing of their grievances on Raffy Tulfo's
radio program "[was] enough reason for them not to report for work, simply because of a possible
disciplinary action by [Novo Jeans]." 11 The dispositive portion of the Labor Arbiter Decision read:
WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered DISMISSING the above-
captioned consolidated cases for utter lack of merit and for forum-shopping.
SO ORDERED.12
The employees appealed to the National Labor Relations Commission.13
On June 25, 2012, the National Labor Relations Commission rendered a Decision 14 reversing that
of the Labor Arbiter and finding that the employees were illegally dismissed. It ruled that the
allegations of both parties "were unsubstantiated and thus [were] equipoised" and that "if doubt
exists between the evidence presented by the employer and that by the employee, the scales of
justice must be tilted in favor of the latter."15 The dispositive portion of the National Labor
Relations Commission Decision read:
WHEREFORE, premises considered, judgment is hereby rendered finding the appeal meritorious
with respect to the issue of illegal dismissal. Complainants-appellants' respective employers are
hereby found liable, jointly and severally, to pay complainants-appellants their backwages and
separation pay plus ten percent thereof as attorney's fees. Accordingly, the decision of the Labor
Arbiter dated May 31, 2011 is hereby MODIFIED. All other dispositions STANDS (sic) undisturbed.
The computation of the aforesaid awards is as follows:
....
TOTAL AWARD Php30,969,426.00
SO ORDERED.16
Novo Jeans moved for partial reconsideration17 but was denied by the National Labor Relations
Commission in its August 24, 2012 Resolution.18 Thus, it filed a Petition for Certiorari 19 with the
Court of Appeals.
On February 25, 2013, the Court of Appeals rendered a Decision20 reversing the Decision of the
National Labor Relations Commission and reinstating the Labor Arbiter Decision. The Court of
Appeals found that Novo Jeans' counsel, as the affiant, substantially complied with the verification
requirement even if his personal knowledge was based on facts relayed to him by his clients and on
authentic records since he was not privy to the antecedents of the case.21
The Court of Appeals stated that while the employees merely alleged that they were no longer
allowed to report to work on a particular day, Novo Jeans was able to present the First Notice of
Termination of Employment sent to them, asking them to explain their sudden absence from work
without proper authorization. It likewise found that the Notices of Termination of Employment
(Notices) did not indicate that the employees were dismissed or that they were prevented from
entering the stores. 22
2
According to the Court of Appeals, the equipoise rule was inapplicable in this case since it only
applied when the evidence between the parties was equally balanced. Considering that only Novo
Jeans was able to present proof of its claims, the Court of Appeals was inclined to rule in its
favor. 23 Thus, the Court of Appeals concluded that the case involved voluntary termination of
employment, not illegal dismissal.24 The dispositive portion of its Decision read:
WHEREFORE, in view of the foregoing, the instant Petition is hereby GRANTED. The assailed
Decision dated June 25, 2012 and Resolution dated August 24, 2012 rendered by the National Labor
Relations Commission in NLRC LAC No. 07-001930-11/NLRC NCR Cases No. 08-10645-10, 08-10649-
10, 08-10655-10, 08-10660-10, 08- 10662-10, 08-10666-10 and 08-10670-10 are hereby REVERSED
and SET ASIDE. Corollarily, the Decision dated May 31, 2011 rendered by the Labor Arbiter is hereby
REINSTATED.
SO ORDERED.25
The employees filed a Motion for Reconsideration26 but it was denied in the Court of Appeals May
30, 2013 Resolution.27 Hence, this Petition28 was filed before this Court.
Petitioners point out that the Court of Appeals erred in not finding grave abuse of discretion,
considering that the petition filed before it was a special civil action for certiorari. They aver that the
Court of Appeals should not have used the special remedy of certiorari merely to re-evaluate the
findings of a quasi-judicial body absent any finding of grave abuse of discretion. 29
Petitioners likewise argue that respondents were unable to substantially comply with the
verification requirement before the Court of Appeals. They submit that respondents' counsel would
have been privy to the antecedents of the case so as to have personal knowledge and not merely
knowledge as relayed by his clients. 30 They add that respondents "deliberately withheld the
Annexes of the Position Paper of the Petitioners submitted to the Labor Arbiter[;] hence, said
Position Paper cannot be considered authentic."31
Petitioners assert that the Court of Appeals had no factual basis to rule in respondents' favor since
there was no evidence to prove that the Notices were sent to petitioners at their last known
addresses. The evidence on record merely showed sample letters of the Notices.32 Petitioners
maintain that this is a situation where the employees allege that they were prevented from
entering their work place and the employer alleges otherwise. They insist that if doubt exists
between the evidence presented by the employer and the evidence presented by the employees,
the doubt must be resolved in favor of the employees, consistent with the Labor Code's policy to
afford protection to labor. 33
On the other hand, respondents argue that a defect in the verification will not necessarily cause the
dismissal of the pleading and that they had sufficiently complied with the requirement when the
affiant attested that the petition was based on facts relayed by his clients and on authentic
records. 34 They also point out that only relevant and pertinent documents should be attached to
their pleadings before the courts; thus, the annexes of petitioner, not being relevant or pertinent,
need not be attached to their pleadings. 35

Respondents contend that the Court of Appeals recognized that the issue in their Petition
for Certiorari concerned the alleged grave abuse of discretion of the National Labor Relations
Commission and thoroughly discussed the issue in the assailed judgment. 36 They likewise submit
that the Court of Appeals may review factual findings of the National Labor Relations Commission
since the finding of grave abuse of discretion requires a re-examination of the sufficiency or
absence of evidence.37
Respondents maintain that the receipt of the Notices was admitted and recognized by the parties
before the Labor Arbiter and was never brought as an issue until the National Labor Relations
Commission made a finding that the Notices were never received.38 According to respondents,
petitioners were estopped from questioning the receipt of the Notices when they already admitted
to their receipt before the Labor Arbiter.39 They argue that the Labor Arbiter and the Court of
Appeals did not err in finding that the termination of employment was voluntary since petitioners
failed to present evidence of the fact of their dismissal. 40
The main issue before this Court is whether or not petitioners were illegally dismissed by
respondents. However, there are certain procedural issues that must first be addressed, in
particular: (1) whether or not the Court of Appeals may, in a petition for certiorari, review and re-
assess the factual findings of the National Labor Relations Commission; and (2) whether or not
verification based on facts relayed to the affiant by his clients is valid.
I
Before discussing the merits of the case, this Court takes this opportunity to clarify certain doctrines
regarding the review of factual findings by the Court of Appeals.
Factual findings of labor officials exercising quasi-judicial functions are accorded great respect and
even finality by the courts when the findings are supported by substantial evidence.41 Substantial
evidence is "the amount of relevant evidence which a reasonable mind might accept as adequate to
support a conclusion. "42 Thus, in labor cases, the issues in petitions for certiorari before the Court
of Appeals are limited only to whether the National Labor Relations Commission committed grave
abuse of discretion.
However, this does not mean that the Court of Appeals is conclusively bound by the findings of the
National Labor Relations Commission. If the findings are arrived at arbitrarily, without resort to any
substantial evidence, the National Labor Relations Commission is deemed to have gravely abused its
discretion:
However, this does not mean that the Court of Appeals is conclusively bound by the findings of the
National Labor Relations Commission. If the findings are arrived at arbitrarily, without resort to any
substantial evidence, the National Labor Relations Commission is deemed to have gravely abused its
discretion:
3
On this matter, the settled rule is that factual findings of labor officials, who are deemed to have
acquired expertise in matters within their jurisdiction, are generally accorded not only respect but
even finality by the courts when supported by substantial evidence, i.e., the amount of relevant
evidence which a reasonable mind might accept as adequate to support a conclusion. We
emphasize, nonetheless, that these findings are not infallible. When there is a showing that they
were arrived at arbitrarily or in disregard of the evidence on record, they may be examined by the
courts. The [Court of Appeals] can then grant a petition for certiorari if it finds that the [National
Labor Relations Commission], in its assailed decision or resolution, has made a factual finding that is
not supported by substantial evidence. It is within the jurisdiction of the [Court of Appeals], whose
jurisdiction over labor cases has been expanded to review the findings of the [National Labor
Relations Commission].43
The Court of Appeals may also review factual findings if quasi-judicial agencies' findings are
contradictory to its own findings. 44 Thus, it must re-examine the records to determine which
tribunal's findings were supported by the evidence.
In this instance, the Labor Arbiter and the National Labor Relations Commission made contradictory
factual findings. Thus, it was incumbent on the Court of Appeals to re-examine their findings to
resolve the issues before it. The Court of Appeals also found that the findings of the National Labor
Relations Commission were not supported by substantial evidence, and therefore, were rendered in
grave abuse of discretion.
Thus, in the determination of whether the National Labor Relations Commission committed grave
abuse of discretion, the Court of Appeals may re-examine facts and re-assess the evidence.
However, its findings may still be subject to review by this Court.
This Court notes that in cases when the Court of Appeals acts as an appellate court, it is still a trier
of facts. Questions of fact may still be raised by the parties. If the parties raise pure questions of
law, they may directly file with this Court. Moreover, contradictory factual findings between the
National Labor Relations Commission and the Court of Appeals do not automatically justify this
Court's review of the factual findings. They merely present a prima facie basis to pursue the action
before this Court. The need to review the Court of Appeals' factual findings must still be pleaded,
proved, and substantiated by the party alleging their inaccuracy. This Court likewise retains its full
discretion to review the factual findings.
II
All petitions for certiorari are required to be verified upon filing. 45 The contents of verification are
stated under Rule 7, Section 4 of the Rules of Court:
Section 4. Verification. Except when otherwise specifically required by law or rule, pleadings need
not be under oath, verified or accompanied by affidavit.
A pleading is verified by an affidavit that the affiant has read the pleading and that the allegations
therein are true and correct of his personal knowledge or based on authentic records.

A pleading required to be verified which contains a verification based on "information and belief'',
or upon "knowledge, information and belief," or lacks a proper verification, shall be treated as an
unsigned pleading.
Thus, for a pleading to be verified, the affiant must attest that he or she has read the pleading and
that the allegations are true and correct based on his or her personal knowledge or on authentic
records. Otherwise, the pleading is treated as an unsigned pleading.
Shipside Incorporation v. Court of Appeals46required that the assurance should "not [be] the
product of the imagination or a matter of speculation, and that the pleading is filed in good
faith."47 However, verification is merely a formal, not jurisdictional, requirement. It will not result
in the outright dismissal of the case since courts may simply order the correction of a defective
verification.48
Petitioners argue that respondents' verification was invalid since it was not based on authentic
records, alleging that respondents' failure to attach petitioners' position paper annexes to their
Petition for Certiorari before the Court of Appeals made their records inauthentic. 49
A pleading may be verified by attesting that the allegations are based either on personal
knowledge and on authentic records, or on personal knowledge or on authentic records. The use
of either, however, is not subject to the affiant's whim but rather on the nature of the allegations
being attested to. Circumstances may require that the affiant attest that the allegations are based
only on personal knowledge or only on authentic records. Certainly, there can be situations where
the affiant must attest to the allegations being based on both personal knowledge and on authentic
records, thus:
A reading of the above-quoted Section 4 of Rule 7 indicates that a pleading may be verified under
either of the two given modes or under both. The veracity of the allegations in a pleading may be
affirmed based on either one's own personal knowledge or on authentic records, or both, as
warranted. The use of the [conjunction] "or" connotes that either source qualifies as a sufficient
basis for verification and, needless to state, the concurrence of both sources is more than sufficient.
Bearing both a disjunctive and conjunctive sense, this parallel legal signification avoids a
construction that will exclude the combination of the alternatives or bar the efficacy of any one of
the alternatives standing alone.
Contrary to petitioner's position, the range of permutation is not left to the pleader's liking, but is
dependent on the surrounding nature of the allegations which may warrant that a verification be
based either purely on personal knowledge, or entirely on authentic records, or on both sources.50
Authentic records may be the basis of verification if a substantial portion of the allegations in the
pleading is based on prior court proceedings.51 Here, the annexes that respondents allegedly failed
to attach are employee information, supporting documents, and work-related documents proving
that petitioners were employed by respondents. 52 The fact of petitioners' employment, however,
has not been disputed by respondents. These documents would not have been the "relevant and
pertinent"53 documents contemplated by the rules.
4
Petitioners likewise contend that respondents' Petition for Certiorari54 before the Court of Appeals
should not have been given due course since the verification55 signed by respondents' counsel,
Atty. Eller Roel I. Daclan (Atty. Daclan), attested that:
2. I caused the preparation of the foregoing petition and attest that, based upon facts relayed to me
by my clients and upon authentic records made available, all the allegations contained therein are
true and correct[.] 56
Thus, the issue on verification centers on whether the phrase "based upon facts relayed to me by
my clients" may be considered sufficient compliance. To resolve this issue, this Court must first
address whether respondents' counsel may sign the verification on their behalf.
The rules on compliance with the requirement of the verification and certification of non-forum
shopping were already sufficiently outlined in Altres v. Empleo, 57 where this Court stated:
For the guidance of the bench and bar, the Court restates in capsule form the jurisprudential
pronouncements already reflected above respecting non-compliance with the requirements on, or
submission of defective, verification and certification against forum shopping:
1) A distinction must be made between non-compliance with the requirement on or submission of
defective verification, and noncompliance with the requirement on or submission of defective
certification against forum shopping.
2) As to verification, non-compliance therewith or a defect therein does not necessarily render the
pleading fatally defective. The court may order its submission or correction or act on the pleading if
the attending circumstances are such that strict compliance with the Rule may be dispensed with in
order that the ends of justice may be served thereby.
3) Verification is deemed substantially complied with when one who has ample knowledge to swear
to the truth of the allegations in the complaint or petition signs the verification, and when matters
alleged in the petition have been made in good faith or are true and correct.
4) As to certification against forum shopping, non-compliance therewith or a defect therein, unlike
in verification, is generally not curable by its subsequent submission or correction thereof, unless
there is a need to relax the Rule on the ground of "substantial compliance" or presence of "special
circumstances or compelling reasons".
5) The certification against forum shopping must be signed by all the plaintiffs or petitioners in a
case; otherwise, those who did not sign will be dropped as parties to the case. Under reasonable or
justifiable circumstances, however, as when all the plaintiffs or petitioners share a common interest
and invoke a common cause of action or defense, the signature of only one of them in the
certification against forum shopping substantially complies with the Rule.
6) Finally, the certification against forum shopping must be executed by the party-pleader, not by
his counsel. If, however, for reasonable or justifiable reasons, the party-pleader is unable to sign, he
must execute a Special Power of Attorney designating his counsel of record to sign on his behalf. 58
The policy behind the requirement of verification is to guard against the filing of fraudulent
pleadings. Litigants run the risk of perjury59 if they sign the verification despite knowledge that the
stated allegations are not true or are products of mere speculation:

Verification is not an empty ritual or a meaningless formality. Its import must never be sacrificed in
the name of mere expedience or sheer caprice. For what is at stake is the matter of verity attested
by the sanctity of an oath to secure an assurance that the allegations in the pleading have been
made in good faith, or are true and correct and not merely speculative. 60
Thus, for verification to be valid, the affiant must have "ample knowledge to swear to the truth of
the allegations in the complaint or petition."61 Facts relayed to the counsel by the client would be
insufficient for counsel to swear to the truth of the allegations in a pleading. Otherwise, counsel
would be able to disclaim liability for any misrepresentation by the simple expediency of stating
that he or she was merely relaying facts with which he or she had no competency to attest to. For
this reason, the Rules of Court require no less than personal knowledge of the facts to sufficiently
verify a pleading.
Respondents' counsel, not having sufficient personal knowledge to attest to the allegations of the
pleading, was not able to validly verify the facts as stated. Therefore, respondents' Petition
for Certiorari before the Court of Appeals should have been considered as an unsigned pleading.
Respondents' certification of non-forum shopping is likewise defective. The certification of non-
forum shopping must be signed by the litigant, not his or her counsel. The litigant may, for
justifiable reasons, execute a special power of attorney to authorize his or her counsel to sign on his
or her behalf. 62 In this instance, the verification and certification against forum shopping63 was
contained in one ( 1) document and was signed by respondents' counsel, Atty. Daclan.
Corporations, not being natural persons, may authorize their lawyers through a Secretary's
Certificate to execute physical acts. Among these acts is the signing of documents, such as the
certification against forum shopping. A corporation's inability to perform physical acts is considered
as a justifiable reason to allow a person other than the litigant to sign the certification against forum
shopping.64 By the same reasoning, partnerships, being artificial entities, may also authorize an
agent to sign the certification on their behalf.
Respondents include three (3) corporations, one (1) partnership, and three (3) sole proprietorships.
Respondents LSG Manufacturing Corporation, Asia Consumer Value Trading, Inc., and Wantofree
Oriental Trading, Inc. submitted Secretary's Certificates65 authorizing Atty. Daclan to sign on their
behalf. On the other hand, respondent HSY Marketing Ltd., Co. submitted a Partnership
Certification.66 Meanwhile, respondents Alexander Arqueza (Arqueza), proprietor of Fabulous
Jeans and Shirt and General Merchandise, Rosario Q. Co (Co), proprietor of Unite General
Merchandise, and Lucia Pun Ling Yeung (Yeung), proprietor of Coen Fashion House & General
Merchandise, submitted Special Powers of Attorney67 on their behalf.
However, sole proprietorships, unlike corporations, have no separate legal personality from their
proprietors.68 They cannot claim the inability to do physical acts as a justifiable circumstance to
authorize their counsel to sign on their behalf. Since there was no other reason given for
authorizing their counsel to sign on their behalf, respondents Arqueza, Co, and Yeung's certification
against forum shopping is invalid.
5
While courts may simply order the resubmission of the verification or its subsequent correction,69 a
defect in the certification of non-forum shopping is not curable 70 unless there are substantial
merits to the case.71
However, respondents' Petition for Certiorari before the Court of Appeals was unmeritorious. Thus,
its defective verification and certification of non-forum shopping should have merited its outright
dismissal.
III
When the evidence of the employer and the employee are in equipoise, doubts are resolved in
favor of labor.72 This is in line with the policy of the State to afford greater protection to labor. 73
Petitioners allege that they were illegally dismissed from service when they were prevented from
entering their work premises a day after airing their grievance in a radio show. On the other hand,
respondents deny this allegation and state that petitioners were never dismissed from
employment.
In illegal dismissal cases, the burden of proof is on the employer to prove that the employee was
dismissed for a valid cause and that the employee was afforded due process prior to the
dismissal. 74
Respondents allege that there was no dismissal since they sent petitioners a First Notice of
Termination of Employment, asking them to show cause why they should not be dismissed for their
continued absence from work. However, petitioners argue that this evidence should not be given
weight since there is no proof that they received this Notice.
Indeed, no evidence has been presented proving that each and every petitioner received a copy of
the First Notice of Termination of Employment.1âwphi1 There are no receiving copies or
acknowledgement receipts. What respondents presented were "Sample Letters of
Respondents"75 and not the actual Notices that were allegedly sent out.
While petitioners admitted that the Notices may have been sent, they have never actually admitted
to receiving any of them. In their Position Paper before the Labor Arbiter and in their Memorandum
of Appeal before the National Labor Relations Commission:
On June 7, 2010, all employees who went to complain against the respondent[ s] were not allowed
to enter the stores of respondent[s]. The next day, respondent[s] sent letter[s] to the employees
purporting to be a show cause letter but the truth of the matter is that all employees who went to
the office of Tulfo to complain against the respondent[ s] were already terminated[.]76
The lack of evidence of petitioners' receipts suggests that the Notices were an afterthought,
designed to free respondents from any liability without having to validly dismiss petitioners.

There is likewise no proof that petitioners abandoned their employment. To constitute
abandonment, the employer must prove that "first, the employee must have failed to report for
work or must have been absent without valid or justifiable reason; and second, [that] there must
have been a clear intention on the part of the employee to sever the employer-employee
relationship manifested by some overt act."77
Abandonment is essentially a matter of intent. It cannot be presumed from the occurrence of
certain equivocal acts. 78 There must be a positive and overt act signifying an employee's deliberate
intent to sever his or her employment. Thus, mere absence from work, even after a notice to
return, is insufficient to prove abandonment. 79 The employer must show that the employee
unjustifiably refused to report for work and that the employee deliberately intended to sever the
employer-employee relation. Furthermore, there must be a concurrence of these two (2)
elements.80Absent this concurrence, there can be no abandonment.
Respondents have not presented any proof that petitioners intended to abandon their
employment. They merely alleged that petitioners have already voluntarily terminated their
employment due to their continued refusal to report for work. However, this is insufficient to prove
abandonment.
Where both parties in a labor case have not presented substantial evidence to prove their
allegations, the evidence is considered to be in equipoise. In such a case, the scales of justice are
tilted in favor of labor. Thus, petitioners are hereby considered to have been illegally dismissed.
This Court notes that had petitioners been able to substantially prove their dismissal, it would have
been rendered invalid not only for having been made without just cause81 but also for being in
violation of their constitutional rights. A laborer does not lose his or her right to freedom of
expression upon employment.82 This is "[a] political [right] essential to man's enjoyment of his [or
her] life, to his [or her] happiness, and to his [or her] full and complete fulfillment."83 While the
Constitution and the courts recognize that employers have property rights that must also be
protected, the human rights of laborers are given primacy over these rights. Property rights may
prescribe. Human rights do not. 84
When laborers air out their grievances regarding their employment in a public forum, they do so in
the exercise of their right to free expression. They are "fighting for their very survival, utilizing only
the weapons afforded them by the Constitution-the untrammelled enjoyment of their basic human
rights."85 Freedom and social justice afford them these rights and it is the courts' duty to uphold
and protect their free exercise. Thus, dismissing employees merely on the basis that they
complained about their employer in a radio show is not only invalid, it is unconstitutional.
However, there not being sufficient proof that the dismissal was meant to suppress petitioners'
constitutional rights, this Court is constrained to limit its conclusions to that of illegal dismissal
under the Labor Code.
Petitioners were not dismissed under any of the causes mentioned in Article 279 [282]86 of the
Labor Code. They were not validly informed of the causes of their dismissal. Thus, their dismissal
was illegal.
6
An employee who is found to have been illegally dismissed is entitled to reinstatement without loss
of seniority rights and other privileges. 87 If reinstatement proves to be impossible due to the
strained relations between the parties, the illegally dismissed employee is entitled instead to
separation pay.88
WHEREFORE, the Petition is GRANTED. The February 25, 2013 Decision and May 30, 2013
Resolution of the Court of Appeals in CA-G.R. SP No. 126522 are SET ASIDE. Respondents
are DIRECTED to reinstate petitioners to their former positions without loss of seniority rights or
other privileges.
SO ORDERED.
LEO T. MAULA, petitioner, vs. XIMEX DELIVERY EXPRESS, INC., G.R. No. 207838. January 25,
2017.*
Labor Law; Management Prerogative; While an employer is given a wide latitude of discretion in
managing its own affairs, in the promulgation of policies, rules and regulations on work-related
activities of its employees, and in the imposition of disciplinary measures on them, the exercise of
disciplining and imposing appropriate penalties on erring employees must be practiced in good faith
and for the advancement of the employer’s interest and not for the purpose of defeating or
circumventing the rights of employees under special laws or under valid agreements.—While an
employer is given a wide latitude of discretion in managing its own affairs, in the promulgation of
policies, rules and regulations on work-related activities of its employees, and in the imposition of
disciplinary measures on them, the exercise of disciplining and imposing appropriate penalties on
erring employees must be practiced in good faith and for the advancement of the employer’s
interest and not for the purpose of defeating or circumventing the rights of employees under
special laws or under valid agreements. The reason being that — Security of tenure of workers is
not only statutorily protected, it is also a constitutionally guaranteed right. Thus, any deprivation of
this right must be attended by due process of law. This means that any disciplinary action which
affects employment must pass due process scrutiny in both its substantive and procedural aspects.
The constitutional protection for workers elevates their work to the status of a vested right. It is a
vested right protected not only against state action but against the arbitrary acts of the employers
as well. This court in Philippine Movie Pictures Workers’ Association v. Premier Productions, Inc.,
categorically stated that “[t]he right of a person to his labor is deemed to be property within the
meaning of constitutional guarantees.” Moreover, it is of that species of vested constitutional right
that also affects an employee’s liberty and quality of life. Work not only contributes to defining the
individual, it also assists in determining one’s purpose. Work provides for the material basis of
human dignity.
Same; Termination of Employment; Dismissal from employment has two facets: first, the legality of
the act of dismissal, which constitutes substantive due process; and, second, the legality of the
manner of dismissal, which constitutes procedural due process.—Dismissal from employment has

