Labor Relation Cases

Labor Relation Cases 1st Batch Commissioner Velasco

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20.

Gonzalez vs. NLRC Capitol Med Center vs. Meris PAL vs NLRC, 225 SCRA 301 (1993) Fair Shipping Corp. vs Medel 679 SCRA 360, Aug. 29, 2012, GR 177907 Brewmaster Intl., Inc. vs NFL 271SCRA 275 (1997) Mabeza vs NLRC, 271 SCRA 679, 1997 Reynaldo Moya of First Solid Rubber Industries, GR 184011, Sept. 18, 2013 Fuentes et al vs NLRC et al., 266 SCRA 24 (1997) Capili vs NLRC 270 SCRA 488 (1997) Garcia vs NLRC 234 SCRA 632 (1994) Jamer vs NLRC 278 SCRA 632 (1997) Gandara Mill Supply vs NLRC, 300 SCRA 702 (1998) BPI vs BPI EU GR 175678, Aug. 22, 2012 PLDT vs NLRC 276 SCRA 1 (1997) Price et al vs Innodata, GR 178505, Sept. 30, 2008 Penaflor vs Outdoor Clothing Mfg. Corp. GR 177114, Jan. 2, 2010 ONCC vs NLRC 277 SCRA 91 Alex Gurango vs Best Chemicals & Plastics, Inc., GR 174593, Aug. 25, 2010 Lilia Laboradan vs Forest Hills Academy, GR 172295, Dec. 23, 2008 LVN Pictures vs LVN Musicians Guild, 1 SCRA 132

G.R. No. 125735

August 26, 1999

LORLENE A. GONZALES, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, FIFTH DIVISION, CAGAYAN DE ORO CITY, and ATENEO DE DAVAO UNIVERSITY, respondents. BELLOSILLO, J.: By way of certiorari under Rule 65 of the Rules of Court petitioner seeks the nullification of the Decision of public respondent National Labor Relations Commission, Fifth Division, which reversed and set aside that of Executive Labor Arbiter Conchita J. Martinez. LORLENE GONZALES, petitioner, has been a schoolteacher in the Elementary Department of private respondent Ateneo de Davao UNIVERSITY (hereafter ATENEO) since 1974 assigned to teach Reading, Mathematics, Language and Pilipino in the Grade VI class, while ATENEO is an educational institution, a corporation duly organized under the laws of the Philippines, with principal address at Jacinto St., Davao City.1âwphi1.nêt Sometime in 1991 Fr. Oscar Millar, S.J., Ateneo Grade School Headmaster, sent a letter dated 11 April 1991 informing petitioner Lorlene A. Gonzales of the complaints of two (2) parents for alleged use of corporal punishment on her students. Petitioner claimed that she was not informed of the identity of the parents who allegedly complained of the corporal punishment she purportedly inflicted in school-year 1990-1991. She likewise claimed that she was not confronted about it by private respondent ATENEO in 1991 and that it was only two (2) years after the complaints were made that she discovered, through her students and their parents, that ATENEO was soliciting complainants to lodge written complaints against her. On 31 March 1993 she wrote a letter to Fr. Oscar Millar, S.J., demanding that she be formally informed of the complaint and be duly investigated. On 9 June 1993 petitioner was informed of the composition of an investigative committee organized by Fr. Oscar Millar, S.J., to look into the alleged use of corporal punishment by petitioner in disciplining her students. It can be gleaned from the records that she was duly furnished with the rules of procedure, informed of the schedule of the hearings, and given copies of the affidavits executed by the students who testified against her. Petitioner refused to take part in the investigation unless the rules of procedure laid down by the Committee be revised, contending that the same were violative of her right to due process. Petitioner specifically objected to the provision which stated: . . . 3) Counsel for Ms. Lorlene Gonzales shall not directly participate in the investigation but will merely advise Ms. Gonzales . . . (par. 3).1 But the Committee was steadfast in its resolve to adopt the aforementioned rules. In its letter dated 9 August 1993, private respondent informed petitioner that the rules of procedure to be applied were "substantially the same rules that were used in the investigation of a former Ateneo employee and therefore we are under legal advice not to change these rules."2 Over the objection of petitioner the Committee commenced with its investigation without petitioner’s participation. Out of the twenty-two (22) invitations sent out by ATENEO to petitioner’s students and their parents to shed light on the matter of corporal punishment allegedly "administered" by her, eleven (11) appeared and testified before the committee. The eleven (11) witnesses also executed written statements denominated as "affidavits."

On 10 November 1993 private respondent served a Notice of Termination on petitioner pursuant to the findings and recommendation of the Committee. Thereafter, petitioner received a letter from the president of ATENEO demanding her voluntary resignation a week from receipt of the letter, otherwise, she would be considered resigned from the service. On 29 November 1993 petitioner filed a complaint before the Labor Arbiter for illegal dismissal. After trial, Executive Labor Arbiter Conchita J. Martinez found her dismissal illegal for lack of factual basis and ordered ATENEO to award petitioner separation pay, back wages and 13th month pay. In her decision, the Executive Labor Arbiter opined that although petitioner was afforded procedural due process respondent institution "failed to establish substantial evidence as to the guilt of the complainant of the offense charged"3 thus — . . . the complainant was afforded procedural due process. There is convincing and sufficient evidence . . . showing respondent complied with the notice and hearing requirement. . . . .4 After considering the evidence, arguments and counter-arguments of the parties, this office finds that the respondent failed to establish substantial evidence as to the guilt of complainant of the offense charged. . . .5 Complainant has sufficiently established that she is a very good teacher. She is equipped with the appropriate educational qualifications, trainings, seminars and work experiences. Such fact was affirmed by her present and former students, their parents, colleagues and the former headmaster of the grade school. . . .6 As a matter of fact, six (6) out of the nine (9) students and their parents/guardians have retracted and withdrawn their statements. . . .7 Both parties appealed to the NLRC which on 25 March 1996 reversed the decision of the Executive Labor Arbiter by declaring petitioner’s dismissal valid and legal but added that since ATENEO offered petitioner her retirement benefits it was but proper that she be extended said benefits. Petitioner now seeks the reversal of the decision; hence, this petition. The crux of the controversy is whether the NLRC committed grave abuse of discretion in sustaining as valid and legal the dismissal of petitioner by private respondent ATENEO. The NLRC, in our view, appears to have skirted several important issues raised by petitioner foremost of which is the absence of due process. Upon being notified of her termination, she has the right to demand compliance with the basic requirements of due process. Compliance entails the twin requirements of procedural and substantial due process. Ample opportunity must be afforded the employee to defend herself either personally and/or with assistance of a representative; to know the nature of her offense; and, to cross examine and confront face to face the witnesses against her. Likewise, due process requires that the decision must be based on established facts and on a sound legal foundation. It is precisely to demand compliance with these requirements that petitioner at the very onset of the investigation demanded the revision of the rules laid down by the Investigative Committee. The adamant refusal of the Committee to accede to this demand resulted in her failure to confront and cross-examine her accusers. This is not "harping at technicalities" as wrongfully pointed out by the NLRC but a serious violation of petitioner's statutory and constitutional right to due process that ultimately vitiated the investigation.

Moreover, the failure of ATENEO to refute the contention of petitioner that the joint affidavits executed by the students and parents were "pre-prepared" raises serious doubts as to the probative value of this evidence. As correctly pointed out by the Executive Labor Arbiter, "there is more reason to disregard it especially where the same was challenged and has remained unexplained." Hearsay evidence, in the strict sense, has no probative value whether objected to or not. In the instant case, ATENEO failed to prove by substantial evidence that petitioner had inflicted corporal punishment on her students. In Ang Tibay v. CIR, the Court set the measure of evidence to be presented in an administrative investigation when it said, "substantial evidence is more than mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." The evidence of private respondent did not measure up to this standard. It relied solely on the witnesses' affidavits with questionable veracity. Moreover, the affidavit of recantation executed by some students and their parents all the more weakened the case of private respondent. Failure in this regard negates the very existence of the ground for dismissal. On the other hand, petitioner adequately proved, by means of affidavits, letters of petition and manifesto made by her students and co-teachers, that she was a competent and dedicated teacher having spent seventeen (17) years of her life in the service of the very institution which is now seeking her dismissal. In view of the foregoing, the conclusion of the NLRC is unwarranted. Employment is not merely a contractual relationship; it has assumed the nature of property right. It may spell the difference whether or not a family will have food on their table, roof over their heads and education for their children. It is for this reason that the State has taken up measures to protect employees from unjustified dismissals. It is also because of this that the right to security of tenure is not only a statutory right but, more so, a constitutional right. WHEREFORE, the assailed Decision of public respondent National Labor Relations Commission dated 25 March 1996 is REVERSED and SET ASIDE, and the decision of Executive Labor Arbiter Conchita J. Martinez "declaring the dismissal of complainant Lorlene A. Gonzales illegal for lack of factual basis and ordering respondent Ateneo de Davao University to pay complainant separation pay, back wages and 13th month pay in the total amount of TWO HUNDRED SIXTEEN THOUSAND NINE HUNDRED THIRTY-EIGHT and 70/100 PESOS (P216,938.70) . . . [f]urther, ordering respondent to pay 10% of the total monetary award as attorney's fees to counsel for complainant . . . [d]ismissing all other claims for lack of merit," is REINSTATED, AFFIRMED and ADOPTED herein as the decision in the instant case.1âwphi1.nêt SO ORDERED.

G.R. No. 155098 September 16, 2005 CAPITOL MEDICAL CENTER, INC. and DR. THELMA NAVARETTE-CLEMENTE, Petitioners, vs. DR. CESAR E. MERIS, Respondent. DECISION CARPIO MORALES, J.: Subject of the present appeal is the Court of Appeals Decision1 dated February 15, 2002 reversing the NLRC Resolution2 dated January 19, 1999 and Labor Arbiter Decision3 dated April 28, 1998 which both held that the closure of the Industrial Service Unit of the Capitol Medical Center, Inc., resulting to the termination of the services of herein respondent Dr. Cesar Meris as Chief thereof, was valid. On January 16, 1974, PETITIONER Capitol Medical Center, Inc. (Capitol) hired Dr. Cesar Meris (Dr. Meris),4 one of its stockholders,5 as in charge of its Industrial Service Unit (ISU) at a monthly salary of P10,270.00. Until the closure of the ISU on April 30, 1992,6 Dr. MERIS b 500 employees and health workers as well as to employees and workers of companies having retainer contracts with it.7 On March 31, 1992, Dr. Meris received from Capitol’s president and chairman of the board, Dr. Thelma Navarette-Clemente (Dr. Clemente), a notice advising him of the management’s decision to close or abolish the ISU and the consequent termination of his services as Chief thereof, effective April 30, 1992.8 The notice reads as follows: March 31, 1992 Dr. Cesar E. Meris Chief, Industrial Service Unit Capitol Medical Center Dear Dr. Meris: Greetings! Please be formally advised that the hospital management has decided to abolish CMC’s Industrial Service Unit as of April 30, 1992 in view of the almost extinct demand for direct medical services by the private and semi-government corporations in providing health care for their employees. Such a decision was arrived at, after considering the existing trend of industrial companies allocating their health care requirements to Health Maintenance Organizations (HMOs) or thru a tripartite arrangement with medical insurance carriers and designated hospitals. As a consequence thereof, all positions in the unit will be decommissioned at the same time industrial services [are] deactivated. In that event, you shall be entitled to return to your private

practice as a consultant staff of the institution and will become eligible to receive your retirement benefits as a former hospital employee. Miss Jane Telan on the other hand will be transferred back to Nursing Service for reassignment at the CSR. We wish to thank you for your long and faithful service to the institution and hope that our partnership in health care delivery to our people will continue throughout the future. Best regards. Very truly yours, (SGD.) DR. THELMA NAVARETTE-CLEMENTE9 (Emphasis and underscoring supplied) Dr. Meris, doubting the reason behind the management’s decision to close the ISU and believing that the ISU was not in fact abolished as it continued to operate and offer services to the client companies with Dr. Clemente as its head and the notice of closure was a mere ploy for his ouster in view of his refusal to retire despite Dr. Clemente’s previous prodding for him to do so,10 sought his reinstatement but it was unheeded. Dr. Meris thus filed on September 7, 1992 a complaint against Capitol and Dr. Clemente for illegal dismissal and reinstatement with claims for backwages, moral and exemplary damages, plus attorney’s fees.11 Finding for Capitol and Dr. Clemente, the Labor Arbiter held that the abolition of the ISU was a valid and lawful exercise of management prerogatives and there was convincing evidence to show that ISU was being operated at a loss.12 The decretal text of the decision reads: WHEREFORE, judgment is hereby rendered dismissing the complaint. Respondents are however ordered to pay complainant all sums due him under the hospital retirement plan. SO ORDERED.13 (Emphasis supplied) On appeal by Dr. Meris, the National Labor Relations Commission (NLRC) modified the Labor Arbiter’s decision. It held that in the exercise of Capitol’s management prerogatives, it had the right to close the ISU even if it was not suffering business losses in light of Article 283 of the Labor Code and jurisprudence.14 And the NLRC set aside the Labor Arbiter’s directive for the payment of retirement benefits to Dr. Meris because he did not retire. Instead, it ordered the payment of separation pay as provided under Article 283 as he was discharged due to closure of ISU, to be charged against the retirement fund.15 Undaunted, Dr. Meris elevated the case to the Court of Appeals via petition for review16 which, in the interest of substantial justice, was treated as one for certiorari.17 Discrediting Capitol’s assertion that the ISU was operating at a loss as the evidence showed a continuous trend of increase in its revenue for three years immediately preceding Dr. Meris’s dismissal on April 30, 1992,18 and finding that the ISU’s "Analysis of Income and Expenses" which was prepared long after Dr. Meris’s dismissal, hence, not yet available, on or before April 1992, was tainted with irregular entries, the appellate court held that Capitol’s evidence failed to meet the standard of a sufficient and adequate proof of loss necessary to justify the abolition of the ISU.19

