Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No.

183417 February 5, 2010

MINDANAO TIMES CORPORATION, Petitioner, vs. MITCHEL R. CONFESOR, Respondent. DECISION CARPIO MORALES, J.: Via petition for review on certiorari, Mindanao Times Corporation (petitioner) seeks the reversal of the Court of Appeals Amended Decision1 of November 29, 2007 and Resolution2 of May 26, 2008 setting aside the National Labor Relations Commission (NLRC) Resolutions of November 30, 20043 and February 28, 20054 which reinstated the Decision of the Labor Arbiter. Mitchel Confesor (respondent) was employed on May 1998 by petitioner, publisher of a newspaper of general circulation in Mindanao and Davao City. He became petitioners Associate Editor in six months. Respondent resigned from petitioner on June 17, 2003. On August 28, 2003, he filed a verified complaint5 before the Labor Arbiter for payment of separation pay and pro-rated 13th month pay for 2003. He later amended his complaint6 from one of money claims to illegal dismissal, averring that petitioners President and Chief Operating Officer forced him to resign after he and Anthony Allada, a columnist, published separate articles which appeared in the June 14, 2003 issue of petitioners newspaper accusing then Presidential Assistant Dominador "Boy" Zuo, Jr., Cong. Prospero Nograles and Cong. Corazon Malanyaon of being involved in some anomalies; and that he did resign as he was told that he would be entitled to separation pay and other benefits, but that the promised benefits were not forthcoming, hence, his filing of the complaint. By Decision7 of January 19, 2004, the Labor Arbiter, finding that respondent was constructively dismissed, ordered petitioner to pay him P71,909.77 representing backwages, as well as separation pay and 10% of the total award as attorneys fees. Both parties appealed to the NLRC in Cagayan de Oro City, respondent contending that, in addition to the award granted by the Labor Arbiter, he was entitled to service incentive leave pay and moral and exemplary damages. Petitioner, on the other hand, questioned the Labor Arbiters finding of constructive dismissal. In compliance with the appeal bond requirement, petitioner deposited the amount of P71,909.77 with the United Coconut Planters Bank and surrendered to the NLRC the passbook8 covering the

deposit, along with a Deed of Assignment9 it executed assigning the proceeds of the deposit in favor of respondent and authorizing the NLRC to release the same in the event that the Labor Arbiters Decision becomes final and executory. By Resolution of November 30, 2004, the NLRC reversed the ruling of the Labor Arbiter and dismissed respondents complaint, holding that there was no constructive dismissal since respondent effectively resigned from his employment. Respecting the issue raised by respondent of whether the bank deposit complied with the appeal bond requirement, the NLRC held that it was in substantial compliance with Sec. 6, Rule 6 of the NLRC Rules of Procedure. The Court of Appeals, to which respondent assailed the NLRC resolution via petition for certiorari, dismissed said petition by Decision10 of November 13, 2006. On respondents Motion for Reconsideration, however, the appellate court, by the assailed Amended Decision of November 29, 2007, set aside the NLRC February 28, 2005 Resolution and reinstated the Labor Arbiters Decision which it declared to have become final and executory. In concluding that the Labor Arbiters Decision had become final and executory, the appellate court held that the bank deposit of petitioner failed to substantially comply with the appeal bond requirement, noting that its Deed of Assignment "cannot be a substitute for the cash or surety bond contemplated under the Rules for the perfection of appeal" as the deed "does not ensure payment of the adjudged monetary award in case the appeal of [herein petitioner] fails." Petitioners motion and supplemental motion for reconsideration having been denied, it filed the present petition, insisting that its bank deposit and Deed of Assignment which it transmitted to the NLRC, along with the passbook, constituted substantial compliance with the rule on perfection of appeals. The petition is bereft of merit. Article 22311 of the Labor Code provides that an appeal by the employer to the NLRC from a judgment of a labor arbiter which involves a monetary award may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the NLRC, in an amount equivalent to the monetary award in the judgment appealed from. Section 4 of the New Rules of Procedure of the NLRC echoes the provision, viz.: SECTION 4. REQUISITES FOR PERFECTION OF APPEAL. a) The appeal shall be filed within the reglementary period as provided in Section 1 of this Rule; shall be verified by appellant himself in accordance with Section 4, Rule 7 of the Rules of Court, with proof of payment of the required appeal fee and the posting of a cash or surety bond as provided in Section 6 of this Rule; shall be accompanied by memorandum of appeal in three (3) legibly typewritten copies which shall state the grounds relied upon and the arguments in support thereof; the relief prayed for, and a statement of the date when the appellant received the appealed decision, resolution or order and a certificate of non-forum shopping with proof of service on the other party of such appeal. A mere notice of

appeal without complying with the other requisites aforestated shall not stop the running of the period for perfecting an appeal. b) The appellee may file with the Regional Arbitration Branch or Regional Office where the appeal was filed, his answer or reply to appellants memorandum of appeal, not later than ten (10) calendar days from receipt thereof. Failure on the part of the appellee who was properly furnished with a copy of the appeal to file his answer or reply within the said period may be construed as a waiver on his part to file the same. c) Subject to the provisions of Article 218, once the appeal is perfected in accordance with these Rules, the Commission shall limit itself to reviewing and deciding specific issues that were elevated on appeal. (emphasis supplied) Further, Sec. 6 of the same Rules provides: SECTION 6. BOND. In case the decision of the Labor Arbiter or the Regional Director involves a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond. The appeal bond shall either be in cash or surety in an amount equivalent to the monetary award, exclusive of damages and attorneys fees. In case of surety bond, the same shall be issued by a reputable bonding company duly accredited by the Commission or the Supreme Court, and shall be accompanied by: a) a joint declaration under oath by the employer, his counsel, and the bonding company, attesting that the bond posted is genuine, and shall be in effect until final disposition of the case. b) a copy of the indemnity agreement between the employer-appellant and bonding company; and c) a copy of security deposit or collateral securing the bond. A certified true copy of the bond shall be furnished by the appellant to the appellee who shall verify the regularity and genuineness thereof and immediately report to the Commission any irregularity. Upon verification by the Commission that the bond is irregular or not genuine, the Commission shall cause the immediate dismissal of the appeal. No motion to reduce bond shall be entertained except on meritorious grounds and upon the posting of a bond in a reasonable amount in relation to the monetary award. The filing of the motion to reduce bond without compliance with the requisites in the preceding paragraph shall not stop the running of the period to perfect an appeal. (emphasis and underscoring supplied)

Clearly, an appeal from a judgment as that involved in the present case is perfected "only" upon the posting of a cash or surety bond. Accessories Specialist, Inc. v. Alabanza enlightens:12 The posting of a bond is indispensable to the perfection of an appeal in cases involving monetary awards from the decision of the LA. The intention of the lawmakers to make the bond a mandatory requisite for the perfection of an appeal by the employer is clearly limned in the provision that an appeal by the employer may be perfected "only upon the posting of a cash or surety bond." The word "only" makes it perfectly plain that the lawmakers intended the posting of a cash or surety bond by the employer to be the essential and exclusive means by which an employer's appeal may be perfected. The word "may" refers to the perfection of an appeal as optional on the part of the defeated party, but not to the compulsory posting of an appeal bond, if he desires to appeal. The meaning and the intention of the legislature in enacting a statute must be determined from the language employed; and where there is no ambiguity in the words used, then there is no room for construction.1avvphi1 The filing of the bond is not only mandatory but also a jurisdictional requirement that must be complied with in order to confer jurisdiction upon the NLRC. Non-compliance therewith renders the decision of the LA final and executory. This requirement is intended to assure the workers that if they prevail in the case, they will receive the money judgment in their favor upon the dismissal of the employer's appeal. It is intended to discourage employers from using an appeal to delay or evade their obligation to satisfy their employees' just and lawful claims. (citations omitted, italics in the original; emphasis and underscoring supplied) "Cash," means a sum of money; cash bail (the sense in which the term "cash bond" is used) is a sum of money posted by a criminal defendant to ensure his presence in court, used in place of a surety bond and real estate.13 In the present case, the Deed of Assignment, as well as the passbook, which petitioner submitted to the NLRC is neither a cash nor a surety bond. Petitioners appeal to the NLRC was thus not duly perfected, thereby rendering the Labor Arbiters Decision final and executory. WHEREFORE, the petition is DENIED. SO ORDERED. CONCHITA CARPIO MORALES Associate Justice

Republic of the Philippines Supreme Court Manila

SECOND DIVISION

MANDAUE GALLEON TRADE, INC. and GAMALLOSONS TRADERS, INC., represented by FAUSTO B. GAMALLO, Petitioners,

G.R. No. 181051

Present:

- versus CARPIO, J., BIENVENIDO ISIDTO, ERWIN BA-AY, VICTORIANO BENDANILLA, EDUVIGIS GUTIB, JULITO GUTIB, GREGORIO ORDENISA, DAMIAN RABANAL, ROSITA RABANAL, EUSTAQUIA SIGLOS, PRIMITIVO SIGLAS, and RODOLFO TORRES Respondents. Chairperson, NACHURA, PERALTA, ABAD, and MENDOZA, JJ.

Promulgated:

July 5, 2010

x------------------------------------------------------------------------------------x

DECISION

NACHURA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court, assailing the Decision1[1] dated January 31, 2007 and the Resolution2[2] dated December 14, 2007 of the Court of Appeals (CA) in CA-G.R. SP No. 86209.

The facts of the case are as follows:

1 2

Respondents, alleging that they were employees of petitioners, filed a case for illegal dismissal and non-payment of overtime pay, holiday pay, thirteenth (13th) month pay, and service incentive leave pay against petitioners, Manuel Jose Oyson III and Simonette C. Abao before the Regional Arbitration Branch VII, Cebu City of the National Labor Relations Commission (NLRC). Petitioners are engaged in making rattan furniture in Mandaue City.

Respondents averred that they started working at Gamallo Sons, Inc. in 1977 and 1978. In 1980, the firm name was changed to Gamallosons Traders, Inc. and eventually it became Mandaue Galleon Trade, Inc. The employees suspected that the adoption and substitution of many firm names was intended to subvert the labor standard benefits, status, terms, and conditions of employment.

They claimed that, in order to ensure their availability for possible twentyfour (24) hour service, respondents were extended loans to build their houses in petitioners compound. Thus, they were on call any time, day or night.

On July 22, 1978, respondents were notified that the company adopted a policy of voluntary retrenchment, offering employees separation pay equivalent to one (1) month pay for every year of service. However, respondents did not avail of the said plan. They asserted that, on March 5, 2001, they were dismissed from employment without just cause and without due process.

On the other hand, petitioners averred that respondents were not their employees but were independent contractors who received various orders from many other furniture manufacturers, and that respondents constructed their houses and workplaces in the compound owned by another corporation, the Galleon Agro Realty Development Corporation.

On April 3, 2002, the Labor Arbiter rendered a decision,3[3] finding respondents illegally dismissed from employment. The dispositive portion of the decision reads:

WHEREFORE, premises considered, judgment is hereby rendered ordering the respondents Mandaue Galleon Trade, Inc. and Gamallosons Traders, Inc. to pay jointly and severally the complainants as follows: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Bienvenido Isidto Erwin Ba-ay Victoriano Bendanilla Eduveges Gutib Julito Gutib Gregorio Ordanisa Damian Rabanal Rosita Rabanal Eustaquia Siglos Primitivo Siglos Rodolfo Torres P 95,200.00 P 57,500.00 P 75,000.00 P 90,000.00 P 90,000.00 P 85,000.00 P 85,000.00 P 85,000.00 P 85,000.00 P 85,000.00 P 85,000.00 Total P917,700.00

The other claims and the case against respondents Manuel Jose Oyson and Simonette Abao are dismissed for lack of merit.

SO ORDERED.4[4]

The Labor Arbiter ruled that respondents were indeed employees of petitioners. He ratiocinated that aside from the bare allegations of petitioners that respondents were independent contractors and had contracted work from other furniture manufacturers, no proof was presented to establish the same. By petitioners own admission, it was proven that respondents were provided with houses and workplaces in the compound of the sister company of petitioners. Illegal dismissal was established by the fact that respondents were not given work by petitioners and by the demand of the general manager of petitioners for respondents to vacate the place where they constructed their houses.

Petitioners filed an appeal before the NLRC. However, they failed to attach a certification of non-forum shopping to their notice of appeal, as required by Section 4, Rule VI of the NLRC Rules of Procedure. Thus, on December 4, 2003, the NLRC issued a resolution5[5] dismissing petitioners appeal for being fatally defective, and the decision of the Labor Arbiter was affirmed in toto with finality. Petitioners filed a motion for reconsideration. However, the same was denied in a resolution6[6] dated May 27, 2004.

4 5 6

On March 15, 2005, an Entry of Judgment was issued by the NLRC, stating that, pursuant to the Internal Rules of the Commission, the December 4, 2003 NLRC resolution had become final and executory on July 17, 2004.

Aggrieved, petitioners filed a petition for certiorari under Rule 65 of the Rules of Court before the CA. On January 31, 2007, the CA rendered a Decision,7 [7] the dispositive portion of which reads:

WHEREFORE, in the light of the foregoing, the instant petition is hereby DISMISSED. Consequently, the assailed Resolutions dated December 4, 2003 and May 27, 2004, respectively of public respondent NLRC are hereby AFFIRMED.8[8]

Petitioners filed a motion for reconsideration. But the same was denied by the CA in a Resolution dated December 14, 2007. Hence, this petition.

Petitioners present this sole issue for our resolution:

7 8

WHETHER OR NOT THE COURT OF APPEALS COMMITTED A GRAVE AND REVERSIBLE ERROR IN AFFIRMING THE DECISION OF THE NLRC DENYING PETITIONERS APPEAL ON MERE TECHNICALITY DESPITE THE EXISTENCE OF MERITORIOUS CASE OF THE PETITIONERS.9[9]

The appeal is devoid of merit.

Section 4(a), Rule VI of The New Rules of Procedure of the NLRC 10[10] prescribes, viz.:

SECTION 4. REQUISITES FOR PERFECTION OF APPEAL. - (a) The Appeal shall be filed within the reglementary period as provided in Section 1 of this Rule; shall be verified by appellant himself in accordance with Section 4, Rule 7 of the Rules of Court, with proof of payment of the required appeal fee and the posting of a cash or surety bond as provided in Section 6 of this Rule; shall be accompanied by memorandum of appeal in three (3) legibly typewritten copies which shall state the grounds relied upon and the arguments in support thereof; the relief prayed for; and a statement of the date when the appellant received the appealed decision, resolution or order and a certificate of non-forum shopping with proof of service on the other party of such appeal. A mere notice of appeal without complying with the other requisites aforestated shall not stop the running of the period for perfecting an appeal.

Based on the foregoing, a certificate of non-forum shopping is a requisite for the perfection of an appeal, and non-compliance therewith shall not stop the running of the period for perfecting an appeal.

9 10

In the instant case, petitioners aver that the CA should have granted the petition and decided the case on the merits, considering that petitioners complied, albeit belatedly, with the requirement of a certificate of non-forum shopping. 11[11] Petitioners pray for a reversal of the Decision of the CA, without presenting any special circumstances or compelling reasons why the Court should liberally apply the Rules in their favor. Petitioners do not offer any valid or justifiable excuse for their failure to file the certificate on non-forum shopping together with the notice of appeal.

Administrative Circular No. 28-91, dated February 8, 1994, issued by the Supreme Court requires that every petition filed with the Supreme Court or the CA must be accompanied by a certificate of non-forum shopping. Later, Administrative Circular No. 04-94 was issued and made effective on April 1, 1994. It expanded the certification requirement to include cases filed in court and in quasi-judicial agencies. The Court adopted paragraphs (1) and (2) of Administrative Circular No. 04-94 to become Section 5, Rule 7 of the 1997 Rules of Civil Procedure. Significantly, to curb the malpractice of forum shopping, the rule ordains that a violation thereof would constitute contempt of court and be a cause for the summary dismissal of the petition, without prejudice to the taking of appropriate action against the counsel of the party concerned.12[12]

11 12

The filing of a certificate of non-forum shopping is mandatory in initiatory pleadings. The subsequent compliance with the requirement does not excuse a partys failure to comply therewith in the first instance. In those cases where the Court excused non-compliance with the requirement to submit a certificate of nonforum shopping, it found special circumstances or compelling reasons which made the strict application of the Circular clearly unjustified or inequitable. In this case, however, the petitioners offered no valid justification for their failure to comply with the Circular.13[13]

In Spouses Ong v. CA,14[14] we ruled that non-compliance with the required certification is fatal. The filing of the same is not waived by failing to immediately assert the defect, and neither is it cured by its belated submission on the ground that the party was not in any way guilty of actual forum shopping. In cases where the Court tolerated the deficiency, special circumstances or compelling reasons made the strict application distinctly unjustified.

In Altres v. Empleo,15[15] the Court en banc issued guidelines based on jurisprudential pronouncements respecting non-compliance with the requirements on, or submission of defective, verification and certification against forum shopping. The portions thereof which are pertinent to the instant case are the following:
13 14 15

1) A distinction must be made between non-compliance with the requirement on or submission of defective verification, and non-compliance 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.

Finally, it bears stressing that while it is true that litigation is not a game of technicalities and that rules of procedure shall not be strictly enforced at the cost of substantial justice, it does not mean that the Rules of Court may be ignored at will and at random to the prejudice of the orderly presentation and assessment of the issues and their just resolution. It must be emphasized that procedural rules should not be belittled or dismissed simply because their non-observance might have resulted in prejudice to a party's substantial rights. Like all rules, they are required to be followed, except only for the most persuasive of reasons.

WHEREFORE, in view of the foregoing, the Decision dated January 31, 2007 and the Resolution dated December 14, 2007 of the Court of Appeals in CAG.R. SP No. 86209 are hereby AFFIRMED.

Costs against petitioners.

SO ORDERED.

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 152494 September 22, 2004

MARIANO ONG, doing business under the name and style MILESTONE METAL MANUFACTURING, petitioner, vs. THE COURT OF APPEALS, CONRADO DABAC, BERNABE TAYACTAC, MANUEL ABEJUELLA, LOLITO ABELONG, RONNIE HERRERO, APOLLO PAMIAS, JAIME ONGUTAN, NOEL ATENDIDO, CARLOS TABBAL, JOEL ATENDIDO, BIENVENIDO EBBER, RENATO ABEJUELLA, LEONILO ATENDIDO, JR., LODULADO FAA and JAIME LOZADA, respondents. DECISION YNARES-SANTIAGO, J.: This is a petition for review on certiorari assailing the decision1 of the Court of Appeals in CAG.R. SP No. 62129, dated October 10, 2001, which dismissed the petition for certiorari for lack of merit, as well as the resolution,2 dated March 7, 2002, denying the motion for reconsideration. Petitioner is the sole proprietor of Milestone Metal Manufacturing (Milestone), which manufactures, among others, wearing apparels, belts, and umbrellas.3 Sometime in May 1998, the business suffered very low sales and productivity because of the economic crisis in the country.

Hence, it adopted a rotation scheme by reducing the workdays of its employees to three days a week or less for an indefinite period.4 On separate dates, the 15 respondents filed before the National Labor Relations Commission (NLRC) complaints for illegal dismissal, underpayment of wages, non-payment of overtime pay, holiday pay, service incentive leave pay, 13th month pay, damages, and attorneys fees against petitioner. These were consolidated and assigned to Labor Arbiter Manuel Manasala. Petitioner claimed that 9 of the 15 respondents were not employees of Milestone but of Protone Industrial Corporation which, however, stopped its operation due to business losses. Further, he claims that respondents Manuel Abuela, Lolita Abelong, Ronnie Herrero, Carlos Tabbal, Conrado Dabac, and Lodualdo Faa were not dismissed from employment; rather, they refused to work after the rotation scheme was adopted. Anent their monetary claims, petitioner presented documents showing that he paid respondents minimum wage, 13th month pay, holiday pay, and contributions to the SSS, Medicare, and Pag-Ibig Funds.5 On November 25, 1999, the Labor Arbiter rendered a decision awarding to the respondents the aggregate amount of P1,111,200.40 representing their wage differential, holiday pay, service incentive leave pay and 13th month pay, plus 10% thereof as attorneys fees. Further, petitioner was ordered to pay the respondents separation pay equivalent to month salary for every year of service due to the indefiniteness of the rotation scheme and strained relations caused by the filing of the complaints.6 Petitioner filed with the NLRC a notice of appeal with a memorandum of appeal and paid the docket fees therefor. However, instead of posting the required cash or surety bond, he filed a motion to reduce the appeal bond. The NLRC, in a resolution dated April 28, 2000, denied the motion to reduce bond and dismissed the appeal for failure to post cash or surety bond within the reglementary period.7 Petitioners motion for reconsideration was likewise denied.8 Petitioner filed a petition for certiorari with the Court of Appeals alleging that the NLRC acted with grave abuse of discretion in dismissing the appeal for non-perfection of appeal although a motion to reduce appeal bond was seasonably filed. However, the petition was dismissed and thereafter the motion for reconsideration was likewise dismissed for lack of merit.9 Hence, this petition for review on the following assignment of errors: I. PUBLIC RESPONDENT COURT OF APPEALS COMMITTED SERIOUS ERROR AND GRAVE ABUSE OF DISCRETION IN AFFIRMING THE DECISION OF THE NLRC DISMISSING THE APPEAL OF PETITIONERS (sic) FOR NON-PERFECTION WHEN A MOTION TO REDUCE APPEAL BOND WAS SEASONABLY FILED WHICH IS ALLOWED BY THE RULES OF PROCEDURE OF THE NLRC. II.

PUBLIC RESPONDENT COURT OF APPEALS COMMITTED SERIOUS ERROR AND GRAVE ABUSE OF DISCRETION IN AFFIRMING THE DISMISSAL BY NLRC OF PETITIONERS APPEAL AND IN EFFECT UPHOLDING THE ERRONEOUS DECISION OF THE LABOR ARBITER AWARDING SEPARATION PAY TO PRIVATE RESPONDENTS DESPITE THE FINDING THAT THERE WAS NO ILLEGAL DISMISSAL MADE BY MILESTONE. III. PUBLIC RESPONDENT COURT OF APPEALS COMMITTED SERIOUS ERROR IN AFFIRMING THE NLRCS DISMISSAL OF PETITIONERS APPEAL AND IN EFFECT UPHOLDING THE ERRONEOUS DECISION OF THE LABOR ARBITER THAT PETITIONER MILESTONE HAS VIOLATED THE MINIMUM WAGE LAW AND THAT PRIVATE RESPONDENTS WERE UNDERPAID. IV. PUBLIC RESPONDENT COURT OF APPEALS COMMITTED SERIOUS ERROR IN AFFIRMING THE NLRCS DISMISSAL OF PETITIONERS APPEAL AND IN EFFECT UPHOLDING THE ERRONEOUS DECISION OF THE LABOR ARBITER THAT PETITIONER MILESTONE HAS NOT PAID PRIVATE RESPONDENTS THEIR SERVICE INCENTIVE LEAVE PAY, 13th MONTH PAY, AND HOLIDAY PAY. V. PUBLIC RESPONDENT COURT OF APPEALS COMMITTED SERIOUS ERROR IN AFFIRMING THE NLRCS DISMISSAL OF PETITIONERS APPEAL AND IN EFFECT UPHOLDING THE ERRONEOUS DECISION OF THE LABOR ARBITER THAT THE EVIDENCE SUBMITTED BY PRIVATE RESPONDENTS IN SUPPORT OF THEIR CLAIMS ARE NOT SELF-SERVING, IRRELEVANT AND IMMATERIAL TO THE FACTS AND LAW IN ISSUE IN THIS CASE.10 The petition lacks merit. Time and again it has been held that the right to appeal is not a natural right or a part of due process, it is merely a statutory privilege, and may be exercised only in the manner and in accordance with the provisions of law. The party who seeks to avail of the same must comply with the requirements of the rules. Failing to do so, the right to appeal is lost.11 Article 223 of the Labor Code, as amended, sets forth the rules on appeal from the Labor Arbiters monetary award: ART. 223. Appeal. Decisions, awards, or orders of the Labor Arbiter are final and executory unless appealed to the Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards, or orders. x x x.

xxx

xxx

xxx

In case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission in the amount equivalent to the monetary award in the judgment appealed from. (Emphasis ours) The pertinent provisions of Rule VI of the New Rules of Procedure of the NLRC,12 which were in effect when petitioner filed his appeal, provide: Section 1. Periods of Appeal. Decisions, awards or orders of the Labor Arbiter and the POEA Administrator shall be final and executory unless appealed to the Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards or orders of the Labor Arbiter x x x. xxx xxx xxx

Section 3. Requisites for Perfection of Appeal. (a) The appeal shall be filed within the reglementary period as provided in Section 1 of this Rule; shall be under oath with proof of payment of the required appeal fee and the posting of a cash or surety bond as provided in Section 5 of this Rule; shall be accompanied by a memorandum of appeal which shall state the grounds relied upon and the arguments in support thereof; the relief prayed for; and a statement of the date when the appellant received the appealed decision, order or award and proof of service on the other party of such appeal. A mere notice of appeal without complying with the other requisite aforestated shall not stop the running of the period for perfecting an appeal. xxx xxx xxx

Section 6. Bond. In case the decision of the Labor Arbiter, the Regional Director or his duly authorized Hearing Officer involves a monetary award, an appeal by the employer shall be perfected only upon the posting of a cash or surety bond, which shall be in effect until final disposition of the case, issued by a reputable bonding company duly accredited by the Commission or the Supreme Court in an amount equivalent to the monetary award, exclusive of damages and attorneys fees. The employer, his counsel, as well as the bonding company, shall submit a joint declaration under oath attesting that the surety bond posted is genuine. The Commission may, in justifiable cases and upon Motion of the Appellant, reduce the amount of the bond. The filing of the motion to reduce bond shall not stop the running of the period to perfect appeal. (Emphasis ours) In the case at bar, petitioner received the decision of the Labor Arbiter on January 6, 2000. He filed his notice of appeal with memorandum of appeal and paid the corresponding appeal fees on

January 17, 2000, the last day of filing the appeal. However, in lieu of the required cash or surety bond, he filed a motion to reduce bond alleging that the amount of P1,427,802,04 as bond is "unjustified and prohibitive" and prayed that the same be reduced to a "reasonable level." The NLRC denied the motion and consequently dismissed the appeal for non-perfection. Petitioner now contends that he was deprived of the chance to post bond because the NLRC took 102 days to decide his motion. Petitioners argument is unavailing. While, Section 6, Rule VI of the NLRCs New Rules of Procedure allows the Commission to reduce the amount of the bond, the exercise of the authority is not a matter of right on the part of the movant but lies within the sound discretion of the NLRC upon showing of meritorious grounds.13 Petitioners motion reads: 1. The appeal bond which respondents-appellants will post in this case is P1,427,802.04. They are precisely questioning this amount as being unjustified and prohibitive under the premises. 2. The amount of this appeal bond must be reduced to a reasonable level by this Honorable Office. WHEREFORE, in view thereof, it is respectfully prayed of this Honorable Office that the appeal bond of P1,427,802.04 be reduced.14 After careful scrutiny of the motion to reduce appeal bond, we agree with the Court of Appeals that the NLRC did not act with grave abuse of discretion when it denied petitioners motion for the same failed to either elucidate why the amount of the bond was "unjustified and prohibitive" or to indicate what would be a "reasonable level."15 In Calabash Garments, Inc. v. NLRC,16 it was held that "a substantial monetary award, even if it runs into millions, does not necessarily give the employer-appellant a "meritorious case" and does not automatically warrant a reduction of the appeal bond." Even granting arguendo that petitioner has meritorious grounds to reduce the appeal bond, the result would have been the same since he failed to post cash or surety bond within the prescribed period. The above-cited provisions explicitly provide that an appeal from the Labor Arbiter to the NLRC must be perfected within ten calendar days from receipt of such decisions, awards or orders of the Labor Arbiter. In a judgment involving a monetary award, the appeal shall be perfected only upon (1) proof of payment of the required appeal fee; (2) posting of a cash or surety bond issued by a reputable bonding company; and (3) filing of a memorandum of appeal. A mere notice of appeal without complying with the other requisites mentioned shall not stop the running of the period for perfection of appeal.17 The posting of cash or surety bond is not only mandatory but jurisdictional as well, and non-compliance therewith is fatal and has the effect of rendering the judgment final

and executory.18 This requirement is intended to discourage employers from using the appeal to delay, or even evade, their obligation to satisfy their employees just and lawful claims.19 The intention of the lawmakers to make the bond an indispensable requisite for the perfection of an appeal by the employer is underscored by the provision that an appeal by the employer may be perfected only upon the posting of a cash or surety bond. The word "only" makes it perfectly clear that the lawmakers intended the posting of a cash or surety bond by the employer to be the exclusive means by which an employers appeal may be perfected.20 The fact that the NLRC took 102 days to resolve the motion will not help petitioners case. The NLRC Rules clearly provide that "the filing of the motion to reduce bond shall not stop the running of the period to perfect appeal." Petitioner should have seasonably filed the appeal bond within the ten-day reglementary period following the receipt of the order, resolution or decision of the NLRC to forestall the finality of such order, resolution or decision. In the alternative, he should have paid only a moderate and reasonable sum for the premium, as was held in Biogenerics Marketing and Research Corporation v. NLRC,21 to wit: x x x The mandatory filing of a bond for the perfection of an appeal is evident from the aforequoted provision that the appeal may be perfected only upon the posting of cash or surety bond. It is not an excuse that the over P2 million award is too much for a small business enterprise, like the petitioner company, to shoulder. The law does not require its outright payment, but only the posting of a bond to ensure that the award will be eventually paid should the appeal fail. What petitioners have to pay is a moderate and reasonable sum for the premium for such bond. (Emphasis ours) While the bond requirement on appeals involving monetary awards has been relaxed in certain cases, this can only be done where there was substantial compliance of the Rules or where the appellants, at the very least, exhibited willingness to pay by posting a partial bond.22 Petitioners reliance on the case of Rosewood Processing, Inc. v. NLRC23 is misplaced. Petitioner in the said case substantially complied with the rules by posting a partial surety bond of fifty thousand pesos issued by Prudential Guarantee and Assurance, Inc. while his motion to reduce appeal bond was pending before the NLRC. In the case at bar, petitioner did not post a full or partial appeal bond within the prescribed period, thus, no appeal was perfected from the decision of the Labor Arbiter. For this reason, the decision sought to be appealed to the NLRC had become final and executory and therefore immutable. Clearly, then, the NLRC has no authority to entertain the appeal, much less to reverse the decision of the Labor Arbiter. Any amendment or alteration made which substantially affects the final and executory judgment is null and void for lack of jurisdiction, including the entire proceeding held for that purpose.24 WHEREFORE, in view of the foregoing, the petition is DENIED. The assailed decision of the Court of Appeals in CA-G.R. SP No. 62129, dated October 10, 2001, dismissing the petition for certiorari for lack of merit, is AFFIRMED. No pronouncement as to costs.

SO ORDERED. Davide, Jr., Quisumbing, Carpio, and Azcuna, JJ., concur.

FIRST DIVISION

REPUBLIC CEMENT CORPORATION, Petitioner,

G.R. No. 168910

Present:

PUNO, C.J., Chairperson, CARPIO, - versus CORONA, LEONARDO-DE CASTRO, and BERSAMIN, JJ.

PETER I. GUINMAPANG, Respondent. Promulgated: August 24, 2009 x--------------------------------------------------x

RESOLUTION

CARPIO, J.:

This is a petition for review16[1] of the 17 March 2005 Decision17[2] and 7 July 2005 Resolution18[3] of the Court of Appeals in CA-G.R. SP No. 86025. In its 17 March 2005 Decision, the Court of Appeals set aside the 29 January 2004 19[4] Order of the National Labor Relations Commission (NLRC) which dismissed the appeal of respondent Peter I. Guinmapang (Guinmapang) for being filed out of time. In its 7 July 2005 Resolution, the Court of Appeals denied the motion for reconsideration of petitioner Republic Cement Corporation (Republic Cement). Guinmapang was an employee of Republic Cement from May 1996 to 15 August 2001. Guinmapangs last position was supervisor with a monthly salary of P13,100.

On 4 July 2001, Republic Cement issued General Circular No. 101-027 announcing the implementation of a retrenchment program. On 12 July 2001,

16 17 18 19

Guinmapang received a notice from Republic Cement that his services were being terminated effective 15 August 2001 pursuant to the retrenchment program. On the same date, Republic Cement also sent the required notice to the Department of Labor and Employment. However, Guinmapang refused to receive the separation package offered by Republic Cement.

Thereafter, Guinmapang filed a complaint for illegal dismissal and other money claims against Republic Cement.20[5]

On 30 May 2003, the Labor Arbiter ruled in Republic Cements favor.21[6] The dispositive portion of the 30 May 2003 decision provides:

WHEREFORE, premises considered, let the complaint be, as it is hereby, DISMISSED for lack of merit. However, respondent Republic Cement Corporation, is hereby ordered to pay the complainant his separation pay in the amount of Seventy Eight Thousand Six Hundred Pesos (Php 78,600). SO ORDERED. 22[7]

The Labor Arbiter said that retrenchment to prevent losses is an authorized cause to terminate the employer-employee relationship. According to the Labor Arbiter, Republic Cement was able to prove that it sustained losses from 1998 to

20 21 22

2000. As to the procedural requirements, the Labor Arbiter found that Republic Cement complied with the notice requirement.

On 23 June 2003, Guinmapangs counsel received a copy of the Labor Arbiters 30 May 2003 Decision. However, Guinmapangs counsel filed his appeal with the NLRC only on 4 July 2003, one day beyond the 10-day reglementary period to file an appeal.

In its 29 January 2004 Order, the NLRC dismissed Guinmapangs appeal. The 29 January 2004 Order of the NLRC provides:

WHEREFORE, premises considered, the instant appeal, having been filed after the reglementary period, is hereby, DISMISSED.
The Decision herein sought to be appealed, is hereby, AFFIRMED, in toto.

SO ORDERED.23[8]

The NLRC said that the 10-day reglementary period to perfect an appeal is mandatory and jurisdictional in nature. The NLRC added that Guinmapangs failure to file the appeal within the reglementary period rendered the Labor Arbiters decision final and executory and deprived the NLRC of jurisdiction to alter the judgment, much less to entertain the appeal.

23

Guinmapang filed a motion for reconsideration. In its 31 May 2004 Order, 24

[9] the NLRC denied the motion.

Thereafter, Guinmapang filed a petition for certiorari before the Court of Appeals. Guinmapang alleged that the NLRC acted with grave abuse of discretion amounting to lack of jurisdiction when, in affirming the Labor Arbiters Decision, it held that Guinmapangs retrenchment was legal and that Guinmapang was not entitled to damages, attorneys fees and litigation costs.

The Court of Appeals granted Guinmapangs petition. The 17 March 2005 Decision of the Court of Appeals provides:

WHEREFORE, the petition is GRANTED. Accordingly, the January 29, 2004 Order and the May 31, 2004 Order, which denied the motion for reconsideration thereof, are hereby REVERSED and SET ASIDE. The public respondent is hereby ordered to decide the petitioners appeal on the merits. SO ORDERED. 25[10]

The Court of Appeals noted that, in their pleadings, both parties discussed the merits of the case. However, since the NLRCs 29 January 2004 Order dealt only with the dismissal of the case for having been filed beyond the 10-day reglementary period, the Court of Appeals did not rule on the merits of the case. The Court of Appeals limited its discussion of the case to the procedural issue.
24 25

The Court of Appeals started by declaring that in labor cases, the rules of procedure are not to be strictly adhered to. The Court of Appeals said that technicalities should not be permitted to stand in the way of equitably and completely resolving the rights and obligations of the parties. The Court of Appeals gave credence to Guinmapangs explanation that the appeal was filed one day late because Guinmapangs counsel suffered from an asthma attack a few days before the last day for the filing of the appeal. The Court of Appeals added that the delay of one day was not deliberate. Moreover, the Court of Appeals found that Guinmapangs Memorandum of Appeal before the NLRC raised valid and meritorious arguments. Therefore, in the interest of justice, the Court of Appeals ruled that the NLRC should have taken cognizance of Guinmapangs appeal even if it was filed out of time.

Hence, this petition.

Republic Cement raises the sole issue:

THE COURT OF APPEALS GRAVELY ERRED IN REVERSING AND SETTING ASIDE THE DECISION OF THE NLRC AND ORDERING IT TO DECIDE THE APPEAL OF RESPONDENT PETER GUINMAPANG ON THE MERITS, DESPITE THE FAILURE OF THE RESPONDENT TO PERFECT HIS APPEAL WITHIN THE TEN (10) DAY REGLEMENTARY PERIOD FOR APPEALING A DECISION OF THE LABOR ARBITER TO THE NLRC.26[11]

The petition has no merit.

26

Republic Cement, while acknowledging that technical rules of procedure are not binding in labor cases, argues that the NLRC should not disregard and violate the implementing rules which it had itself promulgated. Republic Cement insists that, in the settlement of labor disputes, delays cannot be countenanced.

On the other hand, Guinmapang argues that in labor cases, the technical rules of procedure are not to be strictly applied. Guinmapang explains that his counsel presented a medical certificate showing that he suffered from mild resistant asthma on the last day of filing. Guinmapang maintains that the one day delay was not a gross violation of the rules on filing an appeal.

Article 223 of the Labor Code, the governing law on the timeliness of an appeal from the decisions, awards or orders of the Labor Arbiter, provides that the aggrieved party has 10 calendar days from receipt thereof to appeal to the NLRC. Section 1 of Rule VI of the 2005 Revised Rules of the NLRC implements the said provision of the Labor Code. Section 1 provides:

Section 1. Periods of Appeal. - Decisions, awards or orders of the Labor Arbiter shall be final and executory unless appealed to the Commission by any or both parties within ten (10) calendar days from receipt thereof x x x.

There is no dispute that Guinmapang received a copy of the Labor Arbiters Decision on 23 June 2003. Thus, pursuant to Article 223 of the Labor Code and Section 1, Rule VI of the 2005 Revised Rules of the NLRC, Guinmapang had only

until 3 July 2003, the 10th calendar day from 23 June 2003, within which to file an appeal. However, due to the asthma attack suffered by Guinmapangs counsel, Guinmapangs appeal was filed on 4 July 2003, a day late.

The general rule is that the perfection of an appeal in the manner and within the period prescribed by law is, not only mandatory, but jurisdictional, and failure to conform to the rules will render the judgment sought to be reviewed final and unappealable.27[12] By way of exception, unintended lapses are disregarded so as to give due course to appeals filed beyond the reglementary period on the basis of strong and compelling reasons, such as serving the ends of justice and preventing a grave miscarriage thereof.28[13] The purpose behind the limitation of the period of appeal is to avoid an unreasonable delay in the administration of justice and to put an end to controversies.29[14]

In Chronicle Securities Corporation v. NLRC,30[15] we ruled:

In not a few instances, we relaxed the rigid application of the rules of procedure to afford the parties the opportunity to fully ventilate their cases on the merits. This is in line with the time honored principle that cases should be decided only after giving all the parties the chance to argue their causes and defenses. Technicality and procedural imperfections should thus not serve as bases of decisions. In that way, the ends of justice would be better served. For indeed, the general objective of procedure is to facilitate the application of justice to the rival claims of contending parties, bearing always in mind that procedure is not to hinder but to promote the administration of justice.31[16]
27 28 29 30 31

Indeed the prevailing trend is to accord party litigants the amplest opportunity for the proper and just determination of their causes, free from the constraints of needless technicalities.32[17]

A one-day delay in the perfection of the appeal was excused in Gana v. NLRC,33[18] Surigao del Norte Electric Cooperative v. NLRC,34[19] City Fair Corporation v. NLRC,35[20] Pacific Asia Overseas Shipping Corp. v. NLRC,36[21] and Insular Life Assurance Co., Ltd. v. NLRC.37[22]

We agree with the Court of Appeals that since no intent to delay the administration of justice could be attributed to Guinmapang, a one day delay does not justify the appeals denial.38[23] merit. More importantly, the Court of Appeals declared that Guinmapangs appeal, on its face, appears to be impressed with The constitutional mandate to accord full protection to labor and to safeguard the employees means of livelihood should be given proper attention and sanction.39[24] A greater injustice may occur if said appeal is not given due course
32 33 34 35 36 37 38 39

than if the reglementary period to appeal were strictly followed.40[25] In this case, we are inclined to excuse the one day delay in order to fully settle the merits of the case. This is in line with our policy to encourage full adjudication of the merits of an appeal.41[26]

WHEREFORE, we DENY the petition. We AFFIRM the 17 March 2005 Decision and the 7 July 2005 Resolution of the Court of Appeals in CA-G.R. SP No. 86025.

SO ORDERED.

ANTONIO T. CARPIO Associate Justice

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION

G.R. No. 92234 August 30, 1990 THE UNIVERSITY OF NUEVA CACERES, petitioner, vs. THE HON. RUBEN D. TORRES, in his capacity as THE SECRETARY OF LABOR AND EMPLOYMENT, THE UNIVERSITY OF NUEVA CACERES TEACHERS
40 41

ALLIANCE, THE UNIVERSITY OF NUEVA CACERES FACULTY AND EMPLOYEES FEDERATION and HON. ANTONIO B. CAAYAO, in his capacity as CHIEF, INDUSTRIAL LABOR RELATIONS, DEPARTMENT OF LABOR AND EMPLOYMENT, REGION V, respondents. Eufronio K Maristela for petitioner. Adan Marcelo B. Botor for respondent UNCTA.

GANCAYCO, J.: The sole issue presented in the instant petition for certiorari filed by the University of Nueva Caceres is whether or not the Secretary of Labor and Employment committed grave abuse of discretion in dismissing its appeal on the ground of late filing. The merit of the appeal is not in issue here. The following facts are undisputed: On August 8, 1989, the respondent University of Nueva Caceres Teachers Alliance filed a petition for certification election with the Department of Labor and Employment, Region V, Legaspi City, which was docketed as Med-Arbitration Case No. R05-81-A89. Petitioner was named respondent therein. Before the case was heard, or on August 21, 1989, the respondent University of Nueva Caceres Faculty and Employees Federation (hereinafter referred to as FEDERATION) filed a petition for intervention and this was given due course by Med-Arbiter Pedro M. Cao. After conducting several pre-election conferences, Med-Arbiter Pedro M. Cao issued an order dated December 14, 1989, with the following dispositive portion:
WHEREFORE, premises considered, an order is hereby issued as follows: 1. That a certification election be held within twenty (20) days from receipt hereof, 2. That it be held in the premises of respondent-employer duly supervised by the representation Officer(s) designated by the office; 3. That only those in the herein attached list of qualified voters shall be allowed to participate and vote during the election; 4. That the contending parties shall be the petitioner (UNC Concerned Teachers Alliance), the intervenor UNC Faculty and Employees Federation) and NO union. 1

A copy of the above-written order of Med-Arbiter Cano was received by petitioner on December 21, 1989.

Not satisfied therewith, petitioner decided to file an appeal and sent its Memorandum on Appeal by registered mail on January 2, 1990. The FEDERATION for its part, also filed an appeal. On February 9, 1990, public respondent Secretary of Labor and Employment Torres issued a joint resolution denying the appeals of both petitioner and the FEDERATION. The appeal of petitioner was denied for having been filed out of time. 2 Petitioner filed a motion for reconsideration alleging therein that its appeal was correctly and timely filed on January 2, 1990, it being the last day of the calendar period within which it could file its appeal. As another pre-election conference was set to be called, petitioner filed the instant petition stating that it had no other plain and speedy remedy in the course of law. From the facts of this case, it is obvious that respondent Secretary Torres committed grave abuse of discretion in denying the appeal of petitioner for HAVING BEEN FILED OUT OF TIME. Rule V, Book V of the Omnibus Rules Implementing the Labor Code provides for the procedure by which a petition for certification election may be filed. The period of appeal is provided for in Section 9 of the same Rule, to wit:
Sec. 9. Period of appeal.-The appeal shall be filed within ten (10) calendar days from receipt of the order by the appellant. Any opposition thereto may be filed within ten (10) calendar days from receipt of the appeal. The Regional Director shall within five (5) calendar days forward the entire records of the case to the Office of the Secretary. 3

Section 28, Chapter 7, Book I of the Administrative Code of 1987 on the other hand gives us the rule in cases where the day or last day for doing an act required or permitted by law falls on a holiday, thus:
Sec. 28-Pretermission of Holiday-Where the day or the last day for doing any act required or permitted by law falls on a holiday, the act may be done on the next succeeding business day. 4

Applying the above-written rules to the case at bar, We hold that the appeal of petitioner was not filed out of time. As earlier stated, petitioner received its copy of the order of Med-Arbiter Cao on December 21, 1989. Counting ten days from petitioner's receipt, the last day for filing the appeal fell on December 31, a Sunday. Since the following day was a legal holiday (New Year's Day), petitioner could validly file its appeal on January 2, the next business day and this was what petitioner actually did. In the case of SM Agri and General Machineries vs. NLRCL 5 tills Court had the opportunity to rule on a case where the Legal Holiday coincided with the 10th or last day to appeal. This Court held therein that where the 10th-day of the 10-day period fixed by law to appeal falls on a Sunday or a Legal Holiday, the appeal can be filed on the next

business day. In such case, this Court continued, the supposedly last day to appeal will not be deemed the last day because it happens to be a Sunday or Legal Holiday and instead, the act can be done on the next business day following that Sunday or Legal Holiday. 6 WHEREFORE and in view of the foregoing, the instant petition is hereby granted. The resolution of respondent Secretary Torres dated February 9, 1990 is ordered set aside as far as petitioner University is concerned. Respondent Secretary Torres is also ordered to give due course to petitioner's appeal. SO ORDERED. Narvasa (Chairman), Cruz, Grio-Aquino and Medialdea, JJ., concur.

SECOND DIVISION

LANDTEX INDUSTRIES and WILLIAM GO, Petitioners,

G.R. No. 150278

Present:

QUISUMBING, J., Chairperson, CARPIO, - versus CARPIO MORALES, TINGA, and VELASCO, JR., JJ.

COURT OF APPEALS, SALVADOR M. AYSON, and LANDTEX INDUSTRIES WORKERS UNION FEDERATION OF FREE WORKERS (FFW), Respondents. August 9, 2007 Promulgated:

x-------------------------------------------------- x

DECISION

CARPIO, J.:

The Case

This is a petition for review on certiorari42[1] of the Decision43[2] dated 13 February 2001 and of the Resolution44[3] dated 16 October 2001 of the Court of Appeals (appellate court) in CA-G.R. SP No. 50060. The Decision ordered petitioners Landtex Industries (Landtex) and William Go to award respondent Salvador M. Ayson (Ayson) separation pay in lieu of reinstatement, backwages, 13th month pay, service incentive leave pay, and attorneys fees.

The Facts

42 43 44

Landtex, a sole proprietorship owned by Alex Go and managed by William Go, is a business enterprise engaged in the manufacture of garments. Ayson worked in Landtex as a knitting operator from 19 May 1979 to 6 July 1996. Ayson was an officer45[4] of Landtex Industries Workers Union Federation of Free Workers (union) which had an existing collective bargaining agreement (CBA) with Landtex.

Ayson received a letter46[5] from Landtex dated 16 March 1996 which stated that Ayson committed acts contrary to company policies on 2 and 7 March 1996. The letter required Ayson to explain in writing within 24 hours from receipt why no disciplinary action should be taken against him for spreading damaging rumors about the personal life of an unspecified person, and for having an altercation with one of the companys owners when he was asked to submit an ID picture.

Ayson replied in writing47[6] that he could not defend himself from the charge of spreading damaging rumors because Landtexs letter failed to state what rumors he was supposed to have spread. Ayson further explained that he merely replied in a loud voice to the company owners request because he was carrying textiles. Ayson then apologized for his actions.

45 46 47

Landtex sent Ayson another letter dated 2 April 1996 informing him of its receipt of his explanation. Landtex informed Ayson that the omission of the details about the damaging rumors was intentional because other employees might be able to read the letter. Furthermore, Landtex decided to conduct an investigation on 26 April 1996 in view of Aysons denials.

The first meeting between Ayson and Landtexs counsel took place on 26 April 1996. The minutes of the 26 April 1996 meeting state that Ayson was informed that there were witnesses who could testify that he spread rumors about the personal life of William Go and his family. Ayson denied that he spread rumors and requested for another meeting so that he could hear the alleged witnesses and defend himself. Ayson further requested that the next investigation be held at Landtexs Mauban office because he and the union officers accompanying him suffer salary deductions for their attendance of investigations during office hours.48[7] Another meeting was scheduled for 5 May 1996, but Ayson was unable to attend it and went home early because he allegedly needed to look after his child.

The second meeting between Ayson and Landtexs counsel took place on 5 June 1996. The minutes of the 5 June 1996 meeting state that Ayson and a union officer accompanying him appeared but refused to sign the attendance sheet or to participate. Landtexs counsel, Atty. Generosa Jacinto, made a note in the minutes which reads, Pls. advise mgt. They can take any action they want.49[8]
48 49

In a letter dated 19 June 1996, Landtex terminated Aysons services effective 30 June 1996 because of Aysons lack of cooperation during the investigations. Despite this notice, Ayson still reported for work until 6 July 1996.

In a letter dated 8 July 1996, the union president requested Landtex for a formal dialogue regarding Aysons case. Landtex reaffirmed its decision to terminate Ayson in meetings with the union held on 10 and 16 July 1996. Landtex and the union agreed to refer the matter to a third party in accordance with the provisions of law and of the CBA. Landtex expected Ayson to refer the issue to the National Conciliation and Mediation Board (NCMB) for the selection of a voluntary arbitrator. Ayson and the union, however, filed a complaint before the labor arbiter.50[9]

The labor arbiter conducted mandatory conferences for amicable settlement with the participation of all parties. The parties agreed to the idea of payment of separation pay in lieu of reinstatement but differed as to the amount. Ayson wanted to receive one month basic salary for every year of service while Landtex wanted to pay only one-half month basic salary for every year of service from date of hiring to termination of employment.51[10] The parties were not able to settle; hence, the labor arbiter ordered them to submit their position papers.

50 51

In his position paper, Ayson asked whether his dismissal from employment has any just cause. Ayson also asked whether Landtex complied with procedural due process when it terminated his employment.

On the other hand, Landtex and William Go revealed in their position paper that Ayson was seen having a drinking session with other Landtex employees near the company premises. A Landtex security guard, who was a part of the drinking session but whose identity was not revealed, stated that Ayson maliciously narrated spiteful stories about the personal life of William Go. Landtex also questioned the jurisdiction of the labor arbiter over Aysons case. Landtex insisted that the labor arbiter should dismiss Aysons case and refer it to the NCMB for the selection of a voluntary arbitrator.

The Ruling of the Labor Arbiter

On 30 September 1997, the labor arbiter promulgated his decision52[11] which ruled in favor of Ayson. The labor arbiter declared that despite the unions manifestation of its desire to refer Aysons case to a third party in accordance with provisions of law and CBA,53[12] this manifestation did not affect Landtexs
52 53

termination of Aysons employment. Aysons termination thus properly falls under the jurisdiction of the labor arbiter. Moreover, the labor arbiter did not find The pertinent portions of the any evidence supporting Landtexs allegations that Ayson spread malicious rumors about William Go or shouted at William Gos wife. labor arbiters decision read:

Dismissal of a worker is no trifling matter; more so, of herein [Ayson] who had been employed with [Landtex] for seventeen years, more or less. The dismissal must be for a just cause, let alone with due process, and must be based on substantial evidence. Mere allegations will not suffice. WHEREFORE, premises considered, judgment is hereby rendered ordering [Landtex Industries and William Go] to reinstate [Ayson] to his former position without loss of seniority rights with full backwages from the date his salary has been withheld until the actual date of reinstatement. [Landtex Industries and William Go] are further ordered to pay ten (10%) percent of [Aysons] total monetary award as attorneys fees. Backwages 6/30/96 8/31/97 = 14.0 mos. P165.00 x 30 x 14.00 mos. 13th Month Pay SILP 5.833 days x P165.00 = 962.50 P 76,037.50 Attorneys Fees TOTAL = 7,603.75 P 83,641.25 = = P 69,300.00 5,775.00

All other claims of [Ayson] are dismissed for lack of merit.

SO ORDERED.54[13]

Landtex and William Go appealed the labor arbiters decision to the National Labor Relations Commission (NLRC). Landtex and William Go posted a bond in the amount of the total award in the labor arbiters decision to perfect their appeal and to enjoin the execution of the decision. Landtex and William Go insisted that the labor arbiter had no jurisdiction over the parties and over the subject matter in the present case.

The Ruling of the NLRC

On 20 July 1998, the NLRC promulgated its decision55[14] which agreed with Landtex and William Gos argument that Aysons case falls within the original and exclusive jurisdiction of the voluntary arbitrators, as provided in Article 261 of the Labor Code. Landtex merely imposed a disciplinary measure when it terminated Aysons employment. Furthermore, the NLRC ruled that Ayson waived his right to have his case heard before any other forum when he did not undergo the grievance process mandated by his unions CBA with Landtex. The NLRC declared that the disciplinary action meted out by Landtex to Ayson and the waiver of Aysons right to have his case heard were matters which require the interpretation of the CBA, and thus were within the original and exclusive
54 55

jurisdiction of the voluntary arbitrators. The dispositive portion of the NLRCs decision reads:

WHEREFORE, the decision appealed from is hereby SET ASIDE on the ground of lack of jurisdiction over the subject matter. The instant case is hereby referred to Voluntary Arbitration in accordance with the Collective Bargaining Agreement. SO ORDERED.56[15]

The NLRC dismissed Ayson and the unions motion for reconsideration on 11 September 1998. Ayson and the union then filed a petition for certiorari before the appellate court.

The Ruling of the Appellate Court

In a decision promulgated on 13 February 2001, the appellate court sustained the jurisdiction of the labor arbiter and modified the award in favor of Ayson. The appellate court further stated that the records are bereft of any showing that a grievance mediation had been undertaken so as to thresh out any disciplinary measure against [Ayson].57[16] The appellate court took Landtex and William Go to task because they took the avenue of least resistance and discussed the possibility of an amicable settlement instead of filing a motion to
56 57

dismiss before the labor arbiter. Moreover, the appellate court found that Ayson was illegally dismissed because his termination was characterized by bad faith, [and] wanton and reckless exercise of management prerogative.58[17] Landtexs allegations against Ayson failed to show that Aysons dismissal was for a just cause. The appellate court awarded Ayson full backwages, separation pay (equivalent to one months pay for every year of service, a fraction of at least six months being considered as one whole year) in lieu of reinstatement, 13th month pay, service incentive leave pay, and attorneys fees. The dispositive portion of the decision of the appellate court reads:

WHEREFORE, premises considered, the petition is GRANTED and the decision (promulgated on July 20, 1998) and the resolution (promulgated on September 11, 1998) of the public respondent (National Labor Relations Commission) in NLRC NCR Case No. 00-07-0449292 is hereby REVERSED and SET ASIDE. The decision of the labor arbiter, which was rendered on September 30, 1997 is hereby REINSTATEDsubject, however, to the MODIFICATION that separation pay shall be awarded to [Ayson] in lieu of reinstatement. No pronouncement as to costs. SO ORDERED.59[18]

Landtex and William Go filed a motion for reconsideration of the appellate courts decision. Ayson and the union also contested the appellate courts award of separation pay in lieu of reinstatement. The appellate court dismissed both motions in a resolution promulgated on 16 October 2001.

58 59

Landtex and William Go then filed a petition for review before this Court on 11 December 2001. Ayson and the union also filed a petition for review, docketed as G.R. No. 150392, but this petition was withdrawn as Ayson no longer desired to question the resolution of the appellate court.60[19] Emilia P. Ayson, respondent Aysons wife, later made a manifestation that she would like to represent Ayson in the present case since her husband died on 28 August 2002. She attached Aysons death certificate and their marriage certificate to prove her allegations.