two facets: first, the legality of the act of dismissal, which constitutes substantive due process; and,
second, the legality of the manner of dismissal, which constitutes procedural due process. The
burden of proof rests upon the employer to show that the disciplinary action was made for lawful
cause or that the termination of employment was valid. In administrative and quasi-judicial
proceedings, the quantum of evidence required is substantial evidence or “such relevant evidence
as a reasonable mind might accept as adequate to support a conclusion.” Thus, unsubstantiated
suspicions, accusations, and conclusions of the employer do not provide legal justification for
dismissing the employee. When in doubt, the case should be resolved in favor of labor pursuant to
the social justice policy of our labor laws and the 1987 Constitution.
Same; Same; Misconduct; For misconduct or improper behavior to be a just cause for dismissal, (a)
it must be serious; (b) it must relate to the performance of the employee’s duties; and (c) it must
show that the employee has become unfit to continue working for the employer.—Misconduct is
improper or wrong conduct; it is the transgression of some established and definite rule of action, a
forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere
error in judgment. The misconduct, to be serious within the meaning of the Labor Code, must be of
such a grave and aggravated character and not merely trivial or unimportant. Thus, for misconduct
or improper behavior to be a just cause for dismissal, (a) it must be serious; (b) it must relate to the
performance of the employee’s duties; and (c) it must show that the employee has become unfit to
continue working for the employer.
Same; Same; Even if a just cause exists, the employer still has the discretion whether to dismiss the
employee, impose a lighter penalty, or condone the offense committed.—Even if a just cause exists,
the employer still has the discretion whether to dismiss the employee, impose a lighter penalty, or
condone the offense committed. In making such decision, the employee’s past offenses may be
taken into consideration.
Same; Same; Insubordination; Not every case of insubordination or willful disobedience by an
employee reasonably deserves the penalty of dismissal because the penalty to be imposed on an
erring employee must be commensurate with the gravity of his or her offense.—This Court finds the
penalty of dismissal too harsh. Not every case of insubordination or willful disobedience by an
employee reasonably deserves the penalty of dismissal because the penalty to be imposed on an
erring employee must be commensurate with the gravity of his or her offense. Petitioner’s
termination from employment is also inappropriate considering that he had been with respondent
company for seven (7) years and he had no previous derogatory record. It is settled that
notwithstanding the existence of a just cause, dismissal should not be imposed, as it is too severe a
penalty, if the employee had been employed for a considerable length of time in the service of his
or her employer, and such employment is untainted by any kind of dishonesty and irregularity.
Same; Same; An employer is duty-bound to exert earnest efforts to arrive at a settlement of its
differences with the employee.—An employer is duty-bound to exert earnest efforts to arrive at a
settlement of its differences with the employee. While a full adversarial hearing or conference is
not required, there must be a fair and reasonable opportunity for the employee to explain the
7
controversy at hand. Finally, the termination letter issued by respondent miserably failed to satisfy
the requisite contents of a valid notice of termination. Instead of discussing the facts and
circumstances to support the violation of the alleged company rule that imposed a penalty of
dismissal, the letter merely repeats the self-serving accusations stated in Memorandum dated April
3, 2009.
Same; Preventive Suspension; Preventive suspension may be legally imposed against an employee
whose alleged violation is the subject of an investigation. The purpose of suspension is to prevent
harm or injury to the company as well as to fellow employees.—Preventive suspension may be
legally imposed against an employee whose alleged violation is the subject of an investigation. The
purpose of suspension is to prevent harm or injury to the company as well as to fellow employees.
The pertinent rules dealing with preventive suspension are found in Sections 8 and 9 of Rule XXIII,
Book V of the Omnibus Rules Implementing the Labor Code, which read: SEC. 8. Preventive
suspension.—The employer may place the worker concerned under preventive suspension if his
continued employment poses a serious and imminent threat to the life or property of the employer
or of his coworkers. SEC. 9. Period of suspension.—No preventive suspension shall last longer than
thirty (30) days. The employer shall thereafter reinstate the worker in his former or in a
substantially equivalent position or the employer may extend the period of suspension provided
that during the period of extension, he pays the wages and other benefits due to the worker. In
such case, the worker shall not be bound to reimburse the amount paid to him during the extension
if the employer decides, after completion of the hearing, to dismiss the worker.
Same; Same; Preventive suspension is justified where the employee’s continued employment
poses a serious and imminent threat to the life or property of the employer or of the employee’s
coworkers.—Preventive suspension is justified where the employee’s continued employment poses
a serious and imminent threat to the life or property of the employer or of the employee’s
coworkers. Without this kind of threat, preventive suspension is not proper. Here, it cannot be said
that petitioner posed a danger on the lives of the officers or employees of respondent or their
properties. Being one of the Operation Staff, which was a rank and file position, he could not and
would not be able to sabotage the operations of respondent. The difficulty of finding a logical and
reasonable connection between his assigned tasks and the necessity of his preventive suspension is
apparent from the fact that even respondent was not able to present concrete evidence to support
its general allegation.
PERALTA, J.:
This petition for review on certiorari under Rule 45 of the Rules of Civil Procedure seeks to reverse
the November 20, 2012 Decision1 and June 21, 2013 Resolution2 of the Court of Appeals (CA) in CA
G.R. SP No. 121176, which set aside the December 15, 2010 Resolution3 and July 20, 2011

Decision4 of the National Labor Relations Commission (NLRC) that affirmed the February 18, 2010
Decision5 of the Labor Arbiter (LA) finding the illegal dismissal of petitioner.
On May 12, 2009, petitioner Leo T. Maula filed a complaint against respondent Ximex Delivery
Express, Inc. and its officers (Jerome Ibafiez, Lili beth Gorospe, and Amador Cabrera) for illegal
dismissal, underpayment of salary/wages, non-payment/underpayment of overtime pay,
underpayment of holiday premium, underpayment of 13th month pay, non-payment of ECOLA,
non-payment/underpayment of night shift differential, illegal deduction, illegal suspension,
regularization, harassment, underremittance of SSS premiums, deduction of tax without tax
identification number, moral and exemplary damages, and attorney's fees. 6
The factual antecedents, according to petitioner, are as follows:
Petitioner was hired by the respondent as Operation Staff on March 23, 2002. As Operation Steff,
he performed a variety of duties such as but not limited to documentation, checker, dispatcher or
airfreight coordinator. He [was] on call anytime of the day or night. He was rendering night duty
which [started] at 6:00 p.m. More often it went beyond the normal eight-hour schedule such that
he normally rendered duty until 6:00 or 7:00 the following morning. This [was] without payment of
the corresponding night shift differential and overtime pay. His salary from March 2002 to
December 2004 was PhP3,600.00 per month; from January 2005 to July 25, 2006 at PhP6,200.00
per month; from July 26, 2006 to March 15, 2008 at PhP7,500.00 per month; from March 16, 2008
to February 15, 2009 at PhP9,412.00 per month; and, from February 16, 2009 to March 31, 2009 at
PhP9,932.00 per month. x x x.
Petitioner's employment was uneventful until came February 18, 2009 when the [respondent's]
HRD required him and some other employees to sign a form sub-titled "Personal Data for New
Hires." When he inquired about it he was told it was nothing but merely for the twentypeso
increase which the company owner allegedly wanted to see. He could not help but entertain doubts
on the scheme as they were hurriedly made to sign the same. It also [appeared] from the form that
the designatedsalary/wage [was] daily instead of on a monthly basis. x x x.
On February 21, 2009, a Saturday evening, they were surprised to receive an invitation from the
manager for a dinner and drinking spree in a restaurant-bar. It indeed came as a surprise as he
never had that kind of experience with the manager in his seven (7) years working for the company.
On February 25, 2009, he, together with some other concerned employees[,] requested for a
meeting with their manager together with the manager of the HRD. They questioned the document
and aired their side voicing their apprehensions against the designation "For New Hires" since they
were long time regular employees earning monthly salary/wages and not daily wage earners. The
respondent company's manager[,] Amador Cabrera[,] retorted: "Ay wala yan walang kwenta yan."
When he disclosed that he consulted a lawyer, respondent Cabrera insisted it was nothing and
8
aceordingly, no lawyer could say that it really matters. Cabrera even dared the petitioner to present
the lawyer. The meeting was concluded. When he was about to exit from the conference room he
was addressed with the parting words: "Baka gusto mo, mag-labor ka!" He did not react. On March
4, 2009, petitioner filed a complaint before the National Conciliation and Mediation Board. During
the hearing held on March 25, 2009, it was stipulated/agreed upon that:
(1) Company's counsel admits that petitioner is a regular employee;
(2) There shall be no retaliatory action between petitioner and the company arising from this
complaint;
(3) Issues anent BIR and SSS shall be brought to the proper forum.
xxx
Not long thereafter, or on March 25, 2009, in the evening, a supposed problem cropped up. A
misroute of cargo was reported and the company [cast] the whole blame on the petitioner. It was
alleged that he erroneously wrote the label on the box - the name and destination, and allegedly
[was] the one who checked the cargo. The imputation is quite absurd because it was the client who
actually wrote the name and destination, whereas, it was not the petitioner but his co-employee
who checked the cargo. The following day, he received a memorandum charging him with
"negligence in performing duties."
On April 2, 2009 at 4:00 p.m., he received another memorandum of "reassignment" wherein he was
directed to report effective April 2, 2009 to Richard Omalza and Ferdinand Marzan in another
department of the company. But then, at around 4:30 p.m. of the same day, he was instructed by
the HR manager to proceed to his former office for him to train his replacement. He went inside the
warehouse and at around 6:00 p.m. he began teaching his replacement. At 8:00 p.m.[,] his
replacement went outside. He waited for sometime and came to know later when he verified
outside that the person already went straight home. When he went back inside, his supervisor
insisted [to] him to continue with his former work, but due to the "reassignment paper" he had
some reservations. Sensing he might again be framed up and maliciously accused of such as what
happened on March 25, 2009, he thus refused. Around 10:30 p.m., he went home. x x x.
The following day, an attempt to serve another memorandum was made on him. This time he was
made to explain by the HR Manager why he did not perform his former work and not report to his
reassignment. It only [validated] his apprehension of a set-up. For how could he be at two places at
[the same] time (his former work is situated in Sucat, Parafiaque, whereas, his new assignment is in
FTI, Taguig City). It bears emphasizing that the directive for him to continue discharging his former
duties was merely verbal. At this point, petitioner lost his composure. Exasperated, he refused to

receive the memorandum and thus retorted "Segura naabnormal na ang utak mo" as it dawned on
him that they were out looking for every means possible to pin him down.
Nonetheless, he reported to his reassignment in FTI Taguig on April 3, 2009. There he was served
with the memorandum suspending him from work for thirty (30) days effective April 4, 2009 for
alleged "Serious misconduct and willful disobedience by the employee of the lawful orders of his
employer or representative in connection with his work." His apprehension was thus confirmed. x x
x.
On April 8, 2009, he filed a case anew with the NCMB x x x Hearings were scheduled at the NCMB
on April 20, 27, and May 5, 2009 but the respondents never appeared. On May 4, 2009, he reported
to the office only to be refused entry. Instead, a dismissal letter was handed to him.x x x.
On May 5, 2009, at the NCMB, the mediator decided that the case be brought to the National Labor
Relations Commission for arbitration. Thus, he withdrew his complaint. On May 12, 2009[,] he was
able to refile his complaint with the Arbitration Branch of the NLRC. Efforts were exerted by the
Labor Arbiter to encourage the parties to amicably settle but without success. 7
Respondent countered that: it is a duly registered domestic corporation engaged in the business of
cargo forwarding and truck-hauling; petitioner and several other employees misinterpreted the use
of its old form "For New Hires," that they were relegated to the status of new employees when in
fact they have been employed for quite some time already; after the conciliation conference before
the NCMB, it relied on his promise that he would not disturb the peace in the company premises,
which proved to be wishful thinking; as to the misdelivered cargo of Globe Telecoms, initial
investigation disclosed that he was tasked to check the correct information in the package to ensure
prompt delivery, hence, a Memorandum dated March 27, 2009 was issued to him to explain his
side; thereafter, it was learned from his co-employees that he abandoned his work a few hours
after logging in, which was a serious disobedience to the HR Head's order for him to teach the new
employees assigned to his group; also, he refused to accept a company order with respect to his
transfer of assignment to another client, Fullerlife; for the series of willful disobedience, a
Memorandum dated April 3, 2009 was personally served to him by Gorospe, but he repeatedly
refused to receive the memorandum and howled at her, "Seguro na abnormal ang utak mo!"; his
arrogant actuations, which were directed against a female superior who never made any
provocation and in front of many employees, were contemptuous, gravely improper, and breeds
disrespect, even ignominy, against the company and its officers; on April 3, 2009, another
memorandum was issued to give him the opportunity to explain his side and to inform him of his
preventive suspension for thirty (30) days pending investigation; and the management, after
evaluating the gravity of the charge and the number of infractions, decided to dismiss him from
employment through a notice of dismissal dated April 27, 2009, which was sent via registered mail.
The LA ruled for petitioner, opining that:
9
[Petitioner] had cause for alarm and exasperation it appearing that after he joined a complaint in
the NCMB, in a brief period from [March 27, 2009] to [April 3, 2009], [he] was served with a memo
on alleged mishandling which turned out to be baseless, he was reassigned with no clear
explanation and was being charged for disobedience of which was not eventually acted upon. There
is no indication that the altercation between [him] and the HR Manager was of such aggravated
character as to constitute serious misconduct.
This Office finds, on the other hand, that the respondents appeared bent on terminating the
services of complainant following his taking the respondents to task for the new form and in the
eventual dispute before the NCMB.
As to the relief, [petitioner], as an illegally dismissed employee[,] is entitled to the twin relief of
reinstatement with backwages. However, considering the attendant circumstances, it would not be
to the best interest of the [petitioner] to be reinstated as he would be working under an unjustified
suspicion from his employer. Thus, this office finds the award of full backwages from the time of
dismissal on [April 27, 2009] up to [the] date of this decision and separation pay of one month pay
per year of service in order.
Thus, the backwages due to the [petitioner] is computed at P9,932.00 x 10 months x 1.08 or
P107,265.00. His separation pay is also set at ₱9,932.00 x 8 years or P79,456.00. Other claims are
dismissed for lack of factual and legal basis.
Individual respondents Jerome Ibanez, Lilibeth Gorospe and Amador Cabrera are held liable for
being the responsible officers of the respondent company.
WHEREFORE, in view of the foregoing, decision is hereby rendered declaring the dismissal of the
[petitioner] to be illegal and ordering respondents XIMEX DELIVERY EXPRESS, INC., JEROME IBANEZ,
LILIBETH GOROSPE and AMADOR CABRERA to pay [petitioner] the amount of P186,721.00, as
computed above, as backwages and separation pay. All other claims are dismissed.
SO ORDERED.8
On appeal, the NLRC affirmed in toto the LA's decision. It added:
While We concur that each employee should deal with his coemployees with due respect, the
attending circumstances[,] however[,] should be taken into consideration why said utterance was
made in order to arrive at a fair and equitable decision in this case.
In a span of one week[,] [petitioner] received three (3) [memoranda] requiring him to explain three
(3) different offenses. The utterance was more of an outburst of [his] emotion, having been
 10

subjected to three [memoranda] in successive days, the last of which placed him under suspension
for 30 days. Clearly[,] said utterance [cannot] be considered grave and agravated in character to
warrant the dismissal of herein [petitioner]. x x x.9
Respondent and its accountable officers moved for reconsideration.10 In partially granting the
motion, the NLRC ruled that while the memoranda charging petitioner of negligence, misconduct,
and disobedience were unfounded and that he could not be blamed for his emotional flare-up due
to what he considered as successive retaliatory actions, there was no malice or bad faith on the part
of Ibanez, Gorospe, and Cabrera to justify their solidary liability with respondent.11 Petitioner did
not move to reconsider the modified judgment.
continue his employment with [respondent] who was rendered helpless by his acts of
insubordination.
On the other hand, [respondent] complied with the due process requirements in effecting
[petitioner's] dismissal. It furnished the latter two (2) written notices, first, in Memorandum dated
April 3, 2009 apprising him of the charge of serious misconduct for which his dismissal was sought
and second, in Notice of Dismissal dated April 27, 2009 which informed him of [respondent's]
decision to dismiss him. 12
The petition is meritorious.

Still aggrieved, respondent elevated the case to the CA, which reversed and set aside the December Standard of Review
15, 2010 Resolution and the July 20, 2011 Decision of the NLRC. The appellate court held:
In a Rule 45 petition of the CA decision rendered under Rule 65, We are guided by the following
x x x [A]fter a careful scrutiny of the facts on record, we find that [petitioner's] behavior constitute rules:
serious misconduct which was of grave and aggravated character. When he threw the
Memorandum served on him by HR Supervisor Gorospe in front of her and when he later on [I]n a Rule 45 review (of the CA decision rendered under Rule 65), the question of law that
shouted at her, "Siguro na abnormal ang utak mo!", he was not only being disrespectful, he also confronts the Court is the legal correctness of the CA decision - i.e., whether the CA correctly
manifested a willful defiance of authority and insubordination. Much more, he did it in the presence determined the presence or absence of grave abuse of discretion in the NLRC decision before it, and
of his co-employees which if not corrected would create a precedent to [respondent's] detriment. not on the basis of whether the NLRC decision on the merits of the case was correct. ...
[Petitioner's] actuations were willfully done as shown by the foul language he used against his
superior, with apparent wrongful intent and not mere error in judgment, making him unfit to
Specifically, in reviewing a CA labor ruling under Rule 45 of the Rules of Court, the Court's review is
continue working for [respondent]. [Petitioner] attempted to blame [respondent] for his behaviour
limited to:
allegedly because he was provoked by the successive memoranda it issued to him in a span of two
(2) days. This, however, is a lame excuse and did not in any way justify the inflammatory language
(1) Ascertaining the correctness of the CA's decision in finding the presence or absence of a grave
he used against Gorospe and the throwing of the Memorandum at the HR Supervisor, in the
abuse of discretion. This is done by examining, on the basis of the parties' presentations, whether
presence of his co-employees at that. Condoning his behaviour is not what the law contemplates
the CA correctly determined that at the NLRC level, all the adduced pieces of evidence were
when it mandated a liberal treatment in favor of the working man. An employer cannot be
considered; no evidence which should not have been considered was considered; and the evidence
compelled to continue employing an employee guilty of acts inimical to the employer's interest,
presented supports the NLRC findings; and
justifying loss of confidence in him. A company has the right to dismiss its erring employees as a
measure of self-protection against acts inimical to its interest. x x x.
(2) Deciding any other jurisdictional error that attended the CA’s interpretation or application of the
law.13
xxxx

The general rule is that certiorari does not lie to review errors of judgment of a quasi-judicial
Further, in a long line of cases, it was ruled that accusatory and inflammatory language used by an
tribunal since the judicial review does not go as far as to examine and assess the evidence of the
employee to the employer or superior can be a ground for dismissal or termination. Likewise, it did
parties and to weigh their probative value.14 However, the CA may grant the petition when the
not escape Our attention that [petitioner] had been intentionally defying the orders of his
factual findings complained of are not supported by the evidence on record; when it is necessary to
immediate superiors when he refused to train his replacement prior to his transfer at Fullerlife in
prevent a substantial wrong or to do substantial justice; when the findings of the NLRC contradict
Taguig City despite being told to do so. This defiance was also manifested when he left his work
those of the Labor Arbiter; and when necessary to arrive at a just decision of the case.15
station without his superior's permission. Undoubtedly, [petitioner's] behavior makes him unfit to