The appellate court went on to hold that the ISU was not in fact abolished, its operation and management having merely changed hands from Dr. Meris to Dr. Clemente; and that there was a procedural lapse in terminating the services of Dr. Meris, no written notice to the Department of Labor and Employment (DOLE) of the ISU abolition having been made, thereby violating the requirement embodied in Article 283.20 The appellate court, concluding that Capitol failed to strictly comply with both procedural and substantive due process, a condition sine qua non for the validity of a case of termination,21 held that Dr. Meris was illegally dismissed. It accordingly reversed the NLRC Resolution and disposed as follows: IN VIEW OF ALL THE FOREGOING, the assailed resolutions of the NLRC are hereby set aside, and another one entered – 1 – declaring illegal the dismissal of petitioner as Chief of the Industrial Service Unit of respondent Medical Center; 2 – ordering respondents to pay petitioner a) backwages from the date of his separation in April 1992 until this decision has attained finality; b) separation pay in lieu of reinstatement computed at the rate of one (1) month salary for every year of service with a fraction of at least six (6) months being considered as one year; c) other benefits due him or their money equivalent; d) moral damages in the sum of P50,000.00; e) exemplary damages in the sum of P50,000.00; and f) attorney’s fees of 10% of the total monetary award payable to petitioner. SO ORDERED.22 Hence, the present petition for review assigning to the appellate court the following errors: I . . . IN OVERTURNING THE FACTUAL FINDINGS AND CONCLUSIONS OF BOTH THE NATIONAL LABOR RELATIONS COMMISSION (NLRC) AND THE LABOR ARBITER. II . . . IN HOLDING, CONTRARY TO THE FINDINGS OF BOTH THE LABOR ARBITER AND THE NATIONAL LABOR RELATIONS COMMISSION, THAT THE INDUSTRIAL UNIT (ISU) WAS NOT INCURRING LOSSES AND THAT IT WAS NOT IN FACT ABOLISHED. III

. . . IN NOT UPHOLDING PETITIONERS’ MANAGEMENT PREROGATIVE TO ABOLISH THE INDUSTRIAL SERVICE UNIT (ISU). IV . . . IN REQUIRING PETITIONERS TO PAY RESPONDENT BACKWAGES AS WELL AS DAMAGES AND ATTORNEY’S FEES.23 Capitol questions the appellate court’s deciding of the petition of Dr. Meris on the merits, instead of merely determining whether the administrative bodies acted with grave abuse of discretion amounting to lack or excess of jurisdiction. The province of a special civil action for certiorari under Rule 65, no doubt the appropriate mode of review by the Court of Appeals of the NLRC decision,24 is limited only to correct errors of jurisdiction or grave abuse of discretion amounting to lack or excess of jurisdiction.25 In light of the merits of Dr. Meris’ claim, however, the relaxation by the appellate court of procedural technicality to give way to a substantive determination of a case, as this Court has held in several cases,26 to subserve the interest of justice, is in order. Capitol argues that the factual findings of the NLRC, particularly when they coincide with those of the Labor Arbiter, as in the present case, should be accorded respect, even finality.27 For factual findings of the NLRC which affirm those of the Labor Arbiter to be accorded respect, if not finality, however, the same must be sufficiently supported by evidence on record.28 Where there is a showing that such findings are devoid of support, or that the judgment is based on a misapprehension of facts,29 the lower tribunals’ factual findings will not be upheld. As will be reflected in the following discussions, this Court finds that the Labor Arbiter and the NLRC overlooked some material facts decisive of the instant controversy. Capitol further argues that the appellate court’s conclusion that the ISU was not incurring losses is arbitrary as it was based solely on the supposed increase in revenues of the unit from 1989-1991, without taking into account the "Analysis of Income and Expenses" of ISU from July 1, 1990 to July 1, 1991 which shows that the unit operated at a loss;30 and that the demand for the services of ISU became almost extinct in view of the affiliation of industrial establishments with HMOs such as Fortunecare, Maxicare, Health Maintenance, Inc. and Philamcare and of tripartite arrangements with medical insurance carriers and designated hospitals,31 and the trend resulted in losses in the operation of the ISU. Besides, Capitol stresses, the health care needs of the hospital employees had been taken over by other units without added expense to it;32 the appellate court’s decision is at best an undue interference with, and curtailment of, the exercise by an employer of its management prerogatives;33 at the time of the closure of the ISU, Dr. Meris was already eligible for retirement under the Capitol’s retirement plan; and the appellate court adverted to the alleged lack of notice to the DOLE regarding Dr. Meris’s dismissal but the latter never raised such issue in his appeal to the NLRC or even in his petition for review before the Court of Appeals, hence, the latter did not have authority to pass on the matter.34 Work is a necessity that has economic significance deserving legal protection. The social justice and protection to labor provisions in the Constitution dictate so.

Employers are also accorded rights and privileges to assure their self-determination and independence and reasonable return of capital. This mass of privileges comprises the so-called MANAGEMENT PREROGATIVES. Although they may be broad and unlimited in scope, the State has the right to determine whether an employer’s privilege is exercised in a manner that complies with the legal requirements and does not offend the protected rights of labor. One of the rights accorded an employer is the right to close an establishment or undertaking. The right to close the operation of an establishment or undertaking is explicitly recognized under the Labor Code as one of the authorized causes in terminating employment of workers, the only limitation being that the closure must not be for the purpose of circumventing the provisions on termination of employment embodied in the Labor Code. ART. 283. Closure of establishment and reduction of personnel. – The employer may also terminate the employment of any employee due to the installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor saving devices or redundancy, the worker affected shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or 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 and underscoring supplied) The phrase "closures or cessation of operations of establishment or undertaking" includes a partial or total closure or cessation.35 x x x Ordinarily, the closing of a warehouse facility and the termination of the services of employees there assigned is a matter that is left to the determination of the employer in the good faith exercise of its management prerogatives. The applicable law in such a case is Article 283 of the Labor Code which permits ‘closure or cessation of operation of an establishment or undertaking not due to serious business losses or financial reverses,’ which, in our reading includes both the complete cessation of operations and the cessation of only part of a company’s business. (Emphasis supplied) And the phrase "closures or cessation x x x not due to serious business losses or financial reverses" recognizes the right of the employer to close or cease his business operations or undertaking even if he is not suffering from serious business losses or financial reverses, as long as he pays his employees their termination pay in the amount corresponding to their length of service.36 It would indeed be stretching the intent and spirit of the law if a court were to unjustly interfere in management’s prerogative to close or cease its business operations just because said business operation or undertaking is not suffering from any loss.37 As long as the company’s exercise of the same is in good faith to advance its interest and not for the purpose of defeating or circumventing the rights of employees under the law or a valid agreement, such exercise will be upheld.38

Clearly then, the right to close an establishment or undertaking may be justified on grounds other than business losses but it cannot be an unbridled prerogative to suit the whims of the employer. The ultimate test of the validity of closure or cessation of establishment or undertaking is that it must be bona fidein character.39 And the burden of proving such falls upon the employer.40 In the case at bar, Capitol failed to sufficiently prove its good faith in closing the ISU. From the letter of Dr. Clemente to Dr. Meris, it is gathered that the abolition of the ISU was due to the "almost extinct demand for direct medical service by the private and semi-government corporations in providing health care for their employees;" and that such extinct demand was brought about by "the existing trend of industrial companies allocating their health care requirements to Health Maintenance Organizations (HMOs) or thru a tripartite arrangement with medical insurance carriers and designated hospitals." The records of the case, however, fail to impress that there was indeed extinct demand for the medical services rendered by the ISU. The ISU’s Annual Report for the fiscal years 1986 to 1991, submitted by Dr. Meris to Dr. Clemente, and uncontroverted by Capitol, shows the following: Fiscal Year No. of Industrial No of No. of Capitol Patients Companies Employees 1986-1987 466 11 1445 1987-1988 580 17 1707 1988-1989 676 14 1888 1989-1990 571 16 2731 1990-1991 759 18 232041 If there was extinct demand for the ISU medical services as what Capitol and Dr. Clemente purport to convey, why the number of client companies of the ISU increased from 11 to 18 from 1986 to 1991, as well as the number of patients from both industrial corporations and Capitol employees, they did not explain. The "Analysis of Income and Expenses" adduced by Capitol showing that the ISU incurred losses from July 1990 to February 1992, to wit: July 1, 1990 to July 1, 1991 to June 30, 1991 February 29, 1992 INCOME P16, 772.00 P35, 236.00 TOTAL EXPENSES P225, 583.70 P169,244.34 NET LOSS P(208,811.70) P(134,008.34),42

was prepared by its internal auditor Vicenta Fernandez,43 a relative of Dr. Clemente, and not by an independent external auditor, hence, not beyond doubt. It is the financial statements audited by independent external auditors which constitute the normal method of proof of the profit and loss performance of a company.44 At all events, the claimed losses are contradicted by the accounting records of Capitol itself which show that ISU had increasing revenue from 1989 to 1991. Year In-Patient Out-Patient Total Income 1989 P230,316.38 P 79,477.50 P309,793.88 1990 P278,438.10 P124,256.65 P402,694.75 1991 P305,126.35 P152,920.15 P458,046.5045 The foregoing disquisition notwithstanding, as reflected above, the existence of business losses is not required to justify the closure or cessation of establishment or undertaking as a ground to terminate employment of employees. Even if the ISU were not incurring losses, its abolition or closure could be justified on other grounds like that proffered by Capitol – extinct demand. Capitol failed, however, to present sufficient and convincing evidence to support such claim of extinct demand. In fact, the employees of Capitol submitted a petition46 dated April 21, 1992 addressed to Dr. Clemente opposing the abolition of the ISU. The closure of ISU then surfaces to be contrary to the provisions of the Labor Code on termination of employment. The termination of the services of Dr. Meris not having been premised on a just or authorized cause, he is entitled to either reinstatement or separation pay if reinstatement is no longer viable, and to backwages. Reinstatement, however, is not feasible in case of a strained employer-employee relationship or when the work or position formerly held by the dismissed employee no longer exists, as in the instant case.47 Dr. Meris is thus entitled to payment of separation pay at the rate of one (1) month salary for every year of his employment, with a fraction of at least six (6) months being considered as one(1) year,48 and full backwages from the time of his dismissal from April 30, 1992 until the expiration of his term as Chief of ISU or his mandatory retirement, whichever comes first. The award by the appellate court of moral damages,49 however, cannot be sustained, solely upon the premise that the employer fired his employee without just cause or due process. Additional facts must be pleaded and proven to warrant the grant of moral damages under the Civil Code, such as that the act of dismissal was attended by bad faith or fraud, or was oppressive to labor, or done in a manner contrary to morals, good customs, or public policy; and of course, that social humiliation, wounded feelings, grave anxiety, etc., resulted therefrom.50Such circumstances, however, do not obtain in the instant case. More specifically on bad faith, lack of it is mirrored in Dr. Clemente’s offer to Dr. Meris to be a consultant of Capitol, despite the abolition of the ISU. There being no moral damages, the award of exemplary damages does not lie.51 The award for attorney’s fees, however, remains.52

WHEREFORE, the decision of the Court of Appeals dated February 15, 2002 is hereby AFFIRMED withMODIFICATION. As modified, judgment is hereby rendered ordering Capitol Medical Center, Inc. to pay Dr. Cesar Meris separation pay at the rate of One (1) Month salary for every year of his employment, with a fraction of at least Six (6) Months being considered as One (1) Year, full backwages from the time of his dismissal from April 30, 1992 until the expiration of his term as Chief of the ISU or his mandatory retirement, whichever comes first; other benefits due him or their money equivalent; and attorney’s fees. Costs against petitioners.

G.R. No. 85985 August 13, 1993 PHILIPPINE AIRLINES, INC. (PAL), petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER ISABEL P. ORTIGUERRA and PHILIPPINE AIRLINES EMPLOYEES ASSOCIATION (PALEA), respondents. Solon Garcia for petitioner. Adolpho M. Guerzon for respondent PALEA.

MELO, J.: In the instant petition for certiorari, the Court is presented the issue of whether or not the formulation of a Code of Discipline among employees is a shared responsibility of the employer and the employees. On March 15, 1985, the Philippine Airlines, Inc. (PAL) completely revised its 1966 Code of Discipline. The Code was circulated among the employees and was immediately implemented, and some employees were forthwith subjected to the disciplinary measures embodied therein. Thus, on August 20, 1985, the Philippine Airlines Employees Association (PALEA) filed a complaint before the National Labor Relations Commission (NLRC) for unfair labor practice (Case No. NCR-72051-85) with the following remarks: "ULP with arbitrary implementation of PAL's Code of Discipline without notice and prior discussion with Union by Management" (Rollo, p. 41). In its position paper, PALEA contended that PAL, by its unilateral implementation of the Code, was guilty of unfair labor practice, specifically Paragraphs E and G of Article 249 and Article 253 of the Labor Code. PALEA alleged that copies of the Code had been circulated in limited numbers; that being penal in nature the Code must conform with the requirements of sufficient publication, and that the Code was arbitrary, oppressive, and prejudicial to the rights of the employees. It prayed that implementation of the Code be held in abeyance; that PAL should discuss the substance of the Code with PALEA; that employees dismissed under the Code be reinstated and their cases subjected to further hearing; and that PAL be declared guilty of unfair labor practice and be ordered to pay damages (pp. 7-14, Record.) PAL filed a motion to dismiss the complaint, asserting its prerogative as an employer to prescibe rules and regulations regarding employess' conduct in carrying out their duties and functions, and alleging that by implementing the Code, it had not violated the collective bargaining agreement (CBA) or any provision of the Labor Code. Assailing the complaint as unsupported by evidence, PAL maintained that Article 253 of the Labor Code cited by PALEA reffered to the requirements for negotiating a CBA which was inapplicable as indeed the current CBA had been negotiated. In its reply to PAL's position paper, PALEA maintained that Article 249 (E) of the Labor Code was violated when PAL unilaterally implemented the Code, and cited provisions of Articles IV and I of Chapter II of the Code as defective for, respectively, running counter to the construction of penal laws and making punishable any offense within PAL's contemplation. These provisions are the following:

Sec. 2. Non-exclusivity. — This Code does not contain the entirety of the rules and regulations of the company. Every employee is bound to comply with all applicable rules, regulations, policies, procedures and standards, including standards of quality, productivity and behaviour, as issued and promulgated by the company through its duly authorized officials. Any violations thereof shall be punishable with a penalty to be determined by the gravity and/or frequency of the offense. Sec. 7. Cumulative Record. — An employee's record of offenses shall be cumulative. The penalty for an offense shall be determined on the basis of his past record of offenses of any nature or the absence thereof. The more habitual an offender has been, the greater shall be the penalty for the latest offense. Thus, an employee may be dismissed if the number of his past offenses warrants such penalty in the judgment of management even if each offense considered separately may not warrant dismissal. Habitual offenders or recidivists have no place in PAL. On the other hand, due regard shall be given to the length of time between commission of individual offenses to determine whether the employee's conduct may indicate occasional lapses (which may nevertheless require sterner disciplinary action) or a pattern of incorrigibility. Labor Arbiter Isabel P. Ortiguerra handling the case called the parties to a conference but they failed to appear at the scheduled date. Interpreting such failure as a waiver of the parties' right to present evidence, the labor arbiter considered the case submitted for decision. On November 7, 1986, a decision was rendered finding no bad faith on the part of PAL in adopting the Code and ruling that no unfair labor practice had been committed. However, the arbiter held that PAL was "not totally fault free" considering that while the issuance of rules and regulations governing the conduct of employees is a "legitimate management prerogative" such rules and regulations must meet the test of "reasonableness, propriety and fairness." She found Section 1 of the Code aforequoted as "an all embracing and all encompassing provision that makes punishable any offense one can think of in the company"; while Section 7, likewise quoted above, is "objectionable for it violates the rule against double jeopardy thereby ushering in two or more punishment for the same misdemeanor." (pp. 3839, Rollo.) The labor arbiter also found that PAL "failed to prove that the new Code was amply circulated." Noting that PAL's assertion that it had furnished all its employees copies of the Code is unsupported by documentary evidence, she stated that such "failure" on the part of PAL resulted in the imposition of penalties on employees who thought all the while that the 1966 Code was still being followed. Thus, the arbiter concluded that "(t)he phrase ignorance of the law excuses no one from compliance . . . finds application only after it has been conclusively shown that the law was circulated to all the parties concerned and efforts to disseminate information regarding the new law have been exerted. (p. 39, Rollo.) She thereupon disposed: WHEREFORE, premises considered, respondent PAL is hereby ordered as follows: 1. Furnish all employees with the new Code of Discipline; 2. Reconsider the cases of employees meted with penalties under the New Code of Discipline and remand the same for further hearing; and 3. Discuss with PALEA the objectionable provisions specifically tackled in the body of the decision. All other claims of the complainant union (is) [are] hereby, dismissed for lack of merit.