When Landtex and William Go filed their memorandum in the present case, they stated that Landtex started to suffer serious business reverses in the first quarter of 2001. Landtexs cutting and knitting departments temporarily closed in December 2002, and Landtex permanently ceased its operations in February 2003. Landtex and William Go attached Landtexs notice of closure to the union dated 9 January 2003, Landtexs balance sheets for the years 2000 to 2002, Landtexs profit and loss statements for the years 2000 to 2002, notice of extra-judicial sale of the property of spouses Alex and Nancy Go, demand letters addressed to Alex Go, and unpaid utility bills in the name of Alex Go to prove their allegations.

The Issues

Landtex and William Go raise the following issues before this Court:
60

A. Whether the NLRC correctly ruled that jurisdiction over the subject matter of the instant case pertains exclusively to the voluntary arbitrator considering that 1. The existing CBA provides that a grievance is one that arises from the interpretation or implementation of this agreement, including disciplinary action imposed on any covered employee; and 2. The parties have undergone the grievance machinery of the collective bargaining agreement. B. Whether the instant case concerns enforcement and implementation of company personnel policy and that the issue therein was timely raised. C. Whether there is a valid ground for termination of the employment of [Ayson]. D. Whether [Ayson] is entitled to backwages and separation pay.

E. Whether [the appellate court] committed grave and patent abuse of

discretion and errors of law in setting aside the decision of the NLRC.61[20]

The Ruling of the Court

The petition has no merit.

The Labor Arbiters Jurisdiction

61

Landtex and William Go insist that the matter subject of the present petition is covered by the CBAs provision on voluntary arbitration and thus is excluded from the labor arbiters jurisdiction. They allege that Aysons termination merely enforced Landtexs personnel policy against misconduct. They further claim that the unions request for a formal dialogue signified the initiation of the grievance procedure outlined in the CBA. Landtex and William Go even assert that because of Aysons failure to submit his claim before the NCMB, he is barred from seeking relief from a forum other than that provided in the CBA.

Section 1 of Article XV, Grievance Procedure, of the unions CBA with Landtex reads:

Grievance Machinery. For purposes of this Agreement, a grievance is one that arises from the interpretation or implementation of this Agreement, including disciplinary action imposed on any covered employee. Any grievance, dispute, or complaint which a covered employee or UNION may have against the COMPANY: (a) relative to the meaning, interpretation and application of the terms of this agreement; or (b) arising out of the employment relationship, shall be submitted to the grievance machinery in accordance with the following procedure: Step I The employee shall present his grievance, dispute, or complaint in writing to the COMPANYs Section Head/In Charge and to the UNIONs authorized representative, and thereupon the said Section Head and UNION representative shall endeavor to work out a settlement within four (4) working days from presentation. If, under Step I, no settlement is reached within four (4) working days from presentation, the grievance shall be taken up by the UNION representative with the General Manager. If, under Step II, no settlement is reached within four (4) working days, the grievance shall be referred by the parties to the Management-Employee Committee. If under Step III, no settlement is reached within eight (8)

Step II

Step III

Step IV

working days, the grievance shall be referred by both parties to the National Conciliation and Mediation Board (NCMB) for submission to voluntary arbitration in accordance with NCMBs rules within ten (10) days from the date of the last meeting of the Management-Employee Committee.

Where the grievance or complaint involves the UNION directly, Steps I and II of the foregoing procedure shall be dispensed with and only Steps III and IV shall be followed.62[21]

Articles 217, 261, and 262 of the Labor Code tackle the jurisdiction of labor arbiters and voluntary arbitration as follows:

Art. 217. Jurisdiction of the Labor Arbiters and the Commission. - (a) Except as otherwise provided under this Code, the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the submission of the case by the parties for decision without extension, even in the absence of stenographic notes, the following cases involving all workers, whether agricultural or non-agricultural: 1. Unfair labor practice cases; 2. Termination disputes; 3. If accompanied with a claim for reinstatement, those cases that workers may file involving wages, rates of pay, hours of work and other terms and conditions of employment; 4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations; 5. Cases arising from any violation of Article 264 of this Code, including questions involving the legality of strikes and lockouts; and

62

6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims arising from employer-employee relations, including those of persons in domestic or household service, involving an amount exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with a claim for reinstatement. (b) The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters. (c) Cases arising from the interpretation or implementation of collective bargaining agreements and those arising from the interpretation or enforcement of company personnel policies shall be disposed of by the Labor Arbiter by referring the same to the grievance machinery and voluntary arbitration as may be provided in said agreements. Art. 261. Jurisdiction of Voluntary Arbitrators or panel of Voluntary Arbitrators. - The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have original and exclusive jurisdiction to hear and decide all unresolved grievances arising from the interpretation or implementation of the Collective Bargaining Agreement and those arising from the interpretation or enforcement of company personnel policies referred to in the immediately preceding article. Accordingly, violations of a Collective Bargaining Agreement, except those which are gross in character, shall no longer be treated as unfair labor practice and shall be resolved as grievances under the Collective Bargaining Agreement. For purposes of this article, gross violations of Collective Bargaining Agreement shall mean flagrant and/or malicious refusal to comply with the economic provisions of such agreement. The Commission, its Regional Offices and the Regional Directors of the Department of Labor and Employment shall not entertain disputes, grievances or matters under the exclusive and original jurisdiction of the Voluntary Arbitrator or panel of Voluntary Arbitrators and shall immediately dispose and refer the same to the Grievance Machinery or Voluntary Arbitration provided in the Collective Bargaining Agreement. ART. 262. Jurisdiction over other labor disputes. - The Voluntary Arbitrator or panel of Voluntary Arbitrators, upon agreement of the parties, shall also hear and decide all other labor disputes including unfair labor practices and bargaining deadlocks.

The labor arbiter, the appellate court, and the NLRC differed in their rulings on the matter of jurisdiction. The labor arbiter and the appellate court agreed with Ayson and the unions position. The labor arbiter assumed jurisdiction and emphasized that when the union met with Landtex on 8 July 1996, Ayson was no longer an employee because Landtex terminated him effective 30 June 1996. The manifestation of the unions desire to refer the matter to a third party in

accordance with law and the CBA does not deviate from the fact that Ayson was already dismissed. On the other hand, the NLRC sustained Landtex and William Gos position. The NLRC asserted that the determination of whether Aysons dismissal constitutes a disciplinary action within the scope of the CBA calls for an interpretation of the CBA. When the union called for a meeting with Landtex, the union effectively initiated the grievance procedure. Thus, Aysons case should have been subjected to voluntary arbitration.

We agree with Ayson and the union and affirm the rulings of the labor arbiter and the appellate court.

Article 261 of the Labor Code provides that voluntary arbitrators shall have original and exclusive jurisdiction to hear and decide all unresolved grievances arising from the interpretation or implementation of the Collective Bargaining Agreement and those arising from the interpretation or enforcement of company personnel policies. On the other hand, a reading of Article 217 in conjunction with Article 262 shows that termination disputes fall under the jurisdiction of the labor arbiter unless the union and the company agree that termination disputes should be submitted to voluntary arbitration. Such agreement should be clear and unequivocal. Existing law is an intrinsic part of a valid contract without need for the parties to expressly refer to it. Thus, the original and exclusive jurisdiction of the labor arbiter over unfair labor practices, termination disputes, and claims for

damages cannot be arrogated into the powers of voluntary arbitrators in the absence of an express agreement between the union and the company.63[22]

In the present case, the CBA between Landtex and the union does not clearly state that termination disputes, as opposed to mere disciplinary actions, are covered by the CBA. The CBA defined a grievance as one that arises from the interpretation or implementation of this Agreement, including disciplinary action imposed on any covered employee. The CBA did not explicitly state that termination disputes should be submitted to the grievance machinery.

In ruling that the present case should have been submitted to voluntary arbitration, the NLRC relied on the unions act of meeting with Landtex. The unions letter to Landtex, dated 8 July 1996, reads:

We received your letter dated 19 June 1996 re: TERMINATION LETTER of MR. SALVADOR AYSON who happened to be [a] union officer of LANDTEX INDUSTRIES EMPLOYEES UNION. In connection to [sic] this, we would like to request for a formal dialogue regarding the above matter at a [sic] soonest possible time. We are hoping that the management is with us in resolving this termination of our officer. May we have a continuous harmonious relationship. Thank you.64[23]

63 64

The CBAs provisions on grievance directly involving the union state that the grievance shall be referred by the parties to the Management-Employee Committee. The Management-Employee Committee shall be composed of three representatives each from the union and Landtex. According to the minutes of the meeting prepared by Landtexs counsel, when the union met with Landtex on 10 July 1996, there were seven union members and two Landtex representatives in attendance. The minutes of the meeting read:

The mgt.s position is that it will no longer reconsider the termination of Mr. Ayson. The union on the other hand opened discussion of other possibilities in lieu of reinstatement. The union requested for time to study possibilities. The mgt. will do likewise. Reset 16 July 96[,] 5 pm at factory.65[24]

The next meeting proceeded with the same number of representatives from both parties. The minutes of the meeting state that there was [n]o settlement. Union will refer matter to third party in accordance with provision of law and CBA.66[25]

We find nothing in the records which shows that the meetings between the union and Landtex already constitute the grievance machinery as mandated by the CBA. The meetings happened only after the effectivity of Aysons termination.
65 66

The meetings did not comply with the requisite number of participants. The CBA mandated that there should be three representatives each from the union and Landtex but there were seven union members and two Landtex representatives who attended the meetings. More importantly, there was nothing in the minutes that shows that the attendees constituted a Management-Employee Committee.

Finally, the appellate court is correct in stating that if Landtex really believed that the labor arbiter did not have jurisdiction over the present case, then Landtex should have filed a motion to dismiss in accordance with Section 15, Rule V of The New Rules of Procedure of the NLRC.67[26] Instead of filing a motion to dismiss, Landtex participated in the proceedings before the labor arbiter. Had Landtex immediately filed a motion to dismiss, the labor arbiter would have determined the issue outright before proceeding with hearing the case. In the present case, Landtex raised the issue of jurisdiction only after the labor arbiter required the parties to submit their position papers.

Validity of Aysons Dismissal

67

The requisites for a valid dismissal are (1) the dismissal must be for any of the causes expressed in Article 282 of the Labor Code, and (2) the opportunity to be heard and to defend oneself.68[27] Landtex and William Go assert that Aysons termination was for a just cause as defined in Article 28269[28] of the Labor Code; hence, the two-notice rule70[29] should be followed.

The contents of Landtexs first memorandum to Ayson, signed by Landtexs counsel, read:

Ipinagbigay-alam sa amin ng pamahalaang Landtex Industries and [sic] tungkol sa nangyaring insidente nuong ika-2 at 7 Marso 1996. Ayon sa isang saksi, ikaw ay nagkakalat ng mga balitang nakakasira sa aming personal na buhay. Bukod pa dito nuong ika-7 ng Marso ng ikaw ay hingan ng iyong ID pictures bilang isa sa mga regulasyon ng kompanya, ikaw ay sumungaw sa harap pa mismo ng nagmamay-ari ng kompanya na naging dahilan upang magkasagutan kayo. Iyong nalalaman na ang ganitong gawain ay taliwas sa umiiral na patakaran ng kompanya. Bunga nito[,] ikaw ay hinihingan ng nakasulat na paliwanag 24 oras mula sa pagkakatanggap ng liham na ito. Ang hindi mo pagsunod ay nangangahulugan na maaari ng gumawa ng susunod na aksyong pang-disiplina and [sic] kompanya laban sa iyo.71[30]

Aysons handwritten response reads:

68 69 70 71

Ayon sa salaysay ng inyong saksi ako ay nagkakalat ng balitang nakakasira sa inyong personal na buhay. Ipagpaumanhin po ninyo ang hindi ko pagtugon sa inyong sulat na nakasaad na ako ay nagkakalat ng balitang nakakasira ng inyong personal na buhay sa dahilan na wala naman pong nakasaad sa sulat kung anong balita na ipinagkakalat ko na nakakasira sa personal na buhay ninyo. Noon po ika-7 ng Marso ako po ay hiningan ng ID picture bilang isa sa mga regulasyon ng kompanya at nakasaad po sa sulat na ako po ay sumungaw o sumigaw sa harap mismo ng may-ari ng kompanya. Hindi po ako sumigaw[,] ako po ay sumagot lamang sa tanong nila. Kung ang pagkasagot ko man ay medyo napakalakas ito po ay sa dahilan na nang mga oras na iyon ay may buhat-buhat akong tela na aming inaakyat. Kung ito po ay minamasama ninyo, ay ihinihingi ko na lamang ng paumanhin.72[31]

Landtex then summoned Ayson on 26 April 1996 to a meeting to investigate the 2 and 7 March 1996 incidents. The minutes of the 26 April 1996 meeting read:

Mr. Ayson was apprised of the incident that happened on March 2 & 7 wherein it was alleged that he is spreading some rumors involving [the] personal life of Mr. Go and his family. He was informed that there were witnesses who can testify on this. Mr. Ayson however requested that another investigaton be conducted wherein the alleged witnesses be presented since he cannot answer whether what was reported was true or not. He further denies allegations that he is spreading said rumors. Mr. Ayson together with union officers requested that investigation be conducted instead at Mauban, Quezon City since they are being deducted everytime they attend investigations like this during office hours. Mr. Ayson & union to be notified when another investigation [will] be scheduled.73[32]

The next meeting was held on 5 June 1996. The minutes of the meeting read:
72 73

Mr. Ferdinand Samson, union Sgt. at Arms [and] Mr. Salvador Ayson appeared but refused to sign attendance or participate in [the] investigation. Accord. to them, they will consult FFW.74 [33]

Landtex informed Ayson of its decision to terminate his services in a letter dated 19 June 1996. The letter, signed by Landtexs counsel, reads:

Ito ay hinggil sa insidenteng nangyari na kinasangkutan mo noong ika-2 at 7 ng Marso 1996. Hindi lingid sa iyong kaalaman na ikaw ay binigyan ng pamunuan ng Landtex ng lahat ng pagkakataon upang marinig ang iyong panig at maipagtanggol ang iyong sarili sa paraang naaayon sa batas ngunit, ikaw ay hindi nakiisa o nakipagtulungan. Sa katunayan, noong nakaraang 16 Marso 1996 ikaw [ay] pinadalhan ng memo kung saan nakasaad ang nasabing insidente at kasama ang paghingi ng iyong nakasulat na paliwanag. Noong nakaraang 02 Abril 1996 isang sulat ang pinadala sa iyo kung saan ikaw ay inatasang dumalo sa isang pagsisiyasat. Sa nasabing imbestigasyon, iminungkahi mo at ng iyong mga kasama (mga opisyales ng unyon) na magsagawa ulit ng isa pang imbestigasyon at nais ninyong ito ay isagawa sa inyong pagawaan. Kayat ito ay muling inskedyul noon 06 Mayo 1996 ngunit ikaw ay tumawag ng araw din yaon at sinabing kailangan mong umuwi ng maaga dahil walang magbabantay sa iyong anak. Muli na naman nagtakda ng isa pang pagsisiyasat noong ika-05 Hunyo 1996 ngunit, sa nasabing imbestigasyon ikaw ay tumangging maimbestigahan at tumanggi ring pumirma sa attendance. Ilang pagkakataon na iyong pinalampas kung saan sana ay naipadinig mo ang iyong panig at naipagtanggol mo ang iyong sarili.

Kaugnay nito, ikinalulungkot na ipinababatid sa iyo ng pamunuan na batay sa akusasyon sa iyo, sa pagpatunay ng testigo laban sa iyo ikaw ay tinatanggal sa trabaho. Ang iyong paglilingkod sa Landtex Industries ay hanggang sa ika-30 ng Hunyo 1996 na lamang.75[34]

74 75

Landtex and William Go, in their appeal before the NLRC, stated that paragraphs (a) and (d) of Article 28276[35] were applicable to Ayson. They added that the employer, exercising management prerogative, has the right to protect its interest by imposing the appropriate penalties on erring employees. However, upon reading the records of the case, we cannot deduce any proof of Landtex and William Gos accusations against Ayson. Moreover, the NLRC did not make any pronouncement as to whether Ayson was dismissed for a just cause. The appellate court and the labor arbiter were one in ruling that there was no just cause in Aysons dismissal. We quote the labor arbiters factual findings with approval:

We have painstakingly read the records of this case and, sadly, this Office finds no shred of evidence to show that indeed [Ayson] had been spreading news and gossips or that he ever shouted at Mr. Go and engaged Mr. Go in a heated argument. No affidavit of either the security guard who claimed to be one of the drinking group who heard the alleged malicious news or gossips or that of Mr. and Mrs. Go who had been the subject of [Aysons] alleged shouting has been presented if only to substantiate [Landtex and William Gos] self-serving claims.77[36]

Procedural due process in the dismissal of employees requires notice and hearing. The employer must furnish the employee two written notices before termination may be effected. The first notice apprises the employee of the particular acts or omissions for which his dismissal is sought, while the second notice informs the employee of the employers decision to dismiss him.78[37] In the present case, Landtex more than complied with the two-notice rule.
76 77 78

The requirement of a hearing, on the other hand, is complied with as long as there was an opportunity to be heard, and not necessarily that an actual hearing was conducted.79[38] In the present case, Landtex scheduled three meetings before terminating Ayson. However, Landtex failed to understand the laws purpose in requiring the opportunity to be heard. Landtex scheduled meetings with Ayson but these meetings were not free from arbitrariness. Ayson could not adequately defend himself from Landtexs and William Gos accusations. No witness was ever presented against Ayson, hence Ayson could not test the veracity of their claims.

Unsubstantiated suspicions, accusations, and conclusions of the employer are not sufficient to justify an employees dismissal. The employer must prove by substantial evidence the facts and incidents upon which the accusations are made.80 [39] In Philippine Associated Smelting and Refining Corporation (PASAR) v. NLRC,81[40] we ruled that the mere conduct of an investigation and the statements of the companys security guard are not enough to establish the validity of the charge of wrongdoing against the dismissed employees. It is not enough for an employer who wishes to dismiss an employee to charge him with wrongdoing. The validity of the charge must be established in a manner consistent with due process. A suspicion or belief no matter how sincerely felt cannot substitute for factual findings carefully established through an orderly procedure.
79 80 81

Landtex and William Go failed to observe due process in terminating Ayson. They likewise failed to establish that Aysons termination was for a just cause. Thus, we rule that Landtex and William Go illegally dismissed Ayson.

WHEREFORE, we DENY the petition. We AFFIRM the Decision dated 13 February 2001 and the Resolution dated 16 October 2001 of the Court of Appeals in CA-G.R. SP No. 50060. Emilia P. Ayson, in representation of Salvador M. Ayson, is entitled to receive the amounts due Salvador M. Ayson.

Costs against the petitioners.

SO ORDERED.

Republic of the Philippines Supreme Court

Manila

THIRD DIVISION

JOEL CUSTODIO MACAHILIG, Petitioner,

G.R. NO. 158095

Present:

YNARES-SANTIAGO, J., Chairperson, - versus AUSTRIA-MARTINEZ, CHICO-NAZARIO, NACHURA, and REYES, JJ.

NATIONAL LABOR RELATIONS COMMISSION, ARACELI DE JESUS BOUTIQUE AND/OR ARACELI S. DE JESUS, Respondents. Promulgated: November 23, 2007 x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

DECISION

AUSTRIA-MARTINEZ, J.:

Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court assailing the Decision82[1] dated February 27, 2003 and the Resolution83[2] dated April 22, 2003 of the Court of Appeals (CA) in CA G.R. SP No. 72762 which reversed and set aside the Resolution dated February 21, 2002 and the Order dated June 28, 2002 of the National Labor Relations Commission (NLRC).

Araceli de Jesus ( private respondent) is the owner of a boutique shop bearing her name located in Unit Plaza, J. Bocobo cor. Arquiza Streets, Ermita, Manila which was registered with the Bureau of Domestic Trade on December 23, 1996. Joel Macahilig (petitioner) was one of private respondent's three sales clerks who started working in the boutique shop on January 7, 1997. His latest monthly salary was P3,200.00.

In 2000, private respondent's boutique shop suffered huge losses due to substantial reduction in sales; thus, she adopted as a cost-saving measure the rotation of her three sales clerks, by which each one of them would take a month's leave of absence without pay to start in 2001. The sales clerks agreed among themselves that petitioner's leave would be in January, Elsa Andrino (Andrino) in February, and Abella Amistad (Amistad) in March, with all of them reporting regularly for work in April as private respondent expected that business conditions would improve. However, due to the zero daily sales in the middle part of January 2001, private respondent temporarily closed the boutique shop on January 22, 2001 to cut down on electricity and the daily
82 83

meal and transportation allowances of her sales clerks and reopened the boutique shop on February 8, 2001. According to petitioner, private respondent told him on February 8, 2001 that his services were no longer needed. On February 12, 2001, petitioner filed with the Labor Arbiter (LA) a complaint for illegal dismissal with prayer for separation pay, backwages, and other monetary benefits and damages against private respondent. In his position paper, he alleged that during his vacation leave without pay, he would call private respondent to ask when he would resume his duties but would only get excuses not to return yet; that on February 8, 2001, private respondent told him that she no longer wished to continue his services without giving any reason and prior notice. Petitioner asked for separation pay as reinstatement would not be in the best interest of the parties due to the circumstances availing in their case.

Private respondent denied having dismissed petitioner, as he simply refused to return to work and claimed that he filed the case to exact money from her. She submitted the affidavits of petitioners co-workers, Andrino84[3] and Amistad,85[4] in which they stated that it was petitioner who did not return to work anymore, and that they expressed satisfaction as to their salaries and benefits, including their annual 13th month pay; that Amistad stated that petitioner had been complaining incessantly about commuting daily to and from Ermita, Manila since he resides in Caloocan. Private respondent alleged that she received a phone call from a woman who identified herself as petitioners mother who told her, Bigyan mo na lang ng puhunan sa negosyo si Joel, then hung up. She also denied underpayment or nonpayment of petitioner's monetary claims and submitted the Department of Labor and Employment (DOLE) Inspection Report86[5] of Senior Labor Enforcement
84 85 86

Officer Efren Miranda who inspected the working conditions of the boutique shop in 1999 and reported no violation committed by her.

In a Decision87[6] dated September 14, 2001, the LA ruled in favor of petitioner, the dispositive portion of which reads:

WHEREFORE, premises considered, judgment is hereby rendered declaring the dismissal of the complainant illegal. Respondents are ordered to pay complainant the following: 1. 2. 3. 4. Separation pay Backwages 13th Month pay Service Incentive Leave Pay Total P32,000.00 11,093.33 9,565.33 not entitled P52,658.66

All other claims are denied for lack of merit.88[7]

In finding that petitioner was illegally dismissed, the LA found unmeritorious private respondent's claim that after the lapse of petitioner's one month leave without pay, the latter failed or refused to return to work and thus was guilty of abandonment. The LA found that petitioner never intended to abandon his work since, during the time he was on vacation leave, he had asked private respondent when he would report for work but was finally told on February 8, 2001 that his service was no longer needed; and that the filing of the case negated petitioner's charge of abandonment.

87 88

The LA held that since petitioner was illegally dismissed, he should be reinstated to his former position, but that because petitioner opted for a separation pay, the payment of his backwages and separation pay of one month for every year of service was in order; and considering that the boutique shop was registered only on December 23, 1996, and therefore, petitioner officially started working in the boutique on January 7, 1997, his separation pay must start from the year 1997, and his backwages from the date of his dismissal, i.e., February 8, 2001, both up to the promulgation of the decision.

Private respondent appealed to the NLRC.

On February 21, 2002, the NLRC rendered its Resolution89[8] affirming with modification the decision of the LA, the dispositive portion of which reads:

WHEREFORE, finding no cogent reason to modify, alter, much less reverse the decision appealed from, the same is AFFIRMED with the MODIFICATION that the award of separation pay should be reduced to P16,000.00 covering the period of almost 5 years of service, which is from January 7, 1997 to September 14, 2001 only.90[9]

Private respondent's

Motion for Reconsideration was denied in an

Order91[10] dated June 28, 2002.

89 90 91

Private respondent filed a Petition for Certiorari with prayer for the issuance of a temporary restraining order, with the CA alleging grave abuse of discretion committed by the NLRC.

On February 27, 2003, the CA rendered its assailed Decision granting the petition and reversing the NLRC.

The CA found no indication that petitioner was terminated from his employment, since private respondent had not shown any overt act that she had dismissed petitioner, nor was there any hint that she held a personal grudge against him; that as regards non-payment of compensation, the DOLE Inspection Report stated that no violation was committed by private respondent; that absent any showing of dubiety in the veracity of the contents of the affidavits and of the DOLE Inspection Report, the public respondents should have taken them into consideration.

The CA found that petitioner's actions manifested an intention to no longer work in the boutique shop, to wit: (1) he never returned to his work on February 1, 2001 when it was Andrinos turn to take a vacation leave; (2) he never denied that his mother called private respondent on February 8, 2001, asking the latter to just give petitioner capital; (3) instead of praying for his reinstatement, petitioner sought a separation pay; and (4) he did not deny private respondents allegation

that he is now working in another office. The CA held that the rule that abandonment of work is inconsistent with the filing of a complaint for illegal dismissal is not applicable to this case, as such rule applies only when the complainant seeks reinstatement as a relief, and not when separation pay is prayed for as done by petitioner. Petitioners Motion for Reconsideration was denied in a Resolution dated April 22, 2003.

Petitioner filed the instant petition on the following grounds:

I WHETHER OR NOT THE RESPONDENT HAD SUFFICIENTLY PROVED ABANDONMENT ON THE PART OF THE PETITIONER. II WHETHER OR NOT THE RESPONDENT WAS ABLE TO OVERCOME THE BURDEN OF PROOF THAT THE TERMINATION OF THE PETITIONER WAS BASED ON LEGAL GROUNDS. III WHETHER OR NOT THE REQUIREMENTS OF LAW TO EFFECT A VALID DISMISSAL WERE COMPLIED WITH BY THE RESPONDENT.92[11]

The main issue for resolution is factual, i.e., whether or not petitioner abandoned his job.

92

As a general rule, we do not entertain factual issues. The scope of our review in petitions filed under Rule 45 is limited to errors of law or jurisdiction.93[12] We leave the evaluation of facts to the trial and appellate courts which are better equipped for this task.

However, there are instances in which factual issues may be resolved by this Court, to wit: (1) the conclusion is a finding grounded entirely on speculation, surmise and conjecture; (2) the inference made is manifestly mistaken; (3) there is grave abuse of discretion; (4) the judgment is based on a misapprehension of facts; (5) the findings of fact are conflicting; (6) the CA goes beyond the issues of the case and its findings are contrary to the admissions of both appellant and appellee; (7) the findings of fact of the CA are contrary to those of the trial court; (8) said findings of facts are conclusions without citation of specific evidence on which they are based; (9) the facts set forth in the petition as well as in the petitioner's main and reply briefs are not disputed by the respondent; and (10) the findings of fact of the CA are premised on the supposed absence of evidence and contradicted by the evidence on record.94[13]

Considering that the findings of facts and the conclusions of the LA and the NLRC are inconsistent with those of the CA, we find it necessary to evaluate such findings.

93 94

After a careful examination of the records, we find that the CA erred in granting the petition and reversing the decisions of the LA and the NLRC finding that petitioner was illegally dismissed.

We are well-aware that in labor cases, the employer has the burden of proving that the employee was not dismissed or, if dismissed, that the dismissal was not illegal; and failure to discharge the same would mean that the dismissal is not justified and therefore illegal.95[14]

The CA gave credence to private respondent's allegation that petitioner was not dismissed, but that it was he who never came back after his one-month vacation leave without pay, thus abandoning his job.

We do not agree.

Jurisprudence holds that for abandonment of work to exist, it is essential (1) that the employee must have failed to report for work or must have been absent without valid or justifiable reason; and (2) that there must have been a clear intention to sever the employer-employee relationship as manifested by some overt acts.96[15] Deliberate and unjustified refusal on the part of the employee to go
95 96

back to his work post and resume his employment must be established. Absence must be accompanied by overt acts unerringly pointing to the fact that the employee simply does not want to work anymore. 97[16] And the burden of proof to show that there was unjustified refusal to go back to work rests on the employer.98[17]

Petitioner was on a vacation leave without pay for the whole month of January 2001 as a cost-saving measure adopted by private respondent due to reduction in sales. While petitioner was expected to be back on February 1, 2001, the boutique shop was closed on January 22 and reopened only on February 8, 2001. Petitioner indicated his intention to report back to work when he called private respondent to ask when he was to resume his work. Thus, petitioner's absence was not due to his deliberate refusal to continue his employment, but because private respondent temporarily closed the boutique shop in order for her to cut down on electricity and the daily meal and transportation allowances of her sales clerks.

Petitioner was told by private respondent on February 8, 2001 that his services were no longer needed.

We find private respondent's claim that petitioner abandoned his work for the reason that he had been complaining to Amistad - that since he transferred to
97 98

Caloocan in the middle of 1997, he was having a hard time commuting from Caloocan to Manila back and forth - as pure speculation or mere conjecture. Difficulty in commuting would not necessarily lead a person to simply abandon his job. Notably, it has been shown that petitioner officially started with private respondent in January 1997; and that when he transferred to Caloocan in the middle of 1997, petitioner continued to report for work until he took his forced vacation leave without pay in January 2001.

There is no justification to conclude that petitioner would just abandon his work which gave him a monthly salary of P3,200.00, free meals and daily cash allowance of P60.00. Moreover, there is no clear showing that petitioner was offered another employment elsewhere with better terms and conditions. Private respondent failed to substantiate her claim that petitioner had another job.

Also, petitioner admits that he stands barely three and one-half feet tall; and he knew that he could not arrogantly abandon his source of income, knowing fully well that he would encounter difficulty in looking for a new job.

Private respondent's claim of abandonment is belied by the fact that four days after petitioner's alleged dismissal on February 8, 2001, he filed a complaint for illegal dismissal with the LA. Such dispatch in protesting his termination belies the claimed abandonment.99[18]

99

We cannot affirm the CA's finding that the call made by petitioner's mother, saying bigyan mo na lang ng puhunan si Joel, as an indication of petitioner's intention to no longer work in the boutique shop. This circumstance is not sufficient proof of petitioner's clear and deliberate intent to abandon his job, as it does not conclusively establish that petitioner has no more intent to report for work. Abandonment of position is a matter of intention and cannot be lightly inferred, much less legally presumed, from certain equivocal acts;100[19] specially so when the call was made not by petitioner, but only by his mother whose real intention in calling private respondent we can only surmise.

We also do not agree with the CA's finding that petitioner's prayer for separation pay is a manifestation of his lack of intention to work.

As held in Sentinel Security Agency, Inc. v. National Labor Relations Commission:101[20]

However, the Agency claims that the complainants, after being placed offdetail, abandoned their employ. The solicitor general, siding with the Agency and the labor arbiter, contends that while abandonment of employment is inconsistent with the filing of a complaint for illegal dismissal, such rule is not applicable "where [the complainant] expressly rejects this relief and asks for separation pay instead." The Court disagrees. Abandonment, as a just and valid cause for termination, requires a deliberate and unjustified refusal of an employee to resume his work, coupled with a clear absence of any intention of returning to his or her work. That complainants did not pray for reinstatement is not sufficient proof of abandonment. A strong indication of the intention of complainants to resume work
100 101

is their allegation that on several dates they reported to the Agency for reassignment, but were not given any.102[21]

Moreover, there are instances in which what is ordered is not reinstatement but the payment of separation pay, such as when the business of the employer has closed,103[22] or when the relations between the employer and the employee have been so severely strained that it is not advisable to order reinstatement, 104[23] or when the employee decides not to be reinstated.105[24] Notably, in his position paper filed with the LA, petitioner stated that it was not in the best interest of the parties that reinstatement be granted and thus prayed for separation pay. The prayer for separation pay cannot be legally regarded as an abandonment since, given the smallness of respondent's staff, petitioner would have found it uncomfortable to continue working under the hostile eyes of the employer who had been forced to reinstate him.106[25]

The hostility of private respondent was made manifest when she considered the filing of the case as petitioner's act of exacting money from her. In fact, she branded petitioner as one who was very good at acting, and who had mastered the

102 103 104 105 106

art of gaining other people's sympathy. The realities of the situation precludes a harmonious relationship, should reinstatement be ordered.

In fine, private respondent failed to establish that there was deliberate and unjustified refusal on petitioner's part to go back to his work; thus, petitioner's dismissal was illegal. He was summarily dismissed when he was simply told by private respondent on February 8, 2001 that his services were no longer needed, without any notice and hearing. Thus, the LA correctly awarded petitioner the payment of backwages and separation pay as modified by the NLRC.

However, the LA's award of 13th month pay in favor of petitioner in the amount of P9,565.33, computed from February 12, 1998 to February 8, 2001, needs modification. In the DOLE Inspection Report dated September 10, 1999, Labor Enforcement Officer Miranda found that there was no violation committed by private respondent. This was not refuted by petitioner. However, there is no showing that after September 1999, petitioner received his 13th month pay. Under Presidential Decree No. 851,107[26] 13th month pay is given not later than December 24 of every year. Considering that private respondent asserts that she has given petitioner his 13th month pay, she has the bounden duty to prove that fact; however, she failed to do so. The affidavits of Amistad and Andrino stating that they are receiving their bonus equivalent to one month pay before Christmas would not suffice to prove payment of the 13th month pay to petitioner after September 1999, the date of the Inspection Report. Thus, the computation of the yearly 13th month pay should start from 1999.
107

WHEREFORE, the petition is GRANTED. The Decision dated February 27, 2003 and the Resolution dated April 22, 2003 of the Court of Appeals are hereby REVERSED and SET ASIDE. The Decision dated September 14, 2001 of the Labor Arbiter as modified by the National Labor Relations Commission is REINSTATED with the MODIFICATION that the computation of the 13th month pay should start from 1999.

SO ORDERED.
Republic of the Philippines SUPREME COURT Manila SECOND DIVISION

G.R. No. 119509 February 11, 1999 ENRIQUE A. ARBOLEDA, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and MANILA ELECTRIC COMPANY, respondents.

BELLOSILLO, J.: This petition for certiorari seeks to reverse and set aside for grave abuse of discretion the decision of respondent National Labor Relations Commission (NLRC) dated 29 November 1994 reversing that of the Labor arbiter sustaining petitioner. Enrique A. Arboleda was an employee of Manila Electric Company (MERALCO) for twenty-five (25) years. He served from 1963 to 11 February 1988 when he was dismissed by MERALCO under Sec. 7, par. 1, of its Company Code of Employee Discipline for misappropriating or withholding company funds. His record shows that he

rose from the ranks to become branch clerk, and later, radio operator of MERALCO's Novaliches branch. On 18 July 1986 a certain Antonio D. Sy applied for electrical service for his residence and for his hardware store situated in the premises leased to him by the spouses Renato and Sylvia Cruz. Pending the processing of his application, Sy Was found to have illegal electrical connection, first on 6 March 1987, and then on 8 June 1987. According to Sy, on 9 June 1987 he went to the MERALCO office in Novaliches to pay for his Found Connection (FC) bills. 1 There he met petitioner Arboleda who told him that he had to pay his FC bills amounting to around P2,000.00 for three (3) months before a meter could be installed. Sy demurred saying he had with him only P1,200.00. Petitioner agreed to accept the amount so Sy handed it to him who received it without issuing any official receipt. Thereafter petitioner sent over Brigido "Adu" Anonuevo and ascertain "Mulong" to install the meter. 2 Marcelo P. Umali, then branch manager of MERALCO at Novaliches, narrated that on 16 June 1987 he happened to pass by Sy's house and noticed the illegal connection. He immediately confronted Sy who protested that he had paid his FC bills to petitioner. 3 Umali then interviewed Sylvia Cruz about Sy's claims and she confirmed them. 4 Sy immediately settled his FC bills with MERALCO for which he was issued an official receipt. On 18 June 1987, after complying with all the requirements by MERALCO, his application for electrical service was granted. On the same day, Umali submitted his recommendation to his immediate supervisor, R. A. Villanueva, to have Arboleda investigated. 5 On 21 October 1987 Atty. Anecito A. Mejorada of MERALCO's Special Presidential Committee wrote petitioner Arboleda notifying him that on 27 October 1987 an investigation would be conducted against him for misappropriation of FC bills, 6 but petitioner sought a postponement of the investigation. 7 On 7 November 1987 he was suspended pending his investigation. 8 On 9 November 1987 the investigation proceeded with Juanito Rivera, Chief Steward and Vice-President of the employees' labor union, as petitioner's representative. In the investigation, Arboleda made a general denial about knowing Sy, "Adu" and "Mulong." 9 He claimed that sometime thereafter Brigido Anonuevo went to his house bringing his Affidavit of Justification, Certificate of Attendance at a MERALCO Seminar and Sy's Affidavit of Desistance. 10 On 21 November 1987 petitioner wrote the MERALCO investigators Jose Benalla and Eligio Reonal, Jr., informing them of the visit of Anonuevo and his wife to Sy's house along with Sylvia Cruz. 11 Despite his suspension which lasted until his dismissal, petitioner continued to receive his salary of P11,332.50 from 20 December 1987 to 11 February 1988. 12 On 20 April 1988 Arboleda filed a case against MERALCO for illegal dismissal. He was subsequently sustained by the Labor Arbiter on three (3) grounds: (a) Sy's accusation against him was only prompted by Umali; (b) Sy's credibility was suspect since he was

apprehended thrice for illegal use of electric current; and, (c) Sy's motive was malicious and his testimony was made only; to save his own skin. 13 On appeal by MERALCO the NLRC reversed the Labor Arbiter on the ground that there was no proof of instigation on the part of Umali; Sy's testimony was credible; and, Anonuevo's exculpating evidence in favor of Arboleda was a ruse. 14 The principle that factual findings of administrative bodies are binding upon this Court may be sustained only when no issue of credibility is raised. But when the findings of fact of the NLRC do not agree with those of the Labor Arbiter, this Court must of necessity review the records to determine which findings should be preferred as more conformable to the evidentiary facts. 15 The main issue being the legality of petitioner's dismissal, it may be worth to look into the requisites for the validity of a dismissal, namely, (a) the employee must be afforded due process, i.e., he must be given an opportunity to be heard and defend himself, and (b) the dismissal must be for a valid cause as provided in Art. 282 of the Labor Code. 16 As regards his right to due process, petitioner contends that he was denied such right during the investigation conducted by MERALCO as he did not have the opportunity to confront the witnesses against him. The essence of due process in administrative proceedings is an opportunity to explain one's side or an opportunity to seek reconsideration of the action or ruling complained of. Before an employee can be validly dismissed, the Labor code requires the employer to furnish the employee with two (2) written notices: (a) a written notice containing a statement of the cause for termination to afford the employee ample opportunity to be heard and defend himself with the assistance of his representative, if he so desires; and, (b) if the employer decides to terminate the services of the employee, the employer must notify him in writing of the decision to dismiss him, stating clearly the reasons therefor. 17 This MERALCO more than substantially complied with when it notified Arboleda in a letter dated 21 October 1987 of the charges against him and of his right to be represented by a lawyer or representative and when it gave him notice by letter dated 11 February 1988 of his dismissal and the reasons therefor. The requirement of notice and hearing in termination cases does not connote full adversarial proceedings as elucidated in numerous cases decided by this Court. Actual adversarial proceedings become necessary only for clarification or when there is a need to propound searching questions to witnesses who give vague testimonies. This is a procedural right which the employee must ask for since it is not an inherent right, and summary proceedings may be conducted thereon. 18 In termination cases the settled rule is that the burden of proving that the termination was for a valid or authorized cause rests on the employer. 19 Thus, MERALCO must not only rely on the weakness of petitioner's evidence but must stand on the merits of its own defense.

The core of MERALCO's evidence is the testimony of Alberto Sy who identified petitioner Arboleda as the one who received P1,200.00 from him for purposes of paying off his FC arrears and for which Arboleda did not issue an official receipt. This testimony of Sy was discredited by the Labor Arbiter in his belief that Sy so with the ulterior motive of avoiding criminal prosecution because of his illegal connection and that he only complained due to the instigation of Umali, The Novaliches branch manager. But the NLRC believed that Sy categorically denounced Arboleda without any prompting from Umali and that, despite petitioner's denials, Anonuevo was known to petitioner. For, why else would Anonuevo come out in defense of the latter? In fact the NLRC explicitly termed the testimony of Anonuevo as a ruse. We agree with the NLRC. Sy categorically and spontaneously denounced Arboleda without any prodding from Umali. 20 It may be recalled that Umali only asked Sy why he had an FC. 21 Perhaps Umali did not even expect SY to implicate anyone from MERALCO as the culprit, much less think of Arboleda as the guilty party, especially when there was no showing of any enmity between them. Apparently, when Sy mentioned Arboleda's name, it was more out of indignation that the electrical connection should be found to be illegal when he had paid for its proper and legitimate connection. Sy's alarm was understandable in the light of the two (2) instances when he was found to have illegal connections. That the testimony of Sy is credible is shown by the fact that his statements were replete with consistent and positive details congruent with human experience. Testimony is positive when the witness affirms that a fact did or did not occur, and negative when he says that he did not see or know of the factual occurrence. Positive testimony is entitled to greater weight than negative .testimony. 22 There is nothing on records indicate any ulterior motive on the part of Sy to fabricate his testimony. The finding of the Labor Arbiter that Sy only denounced Arboleda to save his own skin from possible criminal prosecution may be explained by these questions: Why would Sy implicate Arboleda when, according Arboleda, seconded by Anonuevo, they had never met before? Why did Sy not name Anonuevo instead as the one to whom he paid the money? Absent convincing evidence showing any cogent reason why a witness should testify falsely, his testimony may be accorded full faith and credit. 23 Proof beyond reasonable doubt is not required for a judgment on the legality of an employee's dismissal, nor even preponderance of evidence for that matter, substantial evidence being sufficient. 24 Substantial evidence is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. 25 The nature of petitioner's testimony is that of a general denial; consequently, as between an affirmative assertion and a general denial, weight must be accorded to the affirmative assertion. 26 Neither can we extend credence to the testimony of Anonuevo as it is only in the nature of negative assertions which are obviously in conflict with the affirmative statements of Sy. Besides, Anonuevo's testimony runs counter to the normal course of human behavior. Anonuevo's act of coming to Arboleda's rescue with an Affidavit of Justification 27 upon hearing of his investigation makes Anonuevo speciously suspect.

His Affidavit of Justification although notarized on the 19th of November was actually dated 10 October 1987, or more than twenty (20) days before Arboleda was confidentially notified of the impending investigation. 28 Anonuevo's explanation that Sy named Arboleda because he happened to mention the latter's name to Sy is, to say the least, fatuous. He claimed that he was not on intimate terms or even familiar with Arboleda, having supposedly seen him only around MERALCO and only knowing his position therein, yet he had the temerity to drop Arboleda's name to Sy. This defies logic and common experience. Furthermore, Anonuevo's actuation's regarding his supposed contract with Sy were a little strange. For one, he seemed confused as to what the contract was all about, whether it was just to follow up the application for electrical connection, or for payment of FC bills, or for the installation of electric meters, as he did not seem to know for what was the amount supposedly given to him by Sy. 29 Stranger still was his installing the electric meter ahead of paying the FC bills or before getting the go-signal from MERALCO. All these, coupled with the fact that in Anonuevo's affidavit 30 he admitted having returned the money to SY after learning about Umali's memorandum-complaint against petitioner when such complaint was supposed to be confidential, clearly demonstrate that Anonuevo was merely used by the petitioner in an attempt to improve his lot. Thus it is evident that petitioner was guilty of serious misconduct to warrant his dismissal from the service which, in this case, was lawfully effected with proper notice and just for a cause. WHEREFORE, finding no grave abuse of discretion, the petition is DISMISSED. The decision of the National Labor Relations Commission dismissing petitioner's complaint for illegal dismissal is AFFIRMED. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 144899 February 5, 2004

ELIZABETH C. BASCON and NOEMI V. COLE, petitioners vs. HONORABLE COURT OF APPEALS, METRO CEBU COMMUNITY HOSPITAL, INC., and GREGORIO IYOY, respondents. DECISION

QUISUMBING, J.: This petition for review on certiorari assails the Court of Appeals Decision1 in CA-G.R. SP No. 51690, dated March 13, 2000, which set aside the decision of the National Labor Relations Commission (NLRC), 4th Division, dated November 25, 1998, in NLRC Case No. V-00234-97. The NLRC had reversed the judgment of the Labor Arbiter, dated April 24, 1997, in NLRC-RABVII Case No. 07-0828-96, which held valid herein petitioners dismissal from employment. Petitioners also challenge the appellate courts Resolution,2 dated August 9, 2000, which denied their motion for reconsideration. The petitioners in the instant case were employees of private respondent Metro Cebu Community Hospital, Inc. (MCCH) and members of the Nagkahiusang Mamumuo sa Metro Cebu Community Hospital (NAMA-MCCH), a labor union of MCCH employees. Petitioner Elizabeth C. Bascon had been employed as a nurse by respondent MCCH since May 1984. At the time of her termination from employment in April 1996, she already held the position of Head Nurse. The other petitioner, Noemi V. Cole, had been working as a nursing aide with MCCH since August 1974. Both petitioners were dismissed by the respondent hospital for allegedly participating in an illegal strike. The instant controversy arose from an intra-union conflict between the NAMA-MCCH and the National Labor Federation (NFL), the mother federation of NAMA-MCCH. In November 1995, NAMA-MCCH asked MCCH to renew their Collective Bargaining Agreement (CBA), which was set to expire on December 31, 1995. NFL, however, opposed this move by its local affiliate. Mindful of the apparent intra-union dispute, MCCH decided to defer the CBA negotiations until there was a determination as to which of said unions had the right to negotiate a new CBA. Believing that their union was the certified collective bargaining agent, the members and officers of NAMA-MCCH staged a series of mass actions inside MCCHs premises starting February 27, 1996. They marched around the hospital putting up streamers, placards and posters. On March 13 and 19, 1996, the Department of Labor and Employment (DOLE) office in Region 7 issued two (2) certifications stating that NAMA-MCCH was not a registered labor organization. This finding, however, did not deter NAMA-MCCH from filing a notice of strike with the Region 7 Office of the National Conciliation and Mediation Board (NCMB). Said notice was, however, disregarded by the NCMB for want of legal personality of the union. Meanwhile, the MCCH management received reports that petitioners participated in NAMAMCCHs mass actions. Consequently, notices were served on all union members, petitioners included, asking them to explain in writing why they were wearing red and black ribbons and roaming around the hospital with placards. In their collective response dated March 18, 1996, the union members, including petitioners, explained that wearing armbands and putting up placards was their answer to MCCHs illegal refusal to negotiate with NAMA-MCCH. Subsequently, on March 28, 1996, MCCH notified the petitioners that they were to be investigated for their activities in the mass actions, with the hearings being scheduled on March 28, 1996 and April 1, 1996. Petitioners, however, denied receiving said notices. In a notice dated April 8, 1996, MCCH ordered petitioners to desist from participating in the mass actions conducted in the

hospital premises with a warning that non-compliance therewith would result in the imposition of disciplinary measures. Petitioners again claimed they did not receive said order. Petitioners Bascon and Cole were then served notices terminating their employment effective April 12, 1996 and April 19, 1996, respectively. The dismissal of petitioners did not deter NAMA-MCCH from staging more mass actions. The means of ingress to and egress from the hospital were blocked. Employees and patients, including emergency cases, were harassed, according to MCCH management, which also complained that mass actions held inside the hospital had created an atmosphere of animosity and violence, aggravating the condition of ailing patients. Furthermore, the hospital also suffered heavy losses brought about by a notable decline in the patient admission rates and the refusal of suppliers to extend credit. To address its labor problems, MCCH sought an injunction from the NLRC on July 9, 1996 in Injunction Case No. V-0006-96. Meanwhile, on July 1, 1996, Bascon and Cole filed a complaint for illegal dismissal, docketed as NLRC-RAB-VII Case No. 07-0828-96. They denied having participated in said mass actions or having received the notices (1) enjoining them from wearing armbands and putting up placards, with warning that disciplinary measure would be imposed, and (2) informing them of the schedule of hearing. They admit, however, to wearing armbands for union identity while nursing patients as per instruction of their union leaders. On July 16, 1996, a Temporary Restraining Order (TRO) was duly issued in Injunction Case No. V-0006-96. On August 27, 1996, the local government of Cebu City ordered the demolition of the picket staged by the members of NAMA-MCCH for being both a public nuisance and a nuisance per se. On September 18, 1996, the injunction was made permanent by an NLRC Resolution in Injunction Case No. V-0006-96, the fallo of which reads: WHEREFORE, premises considered, the petition for injunction is hereby GRANTED enjoining respondents in the course of their strike/picket from committing the illegal acts mentioned in Article 264 (e) of the Labor Code more particularly the blocking of the free ingress to and egress from petitioner hospital and from committing threats, coercion and intimidation of the nonstriking/picketing employees/workers reporting for work, vehicles/patients desiring to enter for the purpose of seeking admission/confinement in petitioner hospital and for such other lawful purpose. SO ORDERED.3 In a Decision4 dated April 24, 1997, the Labor Arbiter found the termination complained of in NLRC-RAB-VII Case No. 07-0828-96 to be valid and legal, and dismissed the complaint. The Labor Arbiter held that petitioners were justly dismissed because they actually participated in the illegal mass action. It also concluded that petitioners received the notices of hearing, but deliberately refused to attend the scheduled investigation.

Petitioners then appealed the Labor Arbiters ruling to the NLRC, 4th Division, which docketed the appeal as NLRC Case No. V-00234-97. In its Decision5 dated November 25, 1998, the NLRC, 4th Division reversed the ruling of the Labor Arbiter and ordered the reinstatement of petitioners with full backwages. First, it found that petitioners merely wore armbands for union identity, per instruction of their union officials. Said wearing of armbands while nursing patients, is a constitutional right, which cannot be curtailed if peacefully carried out. Second, it ruled that the placards complained of by MCCH did not contain scurrilous, indecent or libelous remarks. Finally, it concluded that, in a belated but crude attempt to camouflage the illegal dismissal of petitioners, MCCH merely fabricated the notices allegedly sent to petitioners. Anent the charge of gross insubordination, the NLRC ruled that petitioners were not guilty thereof, because the elements thereof had not been sufficiently proven, to wit: (1) reasonableness and lawfulness of the order or directive, (2) sufficiency of knowledge on the part of the employee of such order, and (3) the connection of the order with the duties which the employee had been engaged to discharge. Unconvinced of the correctness of the NLRC decision, MCCH filed a motion for reconsideration presenting the following documentary evidence: 1) Affidavits of Paz Velasco, Luciano Quitoy, Joseph Dagatan, and Gina Jumao-as to show that petitioners were duly served the notices in question; 2) Letter reply of NAMA-MCCH dated March 18, 1996 wherein petitioners, together with the rest of the union members, collectively acknowledged receipt of the March 15, 1996 directive; 3) Position Paper of terminated co-employees where the receipt of the subject notices were admitted as well as the commission of the aforementioned protest mass actions; and 4) Appeal of private respondents, who did not join the protest mass action, to the Board of Trustees of MCCH to show that reinstatement is no longer feasible in view of strained relationship. On February 4, 1999, the NLRC denied the plea for reconsideration of MCCH. Undeterred, MCCH filed a special civil action for certiorari under Rule 65 of the 1997 Rules of Civil Procedure before the Court of Appeals, docketed as CA-G.R. SP No. 51690. In its Decision6 dated March 13, 2000, the Court of Appeals decided CA-G.R. SP No. 51690 as follows: WHEREFORE, the petition is granted. The Decision of public respondent NLRC 4th Division dated November 25, 1998 in NLRC Case No. V-00234-97 is hereby REVERSED and the complaint of private respondents is dismissed for lack of merit. Petitioner Metro Cebu Community

Hospital (MCCH) is however ordered to pay the private respondents separation pay equivalent to one-half month for every year of service in the interest of equity. No costs. SO ORDERED.7 The appellate court held that Bascon and Cole were validly terminated for their gross insubordination or willful disobedience as: 1) The order for petitioners to refrain from wearing armbands and putting up placards was legal, fair and reasonable. 2) The order was connected with the duties, which the petitioners had been engaged to discharge. 3) Said order was sufficiently made known to petitioners as receipt of the same by the latter was convincingly substantiated by hard evidence. The appellate court stressed that petitioners gross insubordination constituted unlawful acts undertaken in conjunction with an illegal mass concerted action akin to an illegal strike. Finally, the Court of Appeals ruled that petitioners union activities violated the rights of patients and third parties such that they were outside the ambit of legality and beyond the mantle of protection of the freedom of speech. Hence, the instant case, with the petitioners submitting for resolution the following issues: I CAN THE HONORABLE COURT OF APPEALS SUPPLANT ITS FINDINGS OF FACTS WITH THAT OF THE COMMISSION? II CAN THE HONORABLE COURT OF APPEALS REVERSE THE DECISION OF THE COMMISSION ALTHOUGH THERE IS NO FINDING OF GRAVE ABUSE OF DISCRETION OR LACK OF JURISDICTION? III CAN AN EMPLOYEE BE TERMINATED FOR INSUBORDINATION FOR IPSO FACTO NOT SHOWING UP FOR THE INVESTIGATION?8 Anent the first and second issues, as a general rule, the findings of facts of the NLRC are deemed binding and conclusive upon the Court. We have repeatedly said that the Court is not a trier of facts. Thus, resort to judicial review of the decisions of the NLRC in a special civil action for

certiorari under Rule 65 of the Rules of Court is generally limited to the question of grave abuse of discretion amounting to lack or excess of jurisdiction.9 However, where, as in the instant case, the findings of facts of the NLRC contradict those of the Labor Arbiter, a departure from the general rule is warranted. Thus, the Court may look into the records of the case and reexamine the questioned findings.10 Where the NLRC and the Labor Arbiter disagree on their finding of facts, the Court can review the records to determine which findings should be preferred as more conformable to the evidentiary facts.11 In St. Martin Funeral Home v. NLRC,12 we held that the special civil action of certiorari is the mode of judicial review of the decisions of the NLRC either by this Court or the Court of Appeals, but the latter court is the more appropriate forum in strict observance of the doctrine on the hierarchy of courts and that, in the exercise of this power, the Court of Appeals can review the factual findings or the legal conclusions of the NLRC.13 With regard to the third issue, note that petitioners were terminated for allegedly participating in an illegal strike and gross insubordination to the order prohibiting them from wearing armbands and putting up placards, not for ipso facto failing to show up in the scheduled investigation. Thus, the real issue is whether or not petitioners were validly terminated for (1) allegedly participating in an illegal strike and/or (2) gross insubordination to the order to stop wearing armbands and putting up placards. As to the first ground, Article 264 (a) of the Labor Code provides in part that: Any union officer who knowingly participates in illegal strike and any worker or union officer who knowingly participates in the commission of illegal acts during a strike may be declared to have lost his employment status (Emphasis ours) Thus, while a union officer can be terminated for mere participation in an illegal strike, an ordinary striking employee, like petitioners herein, must have participated in the commission of illegal acts during the strike (underscoring supplied). There must be proof that they committed illegal acts during the strike.14 But proof beyond reasonable doubt is not required. Substantial evidence, which may justify the imposition of the penalty of dismissal, may suffice. In this case, the Court of Appeals found that petitioners actual participation in the illegal strike was limited to wearing armbands and putting up placards. There was no finding that the armbands or the placards contained offensive words or symbols. Thus, neither such wearing of armbands nor said putting up of placards can be construed as an illegal act. In fact, per se, they are within the mantle of constitutional protection under freedom of speech. Evidence on record shows that various illegal acts were committed by unidentified union members in the course of the protracted mass action. And we commiserate with MCCH, patients, and third parties for the damage they suffered. But we cannot hold petitioners responsible for acts they did not commit. The law, obviously solicitous of the welfare of the common worker, requires, before termination may be considered, that an ordinary union member must have knowingly participated in the commission of illegal acts during a strike.