As will be shown later, none of the recognized exceptions is present in this case; hence, the CA
.erred when it made its own factual determination of the matters involved and, on that basis,
reversed the NLRC ruling that affirmed the findings of the labor arbiter. While this Court, in a Rule
45 petition, is not a trier of facts and does not analyze and weigh again the evidence presented
before the tribunals below, the conflicting findings of the administrative bodies exercising quasi-
judicial functions and the CA compels Us to make Our own independent findings of facts. 16
Termination of Employment
While an employer is given a wide latitude of discretion in managing its own affairs, in the
promulgation of policies, rules and regulations on work-related activities of its employees, and in
the imposition of disciplinary measures on them, the exercise of disciplining and imposing
appropriate penalties on erring employees must be practiced in good faith and for the
advancement of the employer's interest and not for the purpose of defeating or circumventing the
rights of employees under special laws or under valid agreements. 17 The reason being that -
Security of tenure of workers is not only statutorily protected, it is also a constitutionally
guaranteed right. Thus, any deprivation of this right must be attended by due process of law. This
means that any disciplinary action which affects employment must pass due process scrutiny in
both its substantive and procedural aspects.
The constitutional protection for workers elevates their work to the status of a vested right. It is a
vested right protected not only against state action but against the arbitrary acts of the employers
as well. This court in Philippine Movie Pictures Workers' Association v. Premier Productions, Inc.
categorically stated that "[t]he right of a person to his labor is deemed to be property within the
meaning of constitutional guarantees." Moreover, it is of that species of vested constitutional right
that also affects an employee's liberty and quality of life. Work not only contributes to defining the
individual, it also assists in determining one's purpose. Work provides for the material basis of
human dignity. 18
Dismissal from employment have two facets: first, the legality of the act of dismissal, which
constitutes substantive due process; and, second, the legality of the manner of dismissal, which
constitutes procedural due process. 19 The burden of proof rests upon the employer to show that
the disciplinary action was made for lawful cause or that the termination of employment was
valid.20 In administrative and quasi-judicial proceedings, the quantum of evidence required is
substantial evidence or "such relevant evidence as a reasonable mind might accept as adequate to
support a conclusion."21 Thus, unsubstantiated suspicions, accusations, and conclusions of the
employer do not provide legal justification for dismissing the employee. 22 When in doubt, the case
should be resolved in favor of labor pursuant to the social justice policy of our labor laws and the
1987 Constliution.23
11
Act of Dismissal
Respondent manifestly failed to prove that petitioner's alleged act constitutes serious misconduct.
Misconduct is improper or wrong conduct; it is the transgression of some established and definite
rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent
and not mere error in judgment.24The misconduct, to be serious within the meaning of the Labor
Code, must be of such a grave and aggravated character and not merely trivial or
unimportant. 25 Thus, for misconduct or improper behavior to be a just cause for dismissal, (a) it
must be serious; (b) it must relate to the performance of the employee's duties; and (c) it must
show that the employee has become unfit to continue working for the employer. 26
While this Court held in past decisions that accusatory and inflammatory language used by an
employee to the employer or superior can be a ground for dismissal or termination,27 the
circumstances peculiar to this case find the previous rulings inapplicable. The admittedly insulting
and unbecoming language uttered by petitioner to the HR Manager on April 3, 2009 should be
viewed with reasonable leniency in light of the fact that it was committed under an emotionally
charged state. We agree with the labor arbiter and the NLRC that the on-the-spur-of-the-moment
outburst of petitioner, he having reached his breaking point, was due to what he perceived as
successive retaliatory and orchestrated actions of respondent. Indeed, there was only lapse in
judgment rather than a premeditated defiance of authority.
Further, petitioner's purported "thug-like" demeanor is not serious in nature. Despite the "grave
embarassment" supposedly caused on Gorospe, she did not even take any separate action
independent of the company. Likewise, respondent did not elaborate exactly how and to what
extent that its "nature of business" and "industrial peace" were damaged by petitioner's
misconduct. It was not shown in detail that he has become unfit to continue working for the
company and that the continuance of his services is patently inimical to respondent's interest.
Even if a just cause exists, the employer still has the discretion whether to dismiss the employee,
impose a lighter penalty, or condone the offense committed.28 In making such decision, the
employee's past offenses may be taken into consideration.29
x x x In Merin v. National Labor Relations Commission, this Court expounded on the principle of
totality of infractions as follows:
The totality of infractions or the number of violations committed during the period of employment
shall be considered in determining the penalty to be imposed upon an erring employee. The
offenses committed by petitioner should not be taken singly and separately. Fitness for continued
employment cannot be compartmentalized into tight little cubicles of aspects of character, conduct
and ability separate and independent of each other. While it may be true that petitioner was

penalized for his previous infractions, this does not and should not mean that his employment
record would be wiped clean of his infractions. After all, the record of an employee is a relevant
consideration in determining the penalty that should be meted out since an employee's past
misconduct and present behavior must be taken together in determining the proper imposable
penalty[.] Despite the sanctions imposed upon petitioner, he continued to commit misconduct and
exhibit undesirable behavior on board. Indeed, the employer cannot be compelled to retain a
misbehaving employee, or one who is guilty of acts inimical to its interests.30
In this case, respondent contends that aside from petitioner's disrespectful remark against Gorospe,
he also committed several prior intentional misconduct, to wit: erroneous packaging of a cargo of
respondent's client, abandoning work after logging in, failing to teach the rudiments of his job to
the new employees assigned to his group despite orders from his superior, and refusing to accept
the management's order on the transfer of assignment. After evaluating the gravity of the charges
and the number of infractions, respondent decided to dismiss petitioner from his employment.
We do not agree. Respondent cannot invoke the principle of totality of infractions considering that
petitioner's alleged previous acts of misconduct were not established in accordance with the
requirements of procedural due process. In fact, respondent conceded that he "was not even
censured for any infraction in the past." It admitted that "[the] March 25, 2009 incident that
[petitioner] was referring to could not be construed as laying the predicate for his dismissal,
because [he] was not penalized for the misrouting incident when he had adequately and
satisfactorily explained his side. Neither was he penalized for the other [memoranda] previously or
subsequently issued to him."31
This Court finds the penalty of dismissal too harsh. Not every case of insubordination or willful
disobedience by an employee reasonably deserves the penalty of dismissal because the penalty to
be imposed on an erring employee must be commensurate with the gravity of his or her
offense. 32Petitioner's termination from employment is also inappropriate considering that he had
been with respondent company for seven (7) years and he had no previous derogatory record. It is
settled that notwithstanding the existence of a just cause, dismissal should not be imposed, as it is
too severe a penalty, if the employee had been employed for a considerable length of time in the
service of his or her employer, and such employment is untainted by any kind of dishonesty and
irregularity.33
Manner of dismissal
The procedural due process requirement was not complied with. King of Kings Transport, Inc. v.
Mamac, 34 provided for the following rules in terminating the services of employees:
(1) The first written notice to be served on the employees should contain the specific causes or
grounds for termination against them, and a directive that the employees are given the opportunity
12
to submit their written explanation within a reasonable period. "Reasonable opportunity" under the
Omnibus Rules means every kind of assistance that management must accord to the employees to
enable them to prepare adequately for their defense. This should be construed as a period of at
least five (5) calendar days from receipt of the notice to give the employees an opportunity to study
the accusation against them, consult a union official or lawyer, gather data and evidence, and
decide on the defenses they will raise against the complaint. Moreover, in order to enable the
employees to intelligently prepare their explanation and defenses, the notice should contain a
detailed narration of the facts and circumstances that will serve as basis for the charge against the
employees. A general description of the charge will not suffice. Lastly, the notice should specifically
mention which company rules, if any, are violated and/or which among the grounds under Art. 282
is being charged against the employees.
(2) After serving the first notice, the employers should schedule and conduct a hearing or
conference wherein the employees will be given the opportunity to: (1) explain and clarify their
defenses to the charge against them; (2) present evidence in support of their defenses; and (3)
rebut the evidence presented against them by the management. During the hearing or conference,
the employees are given the chance to defend themselves personally, with the assistance of a
representative or counsel of their choice. Moreover, this conference or hearing could be used by
the parties as an opportunity to come to an amicable settlement.
(3) After determining that termination of employment is justified, the employers shall serve the
employees a written notice of termination indicating that: (1) all circumstances involving the charge
against the employees have been considered; and (2) grounds have been established to justify the
severance of their employment.35
Later, Perez, et al. v. Phil. Telegraph and Telephone Co. et al., 36 clarified that an actual or formal
hearing is not an absolute requirement. The Court en bane held:
>>
Article 277(b) of the Labor Code provides that, in cases of termination for a just cause, an employee
must be given "ample opportunity to be heard and to defend himself." Thus, the opportunity to be
heard afforded by law to the employee is qualified by the word "ample" which ordinarily means
"considerably more than adequate or sufficient." In this regard, the phrase "ample opportunity to
be heard" can be reasonably interpreted as extensive enough to cover actual hearing or conference.
To this extent, Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code is in
conformity with Article 277(b).
Nonetheless, Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code should not
be taken to mean that holding an actual hearing or conference is a condition sine qua non for
compliance with the due process requirement in termination of employment. The test for the fair

procedure guaranteed under Article 277(b) cannot be whether there has been a formal
pretermination confrontation between the employer and the employee. The "ample opportunity to
be heard" standard is neither synonymous nor similar to a formal hearing. To confine the
employee's right to be heard to a solitary form narrows down that right. It deprives him of other
equally effective forms of adducing evidence in his defense. Certainly, such an exclusivist and
absolutist interpretation is overly restrictive. The "very nature of due process negates any concept
of inflexible procedures universally applicable to every imaginable situation."
The standard for the hearing requirement, ample opportunity, is couched in general language
revealing the legislative intent to give some degree of flexibility or adaptability to meet the
peculiarities of a given situation. To confine it to a single rigid proceeding such as a formal hearing
will defeat its spirit.
Significantly, Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code itself
provides that the so-called standards of due process outlined therein shall be observed
"substantially," not strictly. This is a recognition that while a formal hearing or conference is ideal, it
is not an absolute, mandatory or exclusive avenue of due process.
An employee's right to be heard in termination cases under Article 277(b) as implemented by
Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code should be interpreted in
broad strokes. It is satisfied not only by a formal face to face confrontation but by any meaningful
opportunity to controvert the charges against him and to submit evidence in support thereof.
A hearing means that a party should be given a chance to adduce his evidence to support his side of
the case and that the evidence should be taken into account in the adjudication of the
controversy. "To be heard" does not mean verbal argumentation alone inasmuch as one may be
heard just as effectively through written explanations, submissions or pleadings. Therefore, while
the phrase "ample opportunity to be heard" may in fact include an actual hearing, it is not limited to
a formal hearing only. In other words, the existence of an actual, formal "trial-type" hearing,
although preferred, is not absolutely necessary to satisfy the employee's right to be heard.
[T]he employer may provide an employee with ample opportunity to be heard and defend himself
with the assistance of a representative or counsel in ways other than a formal hearing. The
employee can be fully afforded a chance to respond to the charges against him, adduce his
evidence or rebut the evidence against him through a wide array of methods, verbal or written.
After receiving the first notice apprising him of the charges against him, the employee may submit a
written explanation (which may be in the form of a letter, memorandum, affidavit or position
paper) and offer evidence in support thereof, like relevant company records (such as his 201 file
and daily time records) and the sworn statements of his witnesses. For this purpose, he may
prepare his explanation personally or with the assistance of a representative or counsel. He may
13
also ask the employer to provide him copy of records material to his defense. His written
explanation may also include a request that a formal hearing or conference be held. In such a case,
the conduct of a formal hearing or conference becomes mandatory, just as it is where there exist
substantial evidentiary disputes or where company rules or practice requires an actual hearing as
part of employment pretermination procedure. To this extent, we refine the decisions we have
rendered so far on this point of law.
This interpretation of Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code
reasonably implements the "ample opportunity to be heard" standard under Article 277(b) of the
Labor Code without unduly restricting the language of the law or excessively burdening the
employer. This not only respects the power vested in the Secretary of Labor and Employment to
promulgate rules and regulations that will lay down the guidelines for the implementation of Article
277(b). More importantly, this is faithful to the mandate of Article 4 of the Labor Code that "[a]ll
doubts in the implementation and interpretation of the provisions of [the Labor Code], including its
implementing rules and regulations shall be resolved in favor of labor."
In sum, the following are the guiding principles in connection with the hearing requirement in
dismissal cases:
(a) "ample opportunity to be heard" means any meaningful opportunity (verbal or written) given to
the employee to answer the charges against him and submit evidence in support of his defense,
whether in a hearing, conference or some other fair, just and reasonable way.
(b) a formal hearing or conference becomes mandatory only when requested by the employee in
writing or substantial evidentiary disputes exist or a company rule or practice requires it, or when
similarcircumstances justify it.
(c) the "ample opportunity to be heard" standard in the Labor Code prevails over the "hearing or
conference" requirement in the implementing rules and regulations.37
In this case, the Memorandum dated April 3, 2009 provided:
Ito ay patungkol sa pangyayari kanina, mga bandang alas kuwatro ng hapon, na kung saan ang mga
ipinakita at ini-asal mo sa akin bilang iyong HR Supervisor na pagbato/paghagis na may kasamang
pagdadabog ang memo na ibinigay para sa iyo na nagsasaad na ikaw ay pinagpapaliwanag lamang
sa mga alegasyon laban sa iyo na dinulog sa aming tanggapan. Ikaw ay binigyan ng pagkakataon na
ibigay ang iyong paliwanag ngunit ang iyong ginawa ay, ikaw ay nagdabog at inihagis ang memo sa
harapan mismo ng iyong HR Supervisor sa kadahilanang hindi mo lamang matanggap ang mga
alegasyong inirereklamo tungkol sayo. Ang paninigaw mo at pagsasabi na "Abnormal pala utak mo
eh" sa HR Supervisor mo na mas nakatataas sa iyo sa harap ng maraming empleyado ay nagpapakita
lang na ikaw ay lumabag sa patakaran ng kumpanya na "Serious Misconduct and willful

disobedience by the employee of the lawful orders of his employer or representative in connection
with his work."
Dahil dito, ang pamunuan ay nagdesisyon na ikaw ay suspendihin ng tatlumpung araw (30) habang
isinasagawa ang imbestigasyon at ito ay magsisimula pagkatanggap mo ng liham na ito. Para sa
iyong kaalaman at pagsunod.38
On the other hand, the dismissal letter dated April 27, 2009, which was also signed by Gorospe,
stated:
Ito ay patungkol sa pangyayari na kung saan, ipinakita mo ang hindi kagandahang asal at
kagaspangan ng iyong pag-uugali at hindi pagbibigay ng respeto sa mas nakatataas sa iyo. Na kung
saan ay iyong ibinato/inihagis ang memo para sa iyo na nagsasaad na ikaw ay pinagpapaliwanag at
binibigyan ng pagkakataon na marinig ang iyong panig laban sa mga alegasyon na iyong
kinakaharap. Ang paninigaw mo at pagsasabi na "Abnormal pala utak mo eh" sa akin na HR
Supervisor mo na mas nakatataas sa iyo sa harap ng maraming empleyado ay nagpapakita lamang
na ikaw ay lumabag sa patakaran ng kumpanya, ang "Serious Misconduct by the employee of the
lawful orders of his employer or representative in connection with his work." Nais naming sabihin
na hindi pinahihintulutan ng pamunuan ang ganitong mga pangyayari. Dahil dito, ang pamunuan ay
nagdesisyon na ikaw ay tanggalin sa kumpanyang ito na magsisimula pagkatanggap mo ng sulat [na]
ito. Paki sa ayos ang iyong mga trabahong maiiwan.39
Evidently, Memorandum dated April 3, 2009 does not contain the following: a detailed narration of
facts and circumstances for petitioner to intelligently prepare his explanation and defenses, the
specific company rule violated and the corresponding penalty therefor, and a directive giving him at
least five (5) calendar days to submit a written explanation. No ample opportunity to be heard was
also accorded to petitioner. Instead of devising a just way to get the side of petitioner through
testimonial and/or documentary evidence, respondent took advantage of his "refusal" to file a
written explanation. This should not be so. An employer is duty-bound to exert earnest efforts to
arrive at a settlement of its differences with the employee. While a full adversarial hearing or
conference is not required, there must be a fair and reasonable opportunity for the employee to
explain the controversy at hand.40 Finally, the termination letter issued by respondent miserably
failed to satisfy the requisite contents of a valid notice of termination. Instead of discussing the
facts and circumstances to support the violation of the alleged company rule that imposed a penalty
of dismissal, the letter merely repeats the self-serving accusations stated in Memorandum dated
April 3, 2009.
Preventive Suspension
Similar to a case,41 no hearing or conference was called with respect to petitioner's alleged
misconduct. Instead, he was immediately placed under preventive suspension for thirty (30) days
14
and was dismissed while he was still serving his suspension. According to respondent, it is proper to
suspend him pending investigation because his continued employment poses serious and imminent
threat to the life of the company officials and also endanger the operation of the business of
respondent, which is a common carrier dutybound to observe extra ordinary diligence. 42
Preventive suspension may be legally imposed against an employee whose alleged violation is the
subject of an investigation. The purpose of suspension is to prevent-harm or injury to the company
as well as to fellow employees.43 The pertinent rules dealing with preventive suspension are found
in Sections 8 and 9 of Rule XXIII, Book V of the Omnibus Rules Implementing the Labor Code, which
read: SEC. 8. Preventive suspension. - The employer may place the worker concerned under
preventive suspension if his continued employment poses a serious and imminent threat to the life
or property of the employer or of his co-workers.
SEC. 9. Period of suspension. - No preventive suspension shall last longer than thirty (30) days. The
employer shall thereafter reinstate the worker in his former or in a substantially equivalent position
or the employer may extend the period of suspension provided that during the period of extension,
he pays the wages and other benefits due to the worker. In such case, the worker shall not be
bound to reimburse the amount paid to him during the extension if the employer decides, after
completion of the hearing, to dismiss the worker.
As succinctly stated above, preventive suspension is justified where the employee's continued
employment poses a serious and imminent threat to the life or property of the employer or of the
employee's co-workers.1âwphi1 Without this kind of threat, preventive suspension is not
proper.44 Here, it cannot be said that petitioner posed a danger on the lives of the officers or
employees of respondent or their properties. Being one of the Operation Staff, which was a rank
and file position, he could not and would not be able to sabotage the operations of respondent. The
difficulty of finding a logical and reasonable connection between his assigned tasks and the
necessity of his preventive suspension is apparent from the fact that even respondent was not able
to present concrete evidence to support its general allegation.
WHEREFORE, premises considered, the petition is GRANTED. The November 20, 2012 Decision and
June 21, 2013 Resolution of the Court of Appeals in CA G.R. SP No. 121176, which set aside the
December 15, 2010 Resolution and July 20, 2011 Decision of the National Labor Relations
Commission that affirmed the February 18, 2010 Decision of the Labor Arbiter finding the illegal
dismissal of petitioner, are hereby REVERSED AND SET ASIDE. The Labor Arbiter is DIRECTED to
recompute the proper amount of backwages and separation pay due to petitioner in accordance
with this decision.
SO ORDERED.

Pascua vs. Bank Wise, Inc. G.R. No. 191460. January 31, 2018.*
Labor Law; Execution of Judgments; Under the 2005 National Labor Relations Commission (NLRC)
Revised Rules of Procedure, execution proceedings only commence upon the finality of the National
Labor Relations Commission’s judgment.—Under the 2005 NLRC Revised Rules of Procedure,
execution proceedings only commence upon the finality of the National Labor Relations
Commission’s judgment. Rule XI, Section 1 states: RULE XI EXECUTION PROCEEDINGS Section 1.
Execution Upon Finality of Decision or Order.—a) A writ of execution may be issued motu proprio or
on motion, upon a decision or order that finally disposes of the action or proceedings after the
parties and their counsels or authorized representatives are furnished with copies of the decision or
order in accordance with these Rules, but only after the expiration of the period to appeal if no
appeal has been filed, as shown by the certificate of finality. If an appeal has been filed, a writ of
execution may be issued when there is an entry of judgment as provided for in Section 14 of Rule
VII. b) No motion for execution shall be entertained nor a writ of execution be issued unless the
Labor Arbiter or the Commission is in possession of the records of the case which shall include an
entry of judgment if the case was appealed; except that, as provided for in Section 14 of Rule V and
Section 6 of this Rule, and in those cases where partial execution is allowed by law, the Labor
Arbiter shall retain duplicate original copies of the decision to be implemented and proof of service
thereof for the purpose of immediate enforcement.
Same; Termination of Employment; Constructive Dismissal; It is constructive dismissal when
resignation “was made under compulsion or under circumstances approximating compulsion, such
as when an employee’s act of handing in his [or her] resignation was a reaction to circumstances
leaving him [or her] no alternative but to resign.”—The employer has the burden of proving, in
illegal dismissal cases, that the employee was dismissed for a just or authorized cause. Even if the
employer claims that the employee resigned, the employer still has the burden of proving that the
resignation was voluntary. It is constructive dismissal when resignation “was made under
compulsion or under circumstances approximating compulsion, such as when an employee’s act of
handing in his [or her] resignation was a reaction to circumstances leaving him [or her] no
alternative but to resign.” “Resignation is the voluntary act of an employee who is in a situation
where one believes that personal reasons cannot be sacrificed in favor of the exigency of the
service, and one has no other choice but to dissociate oneself from employment.” In order to prove
that resignation is voluntary, “the acts of the employee before and after the alleged resignation
must be considered in determining whether he or she, in fact, intended to sever his or her
employment.”
Same; Employees with special qualifications would be on equal footing with their employers, and
thus, would need a lesser degree of protection from the State than an ordinary rank-and-file
worker.—Labor is a constitutionally protected social class due to the perceived inequality between
capital and labor. Article 1700 of the Civil Code states: Article 1700. The relations between capital
and labor are not merely contractual. They are so impressed with public interest that labor
15
contracts must yield to the common good. Therefore, such contracts are subject to the special laws
on labor unions, collective bargaining, strikes and lockouts, closed shop, wages, working conditions,
hours of labor and similar subjects. The presumption is that the employer and the employee are on
unequal footing so the State has the responsibility to protect the employee. This presumption,
however, must be taken on a case-to-case basis. In situations where special qualifications are
required for employment, such as a Master’s degree or experience as a corporate executive,
prospective employees are at a better position to bargain or make demands from the employer.
Employees with special qualifications would be on equal footing with their employers, and thus,
would need a lesser degree of protection from the State than an ordinary rank-and-file worker.
Same; Termination of Employment; Resignation; Voluntary Resignation; Separation Pay; An
employee who voluntarily resigns is not entitled to separation pay unless it was previously
stipulated in the employment contract or has become established company policy or practice.—
Pascua’s resignation letter, however, was unconditional. It contained no reservations that it was
premised on his subsequent claim for severance pay and other benefits. His resignation was also
accepted by his employers. In this instance, Pascua is not considered to have been constructively
dismissed. Pascua’s third letter likewise indicates that he has already accepted the consequences of
his voluntary resignation but that it would be subject to the payment of severance pay. However,
his claim for severance pay cannot be granted. An employee who voluntarily resigns is not entitled
to separation pay unless it was previously stipulated in the employment contract or has become
established company policy or practice. There is nothing in Pascua’s Contract of Employment that
states that he would be receiving any monetary compensation if he resigns. He has also not shown
that the payment of separation pay upon resignation is an established policy or practice of
Bankwise since his third letter indicated that he was unaware of any such policy.
LEONEN, J.:
There is constructive dismissal when an employee is compelled by the employer to resign or is
placed in a situation where there would be no other choice but to resign. An unconditional and
categorical letter of resignation cannot be considered indicative of constructive dismissal if it is
submitted by an employee fully aware of its effects and implications.
For resolution are two (2) separate Petitions for Review on Certiorari1 assailing the July 13, 2009
Decision2 and February 22, 2010 Resolution3 of the Court of Appeals in CA-G.R. SP No. 103453. The
Court of Appeals affirmed the Labor Arbiter and National Labor Relations Commission's finding that
Perfecto M. Pascua (Pascua) was constructively dismissed. The Court of Appeals, however, absolved
Philippine Veterans Bank from liability and held only Bankwise, Inc. (Bankwise) liable for Pascua's
money claims. Pascua was employed by Bankwise as its Executive Vice President for Marketing on
July 1, 2002.4