SO ORDERED. (p. 40, Rollo.) PAL appealed to the NLRC. On August 19, 1988, the NLRC through Commissioner Encarnacion, with Presiding Commissioner Bonto-Perez and Commissioner Maglaya concurring, found no evidence of unfair labor practice committed by PAL and affirmed the dismissal of PALEA's charge. Nonetheless, the NLRC made the following observations: Indeed, failure of management to discuss the provisions of a contemplated code of discipline which shall govern the conduct of its employees would result in the erosion and deterioration of an otherwise harmonious and smooth relationship between them as did happen in the instant case. There is no dispute that adoption of rules of conduct or discipline is a prerogative of management and is imperative and essential if an industry, has to survive in a competitive world. But labor climate has progressed, too. In the Philippine scene, at no time in our contemporary history is the need for a cooperative, supportive and smooth relationship between labor and management more keenly felt if we are to survive economically. Management can no longer exclude labor in the deliberation and adoption of rules and regulations that will affect them. The complainant union in this case has the right to feel isolated in the adoption of the New Code of Discipline. The Code of Discipline involves security of tenure and loss of employment — a property right! It is time that management realizes that to attain effectiveness in its conduct rules, there should be candidness and openness by Management and participation by the union, representing its members. In fact, our Constitution has recognized the principle of "shared responsibility" between employers and workers and has likewise recognized the right of workers to participate in "policy and decision-making process affecting their rights . . ." The latter provision was interpreted by the Constitutional Commissioners to mean participation in "management"' (Record of the Constitutional Commission, Vol. II). In a sense, participation by the union in the adoption of the code if conduct could have accelerated and enhanced their feelings of belonging and would have resulted in cooperation rather than resistance to the Code. In fact, labor-management cooperation is now "the thing." (pp. 3-4, NLRC Decision ff. p. 149, Original Record.) Respondent Commission thereupon disposed: WHEREFORE, premises considered, we modify the appealed decision in the sense that the New Code of Discipline should be reviewed and discussed with complainant union, particularly the disputed provisions [.] (T)hereafter, respondent is directed to furnish each employee with a copy of the appealed Code of Discipline. The pending cases adverted to in the appealed decision if still in the arbitral level, should be reconsidered by the respondent Philippine Air Lines. Other dispositions of the Labor Arbiter are sustained. SO ORDERED. (p. 5, NLRC Decision.) PAL then filed the instant petition for certiorari charging public respondents with grave abuse of discretion in: (a) directing PAL "to share its management prerogative of formulating a Code of Discipline"; (b) engaging in quasi-judicial legislation in ordering PAL to share said prerogative with the union; (c) deciding beyond the issue of unfair labor practice, and (d) requiring PAL to reconsider pending cases still in the arbitral level (p. 7, Petition; p. 8,Rollo.)

As stated above, the Principal issue submitted for resolution in the instant petition is whether management may be compelled to share with the union or its employees its prerogative of formulating a code of discipline. PAL asserts that when it revised its Code on March 15, 1985, there was no law which mandated the sharing of responsibility therefor between employer and employee. Indeed, it was only on March 2, 1989, with the approval of Republic Act No. 6715, amending Article 211 of the Labor Code, that the law explicitly considered it a State policy "(t)o ensure the participation of workers in decision and policy-making processes affecting the rights, duties and welfare." However, even in the absence of said clear provision of law, the exercise of management prerogatives was never considered boundless. Thus, in Cruz vs. Medina (177 SCRA 565 [1989]) it was held that management's prerogatives must be without abuse of discretion. In San Miguel Brewery Sales Force Union (PTGWO) vs. Ople (170 SCRA 25 [1989]), we upheld the company's right to implement a new system of distributing its products, but gave the following caveat: So long as a company's management prerogatives are exercised in good faith for the advancement of the employer's interest and not for the purpose of defeating or circumventing the rights of the employees under special laws or under valid agreements, this Court will uphold them. (at p. 28.) All this points to the conclusion that the exercise of managerial prerogatives is not unlimited. It is circumscribed by limitations found in law, a collective bargaining agreement, or the general principles of fair play and justice (University of Sto. Tomas vs. NLRC, 190 SCRA 758 [1990]). Moreover, as enunciated in Abbott Laboratories (Phil.), vs. NLRC (154 713 [1987]), it must be duly established that the prerogative being invoked is clearly a managerial one. A close scrutiny of the objectionable provisions of the Code reveals that they are not purely business-oriented nor do they concern the management aspect of the business of the company as in the San Miguel case. The provisions of the Code clearly have repercusions on the employee's right to security of tenure. The implementation of the provisions may result in the deprivation of an employee's means of livelihood which, as correctly pointed out by the NLRC, is a property right (Callanta, vs Carnation Philippines, Inc., 145 SCRA 268 [1986]). In view of these aspects of the case which border on infringement of constitutional rights, we must uphold the constitutional requirements for the protection of labor and the promotion of social justice, for these factors, according to Justice Isagani Cruz, tilt "the scales of justice when there is doubt, in favor of the worker" (Employees Association of the Philippine American Life Insurance Company vs. NLRC, 199 SCRA 628 [1991] 635). Verily, a line must be drawn between management prerogatives regarding business operations per se and those which affect the rights of the employees. In treating the latter, management should see to it that its employees are at least properly informed of its decisions or modes action. PAL asserts that all its employees have been furnished copies of the Code. Public respondents found to the contrary, which finding, to say the least is entitled to great respect. PAL posits the view that by signing the 1989-1991 collective bargaining agreement, on June 27, 1990, PALEA in effect, recognized PAL's "exclusive right to make and enforce company rules and regulations to carry out the functions of management without having to discuss the same with

PALEA and much less, obtain the latter'sconformity thereto" (pp. 11-12, Petitioner's Memorandum; pp 180-181, Rollo.) Petitioner's view is based on the following provision of the agreement: The Association recognizes the right of the Company to determine matters of management it policy and Company operations and to direct its manpower. Management of the Company includes the right to organize, plan, direct and control operations, to hire, assign employees to work, transfer employees from one department, to another, to promote, demote, discipline, suspend or discharge employees for just cause; to lay-off employees for valid and legal causes, to introduce new or improved methods or facilities or to change existing methods or facilities and the right to make and enforce Company rules and regulations to carry out the functions of management. The exercise by management of its prerogative shall be done in a just reasonable, humane and/or lawful manner. Such provision in the collective bargaining agreement may not be interpreted as cession of employees' rights to participate in the deliberation of matters which may affect their rights and the formulation of policies relative thereto. And one such mater is the formulation of a code of discipline. Indeed, industrial peace cannot be achieved if the employees are denied their just participation in the discussion of matters affecting their rights. Thus, even before Article 211 of the labor Code (P.D. 442) was amended by Republic Act No. 6715, it was already declared a policy of the State, "(d) To promote the enlightenment of workers concerning their rights and obligations . . . as employees." This was, of course, amplified by Republic Act No 6715 when it decreed the "participation of workers in decision and policy making processes affecting their rights, duties and welfare." PAL's position that it cannot be saddled with the "obligation" of sharing management prerogatives as during the formulation of the Code, Republic Act No. 6715 had not yet been enacted (Petitioner's Memorandum, p. 44; Rollo, p. 212), cannot thus be sustained. While such "obligation" was not yet founded in law when the Code was formulated, the attainment of a harmonious labor-management relationship and the then already existing state policy of enlightening workers concerning their rights as employees demand no less than the observance of transparency in managerial moves affecting employees' rights. Petitioner's assertion that it needed the implementation of a new Code of Discipline considering the nature of its business cannot be overemphasized. In fact, its being a local monopoly in the business demands the most stringent of measures to attain safe travel for its patrons. Nonetheless, whatever disciplinary measures are adopted cannot be properly implemented in the absence of full cooperation of the employees. Such cooperation cannot be attained if the employees are restive on account, of their being left out in the determination of cardinal and fundamental matters affecting their employment. WHEREFORE, the petition is DISMISSED and the questioned decision AFFIRMED. No special pronouncement is made as to costs. SO ORDERED.

G.R. No. 177907

August 29, 2012

FAIR SHIPPING CORP., and/or KOHYU MARINE CO., LTD., Petitioners, vs. JOSELITO T. MEDEL, Respondent. DECISION LEONARDO-DE CASTRO, J.: In this Petition for Review on Certiorari1 under Rule 45, the Court is asked to reverse and set aside the Decision2and Resolution3 of the Court of Appeals in CA-G.R. SP No. 75893 dated November 20, 2006 and May 15, 2007, respectively. In the assailed Decision, the Court of Appeals held that the Second Division of the National Labor Relations Commission (NLRC) committed grave abuse of discretion amounting to lack or excess of jurisdiction in issuing the Decision4 dated July 31, 2002 in NLRC OFW (M) 99-09-01462 (CA No. 029790-01). In the assailed resolution, the Court of Appeals denied for lack of merit the Motion for Reconsideration5 of herein petitioners Fair Shipping Corporation and Kohyu Marine Co., Ltd. and the Partial Motion for Reconsideration filed by herein respondent Joselito T. Medel. From the records of the case, we culled the following material facts: On November 23, 1998, Medel was hired by Fair Shipping Corporation, for and in behalf of its foreign principal Kohyu Marine Co., Ltd. Under the Contract of Employment6 signed by Medel, the latter was employed as an Able Seaman of the vessel M/V Optima for a period of 12 months with a basic monthly salary of US$335.00, plus fixed overtime pay of US$136.00 and vacation leave with pay of two and a half (2.5) days per month. The contract expressly stated that the terms and conditions of the revised Employment Contract governing the employment of all seafarers, as approved per Department Order No. 33 and Memorandum Circular No. 55, both series of 1996 the 1996 POEA SEC,7 were to be strictly and faithfully observed by the parties. Medel boarded the M/V Optima on November 27, 1998 and commenced the performance of his duties therein.8On March 1, 1999, while the M/V Optima was docked at the Port of Vungtao in Ho Chi Minh City, Vietnam, Medel figured in an unfortunate accident. During the conduct of emergency drills aboard the vessel, one of Medel’s co-workers lost control of the manual handle of a lifeboat, causing the same to turn uncontrollably; and it struck Medel in the forehead. Medel was given first aid treatment and immediately brought to the Choray Hospital in Ho Chi Minh City on said date.9 After undergoing surgical procedure to treat his fractured skull, Medel was discharged from the hospital on March 13, 1999. Medel’s Discharge Summary disclosed that he underwent the following treatment: 1/ Surgical procedure: An open wound, 5 cm long, in the left frontal region. Extend [of] the wound up to 10 cm. The underlying frontal bone is found completely shattered. The frontal sinus is broken. The fracture in the frontal bone extends beyond the midline to the right parietal bone. The fractured skull is depressed 1 cm. Frontal sinus is cleansed, its mucosa is cauterized. A Gelfoam is packed into the frontal sinus. The broken fragments of the frontal bone are removed. The remaining depressed frontal bone is elevated to normal position. The fractured fronto-parietal bone is gouged out. A rubber tube drain is placed into the wound. Skin is closed in 2 layers.

Post-op is uneventful. Left palpebral ptosis and dimmed vision are recorded. Eye examination shows scattered retinal hemorrhages. Surgical incision heals well. Left palpebral ptosis recovers nearly completely. Retinal hemorrhage is markedly reduced, however, left vision is not yet fully recovered.10 Medel’s attending physician then recommended his "[r]epatriation for further treatment (at the patient’s request)" and that he should "see a neurosurgeon and an ophthalmologist in the Philippines."11 Medel was repatriated to the Philippines on March 13, 1999 and was admitted to the Metropolitan Hospital on the said date. In a letter dated March 16, 1999, Dr. Robert D. Lim, the companydesignated physician and Medical Coordinator of the Metropolitan Hospital, informed petitioners that Medel was seen by a neurologist, an ENT specialist, and an ophthalmologist.12 Medel subsequently underwent a cranial CT scan and an ultrasound on his left eye, which was also injured during the accident.13 On April 22, 1999, a posterior vitrectomy was performed on Medel’s left eye;14 and on July 14 and July 19, 1999, Medel’s left eye was likewise subjected to two sessions of argon laser retinopexy.15 Dr. Lim then reported to petitioners that Medel’s condition was re-evaluated on July 22, 1999 and, after consulting with the neurosurgeon at the Metropolitan Hospital, Medel was advised to undergo cranioplasty to treat the bony defect in his skull.16 On October 20, 1999, Medel was admitted to the hospital and underwent the said surgical procedure.17 On October 25, 1999, Dr. Daniel L. Ong, a neurologist at the Metropolitan Hospital, sent a report to Dr. Lim stating thus: DEAR DR. LIM, RE: DELAY OF CRANIOPLASTY OF LEFT FRONTAL SINUS OPEN DEPRESSED FRACTURE; S/P POST-CRANIOTOMY (MR. JOSELITO MEDEL) THE REASON FOR THE DELAY IS DUE TO THE POOR SKIN CONDITION AND THE POTENTIAL INFARCTION IN THIS PARTICULAR AREA IF DONE TOO QUICKLY. THIS IS ALSO THE REASON FOR PROLONGED AN[T]IBIOTIC COVERAGE AS PART OF THE INITIAL PREPARATORY TREATMENT, USUALLY SIX MONTHS WAIT BEFORE A CRANIOPLASTY IN THIS CASE. I THINK PATIENT CAN RESUME SEA DUTIES WITHOUT ANY DISABILITY. THANK YOU. (SIGNED) DANIEL ONG, M.D.18 Months after, in a letter dated February 15, 2000, Dr. Lim informed petitioners of Medel’s condition, the relevant portion of which states: RE : MR. JOSELITO MEDEL MV OPTIMA FAIR SHIP. CORP. : PATIENT WAS SEEN AND RE-EVALUATED FEBRUARY 11, 2000. : HE WAS SEEN BY OUR NEUROLOGIST AND NEURO-SURGEON.