As regards the appellate courts finding that petitioners were justly terminated for gross insubordination or willful disobedience, Article 282 of the Labor Code provides in part: An employer may terminate an employment for any of the following causes: (a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work. However, willful disobedience of the employers lawful orders, as a just cause for dismissal of an employee, envisages the concurrence of at least two requisites: (1) the employee's assailed conduct must have been willful, that is, characterized by a wrongful and perverse attitude; and (2) 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.15 In this case, we find lacking the element of willfulness characterized by a perverse mental attitude on the part of petitioners in disobeying their employers order as to warrant the ultimate penalty of dismissal. Wearing armbands and putting up placards to express ones views without violating the rights of third parties, are legal per se and even constitutionally protected. Thus, MCCH could have done well to respect petitioners right to freedom of speech instead of threatening them with disciplinary action and eventually terminating them. Neither are we convinced that petitioners exercise of the right to freedom of speech should be taken in conjunction with the illegal acts committed by other union members in the course of the series of mass actions. It bears stressing that said illegal acts were committed by other union members after petitioners were already terminated, not during the time that the latter wore armbands and put up placards. Finally, even if willful disobedience may be properly appreciated, still, the penalty of dismissal is too harsh. Not every case of willful disobedience by an employee of a lawful work-connected order of the employer may be penalized with dismissal. There must be reasonable proportionality between, on the one hand, the willful disobedience by the employee and, on the other hand, the penalty imposed therefor.16 In this case, evidence is wanting on the depravity of conduct and willfulness of the disobedience on the part of petitioners, as contemplated by law. Wearing armbands to signify union membership and putting up placards to express their views cannot be of such great dimension as to warrant the extreme penalty of dismissal, especially considering the long years of service rendered by petitioners and the fact that they have not heretofore been subject of any disciplinary action in the course of their employment with MCCH. The termination of petitioners employment not being for any of the just or authorized causes, it constitutes illegal dismissal. Article 279 of the Labor Code, as amended, provides that: An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement.

Hence, illegally dismissed employees are entitled to both reinstatement and full backwages as a matter of course. MCCH alleges that due to strained relations, reinstatement is no longer possible. We disagree. In Quijano v. Mercury Drug Corporation,17 we stated that the doctrine of "strained relations" is inapplicable to a situation where the employee has no say in the operation of the employers business. Petitioners herein are nurse and nursing aide, respectively in MCCH and thus, have no prerogative in the operation of the business. As also held in the Mercury Drug case: To protect labors security of tenure, we emphasize that the doctrine of "strained relations" should be strictly applied so as not to deprive an illegally dismissed employee of his right to reinstatement. Every labor dispute almost always results in "strained relations," and the phrase cannot be given an overarching interpretation, otherwise, an unjustly dismissed employee can never be reinstated.18 We cannot in our conscience allow MCCH to unjustly deny petitioners their lawful occupation, especially at this late point in their lives when it would be a near impossibility for them to find another employment. The employers power to dismiss must be tempered with the employees right to security of tenure. Time and again we have said that the preservation of the lifeblood of the toiling laborer comes before concern for business profits. Employers must be reminded to exercise the power to dismiss with great caution, for the State will not hesitate to come to the succor of workers wrongly dismissed by capricious employers. WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals in CA-G.R. SP No. 51690 dated March 13, 2000 is REVERSED. Private respondent Metro Cebu Community Hospital is hereby ordered to reinstate petitioners Noemi V. Cole and Elizabeth C. Bascon without loss of seniority rights and other privileges and to pay them full backwages, inclusive of allowances, and other benefits computed from the time they were dismissed up to the time of their actual reinstatement. No pronouncement as to costs. SO ORDERED

FIRST DIVISION [G.R. No. 155178, May 07, 2008] SAN MIGUEL CORPORATION, PETITIONER, VS. ANGEL C. PONTILLAS, RESPONDENT. DECISION CARPIO, J.: The Case

Before the Court is a petition for review assailing the 26 March 2002 Decision[1] and the 20 August 2002 Resolution[2] of the Court of Appeals in CA-G.R. SP No. 50680. The Antecedent Facts On 24 October 1980, San Miguel Corporation (petitioner) employed Angel C. Pontillas (respondent) as a daily wage company guard. In 1984,[3] respondent became a monthly-paid employee which entitled him to yearly increases in salary. Respondent alleged that his yearly salary increases were only a percentage of what the other security guards received. On 19 October 1993, respondent filed an action for recovery of damages due to discrimination under Article 100[4] of the Labor Code of the Philippines (Labor Code), as amended, as well as for recovery of salary differential and backwages, against petitioner, Capt. Segundino D. Fortich (Capt. Fortich), Company Security Commander and head of the Mandaue Security Department, and Director Francisco Manzon, Vice President and Brewery Director. During the mandatory conference on 23 November 1993, respondent questioned the rate of salary increase given him by petitioner. On 6 December 1993, Ricardo F. Elizagaque (Elizagaque), petitioner's Vice President and VisMin Operations Center Manager, issued a Memorandum ordering, among others, the transfer of responsibility of the Oro Verde Warehouse to the newly-organized VisMin Logistics Operations effective 1 January 1994. In compliance with Elizagaque's Memorandum, Capt. Fortich issued a Memorandum dated 7 February 1994 addressed to Comdr. Danilo C. Flores (Comdr. Flores), VisMin Logistics Operations Manager, effecting the formal transfer of responsibility of the security personnel and equipment in the Oro Verde Warehouse to Major Teodulo F. Enriquez (Major Enriquez), Security Officer of the VisMin Logistics Operations, effective 14 February 1994. Simultaneously, Capt. Fortich gave the same information to his Supervising Security Guards for them to relay the information to the company security guards. Respondent continued to report at Oro Verde Warehouse. He alleged that he was not properly notified of the transfer and that he did not receive any written order from Capt. Fortich, his immediate superior. Respondent also alleged that he was wary of the transfer because of his pending case against petitioner. He further claimed that two other security guards continue to report at Oro Verde Warehouse despite the order to transfer. Petitioner alleged that respondent was properly notified of the transfer but he refused to receive 14 memoranda issued by Major Enriquez from 14-27 February 1994. Petitioner also alleged that respondent was given notices of Guard Detail dated 9 February 1994 and 15 February 1994 but he still refused to report for duty at the VisMin Logistics Operations. In a letter dated 28 February 1994, petitioner informed respondent that an administrative investigation would be conducted on 4 March 1994 relative to his alleged offenses of Insubordination or Willful Disobedience in Carrying Out Reasonable Instructions of his superior. During the investigation, respondent was given an opportunity to present his evidence and be assisted by counsel. In a letter dated 7 April 1994, petitioner informed respondent of its decision to terminate him for violating company rules and regulations, particularly for Insubordination or

Willful Disobedience in Carrying Out Reasonable Instructions of his superior. On 15 June 1994, respondent filed an amended complaint against petitioner for illegal dismissal and payment of backwages, termination pay, moral and exemplary damages, and attorney's fees. The Ruling of the Labor Arbiter In a Decision dated 25 October 1996,[5] the Labor Arbiter dismissed respondent's complaint for lack of merit. The Labor Arbiter recognized the management prerogative to transfer its employees from one station to another. The Labor Arbiter found nothing prejudicial, unjust, or unreasonable to petitioner's decision to merge the functions of the Materials Management of the Mandaue Brewery and the Physical Distribution Group which resulted to the forming of the VisMin Logistics Operations. The Labor Arbiter ruled that as a consequence of the merger, the instructions and orders to all security personnel should necessarily come from the security officer of the new organization. Hence, respondent's allegation that his transfer order should come from Capt. Fortich and not from Major Enriquez was misleading. The Labor Arbiter ruled that respondent was informed of the impending merger, verbally and in writing, as early as 6 December 1993. The Labor Arbiter further ruled that petitioner did not violate Article 100 of the Labor Code. The Labor Arbiter ruled that respondent's claim that giving him a day-off twice a month resulted to diminution of his monthly take-home pay was an erroneous interpretation of the Labor Code, which even required employers to give their employees a rest day per week. The Labor Arbiter also ruled that there was no basis for the allegation that respondent was discriminated against in the annual salary increases. The Labor Arbiter ruled that respondent was accorded due process before his termination from the service. He was investigated with the assistance of counsel, and he was able to confront petitioner's witnesses and present evidence in his favor. Respondent appealed from the Labor Arbiter's Decision. The Ruling of the NLRC In its 23 May 1997 Decision,[6] the National Labor Relations Commission (NLRC) set aside the Labor Arbiter's Decision. The NLRC ruled that respondent was not informed of his transfer from Oro Verde Warehouse to VisMin Logistics Operations. The notices allegedly sent to respondent did not indicate any receipt from respondent. The NLRC also ruled that the notations in the notices stating "Refused to sign" appeared to be written by the same person on just one occasion. The NLRC found that respondent was waiting for a formal notice from Capt. Fortich, who only instructed his Supervising Security Guard, Rodrigo T. Yocte, to remind respondent of his transfer and new assignment. The NLRC declared that the notices sent by Major Enriquez had no binding effect because he was not respondent's superior. The NLRC held that it was premature to charge respondent with insubordination for his failure to comply with the order of someone who was not his department head. The NLRC stated that respondent had good reason to continue reporting at Oro Verde Warehouse.

The NLRC further ruled that respondent was a victim of discrimination. The NLRC declared that petitioner failed to justify why respondent was not entitled to the full rate of salary increases enjoyed by other security guards. The dispositive portion of the NLRC's Decision reads: WHEREFORE, the decision of the Executive Labor Arbiter is hereby VACATED and SET ASIDE and judgment is hereby rendered: 1. Declaring the dismissal of complainant to be without any just cause and, therefore, illegal; 2. Ordering respondent San Miguel Corporation to reinstate the complainant to his former position without loss of seniority rights and other privileges and with full backwages, inclusive of allowances and other benefits or their monetary equivalent, computed from April 8, 1994 up to his actual reinstatement. However, should reinstatement be no longer feasible, respondent San Miguel Corporation shall pay to complainant, in addition to his full backwages, separation pay of one (1) month pay for every year of service, a period of six (6) months to be considered as one (1) whole year; 3. Ordering respondent San Miguel Corporation to pay to complainant moral damages of P50,000.00 and exemplary damages of P20,000.00; and
4. Ordering respondent San Miguel Corporation to pay to complainant the sum equivalent to

ten percent (10%) of the total monetary award, for and as attorney's fees. SO ORDERED.[7] Petitioner filed a motion for reconsideration. In its 27 February 1998 Resolution,[8] the NLRC partially granted the motion by deleting the award of moral and exemplary damages. The NLRC ruled that there was no showing on record that the discrimination against respondent was tainted with bad faith. Thus: WHEREFORE, in view of all the foregoing, the instant motion for reconsideration is hereby PARTIALLY GRANTED only with respect to the award of moral and exemplary damages which are hereby deleted. SO ORDERED.[9] Petitioner filed a petition for certiorari before the Court of Appeals. The Ruling of the Court of Appeals In its 26 March 2002 Decision, the Court of Appeals affirmed with modification the NLRC's Decision. The Court of Appeals ruled that under Article 282(a) of the Labor Code, as amended, an employer may terminate an employment for serious misconduct or willful disobedience by the employee of the lawful orders of his employer or his representative in connection with his work. However, disobedience requires the concurrence of at least two requisites: (1) the employee's assailed conduct must have been willful or intentional, and the willfulness must be characterized by a

wrongful and perverse attitude; and (2) 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. The Court of Appeals ruled that there was no sufficient evidence that would show that respondent's failure to report to his new superior was willful and characterized by a perverse and wrongful attitude. The Court of Appeals ruled that respondent was waiting for his former superior to formally inform him of his new assignment. The Court of Appeals further ruled that respondent was suspicious of petitioner's intention to transfer him in view of the pendency of the case he filed against petitioner. The Court of Appeals ruled that there was a clear indication that respondent was a victim of retaliatory measures from petitioner. The dispositive portion of the Court of Appeals' Decision reads: IN VIEW OF THE FOREGOING, the assailed decision and resolution of public respondent NLRC are hereby AFFIRMED with the modification that, in lieu of reinstatement, private respondent should be paid separation pay, equivalent to one (1) month salary for every year of service. No pronouncement as to costs. SO ORDERED.[10] Petitioner filed a motion for reconsideration. In its 20 August 2002 Resolution, the Court of Appeals denied the motion. Hence, the petition before this Court. The Issue The issue in this case is the legality of respondent's dismissal from employment. The Ruling of this Court The petition has merit. Validity of Notice of Appeal We first discuss a side issue which petitioner raises before the Court. Petitioner alleges that there was no valid substitution of respondent's counsel. Petitioner alleges that Atty. Vigilius M. Santiago (Atty. Santiago) filed a notice of entry of appearance as respondent's counsel of record and filed an appeal from the Labor Arbiter's Decision without complying with Section 26, Rule 138 of the Rules of Court. Since there was no valid substitution of counsel, the appeal filed by Atty. Santiago was ineffective. Petitioner alleges that since Atty. Ricardo Cipriano (Atty. Cipriano), the counsel of record, did not appeal from the Labor Arbiter's Decision, the Decision became final and executory. The contention has no merit. A party may have two or more lawyers working in collaboration in a given litigation.[11] Substitution of counsel should not be presumed from the mere filing of a notice of appearance of a new lawyer.[12] The fact that a second attorney enters his appearance for the same party does not necessarily raise the presumption that the authority of the first attorney has been withdrawn.[13] The

entry of appearearance of Atty. Santiago should not give rise to the presumption that Atty. Cipriano withdrew his appearance as counsel in the absence of a formal withdrawal of appearance. Atty. Santiago should only be treated as collaborating counsel despite his appearance as "the new counsel of record." Petitioner even observed that the NLRC's Decision was not sent to Atty. Santiago but to Atty. Cipriano. Even in its petition before the Court, petitioner sent copies of the petition not only to Atty. Santiago but also to Atty. Cipriano, thus acknowledging that Atty. Cipriano remains as respondent's counsel. Since a lawyer is presumed to be properly authorized to represent any cause in which he appears, [14] Atty. Santiago is presumed to be acting within his authority as collaborating counsel when he filed the appeal from the Labor Arbiter's Decision. For as long as Atty. Santiago filed the notice of appeal within the reglementary period, reckoned from the time Atty. Cipriano received the Labor Arbiter's Decision, the NLRC did not abuse its discretion in entertaining the appeal. Validity of Dismissal from Employment Respondent was dismissed for a just cause. An employer may terminate an employment for serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work.[15] Willful disobedience requires the concurrence of two elements: (1) the employee's assailed conduct must have been willful, that is, characterized by a wrongful and perverse attitude; and (2) 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.[16] The records show that respondent was not singled out for the transfer. Respondent's transfer was the effect of the integration of the functions of the Mandaue Brewery - Materials Management and the Physical Distribution group into a unified logistics organization, the VisMin Logistics Operations. The 6 December 1993 Memorandum of Elizagaque showed the transfer to the VisMin Logistics Operations of the following functions: 1. Bottle Yard Operations (including direct loading of route/overland truck and Remuco forklift operations); and
2. Transporation Management (car/service pick-ups, dump trucks, flatbed and firetruck)[17]

The Memorandum also showed that the following assets were also transferred to the new VisMin Logistics Operations: 1. 2. 3. 4. 5. 6. 7. 8. Oro Verde Warehouse Raw Sugar Warehouse ARMS Bldg. & Training Center Malt Bagging Plant Weigh Bridge Planters' Warehouse, Wharf & Offices Cars/Service Pick-ups Dump Trucks

9. Flat Bed 10. Fire Truck 11. Gas Station 12. B. Yeast Tanker[18] In other words, the entire Oro Verde Warehouse, to which unit respondent belonged, was affected by the integration. We do not agree that respondent was not formally notified of the transfer. The Memorandum dated 7 February 1994 of Capt. Fortich to Comdr. Flores states: 2. This is to formalize the transfer of security operations and control of all security personnel and equipment at subject warehouses, effective 14 Feb 94.
3. Security personnel involved will be verbally informed of the transfer for smooth transition

and proper coordination will be made to the Secutiy Officer of VISMIN Logistics Operations.[19] As early as 9 February 1994, Major Enriquez, the head of the VisMin Logistics Operations and thus, respondent's new superior, issued a guard detail for 14-20 February 1994.[20] All agency guards signed the detail, except respondent who refused to sign.[21] On 15 February 1994, Major Enriquez again issued a guard detail for 21-27 February 1994.[22] Again, all security guards concerned signed the detail except respondent who refused to sign. Major Enriquez issued successive memoranda[23] to respondent officially informing him of his transfer to the VisMin Logistics Operations but respondent refused to sign all the notices. The employer exercises the prerogative to transfer an employee for valid reasons and according to the requirements of its business, provided the transfer does not result in demotion in rank or diminution of the employee's salary, benefits, and other privileges.[24] In this case, we found that the order of transfer was reasonable and lawful considering the integration of Oro Verde Warehouse with VisMin Logistics Operations. Respondent was properly informed of the transfer but he refused to receive the notices on the pretext that he was wary because of his pending case against petitioner. Respondent failed to prove that petitioner was acting in bad faith in effecting the transfer. There was no demotion involved, or even a diminution of his salary, benefits, and other privileges. Respondent's persistent refusal to obey petitioner's lawful order amounts to willful disobedience under Article 282 of the Labor Code. WHEREFORE, we GRANT the petition. We SET ASIDE the 26 March 2002 Decision and the 20 August 2002 Resolution of the Court of Appeals in CA-G.R. SP No. 50680. We REINSTATE the 25 October 1996 Decision of the Labor Arbiter. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 151400 September 1, 2004

LITTON MILLS, INC. and/or JAMES L. GO, petitioners, vs. MELBA S. SALES, respondent. DECISION CALLEJO, SR., J.: Petitioner Litton Mills, Inc., represented by James Go, insists that this is a plain and simple case of an employee caught in flagrante. Respondent Melba S. Sales intractably contends the opposite, and maintains that she was a victim of a despicable frame-up. The Labor Arbiter and the National Labor Relations Commission (NLRC) sided with the petitioner herein, while the Court of Appeals gave credence to the stance of the respondent. The petitioner now comes before the Court for relief on a petition for review on certiorari. The Antecedents On September 20, 1999, petitioner Litton Mills, Inc. dismissed the respondent for theft of two (2) packs of miniature fuse links and a piece of cloth tape, found inside the latters bag during an inspection at the exit gate of the petitioners plant. On October 1, 1999, the respondent filed a Complaint against the petitioner for illegal dismissal with the NLRC docketed as NLRC-NCRCase No. 00-10-090039-99. The Case for the Petitioner On April 22, 1983, the petitioner employed respondent Melba S. Sales and assigned her to the Spinning, Weaving and Finishing Department. As of September 5, 1999, she was assigned as a weaver at the Weaving Department with a daily wage of P326.29.1 At around 6:10 a.m. on September 5, 1999, Security Officer Noel A. Maallo was at Gate 2 of the plant site, inspecting the handbags of employees exiting the gate after their tours of duty. The practice of bag inspection whenever persons entered and exited the plant site had been a long-standing procedure of the petitioner. When Maallo opened the respondents bag, he found two packs of miniature fuse links inside a side pocket, as well as cloth tape hidden beneath and commingled with the respondents soiled clothes. The fuse links had apparently been embedded in the machines at the Spinning, Weaving and Finishing Department, and without which such machines would not operate.2 Maallo made a written report3 of the incident to Johnson Robert Go, Jr. that day and reported the incident to the

Pasig City Police. The report was placed in the police blotter.4 On September 6, 1999, the respondent was required by the petitioner, through its Assistant Vice-President, Rodolfo S. Mario, to submit an explanation why no disciplinary action should be taken against her for stealing company property. The respondent was also informed that she was being placed under preventive suspension for fifteen (15) days effective immediately.5 On September 7, 1999, the respondent submitted a handwritten explanation in which she denied the charges. She also stated therein that she had a talk with Maallo while in front of the door to the room of Atty. Mario, and was told that the inspection of bags of employees that early morning of September 5, 1999 had been very strict because their office had earlier received information that a woman was about to bring out company property at the exit gate.6 A formal investigation of the incident was conducted by Atty. Melvyn S. Florencio, who later submitted his Report to the President of the petitioner, Johnson Roberto Go, Jr., recommending the dismissal of the respondent for theft of company property which was one of the Offenses Subject to Disciplinary Action (OSDA), under Section 1 thereof. The Case for the Respondent7 The respondent adduced evidence that she was first employed by the petitioner Litton Mills, Inc. as a weaver on April 22, 1983. She had been the leading critic of the employees union in the company and often criticized Emiliano Salonga, one of the members of the Board of Directors of the Union, in the presence of many persons.8 She was once invited by Salonga to attend an orientation conference at the behest of the union, but she just laughed at him.9 When the petitioner ordered a retrenchment, union president Ariel Villanueva supported the decision of the management. The respondent criticized the retrenchment, as well as the increase of union dues and special assessment of P200.00 after the execution of the Collective Bargaining Agreement between the union and the petitioner.10 At one time, Salonga told another employee, Zaida C. de Asis, that he would do anything to eliminate the respondent.11 The respondent averred that her criticism did not sit well with Sonia Mercado, who considered her (the respondent) very critical and outspoken of the leadership of the union.12 Mercado was also very angry with the respondent for another reason; she suspected the latter of calling her husband and telling him of her close relationship with Salonga.13 Even Alex Go, the manager of the Spinning, Weaving and Finishing Department, talked to her at 2:30 p.m. on April 27, 1999, and told the respondent that someone had reported that she had been leaving the working area and going to other departments during office hours. She vehemently denied the report and even reminded Go that she had a production rating of 80% to 95% compared to the failing rating of Mercado, who oftentimes talked with Salonga in the working area. Not long after, or on September 3, 1999, the cloth tape and fuse links were found in the respondents bag. The respondent claimed that she was a victim of a frame-up. She averred that on September 4, 1999, a Saturday, she reported for work at the plant site and arrived there at 2:00 p.m. She brought a handbag in which she placed some clothes as she was scheduled to work overtime up to 6:00 a.m. the next day, September 5, 1999. She placed her bag inside her locker before reporting for work at the Weaving Department. However, she failed to lock her locker before she left. At around

4:30 a.m., Zaida de Asis, who was also assigned at the Weaving Department, saw Salonga hand over to Mercado a plastic bag about 3 inches long and 3 inches wide.14 At around 5:00 a.m., she returned to the locker room, got her bag from the locker and took out her clothes from the bag. She placed the bag on the bench as she changed her clothes. Also changing their clothes then with her were Zaida de Asis, Sonia Mercado and two other employees.15 The respondent placed her soiled clothes inside her bag and returned her bag to her locker. She did not lock her locker, as she usually did, and returned to the working area.16 At around 6:00 a.m., the respondent left the working area and took out her bag from the locker. She did not notice anything unusual inside her bag. She then proceeded to Gate 2 of the plant where she saw two long lines formed, one for women employees and the other for male employees. The lines were manned by security officers, one of whom was Security Officer Maallo. She noticed that the inspection of the bags of male employees was lax compared to the inspection done on the women employees, which was unusually strict. She saw Salonga near the security guard being frisked, and then leave. She heard someone shout, "May nagtip; may nagtip." Zaida de Asis bag was inspected ahead of the others. Momentarily, Maallo announced, "Sino ang gustong magpakapkap sa akin?" She forthwith presented herself to Maallo and opened her bag for inspection. She was aghast when Maallo found the cloth tape and the two packs of miniature fuse links inside. Maallo ordered her to stay while he continued with his inspection of the bags of the other employees. The respondent herein asserts that the miniature fuse links found in her bag were used in the Maintenance Department. After the incident, Union president Ariel Villanueva, spread word that he was even prepared to have his head cut off if the respondent would be reinstated to her position. After the respondent rested her case, Mercado testified and identified her and Salongas joint statement. She admitted that at about 2:30 p.m. to 3:00 p.m. on September 5, 1999, she placed a plastic bag containing pineapple pie from Salonga.17 She denied the respondents claim that she and Salonga instigated the alleged frame-up. During the conciliation conference at the Arbitration Branch, the petitioner offered to pay the respondent separation pay if she agreed to resign from the company. The respondent, however, refused the offer. On February 16, 2000, Labor Arbiter Jose G. de Vera, rendered a Decision dismissing the complaint but ordering the petitioner to pay her P6,559.35.18 The respondent appealed the decision to the NLRC which affirmed the decision of the Labor Arbiter.19 The petitioner filed a motion for partial reconsideration of the decision, while the respondent filed her motion for reconsideration thereof. Both motions were denied by the NLRC.20 The respondent filed a petition for certiorari with the Court of Appeals which rendered judgment on September 28, 2001 setting aside and reversing the decision of the NLRC, ordering the reinstatement of the respondent and remanding the case of the Labor Arbiter for the computation of the monetary awards in favor of the respondent.

The petitioner comes before this Court and raises the following issues: I WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT THE RESPONDENT WAS ILLEGALLY DISMISSED. II WHETHER OR NOT THE COURT OF APPEALS SERIOUSLY ERRED IN DECLARING THAT THE RESPONDENT IS ENTITLED TO REINSTATEMENT TO HER FORMER POSITION WITH FULL BACKWAGES AND PAYMENT OF HER MONETARY CLAIMS.21 The core issues are the following: (a) whether or not the petitioner adduced the requisite quantum of proof that the respondent stole the cloth tape and pieces of miniature fuse links owned by her employer, the petitioner; and (b) whether the penalty of dismissal meted against the respondent is appropriate in this case. The general rule is that the factual findings of the NLRC affirming those of the Labor Arbiter are given high respect by the appellate court absent a showing of unfairness or arbitrariness in the process of their deduction from the evidence or grave abuse of discretion.22 In this case, the Labor Arbiter, after calibrating the evidence of the respondent and Zaida de Asis, ratiocinated as follows: The main issue for resolution in the instant case is whether or not there exists just and valid cause to justify the termination of the complainant. The complainant, in her position paper, alleges that she was framed up. In particular, she accused union officers Emiliano Salonga and Sonia Mercado as the ones responsible in planting incriminatory evidences against her. She claims that she incurred the ire of the said union officers who suspected her of spreading rumors about an alleged amorous relationship between them. As proof of the alleged plot against her, complainant relied on the affidavit executed by Zaida de Asis who allegedly saw Emiliano Salonga gave Sonia Mercado a plastic bag containing small items which later was discovered inside complainants bag. The attendant circumstances in the instant case as found by this Arbitration Branch militate strongly against the complainant. She was caught red-handed by the security guard who inspected her bag as she was about to leave the company premises to be containing objects belonging to the respondent company. While the complainant claimed innocence contending that she was completely unaware about what was implanted inside her bag by those who allegedly framed her up, her explanation nonetheless failed to convince this Arbitration Branch. Complainants tale that

some union officers plotted her ouster from the company after she was suspected of spreading rumors about the alleged illicit relationship between them is at most an afterthought designed to extricate herself from a difficult bind. Further, complainant relied on the sworn declaration of a co-employee identified as Zaida de Asis who testified that when the security guard inspected the bag of the complainant and found therein a plastic bag containing the fuse links, she allegedly recognized the plastic bag as the one she earlier saw being handed by Emiliano Salonga to Sonia Mercado at the vicinity of the locker room. It is to be noted singularly that the above declarations of Ms. De Asis is inconsistent with the findings of the investigating officer, who in his report states as follows: "Upon clarificatory questioning, she said that shes acquainted with Ms. Melba Sales. She does not know if Ms. Melba Sales (sic) or Mr. Emiliano Salonga has personal animosity with Ms. Melba Sales. She is not in a position to comment on the charge filed by the security department of Litton Mills, Inc. against Ms. Melba Sales. She was with Ms. Melba Sales at the time the later (sic) was being inspected by Mr. Noel Maallo but does know (sic) what happened with Ms. Melba Sales while being searched by Mr. Maallo, as she had already left Gate 2." The foregoing statement of Ms. De Asis during the administrative investigation readily shows that she was no longer present at the time the security guard discovered the pilfered items inside the bag of the complainant and, therefore, is not in a position to state that the bag was the same plastic bag being handed by Salonga to Sonia Mercado. The foregoing inconsistent statements of Ms. De Asis clearly shows that she is not a reliable witness.23 The NLRC affirmed the findings of the Labor Arbiter and further declared that: In trying to convince us that the articles found in her bag were planted, complainantappellant relied heavily on the declarations of her sole witness Ms. Zaida C. de Asis. Unfortunately, a close scrutiny of her sworn statement would reveal that the same is not substantially supportive of what complainant-appellant wants us to believe. It is noted that while Ms. De Asis declared that she saw Salonga giving small items in a plastic to Mercado, she did not personally witness the security guard inspecting the complainantappellants bag. She merely presumed that what she saw being handed to Mercado were the same items found in the bag during inspection. She even stated that she learned of the incident only the following day. More important, Ms. De Asis did not see what articles were being given to Mercado. Neither did she witness when the stolen articles were supposedly planted in complainant-appellants bag. These could easily be gleaned from the following statements in her affidavit. (Records, p. 33). "x x x

3) Na, noong Septiembre 6, 1999, mga alas kuwatro ng madaling araw habang papasok sa locker room, ay nakita ko na itong si Emiliano Salonga na may iniabot na maliit na bagay na naka-plastic kay Sonia Mercado. xxx 6) Na, ng inspiksyunin ng OIC ng guwardia ang bag ni Sales ay nakita niya iyong nakabalot ng plastic, na siya ring nakita ko ng iabot nitong si Emilio (sic) Salonga kay Sonia Mercado. Ito ay napag-alaman ko kinabukasan. (Underscored for emphasis) The aforequoted statements, particularly that which shows that Ms. De Asis was no longer present at the time the security guard discovered the pilfered items, were confirmed in the investigation report which states in part, thus: "After the undersigned terminated his investigation with Ms. Melba Sales, the latter presented as her only witness Ms. Zaida de Asis, who testified that at around September 05, 1999 at around (sic) 4:30 A.M., she left the womens locker area. At this juncture, she saw a woman near the door of the mens locker room and saw a man giving to the woman a plastic pack which is about 3 inches in length and 3 inches in width. She did not see the contents of what was given to the woman. She identified the man as Mr. Emiliano Salonga and the woman as Ms. Sonia Mercado. "Upon clarificatory questioning, she said that shes acquainted with Ms. Melba Sales or Emiliano Salonga has personal animosity with Ms. Melba Sales. (sic) She is not in a position to comment on the charge filed by the security department of Litton Mills, Inc. against Ms. Melba Sales. She was with Ms. Melba Sales at the time the latter was being searched by Mr. Noel Maallo but does not know what happened with Ms. Melba Sales while being searched by Mr. Noel Maallo as she had already left gate 2." All told, the Labor Arbiter did not err in finding that there is no valid basis for complainantappellants defense of frame-up and, consequently, the well-founded and rational conclusion that complainant-appellant stole company property. Respondents-appellees, therefore, had valid grounds to dispense with her services. After all, theft committed by an employee constitutes a valid reason for dismissal by the employer (Firestone Tire and Rubber Co. of the Phils. vs. Lariosa, 148 SCRA 187). It is noted, however, that during the early stages of this proceedings, respondentsappellees offered to grant complainant-appellant separation pay equivalent to 15-days pay for every year of service. Considering that complainant-appellant had worked with the company for 17 years with no known previous bad record, which presumably prompted respondents-appellees to voluntarily make the proposal, the ends of social and compassionate justice would be served if respondents-appellees would make good its offer.24 However, the Court of Appeals found the factual findings of the Labor Arbiter and the NLRC, and their conclusions based on said findings, erroneous and held as follows: The striking facts which appeared on record could not escape Our attention, to wit:

"1) That it is a standard security procedure of the private respondent Litton Mills that all persons entering and leaving the premises of the company are required to submit their bags and other belongings to the security personnel at the gate for inspection (Rollo, p. 162); "2) That petitioner, after hearing Security Officer Noel Maallo shouted: (sic) Sino ang gustong magpakapkap sa akin?, voluntarily went to the said security officer so that she may be inspected after she opened her bag (Ibid, p. 194); "3) That during the investigation conducted by Melvyn S. Florencio, petitioner admitted that the fuse and cloth tape were found inside her bag but she maintained her innocence (Ibid, p. 201); "4) That the packs of miniature fuse links were found inside the side pocket of petitioners bag, while the cloth tape was found at the center pocket of the petitioners bag hidden beneath and mixed with her soiled clothes (Ibid, p. 185); "5) That the miniature fuse links are being used by different machines at the Spinning, Weaving and Finishing Departments without which would cause stoppage of said machines (Ibid, p. 185); and "6) That petitioner, despite having been offered by private respondents of separation pay, refused and opted to proceed with this litigation to prove her innocence (Ibid, p. 25)." These facts and circumstances lead Us to conclude that the petitioner is innocent of the charge of pilferage. First, if she really had the intention to steal the fuse links and the cloth tape from the respondent company, knowing that a routine inspection is conducted before leaving the plant, she should not have put the fuse links inside the side pocket of her bag. Said side pocket was apparent in the eyes of the security officers and are most likely to be inspected. Note that the cloth tape which is less important than the fuse links was the one found inside the center pocket of the bag mixed with the soiled clothes of the petitioner. Second, the petitioners conduct of voluntarily going to the security officer and of spontaneously opening her bag for inspection is an act inconsistent with the idea that she was hiding something in her bag. Third, there is no proof of motive attributed to herein petitioner why she would steal the fuse links vital in the operation of the machines in her department. Neither is there any proof adduced why she would have stolen said articles with persistence, knowing that the risk of being caught is highly probable because of the routine inspection.

Finally, despite having been offered to be paid of a separation pay which a truly guilty individual could have hastily accepted, the petitioner refused and opted to proceed with this burdensome litigation to prove her innocence. It would seem from the above circumstances and observations that the mere fact that certain company articles were found in the possession of herein petitioner during the routine inspection is not sufficient to warrant a reasonable mind to conclude that she is guilty of theft of private respondents properties. Hence, public respondents gravely abused their discretion in upholding the dismissal of herein petitioner absent substantial evidence to prove the same.25 The petitioner contends that the Court of Appeals erred in reversing the decision of the NLRC, affirming on appeal the decision of the Labor Arbiter whose findings are generally accorded, not only respect, but even conclusive and binding effect on the Court of Appeals. The petitioner asserts that the "striking facts" referred to by the Court of Appeals in its decision are based on conjectures, possibilities and suppositions. The petitioner avers that it was not incredible for the respondent to have kept the subject goods in her bag on her way to Gate 2 because she knew that, on previous occasions, the inspection of bags of exiting employees was lax and perfunctory. She did not expect such inspection at 6:10 a.m. of September 5, 1999 to be strict, such that even wallets of employees were searched. She said so herself in her affidavit Sa pagsapit ko sa gate 2 na siyang daang palabas napansin ko na ang pila ng kababaihan ay mahaba, dahil sa hindi pangkaraniwang higpit ng kanilang pagsisiyasat at pagkapkap, na maging ang wallet ay kanilang tinitingnan, subalit hindi naman ginagawa sa pila ng kalalakihan, sa pila namin ay may sumigaw ng "May nagtip, may nagtip." Sa puntong ito nagsalita si Ginoong Maallo na OIC ng mga guardiya na "Sino ang gustong magpakapkap sa akin?" sa tinuran niyang iyon agad akong tumungo sa kanya dahil alam ko ang proseso nito. Kaya binuksan ko ang zipper ng aking bag at ipinasiyasat sa kanya, at dito na po niya nakita ang mga bagay na ibinibintang sa akin na wala naman akong kinalaman.26 There is no evidence on record, the petitioner avers, that the contents of the side pocket of the respondents bag were inspected by Maallo before the bag was opened. It also posits that it was not unexpected for the respondent to have placed the cloth tape inside her bag and hide it between her soiled clothes, because if she placed the cloth tape in the side pocket, it would have caused the pocket and the bag to bulge, and thus, invite the attention of the security officer conducting the inspection. It also posits that the respondents acts of counterchecking her bag before presenting it to Maallo for inspection was consistent with her stealing the stated items. Motive to commit a crime is not an essential element of theft. The fact remains, the petitioner emphasizes, that the respondent was caught in flagrante; hence, motive need not be established. The defense of frameup, the petitioner notes, cannot prevail since the respondent was caught in flagrante. The petitioner posits that, while it is true that it offered to pay separation pay to the respondent during the conciliation phase of the proceedings before the Arbitration Branch, it did so merely to "buy peace" and not to admit that the charge against the respondent was baseless; for if it were

otherwise, then all illegal dismissal cases would prosper by the mere expedience of the complainant rejecting the offer of the employer to settle the case by way of a compromise. The respondent, in her Comment on the petition, cited the ruling of this Court in Judric Canning Corporation vs. Inciong,27 to wit: [I]t Offered to pay respondent union members separation pay of one (1) month. This is a clear admission of the charge of arbitrary dismissal for why should the petitioner offer to pay what it calls "severance pay" if the private respondents were not, indeed, dismissed, or if the petitioner sincerely believed in the righteousness of its stance? The respondent asserts that having served the petitioner for seventeen (17) long years without any blemish, she certainly would not steal a piece of cloth tape and pieces of miniature fuse links, an offense for which she would surely be dismissed from her employment, besides being charged with a felony. She contends that it was never the burden of the respondent to prove her innocence of the charge; the petitioner, as complainant, was burdened to prove the said charge with clear and convincing evidence, and not merely substantial evidence, considering that the charge was for the theft of her employers property, meriting the penalty of dismissal from employment under Section 1.00 of the OSDA. The Ruling of the Court The petition has no merit. In illegal dismissal cases, the employer is burdened to prove just cause for terminating the employment of its employee with clear and convincing evidence.28 The case of the employer must stand or fall on its own merits and not on the weakness of the employees defense.29 The alleged weakness of the defense of the employee cannot operate to relieve nor discharge the employer of its burden in termination cases. This principle is designed to give flesh and blood to the guaranty of security of tenure granted by the Constitution to employees under the Labor Code.30 The petitioner was burdened to prove the charge of theft of its property by the respondent to wit: (a) it was the owner of the cloth tape31 and the miniature fuse links;32 (b) the respondent herein took said property; (c) without the consent of the petitioner as owner. Taking is the act of depriving another of the possession and dominion of movable property without his permission and consent, and without animus revertendi.33 However, as found by the Court of Appeals, the petitioner failed to discharge its burden. First. The only evidence adduced by the petitioner that it was the owner of the cloth tape and fuse links referred to was the Affidavit of Maallo that, upon verification, the fuse links were being used by different machines at the Spinning, Weaving and Finishing Department and that without them, such machines would stop functioning or operating.34 The petitioner failed to submit any affidavit or document showing that it was the owner of the said fuse links and cloth tape. Second. The petitioner failed to prove the particular section of the plant where the cloth tape and fuse links were kept. There is no evidence that the respondent took the articles from any of the

sections of the petitioners plant where the said articles were kept, and that the respondent had access to those sections of the plant. It bears stressing that the respondent was merely a weaver in the Spinning, Weaving and Finishing Department. The respondent could not have taken the articles where they were kept because from the time she arrived in the plant up to the time when she exited from her place of work, she was either in the locker room to change her clothes and to return her bag in the locker, or was at her working place. Third. We are not impervious of Rule 131, Section 3(j) of the Revised Rules of Evidence which provides: That a person found in possession of a thing taken in the doing of a recent wrongful act is the taker and the doer of the whole act; otherwise, the things which a person possesses, or exercises acts of ownership over, are owned by him; However, for such presumption to arise, the petitioner was burdened to prove the following: (a) that its property was stolen; (b) it was committed recently; (c) that the stolen property was found in the possession of the respondent; and (d) the respondent is unable to explain his possession satisfactorily.35 The presumption does not apply if the property was not recently stolen. In this case, the petitioner failed to establish its ownership of the cloth tape and miniature fuse links, that the same were stolen, and that the theft was committed shortly before the same were found in the possession of the respondent at the exit gate. The Labor Arbiter and the NLRC rendered judgment against the respondent simply and merely because the said quasi-judicial agencies disbelieved her explanation as to how and why the articles were in her bag, and why she could not have stolen the said articles from the plant of the petitioner. It was not ascertained whether the petitioner herein mustered the requisite quantum of evidence to prove its charge against the respondent with clear and convincing evidence. In fine, judgment was rendered by the Labor Arbiter against the respondent because of the weakness of her defense; instead, it should have rendered judgment in her favor because of the petitioners failure to prove just cause for her dismissal, to wit, that she stole her employers property. In calibrating the evidence of the petitioner vis--vis that of the respondent, the Court of Appeals found the respondent's evidence credible and entitled to full probative weight. We agree with the Court of Appeals. Case law has it that, for evidence to be believed, it must not only proceed from the mouth of a credible witness, it must be credible in itself. Evidence is credible when it is such as the common experience of mankind can approve as probable under the circumstances. There is no test of truth of human testimony, except its conformity to our knowledge, observation and experience.36 In this case, the respondent had been under the employ of the petitioner for seventeen (17) years since April 22, 1983. There is no evidence that any charges were ever filed against her for any infraction from 1983 up to 1999. While the petitioners Department Manager Alex Go claimed that on two occasions in 1999, he called the respondents attention and reprimanded her for allegedly loitering outside the working area and engaging in gossip during working hours,37 the respondent

vehemently denied the same. The petitioner was unable to explain why Alex Go executed his affidavit on the respondents supposed infractions only after September 5, 1999. Moreover, the petitioner had not adduced any evidence to controvert that of the respondents that while under its employ, her production rating ranged from 80% to 95%.38 We find it incredible that the respondent would steal a measly cloth tape and two packs of miniature fuse links and risk being dismissed from her employment. The respondent knew that her bag would be inspected by the security guard at the exit gate; hence, the articles would be discovered if she stole the articles and placed the same in her bag on her way out of the plant via the exit gate. Even if bag inspections had been lax or perfunctory in the past, there was the everpresent possibility that any stolen articles in the bag could be discovered. Ordinarily, one who has stolen property will do so beyond the prying eyes of anyone who would squeal on her, and exert all effort to conceal the corpus delicti to avert apprehension and prosecution therefor. In this case, the respondent noticed, while waiting for her bag to be inspected, that the inspection of bags of exiting female employees was unusually strict. Even as security guard Maallo announced, "Sino ang gustong magpakapkap sa akin?" and amidst the shouts of, "May nagtip, may nagtip," the respondent spontaneously went towards Maallo, opened her bag without hesitation, and presented it for inspection. The spontaneous actuations of the respondent are inconsistent with those of one who has just allegedly stolen the properties of her employer, and are consistent with her claim that the articles were placed in her bag without her knowledge. Fourth. The respondent averred that when she was seated in front of the door of Atty. Marinos office with Maallo, the latter told her that the security guards had been unusually strict in the inspection of bags earlier that morning because of a telephone report received from a woman and a man. Maallo did not deny the averments of the respondent. Indeed, the information relayed by Maallo to the respondent was somehow confirmed by the latters testimony that before she presented her bag for inspection, someone shouted, "May nagtip, may nagtip." We find it implausible for the respondent to have stolen the cloth tape and fuse links with the knowledge of not only one but two or more persons; what with her open and vociferous criticisms of the Union and its president, and one of the members of the Board of Directors, Emiliano Salonga. IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of merit. The assailed Decision of the Court of Appeals is AFFIRMED. No costs. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 145280 December 4, 2001

ST. MICHAEL'S INSTITUTE, FR. NICANOR VICTORINO and EUGENIA BLANCO, petitioners, vs. CARMELITA A. SANTOS, FLORENCIO M. MAGCAMIT and ALBERT M. ROSARDA, respondents. DE LEON, JR., J.: Before us is a petition for review on certiorari of the Decision1 and Resolution2 of the Court of Appeals dated March 20, 2000 and September 29, 2000, respectively, in CA-G.R. SP No. 53283 which modified the Decision3 dated April 17, 1996 of the National Labor Relations Commission (NLRC) in NLRC Case No. NCR CA No. 007922-94 by ordering the payment of backwages in addition to the judgment of the NLRC directing the reinstatement of respondents Florencio M. Magcamit and Albert M. Rosarda to their former positions as teachers and the payment of separation benefits to respondent Carmelita A. Santos. Petitioner St. Michael's Institute is an institute of learning located in Bacoor, Cavite with petitioner Fr. Nicanor Victorino as Director and petitioner Eugenia Blanco as the Principal and respondents Carmelita Santos, Florencio Magcamit and Albert Rosarda were regular classroom teachers. Respondent Santos began teaching at St. Michael's Institute in 1979 while respondents Magcamit and Rosarda joined its school faculty only in 1990. Their service with the school was abruptly interrupted when each of them was served a notice of termination of employment on September 20, 1993.4 The termination allegedly stemmed from an incident that occurred on August 10, 1993. On said date, a public rally was held at the town plaza of Bacoor, Cavite in the vicinity of petitioner school. The rally, organized and participated in by faculty members, parents and some students of petitioner school, was, among others, aimed at calling the attention of the school administration to certain grievances relative to substandard school facilities and the economic demands of teachers and other employees of St. Michael's Institute.1wphi1.nt Petitioner Blanco, as school principal, sent each of the respondents identical memoranda dated August 11 and 12, 1993, requiring them to explain their acts of leading the aforementioned rally of students outside the school premises; preventing students from attending classes; and denouncing the school authority in their speeches.5 Responding to the individual memorandum sent to them, respondents Magcamit and Rosarda, in separate letters dated August 13, 1993, denied all the accusations attributed to them, and explained that they were invited by the core group of parents and merely joined them in expressing their sentiments; that they did not denounce the school authority but, rather, the way it was being misused and abused.6 On the other hand, respondent Santos, in a letter dated August 16, 1993, justified her actions as having been done "on behalf of her co-teachers with the parents' blessings" to denounce "the administration's corrupt practices more so the school director".7 Expressing a need for investigation, petitioner school Principal Blanco created an investigation committee composed of Atty. Sabino Padilla, Jr., legal counsel of the school, PNP Maj. Hermenegildo Phee, CAT Commander, and Mrs. Zenaida Bonete, the School Registrar.8 The

Investigation Committee found that respondents had led and actively participated in the said rally, in which they denounced the Director of the Institute, petitioner Fr. Victorino, without justification, and consequently recommended their termination from service.9 On September 20, 1993, each of the respondents were sent three (3) identical letters informing them of their termination from the service "for serious disrespect" to their superior, petitioner Fr. Victorino, and for "serious misconduct that resulted in the disruption of classes."10 Respondents Magcamit and Rosarda immediately filed on September 21, 1993 a complaint for illegal dismissal against the petitioners.11 On October 12, 1993, a second complaint for illegal dismissal was filed by respondents Magcamit and Rosarda, this time with respondent Santos.12 Both complaints were consolidated. On September 30, 1994, Labor Arbiter Leandro M. Jose rendered a joint decision to dismiss the complaints for lack of merit.13 The Labor Arbiter found and declared that there was just cause for the dismissal of the respondents' complaints since they were guilty of dereliction of duty and insubordination for failing to exercise the very task that they are duty-bound to perform as teachers of petitioner school, that is, to conduct classes on August 10, 1993. In addition, the Labor Arbiter opined that the willful conduct of private respondents in disobeying the reasonable order of the school principal to conduct classes is a just cause for termination and falls within the ambit of Article 282 of the Labor Code. Besides, the Labor Arbiter stated that the airing of grievances could have been done in a more acceptable way, through the Parents-Teachers Association or any aggrupation of teachers, parents and students. On appeal, the NLRC further found that during the early part of 1993, the high school faculty of St. Michael's Institute formed a labor union. Among the organizers of the union were respondents Magcamit, Santos and Rosarda, who were later elected as President, Director and PRO, respectively, of the labor union. Certain grievances were aired in a dialogue with the school administration headed by petitioner Fr. Victorino before the School Chancellor, Fr. Arigo. The dialogue proved futile. Sometime in March of 1993, petitioner school issued termination letters to the respondents and three (3) other faculty members. Because of their termination, respondents filed a complaint for illegal dismissal before the NLRC. However, the case was settled amicably with the conditions that complainants therein would withdraw their case and that, in turn, the school authorities would create a grievance committee. Respondents promptly complied with the condition and withdrew their complaint for illegal dismissal. As to the creation of a grievance committee, the same had still not materialized as of August 10, 1993 when the public rally was conducted. The NLRC concluded that there was no sufficient reason to uphold the validity of the termination of the respondents' employment as the August 10, 1993 rally which was purposely held to call the school's attention to the grievances of its teachers and students, could hardly be considered as without justification. Thus, the NLRC reversed the ruling of the Labor Arbiter and held that the respondents had been illegally dismissed. Petitioners then brought a petition for certiorari14 before this Court. They contend that the NLRC committed grave abuse of discretion in (a) reversing and setting aside the appealed decision on causes of action different from that raised by the respondents before the Labor Arbiter, (b) reversing the finding of the Labor Arbiter that the acts of petitioners were illegal, and (c) ordering

the reinstatement of respondents Magcamit and Rosarda and payment of separation pay to respondent Santos. The Court referred the certiorari petition to the Court of Appeals in line with the doctrine laid down in the case of St. Martin Funeral Homes v. NLRC, promulgated on September 16, 1998, wherein the Court declared that "all appeals from the NLRC to the Supreme Court via a petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure should henceforth be initially filed in the Court of Appeals as the appropriate forum for relief desired in strict observance of the doctrine on the hierarchy of courts."15 Acting on the petition, the Court of Appeals sustained the decision of the NLRC but further awarded backwages to respondents. Petitioners sought reconsideration of the said decision but the same was denied in a Resolution16 dated September 29, 2000. Nonetheless, the appellate court modified the award of backwages to respondent Santos in that the same shall only be up to December 11, 1998, the date when she would have compulsorily retired from the service upon reaching sixty-five (65) years of age. Dissatisfied, petitioners interposed this petition for review anchored on the following assignment of errors:17 I. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT RULING THAT RESPONDENTS WERE GUILTY OF SERIOUS MISCONDUCT; WHICH MISCONDUCT WARRANTED THEIR DISMISSAL FROM THEIR EMPLOYMENT. II. THE HONORABLE COURT OF APPEALS GRAVE (sic) ERRED IN IGNORING THE RULINGS OF THIS HONORABLE COURT ON THE RIGHT AND PREROGATIVE OF THE EMPLOYER TO DISMISS ERRING EMPLOYEES FOR VIOLATION OF WORKING RULES AND REGULATIONS. III. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN FAILING TO RULE THAT THE DISMISSAL OF RESPONDENTS WAS NOT DUE TO UNION ACTIVITY OR UNFAIR LABOR PRACTICE BUT WAS DUE RATHER TO THEIR DELIBERATE REFUSAL TO ATTEND TO THEIR CLASSES ON 10 AUGUST 1993 AND THEIR UTTERANCE OF FOUL AND OBSCENE REMARKS DIRECTED AT THE SCHOOL DIRECTOR, FR. NICANOR VICTORINO. IV. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED WHEN IT ORDERED NOT ONLY THE REINSTATEMENT OF RESPONDENTS BUT ALSO PAYMENT TO THEM OF BACKWAGES; THIS, DESPITE THE FACT THAT THE NATIONAL LABOR RELATIONS COMMISSION DELIBERATELY REFUSED TO AWARD THEM BACKWAGES AND SAID RESPONDENTS UNDISPUTEDLY DID NOT APPEAL THE NLRC DECISION. V. ASSUMING ARGUENDO THAT RESPONDENT CARMELITA SANTOS IS ENTITLED TO BACKWAGES, THE COMPUTATION OF HER BACKW AGES SHOULD BE UP TO 11 DECEMBER 1993, NOT UNTIL 11 DECEMBER 1998.

Petitioners take exception to the conclusion and ruling of the Court of Appeals that there was no just cause for the dismissal of the respondents. It is the petitioners' position that the appellate court failed to properly appreciate that the willful refusal of the respondents to perform the very task they were hired and required to do, that is to teach, was tantamount to serious misconduct which gave the petitioners the right to terminate the employment of the respondents. Furthermore, the dismissal of respondents for joining the public rally on August 10, 1993 was "fully justified because not only were classes disrupted on that day but the public rally was accompanied by utterances of obscene, insulting or offensive words against their immediate superiors, more specifically petitioner Fr. Nicanor Victorino, Director of petitioner school.18 The petitioners' arguments fail to persuade usThe employer's right to conduct the affairs of his business, according to its own discretion and judgment, is well-recognized. An employer has a free reign and enjoys wide latitude of discretion to regulate all aspects of employment, including the prerogative to instill discipline in its employees and to impose penalties, including dismissal, upon erring employees. This is a management prerogative, where the free will of management to conduct its own affairs to achieve its purpose takes form. The only criterion to guide the exercise of its management prerogative is that the policies, rules and regulations on work-related activities of the employees must always be fair and reasonable and the corresponding penalties, when prescribed, commensurate to the offense involved and to the degree of the infraction.19 In the instant case, the reason basically cited for the dismissal of respondents is serious misconduct or willful disobedience for dereliction of duty predicated on their absence for only one day of classes for attending a public rally and denouncing the school authority. The magnitude of the infraction must be weighed and equated with the penalty prescribed and must be commensurate thereto, in view of the gravity of the penalty of dismissal or termination from the service. What is at stake here is not simply the job itself of the employee but also his regular income therefrom which is the means of livelihood of his family. We agree with the appellate court's conclusion that, under the attendant factual antecedents, the dismissal meted out on the respondents for dereliction of duty for one school day and denouncing school authority, appears to be too harsh a penalty. It must be noted that the respondents are being held liable for a first time offense and, in the case of respondent Santos, despite long years of unblemished service. Even when an employee is found to have transgressed the employer's rules, in the actual imposition of penalties upon the erring employee, due consideration must still be given to his length of service and the number of violations committed during his employment.20 Where a penalty less punitive would suffice, whatever missteps may have been committed by the employee ought not to be visited with a consequence so severe such as dismissal from employment.21 Moreover, the facts, as further established on appeal in the NLRC, paint out a picture that the respondents were singled out by the petitioners apparently for being officers of the teachers' union which they formed, despite the fact that several other teachers also joined the August 10, 1993 rally. We reiterate the settled doctrine in termination of employment disputes that the burden of proof is always on the employer to prove that the dismissal was for a just and valid cause.22 Evidence must

be clear, convincing and free from any inference that the prerogative to dismiss an employee was abused and unjustly used by the employer to further any vindictive end. Misconduct is the transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error of judgment.23 As a just cause for termination, the misconduct must be serious, which implies that it must be of such grave and aggravated character and not merely trivial or unimportant. On the other hand, disobedience, as a just cause for termination, must be willful or intentional. Willfulness is characterized by a wrongful and perverse mental attitude rendering the employee's act inconsistent with proper subordination.24 Not every case of insubordination or willful disobedience by an employee of a lawful work-connected order of the employer is reasonably penalized with dismissal. As we have stated, there must be reasonable proportionality between, on the one hand, the willful disobedience by the employee and, on the other hand, the penalty imposed therefor.25 In the instant case, evidence is wanting on the depravity of conduct, and willfulness of the disobedience on the part of the respondents. Absence of one day of work to join a public rally cannot be of such great dimension as to equate it with an offense punishable with the penalty of dismissal. The reinstatement of the respondents is, thus, just and proper. On the matter of the award of backwages, petitioners advance the view that by awarding backwages, the appellate court "unwittingly reversed a time-honored doctrine that a party who has not appealed cannot obtain from the appellate court any affirmative relief other than the ones granted in the appealed decision."26 We do not agree. The fact that the NLRC did not award backwages to the respondents or that the respondents themselves did not appeal the NLRC decision does not bar the Court of Appeals from awarding backwages. While as a general rule, a party who has not appealed is not entitled to affirmative relief other than the ones granted in the decision of the court below, the Court of Appeals is imbued with sufficient authority and discretion to review matters, not otherwise assigned as errors on appeal, if it finds that their consideration is necessary in arriving at a complete and just resolution of the case27 or to serve the interests of justice or to avoid dispensing piecemeal justice.28 Article 279 of the Labor Code, as amended, mandates that an illegally dismissed employee is entitled to the twin reliefs of (a) either reinstatement or separation pay, if reinstatement is no longer viable, and (b) backwages.29 Both are distinct reliefs given to alleviate the economic damage suffered by an illegally dismissed employee30 and, thus, the award of one does not bar the other. Both reliefs are rights granted by substantive law which cannot be defeated by mere procedural lapses.31 Substantive rights like the award of backwages resulting from illegal dismissal must not be prejudiced by a rigid and technical application of the rules.32 The order of the Court of Appeals to award backwages being a mere legal consequence of the finding that respondents were illegally dismissed by petitioners, there was no error in awarding the same.1wphi1.nt Finally, we sustain the award of backwages to respondent Santos up to December 11, 1998, when respondent Santos became 65 years old. We do not subscribe to the view of the petitioners that payment of backwages to respondent Santos should be computed only up to December 11, 1993, when respondent Santos reached 60 years of age. It is worth noting that in their motion for reconsideration before the Court of Appeals, petitioners merely attached the Service Record and

Baptismal Certificate of respondent Santos to support their contention that under respondent school's policy teachers retire upon reaching the age of 60 and, thus, the amount of backwages to respondent Santos should be up to December 11, 1993 only, when she reached 60 years of age. The documentary evidence appended to the instant petition for review by the petitioners, which is not a newly discovered evidence, to substantiate its view and belated allegation on the existence of a school policy to retire teachers upon reaching 60 years of age cannot be considered at this stage. Petitioners could have presented and offered in evidence documents on the existence of the alleged school policy before the Labor Arbiter or the NLRC but they failed to do so nor have they offered adequate explanation for their failure to present and offer the said documents in evidence. It is basic that evidence not formally offered before the court below cannot be considered on appeal.33 Thus, such documents cannot be admitted, much less given probative value, in this appeal. To do so would be repugnant to the demands of justice and fair play. Let it be stressed that in petitions for review on certiorari, the jurisdiction of this Court in cases brought before it from the Court of Appeals is limited to reviewing questions of law, which involve no examination of the probative value of the evidence presented by the litigants or any of them.34 WHEREFORE, the instant petition is hereby DENIED and the assailed Decision and Resolution of the Court of Appeals dated March 20, 2000 and September 29, 2000, respectively, in CA-G.R. SP No. 53283 are AFFIRMED. Costs against the petitioners. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. 158693 November 17, 2004

JENNY M. AGABON and VIRGILIO C. AGABON, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION (NLRC), RIVIERA HOME IMPROVEMENTS, INC. and VICENTE ANGELES, respondents.