On September 29, 2004, Philippine Veterans Bank and Bankwise entered into a Memorandum of
Agreement for the purchase of Bankwise's entire outstanding capital stock.5 On January 12, 2005,
Philippine Veterans Bank allegedly assumed full control and management of Bankwise.6 Philippine
Veterans Bank allegedly elected new members of the Board of Directors and appointed a new set of
officers, including the President and Chief Operating Officer. 7
Pascua was reassigned to a Special Accounts Unit but his duties, functions, and responsibilities were
not clearly delineated or defined.8
On February 3, 2005, Pascua was informed by Roberto A. Buhain (Buhain), President of Bankwise,
that as part of the merger or trade-off agreement with Philippine Veterans Bank, he should tender
his resignation.9 Buhain assured Pascua that he would be paid all his money claims during this
transition. 10 Instead of tendering his resignation, Pascua wrote a letter dated February 7, 2005,
wherein he pleaded, among others, that he stay in office until the end of the year. 11
Seeing as Pascua had yet to submit his resignation, Vicente Campa (Campa), a director of Bankwise,
told him that it was imperative that he submit his resignation and assured his continued service
with Philippine Veterans Bank.12Based on Campa's assurance, Pascua tendered his resignation on
February 22, 2005. His letter of resignation read:
SIR: IN ACCORDANCE WITH THE INSTRUCTIONS OF THE PREVIOUS OWNERS OF THE BANK, I HEREBY
TENDER MY RESIGNATION FROM THE BANK.13
On March 6, 2005, Pascua wrote a letter to Campa reminding him of his money claims due to his
resignation.14Because of "the urgency of [his] financial needs,"15 he proposed the initial payment
of his midyear bonus of ₱150,000.00 or the transfer of his Bankwise loan amounting to
₱1,000,000.00 to offset his claim.16 Pascua alleged that he was summoned by Buhain to his office
on March 8, 2005 and handed a letter of acceptance of his resignation effective March 31, 2005.17
In a letter dated March 12, 2005, Pascua informed Buhain that per Buhain's suggestion, he asked
Campa to request Bankwise's Board of Directors for the extension of his service until August 30,
2005. Both Philippine Veterans Bank and Bankwise, however, denied the request. Pascua allegedly
inquired from Buhain how his money claims would be paid in view of "the passive attitude" of the
banks. Buhain allegedly assured him that he already sought a meeting with Campa on the matter.
During the meeting Campa also assured him that all his money claims would be paid by the previous
owners of Bankwise.18
Due to the inaction of Philippine Veterans Bank and Bankwise, Pascua sent Buhain a letter dated
April 13, 2005, demanding the early settlement of his money claims. 19 The demand was not
heeded. Thus, Pascua filed a Complaint for illegal dismissal, non-payment of salary, overtime pay,
holiday pay, premium pay for holiday, service incentive leave, 13th month pay, separation pay,
16
retirement benefits, actual damages, moral damages, exemplary damages, and attorney's fees
against Bankwise and Philippine Veterans Bank.20
In his November 25, 2005 Decision,21 the Labor Arbiter dismissed the Complaint on the ground that
Pascua had voluntarily resigned. The Labor Arbiter relied on Pascua's resignation letter dated
February 22, 2005 and paragraph 8 of his Contract of Employment22 stating that no verbal
agreement between the employee and Bankwise may alter the terms of employment. The Labor
Arbiter found that there was no evidence in writing to prove the alleged private agreement among
Pascua, Buhain, and Campa. 23
Pascua appealed to the National Labor Relations Commission. In its October 31, 2007
Decision,24 the National Labor Relations Commission reversed the Labor Arbiter's findings and held
that Pascua was constructively dismissed.25 It found that Pascua was separated from service as part
of the merger or trade-off deal between Bankwise and Philippine Veterans Bank and was forced to
accept his separation from service on the promise that he would be paid severance pay and his
other benefits.26 The dispositive portion of this Decision read:
WHEREFORE, premises considered, the assailed Decision is hereby REVERSED and SET ASIDE and a
NEW one rendered whereby, the respondents Bank Wise, Inc. and Philippine Veterans Bank are
hereby ordered to pay complainant Perfecto M. Pascua the amount of Php7,608,543.54
representing his backwages, separation pay and attorney's fees as above computed. SO
ORDERED.27
Philippine Veterans Bank and Bankwise filed separate Motions for Reconsideration dated December
14, 200728 and December 17, 2007,29 respectively, before the National Labor Relations
Commission. In its March 14, 2008 Resolution, the National Labor Relations Commission resolved to
deny the Motions for Reconsideration filed "by the respondents" even though it only mentioned the
December 14, 2007 Motion for Reconsideration. 30
Philippine Veterans Bank filed a Petition for Certiorari before the Court of Appeals, arguing that
Pascua's resignation was voluntary. It also argued that even assuming Pascua was constructively
dismissed, it should not be made liable with Bankwise since it was separate and distinct from it.31
On February 7, 2008, during the pendency of the Petition for Certiorari with the Court of Appeals,
the Monetary Board of the Bangko Sentral ng Pilipinas determined that Bankwise was insolvent and
adopted Resolution No. 157 forbidding Bankwise from further doing business in the
Philippines.32 In the same Resolution, the Monetary Board placed Bankwise under receivership and
designated Philippine Deposit Insurance Corporation as its receiver.33 On October 30, 2008, the
Monetary Board issued Resolution No. 1386 directing the Philippine Deposit Insurance Corporation
to proceed with the liquidation of Bankwise. 34

On July 13, 2009, the Court of Appeals rendered its assailed Decision,35 finding that Pascua was
constructively dismissed but held that only Bankwise should be made liable to Pascua for his money
claims. 36 The dispositive portion of this Decision read:
WHERFORE, the petition is DISMISSED while the assailed decision of the NLRC is PARTLY AFFIRMED
with the modification that only respondent Bank Wise is ordered to pay Perfecto M. Pascua
backwages, separation pay and attorney's fees.SO ORDERED.37
The Court of Appeals found that there was no certificate of merger between Bankwise and
Philippine Veterans Bank; hence, Bankwise retained its separate corporate identity. 38 The Court of
Appeals also pointed out that the National Labor Relations Commission's finding of Philippine
Veterans Bank's liability was an error of judgment, and not of jurisdiction; hence, it did not commit
grave abuse of discretion. 39
Pascua and Bankwise separately filed Motions for Reconsideration of this Decision. Both Motions,
however, were denied by the Court of Appeals in its February 22, 2010 Resolution. 40
Pascua filed a Petition for Review on Certiorari41 with this Court docketed as G.R. No. 191460.
Bankwise also filed a Petition for Review on Certiorari42 with this Court, docketed as G.R. No.
191464. This Court consolidated both Petitions on April 26, 2010.43
Pascua argues that the Court of Appeals erroneously absolved Philippine Veterans Bank of its
liability since it had already taken over the management and business operations of Bankwise by
the time he was constructively dismissed.44 He insists that since Bankwise was already declared
insolvent, Philippine Veterans Bank should be held solidarily liable as Bankwise's assets are already
exempt from execution.45
Bankwise, on the other hand, claims that the Court of Appeals erred in finding it liable since the
National Labor Relations Commission never resolved its Motion for Reconsideration.46 Considering
that its Motion for Reconsideration was still pending, the decision of the National Labor Relations
Commission against it has not yet become final.47
Bankwise also contends that assuming Pascua was enticed to resign in exchange for severance pay,
it should not be held liable for the actions of Buhain and Campa, who acted beyond their
authority.48 It insists that paragraph 8 of Pascua's Contract of Employment states that no verbal
agreement can alter or vary the terms of the contract unless it is reduced in writing.49 It alleged
that even assuming it was liable to Pascua, the liability could not be enforced since it was
undergoing liquidation by the Philippine Deposit Insurance Corporation. 50 It also points out that
legal compensation should be an applicable defense since Pascua had three (3) outstanding loan
obligations to it in the amount of ₱4,902,364.88.51
17
For its part, Philippine Veterans Bank asserts that it is a distinct and separate entity from Bankwise
since the Memorandum of Agreement between them was not consummated. 52 Even assuming
that their Memorandum of Agreement was consummated, Bankwise expressly freed Philippine
Veterans Bank from liability arising from money claims of its employees. 53 It also points out that
even if Pascua was found to have been constructively dismissed, only Bankwise's corporate officers
should be held liable for their unauthorized acts. 54
Philippine Veterans Bank likewise posits that Pascua was not constructively dismissed since he had
voluntarily resigned. It points out three (3) letters of resignation that Pascua drafted demanding
payment of his severance pay according to the terms he had specified. It argues that Pascua
voluntarily resigned knowing that it was acquiring Bankwise and it is not obliged to absorb
Bankwise's employees.55
This Court is asked to resolve the sole issue of whether or not Pascua was constructively dismissed.
Assuming that Pascua is found to have been constructively dismissed, this Court must also resolve
the issue of whether or not Philippine Veterans Bank should be solidarily liable with Bankwise, Inc.
for his money claims.
At the outset, however, this Court must first address the issue of whether or not the National Labor
Relations Commission March 14, 2008 Resolution also resolved Bankwise, Inc.'s Motion for
Reconsideration dated December 17, 2007.
1. The National Labor Relations Commission October 31, 2007 Decision56 already attained finality
when the records of the case were remanded to the Labor Arbiter and a writ of execution was
issued in Pascua's favor.
Philippine Veterans Bank filed a Motion for Reconsideration57 dated December 14, 2007 while
Bankwise filed a Motion for Reconsideration58 dated December 17, 2007. On March 14, 2008, the
National Labor Relations Commission resolved both motions in a Resolution59 which read:
Acting on the Motion for Reconsideration dated December 14, 2007 filed by the
respondents relative to the Decision promulgated by this Commission on October 31, 2007, We
resolve to DENY the same as the motion raised no new matters of substance which would warrant
reconsideration of the Decision of this Commission.60 (Emphasis supplied)
The Philippine Deposit Insurance Corporation, on behalf of Bankwise, entered its appearance before
the National Labor Relations Commission during the pendency of the Motions for
Reconsideration.61 In a Comment dated August 27, 2008, it argued that the National Labor
Relations Commission October 31, 2008 Decision could not have attained finality as to Bankwise
since its Motion for Reconsideration was still pending.62 What may have been an unfortunate

typographical error in the March 14, 2008 Resolution gave the impression that Bankwise's Motion
for Reconsideration remained unacted upon.
Under the 2005 NLRC Revised Rules of Procedure, 63 execution proceedings only commence upon
the finality of the National Labor Relations Commission's judgment. Rule XI, Section 1 states:
RULE XI EXECUTION PROCEEDINGS
Section 1. Execution Upon Finality of Decision or Order. - a) A writ of execution may be issued motu
proprio or on motion, upon a decision or order that finally disposes of the action or proceedings
after the parties and their counsels or authorized representatives are furnished with copies of the
decision or order in accordance with these Rules, but only after the expiration of the period to
appeal if no appeal has been filed, as shown by the certificate of finality. If an appeal has been filed,
a writ of execution may be issued when there is an entry of judgment as provided for in Section 14
of Rule VII.
b) No motion for execution shall be entertained nor a writ of execution be issued unless the Labor
Arbiter or the Commission is in possession of the records of the case which shall include an entry of
judgment if the case was appealed; except that, as provided for in Section 14 of Rule V and Section
6 of this Rule, and in those cases where partial execution is allowed by law, the Labor Arbiter shall
retain duplicate original copies of the decision to be implemented and proof of service thereof for
the purpose of immediate enforcement.
By August 7, 2008, the records of the case were remanded to the Labor Arbiter for
execution.64 Thus, the National Labor Relations Commission already considered its March 14, 2008
Resolution as final and executory to all parties, including Bankwise. Bankwise was also given notice
of the March 14, 2008 Resolution, 65 so it cannot claim that the Resolution only resolved Philippine
Veterans Bank's Motion for Reconsideration.
In his October 13, 2008 Order, 66 the Labor Arbiter held that although Bankwise was liable, he
could not issue a writ of execution against it since its assets were under receivership. 67 The Labor
Arbiter, however, stated that Pascua was not precluded from filing his money claim before the
Statutory Receiver.68 Among the issues considered by the Labor Arbiter was the Philippine Deposit
Insurance Corporation's argument that the March 14, 2008 Resolution did not resolve Bankwise's
Motion for Reconsideration.69
However, the Order was a definitive notice to Bankwise that the National Labor Relations
Commission considered its judgment final and executory against Bankwise. Thus, Bankwise is bound
by the finality of the National Labor Relations Commission October 31, 2007 Decision.
18
2. The employer has the burden of proving, in illegal dismissal cases, that the employee was
dismissed for a just or authorized cause. Even if the employer claims that the employee resigned,
the employer still has the burden of proving that the resignation was voluntary. 70 It is constructive
dismissal when resignation "was made under compulsion or under circumstances approximating
compulsion, such as when an employee's act of handing in his [or her] resignation was a reaction to
circumstances leaving him [or her] no alternative but to resign."71
"Resignation is the voluntary act of an employee who is in a situation where one believes that
personal reasons cannot be sacrificed in favor of the exigency of the service, and one has no other
choice but to dissociate oneself from employment."72 In order to prove that resignation is
voluntary, "the acts of the Employee before and after the alleged resignation must be considered in
determining whether he or she, in fact, intended to sever his or her employment."73
Pascua wrote three (3) letters addressed to Bankwise's officers. The first letter dated February 7,
2005, was not a letter of resignation, but a plea from Pascua to remain in service until the end of
the year: ... I beg to request that I be allowed to stay up to the end of the year and wind up my
banking career with the institution that has given me the most daunting challenge ever. Given the
opportunity[,] I would have preferred to be with the Marketing Group. Alternatively, I could
supervise a Management Services Group (HRD, GSD, Asset Mgt and the like) a position previously
held in another institution or any assignment which you feel I could do best as well under a new
financial package under your best judgment. In any position, I commit to generate as much business
as I can to the bank, both in terms of deposits and earning portfolios.
With all humility, I must admit that I am not prepared to lose my job for reasons already stated in
our meeting. Being the sole breadwinner and having a graduating student denied by CAP support,
and some financial obligations, losing my job will really spell some disaster in my life. However, this
is the only evidence that shows Pascua was unwilling to resign. Pascua admitted that he voluntarily
sent a resignation letter on the condition that his money claims would be made. 75 Thus, his second
letter was a reluctant acceptance of his fate containing only one (1) line: IN ACCORDANCE WITH THE
INSTRUCTIONS OF THE PREVIOUS OWNERS OF THE BANK, I HEREBY TENDER MY RESIGNATION
FROM THE BANK.76
Consistent with his intention to tender his resignation upon the payment of his money claims, his
third letter was a proposal for a payment plan to cover his severance pay:
You will recall from our meeting with Mr. Buhain on March 31, 2005 that I presented an estimate of
severance and other claims due to my attrition from a trade off agreement you have purportedly
agreed with the new bank owners, represented by Philippine Veterans Bank, as part of the overall
deal. The total amount of my claim approximates one million pesos. While you readily admitted and
agreed in that meeting that my claim will be shouldered by the old owners, which you represent,
you requested that we wait for Atty. Madara for his return by the end of the month.

Considering the urgency of my financial needs which I have confided to you on many occasion[s],
may I respectfully propose the following:
1. Initial payment of my midyear bonus amounting to ₱150,000, immediately, or
2. Transfer of my bank loan with Bankwise for your account or assumption with a balance
amounting to one million pesos as an offset to my claim[.]
For the record, and following my lawyer's advice[,] may I respectfully request for a copy of any
document embodying the terms and conditions where old owners are liable to assume my
severance and other benefits due to the trade off agreement. 77
Labor is a Constitutionally protected social class due to the perceived inequality between capital
and labor.78 Article 1700 of the Civil Code states:
Article 1700. The relations between capital and labor are not merely contractual. They are so
impressed with public interest that labor contracts must yield to the common good. Therefore, such
contracts are subject to the special laws on labor unions, collective bargaining, strikes and lockouts,
closed shop, wages, working conditions, hours of labor and similar subjects. 79
The presumption is that the employer and the employee are on unequal footing so the State has
the responsibility to protect the employee. This presumption, however, must be taken on a case-to-
case basis. 80
In situations where special qualifications are required for employment, such as a Master's degree or
experience as a corporate executive, prospective employees are at a better position to bargain or
make demands from the employer. 81 Employees with special qualifications would be
on equal footing with their employers, and thus, would need a lesser degree of protection from the
State than an ordinary rank-and-file worker.
Pascua, as the Head of Marketing with annual salary of ₱2,250,000.00,82 would have "Qeen in
possession of the special qualifications needed for his post. He would have supervised several
employees in his long years in service and might have even processed their resignation letters. He
would have been completely aware of the implications of signing a categorically worded resignation
letter. If he did not intend to resign, he would not have submitted a resignation letter. He would
have continued writing letters to Bankwise signifying his continued refusal to resign.
Pascua's resignation letter, however, was unconditional. It contained no reservations that it was
premised on his subsequent claim for severance pay and other benefits. His resignation was also
19
accepted by his employers. In this instance, Pascua is not considered to have been constructively
dismissed.
Pascua's third letter likewise indicates that he has already accepted the consequences of his
voluntary resignation but that it would be subject to the payment of severance pay. However, his
claim for severance pay cannot be granted. An employee who voluntarily resigns is not entitled to
separation pay unless it was previously stipulated in the employment contract or has become
established company policy or practice. 83 There is nothing in Pascua's Contract of
Employment84 that states that he would be receiving any monetary compensation if he resigns. He
has also not shown that the payment of separation pay upon resignation is an established policy or
practice of Bankwise since his third letter indicated that he was unaware of any such policy:
For the record, and following my lawyer's advice[,] may I respectfully request for a copy of any
document embodying the terms and conditions where old owners are liable to assume my
severance and other benefits due to the trade off agreement. 85 (Emphasis supplied)
Pascua cannot also rely on the verbal assurances of Buhain and Campa that he would be paid his
severance pay if he resigns. Number 8 of his Contract of Employment states that verbal agreements
between him and the Bankwise's officers on the terms of his employment are not binding on either
party:
8. VERBAL AGREEMENT
It is understood that there are no verbal agreement or understanding between you and the Bank or
any of its agents and representatives affecting this Agreement.1âwphi1 And that no alterations or
variations of its terms shall be binding upon either party unless the same are reduced in writing and
signed by the parties herein. 86
It was incumbent on Pascua to ensure that his severance pay in the event of his resignation be
embodied on a written agreement before submitting his resignation letter. He should have, at the
very least, indicated his conditions in his resignation letter. His third letter cannot be considered the
written statement of his money claims contemplated in his Contract of Employment since it was
unilateral and was not signed by Bankwise's officers.
Considering that Pascua was not considered to have been constructively dismissed, there is no need
to discuss the issue of Philippine Veterans Bank and Bankwise's solidary liability for money claims.
WHEREFORE, the Petition is GRANTED.The July 13, 2009 Decision and February 22, 2010 Resolution
of the Court of Appeals in CA-G.R. SP No. 103453 are REVERSED and SET ASIDE. The Decision dated
November 25, 2005 of the Labor Arbiter is REINSTATED.Bankwise, Inc. and Philippine Veterans Bank
are absolved from the payment of Perfecto M. Pascua's money claims. SO ORDERED.
 20

SAMUEL MAMARIL, v. THE RED SYSTEM COMPANY, INC G.R. No. 229920, July 04, 2018 Upon discovering Mamaril's mishap, Red System immediately re-assigned the former as a
warehouse yard driver.11 As a yard driver, Mamaril was tasked to maneuver trucks to ensure their
D E C I S I O N REYES, JR., J.: proper parking in preparation for the safe and efficient loading and unloading of products.12

An employee's tenurial security shall not be used as a shield to force the hand of an employer to However, days after Mamaril's transfer, he was involved in yet another accident. On November 12,
maintain a recalcitrant employee, whose continued employment is patently inimical to the 2011, Mamaril parked the truck with plate number PIK 726, without again putting a tire choke and
employer's interest. Accordingly, an employee who is found to be willfully disobedient of the engaging the hand break. As a result, the parked truck moved and hit another vehicle, causing
employer's lawful and reasonable rules and regulations may be dismissed from service. damage amounting to Php 25,500.00. In addition, Mamaril caused an undetermined amount of
damage to the vehicle hit by his truck.13 Mamaril again concealed the incident.
This treats of the Petition for Review on Certiorari1 under Rule 45 of the Revised Rules of Court
seeking the reversal of the Decision2 dated September 9, 2016, and Resolution3 dated January 30, Sometime in February 2012, Red System suddenly received a Job Order amounting to Php
2017, rendered by the Court of Appeals (CA) in CA-G.R. SP No. 06413-MIN, which dismissed the 25,500.00, for the repair of the truck with plate number PIK 726, from Motormall Davao
complaint for illegal dismissal filed by petitioner Samuel Mamaril (Mamaril) against respondent The Corporation.14 Surprised and curious as to how the truck incurred such heavy damage, Red System
Red System Company, Inc. (Red System). conducted an investigation. The investigation pointed to Mamaril as the person responsible for the
damage.15
The Antecedents
Consequently, on April 10, 2012, Red System sent Mamaril a Notice to Explain.16 In the said Notice,
Mamaril was likewise apprised that the charges against him were serious and may warrant the
Red System is a company engaged in the business of transporting Coca Cola Products from Coca-
penalty of dismissal.17
Cola warehouses to its various customers.4 Red System owns and operates several delivery trucks.5
On May 3, 2012, Mamaril submitted his written explanation, where he admitted that he violated
On June 1, 2011, Red System employed Mamaril as a delivery service representative. Mamaril was
the safety rules, which caused damage to the truck.18
assigned in Davao and was tasked to transport goods from various depots to the end users.6 He
received a daily wage of Php 301.00.7
Thereafter, on June 8, 2012, Red System held an administrative hearing. Mamaril admitted that his
failure to engage the hand brake and put a tire choke on the vehicle resulted to
Prior to his employment as a delivery service representative, Mamaril was required to undergo
damage.19 Additionally, Red System discovered during the investigation that Mamaril had also
seminars to orient him on the rules and regulations of Red System. During the orientation, drivers
committed several other infractions that were not reported to the company, such as pilferage,
like Mamaril, were reminded to always observe the following safety rules, namely, to put a tire
tardiness and other violations of the company's safety rules.20
choke (kalso), engage the hand brake, and shift the transmission to first gear, before leaving the
parked vehicle. These safeguards were necessary to prevent the movement of the truck while
Meanwhile, during the pendency of the administrative hearing against Mamaril, Red Systems'
pushed by a forklift during loading and unloading operations.8
officers noticed that the former encountered several near-accident misses and exhibited a lack of
concern towards his work. Consequently, Mamaril was advised to be more focused on his duties.
Meanwhile, on November 9, 2011, Red System conducted an administrative hearing to determine
However, the advice remained unheeded. Thus, to protect the safety of the company personnel and
Mamaril's complicity in fraudulent and anomalous re-fueling charges on the truck he was driving.
equipment, Red System placed Mamaril under preventive suspension for a period of one month,
However, when asked if he had violated any other company regulations, or if he had met an
which took effect on August 3, 2012. Nina Kathrina Sordan, Red System's Site Human Resource
accident that caused any damage to the truck, Mamaril admitted that he had met an accident in the
Officer, and Ruselo Raga (Raga), Mamaril's supervisor, explained to Mamaril the nature and
past.9
duration of his preventive suspension.
Apparently, three days after Mamaril's employment, he failed to put a tire choke, and worse,
Subsequently, prior to the expiration of the 30-day preventive suspension, Raga contacted Mamaril
shifted the gear to neutral after parking the truck he was driving. This caused the truck to move,
and told him to report for work on September 4, 2012. Mamaril did not comply with the directive,
which caused damage to Coca-Cola products valued at Php 14,556.00. Mamaril did not report the
and belatedly returned on September 18, 2012.22
incident, and even concealed the matter.10