HIS WOUND IS HEALED. HIS PERIMETRY RESULT WAS GIVEN TO OUR NEUROLOGIST AND HE OPINES THAT PATIENT IS NOW FIT TO WORK. : HE WAS PRONOUNCED FIT TO RESUME SEA DUTIES AS OF FEBRUARY 11, 2000. : HOWEVER, THE PATIENT REFUSED TO SIGN HIS CERTIFICATE OF FITNESS TO WORK. : FOR YOUR PERUSAL.19 In the interregnum, before Medel actually underwent the procedure of cranioplasty, he claimed from petitioners the payment of permanent total disability benefits. Petitioners, however, refused to grant the same.20Consequently, on September 7, 1999, Medel filed before the Arbitration Branch of the NLRC a complaint21against petitioners for disability benefits in the amount of US$60,000.00, medical expenses, loss of earning capacity, damages and attorney’s fees. The case was docketed as NLRC OFW (M) No. 99-09-01462. Medel claimed entitlement to permanent total disability benefits as more than 120 days had passed since he was repatriated for medical treatment but he was yet to be declared fit to work or the degree of his disability determined by the company-designated physician. On July 30, 2001, the Labor Arbiter issued a Decision22 in favor of Medel, holding that: Upon the records, this Office is more than convinced that Medel is entitled to a [sic] disability benefits which is equivalent to 120% of US$50,000.00 or US$60,000.00 or its peso equivalent at the exchange rate prevailing at the time of its payment. As held by petitioners to be an undisputed fact, Medel suffered injury that was sustained by him during the effectivity of his shipboard employment contract and while engaged in the performance of his contracted duties. Upon Medel’s arrival, petitioners referred him to the company designated physician at Metropolitan Hospital on March 13, 1999, with impression, "Head Injury with Open Fracture of the Left Frontal Bone: S/P Open Reduction & Internal Fixation of Frontal Bone and Sinus; Cerebral Concussion; Vitreous Hemorrhage, left eye secondary to trauma." Suggested procedure was Ultrasound of the left eye. Subsequently, Medel was referred to a neuro-surgeon. His cranial CT scan showed "Minimal Pneumocephalus; Inferior Frontal Region; Comminuted Fracture, Frontal Bone; Post craniotomy Defect, Left Frontal Bone; changed within the Sphenoid which may relate to previous hemorrhage and Negative for Mass effect nor Intracranial Intracerebral Hemorrhage." His ultrasound of the left eye confirmed the presence of Vitreous Hemorrhage. Suggestion was Vitrectomy, Left eye. On June 28, 1999, Medel was re-evaluated, however, the ophthalmologist suggested Argon Laser Retinopexy since he was noted to have Wrinkled Macula and Areas of weakness in the Retina secondary to Trauma. He was then seen July 14, 1999 when he underwent first session of Argon Laser Retinopexy and for re-evaluation on July 19, 1999 for second session. On July 23, 1999, he was seen by the neurosurgeon who advised him to undergo the procedure of cranioplasty to cover the bony defect of the skull to be done in October 1999. With the foregoing, we are persuaded by Medel’s arguments that the claim for disability benefits is not solely premised on the extent of his injury but also on the consequences of the same to his profession as a seafarer which was his only means of livelihood. We could imagine the nature of these undertakings of seafarers where manual and strenuous activities are part of the days work. Moreso, with the position of Medel being an ordinary seaman which primarily comprises the vessel manpower and labor. Thus, to us, we are convinced that Medel is entitled to the benefits under

Section 20 B of the POEA Memorandum Circular No. 55 and Section 30 A thereof which was deemed incorporated to his POEA approved employment contract. Further, the claim for attorney’s fees is justified considering the above discussed circumstances which in effect has constrained Medel to hire the services of a legal counsel to protect his interest.23 The Labor Arbiter decreed as follows: WHEREFORE, in view of the foregoing, judgment is hereby rendered finding petitioners jointly and severally liable to: 1) To pay Medel the amount of US$60,000.00 or its peso equivalent at the prevailing exchange rate at the time of payment, representing permanent and total disability; and 2) To pay Medel the equivalent amount of ten (10%) percent of the total judgment award, as and for attorney’s fees; All other claims are hereby dismissed for lack of merit.24 Petitioners filed a Memorandum of Appeal25 before the NLRC, which was docketed as NLRC CA No. 029790-01. In their appeal, petitioners alleged that the disability compensation granted to Medel was improper because the same was not based on a disability assessment issued by the companydesignated physician. As Medel was not disabled, they argued that he was not entitled to any compensation, including attorney’s fees. In its Decision dated July 31, 2002, the Second Division of the NLRC found merit in the petitioners’ appeal and disposed of the same thus: WHEREFORE, the appealed decision is SET ASIDE and a new one entered by ordering Medel’s claim DISMISSED for lack of merit.26 The NLRC ruled that under Section 20(B)(2) of the 1996 POEA SEC, the disability of a seafarer should be assessed by the company-designated physician. The employer shall be liable for the seafarer’s medical treatment until the latter is declared fit to work or his disability is assessed. Should the seafarer recover, the NLRC posited that the contractual obligation of the employer should cease. However, if the seafarer is found to be incapacitated, the employer’s contractual obligation shall terminate only after the latter pays the seafarer’s disability benefits. Furthermore, the NLRC stated that the 120 days referred to in Section 20(B)(3) of the POEA SEC27 pertained to "the maximum number of days to which a seafarer who signed-off from the vessel for medical treatment is entitled to sickness wages."28 The NLRC ruled that there was no evidence to prove that Medel was disabled, other than his contention that his treatment had gone beyond 120 days. Medel was even declared fit to resume sea duty. Thus, the NLRC held that Medel had no basis for his claim of disability benefits. Medel filed a Motion for Reconsideration29 of the above NLRC Decision but the same was denied in the NLRC Resolution30 dated November 21, 2002. Medel, thus, filed a Petition for Certiorari31 before the Court of Appeals, which sought the reversal of the NLRC rulings for having been allegedly issued with grave abuse of discretion amounting to lack or excess of jurisdiction. Medel’s petition was docketed as CA-G.R. SP No. 75893.

On November 20, 2006, the Court of Appeals rendered the assailed decision, the dispositive portion of which provides: WHEREFORE, in view of the foregoing, the NLRC Decision dated July 31, 2002 is herebyREVERSED and SET ASIDE. The decision of the Labor Arbiter dated July 30, 2001 is herebyREINSTATED with respect only to the award of disability benefits. The award of attorney’s fees in the Labor Arbiter’s decision is deleted.32 Citing the Court’s ruling in Crystal Shipping, Inc. v. Natividad,33 the Court of Appeals stated that an award of permanent total disability benefits is proper when an employee is unable to perform his customary work for more than 120 days. Since Medel’s accident rendered him incapable of performing his usual or customary work for more than 120 days, the Court of Appeals concluded that he was entitled to permanent total disability benefits. The Court of Appeals also refused to accept the veracity of the medical certificate attesting to Medel’s fitness to resume sea duties as the same was issued by Dr. Lim, a physician who the appellate court deemed as not privy to Medel’s condition. The Court of Appeals did not, however, heed Medel’s claims for moral and exemplary damages since petitioners neither abandoned him during his period of disability, nor were they negligent in providing for his medical treatment. Lastly, the Court of Appeals deleted the award of attorney’s fees. Medel filed a Partial Motion for Reconsideration34 of the above decision as regards the award of attorney’s fees. On the other hand, petitioners filed their Motion for Reconsideration,35 arguing that the provisions alone of the POEA SEC should apply in determining what constitutes permanent total disability, to the exclusion of the Labor Code provisions on disability compensation. In the assailed Resolution dated May 15, 2007, the Court of Appeals denied for lack of merit the respective motions of the parties. Hence, petitioners instituted this petition, citing the following issues: I. WHETHER OR NOT THE DISABILITY BENEFITS PROVIDED UNDER THE POEA CONTRACT ARE SEPARATE AND DISTINCT FROM THOSE PROVIDED UNDER THE LABOR CODE. II. WHETHER OR NOT UNDER THE POEA CONTRACT THE INABILITY TO WORK FOR MORE THAN ONE HUNDRED TWENTY (120) DAYS IS TOTAL AND PERMANENT DISABILITY. III. WHETHER OR NOT, IN DISABILITY COMPENSATION CLAIMS, THE CONDITIONS PRECEDENT REQUIRED UNDER THE POEA CONTRACT SHOULD BE LIGHTLY DISREGARDED ON MERE APPEAL TO THE LIBERALITY OF LAWS TOWARDS FILIPINO SEAFARERS.36 Petitioners argue that Medel’s claims for disability benefits should be resolved by applying exclusively the provisions of the POEA SEC and the relevant jurisprudence interpreting the same, without resorting to the provisions of the Labor Code on disability benefits. Moreover, petitioners aver that the 1996 POEA SEC does not state that the mere lapse of 120 days automatically makes a seafarer permanently and totally disabled. In spite of the lapse of 120 days, petitioners posit that the entitlement to disability benefits would only come as a matter of course after the degree of the

seafarer’s disability had been established, which assessment shall be made after the seafarer no longer responds to any medication or treatment. Thus, a seafarer is entitled to receive permanent total disability benefits only if the seafarer was declared by the company-designated physician to be suffering from a Grade 1 impediment. In the present case, petitioners insist that there was no disability assessment from the companydesignated physician. On the contrary, Medel was even assessed to be physically fit to resume work. Petitioners then faulted the Court of Appeals for rejecting the certification of Dr. Ong that Medel was fit to resume sea duties. Petitioners insist that said doctor had personal knowledge of Medel’s condition, as he was a member of a team of physicians tasked to treat Medel. Petitioners maintain that Medel did not present evidence to prove his incapacity, which would entitle him to the disability benefits that he sought. After thoroughly reviewing the records of this case, the Court concludes and so declares that the instant petition lacks merit. The Applicable Law and Jurisprudence in the Award of Disability Benefits of Seafarers The application of the provisions of the Labor Code to the contracts of seafarers had long been settled by this Court. In Remigio v. National Labor Relations Commission,37 we emphatically declared that: The standard employment contract for seafarers was formulated by the POEA pursuant to its mandate under E.O. No. 247 to "secure the best terms and conditions of employment of Filipino contract workers and ensure compliance therewith" and to "promote and protect the well-being of Filipino workers overseas." Section 29 of the 1996 POEA SEC itself provides that "all rights and obligations of the parties to the Contract, including the annexes thereof, shall be governed by the laws of the Republic of the Philippines, international conventions, treaties and covenants where the Philippines is a signatory." Even without this provision, a contract of labor is so impressed with public interest that the New Civil Code expressly subjects it to "the special laws on labor unions, collective bargaining, strikes and lockouts, closed shop, wages, working conditions, hours of labor and similar subjects." Thus, the Court has applied the Labor Code concept of permanent total disability to the case of seafarers. x x x.38 The Labor Code defines permanent total disability under Article 192(c)(1), which states: ART. 192. PERMANENT TOTAL DISABILITY. – x x x xxxx (c) The following disabilities shall be deemed total and permanent: (1) Temporary total disability lasting continuously for more than one hundred twenty days, except as otherwise provided in the Rules. (Emphasis ours.) This concept of permanent total disability is further explained in Section 2(b), Rule VII of the Implementing Rules of Book IV of the Labor Code (Amended Rules on Employees Compensation) as follows:

SEC. 2. Disability. – x x x (b) A disability is total and permanent if as a result of the injury or sickness the employee is unable to perform any gainful occupation for a continuous period exceeding 120 days, except as otherwise provided for in Rule X of these Rules. (Emphasis ours.) The exception in Rule X of the Implementing Rules of Book IV (Amended Rules on Employees Compensation) as mentioned above, on the other hand, pertains to an employee’s entitlement to temporary total disability benefits under Section 2 of the aforesaid Rule X, to wit: SEC. 2. Period of entitlement. — (a) The income benefit shall be paid beginning on the first day of such disability. If caused by an injury or sickness it shall not be paid longer than 120 consecutive days except where injury or sickness still requires medical attendance beyond 120 days but not to exceed 240 days from onset of disability in which case benefit for temporary total disability shall be paid. However, the System may declare the total and permanent status at any time after 120 days of continuous temporary total disability as may be warranted by the degree of actual loss or impairment of physical or mental functions as determined by the System. (Emphasis ours.) In Vergara v. Hammonia Maritime Services, Inc.,39 the Court discussed how the above-mentioned provisions of the Labor Code and its implementing rules should be read in conjunction with the first paragraph of Section 20(B)(3) of the 2000 POEA SEC, which states: 3. Upon sign-off from the vessel for medical treatment, the seafarer is entitled to sickness allowance equivalent to his basic wage until he is declared fit to work or the degree of permanent disability has been assessed by the company-designated physician but in no case shall this period exceed one hundred twenty (120) days. Correlating the aforementioned provision of the POEA SEC with the pertinent labor laws and rules, Vergara teaches that: As these provisions operate, the seafarer, upon sign-off from his vessel, must report to the company-designated physician within three (3) days from arrival for diagnosis and treatment. For the duration of the treatment but in no case to exceed 120 days, the seaman is on temporary total disability as he is totally unable to work. He receives his basic wage during this period until he is declared fit to work or his temporary disability is acknowledged by the company to be permanent, either partially or totally, as his condition is defined under the POEA Standard Employment Contract and by applicable Philippine laws. If the 120 days initial period is exceeded and no such declaration is made because the seafarer requires further medical attention, then the temporary total disability period may be extended up to a maximum of 240 days, subject to the right of the employer to declare within this period that a permanent partial or total disability already exists. The seaman may of course also be declared fit to work at any time such declaration is justified by his medical condition. xxxx As we outlined above, a temporary total disability only becomes permanent when so declared by the company physician within the periods he is allowed to do so, or upon the expiration of the maximum 240-day medical treatment period without a declaration of either fitness to work or the existence of a permanent disability. x x x.40 (Emphases ours.) Incidentally, although the contract involved in Vergara was the 2000 POEA SEC, the Court applied the ruling therein to the case of Magsaysay Maritime Corporation v. Lobusta,41 which involved the