DECISION

YNARES-SANTIAGO, J.:

This petition for review seeks to reverse the decision1 of the Court of Appeals dated January 23, 2003, in CA-G.R. SP No. 63017, modifying the decision of National Labor Relations Commission (NLRC) in NLRC-NCR Case No. 023442-00. Private respondent Riviera Home Improvements, Inc. is engaged in the business of selling and installing ornamental and construction materials. It employed petitioners Virgilio Agabon and Jenny Agabon as gypsum board and cornice installers on January 2, 19922 until February 23, 1999 when they were dismissed for abandonment of work. Petitioners then filed a complaint for illegal dismissal and payment of money claims3 and on December 28, 1999, the Labor Arbiter rendered a decision declaring the dismissals illegal and ordered private respondent to pay the monetary claims. The dispositive portion of the decision states: WHEREFORE, premises considered, We find the termination of the complainants illegal. Accordingly, respondent is hereby ordered to pay them their backwages up to November 29, 1999 in the sum of: 1. Jenny M. Agabon - P56, 231.93 2. Virgilio C. Agabon - 56, 231.93 and, in lieu of reinstatement to pay them their separation pay of one (1) month for every year of service from date of hiring up to November 29, 1999. Respondent is further ordered to pay the complainants their holiday pay and service incentive leave pay for the years 1996, 1997 and 1998 as well as their premium pay for holidays and rest days and Virgilio Agabon's 13th month pay differential amounting to TWO THOUSAND ONE HUNDRED FIFTY (P2,150.00) Pesos, or the aggregate amount of ONE HUNDRED TWENTY ONE THOUSAND SIX HUNDRED SEVENTY EIGHT & 93/100 (P121,678.93) Pesos for Jenny Agabon, and ONE HUNDRED TWENTY THREE THOUSAND EIGHT HUNDRED TWENTY EIGHT & 93/100 (P123,828.93) Pesos for Virgilio Agabon, as per attached computation of Julieta C. Nicolas, OIC, Research and Computation Unit, NCR. SO ORDERED.4 On appeal, the NLRC reversed the Labor Arbiter because it found that the petitioners had abandoned their work, and were not entitled to backwages and separation pay. The other money claims awarded by the Labor Arbiter were also denied for lack of evidence.5 Upon denial of their motion for reconsideration, petitioners filed a petition for certiorari with the Court of Appeals.

The Court of Appeals in turn ruled that the dismissal of the petitioners was not illegal because they had abandoned their employment but ordered the payment of money claims. The dispositive portion of the decision reads: WHEREFORE, the decision of the National Labor Relations Commission is REVERSED only insofar as it dismissed petitioner's money claims. Private respondents are ordered to pay petitioners holiday pay for four (4) regular holidays in 1996, 1997, and 1998, as well as their service incentive leave pay for said years, and to pay the balance of petitioner Virgilio Agabon's 13th month pay for 1998 in the amount of P2,150.00. SO ORDERED.6 Hence, this petition for review on the sole issue of whether petitioners were illegally dismissed.7 Petitioners assert that they were dismissed because the private respondent refused to give them assignments unless they agreed to work on a "pakyaw" basis when they reported for duty on February 23, 1999. They did not agree on this arrangement because it would mean losing benefits as Social Security System (SSS) members. Petitioners also claim that private respondent did not comply with the twin requirements of notice and hearing.8 Private respondent, on the other hand, maintained that petitioners were not dismissed but had abandoned their work.9 In fact, private respondent sent two letters to the last known addresses of the petitioners advising them to report for work. Private respondent's manager even talked to petitioner Virgilio Agabon by telephone sometime in June 1999 to tell him about the new assignment at Pacific Plaza Towers involving 40,000 square meters of cornice installation work. However, petitioners did not report for work because they had subcontracted to perform installation work for another company. Petitioners also demanded for an increase in their wage to P280.00 per day. When this was not granted, petitioners stopped reporting for work and filed the illegal dismissal case.10 It is well-settled that findings of fact of quasi-judicial agencies like the NLRC are accorded not only respect but even finality if the findings are supported by substantial evidence. This is especially so when such findings were affirmed by the Court of Appeals.11 However, if the factual findings of the NLRC and the Labor Arbiter are conflicting, as in this case, the reviewing court may delve into the records and examine for itself the questioned findings.12 Accordingly, the Court of Appeals, after a careful review of the facts, ruled that petitioners' dismissal was for a just cause. They had abandoned their employment and were already working for another employer. To dismiss an employee, the law requires not only the existence of a just and valid cause but also enjoins the employer to give the employee the opportunity to be heard and to defend himself.13 Article 282 of the Labor Code enumerates the just causes for termination by the employer: (a) serious misconduct or willful disobedience by the employee of the lawful orders of his employer or the latter's representative in connection with the employee's work; (b) gross and habitual neglect by the employee of his duties; (c) fraud or willful breach by the employee of the trust reposed in him

by his employer or his duly authorized representative; (d) commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representative; and (e) other causes analogous to the foregoing. Abandonment is the deliberate and unjustified refusal of an employee to resume his employment.14 It is a form of neglect of duty, hence, a just cause for termination of employment by the employer.15 For a valid finding of abandonment, these two factors should be present: (1) the failure to report for work or absence without valid or justifiable reason; and (2) a clear intention to sever employer-employee relationship, with the second as the more determinative factor which is manifested by overt acts from which it may be deduced that the employees has no more intention to work. The intent to discontinue the employment must be shown by clear proof that it was deliberate and unjustified.16 In February 1999, petitioners were frequently absent having subcontracted for an installation work for another company. Subcontracting for another company clearly showed the intention to sever the employer-employee relationship with private respondent. This was not the first time they did this. In January 1996, they did not report for work because they were working for another company. Private respondent at that time warned petitioners that they would be dismissed if this happened again. Petitioners disregarded the warning and exhibited a clear intention to sever their employer-employee relationship. The record of an employee is a relevant consideration in determining the penalty that should be meted out to him.17 In Sandoval Shipyard v. Clave,18 we held that an employee who deliberately absented from work without leave or permission from his employer, for the purpose of looking for a job elsewhere, is considered to have abandoned his job. We should apply that rule with more reason here where petitioners were absent because they were already working in another company. The law imposes many obligations on the employer such as providing just compensation to workers, observance of the procedural requirements of notice and hearing in the termination of employment. On the other hand, the law also recognizes the right of the employer to expect from its workers not only good performance, adequate work and diligence, but also good conduct19 and loyalty. The employer may not be compelled to continue to employ such persons whose continuance in the service will patently be inimical to his interests.20 After establishing that the terminations were for a just and valid cause, we now determine if the procedures for dismissal were observed. The procedure for terminating an employee is found in Book VI, Rule I, Section 2(d) of the Omnibus Rules Implementing the Labor Code: Standards of due process: requirements of notice. In all cases of termination of employment, the following standards of due process shall be substantially observed: I. For termination of employment based on just causes as defined in Article 282 of the Code:

(a) A written notice served on the employee specifying the ground or grounds for termination, and giving to said employee reasonable opportunity within which to explain his side; (b) A hearing or conference during which the employee concerned, with the assistance of counsel if the employee so desires, is given opportunity to respond to the charge, present his evidence or rebut the evidence presented against him; and (c) A written notice of termination served on the employee indicating that upon due consideration of all the circumstances, grounds have been established to justify his termination. In case of termination, the foregoing notices shall be served on the employee's last known address. Dismissals based on just causes contemplate acts or omissions attributable to the employee while dismissals based on authorized causes involve grounds under the Labor Code which allow the employer to terminate employees. A termination for an authorized cause requires payment of separation pay. When the termination of employment is declared illegal, reinstatement and full backwages are mandated under Article 279. If reinstatement is no longer possible where the dismissal was unjust, separation pay may be granted. Procedurally, (1) if the dismissal is based on a just cause under Article 282, the employer must give the employee two written notices and a hearing or opportunity to be heard if requested by the employee before terminating the employment: a notice specifying the grounds for which dismissal is sought a hearing or an opportunity to be heard and after hearing or opportunity to be heard, a notice of the decision to dismiss; and (2) if the dismissal is based on authorized causes under Articles 283 and 284, the employer must give the employee and the Department of Labor and Employment written notices 30 days prior to the effectivity of his separation. From the foregoing rules four possible situations may be derived: (1) the dismissal is for a just cause under Article 282 of the Labor Code, for an authorized cause under Article 283, or for health reasons under Article 284, and due process was observed; (2) the dismissal is without just or authorized cause but due process was observed; (3) the dismissal is without just or authorized cause and there was no due process; and (4) the dismissal is for just or authorized cause but due process was not observed. In the first situation, the dismissal is undoubtedly valid and the employer will not suffer any liability. In the second and third situations where the dismissals are illegal, Article 279 mandates that the employee is entitled to reinstatement without loss of seniority rights and other privileges and full backwages, inclusive of allowances, and other benefits or their monetary equivalent computed from the time the compensation was not paid up to the time of actual reinstatement.

In the fourth situation, the dismissal should be upheld. While the procedural infirmity cannot be cured, it should not invalidate the dismissal. However, the employer should be held liable for noncompliance with the procedural requirements of due process. The present case squarely falls under the fourth situation. The dismissal should be upheld because it was established that the petitioners abandoned their jobs to work for another company. Private respondent, however, did not follow the notice requirements and instead argued that sending notices to the last known addresses would have been useless because they did not reside there anymore. Unfortunately for the private respondent, this is not a valid excuse because the law mandates the twin notice requirements to the employee's last known address.21 Thus, it should be held liable for non-compliance with the procedural requirements of due process. A review and re-examination of the relevant legal principles is appropriate and timely to clarify the various rulings on employment termination in the light of Serrano v. National Labor Relations Commission.22 Prior to 1989, the rule was that a dismissal or termination is illegal if the employee was not given any notice. In the 1989 case of Wenphil Corp. v. National Labor Relations Commission,23 we reversed this long-standing rule and held that the dismissed employee, although not given any notice and hearing, was not entitled to reinstatement and backwages because the dismissal was for grave misconduct and insubordination, a just ground for termination under Article 282. The employee had a violent temper and caused trouble during office hours, defying superiors who tried to pacify him. We concluded that reinstating the employee and awarding backwages "may encourage him to do even worse and will render a mockery of the rules of discipline that employees are required to observe."24 We further held that: Under the circumstances, the dismissal of the private respondent for just cause should be maintained. He has no right to return to his former employment. However, the petitioner must nevertheless be held to account for failure to extend to private respondent his right to an investigation before causing his dismissal. The rule is explicit as above discussed. The dismissal of an employee must be for just or authorized cause and after due process. Petitioner committed an infraction of the second requirement. Thus, it must be imposed a sanction for its failure to give a formal notice and conduct an investigation as required by law before dismissing petitioner from employment. Considering the circumstances of this case petitioner must indemnify the private respondent the amount of P1,000.00. The measure of this award depends on the facts of each case and the gravity of the omission committed by the employer.25 The rule thus evolved: where the employer had a valid reason to dismiss an employee but did not follow the due process requirement, the dismissal may be upheld but the employer will be penalized to pay an indemnity to the employee. This became known as the Wenphil or Belated Due Process Rule. On January 27, 2000, in Serrano, the rule on the extent of the sanction was changed. We held that the violation by the employer of the notice requirement in termination for just or authorized causes

was not a denial of due process that will nullify the termination. However, the dismissal is ineffectual and the employer must pay full backwages from the time of termination until it is judicially declared that the dismissal was for a just or authorized cause. The rationale for the re-examination of the Wenphil doctrine in Serrano was the significant number of cases involving dismissals without requisite notices. We concluded that the imposition of penalty by way of damages for violation of the notice requirement was not serving as a deterrent. Hence, we now required payment of full backwages from the time of dismissal until the time the Court finds the dismissal was for a just or authorized cause. Serrano was confronting the practice of employers to "dismiss now and pay later" by imposing full backwages. We believe, however, that the ruling in Serrano did not consider the full meaning of Article 279 of the Labor Code which states: ART. 279. Security of Tenure. In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. This means that the termination is illegal only if it is not for any of the justified or authorized causes provided by law. Payment of backwages and other benefits, including reinstatement, is justified only if the employee was unjustly dismissed. The fact that the Serrano ruling can cause unfairness and injustice which elicited strong dissent has prompted us to revisit the doctrine. To be sure, the Due Process Clause in Article III, Section 1 of the Constitution embodies a system of rights based on moral principles so deeply imbedded in the traditions and feelings of our people as to be deemed fundamental to a civilized society as conceived by our entire history. Due process is that which comports with the deepest notions of what is fair and right and just.26 It is a constitutional restraint on the legislative as well as on the executive and judicial powers of the government provided by the Bill of Rights. Due process under the Labor Code, like Constitutional due process, has two aspects: substantive, i.e., the valid and authorized causes of employment termination under the Labor Code; and procedural, i.e., the manner of dismissal. Procedural due process requirements for dismissal are found in the Implementing Rules of P.D. 442, as amended, otherwise known as the Labor Code of the Philippines in Book VI, Rule I, Sec. 2, as amended by Department Order Nos. 9 and 10.27 Breaches of these due process requirements violate the Labor Code. Therefore statutory due process should be differentiated from failure to comply with constitutional due process.

Constitutional due process protects the individual from the government and assures him of his rights in criminal, civil or administrative proceedings; while statutory due process found in the Labor Code and Implementing Rules protects employees from being unjustly terminated without just cause after notice and hearing. In Sebuguero v. National Labor Relations Commission,28 the dismissal was for a just and valid cause but the employee was not accorded due process. The dismissal was upheld by the Court but the employer was sanctioned. The sanction should be in the nature of indemnification or penalty, and depends on the facts of each case and the gravity of the omission committed by the employer. In Nath v. National Labor Relations Commission,29 it was ruled that even if the employee was not given due process, the failure did not operate to eradicate the just causes for dismissal. The dismissal being for just cause, albeit without due process, did not entitle the employee to reinstatement, backwages, damages and attorney's fees. Mr. Justice Jose C. Vitug, in his separate opinion in MGG Marine Services, Inc. v. National Labor Relations Commission,30 which opinion he reiterated in Serrano, stated: C. Where there is just cause for dismissal but due process has not been properly observed by an employer, it would not be right to order either the reinstatement of the dismissed employee or the payment of backwages to him. In failing, however, to comply with the procedure prescribed by law in terminating the services of the employee, the employer must be deemed to have opted or, in any case, should be made liable, for the payment of separation pay. It might be pointed out that the notice to be given and the hearing to be conducted generally constitute the two-part due process requirement of law to be accorded to the employee by the employer. Nevertheless, peculiar circumstances might obtain in certain situations where to undertake the above steps would be no more than a useless formality and where, accordingly, it would not be imprudent to apply the res ipsa loquitur rule and award, in lieu of separation pay, nominal damages to the employee. x x x.31 After carefully analyzing the consequences of the divergent doctrines in the law on employment termination, we believe that in cases involving dismissals for cause but without observance of the twin requirements of notice and hearing, the better rule is to abandon the Serrano doctrine and to follow Wenphil by holding that the dismissal was for just cause but imposing sanctions on the employer. Such sanctions, however, must be stiffer than that imposed in Wenphil. By doing so, this Court would be able to achieve a fair result by dispensing justice not just to employees, but to employers as well. The unfairness of declaring illegal or ineffectual dismissals for valid or authorized causes but not complying with statutory due process may have far-reaching consequences. This would encourage frivolous suits, where even the most notorious violators of company policy are rewarded by invoking due process. This also creates absurd situations where there is a just or authorized cause for dismissal but a procedural infirmity invalidates the termination. Let us take for example a case where the employee is caught stealing or threatens the lives of his coemployees or has become a criminal, who has fled and cannot be found, or where serious business

losses demand that operations be ceased in less than a month. Invalidating the dismissal would not serve public interest. It could also discourage investments that can generate employment in the local economy. The constitutional policy to provide full protection to labor is not meant to be a sword to oppress employers. The commitment of this Court to the cause of labor does not prevent us from sustaining the employer when it is in the right, as in this case.32 Certainly, an employer should not be compelled to pay employees for work not actually performed and in fact abandoned. The employer should not be compelled to continue employing a person who is admittedly guilty of misfeasance or malfeasance and whose continued employment is patently inimical to the employer. The law protecting the rights of the laborer authorizes neither oppression nor self-destruction of the employer.33 It must be stressed that in the present case, the petitioners committed a grave offense, i.e., abandonment, which, if the requirements of due process were complied with, would undoubtedly result in a valid dismissal. An employee who is clearly guilty of conduct violative of Article 282 should not be protected by the Social Justice Clause of the Constitution. Social justice, as the term suggests, should be used only to correct an injustice. As the eminent Justice Jose P. Laurel observed, social justice must be founded on the recognition of the necessity of interdependence among diverse units of a society and of the protection that should be equally and evenly extended to all groups as a combined force in our social and economic life, consistent with the fundamental and paramount objective of the state of promoting the health, comfort, and quiet of all persons, and of bringing about "the greatest good to the greatest number."34 This is not to say that the Court was wrong when it ruled the way it did in Wenphil, Serrano and related cases. Social justice is not based on rigid formulas set in stone. It has to allow for changing times and circumstances. Justice Isagani Cruz strongly asserts the need to apply a balanced approach to labor-management relations and dispense justice with an even hand in every case: We have repeatedly stressed that social justice or any justice for that matter is for the deserving, whether he be a millionaire in his mansion or a pauper in his hovel. It is true that, in case of reasonable doubt, we are to tilt the balance in favor of the poor to whom the Constitution fittingly extends its sympathy and compassion. But never is it justified to give preference to the poor simply because they are poor, or reject the rich simply because they are rich, for justice must always be served for the poor and the rich alike, according to the mandate of the law.35 Justice in every case should only be for the deserving party. It should not be presumed that every case of illegal dismissal would automatically be decided in favor of labor, as management has rights that should be fully respected and enforced by this Court. As interdependent and indispensable partners in nation-building, labor and management need each other to foster

productivity and economic growth; hence, the need to weigh and balance the rights and welfare of both the employee and employer. Where the dismissal is for a just cause, as in the instant case, the lack of statutory due process should not nullify the dismissal, or render it illegal, or ineffectual. However, the employer should indemnify the employee for the violation of his statutory rights, as ruled in Reta v. National Labor Relations Commission.36 The indemnity to be imposed should be stiffer to discourage the abhorrent practice of "dismiss now, pay later," which we sought to deter in the Serrano ruling. The sanction should be in the nature of indemnification or penalty and should depend on the facts of each case, taking into special consideration the gravity of the due process violation of the employer. Under the Civil Code, nominal damages is adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by him.37 As enunciated by this Court in Viernes v. National Labor Relations Commissions,38 an employer is liable to pay indemnity in the form of nominal damages to an employee who has been dismissed if, in effecting such dismissal, the employer fails to comply with the requirements of due process. The Court, after considering the circumstances therein, fixed the indemnity at P2,590.50, which was equivalent to the employee's one month salary. This indemnity is intended not to penalize the employer but to vindicate or recognize the employee's right to statutory due process which was violated by the employer.39 The violation of the petitioners' right to statutory due process by the private respondent warrants the payment of indemnity in the form of nominal damages. The amount of such damages is addressed to the sound discretion of the court, taking into account the relevant circumstances.40 Considering the prevailing circumstances in the case at bar, we deem it proper to fix it at P30,000.00. We believe this form of damages would serve to deter employers from future violations of the statutory due process rights of employees. At the very least, it provides a vindication or recognition of this fundamental right granted to the latter under the Labor Code and its Implementing Rules. Private respondent claims that the Court of Appeals erred in holding that it failed to pay petitioners' holiday pay, service incentive leave pay and 13th month pay. We are not persuaded. We affirm the ruling of the appellate court on petitioners' money claims. Private respondent is liable for petitioners' holiday pay, service incentive leave pay and 13th month pay without deductions. As a general rule, one who pleads payment has the burden of proving it. Even where the employee must allege non-payment, the general rule is that the burden rests on the employer to prove payment, rather than on the employee to prove non-payment. The reason for the rule is that the pertinent personnel files, payrolls, records, remittances and other similar documents which will show that overtime, differentials, service incentive leave and other claims of workers have been

paid are not in the possession of the worker but in the custody and absolute control of the employer.41 In the case at bar, if private respondent indeed paid petitioners' holiday pay and service incentive leave pay, it could have easily presented documentary proofs of such monetary benefits to disprove the claims of the petitioners. But it did not, except with respect to the 13th month pay wherein it presented cash vouchers showing payments of the benefit in the years disputed.42 Allegations by private respondent that it does not operate during holidays and that it allows its employees 10 days leave with pay, other than being self-serving, do not constitute proof of payment. Consequently, it failed to discharge the onus probandi thereby making it liable for such claims to the petitioners. Anent the deduction of SSS loan and the value of the shoes from petitioner Virgilio Agabon's 13th month pay, we find the same to be unauthorized. The evident intention of Presidential Decree No. 851 is to grant an additional income in the form of the 13th month pay to employees not already receiving the same43 so as "to further protect the level of real wages from the ravages of worldwide inflation."44 Clearly, as additional income, the 13th month pay is included in the definition of wage under Article 97(f) of the Labor Code, to wit: (f) "Wage" paid to any employee shall mean the remuneration or earnings, however designated, capable of being expressed in terms of money whether fixed or ascertained on a time, task, piece , or commission basis, or other method of calculating the same, which is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done, or for services rendered or to be rendered and includes the fair and reasonable value, as determined by the Secretary of Labor, of board, lodging, or other facilities customarily furnished by the employer to the employee" from which an employer is prohibited under Article 11345 of the same Code from making any deductions without the employee's knowledge and consent. In the instant case, private respondent failed to show that the deduction of the SSS loan and the value of the shoes from petitioner Virgilio Agabon's 13th month pay was authorized by the latter. The lack of authority to deduct is further bolstered by the fact that petitioner Virgilio Agabon included the same as one of his money claims against private respondent. The Court of Appeals properly reinstated the monetary claims awarded by the Labor Arbiter ordering the private respondent to pay each of the petitioners holiday pay for four regular holidays from 1996 to 1998, in the amount of P6,520.00, service incentive leave pay for the same period in the amount of P3,255.00 and the balance of Virgilio Agabon's thirteenth month pay for 1998 in the amount of P2,150.00. WHEREFORE, in view of the foregoing, the petition is DENIED. The decision of the Court of Appeals dated January 23, 2003, in CA-G.R. SP No. 63017, finding that petitioners' Jenny and Virgilio Agabon abandoned their work, and ordering private respondent to pay each of the petitioners holiday pay for four regular holidays from 1996 to 1998, in the amount of P6,520.00, service incentive leave pay for the same period in the amount of P3,255.00 and the balance of Virgilio Agabon's thirteenth month pay for 1998 in the amount of P2,150.00 is AFFIRMED with the MODIFICATION that private respondent Riviera Home Improvements, Inc. is further

ORDERED to pay each of the petitioners the amount of P30,000.00 as nominal damages for noncompliance with statutory due process. No costs. SO ORDERED. Davide, Jr., C.J., Puno, Panganiban, Quisumbing, Sandoval-Gutierrez, Carpio, Austria-Martinez, Corona, Carpio-Morales, Callejo, Sr., Azcuna, Tinga, Chico-Nazario, and Garcia, JJ., concur.

SEPARATE OPINION TINGA, J: I concur in the result, the final disposition of the petition being correct. There is no denying the importance of the Court's ruling today, which should be considered as definitive as to the effect of the failure to render the notice and hearing required under the Labor Code when an employee is being dismissed for just causes, as defined under the same law. The Court emphatically reaffirms the rule that dismissals for just cause are not invalidated due to the failure of the employer to observe the proper notice and hearing requirements under the Labor Code. At the same time, The Decision likewise establishes that the Civil Code provisions on damages serve as the proper framework for the appropriate relief to the employee dismissed for just cause if the notice-hearing requirement is not met. Serrano v. NLRC,1 insofar as it is controlling in dismissals for unauthorized causes, is no longer the controlling precedent. Any and all previous rulings and statements of the Court inconsistent with these determinations are now deemed inoperative. My views on the questions raised in this petition are comprehensive, if I may so in all modesty. I offer this opinion to discuss the reasoning behind my conclusions, pertaining as they do to questions of fundamental importance. Prologue The factual backdrop of the present Petition for Review is not novel. Petitioners claim that they were illegally dismissed by the respondents, who allege in turn that petitioners had actually abandoned their employment. There is little difficulty in upholding the findings of the NRLC and the Court of Appeals that petitioners are guilty of abandonment, one of the just causes for termination under the Labor Code. Yet, the records also show that the employer was remiss in not giving the notice required by the Labor Code; hence, the resultant controversy as to the legal effect of such failure vis--vis the warranted dismissal. Ostensibly, the matter has been settled by our decision in Serrano2, wherein the Court ruled that the failure to properly observe the notice requirement did not render the dismissal, whether for just or authorized causes, null and void, for such violation was not a denial of the constitutional right to due process, and that the measure of appropriate damages in such cases ought to be the amount of

wages the employee should have received were it not for the termination of his employment without prior notice.3 Still, the Court has, for good reason, opted to reexamine the so-called Serrano doctrine through the present petition Antecedent Facts Respondent Riviera Home Improvements, Inc (Riviera Home) is engaged in the manufacture and installation of gypsum board and cornice. In January of 1992, the Agabons were hired in January of 1992 as cornice installers by Riviera Home. According to their personnel file with Riviera Home, the Agabon given address was 3RDS Tailoring, E. Rodriguez Ave., Moonwalk Subdivision, P-II Paraaque City, Metro Manila.4 It is not disputed that sometime around February 1999, the Agabons stopped rendering services for Riviera Home. The Agabons allege that beginning on 23 February 1999, they stopped receiving assignments from Riviera Home.5 When they demanded an explanation, the manager of Riviera Homes, Marivic Ventura, informed them that they would be hired again, but on a "pakyaw" (piecework) basis. When the Agabons spurned this proposal, Riviera Homes refused to continue their employment under the original terms and agreement.6 Taking affront, the Agabons filed a complaint for illegal dismissal with the National Labor Relations Commission ("NLRC"). Riviera Homes adverts to a different version of events leading to the filing of the complaint for illegal dismissal. It alleged that in the early quarter of 1999, the Agabons stopped reporting for work with Riviera. Two separate letters dated 10 March 1999, were sent to the Agabons at the address indicated in their personnel file. In these notices, the Agabons were directed to report for work immediately.7 However, these notices were returned unserved with the notation "RTS Moved." Then, in June of 1999, Virgilio Agabon informed Riviera Homes by telephone that he and Jenny Agabon were ready to return to work for Riviera Homes, on the condition that their wages be first adjusted. On 18 June 1999, the Agabons went to Riviera Homes, and in a meeting with management, requested a wage increase of up to Two Hundred Eighty Pesos (P280.00) a day. When no affirmative response was offered by Riviera Homes, the Agabons initiated the complaint before the NLRC.8 In their Position Paper, the Agabons likewise alleged that they were required to work even on holidays and rest days, but were never paid the legal holiday pay or the premium pay for holiday or rest day. They also asserted that they were denied Service Incentive Leave pay, and that Virgilio Agabon was not given his thirteenth (13th) month pay for the year 1998.9 After due deliberation, Labor Arbiter Daisy G. Cauton-Barcelona rendered a Decision dated 28 December 1999, finding the termination of the Agabons illegal, and ordering Riviera Homes to pay backwages in the sum of Fifty Six Thousand Two Hundred Thirty One Pesos and Ninety Three Centavos (P56,231.93) each. The Labor Arbiter likewise ordered, in lieu of reinstatement, the payment of separation pay of one (1) month pay for every year of service from date of hiring up to 29 November 1999, as well as the payment of holiday pay, service incentive leave pay, and premium pay for holiday and restday, plus thirteenth (13th) month differential to Virgilio Agabon.10

In so ruling, the Labor Arbiter declared that Riviera Homes was unable to satisfactorily refute the Agabons' claim that they were no longer given work to do after 23 February 1999 and that their rehiring was only on "pakyaw" basis. The Labor Arbiter also held that Riviera Homes failed to comply with the notice requirement, noting that Riviera Homes well knew of the change of address of the Agabons, considering that the identification cards it issued stated a different address from that on the personnel file.11 The Labor Arbiter asserted the principle that in all termination cases, strict compliance by the employer with the demands of procedural and substantive due process is a condition sine qua non for the same to be declared valid.12 On appeal, the NLRC Second Division set aside the Labor Arbiter's Decision and ordered the dismissal of the complaint for lack of merit.13 The NLRC held that the Agabons were not able to refute the assertion that for the payroll period ending on 15 February 1999, Virgilio and Jenny Agabon worked for only two and one-half (2) and three (3) days, respectively. It disputed the earlier finding that Riviera Homes had known of the change in address, noting that the address indicated in the identification cards was not the Agabons, but that of the persons who should be notified in case of emergency concerning the employee.14 Thus, proper service of the notice was deemed to have been accomplished. Further, the notices evinced good reason to believe that the Agabons had not been dismissed, but had instead abandoned their jobs by refusing to report for work. In support of its conclusion that the Agabons had abandoned their work, the NLRC also observed that the Agabons did not seek reinstatement, but only separation pay. While the choice of relief was premised by the Agabons on their purported strained relations with Riviera Homes, the NLRC pointed out that such claim was amply belied by the fact that the Agabons had actually sought a conference with Riviera Homes in June of 1999. The NLRC likewise found that the failure of the Labor Arbiter to justify the award of extraneous money claims, such as holiday and service incentive leave pay, confirmed that there was no proof to justify such claims. A Petition for Certiorari was promptly filed with the Court of Appeals by the Agabons, imputing grave abuse of discretion on the part of the NLRC in dismissing their complaint for illegal dismissal. In a Decision15 dated 23 January 2003, the Court of Appeals affirmed the finding that the Agabons had abandoned their employment. It noted that the two elements constituting abandonment had been established, to wit: the failure to report for work or absence without valid justifiable reason, and; a clear intention to sever the employer-employee relationship. The intent to sever the employer-employee relationship was buttressed by the Agabon's choice to seek not reinstatement, but separation pay. The Court of Appeals likewise found that the service of the notices were valid, as the Agabons did not notify Riviera Homes of their change of address, and thus the failure to return to work despite notice amounted to abandonment of work. However, the Court of Appeals reversed the NLRC as regards the denial of the claims for holiday pay, service incentive leave pay, and the balance of Virgilio Agabon's thirteenth (13th) month pay. It ruled that the failure to adduce proof in support thereof was not fatal and that the burden of proving that such benefits had already been paid rested on Riviera Homes.16 Given that Riviera Homes failed to present proof of payment to the Agabons of their holiday pay and service incentive leave pay for the years 1996, 1997 and 1998, the Court of Appeals chose to believe that

such benefits had not actually been received by the employees. It also ruled that the apparent deductions made by Riviera Homes on the thirteenth (13th) month pay of Virgilio Agabon violated Section 10 of the Rules and Regulations Implementing Presidential Decree No. 851.17 Accordingly, Riviera Homes was ordered to pay the Agabons holiday for four (4) regular holidays in 1996, 1997 and 1998, as well as their service incentive leave pay for said years, and the balance of Virgilio Agabon's thirteenth (13th) month pay for 1998 in the amount of Two Thousand One Hundred Fifty Pesos (P2,150.00).18 In their Petition for Review, the Agabons claim that they had been illegally dismissed, reasserting their version of events, thus: (1) that they had not been given new assignments since 23 February 1999; (2) that they were told that they would only be re-hired on a "pakyaw" basis, and; (3) that Riviera Homes had knowingly sent the notices to their old address despite its knowledge of their change of address as indicated in the identification cards.19 Further, the Agabons note that only one notice was sent to each of them, in violation of the rule that the employer must furnish two written notices before termination the first to apprise the employee of the cause for which dismissal is sought, and the second to notify the employee of the decision of dismissal.20 The Agabons likewise maintain that they did not seek reinstatement owing to the strained relations between them and Riviera Homes. The Agabons present to this Court only one issue, i.e.: whether or not they were illegally dismissed from their employment.21 There are several dimensions though to this issue which warrant full consideration. The Abandonment Dimension Review of Factual Finding of Abandonment As the Decision points out, abandonment is characterized by the failure to report for work or absence without valid or justifiable reason, and a clear intention to sever the employer-employee relationship. The question of whether or not an employee has abandoned employment is essentially a factual issue.22 The NLRC and the Court of Appeals, both appropriate triers of fact, concluded that the Agabons had actually abandoned their employment, thus there is little need for deep inquiry into the correctness of this factual finding. There is no doubt that the Agabons stopped reporting for work sometime in February of 1999. And there is no evidence to support their assertion that such absence was due to the deliberate failure of Riviera Homes to give them work. There is also the fact, as noted by the NLRC and the Court of Appeals, that the Agabons did not pray for reinstatement, but only for separation pay and money claims.23 This failure indicates their disinterest in maintaining the employeremployee relationship and their unabated avowed intent to sever it. Their excuse that strained relations between them and Riviera Homes rendered reinstatement no longer feasible was hardly given credence by the NLRC and the Court of Appeals.24 The contrary conclusion arrived at by the Labor Arbiter as regards abandonment is of little bearing to the case. All that the Labor Arbiter said on that point was that Riviera Homes was not able to refute the Agabons' claim that they were terminated on 23 February 1999.25 The Labor Arbiter did

not explain why or how such finding was reachhy or how such finding was reachhe Agabons was more credible than that of Riviera Homes'. Being bereft of reasoning, the conclusion deserves scant consideration. Compliance with Notice Requirement At the same time, both the NLRC and the Court of Appeals failed to consider the apparent fact that the rules governing notice of termination were not complied with by Riviera Homes. Section 2, Book V, Rule XXIII of the Omnibus Rules Implementing the Labor Code (Implementing Rules) specifically provides that for termination of employment based on just causes as defined in Article 282, there must be: (1) written notice served on the employee specifying the grounds for termination and giving employee reasonable opportunity to explain his/her side; (2) a hearing or conference wherein the employee, with the assistance of counsel if so desired, is given opportunity to respond to the charge, present his evidence or rebut evidence presented against him/her; and (3) written notice of termination served on the employee indicating that upon due consideration of all the circumstances, grounds have been established to justify termination. At the same time, Section 2, Book V, Rule XXIII of the Implementing Rules does not require strict compliance with the above procedure, but only that the same be "substantially observed." Riviera Homes maintains that the letters it sent on 10 March 1999 to the Agabons sufficiently complied with the notice rule. These identically worded letters noted that the Agabons had stopped working without permission that they failed to return for work despite having been repeatedly told to report to the office and resume their employment.26 The letters ended with an invitation to the Agabons to report back to the office and return to work.27 The apparent purpose of these letters was to advise the Agabons that they were welcome to return back to work, and not to notify them of the grounds of termination. Still, considering that only substantial compliance with the notice requirement is required, I am prepared to say that the letters sufficiently conform to the first notice required under the Implementing Rules. The purpose of the first notice is to duly inform the employee that a particular transgression is being considered against him or her, and that an opportunity is being offered for him or her to respond to the charges. The letters served the purpose of informing the Agabons of the pending matters beclouding their employment, and extending them the opportunity to clear the air. Contrary to the Agabons' claim, the letter-notice was correctly sent to the employee's last known address, in compliance with the Implementing Rules. There is no dispute that these letters were not actually received by the Agabons, as they had apparently moved out of the address indicated therein. Still, the letters were sent to what Riviera Homes knew to be the Agabons' last known address, as indicated in their personnel file. The Agabons insist that Riviera Homes had known of the change of address, offering as proof their company IDs which purportedly print out their correct new address. Yet, as pointed out by the NLRC and the Court of Appeals, the addresses indicated in the IDs are not the Agabons, but that of the person who is to be notified in case on emergency involve either or both of the Agabons.

The actual violation of the notice requirement by Riviera Homes lies in its failure to serve on the Agabons the second notice which should inform them of termination. As the Decision notes, Riviera Homes' argument that sending the second notice was useless due to the change of address is inutile, since the Implementing Rules plainly require that the notice of termination should be served at the employee's last known address. The importance of sending the notice of termination should not be trivialized. The termination letter serves as indubitable proof of loss of employment, and its receipt compels the employee to evaluate his or her next options. Without such notice, the employee may be left uncertain of his fate; thus, its service is mandated by the Implementing Rules. Non-compliance with the notice rule, as evident in this case, contravenes the Implementing Rules. But does the violation serve to invalidate the Agabons' dismissal for just cause? The So-Called Constitutional Law Dimension Justices Puno and Panganiban opine that the Agabons should be reinstated as a consequence of the violation of the notice requirement. I respectfully disagree, for the reasons expounded below. Constitutional Considerations Of Due Process and the Notice-Hearing Requirement in Labor Termination Cases Justice Puno proposes that the failure to render due notice and hearing prior to dismissal for just cause constitutes a violation of the constitutional right to due process. This view, as acknowledged by Justice Puno himself, runs contrary to the Court's pronouncement in Serrano v. NLRC28 that the absence of due notice and hearing prior to dismissal, if for just cause, violates statutory due process. The ponencia of Justice Vicente V. Mendoza in Serrano provides this cogent overview of the history of the doctrine: Indeed, to contend that the notice requirement in the Labor Code is an aspect of due process is to overlook the fact that Art. 283 had its origin in Art. 302 of the Spanish Code of Commerce of 1882 which gave either party to the employer-employee relationship the right to terminate their relationship by giving notice to the other one month in advance. In lieu of notice, an employee could be laid off by paying him a mesada equivalent to his salary for one month. This provision was repealed by Art. 2270 of the Civil Code, which took effect on August 30, 1950. But on June 12, 1954, R.A. No. 1052, otherwise known as the Termination Pay Law, was enacted reviving the mesada. On June 21, 1957, the law was amended by R.A. No. 1787 providing for the giving of advance notice for every year of service.29 Under Section 1 of the Termination Pay Law, an employer could dismiss an employee without just cause by serving written notice on the employee at least one month in advance or one-half month for every year of service of the employee, whichever was longer.30 Failure to serve such written

notice entitled the employee to compensation equivalent to his salaries or wages corresponding to the required period of notice from the date of termination of his employment. However, there was no similar written notice requirement under the Termination Pay Law if the dismissal of the employee was for just cause. The Court, speaking through Justice JBL Reyes, ruled in Phil. Refining Co. v. Garcia:31 [Republic] Act 1052, as amended by Republic Act 1787, impliedly recognizes the right of the employer to dismiss his employees (hired without definite period) whether for just case, as therein defined or enumerated, or without it. If there be just cause, the employer is not required to serve any notice of discharge nor to disburse termination pay to the employee. xxx32 Clearly, the Court, prior to the enactment of the Labor Code, was ill-receptive to the notion that termination for just cause without notice or hearing violated the constitutional right to due process. Nonetheless, the Court recognized an award of damages as the appropriate remedy. In Galsim v. PNB,33 the Court held: Of course, the employer's prerogative to dismiss employees hired without a definite period may be with or without cause. But if the manner in which such right is exercised is abusive, the employer stands to answer to the dismissed employee for damages.34 The Termination Pay Law was among the repealed laws with the enactment of the Labor Code in 1974. Significantly, the Labor Code, in its inception, did not require notice or hearing before an employer could terminate an employee for just cause. As Justice Mendoza explained: Where the termination of employment was for a just cause, no notice was required to be given to the employee. It was only on September 4, 1981 that notice was required to be given even where the dismissal or termination of an employee was for cause. This was made in the rules issued by the then Minister of Labor and Employment to implement B.P. Blg. 130 which amended the Labor Code. And it was still much later when the notice requirement was embodied in the law with the amendment of Art. 277(b) by R.A. No. 6715 on March 2, 1989.35 It cannot be denied though that the thinking that absence of notice or hearing prior to termination constituted a constitutional violation has gained a jurisprudential foothold with the Court. Justice Puno, in his Dissenting Opinion, cites several cases in support of this theory, beginning with Batangas Laguna Tayabas Bus Co. v. Court of Appeals36 wherein we held that "the failure of petitioner to give the private respondent the benefit of a hearing before he was dismissed constitutes an infringement on his constitutional right to due process of law.37 Still, this theory has been refuted, pellucidly and effectively to my mind, by Justice Mendoza's disquisition in Serrano, thus:

xxx There are three reasons why, on the other hand, violation by the employer of the notice requirement cannot be considered a denial of due process resulting in the nullity of the employee's dismissal or layoff. The first is that the Due Process Clause of the Constitution is a limitation on governmental powers. It does not apply to the exercise of private power, such as the termination of employment under the Labor Code. This is plain from the text of Art. III, 1 of the Constitution, viz.: "No person shall be deprived of life, liberty, or property without due process of law. . . ." The reason is simple: Only the State has authority to take the life, liberty, or property of the individual. The purpose of the Due Process Clause is to ensure that the exercise of this power is consistent with what are considered civilized methods. The second reason is that notice and hearing are required under the Due Process Clause before the power of organized society are brought to bear upon the individual. This is obviously not the case of termination of employment under Art. 283. Here the employee is not faced with an aspect of the adversary system. The purpose for requiring a 30-day written notice before an employee is laid off is not to afford him an opportunity to be heard on any charge against him, for there is none. The purpose rather is to give him time to prepare for the eventual loss of his job and the DOLE an opportunity to determine whether economic causes do exist justifying the termination of his employment. xxx The third reason why the notice requirement under Art. 283 can not be considered a requirement of the Due Process Clause is that the employer cannot really be expected to be entirely an impartial judge of his own cause. This is also the case in termination of employment for a just cause under Art. 282 (i.e., serious misconduct or willful disobedience by the employee of the lawful orders of the employer, gross and habitual neglect of duties, fraud or willful breach of trust of the employer, commission of crime against the employer or the latter's immediate family or duly authorized representatives, or other analogous cases).38 The Court in the landmark case of People v. Marti39 clarified the proper dimensions of the Bill of Rights. That the Bill of Rights embodied in the Constitution is not meant to be invoked against acts of private individuals finds support in the deliberations of the Constitutional Commission. True, the liberties guaranteed by the fundamental law of the land must always be subject to protection. But protection against whom? Commissioner Bernas in his sponsorship speech in the Bill of Rights answers the query which he himself posed, as follows: "First, the general reflections. The protection of fundamental liberties in the essence of constitutional democracy. Protection against whom? Protection against the state. The Bill of Rights governs the relationship between the individual and the state. Its concern is not the relation between individuals, between a private individual and other individuals. What the Bill of Rights does is to declare some forbidden zones

in the private sphere inaccessible to any power holder." (Sponsorship Speech of Commissioner Bernas; Record of the Constitutional Commission, Vol. 1, p. 674; July 17,1986; Italics supplied)40 I do not doubt that requiring notice and hearing prior to termination for just cause is an admirable sentiment borne out of basic equity and fairness. Still, it is not a constitutional requirement that can impose itself on the relations of private persons and entities. Simply put, the Bill of Rights affords protection against possible State oppression against its citizens, but not against an unjust or repressive conduct by a private party towards another. Justice Puno characterizes the notion that constitutional due process limits government action alone as "pass," and adverts to nouvelle vague theories which assert that private conduct may be restrained by constitutional due process. His dissent alludes to the American experience making references to the post-Civil War/pre-World War II era when the US Supreme Court seemed overly solicitous to the rights of big business over those of the workers. Theories, no matter how entrancing, remain theoretical unless adopted by legislation, or more controversially, by judicial opinion. There were a few decisions of the US Supreme Court that, ostensibly, imposed on private persons the values of the constitutional guarantees. However, in deciding the cases, the American High Court found it necessary to link the actors to adequate elements of the "State" since the Fourteenth Amendment plainly begins with the words "No State shall"41 More crucially to the American experience, it had become necessary to pass legislation in order to compel private persons to observe constitutional values. While the equal protection clause was deemed sufficient by the Warren Court to bar racial segregation in public facilities, it necessitated enactment of the Civil Rights Acts of 1964 to prohibit segregation as enforced by private persons within their property. In this jurisdiction, I have trust in the statutory regime that governs the correction of private wrongs. There are thousands of statutes, some penal or regulatory in nature, that are the source of actionable claims against private persons. There is even no stopping the State, through the legislative cauldron, from compelling private individuals, under pain of legal sanction, into observing the norms ordained in the Bill of Rights. Justice Panganiban's Separate Opinion asserts that corporate behemoths and even individuals may now be sources of abuses and threats to human rights and liberties.42 The concern is not unfounded, but appropriate remedies exist within our statutes, and so resort to the constitutional trump card is not necessary. Even if we were to engage the premise, the proper juristic exercise should be to examine whether an employer has taken the attributes of the State so that it could be compelled by the Constitution to observe the proscriptions of the Bill of Rights. But the strained analogy simply does not square since the attributes of an employer are starkly incongruous with those of the State. Employers plainly do not possess the awesome powers and the tremendous resources which the State has at its command. The differences between the State and employers are not merely literal, but extend to their very essences. Unlike the State, the raison d'etre of employers in business is to accumulate profits. Perhaps the State and the employer are similarly capacitated to inflict injury or discomfort on

persons under their control, but the same power is also possessed by a school principal, hospital administrator, or a religious leader, among many others. Indeed, the scope and reach of authority of an employer pales in comparison with that of the State. There is no basis to conclude that an employer, or even the employer class, may be deemed a de facto state and on that premise, compelled to observe the Bill of Rights. There is simply no nexus in their functions, distaff as they are, that renders it necessary to accord the same jurisprudential treatment. It may be so, as alluded in the dissent of Justice Puno, that a conservative court system overly solicitous to the concerns of business may consciously gut away at rights or privileges owing to the labor sector. This certainly happened before in the United States in the early part of the twentieth century, when the progressive labor legislation such as that enacted during President Roosevelt's New Deal regime most of them addressing problems of labor were struck down by an archconservative Court.43 The preferred rationale then was to enshrine within the constitutional order business prerogatives, rendering them superior to the express legislative intent. Curiously, following its judicial philosophy at the time the U. S. Supreme Court made due process guarantee towards employers prevail over the police power to defeat the cause of labor.44 Of course, this Court should not be insensate to the means and methods by which the entrenched powerful class may maneuver the socio-political system to ensure self-preservation. However, the remedy to rightward judicial bias is not leftward judicial bias. The more proper judicial attitude is to give due respect to legislative prerogatives, regardless of the ideological sauce they are dipped in. While the Bill of Rights maintains a position of primacy in the constitutional hierarchy,45 it has scope and limitations that must be respected and asserted by the Court, even though they may at times serve somewhat bitter ends. The dissenting opinions are palpably distressed at the effect of the Decision, which will undoubtedly provoke those reflexively sympathetic to the labor class. But haphazard legal theory cannot be used to justify the obverse result. The adoption of the dissenting views would give rise to all sorts of absurd constitutional claims. An excommunicated Catholic might demand his/her reinstatement into the good graces of the Church and into communion on the ground that excommunication was violative of the constitutional right to due process. A celebrity contracted to endorse Pepsi Cola might sue in court to void a stipulation that prevents him/her from singing the praises of Coca Cola once in a while, on the ground that such stipulation violates the constitutional right to free speech. An employee might sue to prevent the employer from reading outgoing e-mail sent through the company server using the company e-mail address, on the ground that the constitutional right to privacy of communication would be breached. The above concerns do not in anyway serve to trivialize the interests of labor. But we must avoid overarching declarations in order to justify an end result beneficial to labor. I dread the doctrinal acceptance of the notion that the Bill of Rights, on its own, affords protection and sanctuary not just from the acts of State but also from the conduct of private persons. Natural and juridical persons would hesitate to interact for fear that a misstep could lead to their being charged in court as a constitutional violator. Private institutions that thrive on their exclusivity, such as churches or cliquish groups, could be forced to renege on their traditional tenets, including vows of secrecy and the like, if deemed by the Court as inconsistent with the Bill of Rights. Indeed, that fundamental

right of all private persons to be let alone would be forever diminished because of a questionable notion that contravenes with centuries of political thought. It is not difficult to be enraptured by novel legal ideas. Their characterization is susceptible to the same marketing traps that hook consumers to new products. With the help of unique wrapping, a catchy label, and testimonials from professed experts from exotic lands, a malodorous idea may gain wide acceptance, even among those self-possessed with their own heightened senses of perception. Yet before we join the mad rush in order to proclaim a theory as "brilliant," a rigorous test must first be employed to determine whether it complements or contradicts our own system of laws and juristic thought. Without such analysis, we run the risk of abnegating the doctrines we have fostered for decades and the protections they may have implanted into our way of life. Should the Court adopt the view that the Bill of Rights may be invoked to invalidate actions by private entities against private individuals, the Court would open the floodgates to, and the docket would be swamped with, litigations of the scurrilous sort. Just as patriotism is the last refuge of scoundrels, the broad constitutional claim is the final resort of the desperate litigant. Constitutional Protection of Labor The provisions of the 1987 Constitution affirm the primacy of labor and advocate a multi-faceted state policy that affords, among others, full protection to labor. Section 18, Article II thereof provides: The State affirms labor as a primary social economic force. It shall protect the rights of workers and promote their welfare. Further, Section 3, Article XIII states: The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equal employment opportunities for all. It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to security to tenure, humane conditions of work, and a living wage. They shall also participate in policy and decision-making processes affecting their rights and benefits as may be provided by law. The State shall promote the principle of shared responsibility between workers and employers and the preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their mutual compliance therewith to foster industrial peace. The State shall regulate the relations between workers and employers, recognizing the right of labor to its just share in the fruits of production and the right of enterprises to reasonable returns on investments, and to expansion and growth.