After the completion of the administrative investigation, Red System found Mamaril guilty of
violating the Company Code of Conduct, particularly, Article 4 or Unacceptable Conduct and
Behavior, as well as Rule 5, Section 2, pertaining to "Other Offenses or Other Acts of Negligence,
Inefficiency in the Performance of Duties or in the Care, Custody/or Use of Company Property,
Funds or Equipment Where the Amount of Loss or Damage to the company amounted to more than
Php 25,000.00." Accordingly, Mamaril was terminated for willful disobedience and willful breach of
trust as provided under Article 297 of the Labor Code.23
Aggrieved, Mamaril filed a Complaint for illegal dismissal with damages and attorney's fees. In his
Position Paper,24 he claimed that he was illegally dismissed by Red System. He asserted that his
termination from employment was too harsh as it was manifestly disproportionate to his
infractions. He sought for his reinstatement and the payment of his backwages and other benefits
and privileges from the time of his illegal dismissal until his reinstatement. He likewise prayed for
moral damages, exemplary damages and attorney's fees, assailing Red System's unjust and
oppressive dismissal, which purportedly caused him mental anguish, social humiliation and a
besmirched reputation.25
Ruling of the Labor Arbiter
In its Decision26 on November 20, 2013, the Labor Arbiter (LA) dismissed the complaint for illegal
dismissal. The LA ratiocinated that Mamaril was validly dismissed, as he was found to have been
negligent, for failing to follow Red System's safety instructions. In fact, Mamaril admitted his
complicity in such negligence. The LA held that Mamaril's propensity to violate the company's safety
rules and conceal his misdeeds show that he is unfit to remain in Red System's service.27
Likewise, the LA refused to award Mamaril his 13th month pay and service incentive leave (SIL) pay
considering that they were never substantiated, properly discussed and included in Mamaril's
position paper.
The dispositive portion of the LA decision reads:
WHEREFORE, premises considered, judgment is hereby rendered DISMISSING the complaint for
Illegal Dismissal for lack of merit.
All other claims are likewise DENIED for failure to substantiate and lack of merit.
SO ORDERED.28
Dissatisfied with the LA's ruling, Mamaril filed a Memorandum of Appeal29 with the National Labor
Relations Commission (NLRC).
21
Ruling of the NLRC
On April 24, 2014, the NLRC issued a Resolution30 affirming the LA's decision with modification.
Echoing the ruling of the LA, the NLRC held that Mamaril was validly dismissed from employment,
as he was proven to be guilty of violating Red System's Code of Conduct. Considering that his
dismissal was warranted under the circumstances, his claims for reinstatement and backwages have
no leg to stand on. In the same vein, the NLRC rejected Mamaril's claim for moral and exemplary
damages due to his failure to present evidence showing that Red System acted with malice or bad
faith in effecting his dismissal. The NLRC also denied Mamaril's claim for attorney's fees for lack of
legal and factual basis.31
In addition, the NLRC rejected Mamaril's claim that he was meted with a "double penalty," for
having been suspended, and thereafter terminated from employment. The NLRC clarified that what
was initially imposed upon Mamaril was a preventive suspension, which was a disciplinary measure
resorted to by Red System, pending the investigation of the former's offenses.32
However, the NLRC awarded 13th month pay and SIL pay in favor of Mamaril. It noted that Red
System failed to present any document proving that it had indeed paid Mamaril his 13th month pay
and SIL pay. Nevertheless, the NLRC limited the award to three (3) years prior to the filing of the
complaint, pursuant to Article 291 of the Labor Code.33
The dispositive portion of the NLRC decision reads: WHEREFORE, [Mamaril's] appeal is PARTIALLY
GRANTED.
Accordingly, the decision of [LA] Joseph Martin R. Castillo dated November 20, 2013 is AFFIRMED
with modification. [Red System], through its responsible officers, is directed to pay [Mamaril] his
13th month pay and [SIL] pay limited only to three (3) years from the filing of the instant complaint
pursuant to Article 291 of the Labor Code.
The rest of [Mamaril's] money claims are dismissed for lack of factual and/or legal basis.
The computation of [Mamaril's] money claims shall be done at the Regional Arbitration Branch a
quo during the pre-execution proceedings. SO ORDERED.
Mamaril filed a Petition for Certiorari under Rule 65 of the Revised Rules of Court with the CA.
Ruling of the CA
On September 9, 2016, the CA rendered the assailed Decision35 affirming the NLRC resolution. The
CA found no reason to reverse the findings of the LA and the NLRC holding that Mamaril was validly
terminated by Red System. The CA ratiocinated that Mamaril's repeated failure to comply with Red
System's safety instructions constituted a just cause for his dismissal.36 His acts caused loss and
damage to Red System, and constituted willful disobedience, negligence and willful breach of trust,

which are just causes for termination under the Labor Code.37
Likewise, the CA agreed with the NLRC's finding that the suspension imposed on Mamaril was
merely a preventive suspension and not a penalty.38 Hence, Red System cannot be held guilty for
imposing a double penalty against Mamaril.39
The CA also affirmed the NLRC's award of 13th month pay and SIL pay in favor of Mamaril.40
The decretal portion of the assailed CA decision reads: WHEREFORE, the petition is DENIED. The
Resolutions dated April 24, 2014 and June 30, 2014 of the [NLRC], Eighth Division, are
hereby AFFIRMED. SO ORDERED.41
Undeterred, Mamaril filed the instant Petition for Review on Certiorari42 under Rule 45 of the
Revised Rules of Court.
The Issues
The issues raised for the Court's resolution pertain to: (i) whether or not Mamaril was illegally
dismissed by Red System, and is consequently entitled to reinstatement and full backwages; and (ii)
whether or not Red System was guilty of imposing a double penalty against Mamaril.
Mamaril tenaciously maintains that he was illegally dismissed from his employment. He claims that
he was even subjected to a double penalty that was harsh and excessive, as he was initially placed
under suspension and thereafter dismissed, based on the same infraction. He avers that his initial
suspension could not have been a preventive suspension, considering that the incident subject of
the administrative complaint took place in February 2012 while the administrative hearing belatedly
followed on June 8, 2012, and he was suspended only in September 2012. He even continued to
work for Red System from February to September 2012, which proves that he was not a threat to
Red System's property and personnel.43 According to Mamaril, this clearly shows that the
imposition of the preventive suspension was unnecessary and hence, unjustified.44 Furthermore,
he bewails that the penalty of dismissal was too harsh and excessive for the infraction he
committed. He points out that he readily admitted his misdeed and even offered to pay the cost of
the damage, which are circumstances that warrant the imposition of a lesser penalty.45
On the other hand, Red System counters that Mamaril's claim that his preventive suspension
already constituted a penalty is unfounded and without legal basis. Red System points out that
Mamaril was given a Notice of Preventive Suspension, which clearly indicated that he was being
placed on suspension, pending the investigation of the charges against him. In fact, his supervisor
and the Human Resource Department even separately met with him to discuss the nature and
duration of his preventive suspension. Red System stresses that it was imperative to place Mamaril
under preventive suspension due to the threat he posed to the former's property and personnel.
22
Red System further avers that even assuming that the preventive suspension was illegal, his
dismissal was nonetheless valid. He was terminated after the completion of the administrative
investigation, where he was found to have committed a grave and blatant violation of the
company's safety rules. Besides, Mamaril's conduct during his two-year employment with Red
System revealed a pattern of flagrant and repeated violations of safety rules, notorious tardiness
and involvement in several anomalies. These transgressions clearly justified his termination from
employment.46
Ruling of the Court
The instant petition is bereft of merit.
It must be noted at the outset that the jurisdiction of the Court in a petition for review
on certiorari under Rule 45 of the Revised Rules of Court is limited only to reviewing errors of law,
not of fact, unless the factual findings complained of are completely devoid of support from the
evidence on record, or the assailed judgment is based on a gross misapprehension of facts.47 The
Court finds that none of the mentioned circumstances are present to warrant a review of the
factual findings of the case. Furthermore, the issues raised in the case at bar, which chiefly pertain
to the legality of Mamaril's dismissal, involve a calibration and re-evaluation of the evidence
presented by the parties, which is outside the province of a petition for review under Rule 45 of the
Revised Rules of Court.
At any rate, the CA did not commit any reversible error that would warrant the reversal of its
assailed decision. Mamaril was validly dismissed on
account of his willful disobedience of the lawful orders of Red System.
Remarkably, "the law and jurisprudence guarantee to every employee security of tenure. This
textual and the ensuing jurisprudential commitment to the cause and welfare of the working class
proceed from the social justice principles of the Constitution that the Court zealously implements
out of its concern for those with less in life."48 However, this constitutional commitment to the
policy of social justice does not mean that every labor dispute shall be automatically decided in
favor of labor.49 It must also be remembered that in protecting the rights of the workers, the law
does not authorize the oppression of the employer.50 Hence, due regard is likewise given to the
right of an employer to manage its operations according to reasonable standards and norms of fair
play.51 This means that an employer has free reign over every aspect of its business, including the
dismissal of its employees, as long as the exercise of its management prerogative is done
reasonably, in good faith, and in a manner not otherwise intended to defeat or circumvent the
rights of workers.
Accordingly, Article 297 of the Labor Code affirms the right of an employer to dismiss a miscreant
employee on account of the latter's willful disobedience, to wit: Article 282. (now Article 297)

Termination by employer. An employer may terminate an employment for any of the following
causes:
Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or
representative in connection with his work;
Gross and habitual neglect by the employee of his duties;
Fraud or willful breach by the employee of the trust reposed in him by his employer or duly
authorized representative;
Commission of a crime or offense by the employee against the person of his employer or any
immediate member of his family or his duly authorized representatives; and
Other causes analogous to the foregoing." (Emphasis Ours)
Significantly, jurisprudence ordains that for an employee to be validly dismissed on the ground of
willful disobedience, the employer must prove by substantial evidence that: (i) "the employee's
assailed conduct must have been willful or intentional, the willfulness being characterized by a
wrongful and perverse attitude; and (ii) the order violated must have been reasonable, lawful,
made known to the employee and must pertain to the duties which he had been engaged to
discharge."53
In the case at bar, it bears noting that the lifeblood of Red System's business is the safe transport
and delivery of Coca-Cola products from the warehouse to the customers. As such, Red System
imposed stringent guidelines to ensure the safe and efficient delivery of all the products.
Specifically, drivers were repeatedly reminded to place a tire choke, shift the engine to first gear,
and pull the hand brake, upon parking the truck. Compliance with these safety measures was
essential to prevent the sudden movement of the truck while parked and pushed by a forklift during
loading and unloading operations. Likewise, caution was necessary to avoid damage to the new
trucks. Moreover, extra-care was mandated in hauling Coca-Cola products to avoid accidents which
would result in needless delays and unnecessary expenses and ruin Red System's good will.54
It bears noting that Red System was not remiss in reminding its drivers of the importance of abiding
by their safety regulations. To ensure a strict observance of the rules, the company required its
drivers to attend various safety seminars, in addition to a mandated pre-employment orientation. In
fact, Mamaril attended a pre-orientation seminar and five safety seminars over the course of his
two-year stint with Red System.55 Added to this, the safety rules were also written in Red System's
Code of Conduct. There can be no doubt as to the lawfulness, reasonableness and necessity of Red
System's safety instructions. Moreover, the rules pertained to the duties performed by Mamaril.
Accordingly, Mamaril was duty-bound to comply with such safety orders, as his main task consisted
23
in driving and delivering fragile products. This notwithstanding, Mamaril still willfully and
negligently failed to abide by the safety rules.
The records show that three days after Mamaril was employed, he failed to put a tire choke, and
worse, shifted the truck's gear to neutral. As a result, the parked vehicle moved causing damage to
Coca-Cola products valued at Php 14,556.00, in addition to the damage he caused to the truck. To
make matters worse, instead of reporting the incident to his supervisor, as mandated under Red
System's rules, Mamaril deliberately concealed the incident. If not for his belated admission in an
administrative hearing on a different incident, Red System would not have learned about his prior
misdeed.56
To make matters worse, Mamaril was again found to have committed the same violation of Red
System's safety rules. On November 12, 2011, Mamaril parked the truck with plate number PIK 726,
without again putting a tire choke and engaging the hand brake. Due to his failure to perform the
required safety standards, the truck moved backwards and hit another vehicle. This caused damage
amounting to Php 25,500.00. Brazenly, Mamaril again purposely concealed the incident. Red
System belatedly learned of the accident only after conducting an investigation, after it was
surprised to receive Job Order from Motormall Davao Corporation for the repair of the said truck.57
Clearly, Mamaril's acts constituted a violation of Red System's company policy. Rule 5, Section
2(b)(3) of Red System's Code of Conduct penalizes other acts of negligence or inefficiency in the
performance of duties or in the care, custody and/or use of company property, funds and/or
equipment, where the amount of loss or damage amounts of more than Php 25,000.00. A violation
of such rule warrants a penalty of dismissal.58
Notably, Mamaril violated Red System's safety rules twice, and caused damage amounting to over
Php 40,000.00. To make matters worse, he even deliberately and willfully concealed his
transgressions. Such flagrant violation of the rules, coupled with the perversity of concealing the
incidents, patently show a wrongful and perverse mental attitude rendering Mamaril 's acts
inconsistent with proper subordination. Indubitably, this shows that Mamaril was indeed guilty of
willful disobedience of Red System's lawful orders.
It must likewise be noted that the Court will not condone Mamaril's acts in exchange for his
admission of his mistakes and his willingness to pay for the damage he caused. Guided by the
Court's ruling in St. Luke's Medical Center, Inc. v. Sanchez,59 the deliberate disregard or
disobedience by an employee of the rules, shall not 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.60 To allow a recalcitrant employee like Mamaril to remain in Red System's
employ shall amount to coddling an obstinate employee at the expense of the employer.
Thus, taking all the circumstances collectively, the Court is convinced that Red System had sufficient
and valid reason for terminating Mamaril's services, as his continued employment would be
 24

patently inimical to its interest. It is evident from the circumstances that Red System's decision to Company, et al. v. Esteban,63 where it held that even if the errant employee committed the acts
terminate Mamaril was exercised in good faith, for the advancement of its interest and not for the complained of almost a year before the investigation was conducted, the employer shall not be
purpose of defeating or circumventing the latter's rights. This valid exercise of management estopped from placing the former under preventive suspension, if the employee still performs
prerogative must be upheld. functions that involve handling the employer's property and funds. The employer still has every
right to protect its assets and operations pending the employee's investigation.64 Applying this to
Mamaril's preventive suspension and subsequent dismissal from the service do not partake of a the case at bar, Red System's decision to place Mamaril on preventive suspension eight months
double penalty; neither may his dismissal be regarded as harsh and excessive. after the incident does not in any way render the said decision questionable. What matters is that
Mamaril's continued employment posed a threat to the company's properties and personnel. It
Mamaril claims that he was subjected to a "double penalty," for having been initially placed under would be at the height of inequity to prevent Red System from enacting measures to protect its
preventive suspension, and thereafter dismissed from the service. own equipment pending the administrative investigation.

The Court is not persuaded. To begin with, Mamaril's initial suspension was a preventive Thus, having settled that Mamaril's one-month suspension was in fact a preventive suspension,
suspension that was necessary to protect Red System's equipment and personnel. there was nothing excessive or harsh about Red System's decision to subsequently dismiss Mamaril
Significantly, "[p]reventive suspension is a measure allowed by law and afforded to the employer if after finding him guilty of willful disobedience of its lawful and reasonable orders.
an employee's continued employment poses a serious and imminent threat to the employer's life or
property or of his co-workers."61 An employee may be placed under preventive suspension during Mamaril is Entitled to 13th Month
the pendency of an investigation against him.62 Pay and SIL Pay
In fact, the employer's right to place an employee under preventive suspension is recognized in
Sections 8 and 9 of Rule XXIII, Book V of the Omnibus Rules Implementing the Labor Code, which Essentially, it is settled that in claims for 13th month pay and SIL pay, the burden rests on the
states: employer to prove the fact of payment. This standard follows the basic rule that in all illegal
SEC. 8. Preventive suspension. - The employer may place the worker concerned under preventive dismissal cases the burden rests on the defendant to prove payment rather than on the plaintiff to
suspension if his continued employment poses a serious and imminent threat to the life or property prove non-payment, considering that all pertinent personnel files, payrolls, records, remittances
of the employer or of his co-workers. and other similar documents – which will show that the claims of workers have been paid – are not
in the possession of the worker but are in the custody and control of the employer.65 In the instant
SEC. 9. Period of suspension. - No preventive suspension shall last longer than thirty (30) days. The case, Red System failed to present proof showing that it had indeed paid Mamaril his 13th month
employer shall thereafter reinstate the worker in his former or in a substantially equivalent position pay and SIL pay, thereby entitling the latter to the same monetary claims. All amounts due shall
or the employer may extend the period of suspension provided that during the period of extension, earn legal interest of six percent (6%) per annum from the finality of this ruling until full satisfaction.
he pays the wages and other benefits due to the worker. In such case, the worker shall not be
bound to reimburse the amount paid to him during the extension if the employer decides, after All told, Mamaril's dismissal from Red System was valid pursuant to Article 297(a) of the Labor
completion of the hearing, to dismiss the worker. Code. Mamaril willfully violated Red System's safety instructions. Precisely, these safety instructions
were lawful and reasonable and most importantly, were essentially for the safe discharge of his
In the case at bar, Mamaril was placed under preventive suspension considering that during the duties. It bears stressing that while the law imposes a heavy burden on the employer to respect its
pendency of the administrative hearings, he was noticed to have several near-accident misses and employees' security of tenure, the law likewise protects the employer's right to expect from its
he had exhibited a lack of concern for his work. His inattentiveness posed a serious threat to the employees efficient service, diligence, and good conduct.66 Thus, the Court shall not interfere with
safety of the company equipment and personnel. This is especially true considering that he was the employer's right to dismiss an employee found to have willfully violated its rules and
driving trucks loaded with fragile products. regulations.

Mamaril further questions the propriety of his preventive suspension, by claiming that the timing of
its imposition was suspect, as he even continued working for Red System for eight months after the
incident. According to Mamaril, this fact belied Red System's claim that he was a threat to the
company's safety.
This same argument was struck down by the Court in the case of Bluer Than Blue Ventures
WHEREFORE, premises considered, the instant Petition is hereby DENIED for lack of merit. The
Decision dated September 9, 2016, and Resolution dated January 30, 2017, rendered by the Court
of Appeals in CA-G.R. SP No. 06413-MIN, are AFFIRMED with modification, such that the total
amount due to petitioner Samuel Mamaril shall be subject to a legal interest of six percent (6%) per
annum from the finality of this Decision until full satisfaction.

UNITED DOCTORS MEDICAL CENTER, vs. CESARIO BERNADAS
G.R. No. 209468. December 13, 2017.*
Labor Law; Termination of Employment; Retirement; Jurisprudence characterizes retirement as “the
result of a bilateral act of the parties, a voluntary agreement between the employer and the
employee whereby the latter, after reaching a certain age, agrees to sever his or her employment
with the former.”—Jurisprudence characterizes retirement as “the result of a bilateral act of the
parties, a voluntary agreement between the employer and the employee whereby the latter, after
reaching a certain age, agrees to sever his or her employment with the former.”
Same; Same; Same; Retirement Benefits; Retirement benefits must be differentiated from
insurance proceeds.—At the outset, retirement benefits must be differentiated from insurance
proceeds. One is in the concept of an indemnity while the other is conditioned on age and length of
service. “A ‘contract of insurance’ is an agreement whereby one undertakes for a consideration to
indemnify another against loss, damage or liability arising from an unknown or contingent event.”
On the other hand, retirement plans — while initially humanitarian in nature — now concomitantly
serve to secure loyalty and efficiency on the part of employees, and to increase continuity of service
and decrease the labor turnover, by giving to the employees some assurance of security as they
approach and reach the age at which earning ability and earnings are materially impaired or at an
end. x x x Thus, the grant of insurance proceeds will not necessarily bar the grant of retirement
benefits. These are two (2) separate and distinct benefits that an employer may provide to its
employees.
Same; Same; Same; Retirement Plans; Compulsory and Contributory Retirement Plan; This type of
plan is embodied in Republic Act (RA) No. 8282 for those in the private sector and RA No. 8291 for
those in the government. These laws require a mandatory contribution from the employer as well
as the employee, which shall become a pension fund for the employee upon retirement.—Within
this jurisdiction, there are three (3) types of retirement plans available to employees. The first is
compulsory and contributory. This type of plan is embodied in Republic Act No. 8282 for those in
the private sector and Republic Act No. 8291 for those in the government. These laws require a
mandatory contribution from the employer as well as the employee, which shall become a pension
fund for the employee upon retirement. Considering that the mandatory employee contribution is
deducted from the employee’s monthly income, “retirement packages are usually crafted as ‘forced
savings’ on the part of the employee.” Under this type of retirement plan, the pension is not
considered as mere gratuity but actually forms part of the employee’s compensation. An employee
acquires a vested right to the benefits that have become due upon reaching the compulsory age of
retirement. Thus, the beneficiaries of the retired employee are entitled to the pension even after
the retired employee’s death.
Same; Same; Same; Same; Voluntary Retirement Plan; The second type of retirement plan is by
agreement between the employer and the employee, usually embodied in the Collective Bargaining
Agreement (CBA) between them. The third type is one that is voluntarily given by the employer,
25
expressly as in an announced company policy or impliedly as in a failure to contest the employee’s
claim for retirement benefits.—The second and third types of retirement plans are voluntary. They
may not even require the employee to contribute to a pension fund. The second type of retirement
plan is by agreement between the employer and the employee, usually embodied in the CBA
between them. “The third type is one that is voluntarily given by the employer, expressly as in an
announced company policy or impliedly as in a failure to contest the employee’s claim for
retirement benefits.” The rules regarding the second and third types of retirement plans are
provided for in Article 302 [287] of the Labor Code, as amended.
Same; Same; Same; Same; These types of retirement plans are not meant to be a replacement to
the compulsory retirement scheme under social security laws but must be understood as a
retirement plan in addition to that provided by law.—These types of retirement plans are not
meant to be a replacement to the compulsory retirement scheme under social security laws but
must be understood as a retirement plan in addition to that provided by law. Llora Motors, Inc. v.
Drilon, 179 SCRA 175 (1989), explained: Article 287 of the Labor Code also recognizes that
employers and employees may, by a collective bargaining or other agreement, set up [a] retirement
plan in addition to that established by the Social Security law, but prescribes at the same time that
such consensual additional retirement plan cannot be substituted for or reduce the retirement
benefits available under the compulsory scheme established by the Social Security law. Such is the
thrust of the second paragraph of Article 287 which directs that the employee shall be entitled to
receive retirement benefits earned “under existing laws and any collective bargaining or other
agreement.”
Same; Same; Same; Same; Unlike the fixed retirement ages in social security laws, Article 302 [287]
of the Labor Code allows employers and employees to mutually establish an early retirement age
option.—Unlike the fixed retirement ages in social security laws, Article 302 [287] of the Labor Code
allows employers and employees to mutually establish an early retirement age option. The rationale
for optional retirement is explained in Pantranco North Express v. National Labor Relations
Commission, 259 SCRA 161 (1996): In almost all countries today, early retirement, i.e., before age
60, is considered a reward for services rendered since it enables an employee to reap the fruits of
his labor — particularly retirement benefits, whether lump-sum or otherwise — at an earlier age,
when said employee, in presumably better physical and mental condition, can enjoy them better
and longer. As a matter of fact, one of the advantages of early retirement is that the corresponding
retirement benefits, usually consisting of a substantial cash windfall, can early on be put to
productive and profitable uses by way of income-generating investments, thereby affording a more
significant measure of financial security and independence for the retiree who, up till then, had to
contend with life’s vicissitudes within the parameters of his fortnightly or weekly wages. Thus we
are now seeing many CBAs with such early retirement provisions. Optional retirement may even be
done at the option of the employer for as long as the option was mutually agreed upon by the
employer and the employee.
 26