1996 POEA SEC. As noted in Lobusta, the first paragraph of Section 20(B)(3) of the 2000 POEA SEC was copied verbatim from the first paragraph of Section 20(B)(3) of the 1996 POEA SEC. From the foregoing exposition, Medel’s entitlement to permanent total disability benefits becomes clear.1âwphi1 Medel was accidentally injured on board the M/V Optima on March 1, 1999, where he sustained an open depressed fracture on the left frontal side of his forehead, as well as damage to his left eye and frontal sinus. Since his repatriation to the Philippines on March 13, 1999, Medel underwent medical treatment for his condition under the supervision of Dr. Lim, the companydesignated physician, at the Metropolitan Hospital. He was initially given medications to manage his condition and he went through surgical procedures to repair the damage to his left eye on April 22, 1999, July 14, 1999 and July 19, 1999. Medel’s condition was continuously evaluated by the hospital’s ophthalmologist and neurologist. On October 20, 1999, Medel went through the procedure of cranioplasty to repair his fractured skull.42 According to Dr. Lim, Medel was seen by the hospital neurologist and neurosurgeon on February 11, 2000, on which date he was pronounced fit to resume sea duties. Unmistakably, from the time Medel signed off from the vessel on March 13, 1999 up to the time his fitness to work was declared on February 11, 2000, more than eleven (11) months, or approximately 335 days, have lapsed. During this period, Medel was totally unable to pursue his occupation as a seafarer. Following the guidelines laid down in Vergara, it is evident that the maximum 240-day medical treatment period expired in this case without a declaration of Medel’s fitness to work or the existence of his permanent disability determined. Accordingly, Medel’s temporary total disability should be deemed permanent and thus, he is entitled to permanent total disability benefits. With respect to the alleged earlier pronouncement of Dr. Ong as to the fitness of Medel for sea duties, the Court is not thereby persuaded. To recall, the said pronouncement was made on October 25, 1999 in a letter addressed to Dr. Lim after the cranioplasty of Medel was undertaken on October 20, 1999. After explaining the delay in the conduct of the said procedure, Dr. Ong stated that he "think[s] patient can resume sea duties without any disability."43 The statement of Dr. Ong, however, was not a categorical attestation as to the actual fitness of Medel to resume his occupation as a seafarer. Plainly, after Medel underwent cranioplasty to repair the fracture in his skull, it is not farfetched to assume that he still needed additional time for his wound to heal and to recuperate in order to restore himself to his former state of health. In their Memorandum, petitioners even acknowledged that despite the above opinion of Dr. Ong, Medel continued to avail of further medical treatment and rehabilitation.44Medel also had to be evaluated by specialists to assess his condition. In their Memorandum, petitioners related that "ultimately, the company-designated physicians declared that petitioner was 'fit to resume sea duties' by Medical Certificate dated 15 February 2000."45 The certificate signed by Dr. Lim petiinently stated that "MedeiJ was seen by om· neurologist and neuro-surgeon. His wound is healed. His perimetry result was given to our neurologist and he opines that patient is now fit to work." 46 The same certificate declared that "Medel was pronounced fit to resume sea duties as of February 11, 2000." 47 To our mind, the medical certificate of Dr. Lim dated February 15, 2000 is the definitive declaration on the physical condition of Medel. Unfmiunately for petitioners, however, this declaration was issued beyond the 240-day period as mandated in Vergara. Consequently, we find no reason to overturn the Court of Appeals' conclusion regarding Medel's right to disability benefits, albeit on different legal grounds. WHEREFORE, the instant Petition for Review on Certiorari is DENIED. Petitioners Fair Shipping Corporation and Kohyu Marine Co., Ltd. are held jointly and severally liable to pay Joselito T. Medel permanent total disability benefits of US$60,000.00, to be paid in Philippine Peso at the exchange rate prevailing at the time of actual payment. Costs against petitioners. SO ORDERED.

G.R. No. 119243 April 17, 1997 BREW MASTER INTERNATIONAL INC., petitioner, vs. NATIONAL FEDERATION OF LABOR UNIONS (NAFLU), ANTONIO D. ESTRADA and HONORABLE NATIONAL LABOR RELATIONS COMMISSION, (Third Division), respondents.

DAVIDE, JR., J.: This is a special civil action for certiorari seeking the reversal of the 7 October 1994 decision 1 of the National Labor Relations Commission (NLRC) in NLRC Case No. 00-06-04136-93 (CA No. L007370-94), which modified the 11 July 1994 decision 2 of the Labor Arbiter by directing there instatement of private respondent Antonio D. Estrada, the complainant, without loss of seniority rights and benefits. Private respondent National Federation of Labor Unions (NAFLU), a co-complainant in the labor case, is a labor union of which complainant is a member. The factual and procedural antecedents are summarized in the decision of the Labor Arbiter which we quote verbatim: Complainant was first employed by respondent on 16 September 1991 as route helper with the latest daily wage of P119.00. From 19 April 1993 up to 19 May 1993, for a period of one (1) month, complainant went on absent without permission (AWOP). On 20 May 1993, respondent thru Mr. Rodolfo Valentin, sent a Memo to complainant, to wit: "Please explain in writing within 24 hours of your receipt of this memo why no disciplinary action should be taken against you for the following offense: You were absent since April 19, 1993 up to May 19, 1993. For your strict compliance." In answer to the aforesaid memo, complainant explained: "Sa dahilan po na ako ay hindi nakapagpaalam sainyo (sic) dahil inuwi ko ang mga anak ko sa Samar dahil ang asawa ko ay lumayas at walang mag-aalaga sa mga anak ko. Kaya naman hindi ako naka long distance or telegrama dahil wala akong pera at ibinili ko ng gamot ay puro utang pa. Finding said explanation unsatisfactory, on 16 June 1993, respondent thru its Sales Manager, Mr. Henry A. Chongco issued a Notice of Termination which reads: "We received your letter of explanation dated May 21, 1993 but we regret to inform you that we do not consider it valid. You are aware of the company Rules and Regulations that absence without permission

for six (6) consecutive working days is considered abandonment of work. In view of the foregoing, the company has decided to terminate your employment effective June 17, 1993 for abandonment of work. Hence, this complaint. Complainants contend that individual complainant's dismissal was done without just cause; that if was not sufficiently established that individual complainant's absence from April 19, 1993 to June 16, 1993 are unjustified; that the penalty of dismissal for such violation is too severe; that in imposing such. penalty, respondent should have taken into consideration complainant's length of service and as a first offender, a penalty less punitive will suffice such as suspension for a define period, (Position Paper, complainants). Upon the other hand, respondent contends that individual complainant was dismissed for cause allowed by the company Rules and Regulations and the Labor Code; that the act of complainant in absenting from work for one (1) month without official leave is deleterious to the business of respondent; that it will result to stoppage of production which will not only destructive to respondent's interests but also to the interest of its employees in general; that the dissmisal of complainant from the service is legal, (Position Paper, respondent). 3 The Labor. Arbiter dismissed the complaint for lack of merit, citing the principle of managerial control, which recognizes the employer's prerogative to prescribe reasonable rules and regulations to govern the conduct of his employees. The principle allows the imposition of disciplinary measures which are necessary for the efficiency of both the employer and the employees. In complainant's case, he persisted in not reporting for work until 16 June 1993 notwithstanding his receipt of the memorandum requiring him to explain his absence without approval. The Labor Arbiter, relying on Sheomart, Inc. vs. NLRC, 4 thus concluded: Verily, it is crystal clear that individual complainant has indeed abandoned his work. The filing of the complaint on 25 June 1993 or almost two (2) months from the date complainant failed to report for work affirms the findings of this Office and therefore, under the law and jurisprudence which upholds the right of an employer to discharge an employee who incurs frequent, prolonged and unexplained absences as being grossly remiss in his duties to the employer and is therefore, dismissed for cause, (Shoemart, Inc. vs. NLRC, 176 SCRA 385). An employee is deemed to have abandoned his position or to have resigned from the same, whenever he has been absent therefrom without previous permission of the employer for three consecutive days or more. This justification is the obvious harm to employer's interest, resulting from [sic] the non-availability of the worker's services, (Supra). (Emphasis supplied) 5 and ruled that complainant's termination from his employment was "legal, the same with just or authorized cause and due process." 6 Complainant appealed to the NLRC, alleging that the immediate filing of a complaint for illegal dismissal verily indicated that he never intended to abandon his work, then cited Policarpio v. Vicente Dy Sun, Jr., 7 where the NLRC ruled that prolonged, absence does not, by itself, necessarily mean abandonment. Accordingly, there must be a concurrence of intention and overt acts from which it can be inferred that the employee is no longer interested in working. Complainant likewise

invoked compassion in the application of sanctions, as dismissal from employment brings untold hardship and sorrows on the dependents of the wage earners. In his case, a penalty less punitive than dismissal could have sufficed. In the assailed decision 8 of 7 October 1994, the NLRC modified the Labor Arbiter's decision and held that complainant's dismissal was invalid for the following reasons: Complainant appellant's prolonged absences, although unauthorized, may not amount to gross neglect or abandonment of work to warrant outright termination of employment. Dismissal is too severe a penalty. For one, the mere fact that complainant-appellant is a first offender must be considered in his favor. Besides, it is generally impossible for an employee to anticipate when he would be ill or compelled to attend to some family problems or emergency like in the case at bar. Reliance on the ruling enunciated in the cited case of Shoemart Inc. vs. National Labor Relations, 176 SCRA 385, is quite misplaced because of the obvious dissimilarities of the attendant circumstances in the said case vis-a-vis those obtaining in the case at bar. Unlike in the aforecited Shoemart Case, herein complainant-appellant was not dismissed for unauthorized absences and eventually reinstated anterior to his second dismissal for the same offense nor was he given a second chance which he could have ignored. Otherwise stated, the difference between the two cases greatly lies [in] the fact that complainant in the Shoemart Case in the language of the Supreme Court was "an inveterate absentee who does not deserve reinstatement" compared to herein complainant-appellant who is a first offender 9 The NLRC then decreed as follows: PREMISES CONSIDERED, and [sic] the Decision of the Labor Arbiter, dated 11 July 1994 is hereby MODIFIED, by directing the reinstatement of complainant-appellant to his former position without loss of seniority rights and other benefits, but without backwages. The other findings in tile appealed decision stand AFFIRMED. 10 Petitioner's motion for the reconsideration 11 was denied by the NLRC in its 7 December 1994 resolution. 12 Petitioner thus filed this special civil action contending that the NLRC committed grave abuse of discretion in ordering complainant's reinstatement, which in effect countenances the reinstatement of an employee who is found guilty of "excessive" absences without pior approval. It further argued that the NLRC failed to consider the rationale behind petitioner's Rules and Regulations; that it was deprived of its prerogative to enforce them; and that complainant's reinstatement would adversely affect its business and send the wrong signals to its employees. In its comment 13 for public respondent NLRC, the Office of the Solicitor General maintained that dismissal from employment was too severe a penalty for a first time offender like complainant. Although he violated petitioner's rules and regulations, his absences were justified: he had to bring his children to Samar, his home province, as his wife deserted him. While that by itself might not excuse the failure to seek permission, the Office of the Solicitor General submitted, however, that "it would be at [sic] the height of callousness if one, considering his plight under the circumstance[s], would not give due consideration to [complainant's] explanation. There has to be an exception." 14 Applying Itogon-Suyoc Mines, Inc. v. NLRC, 15 the Office of the Solicitor General recommended complainant's reinstatement, which would be more harmonious to the dictates of social justice and

equity. It further emphasized that the reinstatement should not be considered a condonation of complainant's irresponsible behavior, rather, it must be viewed as a mitigation of the severity of the penalty of dismissal. Accordingly, it prays that this petition be dismissed. In its reply, 16 petitioner disputed the application of Itogon-Suyoc because: (1) the employee involved therein had been in the service for twenty-three years while complainant herein had served petitioner for only two years; and (2) the offense inItogon-Suyoc was limited to a single act of high grading while complainant herein committed a series of unexcused absences. We gave due course to the petition and dispensed with complainant's comment. The sole issue to be resolved is whether the NLRC committed grave abuse of discretion in modifying the, decision of the Labor Arbiter. The answer must be in the negative. A scrutiny of the facts discloses that complainant's absence was precipitated by grave family problem as his wife unexpectedly deserted him and abandoned the family. Considering that he had a full-time job, there was no one to whom to the could entrust the children and he was thus compelled to bring them to the province. It would have been extremely difficult for him to have been husband and wife/father and mother at the same time to the children in the metropolis. He was then under emotional, psychological, spiritual and physical stress and strain. The reason for his absence is, under these circumstances, justified. While his failure to inform and seek petitioner's approval was an omission which must be corrected and chastised, he did not merit the severest penalty of dismissal from the service. Petitioner's finding that complainant was guilty of abandonment is misplaced. Abandonment as a just and valid ground for dismissal requires the deliberate, unjustified refusal of the employee to resume his employment. Two elements must then be satisfied: (1) the failure to report for work or absence without valid or justifiable reason; and (2) a clear intention to sever the employer-employee relation. The second element is the more determinative factor and must be evinced by overt acts. 17 Likewise, the burden of proof is on the employer to show the employee's clear and deliberate intent to discontinue his employment without any intention of returning, 18 mere absence is not sufficient. 19 These elements are not present here. First, as held above, complainant's absence was justified under the circumstances. As to the second requisite, we are not convinced that complainant ever intended to sever the employer-employee relationship. Complainant immediately complied with the memo requiring him to explain his absence, and upon knowledge of his termination, immediately sued for illegal dismissal. These plainly refuted any claim that he was no longer interested in returning to work. 20 Without doubt, the intention is lacking. Moreover, petitioner failed to discharge the burden of proof that complainant was guilty of abandonment. No evidence other than complainant's letter explaining his absence was presented. Needless to state, the letter did not indicate, in the least, that complainant was no longer interested in returning to work. On the contrary, complainant sought petitioner's understanding. In declaring him guilty of abandonment, petitioner merely relied on its Rules and Regulations which limited its application to a six-day continuous absence, contrary to the purpose of the law. While the employer is not precluded from prescribing rules and regulations to govern the conduct of his employees, these rules and their implementation must be fair, just and reasonable. It must be underscored that no less than our Constitution looks with compassion on the workingman and protects his rights not only under a general statement of a state policy, 21 but under the Article on Social Justice and Human Rights, 22 thus placing labor contracts on a higher plane and with greater safeguards. Verily,

relations between capital and labor are not merely contractual. They are impressed with public interest and labor contracts must, perforce, yield to the common good. 23 We then conclude that complainant's "prolonged" absence without approval does not fall within the definition of abandonment and that his dismissal was unjustified. While we do not decide here the validity of petitioner's Rules and Regulations on continuous, unauthorized absences, what is plain is that it was wielded with undue haste resulting in a deprivation of due process, thus not allowing for a determination of just cause or abandonment. In this light, petitioner's dismissal was illegal. This is not to say that his absence should go unpunished, as impliedly noted by the NLRC in declining to award back wages. In the absence of the appropriate offense which defines complainant's infraction in the company's Rules and Regulations, equity dictates that a penalty commensurate to the infraction be imposed. WHEREFORE, the petition is hereby DISMISSED and the decision of the National Labor Relations Commission in NLRC Case No. 06-04136-93 is hereby AFFIRMED. No pronouncement as to costs. SO ORDERED.