The constitutional enshrinement of the guarantee of full protection of labor is not novel to the 1987 Constitution. Section 6, Article XIV of the 1935 Constitution reads: The State shall afford protection to labor, especially to working women, and minors, and shall regulate the relations between the landowner and tenant, and between labor and capital in industry and in agriculture. The State may provide for compulsory arbitration. Similarly, among the principles and state policies declared in the 1973 Constitution, is that provided in Section 9, Article II thereof: The State shall afford full protection to labor, promote full employment and equality in employment, ensure equal work opportunities regardless of sex, race or creed, and regulate the relations between workers and employers. The State shall assure the rights of workers to self-organization, collective bargaining, security of tenure, and just and humane conditions of work. The State may provide for compulsory arbitration. On the other hand, prior to the 1973 Constitution, the right to security of tenure could only be found in legislative enactments and their respective implementing rules and regulations. It was only in the 1973 Constitution that security of tenure was elevated as a constitutional right. The development of the concept of security of tenure as a constitutionally recognized right was discussed by this Court in BPI Credit Corporation v. NLRC,46 to wit: The enthronement of the worker's right to security or tenure in our fundamental law was not achieved overnight. For all its liberality towards labor, our 1935 Constitution did not elevate the right as a constitutional right. For a long time, the worker's security of tenure had only the protective mantle of statutes and their interpretative rules and regulations. It was as uncertain protection that sometimes yielded to the political permutations of the times. It took labor nearly four decades of sweat and tears to persuade our people thru their leaders, to exalt the worker's right to security of tenure as a sacrosanct constitutional right. It was Article II, section 2 [9] of our 1973 Constitution that declared as a policy that the State shall assure the right of worker's to security tenure. The 1987 Constitution is even more solicitous of the welfare of labor. Section 3 of its Article XIII mandates that the State shall afford full protection to labor and declares that all workers shall be entitled to security of tenure. Among the enunciated State policies are the promotion of social justice and a just and dynamic social order. In contrast, the prerogative of management to dismiss a worker, as an aspect of property right, has never been endowed with a constitutional status. The unequivocal constitutional declaration that all workers shall be entitled to security of tenure spurred our lawmakers to strengthen the protective walls around this hard earned right. The right was protected from undue infringement both by our substantive and procedural laws. Thus, the causes for dismissing employees were more defined and restricted; on the other hand, the procedure of termination was also more clearly delineated. These substantive and procedural laws must be strictly complied with before a worker can be dismissed from his employment.47

It is quite apparent that the constitutional protection of labor was entrenched more than eight decades ago, yet such did not prevent this Court in the past from affirming dismissals for just cause without valid notice. Nor was there any pretense made that this constitutional maxim afforded a laborer a positive right against dismissal for just cause on the ground of lack of valid prior notice. As demonstrated earlier, it was only after the enactment of the Labor Code that the doctrine relied upon by the dissenting opinions became en vogue. This point highlights my position that the violation of the notice requirement has statutory moorings, not constitutional. It should be also noted that the 1987 Constitution also recognizes the principle of shared responsibility between workers and employers, and the right of enterprise to reasonable returns, expansion, and growth. Whatever perceived imbalance there might have been under previous incarnations of the provision have been obviated by Section 3, Article XIII. In the case of Manila Prince Hotel v. GSIS,48 we affirmed the presumption that all constitutional provisions are self-executing. We reasoned that to declare otherwise would result in the pernicious situation wherein by mere inaction and disregard by the legislature, constitutional mandates would be rendered ineffectual. Thus, we held: As against constitutions of the past, modern constitutions have been generally ed upon a different principle and have often become in effect extensive codes of laws intended to operate directly upon the people in a manner similar to that of statutory enactments, and the function of constitutional conventions has evolved into one more like that of a legislative body. Hence, unless it is expressly provided that a legislative act is necessary to enforce a constitutional mandate, the presumption now is that all provisions of the constitution are self-executing. If the constitutional provisions are treated as requiring legislation instead of self-executing, the legislature would have the power to ignore and practically nullify the mandate of the fundamental law. This can be cataclysmic. That is why the prevailing view is, as it has always been, that . . . in case of doubt, the Constitution should be considered self-executing rather than non-self-executing. . . . Unless the contrary is clearly intended, the provisions of the Constitution should be considered self-executing, as a contrary rule would give the legislature discretion to determine when, or whether, they shall be effective. These provisions would be subordinated to the will of the lawmaking body, which could make them entirely meaningless by simply refusing to pass the needed implementing statute.49 In further discussing self-executing provisions, this Court stated that: In self-executing constitutional provisions, the legislature may still enact legislation to facilitate the exercise of powers directly granted by the constitution, further the operation of such a provision, prescribe a practice to be used for its enforcement, provide a convenient remedy for the protection of the rights secured or the determination thereof, or place reasonable safeguards around the exercise of the right. The mere fact that legislation may supplement and add to or prescribe a penalty for the violation of a self-executing constitutional provision does not render such a provision ineffective in the absence of such

legislation. The omission from a constitution of any express provision for a remedy for enforcing a right or liability is not necessarily an indication that it was not intended to be self-executing. The rule is that a self-executing provision of the constitution does not necessarily exhaust legislative power on the subject, but any legislation must be in harmony with the constitution, further the exercise of constitutional right and make it more available. Subsequent legislation however does not necessarily mean that the subject constitutional provision is not, by itself, fully enforceable.50 Thus, the constitutional mandates of protection to labor and security of tenure may be deemed as self-executing in the sense that these are automatically acknowledged and observed without need for any enabling legislation. However, to declare that the constitutional provisions are enough to guarantee the full exercise of the rights embodied therein, and the realization of ideals therein expressed, would be impractical, if not unrealistic. The espousal of such view presents the dangerous tendency of being overbroad and exaggerated. The guarantees of "full protection to labor" and "security of tenure", when examined in isolation, are facially unqualified, and the broadest interpretation possible suggests a blanket shield in favor of labor against any form of removal regardless of circumstance. This interpretation implies an unimpeachable right to continued employment-a utopian notion, doubtless-but still hardly within the contemplation of the framers. Subsequent legislation is still needed to define the parameters of these guaranteed rights to ensure the protection and promotion, not only the rights of the labor sector, but of the employers' as well. Without specific and pertinent legislation, judicial bodies will be at a loss, formulating their own conclusion to approximate at least the aims of the Constitution. Ultimately, therefore, Section 3 of Article XIII cannot, on its own, be a source of a positive enforceable right to stave off the dismissal of an employee for just cause owing to the failure to serve proper notice or hearing. As manifested by several framers of the 1987 Constitution, the provisions on social justice require legislative enactments for their enforceability. This is reflected in the record of debates on the social justice provisions of the Constitution: MS. [FELICITAS S.] AQUINO: We appreciate the concern of the Commissioner. But this Committee [on Social Justice] has actually become the forum already of a lot of specific grievances and specific demands, such that understandably, we may have been, at one time or another, dangerously treading into the functions of legislation. Our only plea to the Commission is to focus our perspective on the matter of social justice and its rightful place in the Constitution. What we envision here is a mandate specific enough that would give impetus for statutory implementation. We would caution ourselves in terms of the judicious exercise of self-censorship against treading into the functions of legislation. (emphasis supplied)51 xxx [FLORENZ D.] REGALADO: I notice that the 1935 Constitution had only one section on social justice; the same is true with the 1973 Constitution. But they seem to have stood us in good stead; and I am a little surprised why, despite that attempt at self-censorship, there are certain provisions here which are properly for legislation.52

xxx BISHOP [TEODORO S.] BACANI: [I] think the distinction that was given during the presentation of the provisions on the Bill of Rights by Commissioner Bernas is very apropos here. He spoke of self-executing rights which belong properly to the Bill of Rights, and then he spoke of a new body of rights which are more of claims and that these have come about largely through the works of social philosophers and then the teaching of the Popes. They focus on the common good and hence, it is not as easy to pinpoint precisely these rights nor the situs of the rights. And yet, they exist in relation to the common good.53 xxx MS. [MINDA LUZ M.] QUESADA: I think the nitty-gritty of this kind of collaboration will be left to legislation but the important thing now is the conservation, utilization or maximization of the very limited resources. xxx [RICARDO J.] ROMULO: The other problem is that, by and large, government services are inefficient. So, this is a problem all by itself. On Section 19, where the report says that people's organizations as a principal means of empowering the people to pursue and protect through peaceful means, I do not suppose that the Committee would like to either preempt or exclude the legislature, because the concept of a representative and democratic system really is that the legislature is normally the principal means. [EDMUNDO G.] GARCIA: That is correct. In fact, people cannot even dream of influencing the composition or the membership of the legislature, if they do not get organized. It is, in fact, a recognition of the principle that unless a citizenry is organized and mobilized to pursue its ends peacefully, then it cannot really participate effectively.54 There is no pretense on the part of the framers that the provisions on Social Justice, particularly Section 3 of Article XIII, are self-executory. Still, considering the rule that provisions should be deemed self-executing if enforceable without further legislative action, an examination of Section 3 of Article XIII is warranted to determine whether it is complete in itself as a definitive law, or if it needs future legislation for completion and enforcement.55 Particularly, we should inquire whether or not the provision voids the dismissal of a laborer for just cause if no valid notice or hearing is attendant. Constitutional Commissioner Fr. Joaquin G. Bernas makes a significant comment on Section 3, Article XIII of the 1987 Constitution: The [cluster] of rights guaranteed in the second paragraph are the right "to security of tenure, humane conditions of work, and a living wage." Again, although these have been set apart by a period (.) from the next sentence and are therefore not modified by the final phrase "as may be provided by law," it is not the intention to place these beyond the reach of valid laws. xxx (emphasis supplied)56

At present, the Labor Code is the primary mechanism to carry out the Constitution's directives. This is clear from Article 357 under Chapter 1 thereof which essentially restates the policy on the protection of labor as worded in the 1973 Constitution, which was in force at the time of enactment of the Labor Code. It crystallizes the fundamental law's policies on labor, defines the parameters of the rights granted to labor such as the right to security of tenure, and prescribes the standards for the enforcement of such rights in concrete terms. While not infallible, the measures provided therein tend to ensure the achievement of the constitutional aims. The necessity for laws concretizing the constitutional principles on the protection of labor is evident in the reliance placed upon such laws by the Court in resolving the issue of the validity of a worker's dismissal. In cases where that was the issue confronting the Court, it consistently recognized the constitutional right to security of tenure and employed the standards laid down by prevailing laws in determining whether such right was violated.58 The Court's reference to laws other than the Constitution in resolving the issue of dismissal is an implicit acknowledgment that the right to security of tenure, while recognized in the Constitution, cannot be implemented uniformly absent a law prescribing concrete standards for its enforcement. As discussed earlier, the validity of an employee's dismissal in previous cases was examined by the Court in accordance with the standards laid down by Congress in the Termination Pay Law, and subsequently, the Labor Code and the amendments thereto. At present, the validity of an employee's dismissal is weighed against the standards laid down in Article 279, as well as Article 282 in relation to Article 277(b) of the Labor Code, for a dismissal for just cause, and Article 283 for a dismissal for an authorized cause. The Effect of Statutory Violation Of Notice and Hearing There is no doubt that the dismissal of an employee even for just cause, without prior notice or hearing, violates the Labor Code. However, does such violation necessarily void the dismissal? Before I proceed with my discussion on dismissals for just causes, a brief comment regarding dismissals for authorized cause under Article 283 of the Labor Code. While the justiciable question in Serrano pertained to a dismissal for unauthorized cause, the ruling therein was crafted as definitive to dismissals for just cause. Happily, the Decision today does not adopt the same unwise tack. It should be recognized that dismissals for just cause and dismissals for authorized cause are governed by different provisions, entail divergent requisites, and animated by distinct rationales. The language of Article 283 expressly effects the termination for authorized cause to the service of written notice on the workers and the Ministry of Labor at least one (1) month before the intended date of termination. This constitutes an eminent difference than dismissals for just cause, wherein the causal relation between the notice and the dismissal is not expressly stipulated. The circumstances distinguishing just and authorized causes are too markedly different to be subjected to the same rules and reasoning in interpretation. Since the present petition is limited to a question arising from a dismissal for just cause, there is no reason for making any pronouncement regarding authorized causes. Such declaration would be

merely obiter, since they are neither the law of the case nor dispositive of the present petition. When the question becomes justiciable before this Court, we will be confronted with an appropriate factual milieu on which we can render a more judicious disposition of this admittedly important question. B. Dismissal for Just Cause There is no express provision in the Labor Code that voids a dismissal for just cause on the ground that there was no notice or hearing. Under Section 279, the employer is precluded from dismissing an employee except for a just cause as provided in Section 282, or an authorized cause under Sections 283 and 284. Based on reading Section 279 alone, the existence of just cause by itself is sufficient to validate the termination. Just cause is defined by Article 282, which unlike Article 283, does not condition the termination on the service of written notices. Still, the dissenting opinions propound that even if there is just cause, a termination may be invalidated due to the absence of notice or hearing. This view is anchored mainly on constitutional moorings, the basis of which I had argued against earlier. For determination now is whether there is statutory basis under the Labor Code to void a dismissal for just cause due to the absence of notice or hearing. As pointed out by Justice Mendoza in Serrano, it was only in 1989 that the Labor Code was amended to enshrine into statute the twin requirements of notice and hearing.59 Such requirements are found in Article 277 of the Labor Code, under the heading "Miscellaneous Provisions." Prior to the amendment, the notice-hearing requirement was found under the implementing rules issued by the then Minister of Labor in 1981. The present-day implementing rules likewise mandate that the standards of due process, including the requirement of written notice and hearing, "be substantially observed."60 Indubitably, the failure to substantially comply with the standards of due process, including the notice and hearing requirement, may give rise to an actionable claim against the employer. Under Article 288, penalties may arise from violations of any provision of the Labor Code. The Secretary of Labor likewise enjoys broad powers to inquire into existing relations between employers and employees. Systematic violations by management of the statutory right to due process would fall under the broad grant of power to the Secretary of Labor to investigate under Article 273. However, the remedy of reinstatement despite termination for just cause is simply not authorized by the Labor Code. Neither the Labor Code nor its implementing rules states that a termination for just cause is voided because the requirement of notice and hearing was not observed. This is not simply an inadvertent semantic failure, but a conscious effort to protect the prerogatives of the employer to dismiss an employee for just cause. Notably, despite the several pronouncements by this Court in the past equating the notice-hearing requirement in labor cases to a constitutional maxim, neither the legislature nor the executive has adopted the same tack, even gutting the protection to provide that substantial compliance with due process suffices. The Labor Code significantly eroded management prerogatives in the hiring and firing of employees. Whereas employees could be dismissed even without just cause under the Termination

Pay Law61, the Labor Code affords workers broad security of tenure. Still, the law recognizes the right of the employer to terminate for just cause. The just causes enumerated under the Labor Code serious misconduct or willful disobedience, gross and habitual neglect, fraud or willful breach of trust, commission of a crime by the employee against the employer, and other analogous causes are characterized by the harmful behavior of an employee against the business or the person of the employer. These just causes for termination are not negated by the absence of notice or hearing. An employee who tries to kill the employer cannot be magically absolved of trespasses just because the employer forgot to serve due notice. Or a less extreme example, the gross and habitual neglect of an employee will not be improved upon just because the employer failed to conduct a hearing prior to termination. In fact, the practical purpose of requiring notice and hearing is to afford the employee the opportunity to dispute the contention that there was just cause in the dismissal. Yet it must be understood if a dismissed employee is deprived of the right to notice and hearing, and thus denied the opportunity to present countervailing evidence that disputes the finding of just cause, reinstatement will be valid not because the notice and hearing requirement was not observed, but because there was no just cause in the dismissal. The opportunity to dispute the finding of the just cause is readily available before the Labor Arbiter, and the subsequent levels of appellate review. Again, as held in Serrano: Even in cases of dismissal under Art. 282, the purpose for the requirement of notice and hearing is not to comply with the Due Process Clause of the Constitution. The time for notice and hearing is at the trial stage. Then that is the time we speak of notice and hearing as the essence of procedural due process. Thus, compliance by the employer with the notice requirement before he dismisses an employee does not foreclose the right of the latter to question the legality of his dismissal. As Art. 277(b) provides, "Any decision taken by the employer shall be without prejudice to the right of the worker to contest the validity or legality of his dismissal by filing a complaint with the regional branch of the National Labor Relations Commission.62 The Labor Code presents no textually demonstrable commitment to invalidate a dismissal for just cause due to the absence of notice or hearing. This is not surprising, as such remedy will not restore the employer or employee into equity. Absent a showing of integral causation, the mutual infliction of wrongs does not negate either injury, but instead enforces two independent rights of relief. The Damages' Dimensions Award for Damages Must Have Statutory Basis The Court has grappled with the problem of what should be the proper remedial relief of an employee dismissed with just cause, but not afforded either notice or hearing. In a long line of cases, beginning with Wenphil Corp. v. NLRC63 and up until Serrano in 2000, the Court had deemed an indemnification award as sufficient to answer for the violation by the employer against the employee. However, the doctrine was modified in Serrano.

I disagree with Serrano insofar as it held that employees terminated for just cause are to be paid backwages from the time employment was terminated "until it is determined that the termination is for just cause because the failure to hear him before he is dismissed renders the termination of his employment without legal effect."64 Article 279 of the Labor Code clearly authorizes the payment of backwages only if an employee is unjustly dismissed. A dismissal for just cause is obviously antithetical to an unjust dismissal. An award for backwages is not clearly warranted by the law. The Impropriety of Award for Separation Pay The formula of one month's pay for every year served does have statutory basis. It is found though in the Labor Code though, not the Civil Code. Even then, such computation is made for separation pay under the Labor Code. But separation pay is not an appropriate as a remedy in this case, or in any case wherein an employee is terminated for just cause. As Justice Vitug noted in his separate opinion in Serrano, an employee whose employment is terminated for a just cause is not entitled to the payment of separation benefits.65 Separation pay is traditionally a monetary award paid as an alternative to reinstatement which can no longer be effected in view of the long passage of time or because of the realities of the situation.66 However, under Section 7, Rule 1, Book VI of the Omnibus Rules Implementing the Labor Code, "[t]he separation from work of an employee for a just cause does not entitle him to the termination pay provided in the Code."67 Neither does the Labor Code itself provide instances wherein separation pay is warranted for dismissals with just cause. Separation pay is warranted only for dismissals for authorized causes, as enumerated in Article 283 and 284 of the Labor Code. The Impropriety of Equity Awards Admittedly, the Court has in the past authorized the award of separation pay for duly terminated employees as a measure of social justice, provided that the employee is not guilty of serious misconduct reflecting on moral character.68 This doctrine is inapplicable in this case, as the Agabons are guilty of abandonment, which is the deliberate and unjustified refusal of an employee to resume his employment. Abandonment is tantamount to serious misconduct, as it constitutes a willful breach of the employer-employee relationship without cause. The award of separation pay as a measure of social justice has no statutory basis, but clearly emanates from the Court's so-called "equity jurisdiction." The Court's equity jurisdiction as a basis for award, no matter what form it may take, is likewise unwarranted in this case. Easy resort to equity should be avoided, as it should yield to positive rules which pre-empt and prevail over such persuasions.69 Abstract as the concept is, it does not admit to definite and objective standards. I consider the pronouncement regarding the proper monetary awards in such cases as Wenphil Corp. v. NLRC,70 Reta,71 and to a degree, even Serrano as premised in part on equity. This decision is premised in part due to the absence of cited statutory basis for these awards. In these cases, the Court deemed an indemnity award proper without exactly saying where in statute could such award be derived at. Perhaps, equity or social justice can be invoked as basis for the award. However, this sort of arbitrariness, indeterminacy and judicial usurpation of legislative prerogatives is precisely the source of my discontent. Social justice should be the aspiration of all

that we do, yet I think it the more mature attitude to consider that it ebbs and flows within our statutes, rather than view it as an independent source of funding. Article 288 of the Labor Code as a Source of Liability Another putative source of liability for failure to render the notice requirement is Article 288 of the Labor Code, which states: Article 288 states: Penalties. Except as otherwise provided in this Code, or unless the acts complained of hinges on a question of interpretation or implementation of ambiguous provisions of an existing collective bargaining agreement, any violation of the provisions of this Code declared to be unlawful or penal in nature shall be punished with a fine of not less than One Thousand Pesos (P1,000.00) nor more than Ten Thousand Pesos (P10,000.00), or imprisonment of not less than three months nor more than three years, or both such fine and imprisonment at the discretion of the court. It is apparent from the provision that the penalty arises due to contraventions of the provisions of the Labor Code. It is also clear that the provision comes into play regardless of who the violator may be. Either the employer or the employee may be penalized, or perhaps even officials tasked with implementing the Labor Code. However, it is apparent that Article 288 is a penal provision; hence, the prescription for penalties such as fine and imprisonment. The Article is also explicit that the imposition of fine or imprisonment is at the "discretion of the court." Thus, the proceedings under the provision is penal in character. The criminal case has to be instituted before the proper courts, and the Labor Code violation subject thereof duly proven in an adversarial proceeding. Hence, Article 288 cannot apply in this case and serve as basis to impose a penalty on Riviera Homes. I also maintain that under Article 288 the penalty should be paid to the State, and not to the person or persons who may have suffered injury as a result of the violation. A penalty is a sum of money which the law requires to be paid by way of punishment for doing some act which is prohibited or for not doing some act which is required to be done.72 A penalty should be distinguished from damages which is the pecuniary compensation or indemnity to a person who has suffered loss, detriment, or injury, whether to his person, property, or rights, on account of the unlawful act or omission or negligence of another. Article 288 clearly serves as a punitive fine, rather than a compensatory measure, since the provision penalizes an act that violates the Labor Code even if such act does not cause actual injury to any private person. Independent of the employee's interests protected by the Labor Code is the interest of the State in seeing to it that its regulatory laws are complied with. Article 288 is intended to satiate the latter interest. Nothing in the language of Article 288 indicates an intention to compensate or remunerate a private person for injury he may have sustained.

It should be noted though that in Serrano, the Court observed that since the promulgation of Wenphil Corp. v. NLRC73 in 1989, "fines imposed for violations of the notice requirement have varied from P1,000.00 to P2,000.00 to P5,000.00 to P10,000.00."74 Interestingly, this range is the same range of the penalties imposed by Article 288. These "fines" adverted to in Serrano were paid to the dismissed employee. The use of the term "fines," as well as the terminology employed a few other cases,75 may have left an erroneous impression that the award implemented beginning with Wenphil was based on Article 288 of the Labor Code. Yet, an examination of Wenphil reveals that what the Court actually awarded to the employee was an "indemnity", dependent on the facts of each case and the gravity of the omission committed by the employer. There is no mention in Wenphil of Article 288 of the Labor Code, or indeed, of any statutory basis for the award. The Proper Basis: Employer's Liability under the Civil Code As earlier stated, Wenphil allowed the payment of indemnity to the employee dismissed for just cause is dependent on the facts of each case and the gravity of the omission committed by the employer. However, I considered Wenphil flawed insofar as it is silent as to the statutory basis for the indemnity award. This failure, to my mind, renders it unwise for to reinstate the Wenphil rule, and foster the impression that it is the judicial business to invent awards for damages without clear statutory basis. The proper legal basis for holding the employer liable for monetary damages to the employee dismissed for just cause is the Civil Code. The award of damages should be measured against the loss or injury suffered by the employee by reason of the employer's violation or, in case of nominal damages, the right vindicated by the award. This is the proper paradigm authorized by our law, and designed to obtain the fairest possible relief. Under Section 217(4) of the Labor Code, the Labor Arbiter has jurisdiction over claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations. It is thus the duty of Labor Arbiters to adjudicate claims for damages, and they should disabuse themselves of any inhibitions if it does appear that an award for damages is warranted. As triers of facts in a specialized field, they should attune themselves to the particular conditions or problems attendant to employer-employee relationships, and thus be in the best possible position as to the nature and amount of damages that may be warranted in this case. The damages referred under Section 217(4) of the Labor Code are those available under the Civil Code. It is but proper that the Civil Code serve as the basis for the indemnity, it being the law that regulates the private relations of the members of civil society, determining their respective rights and obligations with reference to persons, things, and civil acts.76 No matter how impressed with the public interest the relationship between a private employer and employee is, it still is ultimately a relationship between private individuals. Notably, even though the Labor Code could very well have provided set rules for damages arising from the employer-employee relationship, referral was instead made to the concept of damages as enumerated and defined under the Civil Code. Given the long controversy that has dogged this present issue regarding dismissals for just cause, it is wise to lay down standards that would guide the proper award of damages under the Civil Code

in cases wherein the employer failed to comply with statutory due process in dismissals for just cause. First. I believe that it can be maintained as a general rule, that failure to comply with the statutory requirement of notice automatically gives rise to nominal damages, at the very least, even if the dismissal was sustained for just cause. Nominal damages are adjudicated in order that a right of a plaintiff which has been violated or invaded by another may be vindicated or recognized without having to indemnify the plaintiff for any loss suffered by him.77 Nominal damages may likewise be awarded in every obligation arising from law, contracts, quasi-contracts, acts or omissions punished by law, and quasi-delicts, or where any property right has been invaded. Clearly, the bare act of failing to observe the notice requirement gives rise to nominal damages assessable against the employer and due the employee. The Labor Code indubitably entitles the employee to notice even if dismissal is for just cause, even if there is no apparent intent to void such dismissals deficiently implemented. It has also been held that one's employment, profession, trade, or calling is a "property right" and the wrongful interference therewith gives rise to an actionable wrong.78 In Better Buildings, Inc. v. NLRC,79 the Court ruled that the while the termination therein was for just and valid cause, the manner of termination was done in complete disregard of the necessary procedural safeguards.80 The Court found nominal damages as the proper form of award, as it was purposed to vindicate the right to procedural due process violated by the employer.81 A similar holding was maintained in Iran v. NLRC82 and Malaya Shipping v. NLRC.83 The doctrine has express statutory basis, duly recognizes the existence of the right to notice, and vindicates the violation of such right. It is sound, logical, and should be adopted as a general rule. The assessment of nominal damages is left to the discretion of the court,84 or in labor cases, of the Labor Arbiter and the successive appellate levels. The authority to nominate standards governing the award of nominal damages has clearly been delegated to the judicial branch, and it will serve good purpose for this Court to provide such guidelines. Considering that the affected right is a property right, there is justification in basing the amount of nominal damages on the particular characteristics attaching to the claimant's employment. Factors such as length of service, positions held, and received salary may be considered to obtain the proper measure of nominal damages. After all, the degree by which a property right should be vindicated is affected by the estimable value of such right. At the same time, it should be recognized that nominal damages are not meant to be compensatory, and should not be computed through a formula based on actual losses. Consequently, nominal damages usually limited in pecuniary value.85 This fact should be impressed upon the prospective claimant, especially one who is contemplating seeking actual/compensatory damages. Second. Actual or compensatory damages are not available as a matter of right to an employee dismissed for just cause but denied statutory due process. They must be based on clear factual and

legal bases,86 and correspond to such pecuniary loss suffered by the employee as duly proven.87 Evidently, there is less degree of discretion to award actual or compensatory damages. I recognize some inherent difficulties in establishing actual damages in cases for terminations validated for just cause. The dismissed employee retains no right to continued employment from the moment just cause for termination exists, and such time most likely would have arrived even before the employer is liable to send the first notice. As a result, an award of backwages disguised as actual damages would almost never be justified if the employee was dismissed for just cause. The possible exception would be if it can be proven the ground for just cause came into being only after the dismissed employee had stopped receiving wages from the employer. Yet it is not impossible to establish a case for actual damages if dismissal was for just cause. Particularly actionable, for example, is if the notices are not served on the employee, thus hampering his/her opportunities to obtain new employment. For as long as it can be demonstrated that the failure of the employer to observe procedural due process mandated by the Labor Code is the proximate cause of pecuniary loss or injury to the dismissed employee, then actual or compensatory damages may be awarded. Third. If there is a finding of pecuniary loss arising from the employer violation, but the amount cannot be proved with certainty, then temperate or moderate damages are available under Article 2224 of the Civil Code. Again, sufficient discretion is afforded to the adjudicator as regards the proper award, and the award must be reasonable under the circumstances.88 Temperate or nominal damages may yet prove to be a plausible remedy, especially when common sense dictates that pecuniary loss was suffered, but incapable of precise definition. Fourth. Moral and exemplary damages may also be awarded in the appropriate circumstances. As pointed out by the Decision, moral damages are recoverable where the dismissal of the employee was attended by bad faith, fraud, or was done in a manner contrary to morals, good customs or public policy, or the employer committed an act oppressive to labor.89 Exemplary damages may avail if the dismissal was effected in a wanton, oppressive or malevolent manner. Appropriate Award of Damages to the Agabons The records indicate no proof exists to justify the award of actual or compensatory damages, as it has not been established that the failure to serve the second notice on the Agabons was the proximate cause to any loss or injury. In fact, there is not even any showing that such violation caused any sort of injury or discomfort to the Agabons. Nor do they assert such causal relation. Thus, the only appropriate award of damages is nominal damages. Considering the circumstances, I agree that an award of Fifteen Thousand Pesos (P15,000.00) each for the Agabons is sufficient. All premises considered, I VOTE to: (1) DENY the PETITION for lack of merit, and AFFIRM the Decision of the Court of Appeals dated 23 January 2003, with the MODIFICATION that in addition, Riviera Homes be

ORDERED to pay the petitioners the sum of Fifteen Thousand Pesos (P15,000.00) each, as nominal damages. (2) HOLD that henceforth, dismissals for just cause may not be invalidated due to the failure to observe the due process requirements under the Labor Code, and that the only indemnity award available to the employee dismissed for just cause are damages under the Civil Code as duly proven. Any and all previous rulings and statements of the Court inconsistent with this holding are now deemed INOPERATIVE. DANTE O. TINGA Associate Justice

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 150198 March 6, 2006

DOMINADOR S. PEREZ and CELINE CAMPOS, Petitioners, vs. THE MEDICAL CITY GENERAL HOSPITAL, ALFREDO BENGZON, BENITA MACALAGAY and MARIANNE FRANCISCO, Respondents. DECISION AZCUNA, J.: The present case arose from the dismissal of two orderlies of respondent Medical City General Hospital (the Hospital) for allegedly pilfering hospital property. As follows are the antecedent facts:1 Prompted by reports of missing medicines and supplies in the Emergency Room/Trauma Room (ER/TR) and upon the suggestion of one of the Hospitals staff nurses, the Hospital, on September 9, 1999, opened 22 lockers of employees assigned to the ER/TR. The Hospital found four lockers with items belonging to it. The employees corresponding to the lockers and the items found are as follows: Dominador Perez Four rolls of micropore One ovum forcep adson forceps laryngoscope ear pieces monkey wrench

Celine Campos

Two berodual Two ventolin nebules Two tongue depressors nulain (a regulated drug) Ventolin nebules micropore bath towel PIMS (prescription manual) white linen

Lailanie Espiritu Mateo Butardo

Dominador Perez, Celine Campos, Lailanie Espiritu and Mateo Butardo were directed to submit written explanations as to why these items were inside their lockers. Perez, Campos and Butardo submitted their written explanations, while Espiritu opted to resign. An administrative hearing was held where the three employees who responded were represented by a union counsel. At the end of the proceedings, the charge against Butardo was dismissed while Perez and Campos, herein petitioners, were found to have violated category seven of the company rules, a serious infraction meriting dismissal. The Hospital offered them the opportunity to voluntarily resign with separation pay, under a clause provided in the Collective Bargaining Agreement. They refused and the Hospital dismissed them from the service. On January 19, 2000, petitioners filed a complaint for illegal dismissal with the National Labor Relations Commission (NLRC).2 On August 29, 2000, after the submission of position papers, the Labor Arbiter found respondents guilty of illegal dismissal and ordered the reinstatement of petitioners with backwages and without loss of seniority rights.3 On appeal to the NLRC,4 the Labor Arbiters decision was reversed and the complaint was dismissed.5 Petitioners then went to the Court of Appeals (CA) on a petition for certiorari.6 On August 7, 2001, the CA issued the assailed decision, denying the petition and affirming the decision of the NLRC.7 Hence, petitioners have filed the present petition for review on certiorari under Rule 45 of the Rules of Court, asking the Court to reinstate the decision of the Labor Arbiter. In attempting to account for the presence of the items inside their lockers, petitioners gave the following explanations: Perez maintained that on the day before the lockers were opened, he was replacing the bed sheets in the ER and found a monkey wrench tucked under one of the bed cushions. Not finding any proper person to hand over the wrench, and wanting to go home already, he decided to keep the wrench inside his locker for purposes of safekeeping until he could turn it over at his next shift. As for the ovum and adson forceps, he took these instruments on September 2, 1999 because he noticed that they were already due for evaluation and subsequent condemnation. He claimed that he placed them inside his locker with the intention of eventually endorsing them to his supervisor. Lastly, he explained that the micropore plastics were instruments used by him while on duty and the laryngoscope ear piece was kept by him with the consent of his supervisor. Campos asserted that it has been her practice to carry nebules in her pocket whenever she was on duty as a matter of convenience for patients who suffer from sudden asthma attacks. On September

5, 1999, being tired and in a hurry to get home, she just left these in her locker and simply forgot to endorse them to the proper person. They were eventually abandoned inside the locker after she moved out her stuff when she transferred from the ER to Pediatrics. Petitioners, in essence, maintain that they have sufficiently accounted for the presence of these items inside their lockers and that the evidence presented against them is insufficient to show that they are guilty of misappropriating company property. Moreover, assuming ex gratia argumenti that there was violation of company rules, the penalty of dismissal would be too harsh considering their long years of dedicated service to the Hospital. The Court is not a trier of facts, and this rule applies with greater force in labor cases. Hence, the factual findings of the NLRC are generally accorded not only respect but even finality if supported by substantial evidence and especially when affirmed by the CA. However, a disharmony between the factual findings of the Labor Arbiter and the NLRC opens the door to a review by this Court.8 The Labor Arbiter ruled, as follows: We disagree with the respondent companys contention that the complainants were found guilty of misappropriation considering that there was no taking of property for the purpose of depriving the respondents of ownership and possession of the same. The hospital did not incur losses on the alleged misappropriated items since they were placed in the lockers for temporary safekeeping. Undoubtedly, the imputation of misappropriation of company properties entirely rests on speculative inferences, which according to the Supreme Court in Pilipinas Bank vs. NLRC. 215 SCRA 756, can never be the basis of illegal dismissal on the ground of dishonesty. The complainants gave valid explanations and justifications on the questioned items found in their lockers, but respondents ignored their explanations and decided to terminate their services x x x. In reversing the Labor Arbiter, the NLRC concluded: The hospital has convincingly established that all employees, including the herein complainants, are not allowed to place hospital items in their respective lockers as this is contrary to the rules and procedures of the hospital. In the case of the monkey wrench allegedly found by complainant Perez, he should have placed this item in the ER (emergency room) drawer where the instruments are placed in accordance with the Hospitals rules and procedure and not in his locker. The other instruments should be endorsed to the next staff on duty and should not be kept as what Perez did (Annex "B," respondents position paper). With respect to the items for evaluation as well as items to be condemned[,] the same should be submitted to a ward clerk who will endorse it to the Physical Pleat for evaluation. The clerks are the only authorized personnel to keep condemned items and nobody else and these condemned items are to be placed inside the supplies locker. The procedure was attested to by Ms. Imelda M. Lloren, E[R]-TR Supervisor in her latter dated November 19, 1999 (Annex "13," respondents position paper). In the same manner, all staffs in the ER-TR of the hospital are not allowed to put medicines in their pockets. All medicines are placed and should be made accessible in the hospital[s] E-Cart so that in cases of emergency, the said medicines are easily accessible for patients use (Annex "14," respondents[] position paper) x x x.

Contrary to the position taken by the Labor Arbiter, the Hospitals dismissal of petitioners did not rest on speculative inferences. Petitioners themselves have admitted that properties belonging to the Hospital were found inside their lockers. As to how these items got inside the lockers, petitioners acknowledged having placed them there against company rules. In view of these admissions, there is ample evidence to support a charge for pilferage unless petitioners can satisfactorily explain their possession. Perez contends that he had the wrench and the forceps inside his lockers for safekeeping with every intention of turning them over. While this may be considered to explain the presence of the wrench, since he claims he found it only a day before the lockers were opened, it does not fully account for the forceps. Perez alleged that he took these instruments on September 2, 1999 after noticing that they were already due for evaluation and condemnation and was going to endorse them to the supervisor. If this were the case, why was he not able to endorse them at his next shift? Instead, the instruments remained inside his locker for more than a week until the Hospital discovered them when it conducted a search. Secondly, as stated in the December 19, 1999 letter of the ER-TR Supervisor,9 Perezs responsibility is limited to checking and recommending defective or non-functional equipment. He is not allowed to keep the items but is required to deliver them to the ward clerk who, in turn, will keep them in the supplies locker until their delivery to the scrap officer on the last Friday of the month. It was made clear to all hospital staff that hospital equipment should only be kept in the supplies locker. Plainly, Perez had no business taking instruments into his locker, even if these were already defective. As for the micropore and laryngoscope ear piece, Perez claims that the former is used by him while on duty while the latter was kept by him with the consent of his supervisor. According to the Hospital, micropore is a supply charged to the patient and is not issued to orderlies, while a laryngoscope ear piece is a doctors instrument.10 The Court sees no reason why Perez needed to have such items. As an orderly, he was not charged with giving out micropores nor did his job entail the use of a laryngoscope ear piece. For her part, Campos claims that it has been her practice to put nebules inside her pocket for emergencies. Similarly, the Court cannot comprehend the need for her to keep them in her pocket when she can easily get hold of them from the emergency cart. Also, keeping nebules inside her pocket does not explain why she had to keep two at a time, as two were found inside her locker. Even assuming that she found it convenient to have nebules in her pocket, this does not explain the need to also keep it in her locker as she could, without much effort, return it to the emergency cart at the end of every shift. Lastly, there were other items found in her locker (the berodual and tongue depressors) for which Campos failed to account. Based on the foregoing consideration, the Court finds there was sufficient basis to hold that petitioners misappropriated hospital property. The next issue is whether dismissal was the appropriate penalty. The power to dismiss an employee is a recognized prerogative that is inherent in the employers right to freely manage and regulate his business. An employer cannot be expected to retain an employee whose lack of morals, respect and loyalty to his employer or regard for his employers rules and appreciation of the dignity and responsibility of his office has so plainly and completely been bared. An employer may not be compelled to continue to employ a person whose continuance

in service will patently be inimical to his interest. The dismissal of an employee, in a way, is a measure of self-protection. Nevertheless, whatever acknowledged right the employer has to discipline his employee, it is still subject to reasonable regulation by the State in the exercise of its police power.11 Thus, it is within the power of this Court not only to scrutinize the basis for dismissal but also to determine if the penalty is commensurate to the offense, notwithstanding the company rules. In this case, the Court agrees with the Labor Arbiter that dismissal would not be proportionate to the gravity of the offense considering the circumstances present in this case. Perez has been an employee of the Hospital for 19 consecutive years. Campos, while not employed with the Hospital as long as Perez, can lay claim to seven consecutive years. During their long tenure with the Hospital, it does not appear that they have been the subject of disciplinary sanctions and they have kept their records unblemished. Moreover, the Court also takes into account the fact that petitioners are not managerial or confidential employees in whom greater trust is placed by management and from whom greater fidelity to duty is correspondingly expected.12 This can be gleaned from the supervisors letter explaining that orderlies duties are limited to checking equipment and recommending their condemnation.13 Furthermore, in previous cases decided by this Court, a number of employees were granted reinstatement after a determination that their dismissals were not proportionate to the offense committed.14 In Associated Labor Unions-TUCP v. NLRC,15 cited by petitioners, the involved employee was dismissed after being caught pilfering a pair of boots, an aluminum container and 15 hamburger patties. This Court took into account the value of the articles taken, his two years of unblemished service and his position as a rank and file, and ordered his reinstatement without backwages. The reinstatement of petitioners is in line with the social justice mandate of the Constitution. Nevertheless, the Court does not countenance the wrongful act of pilferage but simply maintains that the extreme penalty of dismissal is not justified and a lesser penalty would suffice. Under the facts of this case, suspension would be adequate. Without making any doctrinal pronouncement on the length of the suspension in cases similar to this, the Court holds that considering petitioners non-employment since January 2000, they may be deemed to have already served their period of suspension. Consequently, the Labor Arbiters order of reinstatement is upheld, with the deletion of the award of backwages, so as not to put a premium on acts of dishonesty. WHEREFORE, the petition is PARTIALLY GRANTED and the assailed Decision dated August 7, 2001 rendered by the Court of Appeals is SET ASIDE. Petitioners Dominador Perez and Celine Campos are ordered REINSTATED WITHOUT BACKWAGES BUT WITHOUT LOSS OF SENIORITY. No pronouncement as to costs. SO ORDERED

Petitioner, Present:

YNARES-SANTIAGO, J., Chairperson, - versus AUSTRIA-MARTINEZ, CHICO-NAZARIO, NACHURA, and REYES, JJ.

NATIONAL LABOR RELATIONS COMMISSION AND ROMEO T. STO. TOMAS, Respondents.

Promulgated: October 15, 2007

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

DECISION

AUSTRIA-MARTINEZ, J.:

Before us is a Petition for Review on Certiorari under Rule 45 filed by Caltex (Philippines) Inc., now Chevron Philippines, Inc. (petitioner) seeking to annul and set aside SP No. 65405. Romeo T. Sto Tomas (private respondent) was a regular employee of petitioner since February 2, 1984. He was a Senior Accounting Analyst receiving a monthly salary of P29,860.00 at the time of his termination on July 31, 1997. the Decision108[1] dated May 15, 2003, and the Resolution109[2] dated August 21, 2003 of the Court of Appeals (CA) in CA-G.R.

In a letter110[3] dated October 21, 1996, petitioner informed the Department of Labor and Employment (DOLE) of its plan to implement a redundancy program in its Marketing Division and some departments in its Batangas Refinery for the period starting October 1996 to December 1998. The letter alleged that the redundancy program is a response to the market situation which constrained petitioner to rationalize and simplify its business processes; that petitioner undertook a review, restructuring and streamlining of its organization which resulted in consolidation, abolition and outsourcing of certain functions and in the identification of certain redundant positions. The letter also states that petitioner will provide the DOLE a list of affected employees as it implements each phase of the redundancy program.

108 109 110

Petitioner, through a letter111[4] dated June 30, 1997, notified private respondent of his termination effective July 31, 1997 due to the redundancy of his position and awarded him a separation package in the amount of P559,458.90 consisting of the following:

Regular separation/retirement benefits under the New Retirement Plan; and Ex-gratia payment computed at months basic pay for every year of service TOTAL

P352,721.25

206,737.65 P559,458.90112[5]

On June 8, 1998, respondent filed with the Labor Arbiter a complaint113[6] for illegal dismissal against petitioner and its President and Chief Executive Officer, Mr. Clifton Hon. Private respondent alleged that: being petitioners regular employee, he is entitled to security of tenure; he did not commit any serious misconduct, willful disobedience, gross and habitual neglect of duty or fraud and willful breach of trust to warrant the penalty of dismissal from employment; there was no independent proof or evidence presented by petitioner to substantiate its claim of redundancy nor was he afforded due process as he was not given any opportunity to present his side; he was dismissed due to his active participation in union activities; petitioner opened positions for hiring some of which offered jobs that are the same as what private respondent was performing;

111 112 113

petitioner failed to give written notice to him and DOLE at least one month before the intended date of termination as required by the Labor Code.

In its position paper, petitioner and Mr. Hon averred that private respondents dismissal from the service was due to redundancy of his position which was determined after petitioners business process re-engineering study and organization review, conducted with private respondents knowledge; that redundancy is an authorized cause to terminate an employee which is a management prerogative and cannot be interfered with absent any abuse of discretion; and that there is nothing in the law that requires petitioner to conduct impartial investigation or hearing to terminate an employee due to redundancy.

On March 31, 1999, the Labor Arbiter (LA) rendered a decision114[7] dismissing the complaint without prejudice to the payment of private respondents separation pay as required by law or as granted by petitioner pursuant to company practice whichever is higher.

The LA found that private respondent's dismissal from the service on the ground of redundancy was done in good faith and a valid exercise of management prerogative; that redundancy did not deter the employer to hire additional workers when it is deemed best for proper management; and that there is no need for petitioner to conduct an impartial investigation or hearing since private
114

respondents dismissal was not related to his blameworthy act or omission. While the LA found that petitioner failed to give notice to DOLE one month before the intended date of private respondents termination, the LA ruled that noncompliance with the procedural requirement will not per se make the termination illegal and held that requirement of procedural process was not totally disregarded.

Respondent filed his appeal with the National Labor Relations Commission (NLRC) which in a Decision115[8] dated January 30, 2001, reversed the decision of the LA, the dispositive portion of which reads: WHEREFORE, the decision of the Labor Arbiter is hereby VACATED and SET ASIDE and judgment is hereby rendered: 1. Declaring the dismissal of complainant to be without a just or authorized cause and, therefore, illegal.

2. Ordering respondent Caltex (Phils.) Inc. to reinstate the complainant to his former or substantially equivalent position, without loss of seniority rights and other privileges and to pay complainant his full backwages inclusive of allowance and other benefits computed from August 1, 1997 up to his actual reinstatement. However, should complainants reinstatement be no longer feasible due to some valid reasons, respondent Caltex (Phils.) Inc., is hereby ordered to pay complainant his separation pay computed at one (1) month pay for every year of service, a fraction of at least six (6) months to be considered as one (1) whole year. The separation pay shall be in addition to complainants full backwages. All other claims of complainant are hereby DISMISSED for lack of merit. 116 [9]

115 116

In so ruling, the NLRC expounded that although Article 283 of the Labor Code authorizes termination due to redundancy, there must be factual basis; that the records did not disclose any evidence to show basis for respondents dismissal. respondents termination; that neither did petitioner send notice to DOLE one month prior to

Petitioners Motion for Reconsideration was denied in a Resolution117[10] dated March 27, 2001.

Petitioner filed with the CA a Petition for Certiorari alleging grave abuse of discretion committed by the NLRC in finding respondents termination illegal.

In a Decision dated May 15, 2003, the CA denied the petition. The CA ruled that there was no reason to deviate from the findings of the NLRC since the pieces of evidence presented by petitioner are not only insufficient but also baseless and self-serving; that petitioners main argument that private respondents dismissal on the ground of redundancy was only resorted to after a conduct of thorough business process reengineering study and research is nothing but a bare assertion; that nowhere in the records can it be found that there was indeed a study conducted by petitioner which culminated in the abolition and consolidation of certain positions in the office; that neither was there any proof that petitioner truly had a concrete redundancy program that is reflective of any financial loss or
117

possible and obtainable substantial profits in case the program is implemented nor were there any named factors considered by the petitioner in undertaking the reduction program; that what petitioner presented was merely a copy of its letter to the DOLE informing the latter of its intention to implement a redundancy program and nothing more; and that petitioner failed to apply the criteria in effecting private respondents dismissal due to redundancy as there was no showing that it underwent painstaking selection from among its employees to be dismissed.

The CA further found that petitioner failed to send DOLE a written notice of its implementation of the redundancy program one month prior to the intended date thereof since petitioner had admitted such failure in its Answer to respondents appeal to the NLRC.

The CA likewise found that petitioners belated submission to the CA of the letter dated June 30, 1997 purportedly notifying DOLE of the plan to implement a redundancy program is dubious because of petitioners earlier admission that it did not send DOLE a written notice of termination; that petitioner should have submitted the evidence at the earliest opportunity; and that the letter was selfserving since it did not bear any proof of receipt by the DOLE.

The CA denied petitioners Motion for Reconsideration in a Resolution dated August 21, 2003.

Hence, herein petition filed by petitioner on the following grounds:

THE PUBLIC RESPONDENT COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF OR IN EXCESS OF ITS JURISDICTION WHEN IT ISSUED THE DECISION DATED MAY 15, 2003 AND THE RESOLUTION DATED AUGUST 21, 2003 AFFIRMING THE ORDERS DATED JANUARY 30, 2001 AND MARCH 27, 2001 OF THE RESPONDENT NLRC CONSIDERING THAT THEY ARE NOT SUPPORTED BY SUBSTANTIAL EVIDENCE. THE PUBLIC RESPONDENT COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION WHEN IT AFFIRMED THE FINDING OF THE RESPONDENT NLRC THAT THE DISMISSAL OF THE PRIVATE RESPONDENT WAS WITHOUT JUST AND AUTHORIZED CAUSE. THE PUBLIC RESPONDENT COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR IN EXCESS OF ITS JURISDICTION WHEN IT AFFIRMED THE FINDING OF THE RESPONDENT NLRC DIRECTING THE REINSTATEMENT OF THE PRIVATE RESPONDENT AND THE PAYMENT OF HIS BACKWAGES COMPUTED FROM AUGUST 1, 1997.118[11]

Petitioner insists that it had already informed the DOLE Secretary through a letter-notice dated October 21, 1996 of its plan to implement a redundancy program which was received on October 24, 1996; that the CA ignored such earlier notice and concentrated on its alleged failure to send notice one month prior to private respondents termination; that the June 30, 1997 notice to DOLE was belatedly submitted since it was not easily located; that the belated submission should not be taken against petitioner; that the subsequent notice to the DOLE was only a follow up to the earlier notice dated October 21, 1996; and that there was substantial compliance with the notice requirement of the Labor Code for a valid redundancy program.

118

Petitioner further argues that private respondents termination due to redundancy is valid considering that he consented to his termination by accepting and benefiting from the package given by petitioner in the total amount of P559,458.90; that his separation package is equivalent to 1.39 months basic pay for every year of service, way above the minimum separation pay required by law; that if private respondents termination is indeed illegal and that he should be reinstated with full backwages, he should be ordered to pay back petitioner the benefits he received on account of its redundancy program as he unjustly enriched himself in the amount of P206,737.65 representing ex-gratia benefit paid only to terminated employees on account of the redundancy program.

Petitioner further claims that private respondent was not retrenched but dismissed on account of petitioners redundancy program, thus, the finding that petitioner was not able to provide proof that it truly had an extensive engineering study on account of business losses arising out of massive oil deregulation is misplaced; that retrenchment and redundancy are two different authorized causes terminating employment relationship and the elements of one do not apply to the other; that its right to terminate respondents employment is embodied under Article 283 of the Labor Code which required employers to give notice of redundancy to the worker and the DOLE one month before the intended date of actual termination; that the twin notice requirement is the only condition precedent mandated by law before any valid redundancy may be effected which petitioner had duly complied with; that termination due to redundancy is a valid exercise of

management prerogative which courts ordinarily hesitate to interfere with unless the act is marked with bad faith.

The issues for resolution are (1) whether private respondents termination on the ground of redundancy was valid, and (2) whether petitioner gave a written notice to DOLE as required under Article 283 of the Labor Code.

Under Rule 45 of the Rules of Court, only questions of law may be raised in this Court. However, factual issues may be considered and resolved when the findings of facts and the conclusions of the Labor Arbiter are inconsistent with those of the NLRC and the CA,119[12] as obtaining in the present case.

The CA correctly dismissed herein petitioners petition for certiorari. The NLRC did not commit grave abuse of discretion in finding that respondent was illegally dismissed.

Private respondent was dismissed by petitioner on the ground of redundancy, one of the authorized causes for dismissal under Article 283 of the Labor Code, to wit:

119

Article 283. Closure of establishment and reduction of personnel.The employer may also terminate the employment of any employee due to the installment of labor saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or reverses, the separation pay shall be equivalent to one (1) month pay or at least one half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year (emphasis supplied).

In Becton Dickinson Phils., Inc. v. National Labor Relations Commission,120[13] citing the leading case, Wiltshire File Co., Inc. v. National Labor Relations Commission,121[14] we explained the nature of redundancy as an authorized cause for dismissal in the following manner: x x x redundancy in an employers personnel force necessarily or even ordinarily refers to duplication of work. That no other person was holding the same position that private respondent held prior to the termination of his services, does not show that his position had not become redundant. Indeed, in any well organized business enterprise, it would be surprising to find duplication of work and two (2) or more people doing the work of one person. We believe that redundancy, for purposes of the Labor Code, exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise. Succinctly put, a position is redundant where it is superfluous, and superfluity of a position or positions may be the outcome of a number of factors, such as overhiring of workers, decrease in volume of business, or dropping of a particular product line or service activity previously manufactured or undertaken by the enterprise.122[15]

We are mindful of the rule that the characterization of an employees services as no longer necessary or sustainable, and therefore, properly terminable, is an exercise of business judgment on the part of the employer, and that the
120 121 122

wisdom or soundness of such characterization or decision is not subject to discretionary review. However, such characterization may be rejected if the same is found to be in violation of law or is arbitrary or malicious.123[16] We have held that the employer must comply with the following requisites to ensure the validity of the implementation of a redundancy program: 1) a written notice served on both the employees and the Department of Labor and Employment (DOLE) at least one month prior to the intended date of retrenchment; 2) payment of separation pay equivalent to at least one month pay or at least one month pay for every year of service, whichever is higher; 3) good faith in abolishing the redundant positions; and 4) fair and reasonable criteria in ascertaining what positions are to be declared redundant and accordingly abolished.124[17]

In Asufrin, Jr. v. San Miguel Corporation,125[18] we ruled that it is not enough for a company to merely declare that it has become overmanned. It must produce adequate proof of such redundancy to justify the dismissal of the affected employees.

In Panlilio v. National Labor Relations Commission,126[19] we held that evidence must be presented to substantiate redundancy such as but not limited to the new staffing pattern, feasibility

123 124 125 126

studies/proposal, on the viability of the newly created positions, job description and the approval by the management of the restructuring.

In the instant case, we find no reversible error committed by the CA in upholding the findings of the NLRC that there was no substantial evidence presented by petitioner to justify private respondent's dismissal due to redundancy. As correctly found by the CA, petitioners evidence to show redundancy merely consisted of a copy of petitioners letter to the DOLE informing the latter of its intention to implement a redundancy program and nothing more. The letter which merely stated that petitioner undertook a review, restructuring and streamlining of its organization which resulted in consolidation, abolition and outsourcing of certain functions; and which resulted in identified and redundant positions instead of simplifying its business process restructuring, does not satisfy the requirement of substantial evidence, that is, the amount of evidence which a reasonable mind might accept as adequate to justify a conclusion.127[20]

Petitioner failed to demonstrate the superfluity of private respondents position as there was nothing in the records that would establish any concrete and real factors recognized by law and relevant jurisprudence,128[21] such as overhiring of workers, decreased volume of business, or dropping of a particular product line or service activity previously manufactured or undertaken by the enterprise, which were adopted by petitioner in implementing the redundancy program.

Petitioner also failed to show any fair and reasonable criteria in ascertaining what positions are redundant and how the selection of employees to be dismissed was made.

127 128

In Capitol Wireless, Inc. v. Confesor,129[22] we have held that in selecting the employee to be dismissed, fair and reasonable criteria must be used such as but not limited to (a) less preferred status, e.g. temporary employee; (b) efficiency; and (c) seniority. No such appraisal was done in the present case. The absence of criteria in the selection of an employee to be dismissed renders the dismissal arbitrary.

Moreover, petitioner failed to refute private respondents assertion that it opened positions of accountants for hiring to which he could have qualified rather than be dismissed. In petitioners Memorandum dated May 28, 1997130[23] and July 4, 1997,131[24] it declared vacant the positions of Terminal Accountant and Internal Auditor, respectively, the minimum requirements of which are being accountants and having 4-5 years experience in handling accounting and supervisory functions, among others. There is no showing that private respondent could not perform the functions demanded of the vacant positions considering his experience as petitioners Senior Accounting Analyst for 13 years and to which he could be transferred instead of being dismissed. We find such hiring of accountants inconsistent with respondents termination due to redundancy.

In fact, petitioner expressly stated in its Answer to private respondents Appeal Memorandum filed with the NLRC that it may still hire additional

129 130 131

employees so long as it is not for the position previously declared and determined to be redundant.132[25]

As we ruled, redundancy exists where the services of an employee are in excess of what is reasonably demanded by the actual requirement of the enterprise.133[26] It is the burden of petitioner, as employer, to prove the factual and legal basis for the dismissal of its employees on the ground of redundancy. 134 [27]

The CA committed no reversible error when it found that petitioner failed to discharge the burden of proving respondents dismissal as valid.

There is merit in petitioners claim that the CAs finding that it (petitioner) failed to provide proof that it truly had an extensive reengineering study on account of business losses arising out of massive oil deregulation is misplaced considering that Article 283 of the Labor Code does not require that the employer should be suffering financial losses before he can terminate the services of the employee on the ground of redundancy.135[28] Nevertheless, the CA finding on this matter does not detract from the fact that petitioner failed to show proof of fair and reasonable criteria for the implementation of a valid redundancy program. Thus, whether it is
132 133 134 135

retrenchment or redundancy, or any of the other authorized causes, no employee may be dismissed without observance of the fundamentals of fair play.136[29]

Petitioner committed a fatal error when it failed to give a written notice to DOLE as required under Article 283 of the Labor Code. All three, the LA, NLRC and the CA, found the absence of notice sent by petitioner to DOLE one month before the intended date of private respondents termination. While petitioner claims that it sent a notice to the DOLE through a letter dated June 30, 1997, petitioner failed to show that the same was actually received by DOLE. The purpose of the written notice to the DOLE is to give it the opportunity to ascertain the verity of the alleged authorized cause of termination.137[30]

Petitioners insistence that its written notice of redundancy program per its October 1996 letter addressed to DOLE is a substantial compliance with the notice requirement, is not persuasive since the said letter merely stated its plan of implementing a redundancy program but did not contain the details necessary to effect the program such as the reason for finding certain portions as redundant, the name of the employees to be terminated and the actual date of termination. In fact, petitioner in its October letter wrote that it would provide DOLE with a list of affected employees as it implements each phase of the redundancy program which it failed to do.

136 137

Petitioners failure to show an authorized cause for private respondents termination is sufficient to declare the dismissal illegal.

Petitioners claim that private respondent consented to his termination by accepting his separation pay deserves scant consideration. Private respondent had no other recourse but to accept his separation pay since petitioners letter made it clear that his position had been determined to be redundant and his services shall be terminated effective July 31, 1997. the Labor Code. As private respondent was dismissed allegedly due to redundancy, he is entitled to separation pay under Article 283 of And since there was no extra consideration for the private respondent to give up his employment, such undertaking cannot be allowed to bar the action for illegal dismissal.138[31]

Petitioner asserts that private respondents reinstatement is no longer possible since his former position was already abolished when it was declared redundant. Notably, this matter was only raised for the first time in petitioners motion for reconsideration139[32] of the assailed CA decision dated May 15, 2003. Private respondent, in his comment140[33] to the motion, contends that petitioners claim is doubtful considering that the establishment where he is to be reinstated has not ceased operation or closed. The CA disregarded the claim of petitioner that private respondents reinstatement is no longer possible and denied the motion for reconsideration finding no cogent reason to reconsider its earlier decision.
138 139 140

The issue of whether private respondents reinstatement to his former or substantially equivalent position is no longer possible, is a factual matter which is not a proper subject of the present petition for review on certiorari since we are not a trier of facts. The parties conflicting claims on this matter can be best determined by the Labor Arbiter upon the execution of the judgment after our Decision shall have become final and executory.

Finally, we find merit in petitioners claim that private respondent should return the amount of P206,737.65 representing ex-gratia benefit paid only to terminated employees on account of the redundancy program. While we note that this matter is raised only for the first time, we have ample authority to review and resolve it if we find the consideration and determination of the same essential and indispensable in order141[34] to arrive at a just decision in the case. The ex-gratia benefit should be returned following the principle against unjust enrichment which is held applicable in labor cases.142[35]

WHEREFORE, the petition is DENIED. The Decision dated May 15, 2003 and the Resolution dated August 21, 2003 of the Court of Appeals in CAG.R. SP No. 65405 are AFFIRMED. However, in the higher interest of justice, private respondent is ordered to return the amount of P206,737.65, representing the ex-gratia benefit paid to him by petitioner.
141 142

No costs.