Same; Same; Same; Retirement laws should be liberally construed and administered in favor of the 2013 Resolution3 of the Court of Appeals in CA-G.R. SP No. 126781, sustaining the National Labor
persons intended to be benefited and all doubts as to the intent of the law should be resolved in Relations Commission's finding that Cesario Bernadas' (Cesario) beneficiaries were entitled to his
favor of the retiree to achieve its humanitarian purposes.—The terms and conditions of a CBA optional retirement benefits.
“constitute the law between the parties.” However, this CBA does not provide for the terms and
conditions of the “present policy on optional retirement.” Leonila merely alleged before the Labor On July 17, 1986, Cesario started working as an orderly in United Doctors Medical Center's
Arbiter that petitioner “grants an employee a retirement or separation equivalent to eleven (11) housekeeping department. He was eventually promoted as a utility man.4
days per year of service after serving for at least twenty (20) years,” which was not disputed by
petitioner. Therefore, doubt arises as to what petitioner’s optional retirement package actually United Doctors Medical Center and its rank-and-file employees had a collective bargaining
entails. It is settled that doubts must be resolved in favor of labor. Moreover, “retirement laws agreement (CBA), under which rank-and-file employees were entitled to optional retirement
should be liberally construed and administered in favor of the persons intended to be benefited and benefits.5 On retirement pay, the CBA provided:
all doubts as to the intent of the law should be resolved in favor of the retiree to achieve its
humanitarian purposes.” ARTICLE XI
RETIREMENT AND SEVERANCE PAY
Same; Same; Same; Retirement Benefits; Retirement benefits are the property interests of the
retiree and his or her beneficiaries.— Optional, by its ordinary usage, is the opposite of compulsory. SECTION 1. RETIREMENT AND SEVERANCE PAY. The CENTER shall grant each employee retirement
It requires the exercise of an option. For this reason, petitioner insists that respondent Cesario and severance pay in accordance with law. It shall also continue its present policy on optional
would not have been entitled to his optional retirement benefits as he failed to exercise the option retirement.6
before his untimely death. However, retirement encompasses even the concept of death. This Court
Under the optional retirement policy, an employee who has rendered at least 20 years of service is
has considered death as a form of disability retirement as “there is no more permanent or total
entitled to optionally retire. The optional retirement pay is equal to a retiree's salary for 11 days per
physical disability than death.” Compulsory retirement and death both involve events beyond the
year of service.7
employee’s control. Petitioner admits that respondent Cesario was already qualified to receive his
retirement benefits, having been employed by petitioner for 23 years. While the choice to retire
In addition to the retirement plan, employees are also provided insurance, with United Doctors
before the compulsory age of retirement was within respondent Cesario’s control, his death
Medical Center paying the premiums. The employees' family members would be the beneficiaries
foreclosed the possibility of him making that choice. Petitioner’s optional retirement plan is
of the insurance.8
premised on length of service, not upon reaching a certain age. It rewards loyalty and continued
service by granting an employee an earlier age to claim his or her retirement benefits even if the
On October 20, 2009, Cesario died from a "freak accident"9 while working in a doctor's residence.
employee has not reached his or her twilight years. It would be the height of inequity to withhold
He was 53 years old.10
respondent Cesario’s retirement benefits despite being qualified to receive it, simply because he
died before he could apply for it. In any case, the CBA does not mandate that an application must
Leonila Bernadas (Leonila), representing her deceased husband, Cesario, filed a Complaint11 for
first be filed by the employee before the right to the optional retirement benefits may vest. Thus,
payment of retirement benefits, damages, and attorney's fees with the National Labor Relations
this ambiguity should be resolved in favor of the retiree. Retirement benefits are the property
Commission. Leonila and her son also claimed and were able to receive insurance proceeds of
interests of the retiree and his or her beneficiaries. The CBA does not prohibit the employee’s
P180,000.00 under the CBA.12
beneficiaries from claiming retirement benefits if the retiree dies before the proceeds could be
released. Even compulsory retirement plans provide mechanisms for a retiree’s beneficiaries to
In a Decision13 dated August 31, 2011, the Labor Arbiter dismissed Leonila's Complaint. According
claim any pension due to the retiree. Thus, Leonila, being the surviving spouse of respondent
to the Labor Arbiter, Cesario should have applied for optional retirement benefits during his
Cesario, is entitled to claim the optional retirement benefits on his behalf.
lifetime, the benefits being optional. Since he did not apply for it, his beneficiaries were not entitled
to claim his optional retirement benefits.14
An employee who has already qualified for optional retirement but dies before the option to retire
could be exercised is entitled to his or her optional retirement benefits, which may be claimed by
Leonila appealed to the National Labor Relations Commission.15 In its April 30, 2012
the qualified employee's beneficiaries on his or her behalf.
Decision,16 the National Labor Relations Commission reversed the Labor Arbiter's Decision. It found
that the optional retirement plan was never presented in this case, casting a doubt on whether or
This is a Petition for Review on Certiorari1 assailing the June 21, 2013 Decision2 and the October 4,
 27

not the plan required an application for optional retirement benefits before an employee could This Court denies the Petition.
become entitled to them.17Considering the "constitutional mandate to afford full protection to
labor,"18 the National Labor Relations Commission resolved the doubt in favor of Cesario. The Jurisprudence characterizes retirement as "the result of a bilateral act of the parties, a voluntary
dispositive portion of its Decision read: agreement between the employer and the employee whereby the latter, after reaching a certain
age, agrees to sever his or her employment with the former."36
WHEREFORE, premises considered, the Decision dated August 31, 2011 is REVERSED AND SET
ASIDE. Judgment is hereby rendered finding complainant Cesario M. Bernadas is entitled to optional At the outset, retirement benefits must be differentiated from insurance proceeds. One is in the
retirement benefit in the amount of P98,252.55 and ordering respondent United Doctors Medical concept of an indemnity while the other is conditioned on age and length of service. "A 'contract of
Center to pay the said amount to the complainant. insurance' is an agreement whereby one undertakes for a consideration to indemnify another
against loss, damage or liability arising from an unknown or contingent event."37 On the other
SO ORDERED.19 hand, retirement plans,
United Doctors Medical Center's Motion for Reconsideration20 was denied;21 hence, it filed a
Petition for Certiorari22 with the Court of Appeals. while initially humanitarian in nature, now concomitantly serve to secure loyalty and efficiency on
the part of employees, and to increase continuity of service and decrease the labor turnover, by
On June 21, 2013, the Court of Appeals rendered its Decision23 sustaining the ruling of the National giving to the employees some assurance of security as they approach and reach the age at which
Labor Relations Commission. According to the Court of Appeals, the retirement plan and the earning ability and earnings are materially impaired or at an end.38 (Citation omitted)
insurance were two (2) "separate and distinct benefits"24 that were granted to the employees. It Thus, the grant of insurance proceeds will not necessarily bar the grant of retirement benefits.
held that Leonila's receipt of insurance proceeds did not bar her from being entitled to the These are two (2) separate and distinct benefits that an employer may provide to its employees.
retirement benefits under the CBA.25
Within this jurisdiction, there are three (3) types of retirement plans available to employees.39
United Doctors Medical Center moved for reconsideration26 but was denied in the Court of Appeals
October 4, 2013 Resolution.27 Hence, this Petition28 was filed before this Court. The first is compulsory and contributory. This type of plan is embodied in Republic Act No.
828240 for those in the private sector and Republic Act No. 829141 for those in the government.
Petitioner argues that respondent Cesario's beneficiaries do not have legal capacity to apply for These laws require a mandatory contribution from the employer as well as the employee, which
Cesario's optional retirement benefits since respondent himself never applied for it in his shall become a pension fund for the employee upon retirement. Considering that the mandatory
lifetime.29 It asserts that even assuming respondent Cesario was already qualified to apply for employee contribution is deducted from the employee's monthly income,42 "retirement packages
optional retirement three (3) years prior to his death, he never did. Thus, there would have been no are usually crafted as 'forced savings' on the part of the employee."43
basis for respondent Cesario's beneficiaries to be entitled to his optional retirement
benefits.30 Petitioner likewise argues that to grant respondent Cesario's beneficiaries optional Under this type of retirement plan, the pension is not considered as mere gratuity but actually
retirement benefits on top of the life insurance benefits that they have already received would be forms part of the employee's compensation.44 An employee acquires a vested right to the benefits
equal to "double compensation and unjust enrichment."31 that have become due upon reaching the compulsory age of retirement.45 Thus, the beneficiaries
of the retired employee are entitled to the pension even after the retired employee's death.46
On the other hand, Leonila counters that had her husband died "under normal
circumstances,"32 he would have applied for optional retirement benefits. That Cesario was unable The second and third types of retirement plans are voluntary. They may not even require the
to apply before his death "is a procedural technicality"33 that should be set aside so that "full employee to contribute to a pension fund. The second type of retirement plan is by agreement
protection to labor"34 is afforded and "the ends of social and compassionate justice"35 are met. between the employer and the employee, usually embodied in the CBA between them.47 "The
third type is one that is voluntarily given by the employer, expressly as in an announced company
This Court is tasked to resolve the issue of whether or not Leonila Bernadas as her husband's policy or impliedly as in a failure to contest the employee's claim for retirement benefits."48
representative, may claim his optional retirement benefits. However, to resolve this issue, this
Court must first resolve the issue of whether or not Cesario Bernadas is entitled to receive his The rules regarding the second and third types of retirement plans are provided for in Article 302
optional retirement benefits despite his untimely death. [287]49of the Labor Code, as amended,50 which read:

Article 302. [287] Retirement. - Any employee may be retired upon reaching the retirement age
established in the collective bargaining agreement or other applicable employment contract.
In case of retirement, the employee shall be entitled to receive such retirement benefits as he may
have earned under existing laws and any collective bargaining agreement and other agreements:
Provided, however, That an employee's retirement benefits under any collective bargaining and
other agreements shall not be less than those provided therein.
In the absence of a retirement plan or agreement providing for retirement benefits of employees in
the establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond
sixty-five (65) years which is hereby declared the compulsory retirement age, who has served at
least five (5) years in the said establishment, may retire and shall be entitled to retirement pay
equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at least six
(6) months being considered as one whole year.
However, these types of retirement plans are not meant to be a replacement to the compulsory
retirement scheme under social security laws but must be understood as a retirement plan in
addition to that provided by law. Llora Motors, Inc. v. Drilon,51 explained:
Article 287 of the Labor Code also recognizes that employers and employees may, by a collective
bargaining or other agreement, set up [a] retirement plan in addition to that established by the
Social Security law, but prescribes at the same time that such consensual additional retirement plan
cannot be substituted for or reduce the retirement benefits available under the compulsory scheme
established by the Social Security law. Such is the thrust of the second paragraph of Article 287
which directs that the employee shall be entitled to receive retirement benefits earned "under
existing laws and any collective bargaining or other agreement."52
Unlike the fixed retirement ages in social security laws, Article 302 [287] of the Labor Code allows
employers and employees to mutually establish an early retirement age option. The rationale for
optional retirement is explained in Pantranco North Express v. National Labor Relations
Commission:53
In almost all countries today, early retirement, i.e., before age 60, is considered a reward for
services rendered since it enables an employee to reap the fruits of his labor - particularly
retirement benefits, whether lump-sum or otherwise at an earlier age, when said employee, in
presumably better physical and mental condition, can enjoy them better and longer. As a matter of
fact, one of the advantages of early retirement is that the corresponding retirement benefits,
usually consisting of a substantial cash windfall, can early on be put to productive and profitable
uses by way of income-generating investments, thereby affording a more significant measure of
financial security and independence for the retiree who, up till then, had to contend with life's
vicissitudes within the parameters of his fortnightly or weekly wages. Thus we are now seeing many
CBAs with such early retirement provisions.54
28
Optional retirement may even be done at the option of the employer55 for as long as the option
was mutually agreed upon by the employer and the employee. Thus:
Acceptance by the employees of an early retirement age option must be explicit, voluntary, free,
and uncompelled. While an employer may unilaterally retire an employee earlier than the legally
permissible ages under the Labor Code, this prerogative must be exercised pursuant to a mutually
instituted early retirement plan. In other words, only the implementation and execution of the
option may be unilateral, but not the adoption and institution of the retirement plan containing
such option. For the option to be valid, the retirement plan containing it must be voluntarily
assented to by the employees or .at least by a majority of them through a bargaining
representative.56
The issue in this case concerns the second type of retirement plan, or that which was provided
under the employer and employees' CBA. To wit, the CBA between the parties provides:
ARTICLE XI
RETIREMENT AND SEVERANCE PAY
SECTION 1. RETIREMENT AND SEVERANCE PAY. The CENTER shall grant each employee retirement
and severance pay in accordance with law. It shall also continue its present policy on optional
retirement.57
The terms and conditions of a CBA "constitute the law between the parties."58 However, this CBA
does not provide for the terms and conditions of the "present policy on optional retirement."
Leonila merely alleged before the Labor Arbiter that petitioner "grants an employee a retirement or
separation equivalent to eleven (11) days per year of service after serving for at least twenty (20)
years,"59 which was not disputed by petitioner. Therefore, doubt arises as to what petitioner's
optional retirement package actually entails.
It is settled that doubts must be resolved in favor of labor.60 Moreover, "retirement laws should be
liberally construed and administered in favor of the persons intended to be benefited and all doubts
as to the intent of the law should be resolved in favor of the retiree to achieve its humanitarian
purposes."61
Optional, by its ordinary usage, is the opposite of compulsory. It requires the exercise of an option.
For this reason, petitioner insists that respondent Cesario would not have been entitled to his
optional retirement benefits as he failed to exercise the option before his untimely death.
However, retirement encompasses even the concept of death.62 This Court has considered death
as a form of disability retirement as "there is no more permanent or total physical disability than
death."63Compulsory retirement and death both involve events beyond the employee's control.64
 29

Petitioner admits that respondent Cesario was already qualified to receive his retirement benefits, ROLANDO DE ROCA, v. EDUARDO C. DABUYAN, JENNIFER A. BRANZUELA, JENNYLYN A. RICARTE,
having been employed by petitioner for 23 years.65 While the choice to retire before the AND HERMINIGILDO F. SABANATE, G.R. No. 215281, March 05, 2018
compulsory age of retirement was within respondent Cesario's control, his death foreclosed the
possibility of him making that choice. DEL CASTILLO, J.:

Petitioner's optional retirement plan is premised on length of service, not upon reaching a certain This Petition for Review on Certiorari1 seeks to set aside the June 19, 2014 Decision2 and October
age. It rewards loyalty and continued service by granting an employee an earlier age to claim his or 28, 2014 Resolution3 of the Court of Appeals (CA) dismissing the Petition for Certiorari4 in CA-G.R.
her retirement benefits even if the employee has not reached his or her twilight years. It would be SP No. 127974 and denying herein petitioner's Motion for Reconsideration,5 respectively.
the height of inequity to withhold respondent Cesario's retirement benefits despite being qualified
to receive it, simply because he died before he could apply for it. In any case, the CBA does not As found by the CA, the facts are as follows:
mandate that an application must first be filed by the employee before the right to the optional
retirement benefits may vest. Thus, this ambiguity should be resolved in favor of the retiree.
In 2012, private respondents filed a complaint6 for illegal dismissal against "RAF Mansion Hotel Old
Management and New Management and Victoriano Ewayan." Later, private respondents amended
Retirement benefits are the property interests of the retiree and his or her beneficiaries.66 The CBA
the complaint and included petitioner Rolando De Roca as [co]-respondent. Summons was sent
does not prohibit the employee's beneficiaries from claiming retirement benefits if the retiree dies
through registered mail to petitioner but it was returned.
before the proceeds could be released. Even compulsory retirement plans provide mechanisms for
a retiree's beneficiaries to claim any pension due to the retiree.67 Thus, Leonila, being the surviving
Thereafter, a conference was set but only complainants attended. Thus, another summons was
spouse of respondent Cesario,68 is entitled to claim the optional retirement benefits on his behalf.
issued and personally served to petitioner by the bailiff of the NLRC as evidenced by the latter's
return dated 14 March 2012. Despite service of summons, petitioner did not attend the subsequent
WHEREFORE, the Petition is DENIED. The June 21, 2013 Decision and October 4, 2013 Resolution of
hearings prompting the labor arbiter to direct private respondents to submit their position paper.
the Court of Appeals in CA-G.R. SP No. 126781 are AFFIRMED. Petitioner United Doctors Medical
Center is ordered to pay respondent Cesario Bernadas, through his beneficiary Leonila Bernadas,
On 18 April 2012, private respondents submitted their position paper. On the same day, petitioner
optional retirement benefits in the amount of P98,252.55 as provided by the Labor Code.
filed his motion to dismiss7 on the ground of lack of jurisdiction. He alleged that[,] while he [was]
the owner of RAF Mansion Hotel building, the same [was being] leased by Victoriano Ewayan, the
SO ORDERED.
owner of Oceanics Travel and Tour Agency. Petitioner claims that Ewayan was the employer of
private respondents, Consequently, he asserted that there was no employer-employee relationship
between him and private respondents and the labor arbiter had no jurisdiction.

On 29 June 2012, the labor arbiter rendered a decision directing petitioner, among others, to pay
backwages and other monetary award to private respondents. In said decision, the labor arbiter
also denied the motion to dismiss for having been filed beyond the reglementary period. Petitioner
received a copy of the decision on 3 August 2012.

On 4 September 2012, petitioner filed a petition8 for annulment of judgment on the ground of lack
of jurisdiction before the NLRC. However, the petition was dismissed because it was also filed
beyond the period allowed by the 2011 NLRC Rules of Procedure. Petitioner sought reconsideration
but the same was also denied.9
Ruling of the Labor Arbiter

In the above-mentioned June 29, 2012 Decision10 in NLRC-NCR-Case No. 02-02490-12, Labor
Arbiter J. Potenciano F. Napenas, Jr. held, among others, that -
 30

x x x [R]espondent Rolando De Roca surprisingly filed a "Motion to Dismiss" on the ground of lack of
jurisdiction. In substance, the motion is anchored on the alleged lack of employer-employee
relationship between the parties thereto. In support thereof, respondent De Roca further alleged
that it was rather the Oceanic Travel and Tour Agency and respondent Ewayan in whose favor
respondent De Roca leased the subject Hotel, are the true employers of the complainants as
evidenced by the Contract of Lease of Buildings (Annex "1" respondent's Motion to Dismiss).
Ruling of the National Labor Relations Commission
Instead of filing an appeal before the National Labor Relations Commission (NLRC), petitioner
instituted the petition for annulment of judgment referred to above, which the NLRC dismissed in
its September 28, 2012 Resolution12 for being tardy, as it was filed beyond the 10-day
reglementary period prescribed under Section 3, Rule XII of the 2011 NLRC Rules of Procedure.

Subsequent thereof [sic], complainants filed an Opposition with Motion to Implead (to Ruling of the Court of Appeals
Respondent's Motion to Dismiss), seeking, among others, that the corporation "Oceanic Travel and
Tour Agency" be impleaded as additional respondent. Petitioner filed a Petition for Certiorari before the CA, where he argued, among others, that he was
never an employer of the respondents, as he was merely the owner of the premises which were
Anent the Motion to Dismiss, Rule V, Sections 6 and 7 of the Revised 2011 NLRC Rules of Procedure leased out to and occupied by respondents' true employer, Victoriano Ewayan (Ewayan), who
explicitly provide: owned Oceanic Travel and Tours Agency which operated the RAF Mansion Hotel where
'SECTION 6. MOTION TO DISMISS. - Before the date set for the mandatory conciliation and respondents were employed as cook, waitress, and housekeeper; and that his inclusion in the labor
mediation conference, the respondent may file a motion to dismiss on grounds provided under case was borne of malice which is shown by the fact that when the labor complaint was filed, he
Section 5, paragraph (a) hereof. Such motion shall be immediately resolve[d] by the Labor Arbiter was not originally impleaded as a respondent, and was made so only after respondents discovered
through a written order. An order denying the motion to dismiss, or suspending its resolution until that their employer had already absconded - in which case he was impleaded under the pretext that
the final determination of the case, is not appealable. he constituted the "new management of RAF Mansion Hotel".

SECTION 7. EFFECT OF FAILURE TO FILE. - No motion to dismiss shall be allowed or entertained after On June 19, 2014, the CA rendered the assailed Decision dismissing the petition, decreeing thus:
the lapse of the period provided in Section 6hereof.' At the outset, We note that the issue raised by petitioner is imprecise because the NLRC did not rule
Clearly, respondent De Roca's Motion to Dismiss, having been filed long after the date set for the on the propriety of finding petitioner liable to private respondents. It is obvious from the assailed
mandatory conference, should be dismissed on such ground being a prohibited pleading. resolution that the petition for annulment of judgment was denied because it was tiled after the
lapse of the period presc1ibed under the 2011 NLRC Rules of Procedure and this is the issue that
Corning now on [sic] the meat of the controversy, since respondents obviously failed to controvert this Court will resolve.
the allegations by the complainants in their Position Papers accompanied with supporting evidence,
We have no recourse but to accord them credence for being uncontradicted.
Record shows that petitioner received the decision of the labor arbiter on 3 August 2012 but he
Obviously, respondents had failed to discharge such burden. filed his petition on 4 September 2012 or thirty-one days after such receipt. In this regard, the NLRC
did not commit any error in denying the petition much more grave abuse of discretion. The rule is
WHEREFORE, premises considered, judgement is hereby rendered finding all the respondents liable clear and the NLRC may not 'arbitrarily disregard specific provisions of the Rules which an precisely
for illegal dismissal. intended to assist the parties in obtaining just, expeditious and inexpensive settlement of labor
disputes.'
Accordingly, all of them are hereby ordered to pay complainants their full backwages and other
monetary claims computed from date of their dismissal up to the promulgation of this decision plus Similarly, the labor arbiter did not commit any grave abuse of discretion because he just observed
10% of the total monetary award as attorney's fees. the NLRC rules when he denied petitioner's motion to dismiss. x x x

Lastly, the Motion to Dismiss is denied for being filed beyond the period allowed by the rules, thus, In addition, We also cannot attribute grave abuse of discretion in the labor arbiter's resolution of
a prohibited pleading. Also, the Motion to implead Oceanic Travel and Tours Agency as additional the motion to dismiss in the decision itself. While this may seem peculiar, it must be emphasized
respondent is denied for the same reason. SO ORDERED.11 that the motion to dismiss was filed at about the period when the case was about to be submitted
for decision.