G.R. No. 118506 April 18, 1997 NORMA MABEZA, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, PETER NG/HOTEL SUPREME, respondents.

KAPUNAN, J.: This petition seeking the nullification of a resolution of public respondent National Labor Relations Commission dated April 28, 1994 vividly illustrates why courts should be ever vigilant in the preservation of the constitutionally enshrined rights of the working class. Without the protection accorded by our laws and the tempering of courts, the natural and historical inclination of capital to ride roughshod over the rights of labor would run unabated. The facts of the case at bar, culled from the conflicting versions of petitioner and private respondent, are illustrative. PETITIONER Norma Mabeza contends that around the first week of May, 1991, she and her coemployees at the Hotel Supreme in Baguio City were asked by the hotel's management to sign an instrument attesting to the latter's compliance with minimum wage and other labor standard provisions of law. 1 The instrument provides: 2 JOINT AFFIDAVIT We, SYLVIA IGANA, HERMINIGILDO AQUINO, EVELYN OGOY, MACARIA JUGUETA, ADELAIDA NONOG, NORMA MABEZA, JONATHAN PICART and JOSE DIZON, all of legal ages (sic), Filipinos and residents of Baguio City, under oath, depose and say: 1. That we are employees of Mr. Peter L. Ng of his Hotel Supreme situated at No. 416 Magsaysay Ave., Baguio City. 2. That the said Hotel is separately operated from the Ivy's Grill and Restaurant; 3. That we are all (8) employees in the hotel and assigned in each respective shifts; 4. That we have no complaints against the management of the Hotel Supreme as we are paid accordingly and that we are treated well. 5. That we are executing this affidavit voluntarily without any force or intimidation and for the purpose of informing the authorities concerned and to dispute the alleged report of the Labor Inspector of the Department of Labor and Employment conducted on the said establishment on February 2, 1991. IN WITNESS WHEREOF, we have hereunto set our hands this 7th day of May, 1991 at Baguio City, Philippines. (Sgd.) (Sgd.) (Sgd.) SYLVIA IGAMA HERMINIGILDO AQUINO EVELYN OGOY

(Sgd.) (Sgd.) (Sgd.) MACARIA JUGUETA ADELAIDA NONOG NORMA MABEZA. (Sgd.) (Sgd.) JONATHAN PICART JOSE DIZON SUBSCRIBED AND SWORN to before me this 7th day of May, 1991, at Baguio City, Philippines. Asst. City Prosecutor Petitioner signed the affidavit but refused to go to the City Prosecutor's Office to swear to the veracity and contents of the affidavit as instructed by management. The affidavit was nevertheless submitted on the same day to the Regional Office of the Department of Labor and Employment in Baguio City. As gleaned from the affidavit, the same was drawn by management for the sole purpose of refuting findings of the Labor Inspector of DOLE (in an inspection of respondent's establishment on February 2, 1991) apparently adverse to the private respondent. 3 After she refused to proceed to the City Prosecutor's Office — on the same day the affidavit was submitted to the Cordillera Regional Office of DOLE — petitioner avers that she was ordered by the hotel management to turn over the keys to her living quarters and to remove her belongings from the hotel premises. 4 According to her, respondent strongly chided her for refusing to proceed to the City Prosecutor's Office to attest to the affidavit. 5 She thereafter reluctantly filed a leave of absence from her job which was denied by management. When she attempted to return to work on May 10, 1991, the hotel's cashier, Margarita Choy, informed her that she should not report to work and, instead, continue with her unofficial leave of absence. Consequently, on May 13, 1991, three days after her attempt to return to work, petitioner filed a complaint for illegal dismissal before the Arbitration Branch of the National Labor Relations Commission — CAR Baguio City. In addition to her complaint for illegal dismissal, she alleged underpayment of wages, non-payment of holiday pay, service incentive leave pay, 13th month pay, night differential and other benefits. The complaint was docketed as NLRC Case No. RAB-CAR-05-0198-91 and assigned to Labor Arbiter Felipe P. Pati. Responding to the allegations made in support of petitioner's complaint for illegal dismissal, private respondent Peter Ng alleged before Labor Arbiter Pati that petitioner "surreptitiously left (her job) without notice to the management" 6 and that she actually abandoned her work. He maintained that there was no basis for the money claims for underpayment and other benefits as these were paid in the form of facilities to petitioner and the hotel's other employee. 7Pointing to the Affidavit of May 7, 1991, the private respondent asserted that his employees actually have no problems with management. In a supplemental answer submitted eleven (11) months after the original complaint for illegal dismissal was filed, private respondent raised a new ground, loss of confidence, which was supported by a criminal complaint for Qualified Theft he filed before the prosecutor's office of the City of Baguio against petitioner on July 4, 1991. 8 On May 14, 1993, Labor Arbiter Pati rendered a decision dismissing petitioner's complaint on the ground of loss of confidence. His disquisitions in support of his conclusion read as follows: It appears from the evidence of respondent that complainant carted away or stole one (1) blanket, 1 piece bedsheet, 1 piece thermos, 2 pieces towel (Exhibits "9", "9A," "9-B," "9-C" and "10" pages 12-14 TSN, December 1, 1992).

In fact, this was the reason why respondent Peter Ng lodged a criminal complaint against complainant for qualified theft and perjury. The fiscal's office finding a prima facie evidence that complainant committed the crime of qualified theft issued a resolution for its filing in court but dismissing the charge of perjury (Exhibit "4" for respondent and Exhibit "B-7" for complainant). As a consequence, complainant was charged in court for the said crime (Exhibit "5" for respondent and Exhibit "B-6" for the complainant). With these pieces of evidence, complainant committed serious misconduct against her employer which is one of the just and valid grounds for an employer to terminate an employee (Article 282 of the Labor Code as amended). 9 On April 28, 1994, respondent NLRC promulgated its assailed Resolution 10 — affirming the Labor Arbiter's decision. The resolution substantially incorporated the findings of the Labor Arbiter. 11 Unsatisfied, petitioner instituted the instant special civil action for certiorari under Rule 65 of the Rules of Court on the following grounds: 12 1. WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION COMMITTED A PATENT AND PALPABLE ERROR AMOUNTING TO GRAVE ABUSE OF DISCRETION IN ITS FAILURE TO CONSIDER THAT THE ALLEGED LOSS OF CONFIDENCE IS A FALSE CAUSE AND AN AFTERTHOUGHT ON THE PART OF THE RESPONDENT-EMPLOYER TO JUSTIFY, ALBEIT ILLEGALLY, THE DISMISSAL OF THE COMPLAINANT FROM HER EMPLOYMENT; 2. WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION COMMITTED A PATENT AND PALPABLE ERROR AMOUNTING TO GRAVE ABUSE OF DISCRETION IN ADOPTING THE RULING OF THE LABOR ARBITER THAT THERE WAS NO UNDERPAYMENT OF WAGES AND BENEFITS ON THE BASIS OF EXHIBIT "8" (AN UNDATED SUMMARY OF COMPUTATION PREPARED BY ALLEGEDLY BY RESPONDENT'S EXTERNAL ACCOUNTANT) WHICH IS TOTALLY INADMISSIBLE AS AN EVIDENCE TO PROVE PAYMENT OF WAGES AND BENEFITS; 3. WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION COMMITTED A PATENT AND PALPABLE ERROR AMOUNTING TO GRAVE ABUSE OF DISCRETION IN FAILING TO CONSIDER THE EVIDENCE ADDUCED BEFORE THE LABOR ARBITER AS CONSTITUTING UNFAIR LABOR PRACTICE COMMITTED BY THE RESPONDENT. The Solicitor General, in a Manifestation in lieu of Comment dated August 8, 1995 rejects private respondent's principal claims and defenses and urges this Court to set aside the public respondent's assailed resolution. 13 We agree. It is settled that in termination cases the employer bears the burden of proof to show that the dismissal is for just cause, the failure of which would mean that the dismissal is not justified and the employee is entitled to reinstatement. 14 In the case at bar, the private respondent initially claimed that petitioner abandoned her job when she failed to return to work on May 8, 1991. Additionally, in order to strengthen his contention that

there existed sufficient cause for the termination of petitioner, he belatedly included a complaint for loss of confidence, supporting this with charges that petitioner had stolen a blanket, a bedsheet and two towels from the hotel. 15 Appended to his last complaint was a suit for qualified theft filed with the Baguio City prosecutor's office. From the evidence on record, it is crystal clear that the circumstances upon which private respondent anchored his claim that petitioner "abandoned" her job were not enough to constitute just cause to sanction the termination of her services under Article 283 of the Labor Code. For abandonment to arise, there must be concurrence of two things: 1) lack of intention to work; 16 and 2) the presence of overt acts signifying the employee's intention not to work.17 In the instant case, respondent does not dispute the fact that petitioner tried to file a leave of absence when she learned that the hotel management was displeased with her refusal to attest to the affidavit. The fact that she made this attempt clearly indicates not an intention to abandon but an intention to return to work after the period of her leave of absence, had it been granted, shall have expired. Furthermore, while absence from work for a prolonged period may suggest abandonment in certain instances, mere absence of one or two days would not be enough to sustain such a claim. The overt act (absence) ought to unerringly point to the fact that the employee has no intention to return to work, 18 which is patently not the case here. In fact, several days after she had been advised to take an informal leave, petitioner tried to resume working with the hotel, to no avail. It was only after she had been repeatedly rebuffed that she filed a case for illegal dismissal. These acts militate against the private respondent's claim that petitioner abandoned her job. As the Solicitor General in his manifestation observed: Petitioner's absence on that day should not be construed as abandonment of her job. She did not report because the cashier told her not to report anymore, and that private respondent Ng did not want to see her in the hotel premises. But two days later or on the 10th of May, after realizing that she had to clarify her employment status, she again reported for work. However, she was prevented from working by private respondents. 19 We now come to the second cause raised by private respondent to support his contention that petitioner was validly dismissed from her job. Loss of confidence as a just cause for dismissal was never intended to provide employers with a blank check for terminating their employees. Such a vague, all-encompassing pretext as loss of confidence, if unqualifiedly given the seal of approval by this Court, could readily reduce to barren form the words of the constitutional guarantee of security of tenure. Having this in mind, loss of confidence should ideally apply only to cases involving employees occupying 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. To the first class belong managerial employees, i.e., those vested with the powers or prerogatives to lay down management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees or effectively recommend such managerial actions; and to the second class belong cashiers, auditors, property custodians, etc., or those who, in the normal and routine exercise of their functions, regularly handle significant amounts of money or property. Evidently, an ordinary chambermaid who has to sign out for linen and other hotel property from the property custodian

each day and who has to account for each and every towel or bedsheet utilized by the hotel's guests at the end of her shift would not fall under any of these two classes of employees for which loss of confidence, if ably supported by evidence, would normally apply. Illustrating this distinction, this Court in Marina Port Services, Inc. vs. NLRC, 20has stated that: To be sure, every employee must enjoy some degree of trust and confidence from the employer as that is one reason why he was employed in the first place. One certainly does not employ a person he distrusts. Indeed, even the lowly janitor must enjoy that trust and confidence in some measure if only because he is the one who opens the office in the morning and closes it at night and in this sense is entrusted with the care or protection of the employer's property. The keys he holds are the symbol of that trust and confidence. By the same token, the security guard must also be considered as enjoying the trust and confidence of his employer, whose property he is safeguarding. Like the janitor, he has access to this property. He too, is charged with its care and protection. Notably, however, and like the janitor again, he is entrusted only with the physical task of protecting that property. The employer's trust and confidence in him is limited to that ministerial function. He is not entrusted, in the Labor Arbiter's words, with the duties of safekeeping and safeguarding company policies, management instructions, and company secrets such as operation devices. He is not privy to these confidential matters, which are shared only in the higher echelons of management. It is the persons on such levels who, because they discharge these sensitive duties, may be considered holding positions of trust and confidence. The security guard does not belong in such category. 21 More importantly, we have repeatedly held that loss of confidence should not be simulated in order to justify what would otherwise be, under the provisions of law, an illegal dismissal. "It should not be used as a subterfuge for causes which are illegal, improper and unjustified. It must be genuine, not a mere afterthought to justify an earlier action taken in bad faith." 22 In the case at bar, the suspicious delay in private respondent's filing of qualified theft charges against petitioner long after the latter exposed the hotel's scheme (to avoid its obligations as employer under the Labor Code) by her act of filing illegal dismissal charges against the private respondent would hardly warrant serious consideration of loss of confidence as a valid ground for dismissal. Notably, the Solicitor General has himself taken a position opposite the public respondent and has observed that: If petitioner had really committed the acts charged against her by private respondents (stealing supplies of respondent hotel), private respondents should have confronted her before dismissing her on that ground. Private respondents did not do so. In fact, private respondent Ng did not raise the matter when petitioner went to see him on May 9, 1991, and handed him her application for leave. It took private respondents 52 days or up to July 4, 1991 before finally deciding to file a criminal complaint against petitioner, in an obvious attempt to build a case against her. The manipulations of private respondents should not be countenanced. 23 Clearly, the efforts to justify petitioner's dismissal — on top of the private respondent's scheme of inducing his employees to sign an affidavit absolving him from possible violations of the Labor Code

— taints with evident bad faith and deliberate malice petitioner's summary termination from employment. Having said this, we turn to the important question of whether or not the dismissal by the private respondent of petitioner constitutes an unfair labor practice. The answer in this case must inevitably be in the affirmative. The pivotal question in any case where unfair labor practice on the part of the employer is alleged is whether or not the employer has exerted pressure, in the form of restraint, interference or coercion, against his employee's right to institute concerted action for better terms and conditions of employment. Without doubt, the act of compelling employees to sign an instrument indicating that the employer observed labor standards provisions of law when he might have not, together with the act of terminating or coercing those who refuse to cooperate with the employer's scheme constitutes unfair labor practice. The first act clearly preempts the right of the hotel's workers to seek better terms and conditions of employment through concerted action. We agree with the Solicitor General's observation in his manifestation that "[t]his actuation . . . is analogous to the situation envisaged in paragraph (f) of Article 248 of the Labor Code" 24 which distinctly makes it an unfair labor practice "to dismiss, discharge or otherwise prejudice or discriminate against an employee for having given or being about to give testimony" 25 under the Labor Code. For in not giving positive testimony in favor of her employer, petitioner had reserved not only her right to dispute the claim and proffer evidence in support thereof but also to work for better terms and conditions of employment. For refusing to cooperate with the private respondent's scheme, petitioner was obviously held up as an example to all of the hotel's employees, that they could only cause trouble to management at great personal inconvenience. Implicit in the act of petitioner's termination and the subsequent filing of charges against her was the warning that they would not only be deprived of their means of livelihood, but also possibly, their personal liberty. This Court does not normally overturn findings and conclusions of quasi-judicial agencies when the same are ably supported by the evidence on record. However, where such conclusions are based on a misperception of facts or where they patently fly in the face of reason and logic, we will not hesitate to set aside those conclusions. Going into the issue of petitioner's money claims, we find one more salient reason in this case to set things right: the labor arbiter's evaluation of the money claims in this case incredibly ignores existing law and jurisprudence on the matter. Its blatant onesidedness simply raises the suspicion that something more than the facts, the law and jurisprudence may have influenced the decision at the level of the Arbiter. Labor Arbiter Pati accepted hook, line and sinker the private respondent's bare claim that the reason the monetary benefits received by petitioner between 1981 to 1987 were less than minimum wage was because petitioner did not factor in the meals, lodging, electric consumption and water she received during the period in her computations. 26 Granting that meals and lodging were provided and indeed constituted facilities, such facilities could not be deducted without the employer complying first with certain legal requirements. Without satisfying these requirements, the employer simply cannot deduct the value from the employee's ages. First, proof must be shown that such facilities are customarily furnished by the trade. Second, the provision of deductible facilities must be voluntarily accepted in writing by the employee. Finally, facilities must be charged at fair and reasonable value. 27