SO ORDERED

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 160325 October 4, 2007

ROQUE S. DUTERTE, petitioner, vs. KINGSWOOD TRADING CO., INC., FILEMON LIM and NATIONAL LABOR RELATIONS COMMISSION, respondents. DECISION GARCIA, J.: By this petition for review on certiorari, petitioner Roque S. Duterte seeks the review and setting aside of the decision1 dated June 20, 2003 of the Court of Appeals (CA) in CA-G.R. SP No. 71729, as reiterated in its resolution2 of October 5, 2003, affirming an earlier resolution3 of the National Labor Relations Commission (NLRC) which ruled that petitioner was not illegally dismissed from employment due to disease under Article 284 of the Labor Code. The facts: In September 1993, petitioner was hired as truck/trailer driver by respondent Kingswood Trading Company, Inc. (KTC) of which co-respondent Filemon Lim is the President. Petitioner was on the 6:00 a.m. 6:00 p.m. shift. He averaged 21 trips per month, getting P700 per trip. When not driving, petitioner was assigned to clean and maintain respondent KTCs equipment and vehicles for which he was paid P125 per day. Regularly, petitioner would be seconded by respondent Filemon Lim to drive for one of KTCs clients, the Philippine National Oil Corporation, but always subject to respondents convenience.

On November 8, 1998, petitioner had his first heart attack and was confined for two weeks at the Philippine Heart Center (PHC). This was confirmed by respondent KTC which admitted that petitioner was declared on sick leave with corresponding notification. A month later, petitioner returned to work armed with a medical certificate signed by his attending physician at the PHC, attesting to petitioners fitness to work. However, said certificate was not honored by the respondents who refused to allow petitioner to work. In February 1999, petitioner suffered a second heart attack and was again confined at the PHC. Upon release, he stayed home and spent time to recuperate. In June 1999, petitioner attempted to report back to work but was told to look for another job because he was unfit. Respondents refused to declare petitioner fit to work unless physically examined by the company physician. Respondents promise to pay petitioner his separation pay turned out to be an empty one. Instead, petitioner was presented, for his signature, a document as proof of his receipt of the amount of P14,375.00 as first installment of his Social Security System (SSS) benefits. Having received no such amount, petitioner refused to affix his signature thereon and instead requested for the necessary documents from respondents to enable him to claim his SSS benefits, but the latter did not heed his request. On November 11, 1999, petitioner filed against his employer a complaint for illegal dismissal and damages. In a decision4 dated September 26, 2000, the labor arbiter found for the petitioner. However, while categorically declaring that petitioners dismissal was illegal, the labor arbiter, instead of applying Article 2795 of the Labor Code on illegal dismissals, applied Article 284 on Disease as ground for termination on the rationale that since the respondents admitted that petitioner could not be allowed back to work because of the latters disease, the case fell within the ambit of Article 284. We quote the fallo of the labor arbiters decision: WHEREFORE, in the light of the foregoing, judgment is hereby rendered declaring complainant to have been terminated from employment on the ground that he has been suffering from a disease. Respondents are hereby directed to pay complainant as follows: 1. Separation pay equivalent to one-half (1/2) month salary for every year of service computed at six (6) years of service in the amount of Forty-Two Thousand (P42,000.00) Pesos. 2. Holiday pay for three (3) years in the amount of Twenty-One Thousand (P21,000.00) Pesos; and 3. Service Incentive Leave pay for three (3) years in the amount of Ten Thousand (P10,000.00) Pesos.

All other claims herein sought are hereby denied for lack of merit and factual basis. SO ORDERED. On respondents appeal, the NLRC, in its Resolution6 of April 24, 2002, set aside the labor arbiters decision, ruling that Article 284 of the Labor Code has no application to this case, there being "no illegal dismissal to speak of." The NLRC accordingly dismissed petitioners complaint for illegal dismissal, thus: WHEREFORE, the decision appealed from is VACATED and SET ASIDE.7 A new one is hereby entered DISMISSING the instant case for lack of merit. Therefrom, petitioner went on certiorari to the CA in CA-G.R. SP No. 71729. In the herein assailed decision dated June 20, 2003, the CA upheld the NLRC Resolution, saying that the Commission committed no grave abuse of discretion in holding that petitioner was not illegally dismissed and could not be granted any relief. With his motion for a reconsideration having been denied by the CA in its resolution of October 5, 2003, petitioner is now with this Court via the present recourse. We REVERSE. At bottom, this case involves the simple issue of the legality of ones termination from employment made complicated, however, by over analysis. Simply put, the question at hand pivots on who has the onus of presenting the necessary medical certificate to justify what would otherwise be classified as legal or illegal, as the case may be, dismissal from the service. The following may be another formulation of the issue: For purposes of Article 284 of the Labor Code, would the dismissal of an employee on the ground of disease under the said Article 284 still require the employer to present a certification from a competent public health authority that the disease is of such a nature that it could not be cured within a period of six months even with proper medical treatment? To both the NLRC and the CA, a dismissal on the ground of disease under Article 284 of the Code is illegal only if the employee himself presents the required certification from the proper health authority. Since, as in this case, petitioner failed to produce such certification, his dismissal could not be illegal. In the precise words of the NLRC which the CA effectively affirmed: Neither can it be gainsaid that Article 284 of the Labor Code applies in the instant case since the complainant [petitioner] failed to establish that he is suffering from a disease and his continued employment is prohibited by law or prejudicial to his health or to the health of his co-employees nor was he able to prove that his illness is of such nature or at such stage that it cannot be cured within a period of six months even with proper treatment.8 In order for the complainant to be covered by Article 284 of the Labor Code, he must first present a certification by a competent public health authority that his continued employment will result in the aforesaid consequences, but unfortunately for the complainant, we find none in the instant case. For the respondents to require the

complainant to submit a medical certificate showing that he is already physically fit as a condition of his continued employment under the prevailing circumstance cannot be considered as neither harsh nor oppressive. xxx Prescinding from the above, there is no illegal dismissal to speak of. This finding is further strengthened by the fact that no termination letter or formal notice of dismissal was adduced to prove that complainants services have been terminated. Considering that no illegal dismissal took place, the complainants claim that his right to due process of law had been violated finds no application to the case at bar. (Emphasis added). The Court disagrees with the NLRC and CA. Article 284 of the Labor Code explicitly provides: Art. 284. DISEASE AS GROUND FOR TERMINATION. -- An employer may terminate the services of an employee who has been found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health as well as to the health of his co-employees: Provided, That he is paid separation pay equivalent to at least one (1) month salary or to one-half (1/2) month salary for every year of service, whichever is greater, a fraction of at least six (6) months being considered as one (1) whole year. Corollarily, in order to validly terminate employment on the basis of disease, Book VI, Rule I, Section 8 of the Omnibus Implementing Rules of the Labor Code requires: Disease as a ground for dismissal. -- Where the employee suffers from a disease and his continued employment is prohibited by law or prejudicial to his health or to the health of his co-employees, the employer shall not terminate his employment unless there is a certification by a competent public health authority that the disease is of such nature or at such a stage that it cannot be cured within a period of six (6) months even with proper medical treatment. If the disease or ailment can be cured within the period, the employer shall not terminate the employee but shall ask the employee to take a leave. The employer shall reinstate such employee to his former position immediately upon the restoration of his normal health. (Book VI, Rule 1, Sec. 8 of the Implementing Rules) In a very real sense, both the NLRC and the appellate court placed on the petitioner the burden of establishing, by a certification of a competent public authority, that his ailment is such that it cannot be cured within a period of six months even with proper medical treatment. And pursuing their logic, petitioner could not claim having been illegally dismissed due to disease, failing, as he did, to present such certification. To be sure, the NLRCs above posture is, to say the least, without basis in law and jurisprudence. And when the CA affirmed the NLRC, the appellate court in effect placed on the petitioner the onus of proving his entitlement to separation pay and thereby validated herein respondents act of dismissing him from employment even without proof of existence of a legal ground for dismissal.

The law is unequivocal: the employer, before it can legally dismiss its employee on the ground of disease, must adduce a certification from a competent public authority that the disease of which its employee is suffering is of such nature or at such a stage that it cannot be cured within a period of six months even with proper treatment. Here, the record does not contain the required certification. And when the respondents asked the petitioner to look for another job because he was unfit to work, such unilateral declaration, even if backed up by the findings of its company doctors, did not meet the quantum requirement mandated by the law, i.e., there must be a certification by a competent public authority.9 For sure, the posture taken by both the NLRC and the CA is inconsistent with this Courts pronouncement in Tan v. National Labor Relations Commission,10 thus: Consistent with the Labor Code state policy of affording protection to labor and of liberal construction of labor laws in favor of the working class, Sec. 8, Rule 1, Book VI, of the Omnibus Rules Implementing the Labor Code provides Where the employee suffers from a disease and his continued employment is prohibited by law or prejudicial to his health or to the health of his co-employees, the employer shall not terminate his employment, unless there is a certification by a competent public authority that the disease is of such nature or at such a stage, that it cannot be cured within a period of six (6) months even with proper medical treatment.. There is absolutely nothing on record to show that such a certification was ever obtained by [the employer] much less that one was issued by a competent public authority [o]n the contrary, what appears on record is a Medical Certificate dated May 5, 1999 issued by Dr. Lenita C. de Castro certifying to the contrary, i.e., that [the employee] was in fact already fit to return to work. However, [the employer] did not accept the certificate and insisted that [the employee] present one issued by a government physician. For his failure to present such a certificate, [the employee] was penalized with dismissal. Obviously, the condition imposed by [the employer] finds no basis under the law. To reiterate, contrary to [the employers] insistence that [the employee] first obtain a medical certificate attesting that he was already cured of pulmonary tuberculosis, the abovequoted Sec. 9, Rule 1, Book VI, of the Omnibus Rules is clear that the burden is upon [the employer] not [the employee] to justify the dismissal with a certificate public authority that [the employees] disease is at such stage or of such nature that it cannot be cured within six (6) months even with proper medical treatment. For [the employers] blatant failure to present one, we can only rule that [the employees] dismissal, like that of Garrido, is illegal, invalid and unjustified. (Emphasis and words in brackets supplied.) In Triple Eight Integrated Services, Inc. v. NLRC,11 the Court explains why the submission of the requisite medical certificate is for the employers compliance, thus: The requirement for a medical certificate under Article 284 of the Labor Code cannot be dispensed with; otherwise, it would sanction the unilateral and arbitrary determination by the employer of the gravity or extent of the employees illness and thus defeat the public policy on the protection of labor.

In thus ruling out an illegal dismissal situation in the instant case, the CA effectively agreed with the NLRCs view that the fact of dismissal must be evidenced by positive and overt acts, citing Veterans Phil. Scout Security Agency v. NLRC.12 Said case, however, is not on all fours with the present one. In Veterans, the employer offered the complainant-employee a monthly cash allowance and other benefit pending a new assignment. Therein, the employee was not forthrightly nor constructively dismissed. In fact, the employee in Veterans was found to be in bad faith as he filed his complaint for illegal dismissal the day immediately after he accepted the companys offer of employment benefits. Hence, the Courts ruling in Veterans that the fact of dismissal must be evidenced by positive and overt acts indicating the intention to dismiss. These considerations do not obtain here. Petitioner was not allowed back to work. Neither did he receive any monetary assistance from his employer, and, worse, respondents refused to give him the necessary documents to enable him to claim his SSS benefits. Much was made by the NLRC and the CA about petitioners refusal to comply with respondents order to submit a medical certificate irresistibly implying that such refusal is what constrained them to refuse to take petitioner back in. We are not persuaded. Even assuming, in gratia argumenti, that petitioner committed what may be considered an act of insubordination for refusing to present a medical certificate, such offense, without more, certainly did not warrant the latters placement in a floating status, a veritable dismissal, and deprived of his only source of livelihood. We are not unmindful of the connection between the nature of petitioners disease and his job as a truck/trailer driver. We are also fully aware that petitioners job places at stake the safety of the public. However, we do not agree with the NLRC that petitioner was validly dismissed because his continued employment was prohibited by the basic legal mandate that reasonable diligence must be exercised to prevent prejudice to the public, which justified respondents in refusing work to petitioner. Petitioner could have been admitted back to work performing other tasks, such as cleaning and maintaining respondent companys machine and transportation assets. As a final consideration, the Court notes that the NLRC, as sustained by the CA, considered the petitioner as a field worker and, on that basis, denied his claim for benefits under Articles 9413 to 9514 of the Labor Code, such as holiday pay and service incentive leave pay. Article 82 of the Code lists personnel who are not entitled to the benefits aforementioned.15 Among the excluded group are "field personnel," referring to non-agricultural employees who regularly perform their duties away from the principal place of business or branch office of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty. As a general proposition, field personnel are those whose job/service are not or cannot be effectively monitored by the employer or his representative, their workplace being away from the principal office and whose hours and days of work cannot be determined with reasonable certainty. Field personnel are paid specific amount for rendering specific service or performing specific work. If required to be at specific places at specific times, employees, including drivers, cannot be said to be field personnel despite the fact that they are performing work away from the principal office of

the employer. Thus, to determine whether an employee is a field employee, it is also necessary to ascertain if actual hours of work in the field can be determined with reasonable certainty by the employer. In so doing, an inquiry must be made as to whether or not the employees time and performance are constantly supervised by the employer.16 Guided by the foregoing norms, petitioner was definitely a regular employee of respondent company and not its field personnel, as the term is used in the Labor Code. As it were, he was based at the principal office of the respondent company. His actual work hours, i.e., from 6:00 a.m. to 6:00 p.m., were ascertainable with reasonable certainty. He averaged 21 trips per month. And if not driving for the company, he was paid P125.00 per day for cleaning and maintaining KTCs equipment. Not falling under the category of field personnel, petitioner is consequently entitled to both holiday pay and service incentive leave pay, as mandated by Articles 94 and 95 of the Labor Code. All told, we rule and so hold that petitioners dismissal did not comply with both the substantive and procedural aspects of due process. Clearly, his dismissal is tainted with invalidity.17 WHEREFORE, the assailed decision of the CA in CA-G.R. SP No. 71729 is REVERSED and SET ASIDE. Respondents are declared guilty of illegal dismissal and are ordered to pay petitioner separation pay equivalent to one (1) month pay for every year of service, in lieu of his reinstatement, plus his full backwages from the time his employment was terminated up to the time this Decision becomes final. For this purpose, let this case be REMANDED to the labor arbiter for the computation of petitioners separation pay, backwages and other monetary awards due him. Costs against respondents. SO ORDERED

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 150861 January 22, 2008

AL ARELLANO, SOLOMON BRITANICO, VALERIANO MENDOZA, JOSE PERPETUA, REY PAMINIANO, FREDDIE JIMENA, JOEL UBANA, ALEX MABANTA, ALEXANDER ANTONIO, JERRY NACAYTUNA, ELIZER DELFIN, FRANCISCO CORPUZ, ALEX GARIDO, DANTE DIMAANO, NARCISO ALBAY, MAXIMO GAGARIN, APOLLO CAYABYAB, RONALD GESTIADA, SERGIO ESPERANZA, ROMEO CARPIO and RODRIGO ORDINIZA, petitioners, vs.

POWERTECH CORPORATION, WILLIE CABOBOS and COURT OF APPEALS (Former Special Ninth Division), respondents. DECISION REYES, R.T., J.: FOCUS of this case is the validity of a quitclaim based on a broad special power of attorney affecting the rights of twenty-two (22) employees. This is a petition for review on certiorari assailing the Decision1 of the Court of Appeals (CA) which annulled the Resolution2 of the National Labor Relations Commission (NLRC) voiding the quitclaim and release executed by petitioners attorney-in-fact in favor of their employer, private respondent Powertech Corporation (Powertech). The Antecedents The case stems from a complaint for illegal dismissal and other money claims filed by the Nagkakaisang Manggagawa Ng Powertech Corporation in behalf of its 52 individual members and non-union members against their employer, Powertech. The case was dismissed as to twenty-seven (27) employees by virtue of duly executed affidavits of repudiation and quitclaim. The case proceeded with respect to the remaining twenty-five (25) employees, petitioners in this case. On June 25, 1999, Labor Arbiter Renell Joseph R. Dela Cruz rendered a Decision3 declaring illegal the termination of twenty (20) of petitioners and granting their monetary claims in the total amount of P2,538,728.84. Powertech appealed to the NLRC. During its pendency, Carlos Gestiada, for himself and on behalf of other petitioners, executed a quitclaim, release and waiver4 in favor of Powertech in consideration of the amount of P150,000.00. Earlier, Gestiada was appointed by his co-petitioners as their attorney-in-fact. The appointment was evidenced by a special power of attorney dated October 8, 1999.5 The compromise amount was paid to Gestiada by check. Relying on the quitclaim and release, Powertech filed a motion for the withdrawal of the appeal and cash bond. The NLRC granted6 the motion, dismissed the appeal and ordered the release of the cash bond. The P150,000.00 check, however, bounced due to a stop payment order of Powertech.7 Aggrieved, petitioners moved to nullify the release and quitclaim for lack of consideration. In a Resolution dated February 29, 2000, the NLRC declared the quitclaim, release and waiver void for lack of consideration, reinstated the appeal and ordered Powertech to post a cash or surety bond for the monetary judgment less the amount it had previously posted.8 On March 15, 2000, Gestiada terminated the services of their counsel, Atty. Evangelista and, instead, retained Atty. Manuel Luis Felipe of the Public Attorneys Office.9

A day later, Powertech paid P150,000.00 to Gestiada purportedly as compromise amount for all of petitioners. That same day, Gestiada, through Atty. Felipe, and Powertech filed a joint motion to dismiss10 with the NLRC based on the compromise agreement. Atty. Evangelista opposed11 the motion, alleging that the compromise agreement is unconscionable, that he was illegally terminated as counsel for the other petitioners without their consent, and that the P150,000.00 was received by Gestiada as payment solely for his backwages and other monetary claims. NLRC Resolution On July 31, 2000, the NLRC issued a resolution12 denying the joint motion to dismiss, disposing as follows: WHEREFORE, in view of the foregoing the Joint Motion to Dismiss filed on March 17, 2000 is hereby DENIED for lack of merit. Respondents Omnibus Motion/Manifestation is hereby DENIED for lack of merit and respondents appeal filed on August 9, 1999 is hereby DISMISSED for failure to perfect the same. SO ORDERED.13 In denying the joint motion to dismiss, the NLRC held that the P150,000.00 received by Gestiada did not cover the monetary claim of petitioners against Powertech. The NLRC stated: Evidence show that there was no voluntary severance of attorney-client relationship between Gestiada representing the other complainants and Atty. Evangelista. Thus, in a letter to Atty. Evangelista Gestiada wrote: "Tungkol naman po sa pagtanggal sa inyo bilang abogado iyan po ay isang suwestiyon ni Ginoong Ver Sarmiento at isang kondisyon para ibigay nila ang kabayaran ng aking backwages at karagdagang sahod. Pasensiya na po at kung ako ay maluwag babayaran ko kayo sa inyong serbisyo. Totoong walang pahintulot ang aking mga kasama sa pagtanggal ko sa inyo pero pangsariling desisyon ko po iyon para sa aking kapakanan." The other complainants in this case have never indicated any objection to the continued appearance of Atty. Evangelista. Hence, it must be presumed that Atty. Evangelistas appearance is with the consent of all the complainants herein. On the Joint Motion to Dismiss in their opposition, the other complainants represented by Atty. Evangelista argued that Gestiada received the PhP150,000.00 referred to in the Quitclaim and Release as payment and for his backwages. It is further argued that Gestiada had never intervened in the payment of awards due the other complainants in this case. Thus, as admitted by Gestiada in the same letter addressed to Atty. Evangelista:

"Nais ko pong ipaalam sa inyo na ang kinuha kong pera sa Powertech Corporation sa halagang PhP150,000.00 ay bilang kabayaran sa aking backwages na iginawad sa Desisyon ni Kagalang-galang Labor Arbiter Joseph Rennel dela Cruz. Kung kukuwentahin kulang pa po yon dahil may babayaran pa ang kumpanya na karagdagang sahod o reinstatement salaries mula po lumabas ang Desisyon na ako ay pabalikin sa aking trabaho, hindi po ako pinabalik ng kompanya. x x x x x x Hindi ko naman po pinakialaman ang kabayaran para sa aking mga kasamahan." Gestiadas admission that he received the amount of PhP150,000.00 only as payment for his backwages and that the same has no reference to the claim of the other complainants in this case is bolstered further by the fact that the Quitclaim and Release attached to the instant Joint Motion to Dismiss was signed only by Gestiada and that the other complainants never took part in the execution thereof. A waiver of money claims must be regarded as a personal right; hence, the protective rule that for a compromise dealing with their judgment to be validly entered into there must be personal and specific individual consent given by the workers (Galicia v. NLRC, 276 SCRA 381; Republic v. NLRC, 744 SCRA 564; General Rubber v. Onion, 169 SCRA 808). In any case granting in gratia argumenti that Gestiada had the authority to enter into a compromise agreement in behalf of the other complainants, the Quitclaim and Release cannot be recognized as a valid and binding undertaking as the consideration therefore (PhP150,000.00) as opposed to the total monetary award in the amount equivalent to PhP2,538,728.84 is clearly unconscionable and is thus void for being contrary to public policy.14 For failure of Powertech to post the required cash or surety bond, the NLRC ruled that the Labor Arbiter decision had attained finality, to wit: Thus, settled records show that on June 8, 2000, (illegible), through counsel, received a copy of Our Resolution dated May 24, 2000 directing herein respondents to post a cash or surety bond within ten (10) days from receipt thereof. An appeal is neither a natural right nor is it a part of the due process but is purely a statutory privilege and may be exercised only in the manner prescribed by and in accordance with the provisions of law (Acda v. Minister of Labor, 119 SCRA 306). Whoever would avail of it must strictly comply with (illegible) particularly as these are clearly spelled in the rules ([illegible] Industry v. NLRC, G.R. No. 94754 [May 11, 1993]). Considering that the Joint Motion to Dismiss remains unacted upon at the time respondents received a copy of Our Resolution dated May 24, 2000 respondents in accordance with said Resolution and with Article 223 Labor Code and with Section 6, Rule VI, NLRC New Rules of Procedure should have posted a cash or surety bond. Hence, failing to do so the appealed Decision is deemed final and executory (Acda v. Minister of Labor, supra).15

Undaunted, Powertech elevated the matter to the CA via petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure. CA Disposition On June 20, 2001, the CA rendered a decision in favor of Powertech. The dispositive portion of the decision reads: WHEREFORE, premises considered, the petition is GIVEN DUE COURSE and is hereby GRANTED. The Resolution of the National Labor Relations Commission dated July 31, 2000 declaring the Quitclaim and Release void ab initio and denying the Joint Motion to Dismiss and dismissing the appeal of the petitioners is ANNULLED and SET ASIDE. No pronouncement as to costs. SO ORDERED.16 The CA upheld the validity of the compromise agreement between petitioners and Powertech in the following tenor: The public respondents act of dismissing the appeal and declaring the compromise agreement void is a grave abuse of discretion. Apparently, the National Labor Relations Commission has already lost jurisdiction over the case because the appeal was already considered withdrawn and the cash bond was released through its Resolution dated January 10, 1999. It is noted that said resolution withdrawing the appeal has become final and executory since the same has not been the subject of a motion for reconsideration. In the case at bench, the private respondents sought a reconsideration of the January 10, 1999 resolution because of the non-compliance of the terms and conditions of the agreement by the petitioners or their failure to pay the consideration. Thus, for all intents and purposes, the appeal was considered withdrawn and there could therefore be no legal basis for public respondent to dismiss the same. Neither should the petitioners be required to post any cash or surety bond for the simple reason that there is no more appeal to speak of. Similarly stated, the case having been amicably settled for which a resolution was issued, ipso facto, the filing of a bond is no longer warranted. Anent the public respondents act of declaring the compromise agreement void, the same is likewise a grave abuse of discretion amounting to lack or excess of jurisdiction. Fundamental is the rule that a compromise agreement entered into in good faith by workers and their employer to resolve a pending controversy is valid and binding on the agreeing parties. The National Labor Relations Commission shall not assume jurisdiction over issues involved in the compromise agreement except 1) in case of non-compliance thereof, or 2) if there is prima facie evidence that the settlement was obtained through fraud, misrepresentation or coercion. In the first instance, the Civil Code of the Philippines affords the prevailing party legal remedies in case of non-compliance of the terms and conditions of the compromise agreement. Article 2041 thereof provides that should a party fail or refuse to comply with the terms of a compromise or amicable settlement, the other

party could either a) enforce the compromise by a writ of execution, or b) regard it as rescinded and so insist upon his original demand. The public respondent, in taking cognizance therefore of the motion for reconsideration by the complainants seeking to declare the compromise agreement void on the ground of nonpayment, and consequently, declaring the same as being contrary to law pursuant to its Resolution dated February 29, 2000, acted in excess of jurisdiction since the procedure for acquiring jurisdiction over the case was not properly observed. Indeed, the proper remedy of the aggrieved party is not to file a motion for reconsideration on the ground of nonpayment but to have the compromise agreement enforced by means of a writ of execution. Any violation of the terms thereof would entitle the aggrieved party to an execution of the judgment. In the case of Paredes v. Court of Appeals, the Supreme Court held that if the terms of the settlement are violated, execution is the proper remedy. By and large, when the NLRC made a pronouncement that the compromise agreement is valid and that the appeal has been withdrawn, the same became the law between the parties. Enshrined is the doctrine that compromise agreements voluntarily agreed upon shall be final and binding upon the parties. Hence, judgment in consonance with a compromise agreement is consequently rendered in accordance therewith and the parties are enjoined to comply with, abide by, its terms and conditions. Settlements of this kind are not only recognized to be proper agreements but so encouraged as well. x x x xxxx Suffice it to say that the Supreme Court has consistently held that a compromise agreement, once approved by final orders of the court has the force of res judicata between the parties and should not be disturbed except for vices of consent or forgery. Since a compromise has upon the parties and their successors-in-interest the effect of res judicata, it can only be rescinded on the ground of vitiated consent and this is true even if the compromise turns out to be unsatisfactory to either of the parties. In the instant case, there is no evidence to show that the agreement was entered into by means of fraud, accident, mistake, or excusable negligence or that the agreement was forged. The compromise agreement was voluntarily entered into, since the complainants signified their individual consent to the same by authorizing Carlos Gestiada through a special power of attorney to act for and in their behalf. Moreover, their very own lawyer Atty. Jose Evangelista acted as their witness in that agreement and affixed his signature thereon. On top of this, the said document was subscribed and sworn before Labor Arbiter Dela Cruz. Accordingly, the findings of the NLRC, that the execution of the second compromise agreement is null and void since the consideration of P150,000 was merely a payment for Carlos Gestiadas backwages without reference to the claims of the other complainants, becomes moot and academic. Parenthetically, its findings declaring valid the authority of Atty. Evangelista in filing the Opposition to the Joint Motion to Dismiss questioning the reasonableness of the consideration of the settlement agreement is also futile. In short, the issue as the validity of the compromise agreement and the authority of Atty. Evangelista

has been rendered moot and academic by the fact of payment of the consideration of the settlement.17 Petitioners moved to reconsider the CA decision but their motion was denied.18 Hence, the present recourse. Issues Petitioners impute to the CA "grave abuse of discretion,"19 contending that I PUBLIC RESPONDENT COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN RULING THAT THE NATIONAL LABOR RELATIONS COMMISSION HAD ALREADY LOST JURISDICTION WHEN IT DISMISSED THE APPEAL OF PRIVATE RESPONDENTS. II PUBLIC RESPONDENT COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION IN RULING THAT THE NATIONAL LABOR RELATIONS COMMISSION COMMITTED GRAVE ABUSE OF DISCRETION IN DECLARING VOID THE COMPROMISE AGREEMENT. III PUBLIC RESPONDENT COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN ASSUMING JURISDICTION OVER THE PRESENT PETITION CONSIDERING THAT PRIVATE RESPONDENTS FAILED TO PERFECT THEIR APPEAL WITH THE NATIONAL LABOR RELATIONS COMMISSION. (Underscoring supplied) Our Ruling The meat of the petition is found in the second contention. We shall deal with it ahead of the two others which can be merged into one. The P150,000 was paid to Gestiada solely as payment for his backwages, not those of petitioners; there is evident collusion between Powertech and Gestiada, hence, the compromise agreement is void. Petitioners assert that the P150,000.00 paid to Gestiada was payment solely for himself. As proof, they rely on the letter written in Filipino by Gestiada to Atty. Evangelista dated March 23, 2000.20 Right at the opening sentence, Gestiada stated that "ang kinuha kong pera sa Powertech Corporation na halagang P150,000.00 ay bilang kabayaran sa aking backwages na iginawad sa

desisyon ni Kagalang-galang Labor Arbiter Joseph Rennel Dela Cruz." (the money I got from Powertech in the sum of P150,000.00 was for payment of my backwages awarded under the decision of the Labor Arbiter.) In the penultimate sentence, Gestiada further clarified that "hindi ko naman po pinakialaman ang kabayaran para sa aking mga kasamahan." (I did not deal with the payment for my companions.) The letter reads: Ginoong Atty. Jose Evangelista Suite 1009, 1010 Bldg., A. Mabini Street Ermita, Manila, Metro Manila Sir: Nais ko pong ipaalam sa inyo na ang kinuha kong pera sa Powertech Corporation na halagang P150,000.00 ay bilang kabayaran sa aking backwages na iginawad sa desisyon ni Kagalang-galang Labor Arbiter Joseph Rennel Dela Cruz. Kung kukuwentahin kulang pa po yon dahil may babayaran pa ang kompanya na karagdagang sahod o reinstatement salaries dahil mula po lumabas ang Desisyon na ako ay pabalikin sa aking trabaho, hindi po ako pinabalik ng kompanya. Kahit kulang, napilitan po akong tanggapin ang alok ng kompanya dahil sa tindi ng pangangailangan ng aking pamilya lalo na mula ng ako ay natanggal hanggang ngayon walang tumanggap na ibang kompanya para ako ay makapagtrabaho. Tungkol po naman sa pagtanggal sa inyo bilang abogado, iyan po ay isang suwestiyon ni Ginoong Ver Sarmiento at isang kondisyon para ibigay nila ang kabayaran ng aking backwages at karagdagang sahod. Pasensiya na po at kung ako ay maluwag babayaran ko kayo sa inyong serbisyo. Totoong walang pahintulot ang aking mga kasama sa pagtanggal ko sa inyo, pero pangsariling desisyon ko po iyon para sa aking kapakanan. Hindi ko naman po pinakialaman ang kabayaran para sa aking mga kasamahan. Kung di po kayo napadalahan ng summons o notice ng NLRC sa komperensiya noong Marso 14, 2000 at Marso 15, 2000, hindi ko po alam iyon. Pasensiya na po at maraming salamat sa iyong pangunawa. Gumagalang, (Sgd.) Carlos Gestiada (Underscoring supplied) Powertech, on the other hand, argues that the P150,000.00 was given to Gestiada as compromise amount for all the petitioners. It relies on the release and quitclaim signed by Gestiada indicating that he signed "for himself and attorney-in-fact of all complainants." It is pointed out that Gestiada was given a special power of attorney to negotiate with Powertech on behalf of petitioners. The pertinent portions of the said special power of attorney21 authorize Gestiada to perform the following acts for petitioners:

1. TO REPRESENT us in the case entitled "Nagkakaisa Manggagawa ng Powertech Corporation, et al. v. Power Corporation, et al.," NLRC NCR No. 02-01876-98 NCR-0403148-98; 2. TO ENTER into amicable settlement and compromise agreement under terms and conditions he may deem just and reasonable; 3. TO RECEIVE, COLLECT, ENCASH, DEPOSIT and WITHDRAW, in trust, cash, checks, bills, negotiable instruments and properties representing awards based on judgments and/or compromise agreement or voluntary tender of payment by reason of the aforementioned case; 4. TO SIGN AND EXECUTE compromise agreement, receipts, vouchers, waiver, quitclaims, and other papers and documents pertaining to the foregoing authority.22 The quitclaim, release and waiver23 signed by Gestiada reads: COMES NOW the undersigned complainant(s)/petitioner(s) in the above-entitled case(s) before this office respectfully manifest: That for and in consideration of the sum of ONE HUNDRED FIFTY THOUSAND PESOS (P150,000.00) to (sic) paid by Powertech Corporation in settlement of my/our claims as complainants in the case receipt of which is hereby acknowledged to my/our complete and full satisfaction. I/we hereby release and discharge the said Powertech Corporation and its officer(s) from any/all by way of unpaid wages, separation pay, overtime pay, differential pay or 13th months pay, bonuses, allowances, fringe benefits, SL/VL/SIL, medical benefits, and claims for illegal dismissal reinstatement, backwages, attorneys fees, or otherwise as may be due me/us in connection with my past employment with said establishment and its office. IN VIEW WHEREOF, I/We have hereunto set my/our hand(s) this 16th day of March, 2000 in the City of Quezon City, Philippines. (Sgd.) CARLOS G. GESTIADA Complainant For himself and AttorneyIn-Fact of all Complainants24 If reliance is placed solely on the quitclaim release and waiver executed by Gestiada and the special power of attorney, it would be an inevitable conclusion that the P150,000.00 compromise covered the claims of petitioners, not merely that of Gestiada. That is apparent from the waiver and the special power of attorney. There is much to be said, however, of the circumstances in the execution and the payment of the amount which lead Us to conclude that the P150,000.00 was given to Gestiada solely as payment for his backwages and other monetary claims.

First, the P150,000 compromise is rather measly when taken in light of the more than P2.5 million judgment on appeal to the NLRC. Petitioners already won on the arbiter level P2.5 million pesos. It is highly improbable that they would suddenly agree to accept P150,000 as compromise for the P2.5 million. That translates to a paltry sum of P6,000.00 each for petitioners. From this amount will still be deducted attorneys fees and other litigation expenses. In effect, petitioners agreed to waive more than 94% of what they expect to receive from Powertech. We note that the compromise is a mere 6% of the contingent sum that may be received by petitioners. This minuscule amount is certainly questionable because, to Our mind, it does not represent a true and fair amount which a reasonable agent may bargain for his principal. We contrast the monetary judgment to the P150,000.00 received by Gestiada, which appears to be his share in the P2.5 million based on the calculation of the NLRC.25 We find no plausible reason to disbelieve his claim that the sum represents payment solely of his backwages. In Galicia v. National Labor Relations Commission (Second Division),26 this Court invalidated a compromise agreement which entitled a worker to receive P12,000 in lieu of a monetary judgment of P108,000 for being palpably inequitable, to wit: The more relevant inquiry is whether the consideration for the quitclaims signed by the workers was reasonable and acceptable. Where it is shown that the person making the waiver did so voluntarily and with full understanding of what he was doing and the consideration of the quitclaim is credible, the transaction must be recognized as a valid and binding undertaking. Here, the amount accepted by petitioners was very much less than the amount awarded by the Labor Arbiter. The consideration for the quitclaim, a measly P12,000.00 per worker and the total sum of P300,000.00 are inordinately low and exceedingly unreasonable relative to the P107,380.00 per worker and total P3,223,261.00 awarded by the Arbiter. Palpably inequitable, the quitclaim cannot be considered an obstacle to the pursuit of their legitimate claims. Petitioners never accepted as full compensation the meager amount they received when they signed the quitclaim and release. In the Sinumpaang Salaysay they executed the next day, they expressly declared their awareness that the amount they received was unjust and insufficient to answer for their just claims and the award given by the Labor Arbiter, but due to destitution caused by their protracted unemployment, they decided to accept the P12,000.00 in the meantime. The Court also recognizes "dire necessity" of laborers as ample justification to accept even insufficient sums of money from their employers. xxxx Worth noting is the Solicitor Generals opinion in favor of granting the petition. The OSG concluded that "(w)hile petitioners may not have been tricked into accepting the P12,000.00, to repeat, the undisputed and concurrent circumstances of dire necessity and unconscionability obtaining in the case at bar constitute more than sufficient ground to invalidate the compromise agreement." (Underscoring supplied) Second, even granting for the mere sake of argument that the P150,000 was a fair and reasonable compromise for all, petitioners failed to receive a single centavo from the compromise. This

conclusively indicates that Gestiada received the P150,000 in payment of his backwages and no other. Third, We give credence to the admission of Gestiada that he received the P150,000.00 as payment for his own backwages. In his letter to Atty. Evangelista, Gestiada said that he was pressured by Powertech to sign the waiver and quitclaim for petitioners in order to receive his share in the P2.5 million judgment. Having no stable job after his dismissal, Gestiada had no other choice but to breach his fiduciary obligation to petitioners. He succumbed to the pressure of Powertech in signing the waiver, release and quitclaim in exchange for the P150,000.00. In short, he colluded with Powertech to the detriment of petitioners. Powertech knew that Gestiada had plenary authority to act for petitioners in the labor case. It had prior dealings with him. It also knew that Gestiada was authorized to negotiate for any amount "he may deem just and reasonable" and to sign waivers and quitclaims on behalf of petitioners. Powertech obviously used that knowledge, capitalized on the vulnerable position of Gestiada in entering into the agreement and took advantage of the situation to the disadvantage of petitioners. Fourth, the events that led to the execution of the compromise agreement show that Powertech was negotiating in bad faith. More importantly, they show that Powertech colluded with Gestiada to defraud petitioners of their share of the P2.5 million Labor Arbiter judgment. Evidently, Powertech never intended to pay the P150,000 compromise agreement. It was minded to do so only after the NLRC declared the compromise void and reinstated the P2.5 million judgment of the Labor Arbiter. It cannot escape Our notice that Powertech even ordered a stop payment for the P150,000.00 check issued to Gestiada without any sufficient reason. Worse, it was recalcitrant in making good the check despite due demand. To Our mind, what prompted Powertech to agree to pay the P150,000.00 was the NLRC order voiding the compromise agreement and reinstating the Labor Arbiter P2.5 million judgment. By then, Powertech was faced with the possibility of paying P2.5 million to petitioners. It was also required by law to post a surety bond for the same amount in order to perfect its appeal with the NLRC. Armed with the NLRC order, petitioners were bent on pursuing their appeal. Powertech panicked. It negotiated with Gestiada offering him P150,000.00 in exchange for a waiver and quitclaim for himself and for petitioners. Powertech knew that Gestiada was authorized by petitioners to negotiate for "any sum he may deem just and reasonable" and to sign quitclaims and waivers for them. Jobless and having no regular income, Gestiada succumbed to the pressure. He connived with Powertech and agreed to receive the P150,000.00 for himself in exchange for signing a quitclaim and waiver in the name of petitioners. To give effect to the collusion, Gestiada had to get rid of Atty. Evangelista, who had previously succeeded in nullifying the compromise agreement. He fired Atty. Evangelista without cause basing his dismissal on his plenary authority as agent of petitioners. He then procured the services of another lawyer, Atty. Felipe. We find it striking that Gestiada was not authorized under the special power of attorney to terminate or retain another counsel for petitioners in the labor dispute.

The special power of attorney merely authorized Gestiada to negotiate with Powertech, nothing more. In his letter, Gestiada admitted that the dismissal of Atty. Evangelista was upon the prodding of Virtue Sarmiento, personnel manager of Powertech. Powertech imposed the dismissal of Atty. Evangelista as a condition before Gestiada may receive the amount. A day after firing Atty. Evangelista, Gestiada received the P150,000.00. That same day, Gestiada, represented by Atty. Felipe, and Powertech filed a joint motion to dismiss with the NLRC. All these circumstances indicate that the P150,000.00 was received by Gestiada solely as payment for his backwages and not a whit of a settlement for the monetary claim of petitioners. In line with Our conclusion that Powertech colluded with Gestiada, the CA gravely erred in upholding the compromise agreement. The appellate court decision was premised on the compromise agreement being entered into by Powertech and Gestiada in good faith. It is now clear that there is ample evidence indicating that Powertech was negotiating in bad faith and, worse, it colluded with Gestiada in shortchanging, nay, fraudulently depriving petitioners of their just share in the award. Collusion is a species of fraud.27 Article 227 of the Labor Code empowers the NLRC to void a compromise agreement for fraud, thus: Any compromise settlement, including those involving labor standard laws, voluntarily agreed upon by the parties with the assistance of the Bureau or the regional office of the Department of Labor, shall be final and binding upon the parties. The National Labor Relations Commission or any court shall not assume jurisdiction over issues involved therein except in case of non-compliance thereof or if there is prima facie evidence that the settlement was obtained through fraud, misrepresentation, or coercion.28 (Underscoring supplied) In fine, We find that the CA erred in upholding the compromise agreement between Powertech and Gestiada. The NLRC justifiably declared the compromise agreement as void. Posting of surety bond is mandatory and jurisdictional. Failure to post surety bond rendered the Labor Arbiter decision final and executory. Addressing petitioners third contention on the failure of Powertech to post a surety bond, We agree with the NLRC resolution dismissing its appeal. Said the NLRC on this point: An appeal is neither a natural right nor is it part of due process but purely a statutory privilege and may be exercised only in the manner and in accordance with the provisions of law (Acda v. Minister of Labor, 119 SCRA 306). x x x Considering that the Joint motion to Dismiss remains unacted upon at the time respondents received a copy of Our Resolution dated May 24, 2000, respondents, in accordance with said Resolution and with Article 223 Labor Code and with Section 6, Rule VI, NLRC New Rules of Procedure should have

posted a cash and surety bond. Hence failing to do so the appealed Decision is deemed final and executory (Acda v. Minister of Labor, supra). The posting of a surety bond is mandatory and jurisdictional. This is well settled. In Viron Garments Manufacturing Co., Inc. v. National Labor Relations Commission,29 this Court held: The intention of the lawmakers to make the bond an indispensable requisite for the perfection of an appeal by the employer, is clearly limned (sic) in the provision that an appeal by the employer may be perfected "only upon the posting of a cash or surety bond." The word "only"; makes it perfectly clear, that the lawmakers intended the posting of a cash or surety bond by the employer to be the exclusive means by which an employer's appeal may be perfected. The word "may" refers to the perfection of an appeal as optional on the part of the defeated party, but not to the posting of an appeal bond, if he desires to appeal. The meaning and the intention of the legislature in enacting a statute must be determined from the language employed, and where there is no ambiguity in the words, there is no room for construction (Provincial Board of Cebu v. Presiding Judge of Cebu, Court of First Instance, Branch IV, 171 SCRA 1). The requirement that the employer post a cash or surety bond to perfect its/his appeal is apparently intended to assure the workers that if they prevail in the case, they will receive the money judgment in their favor upon the dismissal of the employer's appeal. It was intended to discourage employers from using an appeal to delay, or even evade, their obligation to satisfy their employees just and lawful claims. The "undertakings" which the petitioners signed, binding themselves to answer and pay the judgment or award would not assure satisfaction of the monetary awards if they (the judgment debtors) became insolvent during the pendency of the appeal. (Underscoring supplied) This rule was affirmed in Quiambao v. National Labor Relations Commission,30 thus: x x x Petitioner is right that the filing of a supersedeas bond is indispensable to the perfection of an appeal in cases which, like the present one, involve monetary awards and that because Central Cement failed to comply with this requirement, the decision of the Labor Arbiter, finding Central Cement guilty of the illegal dismissal of petitioner, became final and executory. Art. 223 expressly provides that "In case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the commission in the amount equivalent to the monetary award in the judgment appealed from." In the recent case of Mary Abigails Food Service, Inc. v. Court of Appeals,31 this Court again reiterated:

A mere notice of appeal without complying with the other requisites aforestated shall not stop the running of the period for perfecting an appeal. Clear it is from the above that an appeal to the NLRC from any decision, award or order of the Labor Arbiter must have to be made within ten (10) calendar days from receipt of such decision, award or order with proof of payment of the required appeal bond accompanied by a memorandum of appeal. And where, as here, the decision of the Labor Arbiter involves a monetary award, the appeal is deemed perfected only upon the posting of a cash or surety bond also within ten (10) calendar days from receipt of such decision in an amount equivalent to the monetary award. The posting of a cash or surety bond is a requirement sine qua non for the perfection of an appeal from the labor arbiters monetary award. Notably, the perfection of an appeal within the period and in the manner prescribed by law is jurisdictional and non-compliance with the requirements therefore is fatal and has the effect of rendering the judgment sought to be appealed final and executory. Such requirement cannot be trifled with. Considering that Powertech failed to post the required bond, its appeal was not deemed perfected and the Labor Arbiter decision is now final and executory. In the similar case of Aquino v. National Labor Relations Commission,32 this Court held: We agree with the Solicitor General that the provisions of Article 223 of the Labor Code, as amended by R.A. No. 6715, requiring the posting of cash or surety bond in appeals from decisions of Labor Arbiter granting monetary awards, are self-executing and do not need any administrative rules to implement them. The appeal made by private respondent, not having been perfected on time for failure to file the appeal bond, the decision of the Labor Arbiter became final and executory. Given the foregoing ruling, We find it unnecessary to tackle petitioners contention that the NLRC had lost jurisdiction over the case when it dismissed Powertechs appeal. It has become inconsequential, the crucial issue having been resolved in their favor. Final Note As a final note, We rebuke Powertechs unscrupulous and despicable act of using an apparently valid compromise agreement to evade payment of its legal obligation to petitioners. We will not allow employers to make a mockery of our legal system by using legal means to perpetrate fraud. This should serve as a warning to parties in labor cases to endeavor to achieve a just and equitable resolution of their disputes and to enter into compromise agreements in good faith. Further, there would have been no opportunity for collusion between Powertech and Gestiada without the blanket authority given by petitioners to Gestiada in the special power of attorney. This should serve as a caveat to principals, particularly to laborers in labor disputes, to be wary of giving too broad an authority to their agents. The powers of the agent may be circumscribed either (a) by putting a clause in the special power of attorney providing a minimum amount upon which

the agent may compromise on behalf of the principal or (b) by providing that some acts of the agent are conditional and subject to the approval of the principal. These conditions may impose additional burden on the negotiating parties. But it will better protect them since the agent will only be authorized to settle for an amount predictably acceptable to the principal, and the third party will have full knowledge of the terms and conditions the principal would not disown or disclaim. Hindi sana nagkaroon ng pagkakataong magsabwatan ang Powertech at si Gestiada kung walang malawak na pahintulot na ibinigay ang petitioners sa kanya. Ito ay dapat magsilbing babala para mag-ingat ang mga prinsipal, lalo na ang mga manggagawa sa usaping pangobrero. Ang ibinibigay na kapangyarihan o special power of attorney sa kinatawan ay maaaring lagyan ng hangganan na magtatakda (a) ng pinakamababang halaga na maaaring pagkasunduan, o (b) ang ilang gagawin ng ahente ay may mga kondisyon na dapat pagtibayin ng prinsipal. Ang mga kondisyong ito ay maaaring magbigay ng karagdagang abala sa magkabilang panig. Subalit higit silang protektado sapagkat ang ahente ay pahihintulutan lamang na pumayag sa halagang katanggap-tanggap sa prinsipal, at ang ikatlong panig naman ay magkakaroon ng buong pagkaunawa sa mga kondisyon na hindi tatanggihan o itatatwa ng prinsipal. WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals is REVERSED and SET ASIDE. The Resolution of the NLRC dated July 31, 2000 is REINSTATED. SO ORDERED

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 160876 January 18, 2008

AZUCENA MAGALLANES, EVELYN BACOLOD and HEIRS OF JUDITH COTECSON, petitioners, vs. SUN YAT SEN ELEMENTARY SCHOOL, PAZ GO, ELENA CUBILLAN, WILLY ANG GAN TENG, BENITO ANG, and TEOTIMO TAN, respondents. DECISION SANDOVAL-GUTIERREZ, J.:

For our resolution is the instant Petition for Review on Certiorari seeking to reverse the Resolution of the Court of Appeals (Seventh Division) dated October 29, 2001 in CA-G.R. SP No. 67068; its Resolution of May 8, 2003 denying the motion for reconsideration; and its Resolution of October 10, 2003, denying the motion for reconsideration of the Resolution of May 8, 2003. The facts of the case are: Azucena Magallanes, Evelyn Bacolod, Judith Cotecson (represented by her heirs), petitioners, Grace Gonzales, and Bella Gonzales were all employed as teachers in the Sun Yat Sen Elementary School in Surigao City. Paz Go and Elena Cubillan are principals of the said school. Willy Ang Gan Teng and Benito Ang are its directors, while Teotimo Tan is the school treasurer. They are all respondents herein. On May 22, 1994, respondents terminated the services of petitioners. Thus, on August 3, 1994, they filed with the Sub-Regional Arbitration Branch No. X, National Labor Relations Commission (NLRC), Butuan City, complaints against respondents for illegal dismissal, underpayment of wages, payment of backwages, 13th month pay, ECOLA, separation pay, moral damages, and attorneys fees. Likewise, on August 22, 1994, petitioner Cotecson filed a separate complaint praying for the same reliefs. On June 3, 1995, Labor Arbiter Rogelio P. Legaspi rendered a Decision declaring that petitioners were illegally dismissed from the service and ordering respondents to reinstate them to their former or equivalent positions without loss of seniority rights, and to pay them their backwages, salary differential, 13th month pay differential, and service incentive leave benefits "as of June 20, 1995." Respondents were likewise directed to pay petitioners moral and exemplary damages. On appeal by respondents, the NLRC, in its Decision dated February 20, 1996, reversed the Arbiters judgment, holding that petitioners are contractual employees and that respondents merely allowed their contracts to lapse. Petitioners timely filed a motion for reconsideration, but it was denied by the NLRC in its Resolution dated April 17, 1996. Petitioners then filed with the Court of Appeals a petition for certiorari, docketed as CA-G.R. SP No. 50531. On October 28, 1999, the Court of Appeals (Special Sixteenth Division) rendered its Decision,1 the dispositive portion of which reads: WHEREFORE, the instant petition is GRANTED with respect to petitioners Cotecson, Bacolod, and Magallanes, the questioned Resolutions of the NLRC dated February 20 and April 1996 are hereby REVERSED and SET ASIDE as to them.