In the case at bar, the inclusion of the denial of the motion to dismiss in the decision is not without
justification. Petitioner not only failed to submit the motion to dismiss on time but also forfeited the
right to submit his position paper because he did not attend the conference and subsequent
hearings. Even if the labor arbiter denied the motion to dismiss in a separate order, petitioner
would still be precluded from submitting a position paper where he can buttress his claim of lack of
jurisdiction. The labor arbiter, therefore, could not be said to have committed grave abuse of
discretion in denying the motion to dismiss and in incorporating its order in the decision.
As regards the claim of petitioner on the merits of his ground, We cannot consider his arguments
and assume that his allegation of lack of employer-employment [sic] relationship between him and
private respondents is true. First, he did not present any evidence to support his claim because he
lost the opportunity to submit a position paper. Thus, his allegations will remain mere allegations.
Second, it would transgress fairness if his allegations in this petition should be given any attention
because the private respondents never had the [opportunity to] present evidence to meet his
claims. Private respondents' arguments were correctly centered on the provisions of the 2011 NLRC
Rules of Procedure because they were the bases for the denial of petitioner's motion to dismiss and
petition for annulment of judgment.
Furthermore, petitioner did not submit the position paper of private respondents where We can
find their averments on the employment relationship between them and petitioner or lack thereof.
This omission not only rendered useless the evaluation of the asseverations in the petition but also
gave Us another reason to dismiss this petition under Section 3, Rule 46 of the Rules of Court.
Petitioner is well-aware that this pleading is material to the resolution of his petition and in
neglecting to attach the same to his petition, the same would warrant the dismissal of this petition.
Lastly, the ultimate aim of petitioner is for Us to review the findings of the labor arbiter on the
employment relationship between him and the private respondents. 'The basic issue of whether or
not the NLRC has jurisdiction over the case resolves itself into the question of whether an employer-
employee relationship existed' between them. Thus, it is an issue which necessitates presentation
of evidence on the part of petitioner and evaluation of the pieces of evidence of each party. Again,
this is not proper in a petition for certiorari.
WHEREFORE, the petition is DISMISSED. SO ORDERED.13
Petitioner filed a motion for reconsideration, but the CA denied the same via its October 28, 2014
Resolution. Hence, the instant Petition, which includes a prayer for injunctive relief against
execution of the judgment pending appeal.
On December 10, 2014 and January 12, 2015, the Court issued Resolutions14 respectively granting
temporary injunctive relief and issuing in favor of petitioner a Temporary Restraining Order15 upon
31
filing of a cash or surety bond.
In a November 9, 2015 Resolution,16 the Court resolved to give due course to the Petition.
Issue
Petitioner frames the issue in this Petition thus -
Petitioner submits before this Honorable Court that the Court of Appeals erred in affirming the
findings of both the labor arbiter and the NLRC and in concluding that they did not abuse their
discretion and acted beyond their jurisdiction when they asserted their authorities and found
petitioner DE ROCA solidarily liable with EWAYAN/OCEANIC TRAVEL AND TOUR AGENCY to private
respondents, despite the patent lack of employer-employee relationship between the petitioner
and private respondents.17
Petitioner's Arguments
In his Petition and Reply18 seeking reversal of the assailed CA dispositions as well as the
nullification of the decisions of the labor tribunals, petitioner argues that the Labor Arbiter's
decision is null and void as there was no determination of facts and evidence relative to his
supposed liability to respondents; that he was not at any time the respondents' employer, but
merely the owner-lessor of the premises where Ewayan and his Oceanic Travel and Tours Agency
operated the RAF Mansion Hotel where respondents were employed as hotel staff; that the labor
tribunals did not acquire jurisdiction over him since the element of employer-employee relationship
was lacking; that he was impleaded in the case only because respondents could no longer trace the
whereabouts of their true employer, Ewayan, who appears to have absconded - for which reason
respondents aim to unduly recover their claims from him; that the labor tribunals and the CA strictly
applied the labor procedural laws and rules, when the rule in labor cases is that technical rules of
procedure are not binding and must yield to the merits of the case and the interests of justice and
due process; and that since the labor tribunals did not have jurisdiction over him as he was not at
any given period the respondents' employer, their decisions are a nullity.
Respondents' Arguments
In their Comment19 to the Petition, respondents argue that the Petition should be denied for lack of
merit; that the CA's dispositions are just and correct; that the issue in this case does not involve the
merits of the labor arbiter's decision, but merely the propriety of the NLRC's dismissal of
petitioner's petition for annulment of judgment; that nonetheless, they have satisfactorily proved
below that petitioner is their employer, by the evidence they submitted - consisting of identification
cards (IDs) issued to them and signed by Ewayan, and pay envelopes and advise slips showing their
salaries as the basis for their claims; that since petitioner owned the building which was a hotel, it
follows that he is their employer; that since he is their employer, the labor arbiter acquired

jurisdiction over him; and that since the decision of the labor arbiter on the merits became final and
executory for petitioner's failure to appeal the same, the same may no longer be impugned.
Our Ruling
The Court grants the Petition.
All throughout the proceedings, petitioner has insisted that he was not the employer of
respondents; that he did not hire the respondents, nor pay their salaries nor exercise supervision or
control over them, nor did he have the power to terminate their services. In support of his claim, he
attached copies of a lease agreement - a Contract of Lease of a Building20 - executed by him and
Oceanic Tours and Travel Agency (Oceanic) represented by Ewayan through his attorney-in-fact
Marilou Buenafe. The agreement would show that petitioner was the owner of a building called the
RAF Mansion Hotel in Roxas Boulevard, Baclaran, Parañaque City; that on September 25, 2007,
Oceanic agreed to lease the entire premises of RAF Mansion Hotel, including the elevator, water
pump, airconditioning units, and existing furnishings and all items found in the hotel and included in
the inventory list attached to the lease agreement, except for certain portions of the building where
petitioner conducted his personal business and which were leased out to other occupants, including
a bank; that the lease would be for a period of five years, or from October 15, 2007 up to October
15, 2012; that the monthly rental would be P450,000.00; and that all expenses, utilities,
maintenance, and taxes - except real property taxes - incurred and due on the leased building
would be for the lessee's account.
Petitioner likewise attached to the instant Petition copies of: 1) a January 23, 2012 letter 21 of
demand to pay and vacate sent to Ewayan, directing the latter's attention to previous demand
letters sent to him and making a final demand to pay rentals in arrears; and 2) a written waiver and
acknowledgment22executed by respondents - except respondent Herminigildo Sabanate - and other
Oceanic employees to the effect that petitioner should not be held liable as owner of the premises
for the "problems" caused by Ewayan.
Thus, it would appear from the facts on record and the evidence that petitioner's building was an
existing hotel called the "RAF Mansion Hotel", which Oceanic agreed to continue to operate under
the same name. There is no connection between petitioner and Oceanic oilier than through the
lease agreement executed by them; they are not partners in the operation of RAF Mansion Hotel. It
just so happens that Oceanic decided to continue operating the hotel using the original name - "RAF
Mansion Hotel".
The only claim respondents have in resorting to implead petitioner as a co respondent in the labor
case is the fact that he is the owner of the entire building called "RAF Mansion Hotel" which
happens to be the very same name of the hotel which Ewayan and Oceanic continued to adopt, for
reasons not evident in the pleadings. It must be noted as well that when they originally filed the
labor case, respondents did not include petitioner as respondent therein. It was only later on that
32
they moved to amend their complaint, impleading petitioner and thus amending the title of the
case to "x x x, Complainants, versus RAF Mansion Hotel Old Management and New
Management/Victoriano Ewayan and Rolando De Roca, Respondents."
As correctly observed by petitioner, such belated attempt to implead him in the labor case must be
seen as an afterthought. Moreover, the fact that respondents recognize petitioner as embodying
the "new management" of RAF Mansion Hotel betrays an admission on their part that he had no
hand in the "old management" of the hotel under Ewayan, during which they were hired and
maintained as hotel employees - meaning that petitioner was never considered as Ewayan's partner
and co-employer; respondents merely viewing petitioner as the subsequent manager taking over
from Ewayan, which bolsters petitioner's allegation that Ewayan had absconded and left
respondents without recourse other than to implead him as the "new management" upon whom
the obligation to settle the claims abandoned by Ewayan now fell.
"Contracts take effect only between the parties, their assigns and heirs, except in case where the
tights and obligations arising from the contract are not transmissible by their nature, or by
stipulation or by provision of law."23 The contract of employment between respondents, on the one
hand, and Oceanic and Ewayan on the other, is effective only between them; it does not extend to
petitioner, who is not a party thereto. His only role is as lessor of the premises which Oceanic leased
to operate as a hotel; he cannot be deemed as respondent's employer - not even under the pretext
that he took over as the "new management" of the hotel operated by Oceanic. There simply is no
truth to such claim.
Thus, to allow respondents to recover their monetary claims from petitioner would necessarily
result in their unjust enrichment.
There is unjust enrichment 'when a person unjustly retains a benefit to the loss of another, or when
a person retains money or property of another against the fundamental principles of justice, equity
and good conscience.' The principle of unjust enrichment requires two conditions: (1) that a person
is benefited without a valid basis or justification, and (2) that such benefit is derived at the expense
of another.
The main objective of the principle against unjust enrichment is to prevent one from enriching
himself at the expense of another without just cause or consideration. x x x 24
"In rendering justice, courts have always been, as they ought to be, conscientiously guided by the
norm that on the balance, technicalities take a backseat against substantive rights, and not the
other way around."25 In short, substantive law outweighs procedural technicalities as in this case.
Indeed, where as here, there is a strong showing that grave miscarriage of justice would result from
the strict application of the [r]ules, we will not hesitate to relax the same in the interest of
substantial justice. It bears stressing that the rules of procedure are merely tools designed to
facilitate the attainment of justice. They were conceived and promulgated to effectively aid the
court in the dispensation of justice. Courts are not slaves to or robots of technical rules, shorn of
judicial discretion. In rendering justice, courts have always been as they ought to be, conscientiously

guided by the norm that on the balance, technicalities take a backseat against substantive rights,
and not the other way around. Thus, if the application of the Rules would tend to frustrate rather
than promote justice, it is always within our power to suspend the rules, or except a particular case
from its operation.26
Taking this to mind, the labor tribunals and the CA should have considered petitioner's repeated
pleas to scrutinize the facts and particularly the lease agreement executed by him and Oceanic,
which would naturally exculpate him from liability as this would prove the absence of an
employment relation between him and respondents. Instead, the case was determined on pure
technicality which in labor disputes, is not necessarily sanctioned - given that proceedings before
the Labor Arbiter and the NLRC are non-litigious in nature where they are encouraged to avail of all
reasonable means to ascertain the facts of the case without regard to technicalities of law or
procedure.27 Petitioner's motion to dismiss, though belated, should have been given due attention.
In arriving at the foregoing conclusions, the Court is guided by the allegations and arguments of the
parties on the existence of an employment relation between them, which may be found in their
pleadings - even at this stage. In particular, respondents squarely addressed the issue in their
Comment to the herein Petition. On the other hand, petitioner has consistently raised the issue and
argued against it all throughout. Since the issue was raised in the Petition and adequately met by
the respondents in their Comment thereto, the Court is not precluded from ruling thereon. There is
thus no need to remand the case to the Labor Arbiter for further proceedings. Finally, this resolves
respondents' claim that the issue here involves only the propriety of the NLRC's dismissal of
petitioner's petition tor annulment of judgment; having argued against petitioner's claim of absence
of an employment relation between them - and having presented documentary evidence below to
prove their case against petitioner - the issue relative to existence or non-existence of em
employment relation is ripe for adjudication before this Court.
With the view taken of the case, it necessarily follows that the decision of the Labor Arbiter must be
set aside for being grossly erroneous and unjust. At worst, it is null and void, and, as petitioner
correctly put it, it is a "lawless thing, which can be treated as an outlaw and slain at sight, or ignored
wherever it exhibits its head."28 Being of such nature, it could not have acquired finality, contrary to
what respondents believe - as it "creates no rights and imposes no duties. Any act performed
pursuant to it and any claim emanating from it have no legal effect." 29
WHEREFORE, the Petition is GRANTED. The June 19,2014 Decision and October 28, 2014 Resolution
of the Court of Appeals in CA-G.R. SP No. 127974 are REVERSED and SET ASlDE. NLRC-NCR-Case No.
02-02490-12 is ordered DISMISSED, but only as against petitioner Rolando De Roca.
SO ORDERED.
33
LUNINGNING Z. BRAZIL, SALVACION L. GARCERA, AND RITA S. DE MESA, PETITIONERS, VS. STI
EDUCATION SER GROUP, INC. AND MONICO V. JACOB, R [ G.R. No. 233314, November 21, 2018 ]
TIJAM, J.:
Enshrined in our Constitution is the State's policy to afford full protection to labor and its right to
security of tenure. This, however, must be balanced against the State's policy to protect and
promote the right to quality education at all levels as embodied in our laws and regulations
prescribing qualifications for the teaching profession. Although this Court is mindful of the plight of
teachers whose security of tenure is necessarily affected by the said laws, We can only afford relief
that is within the confines of the law. Neither estoppel nor equity can contravene a clear provision
of law.
This is an appeal from the Decision[1] dated November 9, 2016 and the Resolution[2] dated June
30, 2017 of the Court of Appeals (CA) in CA-G.R. SP No. 134584.
Facts of the Case
Petitioners were faculty members of respondent STI Education Services Group, Inc. (STI), a
proprietary higher educational institution duly organized under the Philippine laws.
Petitioner Luningning Z. Brazil (Brazil) was first employed by STI College-Legazpi (STI-Legazpi) on
June 3, 1997 as a part-time faculty member. Petitioner Salvacion L. Garcera (Garcera) and petitioner
Rita S. De Mesa (De Mesa) were next hired in June 2000 and June 2001, respectively, also as part-
time faculty members by STI-Legazpi.[3]
The services of Brazil, Garcera and De Mesa (collectively referred to as petitioners) continued until
June 2011, for which they filed a Complaint for illegal constructive dismissal and non-payment of
salaries/wages, separation pay and 13th month pay, with claims for moral and exemplary damages
and attorney's fees before the National Labor Relations Commission (NLRC) Regional Arbitration
Branch (RAB) No. V in Legazpi City. The complaint, docketed as NLRC RAB V Case No. 07-00153-11,
was against STI and its President, respondent Monico V. Jacob (Jacob).[4]
Brazil claimed that she was hired as a "full-load faculty member" of STI-Legazpi in June 2002, when
she started receiving a fixed monthly salary. On February 1, 2004, she was regularized as evidenced
by STI-Legazpi's Personnel Action Form. Likewise, Garcera claimed that in a written evaluation of
her teaching performance, acknowledged by her on October 12, 2004, STI-Legazpi categorized her
employment status as regular. Moreover, in an electronic mail correspondence dated April 24, 2008
with Joseluis Geronimo of the STI Headquarters (HQ), the latter confirmed the status of Brazil and
Garcera as regular employees.[5]
For her part, De Mesa claimed that she was employed as a "full-load faculty member" in 2003, as
indicated in her faculty employment contract dated November 2, 2003. She further advanced that
 34

as of June 2009, she was already considered a regular employee as she started to receive a fixed Members Without the Minimum Qualification of a Regular/Permanent Faculty Member for further
monthly salary for twelve (12) months.[6] information.[12] (Emphasis supplied)

Petitioners alleged that they were required to submit letters of intent and to sign contracts with STI The attached memorandum mentioned in the said letters were from Resty O. Bundoc (Bundoc),
for each semester. However, upon their alleged regularization, STI no longer required them to do Vice-President of Channel Management Division of STI HQ, the body of which is reproduced in its
so. In addition, they enjoyed the same benefits granted to regular employees such as full payment entirety as follows:
of salary and statutory benefits during summer, semestral and Christmas breaks.[7]
The Manual of Regulations for Private Higher Education (MORPHE), which took effect in 2008
On June 3, 2011, Rusty O. Lagatic (Lagatic), the school administrator of STI-Legazpi, handed to the provides for the guidelines which an Institution of Higher Learning like STI Education Sevices Group,
petitioners separate job offers for the first semester of academic year (A.Y.) 2011-2012. The job Inc. (STI) must follow. Based on the MORPHE, particularly Section 36 thereof, a full time faculty or
offers for Brazil and De Mesa were for part-time faculty members, whereas the job offer for Garcera academic personnel is one who possesses at least the minimum academic qualifications prescribed
was for a probationary faculty member. Petitioners refused to sign the said job offers because in the MORPHE, which means that the faculty member must be a holder of a Master's
although the same stipulated a higher monthly salary, their security of tenure as regular employees Degree relevant to the field he/she is teaching. The "Manual of Regulations for Private Schools
would be taken away from them.[8] (MRPS)" which took effect in 1992, Article IX, Section 44, Paragraph C, Sub-paragraph 1-a also
requires the same (same with MRPS 1995 Annotated, Article IX, Section 44, Paragraph C, Sub-
Upon inquiry, petitioners were informed by Lagatic that their 201 files did not contain their Paragraph 1a).
appointment papers, and that they failed to conform with the standards set out in the 2008 Manual
of Regulations for Private Higher Education (2008 MORPHE). Petitioners countered that Garcera Faculty members who have yet to fulfill the minimum requirements (earn a relevant master's
already completed her Master of Arts in Education – English on March 30, 2011, and that Brazil and degree in his/her field of specialization) shall thus be considered as Part Time/Full-Load Faculty
De Mesa were already writing their thesis in their chosen fields, Master of Arts in Public member, and will undertake a contract appropriate to his/her qualification. This adjustment is
Administration and Master of Arts in Physics Education, respectively.[9] necessary in compliance with the mandate as set forth in the MORPHE.

Petitioners alleged that despite their repeated requests for the amendment of their respective job
offers on the basis of their belief that they are regular employees, Lagatic still handed to them the
same job offers on June 8, 2011. As they still refused to sign the said contracts, they were replaced
with six (6) newly-hired faculty members on the following day. They also did not receive any
teaching load at the start of the school year on June 13, 2011, although they still received their
respective salaries for the period of June 1 to 15, 2011.[10]
In separate letters[11] dated June 24, 2011, Lagatic informed the petitioners that their respective
employment contracts were based on the 2008 MORPHE being implemented by the Commission on
Higher Education (CHED) and the General Academic Policies for Faculty Members of HQ-Owned
Schools. Pertinent portion of the identical separate letters reads:
xxx. The employment contract outlined your updated employment classification based on your
existing qualifications as provided for by the MORPHE and STI's General Academic Policies.
Indicated therein is an employment offer for you as a part-time full load faculty member [as for
Brazil and De Mesa]/probationary faculty member [as for Garcera] and an addendum that gives you
an additional of two more years to comply with the minimum qualification standards of CHED.
I am referring you to the attached memorandum dated June 16, 2011 coming from the Vice-
President for Channel Management Division on the Compliance Consideration Program for Faculty
STI recognizes the services and the years rendered by the faculty members that will be affected by
this compliance, and as such, continuance of the benefits they are currently enjoying shall be
allowed, and the two-year compliance consideration program shall be strictly observed to comply
with the minimum requirements.
Non-signature to the Semestral Part Time (Full Load) Faculty Contract effective this School Year
2011 – 2012 waives the faculty member's right to this compliance consideration program offered by
the school which may result to severing employment with STI. Further, non-completion of the
relevant master's degree on May 31, 2013 will automatically revert the faculty member's status to
being a Part time faculty member losing the benefits currently enjoyed and will enjoy under the
compliance consideration program. However, the faculty member's compliance to the minimum
requirement within the given period may qualify him/her to regular/permanent
status.[13] (Emphasis and underscoring supplied)
Petitioners averred that the addendum regarding the additional two years to comply with the CHED
requirement was absent in the job offers handed to them. The memorandum also came late as
classes have already started on June 13, 2011.
Since they were placed in a floating status and no longer received their salary for the period of June
 35

16 to 30, 2011, petitioners stopped reporting for work and filed complaints for illegal constructive WHEREFORE, the appeal is PARTLY GRANTED. The Decision appealed from
dismissal with monetary claims.[14] is AFFIRMED with MODIFICATION: the complaint of Rita De Mesa is DISMISSED for lack of merit;
accordingly the awards for payment of her backwages and separation pay are vacated and the
For their part, while respondents STI and Jacob (collectively referred to as respondents) admitted damages awarded to all appellees are also DISMISSED for lack of merit. The attorney's fees shall be
that for years, Brazil and Garcera have been teaching in STI-Legazpi's General Education Programs, limited to 10% of the amended judgment award.
and De Mesa had been teaching Physics, their employment as such was considered part-time only. SO ORDERED.[19]
Respondents emphasized that since petitioners are not holders of a master's degree, they are
considered part-time academic personnel under Section 36 of the 2008 MORPHE. Under Section In essence, the NLRC affirmed the LA's finding of illegal dismissal except for De Mesa. Thus, it
117 of the 2008 MORPHE, a part-time employee, such as the petitioners, cannot acquire regular or explained:
permanent status. This explains why Brazil and De Mesa were offered part-time full-load faculty
employment; while Garcera was offered probationary faculty employment, as she obtained her Appellees Brazil and Gargacera (sic) were regular faculty members. They were granted regular
master's degree only in March 2011.[15] status in February 1, 2004 and April 2004, respectively. When the MORPHE took effect in 2008, they
were already regular employees. Thus, they enjoyed security of tenure.
In addition, respondents argued that their act of extending the part-time and probationary
employment contracts to the petitioners were validated by the CHED through an Advisory Opinion When Brazil and Gargacera (sic) were offered employment contracts as part-time employees, they
dated July 17, 2011, wherein Atty. Julito Vitriolo, Executive Director IV of the CHED, clarified that were considered constructively dismissed.
any act of giving permanent or regular status to academic teaching personnel who do not possess
the required academic qualifications is not valid since it is contrary to the provisions of Sections 117 As regards De Mesa, she cannot be considered as a regular teacher of the school. She was
and 118 of the 2008 MORPHE.[16] employed in 2001 as a part-time faculty member, and continued as such until March 2003. In June
2003, she signed a contract as a full-load faculty member, and signed a separate semestral contract
Consequently, since petitioners refused to sign their respective contracts, respondents posited that for each semester for the next 4 years. While she claims that in 2009, she was considered a regular
there can be no illegal dismissal to speak of. Their previous employment contracts merely expired. teacher because she started to receive a fixed salary for 12 months, there is no evidence that before
the effectivity of the MORPHE in 2008, she had already attained regular status similar to appellees
Ruling of the Labor Arbiter Brazil and Gargacera (sic). The provisions of the MORPHE applied to her.[20](Emphasis ours)

In a Decision[17] dated December 16, 2011, the Labor Arbiter (LA) declared petitioners as regular
employees. Thus, respondents were found guilty of illegal dismissal and were ordered to pay the Both parties moved for the partial reconsideration of the NLRC Decision.
petitioners their respective separation pay in lieu of reinstatement as well as other monetary
claims. Petitioners reiterated their assertion that De Mesa was already considered a regular employee in
June 2009 as she was enjoying the same benefits granted to regular employees. They insisted that
The LA ratiocinated that although the 2008 MORPHE applies in the determination of whether a the fact she was granted a regular status after the effectivity of the 2008 MORPHE is immaterial.
faculty is a regular employee or not, it does not apply in a case where regular employment status
has already been achieved or had already been granted to faculty members. On the other hand, respondents contended that pursuant to the 2008 MORPHE, Brazil and Garcera
could not have become regular employees because they did not even qualified for probationary
Aggrieved, respondents appealed to the NLRC. status. They argued that under the 2008 MORPHE, an academic teaching personnel cannot acquire
the status of a probationary employee without first possessing a master's degree to teach in his or
Ruling of the NLRC her major field.

Initially, the NLRC partly granted the appeal of the respondents in a Decision[18] dated December In a Resolution[21] dated December 27, 2013, the NLRC resolved the parties' respective motions for
28, 2012, the dispositive portion of which reads: reconsideration in favor of the respondents. It dismissed the petitioners' complaints for illegal
dismissal and other claims for lack of merit.
 36

In the said Resolution, the NLRC declared that Brazil and De Mesa were ineligible for regularization Our Ruling
since they were not yet holders of a master's degree as required under the MORPHE. Thus, they are
considered part-time faculty members in June 2011. We deny the petition.

As for Garcera, the NLRC held that she could be considered a full-time faculty member qualified for
probationary status beginning A.Y. 2011-2012, as she earned her master's degree only in March
2011.
In addition, the NLRC opined that even if the petitioners were earlier recognized as regular
employees, it cannot estop respondents from denying them such status. It cited the case
of University of the East, et al. v. Pepanio, et al.,[22] wherein this Court held that "the operation of
educational institutions involves public interest, and such grant of regular status is against the
public policy embodied in the 2008 MORPHE." The NLRC thus concluded that petitioners were not
dismissed but merely separated from service by their own refusal to sign their respective job offers.
Petitioners assailed the NLRC Resolution dated December 27, 2013 before the CA by filing a petition
for certiorariunder Rule 65.
Ruling of the CA
On November 9, 2016, the CA promulgated its Decision[23] denying the petition and affirming the
assailed NLRC Resolution.
Prefatorily, the Court stresses that it is not a trier of facts. As a rule, only questions of law are
examined by this Court in a Rule 45 Petition.
Further, in labor cases, this Court reviews the Decision of the CA in a Rule 65 Petition presented to
the latter. Thus, "the Court has to examine the CA's Decision from the prism of whether the CA
correctly determined the presence or absence of grave abuse of discretion in the NLRC
decision."[24]
The NLRC commits an act of grave abuse of discretion when its findings and conclusions are not
supported by substantial evidence, or that amount of relevant evidence that a reasonable mind
might accept as adequate to justify a conclusion. Stated differently, no grave abuse of discretion
may be ascribed to the NLRC when its ruling has sufficient basis in evidence, and is not contrary to
law and jurisprudence. In such cases, the CA is constrained to dismiss the petition
for certiorari assailing the NLRC ruling.[25]
After applying the foregoing guidelines in Our careful review of the instant case, We find no
reversible error on the part of the CA in ruling that the NLRC did not commit any grave abuse of
discretion when it dismissed the petitioners' complaints for illegal dismissal with money claims.

In sum, the CA ruled that the NLRC did not commit grave abuse of discretion in dismissing the We do not intend to disturb the factual antecedents of this case as found by the courts a quo. As
petitioners' complaints for illegal dismissal with money claims. Petitioners were merely separated aptly observed by the CA, "the parties do not contest that, either expressly or impliedly, STI granted
from service as a result of their stubborn refusal to sign their respective job offers which were made petitioners the status of a regular faculty member."[26] As such, an examination of the evidence
in accordance with the 2008 MORPHE. pertaining to how the petitioners were granted a regular status by the STI is unnecessary.