These requirements were not met in the instant case. Private respondent "failed to present any company policy or guideline to show that the meal and lodging . . . (are) part of the salary;" 28 he failed to provide proof of the employee's written authorization; and, he failed to show how he arrived at the valuations. 29 Curiously, in the case at bench, the only valuations relied upon by the labor arbiter in his decision were figures furnished by the private respondent's own accountant, without corroborative evidence. On the pretext that records prior to the July 16, 1990 earthquake were lost or destroyed, respondent failed to produce payroll records, receipts and other relevant documents, where he could have, as has been pointed out in the Solicitor General's manifestation, "secured certified copies thereof from the nearest regional office of the Department of Labor, the SSS or the BIR." 30 More significantly, the food and lodging, or the electricity and water consumed by the petitioner were not facilities but supplements. A benefit or privilege granted to an employee for the convenience of the employer is not a facility. The criterion in making a distinction between the two not so much lies in the kind (food, lodging) but the purpose. 31 Considering, therefore, that hotel workers are required to work different shifts and are expected to be available at various odd hours, their ready availability is a necessary matter in the operations of a small hotel, such as the private respondent's hotel. It is therefore evident that petitioner is entitled to the payment of the deficiency in her wages equivalent to the fullwage applicable from May 13, 1988 up to the date of her illegal dismissal. Additionally, petitioner is entitled to payment of service incentive leave pay, emergency cost of living allowance, night differential pay, and 13th month pay for the periods alleged by the petitioner as the private respondent has never been able to adduce proof that petitioner was paid the aforestated benefits. However, the claims covering the period of October 1987 up to the time of filing the case on May 13, 1988 are barred by prescription as P.D. 442 (as amended) and its implementing rules limit all money claims arising out of employer-employee relationship to three (3) years from the time the cause of action accrues. 32 We depart from the settled rule that an employee who is unjustly dismissed from work normally should be reinstated without loss of seniority rights and other privileges. Owing to the strained relations between petitioner and private respondent, allowing the former to return to her job would only subject her to possible harassment and future embarrassment. In the instant case, separation pay equivalent to one month's salary for every year of continuous service with the private respondent would be proper, starting with her job at the Belfront Hotel. In addition to separation pay, backwages are in order. Pursuant to R.A. 6715 and our decision in Osmalik Bustamante, et al. vs. National Labor Relations Commission, 33 petitioner is entitled to full backwages from the time of her illegal dismissal up to the date of promulgation of this decision without qualification or deduction. Finally, in dismissal cases, the law requires that the employer must furnish the employee sought to be terminated from employment with two written notices before the same may be legally effected. The first is a written notice containing a statement of the cause(s) for dismissal; the second is a notice informing the employee of the employer's decision to terminate him stating the basis of the dismissal. During the process leading to the second notice, the employer must give the employee ample opportunity to be heard and defend himself, with the assistance of counsel if he so desires.

Given the seriousness of the second cause (qualified theft) of the petitioner's dismissal, it is noteworthy that the private respondent never even bothered to inform petitioner of the charges against her. Neither was petitioner given the opportunity to explain the loss of the articles. It was only almost two months after petitioner had filed a complaint for illegal dismissal, as an afterthought, that the loss was reported to the police and added as a supplemental answer to petitioner's complaint. Clearly, the dismissal of petitioner without the benefit of notice and hearing prior to her termination violated her constitutional right to due process. Under the circumstance an award of One Thousand Pesos (P1,000.00) on top of payment of the deficiency in wages and benefits for the period aforestated would be proper. WHEREFORE, premises considered, the RESOLUTION of the National Labor Relations Commission dated April 24, 1994 is REVERSED and SET ASIDE, with costs. For clarity, the economic benefits due the petitioner are hereby summarized as follows: 1) Deficiency wages and the applicable ECOLA from May 13, 1988 up to the date of petitioner's illegal dismissal; 2) Service incentive leave pay; night differential pay and 13th month pay for the same period; 3) Separation pay equal to one month's salary for every year of petitioner's continuous service with the private respondent starting with her job at the Belfront Hotel; 4) Full backwages, without qualification or deduction, from the date of petitioner's illegal dismissal up to the date of promulgation of this decision pursuant to our ruling in Bustamante vs. NLRC. 34 5) P1,000.00. ORDERED.

G.R. No. 184011

September 18, 2013

REYNALDO HAYAN MOYA, Petitioner, vs. FIRST SOLID RUBBER INDUSTRIES, INC., Respondent. DECISION PEREZ, J.: Before the Court is a Petition for Review on Certiorari1 from the Decision2 of the Special Third Division of the Court of Appeals in CA-G.R. SP No. 99500 dated 30 April 2008, modifying the Decision of the National Labor Relations Commission (NLRC) by deleting the award of separation pay in favor of Reynaldo Hayan Moya (Moya). The dispositive portion of the assailed decision reads: WHEREFORE, premises considered, the petition is hereby GRANTED. The Resolutions dated January 31, 2007 and April 24, 2007 of the National Labor Relations Commission in NLRC NCR CA No. 048653-06 (NLRC NCR Case No. 00-11-12626 2004) affirming the Decision dated February 28, 2006 of the Labor Arbiter Pablo C. Espiritu, Jr. is MODIFIED by deleting the award for separation pay in favor of private respondent Reynaldo Hayan Moya.3 The facts as gathered by this Court follow: On 25 January 2005, Moya filed before the NLRC-National Capital Region a complaint for illegal dismissal against First Solid Rubber Industries, Inc. (First Solid) and its President Edward Lee Sumulong. In his complaint-affidavit,4Moya alleged that: 1. Sometime in May 1993, he was hired by the company First Solid, a business engaged in manufacturing of tires and rubbers, as a machine operator; 2. Through years of dedication to his job, he was promoted as head of the Tire Curing Department of the company; 3. On October 15, 2004, he reported an incident about an under curing of tires within his department which led to the damage of five tires; 4. The company conducted an investigation of the incident and he was later required to explain; 5. In his explanation, he stated that the damage was caused by machine failure and the incident was without any fault of the operator; 6. Despite his explanation of what transpired, he was terminated by the company through a letter dated November 9, 2004. From the foregoing, he prayed that payment of backwages, separation pay, moral damages and exemplary damages be adjudged in his favor due to the illegal dismissal he suffered from the company. Moya, through his Reply,5 added that his termination fell short of any of the just causes of serious misconduct, gross and habitual neglect of duties and willful breach of trust. He pointed out that the

company failed to prove that his act fell within the purview of improper or wrong misconduct, and that a single act of negligence as compared to eleven (11) years of service of good record with the company will not justify his dismissal. First Solid, in its Position Paper,6 Reply7 and Memorandum,8 admitted that Moya was a former employee of the company and was holding the position of Officer-in-Charge of the Tire Curing Department until his valid dismissal. However, it denied that it illegally dismissed Moya and maintained that his severance from the company was due to a valid exercise of management prerogative.9 The company insisted on its right to validly dismiss an employee in good faith if it has a reasonable ground to believe that its employee is responsible of misconduct, and the nature of his participation therein renders him absolutely unworthy of the trust and confidence demanded by his position.10 Opposing the story of Moya, the company countered that Moya, who was exercising supervision and control over the employees as a department head, failed to exercise the diligence required of him to see to it that the machine operator, Melandro Autor, properly operated the machine. This act is considered as a gross and habitual neglect of duty which caused actual losses to the company.11 During the initial investigation, Moya, in his Explanation Letter12 dated 15 October 2004, insisted that the cause of the damage of five (5) tires was due to premature hauling of the tires below curing time. Unsatisfied with the explanation, the company sent Moya a Letter13 dated 26 October 2004 stating that he failed to explain what really transpired in the under curing of tires. The company informed Moya that the damage was caused by the operator’s unlawful setting of the timer from manual to automatic without Moya’s permission. To make the matter worse, Moya failed to disclose the real situation that the operator was at fault. Moya was given twenty-four (24) hours to defend himself and explain the matter. In response, Moya admitted in a letter dated 29 October 2004 his mistake of not disclosing the true incident and explained that he found it more considerate to just let the operator be suspended and be fined for the damage committed. He denied any willful intention to conceal the truth or cover up the mistake of his employee. Finally, he asked for the company’s forgiveness for the fault he had committed.14 In a letter dated 3 November 2004, Moya reiterated his plea for forgiveness and asked for another chance to continue his employment with the company.15 Procedural due process, through issuance of twin notices, was also complied with by the company. Moya was informed of the charges against him through a memorandum16 indicating his violation and was given an opportunity to answer or rebut the charges. After giving his explanation through several letters to the company, a notice was sent informing him of the management’s decision of his dismissal and termination from services on9 November 2004 based on serious misconduct, gross and habitual neglect of duty and willful breach of trust reposed upon him by the company.17 On 28 February 2006, Labor Arbiter Pablo C. Espiritu, Jr. rendered a judgment18 finding sufficient and valid grounds to dismiss Moya for concealing and lying to First Solid about the factual circumstances leading to the damage of five (5) tires on 15 October 2004. However, it ruled that the dismissal from service of the complainant was too harsh as a penalty since it was a first offense and there was no willful and malicious intention on his part to cause damage. The dispositive portion reads: WHEREFORE, judgment is hereby rendered ordering Respondents First Solid Rubber Industrial, Inc. and Edward Lee Sumulong to jointly and severally pay complainant separation pay in lieu of reinstatement the amount of P63, 654.00.

All other claims whether monetary or otherwise are hereby DISMISSED for lack of merit.19 In justifying his decision, the Labor Arbiter explained that the length of time during which the complainant was deprived of employment was sufficient penalty for the act he had committed against the company. As a result, his reinstatement without backwages to his former position was in order. However, since the employment was already strained and Moya was no longer seeking to be reinstated, he decided that it was for the best interest of both parties to award instead a separation pay of one (1) month salary for every year of credited service less the total of cash advances of the complainant amounting to P19,000.00.20 Not in total accord with the outcome of the decision, First Solid filed its partial appeal before the NLRC on 13 April 2006. The company assailed as error on the part of the Labor Arbiter the grant of separation pay in favor of Moya despite the finding that there was a just cause for the employee’s dismissal from service. It was submitted that the complainant’s length of service to the company cannot be invoked to justify the award. It was argued that Moya was dismissed for just causes; hence, to award separation pay would be tantamount to giving a prize for disloyalty and breach of trust.21 On 31 January 2007, the NLRC affirmed the Decision of the Labor Arbiter in its entirety.22 The NLRC affirmed the finding of the Labor Arbiter that a separation pay should be given to Moya in lieu of reinstatement citing primarily his length of service and years of contribution to the profitable business operation of the company. It also noted that this transgression was the first mistake of Moya in the performance of his functions. Finally, it cited as justification the Court’s ruling in St. Michael’s Institute v. Santos,23 wherein the Court held that "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."24 In its Motion for Reconsideration,25 First Solid insisted that length of service cannot mitigate breach of trust which is penalized with dismissal. On 24 April 2007, the NLRC denied the motion of First Solid as it found no compelling justification to overturn its findings.26 In its Petition for Certiorari before the Court of Appeals, the company reiterated its previous arguments that separation pay cannot be awarded to validly dismissed employees and that length of service was not a ground to reduce the penalty of dismissal due to breach of trust.27 In his Comment28 and Memorandum,29 Moya capitalized on the pronouncement of the Labor Arbiter that his alleged infraction does not merit a penalty of dismissal from service given his length of service to the company as well as the failure of the company to prove that he acted maliciously and with the intention to cause damage. First Solid, in its Reply30 and Memorandum,31 argued that Moya, being a supervisor, the company reposed on him its trust and confidence. He was expected to remain loyal and trustworthy and promote the best interest of the company. His act of concealing, by making a fraudulent report to the company regarding the transgression of the machine operator under him, is a valid basis for dismissal based on breach of trust and confidence. The company further contended that the award of separation pay made by the labor tribunals was contrary to law and jurisprudence.