The Decision dated July 3, 1995 of the Labor Arbiter is hereby REINSTATED as to the said petitioners except as to the award of moral and exemplary damages which is hereby DELETED. SO ORDERED. The Court of Appeals (Special Sixteenth Division) ruled that in lieu of reinstatement, petitioners Cotecson, Bacolod, and Magallanes "shall be entitled to separation pay equivalent to one month salary and backwages computed from the time of their illegal dismissal up to the time of the promulgation of its Decision." With respect to Bella Gonzales and Grace Gonzales, the Court of Appeals found that that they have not acquired the status of regular employees having rendered only two years of service. Consequently, their dismissal from the service is valid. Under the Manual of Regulations for Private Schools, only full-time teachers who have rendered three (3) years of consecutive service shall be considered permanent. Respondents filed a motion for reconsideration but it was denied by the appellate court in its Resolution dated January 13, 2000. Respondents then filed with this Court a petition for certiorari, docketed as G.R. No. 142270. However, it was dismissed for lack of merit in a Minute Resolution dated April 12, 2000. Their motion for reconsideration was denied with finality by this Court on July 19, 2000. Meanwhile, on October 4, 2000, petitioners filed with the Labor Arbiter a motion for execution of his Decision as modified by the Court of Appeals. In an Order dated January 8, 2001, the Labor Arbiter computed the petitioners monetary awards reckoned from the time of their illegal dismissal in June 1994 up to October 29, 1999, pursuant to the Decision of the Court of Appeals (Special Sixteenth Division) in CA-G.R. SP No. 50531. Respondents interposed an appeal to the NLRC (docketed as NLRC Case No. M-006176-2001), contending that the computation should only be up to June 20, 1995 (the date indicated in the Labor Arbiters Decision). In an Order dated March 30, 2001, the NLRC modified the Labor Arbiters computation and ruled that the monetary awards due to petitioners should be computed from June 1994 up to June 20, 1995. Petitioners then filed a petition for certiorari with the Court of Appeals, docketed as CA-G.R. SP No. 67068, raffled off to the Seventh Division. However, in its Resolution of October 29, 2001, the petition was dismissed outright for their failure to attach to their petition copies of the pleadings filed with the Labor Arbiter, thus: No copies of the pleadings filed before the Labor Arbiter appear to have been attached to the petition in violation of the provisions of Section 1, Rule 65 and Section 3, Rule 46 of the 1997 Rules of Civil Procedure, as amended, which requires that the petition:

x x x shall be accompanied by a clearly legible duplicate original or certified true copy of the judgment, order, resolution or ruling subject thereof, such material portions of the record as are referred to therein and other documents relevant or pertinent thereto x x x WHEREFORE, the instant petition is DISMISSED OUTRIGHT pursuant to Section 3, Rule 46 of the 1997 Rules of Civil Procedure. SO ORDERED. Petitioners filed a motion for reconsideration, but they erroneously indicated therein the case number as CA-G.R. SP No. 50531, instead of CA-G.R. SP No. 67068. Their error was compounded by stating that the petition was with the Special Sixteenth Division, instead of the Seventh Division. As a result, the Special Sixteenth Division issued a Minute Resolution dated April 22, 2002 which merely noted the motion, thus: The petitioners motion for reconsideration dated November 22, 2001 and filed by registered mail on November 26, 2001 is merely noted since there was no October 29, 2001 resolution that was issued in this case which the motion for reconsideration seeks to be reconsidered. On realizing their mistake, petitioners then filed with the Seventh Division a Motion to Transfer The Case to it. In a Resolution promulgated on May 8, 2003, the Seventh Division denied petitioners Motion To Transfer The Case on the ground, among others, that the motion is "non-existent" since it does not bear the correct case number, hence, could not be attached to the records of CA-G.R. SP No. 67068. Unfazed, petitioners filed a motion for reconsideration, but it was denied by the Seventh Division in its Resolution of October 10, 2003. At first glance, the petition before us appears to be a futile attempt to revive an extinct motion denied by the appellate court (Seventh Division) by reason of technicality. But in the interest of speedy administration of justice, we should not only delve in technicalities. We shall then address these two issues: (1) whether the Court of Appeals (Seventh Division) erred in holding that affixing a wrong docket number on a motion renders it "non-existent;" and (2) whether the issuance by the NLRC of the Order dated March 30, 2001, amending the amounts of separation pay and backwages, awarded by the Court of Appeals (Sixteenth Division) to petitioners and computed by the Labor Arbiter, is tantamount to grave abuse of discretion amounting to lack or excess of jurisdiction. On the first issue, the Court of Appeals (Seventh Division) is correct when it ruled that petitioners motion for reconsideration of its Resolution dated October 29, 2001 in CA-G.R. SP No. 67068 is "non-existent." Petitioners counsel placed a wrong case number in their motion, indicating CAG.R. SP No. 50531 (Special Sixteenth Division) instead of CA-G.R. SP No. 50531 (Seventh

Division), the correct case number. In Llantero v. Court of Appeals,2 we ruled that where a pleading bears an erroneous docket number and thus "could not be attached to the correct case," the said pleading is, for all intents and purposes, "non-existent." As aptly stated by the Special Sixteenth Division, it has neither the duty nor the obligation to correct the error or to transfer the case to the Seventh Division. In Mega Land Resources and Development Corporation v. C-E Construction Corporation,3 which likewise involves a wrong docket number in a motion, we ruled that the duty to correct the mistake falls solely on the party litigant whose fault caused the anomaly. To hold otherwise would be to impose upon appellate courts the burden of being nannies to appellants, ensuring the absence of pitfalls that hinder the perfection of petitions and appeals. Strictly speaking, it is a dogma that the mistake or negligence of counsel binds the clients4 and appellate courts have no share in that burden. However, we opt for liberality in the application of the rules to the instant case in light of the following considerations. First, the rule that negligence of counsel binds the client may be relaxed where adherence thereto would result in outright deprivation of the clients liberty or property or where the interests of justice so require.5 Second, this Court is not a slave of technical rules, shorn of judicial discretion in rendering justice, it is guided by the norm that on the balance, technicalities take a backseat against substantive rights. Thus, if the application of the rules would tend to frustrate rather than promote justice, it is always within this Courts power to suspend the rules or except a particular case from its application.6 This case involving a labor dispute has dragged on for over a decade now. Petitioners have waited too long for what is due them under the law. One of the original petitioners, Judith Cotecson, died last September 28, 2003 and has been substituted by her heirs. It is time to write finis to this controversy. The Labor Code was promulgated to promote the welfare and well-being of the working man. Its spirit and intent mandate the speedy administration of justice, with least attention to technicalities but without sacrificing the fundamental requisites of due process.7 We recall that in CA-G.R. SP No. 50531, the Court of Appeals (Special Sixteenth Division) held that petitioners Cotecson, Bacolod, and Magallanes "shall be entitled to separation pay equivalent to one month salary and backwages computed from the time of their illegal dismissal up to the time of the promulgation of this decision." This Decision was promulgated on October 28, 1999. The respondents motion for reconsideration was denied by the Court of Appeals (Former Special Sixteenth Division) on January 13, 2000. On April 12, 2000, this Court dismissed respondents petition for certiorari, docketed as G.R. No. 142270, and denied their motion for reconsideration with finality as early as July 19, 2000. Clearly, the Decision in CA-G.R. SP No. 50531 had long become final and executory. The Labor Arbiter computed the monetary awards due to petitioners corresponding to the period from June 1994 to October 28, 1999, in accordance with the Decision of the Court of Appeals (Special Sixteenth Division). The award for backwages and money claims is in the total sum of P912,086.15. It does not escape our attention that upon respondents appeal from the Labor Arbiters Order computing the benefits due to petitioners, the NLRC modified the final and executory Decision of the Court of Appeals (Special Sixteenth Division) when it decreed that the monetary

award due to petitioners should be computed up to June 20, 1995 only (not October 28, 1999), thus, amounting to a lesser amount of P147,673.16. We sustain petitioners contention that the NLRC, in modifying the award of the Court of Appeals, committed grave abuse of discretion amounting to lack or excess of jurisdiction. Quasi-judicial agencies have neither business nor power to modify or amend the final and executory Decisions of the appellate courts. Under the principle of immutability of judgments, any alteration or amendment which substantially affects a final and executory judgment is void for lack of jurisdiction.8 We thus rule that the Order dated March 30, 2001 of the NLRC directing that the monetary award should be computed from June 1994, the date petitioners were dismissed from the service, up to June 20, 1995 only, is void. WHEREFORE, we GRANT the petition. The challenged Resolutions dated October 29, 2001, May 8, 2003, and October 10, 2003 in CA-G.R. SP No. 67068 are REVERSED. The Order of the NLRC dated March 30, 2001 in NLRC Case No. M-006176-2001 is SET ASIDE. The Order of the Labor Arbiter dated January 8, 2001 is REINSTATED. SO ORDERED

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 144089 August 9, 2001

CONCORDE HOTEL, represented by MICHAEL ONG SIY, General Manager, petitioner, vs. COURT OF APPEALS, NATIONAL LABOR RELATIONS COMMISSION, Second Division, and ROBERTO PARADO, respondents. KAPUNAN, J.: This is an appeal,1 with prayer for a writ preliminary injunction and temporary restraining order, from the decision of the Court of Appeals2 dated June 22, 2000 in C.A. G.R. SP. No. 57130 which affirmed the findings of the National Labor Relations Commission3 that the dismissal of herein respondent Roberto Parado was without just cause. The facts from which the present petition proceeds are as follows: Petitioner Concorde Hotel is engaged in the business of a hotel service at the Europa Center, Legarda Road, Baguio City. Before opening its business to the public, petitioner engaged in a mass hiring of personnel through the Highlanders Management Services, a manpower service agency, to

fill up positions in the hotel. Those recruited were subjected to a ten-day training and screening period. One of those recruited is herein private respondent Roberto Parado who applied and was hired by the hotel as assistant cook. Sometime in January 1997, petitioner discovered that some of its stocks and merchandise were missing and unaccounted for in the inventory reports. When the hotel management conducted an inquiry among the employees, it found out that some of its employees, singly or in conspiracy with each other, had been bringing home canned goods, meat and poultry, plates, glasses, spoons and other utensils, including cloth napkins. An in-house investigation was thereafter initiated by the management. Those departments whose stock inventories included items unaccounted for were asked to explain such irregularity. The identities of those who were allegedly involved in the pilferage were gathered from the employees. The Highlanders Agency was furnished a list of the employees allegedly involved in the incident. Those who were named in the list were called and asked to explain in writing on the same day. When nobody submitted the required written explanation, petitioner and Highlanders Agency issued separate notices of termination to the said employees. Petitioner reported the incident to the Baguio Police on January 22, 1997 and the same was entered in the police blotter. Fifteen (15) names were initially listed as suspects in the theft incident. However, eight more names were added to the list. These names were allegedly furnished by other employees who were bothered by their conscience and decided to reveal the identities of the other employees involved in the pilferage. Private respondent was one of these additional suspects. Thereafter, he was terminated from employment. On February 12, 1997, private respondent filed a complaint for illegal dismissal, non-payment of wages, overtime pay, premium pay for rest day and night shift and 13th month pay, backwages, separation pay, service charges, damages and indemnity for non-observance of due process with the Labor Arbiter against petitioner, Milagros Ong Siy and Michael Ong Siy, doing business under the name and style Concorde Hotel.4 Private respondent alleged that on January 23, 1997, Michael Ong Siy, General Manager of Concorde Hotel, talked to him and tried to convince him to stand as witness against his coemployees suspected of having participated in the pilferage and whose services were terminated by the hotel. When he refused, he received a memorandum informing him that he was dismissed effective on that same day (January 23, 1997), for his alleged offenses in violation of the Hotel's Rules and Regulations, namely: (1) dishonesty (allowing food to be taken out of the kitchen without Order Slip); (2) rumor mongering/intriguing against the honor of co-employees; and (3) fraud or willful breach of trust and confidence.5 Respondent claimed that these charges had no basis as he was in fact one of the two employees who complained to the police authorities that certain employees threatened them with harm at the time the incident of pilferage was discovered. He also received a memo from Highlanders Management Services dated January 22, 1997, informing him that his employment was terminated "for failure to satisfactorily meet the minimum of the Company's standards for its employees."6

Petitioner, on the other hand, maintained that after it reported the incident to the police, several employees, allegedly bothered by their conscience, approached management and named eight (8) more employees as among those who participated in the hotel theft. Private respondent was among those who were additionally named. When the management confronted him, he denied the accusations and even got angry with those who pinpointed him. The following day, January 23, 1997, the additional list of suspects was submitted by petitioner to the police authorities, which was noted in the police blotter as an addendum to the initial complaint lodged by petitioner. Private respondent was required to submit a written explanation on the same day and when he failed to do so, petitioner terminated private respondent's employment on the ground of violation of hotels rules and regulations. On July 29, 1998, Labor Arbiter Jesselito Latoja dismissed the complaint for lack of merit. Private respondent, thus appealed to the National Labor Relations Commission (NLRC). On October 19, 1999, the NLRC reversed the decision of the Labor Arbiter and found private respondent's dismissal from employment to be without cause. The dispositive portion of the NLRC's decision reads: WHEREFORE, premises considered, Complainant's appeal is GRANTED. The Executive Labor Arbiter's July 29, 1998 decision on the above-entitled case is REVERSED and SET ASIDE. This Office finds Respondents to have illegally dismissed Complainant from his employment. Respondents Michael Ong-Siy and Concorde Hotel, Inc. are ordered to solidarily pay Complainant the following: 1. Backwages 2. Separation Pay 3. 10% Attorney's Fees TOTAL SO ORDERED.7 Petitioner sought a reconsideration of the aforementioned decision but the same was denied on January 11, 2000 prompting petitioner to file a petition before the Court of Appeals. On June 22, 2000, the Court of Appeals affirmed the Commission's findings. The motion for reconsideration of this decision was, likewise, denied. Hence, this petition assigning the following issues: THE COURT OF APPEALS . . . ERRED IN AFFIRMING THE DECISION OF THE . . . NATIONAL LABOR RELATIONS COMMISSION, THE LATTER HAVING SET ASIDE THE DECISION OF THE EXECUTIVE LABOR ARBITER . . . BASED PRIMARILY ON THE ALLEGED FACT THAT SINCE NO CRIMINAL CHARGES WERE FILED AGAINST THE PRIVATE RESPONDENT, THERE WAS NO JUST CAUSE IN THE TERMINATION OF HIS SERVICES; P158,100.00 14,025.00 17,212.50 P189,337.50

THE . . . COURT OF APPEALS ACTED WITH GRAVE ABUSE OF DISCRETION WHEN IT FAILED TO APPRECIATE THE FACT THAT IT WAS NOT THE HEREIN PETITIONER WHICH TERMINATED THE SERVICES OF THE PRIVATE RESPONDENT BUT IT WAS ANOTHER ENTITY; THE . . . COURT OF APPEALS ACTED WITH GRAVE ABUSE OF DISCRETION WHEN IT DID NOT DISMISS THE CASE AS AGAINST MILAGROS ONG SIY, WHO WAS NOT A PARTY IN INTEREST IN THE CASE; THE . . . COURT OF APPEALS ACTED WITH GRAVE ABUSE OF DISCRETION WHEN IT DENIED HEREIN PETITIONER'S MOTION FOR RECONSIDERATION POINTING OUT THE FOREGOING FACTS.8 Petitioner alleges that the Court of Appeals erred in affirming the finding of the NLRC that there was no just cause in the termination of private respondent's employment; that the basis for private respondent's dismissal was loss of trust and confidence, sanctioned by Art. 282 of the Labor Code, because he allowed food to be taken out of the kitchen without any order slip; that the fact that no criminal charges were filed against private respondent does not detract from the validity of his dismissal because proof beyond reasonable doubt is not required when the basis for an employee's termination is loss of trust and confidence; that, contrary to the findings of the Court of Appeals, private respondent was accorded due process as an in-house investigation was conducted prior to the termination; that private respondent was given the opportunity to present his side when he was required to submit a written explanation as to his participation or non-participation in the pilferage but he failed to comply therewith prompting management to terminate his services; that, assuming for the sake of argument that private respondent was not duly notified prior to his termination, such lack of notice does not make the dismissal illegal per se; and finally, that it was not the one which terminated the services of private respondent but Highlanders Agency. We deny the petition for lack of merit. The Court has repeatedly ruled that for an employee's dismissal to be valid, two requirements must be met: first, the employee must be afforded due process, i.e., he must be given an opportunity to be heard and to defend himself, and second, the dismissal must be for a valid cause.9 The burden of proving that the dismissal of the employee was for a valid and authorized cause rests on the employer and the employer's failure to discharge such burden would mean that the dismissal was not justified and therefore illegal.10 Under Article 282 of the Labor Code, an employer may terminate the services of an employee for loss of trust and confidence: ARTICLE 282. Termination by employer. An employer may terminate an employment for any of the following causes: xxx xxx xxx

(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative; xxx xxx xxx

The Court, however, is cognizant of the fact that in numerous dismissal cases, loss of trust and confidence has been indiscriminately used by employers to justify almost every instance of termination and as a defense against claims of arbitrary dismissal. In the case of General Bank and Trust Company vs. Court of Appeals,11 the Court came up with the following guidelines for the application of the doctrine of loss of confidence: (a) loss of confidence which should not be simulated; (b) it should not be used as a subterfuge for causes which are improper, illegal or unjustified; (c) it should not be arbitrarily asserted in the face of overwhelming evidence to the contrary; and (d) it must be genuine, not a mere afterthought to justify earlier action taken in bad faith. Hence, while an employer is at liberty to dismiss an employee for loss of trust and confidence, he cannot use the same to feign what would otherwise be an illegal dismissal. Loss of confidence applies only to cases involving employees who occupy positions of trust and confidence, or to those situations where the employee is routinely charged with the care and custody of the employer's money or property.12 It must be shown, or the employer must have reasonable ground to believe, if not entertain, the moral conviction that the employee concerned is responsible for the misconduct or infraction and that the nature of his participation therein rendered him absolutely unworthy of the trust and confidence demanded by his position.13 To be a valid ground for dismissal, the loss of confidence must be based on a willful breach of trust and founded on clearly established or proven facts.14 Petitioner is correct insofar as it considered the nature of private respondent's position as assistant cook as a position of trust and confidence. As assistant cook, private respondent is charged with the care of food preparation in the hotel's coffee shop. He is also responsible for the custody of food supplies and must see to it that there is sufficient stock in the hotel kitchen. He should not permit food or other materials to be taken out from the kitchen without the necessary order slip or authorization as these are properties of the hotel. Thus, the nature of private respondent's position as assistant cook places upon him the duty of care and custody of Concorde's property. However, we uphold the findings of the Court of Appeals that petitioner Concorde Hotel failed to sufficiently establish the charge against private respondent which was the basis for its loss of trust and confidence that warranted his dismissal.

When petitioner learned of the missing stocks and the items unaccounted for in the inventories, it allegedly conducted an in-house investigation. Petitioner claims that the result of the investigation pointed to private respondent as one of the perpetrators of the pilferage. This was allegedly gathered from the other employees who voluntarily gave such information to the management because they were bothered by their conscience. However, there is no evidence on record to substantiate this charge allegedly made by private respondent's co-employees. Petitioner failed to present any written statement or the affidavits of such employees on the specific acts of pilferage committed by private respondent or the facts or circumstances describing his involvement therein. The records are also bereft of any evidence showing that petitioner conducted any further investigation or that it verified the allegations by the other employees. While it is true that petitioner had the incident entered in the police blotter, the initial list of suspects did not include private respondent. His name was only added after management failed to persuade him to testify against his co-employees. Moreover, no criminal charge was ever filed by the petitioner against private respondent. While the filing of a criminal charge for an employee's alleged misconduct is not a prerequisite to his dismissal, and proof beyond reasonable doubt is not necessary to justify such dismissal, still the basis thereof must be clearly and convincingly established.15 In this case, the facts regarding private respondent's actual participation in the acts of pilferage was not clearly established by Concorde. What the Court of Appeals correctly found as established in the records is the fact that private respondent was the one who complained to the police authorities after he was threatened with harm by certain employees at the time the incident of theft was discovered. It is also significant to note that in the memorandum of termination sent by petitioner to private respondent, aside from breach of trust and confidence, the other grounds for private respondent's dismissal were dishonesty and rumor mongering. Again, there is no evidence establishing the basis for these grounds. The specific acts which constitute these grounds were not even alleged by petitioner. In the termination letter sent by Highlanders Agency to private respondent, it was merely stated that the reason for his termination was failure to satisfactorily meet the minimum of the company's standards for its employees. This inconsistency in the charges made by petitioner and the agency against private respondent also militate against the validity of the latter's dismissal. Finally, petitioner dismissed private respondent without according him due process. Before an employer can legally effect a dismissal, the employee sought to be dismissed must be furnished two written notices the first is a notice which apprises the employee of the particular acts or omissions for which his dismissal is sought; the second, is a subsequent notice which informs the employee of the employer's decision to dismiss him. These requirements are mandatory, noncompliance with which renders any judgment reached by management void and inexistent.16 Procedural due process requires that an employee be apprised of the charge against him, given reasonable time to answer the same, allowed ample opportunity to be heard and defend himself, and assisted by a representative if the employee so desires.17 In this case, there is no evidence on record that prior to his termination, private respondent was duly served a notice apprising him of the specific acts imputed to him. The charge against private respondent was allegedly based on evidence furnished by his co-employees regarding his participation in the pilferage of company stocks. However, these charges were never reduced into writing and sent to private respondent. Moreover, he was not given any opportunity to confront these employees in order to rebut their

accusations or to present his version of the incident. Private respondent only found out that he was being accused of theft when the hotel management confronted him about it on January 23, 1997. On the same day, he was required by petitioner to submit his written explanation on the matter and when he failed to do so, he was served a notice of termination. The termination notice served to private respondent by the agency was dated January 22, 1997, which was a day prior to his actual confrontation by the hotel management. We affirm the Court of Appeals' finding that there was no legal justification for herein private respondent's dismissal. As to petitioner's claim that it was not the one who terminated private respondent from employment but the manpower agency, suffice it to say, that the evidence on record belies petitioner's claim. As borne by the records, petitioner, through its General Manager Michael Siy, sent a notice of termination to respondent Parado on January 23, 1997. However, Mrs. Milagros Ong Siy cannot be held jointly and severally liable for the obligations of the petitioner for private respondent's failure to establish that she is a stockholder or an officer of Concorde Hotel, Inc. WHEREFORE, the instant petition is hereby DISMISSED. The decision of the Court of Appeals, dated June 22, 2000 in C.A. G.R SP No. 57130, is AFFIRMED. SO ORDERED.

Republic of the Philippines

Supreme Court
Manila

THIRD DIVISION

AUTOMOTIVE ENGINE REBUILDERS, INC. (AER), ANTONIO T. INDUCIL, LOURDES

G.R. No. 160138

T. INDUCIL, JOCELYN T. INDUCIL and MA. CONCEPCION I. DONATO, Petitioners ,

- versus -

PROGRESIBONG UNYON NG MGA MANGGAGAWA SA AER, ARNOLD VILLOTA, FELINO E. AGUSTIN, RUPERTO M. MARIANO II, EDUARDO S. BRIZUELA, ARNOLD S. RODRIGUEZ, RODOLFO MAINIT, JR., FROILAN B. MADAMBA, DANILO D. QUIBOY, CHRISTOPHER R. NOLASCO, ROGER V. BELATCHA, CLEOFAS B. DELA BUENA, JR., HERMINIO P. PAPA, WILLIAM A. RITUAL, ROBERTO CALDEO, RAFAEL GACAD, JAMES C. CAAMPUED, ESPERIDION V. LOPEZ, JR., FRISCO M. LORENZO, JR., CRISANTO LUMBAO, JR., and RENATO SARABUNO,

Respondents. x---------------------------------------------x

PROGRESIBONG UNYON NG MGA MANGGAGAWA SA AER, ARNOLD VILLOTA, FELINO E. AGUSTIN, RUPERTO M. MARIANO II, EDUARDO S. BRIZUELA, ARNOLD S. RODRIGUEZ, RODOLFO MAINIT, JR., FROILAN B. MADAMBA, DANILO D. QUIBOY, CHRISTOPHER R. NOLASCO, ROGER V. BELATCHA, CLEOFAS B. DELA BUENA, JR., HERMINIO P. PAPA, WILLIAM A. RITUAL, ROBERTO CALDEO, RAFAEL GACAD, JAMES C. CAAMPUED, ESPERIDION V. LOPEZ, JR., FRISCO M. LORENZO, JR., CRISANTO LUMBAO, JR., and RENATO SARABUNO, Petitioners , G.R. No. 160192

Present: - versus CARPIO, J.

VELASCO, JR., Chairperson, ABAD, MENDOZA, and AUTOMOTIVE ENGINE REBUILDERS, INC., and ANTONIO T. INDUCIL, Respondents. SERENO,

JJ.

Promulgated:

July 13, 2011

x -----------------------------------------------------------------------------------------------------x

DECISION
MENDOZA, J.:

Challenged in these consolidated petitions for review is the October 1, 2003 Amended Decision143[1] of the Court of Appeals (CA), in CA-G.R. SP No. 73161, which modified the Resolution144[2] of the National Labor Relations Commission (NLRC), by ordering the immediate reinstatement of all the suspended employees of Automotive Engine Rebuilders, Inc. (AER) without backwages.

143 144

Records show that AER is a company engaged in the automotive engine repair and rebuilding business and other precision and engineering works for more than 35 years. Progresibong Unyon Ng Mga Manggagawa sa AER (Unyon) is the legitimate labor union of the rank and file employees of AER which was formed in the year 1998.

Due to a dispute between the parties, both filed a complaint against each other before the NLRC. AER accused the Unyon of illegal concerted activities (illegal strike, illegal walkout, illegal stoppage, and unfair labor practice) while Unyon accused AER of unfair labor practice, illegal suspension and illegal dismissal.

AERs Managements Version

On January 28, 1999, eighteen (18) employees of AER, acting collectively and in concert, suddenly and without reason staged a walkout and assembled illegally in the company premises.

Despite managements plea for them to go back to work, the concerned employees refused and, instead, walked out of the company premises and proceeded to the office of the AER Performance and Service Center (AER-PSC) located on another street. Upon arrival, they collectively tried to cart away one (1)

line boring machine owned by AER out of the AER-PSC premises. They threatened and forced the company guards and some company officers and personnel to open the gate of the AER-PSC compound. They also urged the AERPSC employees to likewise stop working.

The concerned employees occupied the AER-PSC premises for several hours, thus, disrupting the work of the other employees and AERs services to its clients. They refused to stop their unlawful acts despite the intervention of the barangay officers. They left the AER-PSC premises only when the police intervened and negotiated with them.

Subsequently, management issued a memorandum requiring the employees who joined the illegal walkout to explain in writing why they should not be disciplined administratively and dismissed for their unjustified and illegal acts.

The concerned employees submitted their written explanation which contained their admissions regarding their unjustified acts. Finding their explanation unsatisfactory, AER terminated the services of the concerned employees.

On February 22, 1999, the concerned employees started a wildcat strike, barricaded company premises, and prevented the free ingress and egress of the other employees, officers, clients, and visitors and the transportation of company equipments. They also tried to use force and inflict violence against the other employees. Their wildcat strike stopped after the NLRC issued and served a temporary restraining order (TRO).

Meantime, six (6) of the concerned employees, namely: Oscar Macaranas, Bernardino Acosta, Ferdinand Flores, Benson Pingol, Otillo Rabino, and Jonathan Taborda resigned from the company and signed quitclaims.

Unyons Version

On December 22, 1998, Unyon filed a petition for certification election before the Department of Labor and Employment (DOLE) after organizing their employees union within AER. Resenting what they did, AER forced all of its employees to submit their urine samples for drug testing. Those who refused were threatened with dismissal.

On January 8, 1999, the results of the drug test came out and the following employees were found positive for illegal drugs: Froilan Madamba, Arnold Rodriguez, Roberto Caldeo, Roger Bilatcha, Ruperto Mariano, Edwin Fabian, and Nazario Madala.

On January 12, 1999, AER issued a memorandum suspending these employees from work for violation of Article D, Item 2 of the Employees handbook which reads as follows:

Coming to work under the influence of intoxicating liquor or any drug or drinking any alcoholic beverages on the premises on company time.

Out of the seven (7) suspended employees, only Edwin Fabian and Nazario Madala were allowed by AER to report back to work. The other five (5) suspended employees were not admitted by AER without first submitting the required medical certificate attesting to their fitness to work.

While they were in the process of securing their respective medical certificates, however, they were shocked to receive a letter from AER charging them with insubordination and absence without leave and directing them to explain their acts in writing. Despite their written explanation, AER refused to reinstate them.

Meanwhile, Unyon found out that AER was moving out machines from the main building to the AER-PSC compound located on another street. Sensing that management was going to engage in a runaway shop, Unyon tried to prevent the transfer of the machines which prompted AER to issue a memorandum accusing those involved of gross insubordination, work stoppage and other offenses.

On February 2, 1999, the affected workers were denied entry into the AER premises by order of management. Because of this, the affected workers staged a picket in front of company

premises hoping that management would accept them back to work. When their picket proved futile, they filed a complaint for unfair labor practice, illegal suspension and illegal dismissal.

Ruling of the Labor Arbiter

On August 9, 2001, the Labor Arbiter (LA) rendered a decision145[3] in favor of Unyon by directing AER to reinstate the concerned employees but without backwages effective October 16, 2001.

The LA ruled, among others, that the concerned employees were suspended from work without a valid cause and without due process. In finding that there was illegal suspension, the LA held as follows:

There is no doubt that the hostile attitude of the management to its workers and vice versa started when the workers began organizing themselves into a union. As soon as the management learned and received summons regarding the petition for certification election filed by the employees, they retaliated by causing the employees to submit themselves to drug test. And out of the seven who were found positive, five were placed on a 12 day suspension namely: (1) Froilan Madamba; (2) Arnold Rodriguez; (3) Roberto Caldeo; (4) Roger Belatcha; and (5) Ruperto Mariano.

This is illegal suspension plain and simple. Even if they were found positive for drugs, they should have been caused to explain why they were found so. It could have been that they have taken drugs as cure for ailment under a physicians prescription and supervision. Doubts should be in
145

favor of the working class in the absence of evidence that they are drug addicts or they took prohibited or regulated drugs without any justifiable reason at all. In fact, there is not even a showing by the company that the performance of these employees was already adversely affected by their use of drugs. Lest be misunderstood that we are considering use of prohibited drug or regulated drugs, what we abhor is suspension without valid cause and without due process.146[4]

The LA further held that AER was guilty of illegal dismissal for refusing to reinstate the five (5) employees unless they submit a medical certificate that they were fit to work. Thus:

x x x Firstly, the employer has not even established that the five employees are sick of ailments which are not curable within six months, a burden which rests upon the employers and granting that they were sick or drug addicts, the remedy is not dismissal but to allow them to be on sick leave and be treated of their illness and if not cured within 6 months, that is the time that they may be separated from employment but after payment of months salary for every year of service by way of separation pay.147[5]

Finally, the LA held that the concerned employees were not totally without fault. The concerted slowdown of work that they conducted in protesting their illegal suspension was generally illegal and unjustifiable. The LA, thus, ruled that both parties were in pari delicto and, therefore, must suffer the consequences of the wrong they committed.

NLRC Ruling

146 147

Both parties filed their respective appeals with the NLRC. The concerned employees argued that the LA erred in 1) not awarding backwages to them during the period of their suspension; 2) not holding that AER is guilty of unfair labor practice; and 3) not holding that they were illegally dismissed from their jobs.148[6] AER, on the other hand, claimed that the LA erred in finding that there was illegal dismissal and in ordering the reinstatement of the concerned employees without backwages.149[7]

On March 5, 2002, the NLRC issued a Resolution150[8] modifying the LA decision by setting aside the order of reinstatement as it found no illegal dismissal.

The NLRC, however, considered only three (3) out of the eighteen concerned employees, (18) namely: Froilan Madamba, Ruperto Mariano, and Roberto Caldeo because their names were commonly identified in the LA decision and in the concerned employees position paper as those employees who were allegedly illegally suspended.

It wrote that these three (3) employees were validly suspended because they were found positive for illegal drugs in the drug test conducted by AER. Management was just exercising its
148 149 150

management prerogative in requiring them to submit a medical fit-to-work certificate before they could be admitted back to work. The drug test was found to be not discriminatory because all employees of AER were required to undergo the drug test. Neither was the drug test related to any union activity.

Finally, the NLRC ruled that the concerned employees had no valid basis in conducting a strike. Considering that the concerted activity was illegal, AER had the right to immediately dismiss them.

Unyon and the concerned employees filed a petition before the CA advancing the following

ARGUMENTS

PUBLIC RESPONDENT ACTED WITH GRAVE ABUSE OF DISCRETION IN HOLDING THAT THERE ARE ONLY THREE (3) REMAINING COMPLAINANTS IN THE CASE FILED BY THE PETITIONERS.

PUBLIC RESPONDENT ACTED WITH GRAVE ABUSE OF DISCRETION IN HOLDING THAT THE SUSPENSION OF SEVERAL PETITIONERS WAS VALID DESPITE THE ABSENCE OF DUE PROCESS. PUBLIC RESPONDENT ACTED WITH GRAVE ABUSE OF DISCRETION IN SUSTAINING THE VALIDITY OF THE DISMISSAL OF EMPLOYEES WHO TESTED POSITIVE DURING THE DRUG TEST. PUBLIC RESPONDENT ACTED WITH GRAVE ABUSE OF DISCRETION IN ABSOLVING PRIVATE RESPONDENTS OF THE OFFENSE OF UNFAIR LABOR PRACICE.

PUBLIC RESPONDENT ACTED WITH GRAVE ABUSE OF DISCRETION IN DISMISSING PETITIONERS COMPLAINT FOR ILLEGAL DISMISSAL.

The CA Ruling

On June 27, 2003, the CA rendered a decision,151[9] the dispositive portion of which reads as follows:

WHEREFORE, premises considered, the petition is GRANTED. Respondents are hereby directed to reinstate the petitioners effective immediately but without backwages, except those who were tested positive for illegal drugs and have failed to submit their respective medical certificates. SO ORDERED. 152[10]

The CA explained that there still remained 26 complaining employees and not just three (3) as claimed by the NLRC, because 32 members of Unyon signed and filed the complaint, and from the 32 complaining members, only six (6) voluntarily signed quitclaims in favor of AER. It reasoned out that the number of parties to a complaint would correspond to the number of signatories thereto and not necessarily to the names commonly appearing or identified in the position paper and the LA decision. Citing Section 6 of the Rules of Court, the CA held that
151 152

all persons in whom or against whom any right to relief in respect to or arising out of the same transaction or series of transactions is alleged to exist, whether jointly, severally, or in the alternative, may join as plaintiffs or be joined as defendants in one complaint.

The CA, however, agreed with the NLRC on the legality and validity of the suspension. The CA wrote:

The petitioners themselves have admitted that all of them were ordered to give their urine samples for the drug test; that the drug test was applicable to all the employees lends credence that such test was not related to any union activity. The union members were not singled out for said drug testing. The complainants who tested positive for illegal drugs were validly suspended under the company rules. The Employees Handbook of Company Rules and Regulations prohibit employees from reporting for work under the influence of intoxicating liquor and drugs. With the finding that the petitioners tested positive for illegal drugs, AER merely exercised their management prerogative to require a medical certificate that said employees were already fit to work before they can be admitted back to work. Due to the failure of the affected petitioners to submit a medical certificate that they are already fit to work, they were dismissed. Petitioners act of not reporting for duty upon presentation of the medical certificate that they are fit to work as per agreement with the DOLE NCMB on January 25, 1999 had the marks of willful disobedience giving AER the right to terminate employment.153[11]

153

The CA further ruled that both parties were guilty of unfair labor practice. It stated that the hostile attitude of AER towards its workers and vice-versa started when the workers began organizing themselves into a union. AER tried to have a runaway shop when it transferred some of its machinery from the main building to the AER-PSC office located on another street on the pretext that the main building was undergoing renovation. AER also prevented its employees, even those who were excluded from its complaint, from going back to work for allegedly staging an illegal strike. On the other hand, the concerted work slowdown staged by the concerned employees as a result of their alleged illegal suspension was unjustified. Hence, both parties were found by the CA to be in pari delicto and must bear the consequences of their own wrongdoing.

On October 1, 2003, upon the motion for partial reconsideration filed by Unyon praying for the payment of full backwages and the reinstatement of all suspended employees, the CA rendered the assailed Amended Decision, the dispositive portion of which reads, as follows:

WHEREFORE, the partial motion for reconsideration is GRANTED insofar as the reinstatement of the suspended employees is concerned. This Courts decision dated June 27, 2003 is hereby MODIFIED. Private respondents are hereby directed to reinstate all the petitioners immediately without backwages. SO ORDERED. 154[12]

154

Unsatisfied, both parties filed the present consolidated petitions on the following

GROUNDS

FOR UNYON:

THE COURT OF APPEALS LEGALLY ERRED IN NOT AWARDING BACKWAGES TO INDIVIDUAL PETITIONERS NOTWITHSTANDING HAVING ORDERED THEIR REINSTATEMENT TO THEIR PREVIOUS POSITIONS.

FOR AER:

THE HONORABLE COURT OF APPEALS ERRED GRIEVOUSLY WHEN IT GAVE SO MUCH WEIGHT ON THE PRIVATE RESPONDENTS PARTIAL MOTION FOR RECONSIDERATION BY AMENDING ITS DECISION IN ORDERING THEIR IMMEDIATE REINSTATEMENT INCLUDING THOSE WHO HAVE TESTED POSITIVE FOR ILLEGAL DRUGS (DRUG ADDICTS) AND HAVE FAILED TO SUBMIT ANY MEDICAL CERTIFICATE.

G.R. No. 160138

AERs Position

AER questions the findings of the CA that there were 32 complaining employees, which number was reduced to only 26 because six (6) resigned and signed waivers and quitclaims. It argues that the CA should have respected the findings of the LA and the NLRC that there were only 18 complaining employees, which was reduced to 12 due to the resignations and signing of the corresponding Release and Quitclaims by six (6) of them. The figure was further reduced to 8, and finally to just 3 complaining employees.

AER argues that the reinstatement of those employees who tested positive for drugs and refused to submit their respective medical certificate certifying that they were fit to work, violated AERs rules and regulations, and the law in general because it would allow the sheltering of drug addicts in company premises.

AER likewise insists that the drug test that it conducted was not related to any union activity because the test covered all employees. The drug test was part of company rules and guidelines designed to instill discipline and good behavior among its employees as contained in its Employees Manual Company Rules and

Regulations. AER also claims that it simply exercised its employers prerogative in requiring a medical certificate from the affected employees.

Finally, AER avers that the complaining employees, who did not report back to work despite their medical certificate attesting that they were fit to work, committed willful disobedience. AER claims that the complaining employees violated their agreement with the DOLE-National Conciliation and Mediation Board (NCMB) dated January 25, 1999. AER likewise contends that the complaining employees are deemed to have lost their employment status when they engaged in unlawful activities such as abandonment of work, stoppage of work and the commission of attempted theft involving its boring machine. Hence, the termination of their employment was valid.

Unyons Position

Unyon argues that the complaint it filed indicated that there were 32 complainants who signed the complaint. Out of the 32, six (6) executed waivers and quitclaims leaving 26 complainants, not 3 as claimed by AER.

Unyon likewise avers that the dismissal of the affected employees was unlawful for lack of valid ground and prior notice. Although it admits that some of the complainant employees tested positive for drugs, it posits that AER should

have, at least, required those affected employees to explain why they tested positive for drugs because it could be possible that the drug taken was a regulated drug for an ailment and prescribed by a doctor. Therefore, prior notice or due process was still necessary.

Unyon further asserts that the penalty for testing positive for illegal drugs was only a 15-day suspension, which was already served by the affected employees. It also points out that AER never imposed the policy of drug examination on its employees before the union was organized. Clearly, AER adopted a hostile attitude towards the workers when they organized themselves into a union.

Moreover, of the 32 complaining employees in the illegal dismissal case against AER, only 18 were charged by AER with illegal strike. Unyon argues that AER should have admitted back to work those employees who were not included in the charge. There was no allegation either that those excluded were involved in the January 28, 1999 incident.

Lastly, Unyon claims that the penalty of outright dismissal against the eighteen (18) employees charged with illegal strike was grossly disproportionate to their offense.

G.R. 160192

Unyons Position

Unyon basically argues that there was enough proof that AER acted in bad faith and it was guilty of illegal lock-out for preventing the affected employees from going back to work. Hence, the complaining employees are entitled to backwages.

AERs Position

AER counters that there are only three (3) remaining complaining employees who were validly suspended, namely: Froilan Madamba, Ruperto Mariano and Roberto Caldeo. AER claims that these employees are not entitled to backwages or even reinstatement because their separation from work was valid due to their unlawful activities and willful disobedience. AER further states that Unyon failed to properly file a verified position paper. Hence, the complaining employees who failed to file a verified position paper should be excluded from the petition.

In sum, the main issue to be resolved in these consolidated cases is whether or not the CA erred in ruling for the reinstatement of the complaining employees but without grant of backwages.

The Courts Ruling

The Court agrees with the ruling of the CA that there were 32 complaining employees who filed and signed their complaint dated February 18, 1999 for unfair labor practice, illegal dismissal and illegal suspension.155[13] Out of the 32, six (6) undeniably resigned and signed waivers and quitclaims, leaving 26 remaining complainant employees. Thus, the Court adopts and affirms the following CA ruling on this matter:

The number of parties to a complaint corresponds to the number of signatories thereto and not necessarily to the names commonly appearing or identified in the position paper. All persons in whom or against whom any right to relief in respect to or arising out of the same transaction or series of transactions is alleged to exist whether jointly, severally, or in the alternative, may, except as otherwise provided in these Rules, join as plaintiffs or be joined as defendants in one complaint, where any question of law or fact common to all such plaintiffs or to all such defendants may arise in the action; but the court may make such orders as may be just to prevent any plaintiff or defendant from being embarrassed or put to expense in connection with any proceedings in which he may have no interest.156[14]

155 156

This Court likewise affirms the ruling of the CA favoring the reinstatement of all the complaining employees including those who tested positive for illegal drugs, without backwages. The Court is in accord with the ruling of the LA and the CA that neither party came to court with clean hands. Both were in pari delicto.

It cannot be disputed that both parties filed charges against each other, blaming the other party for violating labor laws. AER filed a complaint against Unyon and its 18 members for illegal concerted activities. It likewise suspended 7 union members who tested positive for illegal drugs. On the other hand, Unyon filed a countercharge accusing AER of unfair labor practice, illegal suspension and illegal dismissal. In other words, AER claims that Unyon was guilty of staging an illegal strike while Unyon claims that AER committed an illegal lockout.

AERs fault is obvious from the fact that a day after the union filed a petition for certification election before the DOLE, it hit back by requiring all its employees to undergo a compulsory drug test. Although AER argues that the drug test was applied to all its employees, it was silent as to whether the drug test was a regular company policy and practice in their 35 years in the automotive engine repair and rebuilding business. As the Court sees it, it was AERs first ever drug test of its employees immediately implemented after the workers manifested their desire to organize themselves into a union. Indeed, the timing of the drug test was suspicious.

Moreover, AER failed to show proof that the drug test conducted on its employees was performed by an authorized drug testing center. It did not mention how the tests were conducted and whether the proper procedure was employed. The case of Nacague v. Sulpicio Lines,157[15] is instructive:
Contrary to Sulpicio Lines allegation, Nacague was already questioning the credibility of S.M. Lazo Clinic as early as the proceedings before the Labor Arbiter. In fact, the Labor Arbiter declared that the S.M. Lazo Clinic drug test result was doubtful since it is not under the supervision of the Dangerous Drug Board. The NLRC and the Court of Appeals ruled that Sulpicio Lines validly terminated Nacagues employment because he was found guilty of using illegal drugs which constitutes serious misconduct and loss of trust and confidence. However, we find that Sulpicio Lines failed to clearly show that Nacague was guilty of using illegal drugs. We agree with the Labor Arbiter that the lack of accreditation of S.M. Lazo Clinic made its drug test results doubtful. Section 36 of R.A. No. 9165 provides that drug tests shall be performed only by authorized drug testing centers. Moreover, Section 36 also prescribes that drug testing shall consist of both the screening test and the confirmatory test. Section 36 of R.A. No. 9165 reads:

SEC. 36. Authorized Drug Testing. Authorized drug testing shall be done by any government forensic laboratories or by any of the drug testing laboratories accredited and monitored by the DOH to safeguard the quality of test results. The DOH shall take steps in setting the price of the drug test with DOH accredited drug testing centers to further reduce the cost of such drug test. The drug testing shall employ, among others, two (2) testing methods, the screening test which will determine the positive result as well as the type of drug used and the confirmatory test which will confirm a positive screening test. x x x (Emphases supplied) Department Order No. 53-03 further provides: Drug Testing Program for Officers and Employees Drug testing shall conform with the procedures as prescribed by the
157

Department of Health (DOH) (www.doh.gov.ph). Only drug testing centers accredited by the DOH shall be utilized. A list of accredited centers may be accessed through the OSHC website (www.oshc.dole.gov.ph). Drug testing shall consist of both the screening test and the confirmatory test; the latter to be carried out should the screening test turn positive. The employee concerned must be informed of the test results whether positive or negative. In Social Justice Society v. Dangerous Drugs Board, we explained: As to the mechanics of the test, the law specifies that the procedure shall employ two testing methods, i.e., the screening test and the confirmatory test, doubtless to ensure as much as possible the trustworthiness of the results. But the more important consideration lies in the fact that the tests shall be conducted by trained professionals in access-controlled laboratories monitored by the Department of Health (DOH) to safeguard against results tampering and to ensure an accurate chain of custody. The law is clear that drug tests shall be performed only by authorized drug testing centers. In this case, Sulpicio Lines failed to prove that S.M. Lazo Clinic is an accredited drug testing center. Sulpicio Lines did not even deny Nacagues allegation that S.M. Lazo Clinic was not accredited. Also, only a screening test was conducted to determine if Nacague was guilty of using illegal drugs. Sulpicio Lines did not confirm the positive result of the screening test with a confirmatory test. Sulpicio Lines failed to indubitably prove that Nacague was guilty of using illegal drugs amounting to serious misconduct and loss of trust and confidence. Sulpicio Lines failed to clearly show that it had a valid and legal cause for terminating Nacagues employment. When the alleged valid cause for the termination of employment is not clearly proven, as in this case, the law considers the matter a case of illegal dismissal. (Emphases supplied)

Furthermore, AER engaged in a runaway shop when it began pulling out machines from the main AER building to the AER-PSC compound located on another street on the pretext that the main building was undergoing renovation. Certainly, the striking workers would have no reason to run and enter the AERPSC premises and to cause the return of the machines to the AER building if they were not alarmed that AER was engaging in a runaway shop.

AER committed another infraction when it refused to admit back those employees who were not included in its complaint against the union. Thirty-two (32) employees filed a complaint for illegal dismissal, illegal suspension and unfair labor practice against AER. AER charged 18 employees with illegal strike. AER should have reinstated the 14 employees excluded from its complaint.

Regarding AERs contention that the affected workers abandoned their jobs, the Court has thoroughly reviewed the records and found no convincing proof that they deliberately abandoned their jobs. Besides, this Court has consistently declared in a myriad of labor cases that abandonment is totally inconsistent with the immediate filing of a complaint for illegal dismissal.

In any event, the penalty of dismissal imposed by AER against the striking employees, who, by the way, only staged a one day walkout, was too severe. The pronouncement in the case of Tupas Local Chapter No. 979 v. NLRC158[16] is worth reiterating:

Neither respondent commission's decision nor the labor arbiter's decision as affirmed with modification by it cites any substantial facts or evidence to warrant the terribly harsh imposition of the capital penalty of dismissal and forfeiture of employment on twenty-two of forty-four workers for having staged the so-called one-day (more accurately, a onemorning) "sitdown strike" on August 19, 1980 to inform respondent employer of their having formed their own union and to present their just
158

requests for allowances, overtime pay and service incentive leave pay. Prescinding from respondent commission's misappreciation of the facts and evidence and accepting for the nonce its factual conclusion that the petitioners staged a one-morning sit-down strike instead of making a mass representation for the employer to recognize their newly formed union and negotiate their demands, respondent commission's decision is not in consonance with the constitutional injunction that the Court has invariably invoked and applied to afford protection to labor and assure the workers' rights to self-organization, collective bargaining, security of tenure and just and humane conditions of work. The said decision likewise is not in accordance with settled and authoritative doctrine and legal principles that a mere finding of the illegality of a strike does not automatically warrant a wholesale dismissal of the strikers from their employment and that a premature or improvident strike should not be visited with a consequence so severe as dismissal where a penalty less punitive would suffice. Numerous precedents to this effect have been cited and reaffirmed x x x. x x x x. In the analogous case of PBM Employees Organization vs. PBM Co., Inc.,159[17][10]/ the Court, in setting aside the questioned industrial court's orders held that "the dismissal or termination of the employment of the petitioning eight (8) leaders of the union is harsh for a one-day absence from work." They had been ordered dismissed for having carried out a mass demonstration at Malacaang on March 4, 1969 in protest against alleged abuses of the Pasig police department, upon two days' prior notice to respondent employer company, as against the latter's insistence that the first shift should not participate but instead report for work, under pain of dismissal. The Court held that they were merely exercising their basic human rights and fighting for their very survival "in seeking sanctuary behind their freedom of expression as well as their right of assembly and of petition against alleged persecution of local officialdom." We ruled that "(T)he appropriate penalty - if it deserves any penalty at all - should have been simply to charge said one-day absence against their vacation or sick leave. But to dismiss the eight (8) leaders of the petitioner Union is a most cruel penalty, since as aforestated the Union leaders depend on their wages for their daily sustenance as well as that of their respective families aside from the fact that it is a lethal blow to unionism, while at the same time strengthening the oppressive hand of the petty tyrants in the localities." [Emphases supplied]

159

It must also be noted that there were no injuries during the brief walkout. Neither was there proof that the striking workers inflicted harm or violence upon the other employees. In fact, the Police Memorandum 160[18] dated January 29, 1999 reported no violent incidents and stated that all parties involved in the January 28, 1999 incident were allowed to go home and the employees involved were just given a stern warning.

To the Courts mind, the complaining workers temporarily walked out of their jobs because they strongly believed that management was committing an unfair labor practice. They had no intention of hurting anybody or steal company property. Contrary to AERs assertion, the striking workers did not intend to steal the line boring machine which they tried to cart away from the AER-PSC compound; they just wanted to return it to the main AER building.

Like management, the union and the affected workers were also at fault for resorting to a concerted work slowdown and walking out of their jobs of protest for their illegal suspension. It was also wrong for them to have forced their way to the AER-PSC premises to try to bring out the boring machine. The photos 161[19] shown by AER are enough proof that the picketing employees prevented the entry and exit of non-participating employees and possibly AERs clients. Although the unions sudden work stoppage lasted a day, it surely caused serious disturbance
160 161

and tension within AERs premises and could have adversely affected AERs clients and business in general.

The in pari delicto doctrine in labor cases is not novel to us. It has been applied in the case of Philippines Inter-Fashion, Inc. v NLRC,162[20] where the Court held:

The Solicitor General has correctly stated in his comment that "from these facts are derived the following conclusions which are likewise undisputed: that petitioner engaged in an illegal lockout while the NAFLU engaged in an illegal strike; that the unconditional offer of the 150 striking employees to return to work and to withdraw their complaint of illegal lockout against petitioner constitutes condonation of the illegal lock-out; and that the unqualified acceptance of the offer of the 150 striking employees by petitioner likewise constitutes condonation of the illegal strike insofar as the reinstated employees are concerned." The issues at bar arise, however, from respondent commission's approval of its commissioner's conclusions that (1) petitioner must be deemed to have waived its right to pursue the case of illegal strike against the 114 employees who were not reinstated and who pursued their illegal lockout claim against petitioner; and (2) the said 114 employees are entitled to reinstatement with three months' backwages. The Court approves the stand taken by the Solicitor General that there was no clear and unequivocal waiver on the part of petitioner and on the contrary the record shows that it tenaciously pursued its application for their dismissal, but nevertheless in view of the undisputed findings of illegal strike on the part of the 114 employees and illegal lockout on petitioner's part, both parties are in pari delicto and such situation warrants the restoration of the status quo ante and bringing the parties back to the respective positions before the illegal strike and illegal lockout through the reinstatement of the said 114 employees, as follows: The Bisaya case (102 Phil. 438) is inapplicable to the present case, because in the former, there were only two strikers involved who were both reinstated by their employer
162

upon their request to return to work. However, in the present case, there were more than 200 strikers involved, of which 150 who desired to return to work were reinstated. The rest were not reinstated because they did not signify their intention to return to work. Thus, the ruling cited in the Bisaya case that the employer waives his defense of illegality of the strike upon reinstatement of strikers is applicable only to strikers who signified their intention to return to work and were accepted back ... Truly, it is more logical and reasonable for condonation to apply only to strikers who signified their intention to return and did return to work. The reason is obvious. These strikers took the initiative in normalizing relations with their employer and thus helped promote industrial peace. However, as regards the strikers who decided to pursue with the case, as in the case of the 114 strikers herein, the employer could not be deemed to have condoned their strike, because they had not shown any willingness to normalize relations with it. So, if petitioner really had any intention to pardon the 114 strikers, it would have included them in its motion to withdraw on November 17, 1980. The fact that it did not, but instead continued to pursue the case to the end, simply means that it did not pardon the 114 strikers. xxx xxx xxx The finding of illegal strike was not disputed. Therefore, the 114 strikers employees who participated therein are liable for termination (Liberal Labor Union v. Phil. Can Co., 91 Phil. 72; Insurefco Employees Union v. Insurefco, 95 Phil. 761). On the other hard, the finding of illegal lockout was likewise not disputed. Therefore, the 114 employees affected by the lockout are also subject to reinstatement. Petitioner, however, contends that the application for readmission to work by the 150 strikers constitutes condonation of the lockout which should likewise bind the 114 remaining strikers. Suffice it to say that the 150 strikers acted for themselves, not on behalf of the 114 remaining strikers, and therefore the latter could not be deemed to have condoned petitioner's lockout. The findings show that both petitioner and the 114 strikers are in pari delicto, a situation which warrants the maintenance of the status quo. This means that the contending parties must be brought back to their respective

positions before the controversy; that is, before the strike. Therefore, the order reinstating the 114 employees is proper. With such restoration of the status quo ante it necessarily follows, as likewise submitted by the Solicitor General, that the petition must be granted insofar as it seeks the setting aside of the award of three months' backwages to the 114 employees ordered reinstated on the basis of the general rule that strikers are not entitled to backwages (with some exceptions not herein applicable, such as where the employer is guilty of oppression and union-busting activities and strikers ordered reinstated are denied such reinstatement and therefore are declared entitled to backwages from the date of such denial). More so, is the principle of "no work, no pay" applicable to the case at bar, in view of the undisputed finding of illegality of the strike.

Likewise, the in pari delicto doctrine was applied in the case of First City Interlink Transportation Co. Inc. v The Honorable Secretary,163[21] thus:

3) Petitioner substantially complied with the Return to Work Order. The medical examination, NBI, Police and Barangay Clearances as well as the driver's and conductor's/conductress licenses and photographs required as conditions for reinstatement were reasonable management prerogatives. However, the other requirements imposed as condition for reinstatement were unreasonable considering that the employees were not being hired for the first time, although the imposition of such requirements did not amount to refusal on the part of the employer to comply with the Return to Work Order or constitute illegal lockout so as to warrant payment of backwages to the strikers. If at all, it is the employees' refusal to return to work that may be deemed a refusal to comply with the Return to Work Order resulting in loss of their employment status. As both the employer and the employees were, in a sense, at fault or in pari delicto, the nonreturning employees, provided they did not participate in illegal acts; should be considered entitled to reinstatement. But since reinstatement is no longer feasible, they should be given separation pay computed up to March 8, 1988 (the date set for the return of the employees) in lieu of reinstatement. [Emphases and underscoring supplied]

163

In the case at bar, since both AER and the union are at fault or in pari delicto, they should be restored to their respective positions prior to the illegal strike and illegal lockout. Nonetheless, if reinstatement is no longer feasible, the concerned employees should be given separation pay up to the date set for the return of the complaining employees in lieu of reinstatement.

WHEREFORE, the petitions are DENIED. Accordingly, the complaining employees should be reinstated without backwages. If reinstatement is no longer feasible, the concerned employees should be given separation pay up to the date set for their return in lieu of reinstatement.

SO ORDERED.

JOSE CATRAL MENDOZA Associate Justice

WE CONCUR
Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 140206 June 21, 2001

PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. RODOLFO MATYAONG, accused-appellant. GONZAGA-REYES, J.: On 28 March 1996, accused appellant Rodolfo Matyaong was charged with the crime of parricide before the Regional Trial Court of Palawan and Puerto Princesa City, for hitting his wife Rufina Matyaong with a piece of wood, in an information which states That on or about the 27th day of December, 1995, at Brgy. Latud, Municipality of Rizal, Province of Palawan, Philippines, and within the jurisdiction of this Honorable Court, the said accused, with evident premeditation, treachery and with intent to kill, while armed with a round wood (Bakawan), did then and there wilfully, unlawfully and feloniously attack, assault, maul and club one RUFINA MATYAONG Y PAZ, his lawfully wedded wife, hitting her in the different vital parts of her body and inflicting upon her multiple contusion and hematuas [sic] in the body which were the direct and immediate cause of her death shortly thereafter. CONTRARY TO LAW.1 Upon arraignment, accused-appellant denied culpability.2 Thus, trial ensued, with the prosecution presenting four witnesses, namely Rodolfo Matyaong, Jr., Wilfredo Tablazon, Roberta Paz, and Sgt. Almirante Caburnay. Rodolfo Matyaong, Jr., who was ten years old at the time his testimony was taken, is the eldest child of accused-appellant and Rufina Matyaong. Rodolfo testified that on the evening of 27 December 1995, he was at home cooking dinner for his family. His mother sat nearby reading a letter from his Auntie Ventura, while at the same time nursing his youngest brother. The domestic calm was interrupted, however, by the arrival of accused-appellant who, upon seeing Rufina reading a letter and being illiterate, immediately suspected that it was about another man. Turning a deaf ear to his wifes explanation that the letter was actually about God, accused-appellant grabbed a piece of mangrove wood, commonly known as bakawan, which was two feet in length and 1 inches wide, and beat Rufina. As a result, Rufina lost consciousness and fell to the floor.