Undaunted, petitioners moved for reconsideration of the CA Decision but the same was denied in a Petitioners also do not question the applicability of the 1992 MORPS and/or the 2008 MORPHE to
Resolution dated June 30, 2017. them and their failure to qualify thereunder for lack of a master's degree. They merely insist that
Hence, this petition. despite the application of the 2008 MORPHE, an employer educational institution that has granted
or treated its employees as regular or permanent employees can be held liable for illegal
Issue constructive dismissal, and consequently liable to pay separation pay, back wages, etc. Subsequent
compliance with the MORPHE is not an available defense for employers in such cases.
Simply put, petitioners come to this Court to seek reliefs akin to those awarded in illegal dismissal
cases, on the sole ground that they were already granted regular status, albeit illegally, by On the surface, petitioners' plea is anchored on serving the broader interests of justice and equity.
respondents. Unfortunately, it has no legal leg to stand on.

The issue, therefore, revolves around the nature of employment and corollary rights of faculty Courts may resort to application of equity only when there is insufficiency or absence of
members who failed to attain permanent status under the applicable law, i.e. 1992 Revised Manual law.[27] The principle of equity cannot prevail over the positive mandate of the law, such as the
of Regulations for Private Schools (1992 MORPS) and/or 2008 MORPHE, but who were voluntarily 2008 MORPHE in this case. Application of equity "would be tantamount to overruling or supplanting
treated as regular employees by their employers. the express provisions of the law."[28]

This is not a case of first impression. During the pendency of the instant petition, the Court
promulgated its decision in Raymond A. Son, et al. v. University of Santo Tomas (UST), et al.,[29] the
factual circumstances of which are similar to this case.
In Son, petitioners were also faculty members of undergraduate programs who failed to obtain the
required Master's Degree under the 1992 MORPS and 2008 MORPHE. As such, their appointments
were not renewed by the UST, their employer. Petitioners therein were members of a union with
which UST, at the time, had a Collective Bargaining Agreement (CBA) that provides:
xxx Although a master's degree is an entry requirement, a faculty member admitted to serve the
University without a master's degree shall finish his master's degree in five (5) semesters. If he does
not finish his degree in five (5) semesters, he shall be separated from service at the end of the fifth
semester; however, if he is made to serve the University further, in spite of the lack of a master's
degree, he shall be deemed to have attained tenure.[30](Emphasis ours)
Petitioners in Son were enrolled in a master's program but were unable to finish the same.
However, since they continued to teach in the UST beyond the period provided in the aforequoted
CBA provision, they claimed that they had already attained regular status. Thus, they filed for illegal
dismissal upon UST's non-renewal of their appointments.
In denying the petition, the Court ruled that the CBA provision is null and void for being violative of
the 1992 MORPS that was in effect during its execution. Thus, the provision did not produce any
effect as to the parties therein. The Court, through Justice Del Castillo, succinctly explained:
From a strict legal viewpoint, the parties are both in violation of the law: respondents, for
maintaining professors without the mandated masteral degrees, and for petitioners, agreeing to be
employed despite knowledge of their lack of the necessary qualifications. Petitioners cannot
therefore insist to be employed by UST since they still do not possess the required master's
degrees; the fact that UST continues to hire and maintain professors without the necessary master's
degrees is not a ground for claiming illegal dismissal, or even reinstatement. As far as the law is
concerned, respondents are in violation of the CHED regulations for continuing the practice of hiring
unqualified teaching personnel; but the law cannot come to the aid of petitioners on this sole
ground. As between the parties herein, they are in pari delicto.
It cannot be said either that by agreeing to the tenure by default provision in the CBA, respondents
are deemed to be in estoppel or have waived the application of the requirement under CHED
Memorandum Order No. 40-08. Such a waiver is precisely contrary to law. Moreover, a waiver
would prejudice the rights of the students and the public, who have a right to expect that UST is
acting within the bounds of the law, and provides quality education by hiring only qualified teaching
personnel. Under Article 6 of the Civil Code, "[r]ights may be waived, unless the waiver is contrary
37
to law, public order, public policy, morals, or good customs, or prejudicial to a third person with a
right recognized by law." On the other hand, there could be no acquiescence – amounting to
estoppel – with respect to acts which constitute a violation of law. "The doctrine of estoppel cannot
operate to give effect to an act which is otherwise null and void or ultra vires." "[N]o estoppel can
be predicated on an illegal act.[31] (Emphasis ours; citations omitted)
The ruling in Son is on all fours with the instant case. Petitioners herein essentially claim estoppel
on the part of the respondents in granting them a regular status despite the clear import of the
2008 MORPHE.
In their Reply to Respondents' Comment[32] required by this Court, petitioners specifically alleged
that the ruling in Son does not apply to their petition. They argued that unlike in the case
of Son, the treatment or grant of regular employment status in their case was not pursuant to a
CBA, wherein both parties agreed to the regularization of the employees. In their case, the grant of
regular status was "unilateral and not a shared endeavor."[33] Thus, the fault or violation rests on
STI alone.
We failed to see any material distinction between a CBA and an employment contract that would
justify a different ruling in this case. There is no dearth of evidence showing that petitioners
voluntarily accepted the benefits from the respondents' act of granting them a regular status. In
fact, their enjoyment of such benefits are among their allegations before the Court.
Otherwise stated, petitioners proffer that if they did not explicitly agree to the illegal
terms (i.e., being treated as a regular employee) of their employment contract, they should not
bear the consequences of its illegality. In effect, petitioners want to have their cake and eat it too.
Although petitioners failed to present their appointment papers showing that they were expressly
granted regular status by the STI, the courts a quo were unanimous in finding that STI indeed
granted them such regular status, whether expressly or impliedly.
We note, however, that even if petitioners were able to present employment contracts expressly
stating their status as regular employees, Our conclusion would still be the same.
"Basic is the rule that the nature of employment is determined by the factors set by law, regardless
of any contract expressing otherwise."[34] Ergo, a provision in an employment contract prescribing
a nature of employment that is violative of law, is deemed unwritten and has no effect as to the
parties thereto.
At this juncture, it is imperative upon this Court to explain the nature of employment of a faculty
who does not meet the minimum qualifications under the 1992 MORPS and/or the 2008 MORPHE.
For purposes of clarity, there are two ways to categorize the nature of employment of a faculty in a
 38

higher education institution. c. Whose total working day of not more than eight hours a day is devoted to the school;

First, a faculty may either be full-time or part-time. This manner of classification is unique to the d. Who have no other remunerative occupation elsewhere requiring regular hours of work that will
teaching profession. The criteria or basis for the said classification, as can be gleaned from the conflict with the working hours in the school; and
provisions of the 1992 MORPS and 2008 MORPHE, primarily relates to the academic qualifications
and teaching load of the faculty. e. Who are not teaching full-time in any other educational institution.

Second, a faculty's nature of employment may also be classified under the general provisions of the All teaching personnel who do not meet the foregoing qualifications are considered part-
Labor Code and the applicable jurisprudence. Thus, a faculty may be considered a permanent, time. (Emphasis ours)
probationary, or fixed-term employee. In this manner of classification, the emphasis is on the rights
of the faculty member as an employee, specifically his or her right to security of tenure or the lack The minimum academic qualifications vary according to the grades and levels of instruction taught
of it. The touchstone therefor is found not only in the 1992 MORPS and 2008 MORPHE, but in the by the faculty. Thus, Section 44 of the same Manual provides:
Labor Code and other applicable laws and jurisprudence.
Section 44. Minimum Faculty Qualifications. The minimum qualifications for faculty for the different
These two groups of categories or classifications are interrelated and does not operate to the grades and levels of instruction duly supported by appropriate credentials on file in the school shall
exclusion of one another. To Our mind, the interplay between the two may have caused confusion be as follows:
in determining the nature of employment of a faculty in a higher education institution. To illustrate
using the present case, the LA, in ruling for the petitioners, opined that 2008 MORPHE is only c.Tertiary
applicable in determining whether a faculty is a regular employee or not under the standards of
CHED. Thus, it erroneously applied the general principles under the Labor Code in finding, for (1) For undergraduate courses, other than vocational:
instance, that petitioners, "being teachers, perform activities which are necessary and desirable in
the usual business or trade" of respondents.[35] (a) Holder of a master's degree, to teach largely in his major field; or, for professional courses,
holder of the appropriate professional license required for at least a bachelor's degree. Any
In this light, the Court finds it apt to discuss the interplay between the provisions under the 1992 deviation from this requirement will be subject to regulation by the Department.[37]
MORPS and/or 2008 MORPHE specifically applied to faculty or academic personnel, and the Labor
Code as the general law applicable to all employees. The following discussion will be limited, On the other hand, similar provisions under 2008 MORPHE provide:
however, to faculties who are teaching in undergraduate programs.
Section 35. Minimum Faculty Qualifications. – The minimum qualifications of a faculty in a higher
The provisions of the 1992 MORPS[36] and the 2008 MORPHE are practically identical in terms of education institution shall be as follows:
distinguishing between a full-time and a part-time faculty. Thus, the 1992 MORPS provides:
1) For undergraduate programs:
Section 45. Full-time and Part-time Faculty. As a general rule, all private schools shall employ full-
time academic personnel consistent with the levels of instruction. 1. Holder of a master's degree, to teach mainly in his major field and where applicable, a holder of
appropriate professional license requiring at least a bachelor's degree for the professional courses.
Full-time academic personnel are those meeting all the following requirements: However, in specific fields where there is dearth of holders of Master's degree, a holder of a
professional license requiring at least a bachelor's degree may be qualified to teach. Any deviation
a. Who possess at least the minimum academic qualifications prescribed by the Department under from this requirement will be subject to regulation by the Commission.
this Manual for all academic personnel;
Section 36. Full-time and Part-time Faculty. – As a general rule, all private higher education
b. Who are paid monthly or hourly, based on the regular teaching loads as provided for in the institutions shall employ full-time faculty or academic personnel consistent with the levels of
policies, rules and standards of the Department and the school; instruction.
 39

A full-time faculty or academic personnel is one who meets all the following requirements: These provisions entail that a faculty may have regular teaching load but he or she may be
considered only as a part-time faculty for failure to meet all the minimum academic qualifications.
1) Who possesses at least the minimum academic qualifications prescribed under this Manual for all In contrast, a full-time faculty who has part-time load ceases to become a full-time faculty even if he
academic personnel; or she possesses all the minimum academic qualifications. Note, however, that the requirement on
the teaching load is subject to the discretion of the employer, or the higher education institution. As
2) Who is paid monthly or hourly, based on the regular teaching loads as provided for in the such, the requirement on carrying a regular teaching load is not an absolute requirement.
policies, rules and standards of the Commission and the institution;
We now delve into the second manner of classifying the nature of employment which is the crux of
3) Who devotes not less than eight (8) hours of work a day to the school; controversy in most labor suits involving faculty members.

4) Who have no other remunerative occupation elsewhere requiring regular hours of work, except
when permitted by the higher education institution; and
5) Who is not teaching full-time in any other higher education institution.
All faculty or academic personnel who do not meet the foregoing qualifications are considered part-
time.
Except when permitted by the higher education institution, all faculty or academic personnel who
are at the same time holding positions in the government, whether appointive or elective, shall also
be considered part-time. (Emphasis ours)
As can be gleaned from the foregoing provisions, the rule is simple – a faculty who does not meet
ALL the minimum academic qualifications is automatically a part-time faculty.
Moreover, a faculty who is deemed a full-time faculty after meeting all the minimum academic
qualifications does not perpetually become one. He or she may be reverted to being a part-time
faculty for failure to comply with the requirements on the teaching load. Thus, Section 118 of the
2008 MORPHE provides:
Section 118. Regular or Permanent Status. xxx a regular or permanent academic teaching personnel
who requests a teaching load equivalent to a part-time load, shall be considered resigned, and
hence, may forfeit his/her regular or permanent status at the discretion of the management of the
higher education institution and shall thereby be covered by a term-contract employment.
The next provision provides for the required teaching load for a full-time faculty to retain his regular
or permanent status, viz:
Section 119. Regular Teaching Load. The regular teaching load of full-time academic teaching
personnel shall be determined by the higher education institution but in no case shall exceed 24
units per semester or term.
1.Permanent
As already settled by this Court in a plethora of cases, a faculty who does not qualify as a full-time
faculty under the 1992 MORPS and/or 2008 MORPHE can never attain the status of a permanent or
regular employee.[38] It necessarily follows that only a full-time faculty can be considered a
permanent or regular employee.
Note, however, that being a full-time faculty does not suffice to be considered a permanent
employee. As ruled in the landmark case of Lacuesta v. Ateneo de Manila University,[39] in order
for a faculty teaching in the tertiary level to acquire permanent employment or security of tenure,
he or she must: (1) be a full-time faculty; (2) have rendered three consecutive years of service or six
consecutive semesters (i.e., the probationary period); and (3) such service must have been
satisfactory.[40]
In relation thereto, the pertinent provisions of the 1992 MORPS are as follows:
Section 92. Probationary Period. Subject in all instances to compliance with Department and school
requirements, the probationary period for academic personnel shall not be more than three (3)
consecutive years of satisfactory service for those in the elementary and secondary levels, six (6)
consecutive regular semesters of satisfactory service for those in the tertiary level, and nine (9)
consecutive trimesters of satisfactory service for those in the tertiary level where collegiate courses
are offered on the trimester basis.
Section 93. Regular or Permanent Status. Those who have served the probationary period shall be
made regular or permanent. Full-time teachers who have satisfactorily completed their
probationary period shall be considered regular or permanent. (Emphasis ours)
The same rule is reiterated in the following provisions of the 2008 MORPHE:
Section 117. Probationary Period. An academic teaching personnel, who does not possess the
minimum academic qualifications prescribed under Sections 35 and 36 of this Manual shall be

considered as part-time employee, and therefore cannot avail of the status and privileges of a
probationary employment. A part-time employee cannot acquire regular permanent status, and
hence, may be terminated when a qualified teacher becomes available.
The probationary employment of academic teaching personnel shall not be more than a period of
six (6) consecutive semesters or nine (9) consecutive trimesters of satisfactory service, as the case
may be.
Section 118. Regular or Permanent Status. A full-time academic teaching personnel who has
satisfactorily completed his/her probationary employment, and who possesses the minimum
qualifications required by the Commission and the institution, shall acquire a regular or permanent
status if he/she is re-hired or re-appointed immediately after the end of his/her probationary
employment. However, a regular or permanent academic teaching personnel who requests a
teaching load equivalent to a part-time load, shall be considered resigned, and hence, may forfeit
his/her regular or permanent status at the discretion of the management of the higher education
institution and shall thereby be covered by a term-contract employment. (Emphasis ours)
From the foregoing, a full-time faculty or one who possesses all the minimum academic
qualifications may either be permanent or probationary. He or she may also be a fixed-term
employee for refusal to take full teaching load, as previously discussed.
2. Probationary
In cases where a faculty failed to attain a regular or permanent status, the next question is, whether
the said faculty may be considered a probationary employee. Unlike a fixed-term employee, a
probationary employee is entitled to limited security of tenure.
Article 281 of the Labor Code thus provides:
ART. 281. Probationary employment. - Probationary employment shall not exceed six (6) months
from the date the employee started working, unless it is covered by an apprenticeship agreement
stipulating a longer period. The services of an employee who has been engaged on a probationary
basis may be terminated for a just cause or when he fails to qualify as a regular employee in
accordance with reasonable standards made known by the employer to the employee at the time of
his engagement. An employee who is allowed to work after a probationary period shall be
considered a regular employee.
As held in Yolanda M. Mercado v. AMA Computer College-Parañaque City, Inc.,[41] the Labor Code
is supplemented by the 1992 MORPS with respect to the period of probation.[42]
40
Also, in Mercado, the Court reconciled the conflict arising from the grant of a probationary status
under a fixed-term employment. Thus:
The provision on employment on probationary status under the Labor Code is a primary example of
the fine balancing of interests between labor and management that the Code has institutionalized
pursuant to the underlying intent of the Constitution.
On the one hand, employment on probationary status affords management the chance to fully
scrutinize the true worth of hired personnel before the full force of the security of tenure guarantee
of the Constitution comes into play. Based on the standards set at the start of the probationary
period, management is given the widest opportunity during the probationary period to reject hirees
who fail to meet its own adopted but reasonable standards. These standards, together with the just
and authorized causes for termination of employment the Labor Code expressly provides, are the
grounds available to terminate the employment of a teacher on probationary status. For example,
the school may impose reasonably stricter attendance or report compliance records on teachers on
probation, and reject a probationary teacher for failing in this regard, although the same
attendance or compliance record may not be required for a teacher already on permanent status.
At the same time, the same just and authorizes causes for dismissal under the Labor Code apply to
probationary teachers, so that they may be the first to be laid-off if the school does not have
enough students for a given semester or trimester. Termination of employment on this basis is an
authorized cause under the Labor Code.
When fixed-term employment is brought into play under the above probationary period rules, the
situation – as in the present case – may at first blush look muddled as fixed-term employment is in
itself a valid employment mode under Philippine law and jurisprudence. The conflict, however, is
more apparent than real when the respective nature of fixed-term employment and of employment
on probationary status are closely examined.
The fixed-term character of employment essentially refers to the period agreed upon between the
employer and the employee; employment exists only for the duration of the term and ends on its
own when the term expires. In a sense, employment on probationary status also refers to a period
because of the technical meaning "probation"carries in Philippine labor law – a maximum period of
six months, or in the academe, a period of three years for those engaged in teaching jobs. Their
similarity ends there, however, because of the overriding meaning that being "on
probation" connotes, i.e., a process of testing and observing the character or abilities of a person
who is new to a role or job.
Given the clear constitutional and statutory intents, we cannot but conclude that in a situation
where the probationary status overlaps with a fixed-term contract not specifically used for the fixed
term it offers, Article 281 should assume primacy and the fixed-period character of the contract
must give way. xxx"[43] (Citations omitted; emphasis supplied)
 41

In addition, it bears stressing that only a full-time faculty may be granted a probationary status. As
expressly provided under Section 117 of the 2008 MORPHE, "an academic teaching personnel who
does not possess the minimum academic qualifications prescribed under Sections 35 and 36 of this
Manual shall be considered part-time employee, and therefore cannot avail of the status and
privileges of a probationary employment."[44]
Although the same rule was not expressly provided under the 1992 MORPS, since employment on
probation could lead to a permanent status, it ineluctably follows that only those who may attain a
permanent status can be granted a probationary employment. A part-time faculty could never
attain a permanent status for lack of academic qualifications. Said rule is also consistent with the
nature and purpose of hiring someone on a probationary period – "to observe the fitness, propriety,
and efficiency of a probationer to ascertain whether he is qualified for permanent
employment."[45] Employment on a part-time basis may be inadequate for purposes of
determining if one is qualified for permanent employment as a part-time faculty does not possess
the qualifications in the first place.
In Mercado, the Court also enunciated the following on the nature of a fixed-term employment in
contrast to probationary employment:
To highlight what we mean by a fixed-term contract specifically used for the fixed term it offers, a
replacement teacher, for example, may be contracted for a period of one year to temporarily take
the place of a permanent teacher on a one-year study leave. The expiration of the replacement
teachers contracted term, under the circumstances, leads to no probationary status implications as
she was never employed on probationary basis; her employment is for a specific purpose with
particular focus on the term and with every intent to end her teaching relationship with the school
upon expiration of this term.[50] (Emphasis supplied; underscoring ours)
In all, under a fixed-term employment, the employer-employee relationship is severed upon the
expiration of the term or period stated under the contract without the necessity of any notice to
the employee.[51] Non-renewal of the contract, by no means, equate to dismissal. In other words,
there is no security of tenure in a fixed-term employment.

Accordingly, in the recent case of De La Salle Araneta University, Inc. v. Dr. Eloisa G. As such, the practice of hiring teachers per semester or school year by educational institutions is
Magdurulang,[46] the Court, in counting the period served as a probationary employee for generally governed by the rules on fixed-term employment unless the circumstances provide for
purposes of regularization, did not include appointments on a part-time basis even those that either a probationary or a regular employment status.
commenced prior to 2008 or the effectivity of the 2008 MORPHE.
To recapitulate, since a part-time faculty can neither attain a probationary nor regular status due to
To further illustrate, a full-time faculty, by default, is given a probationary status unless: (1) the lack of all the academic qualifications, the only conclusion therefore is that a part-time faculty will
employer decides to cut short the probationary period for causes provided under the law; or (2) always be a fixed-term employee.
said faculty is hired merely as a substitute of a permanent faculty who is on leave.[47] On the other
hand, a part-time faculty can never be a probationary employee. Applying the yardsticks or guidelines as thoroughly discussed above, the petitioners in this case are
clearly part-time faculty with a fixed-term status. First, they were hired on a semestral
Consequently, if a faculty is not deemed probationary, he or she is considered a fixed-term basis. Second, they do not possess the required master's degrees. In fact, their failure to obtain the
employee. said degrees is the same reason why they cannot attain the status of probationary employees even
for the past couple of years that they served the STI. For Garcera, however, she would have been
3.Fixed-term considered a full-time faculty with a probationary status if she signed her respective job offer as
such. Finally, there is no showing that the terms of contracts under which petitioners served as
The validity of fixed-term employment contracts for teachers was upheld by this Court as early as faculty in STI were illegal according to the criteria set in Brent.
1990 in the oft-cited case of Brent School, Inc. v. Ronalda Zamora[48] provided that:
The Court also takes note of the allegation by the petitioners that the two-year compliance program
(1) the fixed period of employment was agreed upon knowingly and voluntarily by the parties, was not presented nor included in their job offers by the respondents. The said allegation, being
without any force, duress or improper pressure being brought to hear upon the employee and factual in nature, requires this Court to examine evidence adduced in the case for the purpose of
absent any other circumstances vitiating his consent; and (2) where it satisfactorily appears that the ascertaining the truth of the same. Again, the Court generally does not entertain question of facts in
employer and employee dealt with each other on more or less equal terms with no moral a Rule 45 Petition.
dominance whatever being exercised by the former over the latter.[49]
Nonetheless, even granting that the addendum was not present in the job offers, We reiterate the
 42

rule that under a fixed-term employment contract, nothing binds the parties to one another after
the expiration of the term of the contract. Thus, STI was not obliged to offer the said compliance
program to the petitioners. Further, to Our mind, if indeed the addendum is material to this case,
the petitioners should have communicated their interest to avail the same to STI. No allegation to
such effect was made by the petitioners.

Petitioners' allegation of bad faith that would justify an award of damages is also bereft of legal
basis. STI has the right to hire replacement faculty in light of the petitioners' refusal to be hired.
Petitioners left respondents with two options for the continuity of their institution's operations –
either they give in to petitioners' demands or hire new faculty. The former is tantamount to
violating the law. Thus, bad faith cannot be imputed to the parties who merely chose to abide by
the law.

On a final note, this does not mean that the Court countenance illegal acts of STI. We are
constrained to rule in favor of the respondents as there is no relief for petitioners under the law.
Anent the respondents being scathe-free, as aptly stated by Justice Del Castillo in Son:

xxx The fact that government has not cracked down on violators, or that it chose not to strictly
implement the provision, does not erase the violations committed by erring educational
institutions, including the parties herein: it simply means that government will not punish these
violations for the meantime. The parties cannot escape its concomitant effects, nonetheless. And if
respondents knew the overwhelming importance of the said provision and the public interest
involved – as they now fiercely advocate to their favor – they should have complied with the same
as soon as it was promulgated.[52]

WHEREFORE, the Petition is hereby DENIED. The November 9, 2016 Decision and the June 30, 2017
Resolution of the Court of Appeals in CA-G.R. SP No. 134584 are hereby AFFIRMED.

SO ORDERED.