Accused-appellant revived Rufina by pouring water on her, after which he threw the lighted wick lamp at her and then grabbed the bakawan. Rufina fled her house and ran towards the forest. Rodolfo also declared that prior to the attack, his mother was suffering from diarrhea and vomitting spells, as were many other people in their locality.3 Wilfredo Tablazon, barangay kagawad of Canipaan, declared that on the same evening, he was supervising a benefit dance at a local school in a neighboring barangay when he was approached by Soling Balahing asking for his help. Soling told him that Rufina Matyaong was hurt and hiding from her husband in the grassy area near her [Soling] house. After some hesitation, Tablazon finally agreed to go with Soling to the place where Rufina was hiding. Tablazon saw Rufina lying on the ground with three of her children. She was in a very weak condition. Sobbing, Rufina pleaded with him to bring her to Canipaan. Tablazon acceded to her request and Rufina was taken by Jun Makauling to Canipaan by pumpboat. The following morning, she was brought to the barangay health center. Tablazon testified that, while at the health center, Rufina vomitted once and suffered diarrhea. Also, he noticed that she had large contusions on both her arms. Due to Rufinas worsening condition, and at the instance of Rufina and her mother, Tablazon decided to fetch accused-appellant to see his wife. When they arrived at the health center, Tablazon heard accused-appellant say to his wife, "Hindi rin mangyari yan kung hindi mo kasalanan." Accusedappellant remained at the health center, assisting his wife, until she expired on 29 December 1995.4 Another witness for the prosecution was Roberta Paz the mother of the victim. Roberta learned about the assault on her daughter only the day after it occurred. On 28 December 1995, at 7 a.m., Delfin Tabo went to Robertas house and informed her that Tablazon was looking for her. Roberta went with Delfin to the house of Tablazon where she found her daughter, who told her that she was mauled by accused-appellant. Roberta noticed that her daughter had bruises all over her body. They made a mock hammock for Rufina to lie in and then, together with Tablazon and the barangay captain, brought her to the barangay health center.5 At the Canipaan health center, Rufina was treated by Sgt. Almirante Caburnay.6 Sgt. Caburnay belonged to the Philippine Marines 6th Marine Batallion Landing Team, Western Command. From October 1995 to January 1996, he was assigned to Canipaan, Rizal, Palawan as a first aider. On 28 December 1995, Sgt. Caburnay was at the marine detachment in Canipaan when Roberta Paz asked him for assistance for her daughter. He proceeded to the health center where he saw Rufina. He noticed that she had bruises and hematoma on her left arm and back. He was also informed that the patient was suffering from diarrhea. In order to prevent dehydration, Sgt. Caburnay gave Rufina dextrose and, in addition, he administered antibiotics. After assessing Rufinas condition, he advised Roberta to bring her daughter to the health center in the town proper of Rizal so that she could receive better medical attention. Unfortunately, Rufina did not live long enough to receive further treatment in Rizal. On 29 December 1995, at five in the morning, Rufina Matyaong breathed her last at the Canipaan health center.7 In his defense, accused-appellant claimed that his wife died from dehydration caused by diarrhea and vomitting, which started on 27 December 1995. He said that Rufina told him that she got sick after she ate sarimburao (fish). Accused-appellant testified that, from December 28, until she died the following day, he took care of his wife while she was at the health center in Canipaan. With

him at the health center were Roberta Paz, Vilma Apostol and barangay captain Belo Fernando. According to accused-appellant, he cooked lugaw for his wife, and emptied ten chamber pots which she used whenever she vomitted or defecated. Furthermore, accused-appellant declared that three of his children were also retching and suffering from diarrhea, but that they all recovered. Finally, it was insisted by accused-appellant that his son Rodolfo Matyaong, Jr. was induced by Roberta Paz to testify falsely against him.8 To buttress accused-appellants testimony, the defense presented Vilma Apostol, a resident of Canipaan and a barangay health worker. Vilma declared that on 27 December 1995, she was fetched from her house by Roberta Paz to help care for Rufina at the health center. When she arrived thereat, she observed that Rufina was already in serious condition she could no longer speak or ingest any solids, she was being given dextrose, and she was always vomitting and experiencing severe diarrhea.9 After trial, the court a quo rendered judgment,10 finding accused-appellant guilty of parricide, and sentencing him to reclusion perpetua, as the mitigating circumstance of lack of intention to commit so grave a wrong was appreciated in his favor. In addition, the court ordered accused-appellants to pay the heirs of Rufina Matyaong P50,000.00 as civil indemnity. The trial court held that, although he may not have intended to kill her, Rufinas death was the direct and natural consequence of accused-appellants felonious act of clubbing her, and therefore, pursuant to Article 4 of the Revised Penal Code, he is liable for the same.11 Hence, the present appeal. Accused-appellant contends that the prosecution failed to establish that he had inflicted any injuries upon his wife. No medical certificate or autopsy report was introduced in evidence that would prove that Rufina had sustained any wounds or bruises due to the alleged beating by her husband. Even assuming that accused-appellant had mauled his wife, the prosecution did not present any evidence that such beating caused her death. It is the position of the defense that Rufina died due to her vomitting and diarrhea, and not from the beatings.12 In lieu of an appellees brief, the Solicitor General filed a "Manifestation and Motion" asking the Court to acquit accused-appellant since his guilt was not proven beyond a reasonable doubt. It is the Solicitor Generals opinion that, although it was established that accused-appellant beat up Rufina, the prosecution nevertheless failed to establish the nexus between the beatings and her death.13 The elements of parricide are as follows: (1) a person is killed; (2) the deceased is killed by the accused; (3) the deceased is the father, mother, or child, whether legitimate or illegitimate, or a legitimate other ascendant or other descendant, or the legitimate spouse of the accused.14 In every criminal case, the evidence presented must be sufficient to prove the corpus delicti - that is, the actual offense committed. In this case, the prosecution must first establish that the life of a human being was taken, and second, that the death was occasioned by the accuseds criminal act or agency.15 If the evidence clearly discloses that a certain person is dead, and that his death resulted

from the use of violent and criminal means by another, then the corpus delicti is sufficiently proved.16 In the case at bar, it has been established that accused-appellant beat his wife with a piece of wood. This conclusion is based upon the unrebutted testimony of Rodolfo Matyaong, Jr. an eyewitness to the assault. Having failed to prove that the witness was impelled by improper motives, the Court has no reason to disbelieve the childs testimony, which the trial court found to be credible.17 It is also undisputed that the victim died on 29 December 1995, or almost two days after the assault. However, we agree with the Solicitor General that the prosecution has not established the crucial link between the assault and the death. In other words, it has not been proven beyond a reasonable doubt that the beatings inflicted by accused-appellant upon his wife were the proximate cause of her death. It is significant that, in this particular case, no post mortem examination was conducted in order to determine the precise cause of death. There was neither an ante mortem nor post mortem examination of the victims body for purposes of ascertaining the nature and extent of any wounds that may have been sustained as a result of the beating. The significance of evidence on the precise nature of the injuries sustained by the deceased is that it often leads the careful examiner to uncover the real cause of death. Therefore, the examination of a wound, from the legal point of view, should lead to the determination as to when the wound was inflicted, what the degree of danger of the wound is, with its dangers to life or function, whether the wound was given by the injured man himself, or by some one else, and with what manner of instrument the wound was produced.18 Wharton and Stilles provides a valuable discussion on the importance of ascertaining the degree of injury sustained by the victim In considering the extent of injury done, account must be taken of the injury to the function of the various organs, and also the danger to life. A division into mortal and nonmortal wounds, if it could be made, would be very desirable; but the unexpected complications and the various extraneous causes which give gravity to the simplest cases, and, on the other hand, the favorable termination of some injuries apparently the most dangerous, render any such classification impracticable. The general classification into slight, severe, dangerous, and mortal wounds may be used, but the possibility of the slight wound terminating with the loss of the persons life, and the apparently mortal ending with only a slight impairment of some function, must always be kept in mind. x x x The danger to life of any wound is dependent upon a number of factors: the extent of the injury, the form of the wound, the region of the body affected, the blood vessels, nerves, or organs involved, the entrance of disease-producing bacteria or other organisms into the wound, the age and constitution of the person injured, and the opportunities for administering proper surgical treatment. No one should be willing, on theoretical grounds alone, to give an opinion as to the agency of the wound in producing death. A careful postmortem examination will usually show the violent cause of death, and it is the duty of the physician whose opinion is desired, to make that examination most carefully, and to base his opinion entirely upon the findings of this examination; not upon previous notions of the probable nature and effects of the wound. Moreover, it is necessary not merely to make an examination of the regions apparently involved in the injury, but also a thorough

examination of the entire body; for, notwithstanding the immediate cause of death may be evident, it is still advisable to be sure that there was no cause of death in any other part. 19x xx In the case at bar, not an iota of evidence on these points is extant in the records of this case. The testimonies of the prosecution witnesses, none of whom were competent to conduct a medico-legal examination of the victims body, on the injuries sustained by Rufina are, to say the least, inconsistent - Rodolfo Matyaong, Jr., the only eyewitness to the attack, was unable to state on what parts of his mothers body the blows fell; Wilfredo Tablazon said that Rufina had contusions on both her arms; Roberta Paz declared that there were bruises all over her daughters body; and Sgt. Caburnay noted bruises and hematoma on the victims left arm and back. These haphazard observations will certainly not suffice for purposes of a criminal proceeding, wherein a mans liberty, and maybe, even life, are at stake. In addition, the fact that the victim was suffering from severe diarrhea and vomitting, a condition prevalent in the locality at the time, both prior to and after the assault, according to the testimony of both prosecution and defense witnesses,20 and that she did not die immediately after the beating, but almost two days later, makes evidence on the exact cause of her death even more imperative. It is very possible that Rufina died due to food poisoning, of which vomitting and diarrhea are classic symptoms.21 "Irritant foods and food poisoning, on account of organic and vegetable fermentation, may cause serious gastric, as well as intestinal, irritation; and there may ensue a still further conversion of these altered food products into poisonous substances, by a well-known physicochemical process, called ptomains, leukomains, etc., and these may be absorbed into the circulation of the blood, and cause peculiar symptoms of intoxication by the secondary poisonous products."22 When two possible causes of death are present, a doubt is created as to the actual cause, which can only be overcome by expert testimony by a qualified physician who conducted a thorough examination of the victim.23 In the case of U.S. v. Palalon,24 where accused struck the victim with the back of his hand, a few hours after which the victim contracted a fever and died two and one-half days later, the Court acquitted the accused of the charge of homicide on the ground that the cause of death had not been established, despite the fact that a physician had conducted an examination of the deceaseds body and had linked the blows sustained by the victim to his death. The Court held that There is no question as to the fact that the defendant struck the deceased a blow on the mouth. But it is extremely doubtful that the blow either directly or indirectly caused the death. It is not denied that fever was prevalent in the locality in July, 1925, and it is quite probable that the death of the deceased was due entirely to natural causes. The theory of the prosecution is that the deceased, in falling down, received fatal internal injuries, and bases its conclusions on the testimony of Dr. Jose V. Valero, who stated in substance that he examined the body of the deceased on the day following the death and found ecchymosis on the right shoulder and on the stomach and that, as a result of the former, there was a congestion of the right lung, which was the principal cause of the death; that the blows causing the ecchymosis must have been of such force as to have made its effect felt immediately; and that the victim could not have continued working.1wphi1.nt

No proper autopsy of the body was made, and through the testimony of the boys father and that of the witnesses for the defense, it has been proven conclusively that the deceased, contrary to the doctors theory of the case, continued to work for more than a day after he received the blow. The ecchymosis testified to by the doctor may have been nothing but suggillations or "death spots" formed after the death; the fact that the marks were found both on the stomach and on the back of the deceased so indicates. x x x In the present case the examination of the body took place over twenty-four hours after the death and appears to have been very incomplete; no incisions were made and the examining physician, a young man of limited experience, admitted that his conclusions were partly based upon the statements of the members of the family of the deceased. In these circumstances the conclusions cannot have been much more than mere guesses. In this connection we may say that in cases of death under suspicious circumstances it is the duty of the physician performing the post mortem examination to exercise the utmost care and not draw unwarranted conclusions from external appearances susceptible of different interpretations. Meanwhile, in People v. Ilustre,25 the Court affirmed the judgment of conviction of defendant for homicide based upon the opinion of three doctors who held that the death was caused by blows inflicted upon the deceaseds right hypochondrium, which bruised the liver and produced an internal hemorrhage. Further, the Court held that "[t]he fact that the deceased suffered from incipient pulmonary tuberculosis does not affect the defendants criminal liability, for even if it rendered the blow more fatal, the efficient cause of the death remains the same." In People v. Ulep,26 the Court held accused liable for the death of his wife based primarily upon the autopsy report which described the cause of death as cardiac arrest and primary shock caused by strong pressure applied on the upper front chest bone, since it was conclusively established that accused had elbowed his wife on the chest. In light of the autopsy report, the Court was unconvinced by the defenses argument that death was caused by a chronic condition of the deceased, holding that Even if the victim is suffering from an internal ailment, liver or heart disease, or tuberculosis, if the blow delivered by the accused (a) is the efficient cause of death; or (b) accelerated his death; or (c) is the proximate cause of death; then there is criminal liability.27 All these cases lead to the inescapable conclusion that in order to hold a person liable for the death of another, the evidence must establish beyond a reasonable doubt that accuseds criminal act was the proximate cause of such death. Such proof is especially crucial when there are several possible causes of death. In the case at bar, even assuming that the victim was afflicted with food poisoning, accused-appellant may still be held liable for her death if the prosecution had presented proof that accused-appellants act of beating his wife was the efficient or proximate cause of death, or had accelerated her death, which it did not. No man is convicted on a probability. The accused is entitled to an acquittal, unless his guilt is shown beyond a reasonable doubt. This means that the prosecution has the burden of establishing,

beyond reasonable doubt, each and every element constituting the crime charged. This is premised upon the accuseds constitutionally guaranteed right to be presumed innocent.28 There being no evidence on the injuries sustained by Rufina Matyaong and the cause of her death, accused-appellant is entitled to an acquittal for the Court entertains a reasonable doubt that his actions have in fact caused the death of his wife. Although it is perhaps possible to convict accused-appellant under paragraph 3 of Article 266,29 which does not require proof of injury, still, the penalty for the same being only arresto menor, and it appearing that accused-appellant has been detained in prison for a period greatly in excess of that penalty, we find it unnecessary to provide for further punishment. WHEREFORE, accused-appellant is hereby ACQUITTED of the crime of parricide. SO ORDERED. Republic of the Philippines SUPREME COURT Baguio City SECOND DIVISION G.R. No. 170351 March 30, 2011

LEYTE GEOTHERMAL POWER PROGRESSIVE EMPLOYEES UNION - ALU - TUCP, Petitioner, vs. PHILIPPINE NATIONAL OIL COMPANY - ENERGY DEVELOPMENT CORPORATION, Respondent. DECISION NACHURA, J.: Under review is the Decision1 dated June 30, 2005 of the Court of Appeals (CA) in CA-G.R. SP No. 65760,
which dismissed the petition for certiorari filed by petitioner Leyte Geothermal Power Progressive Employees Union ALUTUCP (petitioner Union) to annul and set aside the decision 2 dated December 10, 1999 of the National Labor Relations Commission (NLRC) in NLRC Certified Case No. V-02-99. The facts, fairly summarized by the CA, follow. [Respondent Philippine National Oil Corporation]-Energy Development Corporation [PNOC-EDC] is a government-owned and controlled corporation engaged in exploration, development, utilization, generation and distribution of energy resources like geothermal energy. Petitioner is a legitimate labor organization, duly registered with the Department of Labor and Employment (DOLE) Regional Office No. VIII, Tacloban City.

Among [respondents] geothermal projects is the Leyte Geothermal Power Project located at the Greater Tongonan Geothermal Reservation in Leyte. The said Project is composed of the Tongonan 1 Geothermal Project (T1GP) and the Leyte Geothermal Production Field Project (LGPF) which provide the power and electricity needed not only in the provinces and cities of Central and Eastern Visayas (Region VII and VIII), but also in the island of Luzon as well. Thus, the [respondent] hired and employed hundreds of employees on a contractual basis, whereby, their employment was only good up to the completion or termination of the project and would automatically expire upon the completion of such project. Majority of the employees hired by [respondent] in its Leyte Geothermal Power Projects had become members of petitioner. In view of that circumstance, the petitioner demands from the [respondent] for recognition of it as the collective bargaining agent of said employees and for a CBA negotiation with it. However, the [respondent] did not heed such demands of the petitioner. Sometime in 1998 when the project was about to be completed, the [respondent] proceeded to serve Notices of Termination of Employment upon the employees who are members of the petitioner. On December 28, 1998, the petitioner filed a Notice of Strike with DOLE against the [respondent] on the ground of purported commission by the latter of unfair labor practice for "refusal to bargain collectively, union busting and mass termination." On the same day, the petitioner declared a strike and staged such strike. To avert any work stoppage, then Secretary of Labor Bienvenido E. Laguesma intervened and issued the Order, dated January 4, 1999, certifying the labor dispute to the NLRC for compulsory arbitration. Accordingly, all the striking workers were directed to return to work within twelve (12) hours from receipt of the Order and for the [respondent] to accept them back under the same terms and conditions of employment prior to the strike. Further, the parties were directed to cease and desist from committing any act that would exacerbate the situation. However, despite earnest efforts on the part of the Secretary of Labor and Employment to settle the dispute amicably, the petitioner remained adamant and unreasonable in its position, causing the failure of the negotiation towards a peaceful compromise. In effect, the petitioner did not abide by [the] assumption order issued by the Secretary of Labor. Consequently, on January 15, 1999, the [respondent] filed a Complaint for Strike Illegality, Declaration of Loss of Employment and Damages at the NLRC-RAB VIII in Tacloban City and at the same time, filed a Petition for Cancellation of Petitioners Certificate of Registration with DOLE, Regional Office No. VIII. The two cases were later on consolidated pursuant to the New NLRC Rules of Procedure. The consolidated case was docketed as NLRC Certified Case No. V-02-99 (NCMB-RAB VIII-NS-12-0190-98; RAB Case No. VIII-1-0019-99). The said certified case was indorsed to the NLRC 4th Division in Cebu City on June 21, 1999 for the proper disposition thereof.3 In due course, the NLRC 4th Division rendered a decision in favor of respondent, to wit: WHEREFORE, based on the foregoing premises, judgment is hereby rendered as follows: 1. Declaring the officers and members of [petitioner] Union as project employees; 2. Declaring the termination of their employment by reason of the completion of the project, or a phase or portion thereof, to which they were assigned, as valid and legal; 3. Declaring the strike staged and conducted by [petitioner] Union through its officers and members on December 28, 1998 to January 6, 1999 as illegal for failure to comply with the mandatory requirements of the law on strike[;] 4. Declaring all the officers and members of the board of [petitioner] Union who instigated and spearheaded the illegal strike to have lost their employment[;]

5. Dismissing the claim of [petitioner] Union against PNOC-EDC for unfair labor practice for lack of merit[;] 6. Dismissing both parties claims against each other for violation of the Assumption Order dated January 4, 1999 for lack of factual basis[;] 7. Dismissing all other claims for lack of merit.4 Petitioner Union filed a motion for reconsideration of the NLRC decision, which was subsequently denied. Posthaste, petitioner Union filed a petition for certiorari before the CA, alleging grave abuse of discretion in the decision of the NLRC. As previously adverted to, the CA dismissed the petition for certiorari, thus: WHEREFORE, in view of the foregoing premises, judgment is hereby rendered by us DISMISSING the Petition. The assailed Decision dated December 10, 1999 of the NLRC 4th Division in NLRC Certified Case No. V-02-99 (NCMB-RAB VIII-NS-12-0190-98; RAB Case No. VIII-1-0019-99) and its Order dated March 30, 2001 are hereby AFFIRMED. Costs against the Petitioner.5 Hence, this appeal by certiorari filed by petitioner Union, positing the following questions of law: 1. MAY THE HONORABLE COURT OF APPEALS SUSTAIN THE "PROJECT CONTRACTS" THAT ARE DESIGNED TO DENY AND DEPRIVE THE EMPLOYEES THEIR RIGHT TO SECURITY OF TENURE BY MAKING IT APPEAR THAT THEY ARE MERE PROJECT EMPLOYEES? 2. WHEN THERE ARE NO INTERVALS IN THE EMPLOYEES CONTRACT, SUCH THAT THE SOCALLED UNDERTAKING WAS CONTINUOUS, ARE THE EMPLOYEES PROPERLY TREATED AS PROJECT EMPLOYEES? 3. MAY THE HONORABLE COURT OF APPEALS IGNORE THE FIRMS OWN ESTIMATE OF JOB COMPLETION, PROVING THAT THERE IS STILL 56.25% CIVIL/STRUCTURAL WORK TO BE ACCOMPLISHED, AND RULE THAT THE EMPLOYEES WERE DISMISSED FOR COMPLETION [OF] THE "PROJECT?" 4. MAY A FIRM HIDE UNDER THE SPURIOUS CLOAK OF "PROJECT COMPLETION" TO DISMISS EN MASSE THE EMPLOYEES WHO HAVE ORGANIZED AMONG THEMSELVES A LEGITIMATE LABOR ORGANIZATION TO PROTECT THEIR RIGHTS? 5. WHEN THERE IS NO STOPPAGE OF WORK, MAY A PROTEST ACTIVITY BE CONSIDERED AS A STRIKE CONTRARY TO ITS CONCEPTUAL DEFINITION UNDER ARTICLE 212 (O) OF THE LABOR CODE OF THE PHILIPPINES? 6. WHEN THE DISMISSAL IS AIMED AT RIDDING THE COMPANY OF MEMBERS OF THE UNION, IS THIS UNION BUSTING? 6 Stripped of rhetoric, the issues for our resolution are: 1. Whether the officers and members of petitioner Union are project employees of respondent; and 2. Whether the officers and members of petitioner Union engaged in an illegal strike.

On the first issue, petitioner Union contends that its officers and members performed activities that were usually necessary and desirable to respondents usual business. In fact, petitioner Union reiterates that its officers and members were assigned to the Construction Department of respondent as carpenters and masons, and to other jobs pursuant to civil works, which are usually necessary and desirable to the department. Petitioner Union likewise points out that there was no interval in the employment contract of its officers and members, who were all employees of respondent, which lack of interval, for petitioner Union, "manifests that the undertaking is usually necessary and desirable to the usual trade or business of the employer." We cannot subscribe to the view taken by petitioner Union. The distinction between a regular and a project employment is provided in Article 280, paragraph 1, of the Labor Code: ART. 280. Regular and Casual Employment. The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season. An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such actually exists.7 The foregoing contemplates four (4) kinds of employees: (a) regular employees or those who have been "engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer"; (b) project employees or those "whose employment has been fixed for a specific project or undertaking[,] the completion or termination of which has been determined at the time of the engagement of the employee"; (c) seasonal employees or those who work or perform services which are seasonal in nature, and the employment is for the duration of the season; 8 and (d) casual employees or those who are not regular, project, or seasonal employees. Jurisprudence has added a fifth kind a fixed-term employee.9 Article 280 of the Labor Code, as worded, establishes that the nature of the employment is determined by law, regardless of any contract expressing otherwise. The supremacy of the law over the nomenclature of the contract and the stipulations contained therein is to bring to life the policy enshrined in the Constitution to "afford full protection to labor."10 Thus, labor contracts are placed on a higher plane than ordinary contracts; these are imbued with public interest and therefore subject to the police power of the State.11 However, notwithstanding the foregoing iterations, project employment contracts which fix the employment for a specific project or undertaking remain valid under the law: x x x By entering into such a contract, an employee is deemed to understand that his employment is coterminous with the project. He may not expect to be employed continuously beyond the completion of the project. It is of judicial notice that project employees engaged for manual services or those for special skills like those of carpenters or masons, are, as a rule, unschooled. However, this fact alone is not a valid reason for bestowing special treatment on them or for invalidating a contract of employment. Project employment contracts are not lopsided agreements in favor of only one party thereto. The employers interest is equally important as that of the employee[s] for theirs is the interest that propels economic activity. While it may be true that it is the employer who drafts project employment contracts with its business interest as overriding consideration, such contracts do not, of necessity, prejudice the employee. Neither is the employee left helpless by a prejudicial employment contract. After all, under the law, the interest of the worker is paramount. 12

In the case at bar, the records reveal that the officers and the members of petitioner Union signed employment contracts indicating the specific project or phase of work for which they were hired, with a fixed period of employment. The NLRC correctly disposed of this issue: A deeper examination also shows that [the individual members of petitioner Union] indeed signed and accepted the [employment contracts] freely and voluntarily. No evidence was presented by [petitioner] Union to prove improper pressure or undue influence when they entered, perfected and consummated [the employment] contracts. In fact, it was clearly established in the course of the trial of this case, as explained by no less than the President of [petitioner] Union, that the contracts of employment were read, comprehended, and voluntarily accepted by them. x x x. xxxx As clearly shown by [petitioner] Unions own admission, both parties had executed the contracts freely and voluntarily without force, duress or acts tending to vitiate the worker[s] consent. Thus, we see no reason not to honor and give effect to the terms and conditions stipulated therein. x x x.13 Thus, we are hard pressed to find cause to disturb the findings of the NLRC which are supported by substantial evidence. It is well-settled in jurisprudence that factual findings of administrative or quasi-judicial bodies, which are deemed to have acquired expertise in matters within their respective jurisdictions, are generally accorded not only respect but even finality, and bind the Court when supported by substantial evidence. 14 Rule 133, Section 5 defines substantial evidence as "that amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion." Consistent therewith is the doctrine that this Court is not a trier of facts, and this is strictly adhered to in labor cases.15 We may take cognizance of and resolve factual issues, only when the findings of fact and conclusions of law of the Labor Arbiter or the NLRC are inconsistent with those of the CA.16 In the case at bar, both the NLRC and the CA were one in the conclusion that the officers and the members of petitioner Union were project employees. Nonetheless, petitioner Union insists that they were regular employees since they performed work which was usually necessary or desirable to the usual business or trade of the Construction Department of respondent. The landmark case of ALU-TUCP v. NLRC17 instructs on the two (2) categories of project employees: It is evidently important to become clear about the meaning and scope of the term "project" in the present context. The "project" for the carrying out of which "project employees" are hired would ordinarily have some relationship to the usual business of the employer. Exceptionally, the "project" undertaking might not have an ordinary or normal relationship to the usual business of the employer. In this latter case, the determination of the scope and parameters of the "project" becomes fairly easy. x x x. From the viewpoint, however, of the legal characterization problem here presented to the Court, there should be no difficulty in designating the employees who are retained or hired for the purpose of undertaking fish culture or the production of vegetables as "project employees," as distinguished from ordinary or "regular employees," so long as the duration and scope of the project were determined or specified at the time of engagement of the "project employees." For, as is evident from the provisions of Article 280 of the Labor Code, quoted earlier, the principal test for determining whether particular employees are properly characterized as "project employees" as distinguished from "regular employees," is whether or not the "project employees" were assigned to carry out a "specific project or undertaking," the duration (and scope) of which were specified at the time the employees were engaged for that project. In the realm of business and industry, we note that "project" could refer to one or the other of at least two (2) distinguishable types of activities. Firstly, a project could refer to a particular job or undertaking that is within the regular or usual business of the employer company, but which is distinct and separate, and identifiable as such, from

the other undertakings of the company. Such job or undertaking begins and ends at determined or determinable times. The typical example of this first type of project is a particular construction job or project of a construction company. A construction company ordinarily carries out two or more [distinct] identifiable construction projects: e.g., a twenty-five-storey hotel in Makati; a residential condominium building in Baguio City; and a domestic air terminal in Iloilo City. Employees who are hired for the carrying out of one of these separate projects, the scope and duration of which has been determined and made known to the employees at the time of employment, are properly treated as "project employees," and their services may be lawfully terminated at completion of the project. The term "project" could also refer to, secondly, a particular job or undertaking that is not within the regular business of the corporation. Such a job or undertaking must also be identifiably separate and distinct from the ordinary or regular business operations of the employer. The job or undertaking also begins and ends at determined or determinable times.18 Plainly, the litmus test to determine whether an individual is a project employee lies in setting a fixed period of employment involving a specific undertaking which completion or termination has been determined at the time of the particular employees engagement. In this case, as previously adverted to, the officers and the members of petitioner Union were specifically hired as project employees for respondents Leyte Geothermal Power Project located at the Greater Tongonan Geothermal Reservation in Leyte. Consequently, upon the completion of the project or substantial phase thereof, the officers and the members of petitioner Union could be validly terminated. Petitioner Union is adamant, however, that the lack of interval in the employment contracts of its officer and members negates the latters status as mere project employees. For petitioner Union, the lack of interval further drives home its point that its officers and members are regular employees who performed work which was usually necessary or desirable to the usual business or trade of respondent. We are not persuaded. Petitioner Unions members employment for more than a year does equate to their regular employment with respondent. In this regard, Mercado, Sr. v. NLRC19 illuminates: The first paragraph [of Article 280 of the Labor Code] answers the question of who are regular employees. It states that, regardless of any written or oral agreement to the contrary, an employee is deemed regular where he is engaged in necessary or desirable activities in the usual business or trade of the employer, except for project employees. A project employee has been defined to be one whose employment has been fixed for a specific project or undertaking, the completion or termination of which has been determined at the time of the engagement of the employee, or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season, as in the present case. The second paragraph of Art. 280 demarcates as "casual" employees, all other employees who do not fall under the definition of the preceding paragraph. The proviso, in said second paragraph, deems as regular employees those "casual" employees who have rendered at least one year of service regardless of the fact that such service may be continuous or broken. Petitioners, in effect, contend that the proviso in the second paragraph of Art. 280 is applicable to their case and that the Labor Arbiter should have considered them regular by virtue of said proviso. The contention is without merit. The general rule is that the office of a proviso is to qualify or modify only the phrase immediately preceding it or restrain or limit the generality of the clause that it immediately follows. Thus, it has been held that a proviso is to be

construed with reference to the immediately preceding part of the provision to which it is attached, and not to the statute itself or to other sections thereof. The only exception to this rule is where the clear legislative intent is to restrain or qualify not only the phrase immediately preceding it (the proviso) but also earlier provisions of the statute or even the statute itself as a whole. Policy Instruction No. 12 of the Department of Labor and Employment discloses that the concept of regular and casual employees was designed to put an end to casual employment in regular jobs, which has been abused by many employers to prevent so called casuals from enjoying the benefits of regular employees or to prevent casuals from joining unions. The same instructions show that the proviso in the second paragraph of Art. 280 was not designed to stifle small-scale businesses nor to oppress agricultural land owners to further the interests of laborers, whether agricultural or industrial. What it seeks to eliminate are abuses of employers against their employees and not, as petitioners would have us believe, to prevent small-scale businesses from engaging in legitimate methods to realize profit. Hence, the proviso is applicable only to the employees who are deemed "casuals" but not to the "project" employees nor the regular employees treated in paragraph one of Art. 280. Clearly, therefore, petitioners being project employees, or, to use the correct term, seasonal employees, their employment legally ends upon completion of the project or the [end of the] season. The termination of their employment cannot and should not constitute an illegal dismissal. Considering our holding that the officers and the members of petitioner Union were project employees, its claim of union busting is likewise dismissed. On the second issue, petitioner Union contends that there was no stoppage of work; hence, they did not strike. Euphemistically, petitioner Union avers that it "only engaged in picketing,"20 and maintains that "without any work stoppage, [its officers and members] only engaged in xxx protest activity." We are not convinced. Petitioner Union splits hairs. To begin with, quite evident from the records is the undisputed fact that petitioner Union filed a Notice of Strike on December 28, 1998 with the Department of Labor and Employment, grounded on respondents purported unfair labor practices, i.e., "refusal to bargain collectively, union busting and mass termination." On even date, petitioner Union declared and staged a strike. Second, then Secretary of Labor, Bienvenido E. Laguesma, intervened and issued a Return-to-Work Order21 dated January 4, 1999, certifying the labor dispute to the NLRC for compulsory arbitration. The Order narrates the facts leading to the labor dispute, to wit: On 28 December 1998, [petitioner Union] filed a Notice of Strike against [respondent] citing unfair labor practices, specifically: refusal to bargain collectively, union busting and mass termination as the grounds [therefor]. On the same day, [petitioner] Union went on strike and took control over [respondents] facilities of its Leyte Geothermal Project. Attempts by the National Conciliation and Mediation Board RBVIII to forge a mutually acceptable solution proved futile. In the meantime, the strike continues with no settlement in sight placing in jeopardy the supply of much needed power supply in the Luzon and Visayas grids. xxxx The on-going strike threatens the availability of continuous electricity to these areas which is critical to day-to-day life, industry, commerce and trade. Without doubt, [respondents] operations [are] indispensable to the national

interest and falls (sic) within the purview of Article 263 (g) of the Labor Code, as amended, which warrants (sic) the intervention of this Office. Third, petitioner Union itself, in its pleadings, used the word "strike." Ultimately, petitioner Unions asseverations are belied by the factual findings of the NLRC, as affirmed by the CA: The failure to comply with the mandatory requisites for the conduct of strike is both admitted and clearly shown on record. Hence, it is undisputed that no strike vote was conducted; likewise, the cooling-off period was not observed and that the 7-day strike ban after the submission of the strike vote was not complied with since there was no strike vote taken. xxxx The factual issue of whether a notice of strike was timely filed by [petitioner] Union was resolved by the evidence on record. The evidence revealed that [petitioner] Union struck even before it could file the required notice of strike. Once again, this relied on [petitioner] Unions proof. [Petitioner] Union[s] witness said: Atty. Sinsuat : You stated that you struck on 28 December 1998 is that correct? Witness : Early in the morning of December 1998. xxxx Atty. Sinsuat : And you went there to conduct the strike did you not? Witness : Our plan then was to strike at noon of December 28 and the strikers will be positioned at their respective areas. 22 Article 263 of the Labor Code enumerates the requisites for holding a strike: Art. 263. Strikes, picketing, and lockouts. (a) x x x. x x x x. (c) In cases of bargaining deadlocks, the duly certified or recognized bargaining agent may file a notice of strike or the employer may file a notice of lockout with the Department at least 30 days before the intended date thereof. In cases of unfair labor practice, the period of notice shall be 15 days and in the absence of a duly certified bargaining agent, the notice of strike may be filed by any legitimate labor organization in behalf of its members. However, in case of dismissal from employment of union officers duly elected in accordance with the union constitution and by-laws, which may constitute union busting, where the existence of the union is threatened, the 15-day cooling-off period shall not apply and the union may take action immediately. (d) The notice must be in accordance with such implementing rules and regulations as the Department of Labor and Employment may promulgate. (e) During the cooling-off period, it shall be the duty of the Department to exert all efforts at mediation and conciliation to effect a voluntary settlement. Should the dispute remain unsettled until the lapse of the requisite number of days from the mandatory filing of the notice, the labor union may strike or the employer may declare a lockout.

(f) A decision to declare a strike must be approved by a majority of the total union membership in the bargaining unit concerned, obtained by secret ballot in meetings or referenda called for that purpose. A decision to declare a lockout must be approved by a majority of the board of directors of the corporation or association or of the partners in a partnership, obtained by secret ballot in a meeting called for that purpose. The decision shall be valid for the duration of the dispute based on substantially the same grounds considered when the strike or lockout vote was taken. The Department may, at its own initiative or upon the request of any affected party, supervise the conduct of the secret balloting. In every case, the union or the employer shall furnish the Department the results of the voting at least seven days before the intended strike or lockout, subject to the cooling-off period herein provided. In fine, petitioner Unions bare contention that it did not hold a strike cannot trump the factual findings of the NLRC that petitioner Union indeed struck against respondent. In fact, and more importantly, petitioner Union failed to comply with the requirements set by law prior to holding a strike.1avvphi1 WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. SP No. 65760 is AFFIRMED. Costs against petitioner Union. SO ORDERED. ANTONIO EDUARDO B. NACHURA Associate Justice WE CONCUR

Republic of the Philippines Supreme Court

Manila

FIRST DIVISION

BANAHAW BROADCASTING CORPORATION, Petitioner,

G.R. No. 171673

- versus -

Present:

CAYETANO PACANA III, NOE U. DACER, JOHNNY B. RACAZA, LEONARDO S. OREVILLO, ARACELI T. LIBRE, GENOVEVO E. ROMITMAN, PORFERIA M. VALMORES, MENELEO G. LACTUAN, DIONISIO G. BANGGA, FRANCISCO D. MANGA, NESTOR A. AMPLAYO, LEILANI B. GASATAYA, LORETA G. LACTUAN, RICARDO B. PIDO, RESIGOLO M. NACUA and ANACLETO C. REMEDIO,
Respondents.

CORONA, C.J., Chairperson, VELASCO, JR., LEONARDO-DE CASTRO, PERALTA,* and PEREZ, JJ.

Promulgated:

May 30, 2011 x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

LEONARDO-DE CASTRO, J.:

This is a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure assailing the Decision164[1] dated April 15, 2005 of the Court of Appeals in CA-G.R. SP No. 57847, and its Resolution 165[2] dated January 27, 2006 denying petitioners Motion for Reconsideration.

The factual and procedural antecedents of this case are as follows:

Respondents in the case at bar, Cayetano Pacana III, Noe U. Dacer, Johnny B. Racaza, Leonardo S. Orevillo, Araceli T. Libre, Genovevo E. Romitman, Porferia M. Valmores, Meneleo G. Lactuan, Dionisio G. Bangga, Francisco D. Manga, Nestor A. Amplayo, Leilani B. Gasataya, Loreta G. Lactuan, Ricardo B. Pido, Resigolo M. Nacua and Anacleto C. Remedio (collectively, the DXWG personnel), are supervisory and rank and file employees of the DXWG-Iligan City radio station which is owned by petitioner Banahaw Broadcasting Corporation
164 165

(BBC), a corporation managed by Intercontinental Broadcasting Corporation (IBC).

On August 29, 1995, the DXWG personnel filed with the Sub-regional Arbitration Branch No. XI, Iligan City a complaint for illegal dismissal, unfair labor practice, reimbursement of unpaid Collective Bargaining Agreement (CBA) benefits, and attorneys fees against IBC and BBC.

On June 21, 1996, Labor Arbiter Abdullah L. Alug rendered his Decision166[3] awarding the DXWG personnel a total of P12,002,157.28 as unpaid CBA benefits consisting of unpaid wages and increases, 13th month pay, longevity pay, sick leave cash conversion, rice and sugar subsidy, retirement pay, loyalty reward and separation pay.167[4] The Labor Arbiter denied the other claims of the DXWG personnel for Christmas bonus, educational assistance, medical check-up and optical expenses. Both sets of parties appealed to the National Labor Relations Commission (NLRC).

On May 15, 1997, a Motion to Dismiss, Release, Waiver and Quitclaim, 168 [5] was jointly filed by IBC and the DXWG personnel based on the latters admission that IBC is not their employer as it does not own DXWG-Iligan City.
166 167 168

On April 21, 1997, the NLRC granted the Motion and dismissed the case with respect to IBC.169[6]

BBC filed a Motion for Reconsideration alleging that (1) neither BBC nor its duly authorized representatives or officers were served with summons and/or a copy of the complaint when the case was pending before the Labor Arbiter or a copy of the Decision therein; (2) since the liability of IBC and BBC is solidary, the release and quitclaim issued by the DXWG personnel in favor of IBC totally extinguished BBCs liability; (3) it was IBC that effected the termination of the DXWG personnels employment; (4) the DXWG personnel are members of the IBC union and are not employees of BBC; and (5) the sequestered properties of BBC cannot be levied upon.

On December 12, 1997, the NLRC issued a Resolution vacating the Decision of Labor Arbiter Alug and remanding the case to the arbitration branch of origin on the ground that while the complaint was filed against both IBC and BBC, only IBC was served with summons, ordered to submit a position paper, and furnished a copy of the assailed decision.170[7]

On October 15, 1998, Labor Arbiter Nicodemus G. Palangan rendered a Decision adjudging BBC to be liable for the same amount discussed in the vacated
169 170

Decision of Labor Arbiter Alug:

WHEREFORE, premises considered, judgment is hereby rendered ordering the respondent Banahaw Broadcasting Corporation to pay complainants the following: 1. Cayetano Pacana III 2. Noe U. Dacer 3. Johnny B. Racaza 4. Leonardo S. Orevillo 5. Araceli T. Libre 6. Genovevo E. Romitman 7. Porferia M. Valmores 8. Meneleo G. Lactuan 9. Dionisio G. Bangga 10. Francisco D. Manga 11. Nestor A. Amplayo 12. Leilani B. Gasataya 13. Loreta G. Lactuan 14. Ricardo B. Pido 15. Resigolo M. Nacua 16. Anacleto C. Remedio GRAND TOTAL P 1,730,535.75 886,776.43 1,271,739.34 1,097,752.70 543,467.22 716,455.72 562,564.78 678,995.91 580,873.78 29,286.65 583,798.51 42,669.75 757,252.52 756,835.64 887,344.75 887,345.39
___________________________

P 12,002,157.28

Respondent is likewise ordered to pay 10% of the total award as attorneys fee.171[8]

Both BBC and respondents appealed to the NLRC anew. The appeal was docketed as NLRC CA No. M-004419-98. In their appeal, the DXWG personnel reasserted their claim for the remaining CBA benefits not awarded to them, and alleged error in the reckoning date of the computation of the monetary award. BBC, in its own Memorandum of Appeal, challenged the monetary award itself, claiming that such benefits were only due to IBC, not BBC, employees. 172[9] In the same Memorandum of Appeal, BBC incorporated a Motion for the
171 172

Recomputation of the Monetary Award (of the Labor Arbiter),173[10] in order that the appeal bond may be reduced.

On September 16, 1999, the NLRC issued an Order174[11] denying the Motion for the Recomputation of the Monetary Award. According to the NLRC, such recomputation would result in the premature resolution of the issue raised on appeal. The NLRC ordered BBC to post the required bond within 10 days from receipt of said Order, with a warning that noncompliance will cause the dismissal of the appeal for non-perfection.175[12] Instead of complying with the Order to post the required bond, BBC filed a Motion for Reconsideration,176[13] alleging this time that since it is wholly owned by the Republic of the Philippines, it need not post an appeal bond.

On November 22, 1999, the NLRC rendered its Decision177[14] in NLRC CA No. M-004419-98. In said Decision, the NLRC denied the Motion for Reconsideration of BBC on its September 16, 1999 Order and accordingly dismissed the appeal of BBC for non-perfection. The NLRC likewise dismissed the appeal of the DXWG personnel for lack of merit in the same Decision.

173 174 175 176 177

BBC filed a Motion for Reconsideration of the above Decision. On January 13, 2000, the NLRC issued a Resolution178[15] denying the Motion.

BBC filed with the Court of Appeals a Petition for Certiorari under Rule 65 of the Rules of Court assailing the above dispositions by the NLRC. The Petition was docketed as CA-G.R. SP No. 57847.

On April 15, 2005, the Court of Appeals rendered the assailed Decision denying BBCs Petition for Certiorari. The Court of Appeals held that BBC, though owned by the government, is a corporation with a personality distinct from the Republic or any of its agencies or instrumentalities, and therefore do not partake in the latters exemption from the posting of appeal bonds. The dispositive portion of the Decision states:

WHEREFORE, finding no grave abuse of discretion on the part of public respondents, We DENY the petition. The challenged decision of public respondent dated November 22, 1999, as well as its subsequent resolution dated January 13, 2000, in NLRC Case No. M-004419-98 are hereby AFFIRMED. The decision of the Labor Arbiter dated October 15, 1998 in RAB Case No. 12-09-00309-95 is hereby declared FINAL AND EXECUTORY.179[16]

On January 27, 2006, the Court of Appeals rendered the assailed Resolution
178 179

denying the Motion for Reconsideration. Hence, this Petition for Review.

As stated above, both the NLRC and the Court of Appeals dealt with only one issue whether BBC is exempt from posting an appeal bond. To recall, the NLRC issued an Order denying BBCs Motion for the Recomputation of the Monetary Award and ordered BBC to post the required bond within 10 days from receipt of said Order, with a warning that noncompliance will cause the dismissal of the appeal for non-perfection.180[17] However, instead of heeding the warning, BBC filed a Motion for Reconsideration, alleging that it need not post an appeal bond since it is wholly owned by the Republic of the Philippines.

There is no dispute as regards the history of the ownership of BBC and IBC. Both BBC and IBC, together with Radio Philippines Network (RPN-9), were formerly owned by Roberto S. Benedicto (Benedicto). In the aftermath of the 1986 people power revolution, the three companies, collectively denominated as Broadcast City, were sequestered and placed under the control and management of the Board of Administrators (BOA).181[18] The BOA was tasked to operate and manage its business and affairs subject to the control and supervision of the Presidential Commission on Good Government (PCGG).182[19] In December 1986, Benedicto and PCGG allegedly executed a Management Agreement whereby the Boards of Directors of BBC, IBC and RPN-9 were agreed to be reconstituted. Under the agreement, 2/3 of the membership of the Boards of
180 181 182

Directors will be PCGG nominees, and 1/3 will be Benedicto nominees.

reorganized Board of Directors was thus elected for each of the three corporations. The BOA, however, refused to relinquish its function, paving for the filing by Benedicto of a Petition for Prohibition with this Court in 1989, which was docketed as G.R. No. 87710.

In the meantime, it was in 1987 when the Republic, represented by the PCGG, filed the case for recovery/reconveyance/reversion and damages against Benedicto. Following our ruling in Bataan Shipyard & Engineering Co., Inc. (BASECO) v. Presidential Commission on Good Government,183[20] the institution of this suit necessarily placed BBC, IBC and RPN-9 under custodia legis of the Sandiganbayan.

On November 3, 1990, Benedicto and the Republic executed a Compromise Agreement whereby Benedicto, in exchange for immunity from civil and criminal actions, ceded to the government certain pieces of property listed in Annex A of the agreement and assigned or transferred whatever rights he may have, if any, to the government over all corporate assets listed in Annex B of the agreement.184[21] BBC is one of the properties listed in Annex B.185[22] Annex A, on the other hand, includes the following entry:

183 184 185

CESSION TO THE GOVERNMENT: I. PHILIPPINE ASSETS: xxxx 7. Inter-Continental Broadcasting Corporation (IBC), 100% of total assets estimated at P450 million, consisting of 41,000 sq.mtrs. of land, more or less, located at Broadcast City Quezon City, other land and buildings in various Provinces, and operates the following TV stations:

a. TV 13 (Manila) b. DY/TV 13 (Cebu) c. DX/TV 13 (Davao) d. DYOB/TV 12 (Iloilo) e. DWLW/TV 13 (Laoag) as well as the following Radio Stations a. DZMZ-FM Manila b. DYBQ Iloilo c. DYOO Roxas d. DYRG Kalibo e. DWLW Laoag f. DWGW Legaspi g. DWDW Dagupan h. DWNW Naga i. DXWG Iligan . . . . . . . . . . P352,455,286.00186[23] (Emphasis supplied.)

Then Senator Teofisto T. Guingona, Jr. filed a Petition for Certiorari and Prohibition seeking to invalidate the Compromise Agreement, which was docketed as G.R. No. 96087. The Petition was consolidated with G.R. No. 87710.

On March 31, 1992, this Court, in Benedicto v. Board of Administrators of

186

Television Stations RPN, BBC and IBC,187[24] promulgated its Decision on the consolidated petitions in G.R. No. 87710 and G.R. No. 96087. Holding that the authority of the BOA had become functus oficio, we granted the Petition in G.R. No. 87710, ordering the BOA to cease and desist from further exercising management, operation and control of Broadcast City and is hereby directed to surrender the management, operation and control of Broadcast City to the reorganized Board of Directors of each of the Broadcast City television stations.188[25] We denied the Petition in G.R. No. 96087 for being premature, since the approval of the Compromise Agreement was still pending in the Sandiganbayan.189[26]

The Sandiganbayan subsequently approved the Compromise Agreement on October 31, 1992, and the approval was affirmed by this Court on September 10, 1993 in Republic v. Sandiganbayan.190[27] original complaint on August 29, 1995. Thus, both BBC and IBC were government-owned and controlled during the time the DXWG personnel filed their

In the present Petition, BBC reiterates its argument that since it is now wholly and solely owned by the government, the posting of the appeal bond was unnecessary on account of the fact that it is presumed that the government is
187 188 189 190

always solvent.191[28] Citing the 1975 case of Republic (Bureau of Forestry) v. Court of Appeals,192[29] BBC adds before us that it is not even necessary for BBC to raise its exempt status as the NLRC should have taken cognizance of the same.193[30]

When the Court of Appeals affirmed the dismissal by the NLRC of BBCs appeal for failure of the latter to post an appeal bond, it relied to the ruling of this Court in Republic v. Presiding Judge, Branch XV, Court of First Instance of Rizal.194 [31] The appellate court, noting that BBCs primary purpose as stated in its Articles of Incorporation is to engage in commercial radio and television broadcasting, held that BBC did not meet the criteria enunciated in Republic v. Presiding Judge for exemption from the appeal bond.195[32]

We pertinently held in Republic v. Presiding Judge:

The sole issue implicit in this petition is whether or not the RCA is exempt from paying the legal fees and from posting an appeal bond. We find merit in the petition. To begin with, We have to determine whether the RCA is a governmental agency of the Republic of the Philippines without a separate, distinct and
191 192 193 194 195

independent legal personality from the latter. We maintain the affirmative. The legal character of the RCA as a governmental agency had already been passed upon in the case of Ramos vs. Court of Industrial Relations wherein this Court held: Congress, by said Republic Act 3452 approved on June 14, 1962, created RCA, in pursuance of its declared policy, viz: SECTION 1. It is hereby declared to be the policy of the Government that in order to stabilize the price of palay, rice and corn, it shall engage in the 'purchase of these basic foods directly from those tenants, farmers, growers, producers and landowners in the Philippines who wish to dispose of their produce at a price that will afford them a fair and just return for their labor and capital investment and whenever circumstances brought about by any cause, natural or artificial, should so require, shall sell and dispose of these commodities to the consumers at areas of consumption at a price that is within their reach. RCA is, therefore, a government machinery to carry out a declared government policy just noted, and not for profit. And more. By law, RCA depends for its continuous operation on appropriations yearly set aside by the General Appropriations Act. So says Section 14 of Republic Act 3452: SECTION 14. The sum of one hundred million pesos is hereby appropriated, out of any funds in the National Treasury not otherwise appropriated, for the capitalization of the Administration: Provided, That the annual operational expenses of the Administration shall not exceed three million pesos of the said amount: Provided further, That the budget of the Rice and Corn Administration for the fiscal year nineteen hundred and sixty-three to nineteen hundred and sixty-four and the years thereafter shall be included in the General appropriations submitted to Congress. RCA is not possessed of a separate and distinct corporate existence. On the contrary, by the law of its creation, it is an office directly under the Office of the President of the Philippines.

Respondent, however, contends that the RCA has been created to succeed to the corporate assets, liabilities, functions and powers of the abolished National Rice & Corn Corporation which is a government-owned and controlled corporation separate and distinct from the Government of the Republic of the Philippines. He further contends that the RCA, being a duly capitalized entity doing mercantile activity engaged in the buying and selling of palay, rice, and corn cannot be the same as the Republic of the Philippines; rather, it is an entity separate and distinct from the Republic of the Philippines. These contentions are patently erroneous. xxxx The mercantile activity of RCA in the buying and selling of palay, rice, and corn is only incident to its primary governmental function which is to carry out its declared policy of subsidizing and stabilizing the price of palay, rice, and corn in order to make it well within the reach of average consumers, an object obviously identified with the primary function of government to serve the well-being of the people. As a governmental agency under the Office of the President the RCA is thus exempt from the payment of legal fees as well as the posting of an appeal bond. Under the decisional laws which form part of the legal system of the Philippines the Republic of the Philippines is exempt from the requirement of filing an appeal bond on taking an appeal from an adverse judgment, since there could be no doubt, as to the solvency of the Government. This well-settled doctrine of the Government's exemption from the requirement of posting an appeal bond was first enunciated as early as March 7, 1916 in Government of the Philippine Island vs. Judge of the Court of First Instance of Iloilo and has since been so consistently enforced that it has become practically a matter of public knowledge and certainly a matter of judicial notice on the part of the courts of the land.196[33]

In the subsequent case of Badillo v. Tayag,197[34] we further discussed that:

Created by virtue of PD No. 757, the NHA is a government-owned and controlled corporation with an original charter. As a general rule, however, such corporations -- with or without independent charters -- are required to pay legal fees under Section 21 of Rule 141 of the 1997 Rules of Civil Procedure:

196 197

SEC. 21. Government Exempt. - The Republic of the Philippines, its agencies and instrumentalities, are exempt from paying the legal fees provided in this rule. Local governments and government-owned or controlled corporations with or without independent charters are not exempt from paying such fees. On the other hand, the NHA contends that it is exempt from paying all kinds of fees and charges, because it performs governmental functions. It cites Public Estates Authority v. Yujuico, which holds that the Public Estates Authority (PEA), a government-owned and controlled corporation, is exempt from paying docket fees whenever it files a suit in relation to its governmental functions. We agree. x x x.198[35]

We can infer from the foregoing jurisprudential precedents that, as a general rule, the government and all the attached agencies with no legal personality distinct from the former are exempt from posting appeal bonds, whereas governmentowned and controlled corporations (GOCCs) are not similarly exempted. This distinction is brought about by the very reason of the appeal bond itself: to protect the presumptive judgment creditor against the insolvency of the presumptive judgment debtor. When the State litigates, it is not required to put up an appeal bond because it is presumed to be always solvent.199[36] This exemption, however, does not, as a general rule, apply to GOCCs for the reason that the latter has a personality distinct from its shareholders. necessarily extend to the GOCC itself. Thus, while a GOCCs majority stockholder, the State, will always be presumed solvent, the presumption does not However, when a GOCC becomes a government machinery to carry out a declared government policy,200[37] it becomes similarly situated as its majority stockholder as there is the assurance that the government will necessarily fund its primary functions. Thus, a GOCC that is
198 199 200

sued in relation to its governmental functions may be, under appropriate circumstances, exempted from the payment of appeal fees.

In the case at bar, BBC was organized as a private corporation, sequestered in the 1980s and the ownership of which was subsequently transferred to the government in a compromise agreement. Further, it is stated in its Amended Articles of Incorporation that BBC has the following primary function:

To engage in commercial radio and television broadcasting, and for this purpose, to establish, operate and maintain such stations, both terrestrial and satellite or interplanetary, as may be necessary for broadcasting on a network wide or international basis.201[38]

It is therefore crystal clear that BBCs function is purely commercial or proprietary and not governmental. As such, BBC cannot be deemed entitled to an exemption from the posting of an appeal bond.

Consequently, the NLRC did not commit an error, and much less grave abuse of discretion, in dismissing the appeal of BBC on account of non-perfection of the same. In doing so, the NLRC was merely applying Article 223 of the Labor Code, which provides:

201

ART. 223. Appeal. - Decisions, awards, or orders of the Labor Arbiter are final and executory unless appealed to the Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards, or orders. Such appeal may be entertained only on any of the following grounds: (a) If there is prima facie evidence of abuse of discretion on the part of the Labor Arbiter; (b) If the decision, order or award was secured through fraud or coercion, including graft and corruption; (c) If made purely on questions of law; and (d) If serious errors in the findings of facts are raised which would cause grave or irreparable damage or injury to the appellant. In case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission in the amount equivalent to the monetary award in the judgment appealed from. (Italization supplied.)

The posting of the appeal bond within the period provided by law is not merely mandatory but jurisdictional. The failure on the part of BBC to perfect the appeal thus had the effect of rendering the judgment final and executory.202[39]

Neither was there an interruption of the period to perfect the appeal when BBC filed (1) its Motion for the Recomputation of the Monetary Award in order to reduce the appeal bond, and (2) its Motion for Reconsideration of the denial of the same. In Lamzon v. National Labor Relations Commission,203[40] where the petitioner argued that the NLRC gravely abused its discretion in dismissing her
202 203

appeal on the ground of non-perfection despite the fact that she filed a Motion for Extension of Time to File an Appeal Bond, we held:

The pertinent provision of Rule VI, NLRC Rules of Procedure, as amended, provides as follows: xxxx Section 6. Bond. - In case the decision of a Labor Arbiter, POEA Administrator and Regional Director or his duly authorized hearing officer involves a monetary award, an appeal by the employer shall be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission or the Supreme Court in an amount equivalent to the monetary award, exclusive of moral and exemplary damages and attorney's fees. The employer as well as counsel shall submit a joint declaration under oath attesting that the surety bond posted is genuine and that it shall be in effect until final disposition of the case. The Commission may, in meritorious cases and upon Motion of the Appellant, reduce the amount of the bond. The filing, however, of the motion to reduce bond shall not stop the running of the period to perfect appeal. Section 7. No Extension of Period. - No motion or request for extension of the period within which to perfect an appeal shall be allowed." As correctly observed by the NLRC, petitioner is presumptuous in assuming that the 10-day period for perfecting an appeal, during which she was to post her appeal bond, could be easily extended by the mere filing of an appropriate motion for extension to file the bond and even without the said motion being granted. It bears emphasizing that an appeal is only a statutory privilege and it may only be exercised in the manner provided by law. Nevertheless, in certain cases, we had occasion to declare that while the rule treats the filing of a cash or surety bond in the amount equivalent to the monetary award in the judgment appealed from, as a jurisdictional requirement to perfect an appeal, the bond requirement on appeals involving monetary awards is sometimes given a liberal interpretation in line with the desired objective of resolving controversies on the merits. However, we find no

cogent reason to apply this same liberal interpretation in this case. Considering that the motion for extension to file appeal bond remained unacted upon, petitioner, pursuant to the NLRC rules, should have seasonably filed the appeal bond within the ten (10) day reglementary period following receipt of the order, resolution or decision of the NLRC to forestall the finality of such order, resolution or decision. Besides, the rule mandates that no motion or request for extension of the period within which to perfect an appeal shall be allowed. The motion filed by petitioner in this case is tantamount to an extension of the period for perfecting an appeal. As payment of the appeal bond is an indispensable and jurisdictional requisite and not a mere technicality of law or procedure, we find the challenged NLRC Resolution of October 26, 1993 and Order dated January 11, 1994 in accordance with law. The appeal filed by petitioner was not perfected within the reglementary period because the appeal bond was filed out of time. Consequently, the decision sought to be reconsidered became final and executory. Unless there is a clear and patent grave abuse of discretion amounting to lack or excess of jurisdiction, the NLRC's denial of the appeal and the motion for reconsideration may not be disturbed. 204[41] (Underscoring supplied.)

In the case at bar, BBC already took a risk when it filed its Motion for the Recomputation of the Monetary Award without posting the bond itself. The Motion for the Recomputation of the Monetary Award filed by BBC, like the Motion for Extension to File the Appeal Bond in Lamzon, was itself tantamount to a motion for extension to perfect the appeal, which is prohibited by the rules. The NLRC already exhibited leniency when, instead of dismissing the appeal outright, it merely ordered BBC to post the required bond within 10 days from receipt of said Order, with a warning that noncompliance will cause the dismissal of the appeal for non-perfection. When BBC further demonstrated its unwillingness by completely ignoring this warning and by filing a Motion for Reconsideration on an entirely new ground, the NLRC cannot be said to have committed grave abuse of discretion by making good its warning to dismiss the appeal. Therefore, the Court of Appeals committed no error when it upheld the NLRCs dismissal of petitioners appeal.
204

WHEREFORE, the instant Petition for Review on Certiorari is DENIED. The Decision of the Court of Appeals dated April 15, 2005 in CA-G.R. SP No. 57847, and its Resolution dated January 27, 2006 are hereby AFFIRMED.

No pronouncement as to costs.

SO ORDERED.