In its Decision,32 the Court of Appeals ruled in favor of the company and reversed the decisions of the labor tribunals. The dispositive portions reads: WHEREFORE, premises considered, the petition is GRANTED. The Resolutions dated January 31, 2007 and April 24, 2007 of the National Labor Relations Commission in NLRC NCR CA No. 04865306(NLRC NCR Case No. 00-11-12626-2004) affirming the Decision dated February 28, 2006 of the Labor Arbiter Pablo C. Espiritu, Jr. is MODIFIED by deleting the award for separation pay in favor of private respondent Reynaldo Hayan Moya.33 The appellate court ruled that an employee found to be guilty of serious misconduct or other acts reflecting his moral character is not entitled to separation pay. Moya who held a supervisory position as the Head of the Curing Department breached the trust reposed upon him when he did not disclose what was actually done by the machine operator which eventually caused the damage. It was only when the company discovered that the report was not in accordance with what really transpired that Moya admitted its mistake. In sum, the appellate court agreed that First Solid presented substantial proof to consider Moya as dishonest and disloyal to the company. It took the position that instead of being a basis for the award of separation pay, Moya’s length of service should have been taken against him. The reason for his dismissal was his lack of integrity and loyalty to the company reflecting upon his moral character. The appellate court emphasized that while the law is considerate to the welfare of the employees whenever there is a labor conflict, it also protects the right of an employer to exercise its management prerogative in good faith. The Court’s Ruling That there is a valid ground for the dismissal of Moya based on breach and loss of trust and confidence is no longer at issue. The Labor Arbiter, NLRC and the appellate court were unanimous in their rulings on this matter. The remaining question is whether or not petitioner employee is entitled to separation pay based on his length of service. Petitioner is not entitled to separation pay. Payment of separation pay cannot be justified by his length of service. It must be stressed that Moya was not an ordinary rank-and-file employee. He was holding a supervisory rank being an Officer-in-Charge of the Tire Curing Department. The position, naturally one of trust, required of him abiding honesty as compared to ordinary rank-and-file employees. When he made a false report attributing the damage of five tires to machine failure, he breached the trust and confidence reposed upon him by the company. In a number of cases,34 this Court put emphasis on the right of an employer to exercise its management prerogative in dealing with its company’s affairs including its right to dismiss its erring employees. We recognized the right of the employer to regulate all aspects of employment, such as the freedom to prescribe work assignments, working methods, processes to be followed, regulation regarding transfer of employees, supervision of their work, lay-off and discipline, and dismissal and recall of workers.35 It is a general principle of labor law to discourage interference with an employer’s judgment in the conduct of his business. As already noted, even as the law is solicitous of the welfare of the employees, it also recognizes employer’s exercise of management prerogatives. As long as the company’s exercise of judgment is in good faith to advance its interest and not for the purpose of defeating or circumventing the rights of employees under the laws or valid agreements, such exercise will be upheld.36

Following the ruling in The Coca-Cola Export Corporation v. Gacayan,37 the employers have a right to impose a penalty of dismissal on employees by reason of loss of trust and confidence. More so, in the case of supervisors or personnel occupying positions of responsibility, does loss of trust justify termination. Loss of confidence as a just cause for termination of employment is premised on the fact that an employee concerned holds a position of trust and confidence. This situation holds where a person is entrusted with confidence on delicate matters, such as the custody, handling, or care and protection of the employer’s property. But, in order to constitute a just cause for dismissal, the act complained of must be "work-related" such as would show the employee concerned to be unfit to continue working for the employer.38 The foregoing as viewpoint, the right of First Solid to handle its own affairs in managing its business must be respected. The clear consequence is the denial of the grant of separation pay in favor of Moya. As pronounced in the recent case of Unilever Philippines, Inc., v. Rivera,39 an employee who has been dismissed for any of the just causes enumerated under Article 28240 of the Labor Code, including breach of trust, is not entitled to separation pay.41 This is further bolstered by Section 7,Rule I, Book VI of the Omnibus Rules Implementing the Labor Code which provides that: Sec. 7. Termination of employment by employer. — The just causes for terminating the services of an employee shall be those provided in Article 282 of the Code. The separation from work of an employee for a just cause does not entitle him to the termination pay provided in the Code, without prejudice, however, to whatever rights, benefits and privileges he may have under the applicable individual or collective agreement with the employer or voluntary employer policy or practice.1âwphi1 However, this Court also provides exceptions to the rule based on "social justice" or on "equitable grounds" following the ruling in Philippine Long Distance Telephone Co. v. NLRC,42 stating that separation pay shall be allowed as a measure of social justice only in those instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character. Where the reason for the valid dismissal is, for example, habitual intoxication or an offense involving moral turpitude, like theft or illicit sexual relations with a fellow worker, the employer may not be required to give the dismissed employee separation pay, or financial assistance, or whatever other name it is called, on the ground of social justice.43 The PLDT case further elucidates why an erring employee could not benefit under the cloak of social justice in the award of separation pay, we quote: The policy of social justice is not intended to countenance wrongdoing simply because it is committed by the underprivileged. At best it may mitigate the penalty but it certainly will not condone the offense. Compassion for the poor is an imperative of every humane society but only when the recipient is not a rascal claiming an undeserved privilege. Social justice cannot be permitted to be refuge of scoundrels any more than can equity be an impediment to the punishment of the guilty. Those who invoke social justice may do so only if their hands are clean and their motives blameless and not simply because they happen to be poor. This great policy of our Constitution is not meant for the protection of those who have proved they are not worthy of it, like the workers who have tainted the cause of labor with the blemishes of their own character.44 Moya’s dismissal is based on one of the grounds under Art. 282 of the Labor Code which is willful breach by the employee of the trust reposed in him by his employer. Also, he is outside the protective mantle of the principle of social justice as his act of concealing the truth from the company is clear disloyalty to the company which has long employed him.1âwphi1

Indeed, as found below, Moya’s length of service should be taken against him. The pronouncement in Reno Foods, Inc. v. Nagkakaisang Lakas ng Manggagawa (NLM) Katipunan45 is instructive on the matter: x x x Length of service is not a bargaining chip that can simply be stacked against the employer. After all, an employer-employee relationship is symbiotic where both parties benefit from mutual loyalty and dedicated service. If an employer had treated his employee well, has accorded him fairness and adequate compensation as determined by law, it is only fair to expect a long-time employee to return such fairness with at least some respect and honesty. Thus, it may be said that betrayal by a long-time employee is more insulting and odious for a fair employer.46 (Emphasis supplied). WHEREFORE, we DENY the petition for review on certiorari. The Decision dated 30 April 2008 and Resolution dated 1 August 2008 of the Special Third Division of the Court of Appeals in CA-G.R. SP No. 99500 are hereby AFFIRMED.

G.R. No. 75955 October 28, 1988 MARIA LINDA FUENTES, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION (NLRC), PHILIPPINE BANKING CORPORATION and JOSE LAUREL IV, as its President, respondents. Pedro S. Ravelo for petitioner. The Solicitor General for public respondent. Laurel Law Offices for private respondents.

FERNAN, C.J.: Petitioner Maria Linda Fuentes seeks to set aside the resolution dated November 28, 1985 of the National Labor Relations Commission (NLRC for brevity) affirming the Labor Arbiter's dismissal of her complaint for illegal dismissal against private respondent Philippine Banking Corporation (Philbanking for brevity). Petitioner was employed as a teller at the Philbanking's office at Ayala Avenue, Makati, Metro Manila. On May 28, 1982, at about 10:30 a.m., petitioner, who was acting as an overnight teller, received a cash deposit of P200,000.00. She counted the money with the assistance of a co-teller, finishing the task at 10:40 a.m. or ten (10) minutes after her closing time. Before she could start balancing her transactions, the Chief Teller handed her several payroll checks for validation. Finding the checks to be incomplete, petitioner left her cage to get other checks, without, however, bothering to put the P200,000.00 cash on her counter inside her drawer. When she returned to her cubicle after three (3) to five (5) minutes, she found that the checks for validation were still lacking, so she went out of her cubicle again to get the rest of the checks. On her way to a co-teller's cubicle, she noticed that the P200,000.00 pile on her counter had been re-arranged. She thus returned to her cage, counted the money and discovered that one (1) big bundle worth P50,000.00 was missing therefrom. She immediately asked her co-teller about it and getting a negative reply, she reported the matter to the Chief Teller. A search for the P50,000.00 having proved unavailing, petitioner was asked to explain why she should not be held liable for the loss. She submitted her explanation on June 24, 1982. Subsequently, on June 3, 1983, petitioner was dismissed for gross negligence. On June 21, 1983, she filed a complaint for illegal dismissal with reinstatement and backwages. Private respondent bank seasonably filed an answer with counterclaim that petitioner be ordered to restitute the amount of P50,000. On January 31, 1984, Labor Arbiter Bienvenido Hermogenes rendered a decision dismissing the complaint as well as the counterclaim but without prejudice as to the latter. 1 Petitioner's appeal to the NLRC was dismissed for lack of merit 2 and her motion for reconsideration was denied. 3 Hence, this petition. The issue in this case is whether petitioner's dismissal on the ground of gross negligence was justified under Art. 282 of the Labor Code.

Upon a thorough consideration of the facts of this case, the Court finds no cogent reason for reversing the conclusion of the Labor Arbiter and the NLRC that petitioner was grossly negligent in the performance of her duties as a teller, which negligence resulted in the loss of P50,000.00. Applying the test of negligence, we ask: did the petitioner in doing the alleged negligent act use reasonable care and caution which an ordinarily prudent person would have used in the same situation? If not, she is guilty of negligence. The circumstances surrounding the loss in question lend us no sympathy for the petitioner. It was established that petitioner simply left the pile of money within the easy reach of the crowd milling in front of her cage, instead of putting it in her drawer as required under the private respondent bank's General Memorandum No. 211 (Teller's Manual of Operations) which she was expected to know by heart. 4 Moreover, she left the P200,000.00 on two occasions. 5 Her irresponsibility is nowhere made apparent than in her response to the following question: Q Noong lumabas ka sa iyong cage para pumunta sa iyong Chief Teller, hindi ba ipinagbilin itong pera sa iyong kasamahan? A Hindi ko na ho ipinagbilin kasi masyadong maraming tao noon, at iyong aking teller's counter ay nilagyan ko ng sign na nakasulat ng 'next teller please' na ang ibig sabihin ay kung meron mang mga cliente doon sa akin ay doon muna sila maki-pagtransact ng negosyo sa kabilang teller o kung sino man ang bakante kasi busy ako. 6 As a teller, petitioner must realize that the amount of care demanded by reasonable conduct is that proportionate to the apparent risk. Since it was payday and depositors were milling around, petitioner should have been extra cautious. At no time than the occasion under consideration was the need to be extra careful more obvious. It was certainly not the time to breach the standard operating procedure of keeping one's cash in the drawer as a precautionary and security measure. "A teller's relationship with the bank is necessarily one of trust and confidence. The teller as a trustee is expected to possess a high degree of fidelity to trust and must exercise utmost diligence and care in handling cash. A teller cannot afford to relax vigilance in the performance of his duties." 7 Petitioner argues that there was contributor negligence on the part of private respondent bank consisting in its failure to conduct an investigation minutes after the loss. We do not agree with petitioner. The failure of private respondent bank to conduct an investigation minutes after the loss was totally distinct and independent of, as well as remotely related to the fact of loss itself. Petitioner Fuentes cannot invoke private respondent's alleged contributory negligence as there was no direct causal connection between the negligence of the bank in not conducting the investigation and the loss complained of. In a legal sense, negligence is contributory only when it contributes proximately to the injury, and not simply a condition for its occurrence. In the case at bar, the bank's inaction merely created a condition under which the loss was sustained. Regardless of whether there was a failure to investigate, the fact is that the money was lost in the first place due to petitioner's gross negligence. Such gross negligence was the immediate and determining factor in the loss.

Besides, the petitioner's position is anathema to banking operations. By conducting an instant search on its depositors for every loss that occurs, management holds suspect each depositor within its premises. Considering that currency in the form of money bills bears no distinct earmarks which would distinguish it from other similar bills of similar denominations except as to its serial numbers, any innocent depositor with P50,000 in his possession would be a likely suspect. Such act would do violence to the fiduciary relationship between a bank and its depositors. Ultimately it will result in the loss of valued depositors. Petitioner argues further that the NLRC failed to consider that petitioner left her cage at the instance of the Chief Teller. Again we are not persuaded. The findings of the NLRC are clear. Petitioner left at her own volition to approach her Chief Teller to ask for the remaining checks to ascertain their authenticity and completeness. Besides, irrespective of who summoned her, her responsibility over the cash entrusted to her remained. Although petitioner's infraction was not habitual, we took into account the substantial amount lost. Since the deposit slip for P200,000.00 had already been validated prior to the loss, the act of depositing had already been complete and from thereon, the bank had already assumed the deposit as a liability to its depositors. Cash deposits are not assets to banks but are recognized as current liabilities in its balance sheet. It would be most unfair to compel the bank to continue employing petitioner. In Galsim v. PNB, 8 we upheld the dismissal of a bank teller who was found to have given money to a co-employee in violation of bank rules and regulations. Said act, which caused prejudice to the bank, was a justifiable basis for the bank to lose confidence in the employee. Similarly, in the case at bar, petitioner, as aforesaid, violated private respondent bank's General Memorandum, No. 211 (Teller's Manual of Operations) which strictly says: Cash should never be left exposed. The coins and currencies should be kept in drawers where they are not accessible to someone through the windows with the aid of a stick or other devices. 9 An employer cannot legally be compelled to continue with the employment of a person admittedly guilty of gross negligence in the performance of his duties and whose continuance in his office is patently inimical to the employer's interest. "For the law in protecting the rights of the employee/laborer authorizes neither oppression nor self-destruction of the employer. 10 WHEREFORE, the instant petition is hereby DISMISSED. The assailed decision dated November 28,1985 of the National Labor Relations Commission is affirmed in toto.

G.R. No. 117378 March 26, 1997 GIL CAPILI and RICARDO CAPILI, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, National Capital Region (First Division), BENIGNO SANTOS, DELFIN YUSON, LUISITO SANTOS, URSINO BASISTER, RICARDO REYES, JOSELITO SANTOS, JORGE BINUYA and NICOLAS MULINGBAYAN, respondents.

BELLOSILLO, J.: Respondents Benigno Santos, Delfin Yuson, Luisito Santos, Ursino Basister, Ricardo Reyes, Joselito Santos, Jorge Binuya and Nicolas Mulingbayan are licensed drivers of public utility jeepneys plying the Libertad-Sta. Cruz route in Manila. The jeepneys were formerly owned by petitioner Gil Capili. For the use of the jeepney for twelve hours a driver would pay rent or so-called "boundary" of P280.00 and earn a net profit of P200.00 per day. On 7 May 1991, at a time when petitioner Ricardo Capili jointly with his wife had assumed ownership and operation of the jeepneys driven by private respondents, the latter and the other drivers similarly situated were required by the jeepney operators to sign individually contracts of lease of the jeepneys to formalize their lessor-lessee relationship. However, having gathered the impression that the signing of the contracts of lease was a condition precedent before they could continue driving for petitioners, all the drivers stopped plying their assigned routes beginning 7 May 1991. A week later or on 14 May 1991 the drivers, numbering twenty-two (22), filed a complaint for illegal dismissal before the Labor Arbiter praying not for reinstatement but for separation pay. 1 In the interim, fourteen (14) of the complainants desisted and resumed plying their routes. The remaining eight (8) complainants with their reckoning dates of employment follow: (a) Benigno Santos, 1972; (b) Jorge Binuya, 1965; (c) Luisito Santos, 1982; (d) Delfin Yuson, 1983; (e) Ursino Basister, 1980; (f) Ricardo Reyes, 1985; (g) Joselito Santos, 1989; and, (h) Nicolas Mulingbayan, 1978. Petitioners opposed the claim of private respondents before the Labor Arbiter alleging that the latter voluntarily abandoned their respective jobs without any valid cause and thereafter refused and still continue to refuse to return to work despite repeated demands and/or notices given to them to return to work. In resolving the dispute, the Labor Arbiter ruled — On the issue of dismissal versus abandonment, we are inclined to believe that the latter scenario happened. It is not sound business practice to dismiss many employees at the same time since it would cripple the operations. What was more likely was that the drivers, all 22 of them . . . boycotted respondents on May 7, 1991 by not reporting for work on that day. xxx xxx xxx

From the viewpoint of complainants, their signing of the lease contract was a condition sine qua nonto the continuous driving of their respective drivers (jeepneys?). But from the point of view of respondent Capili and as shown in the aforequoted paragraph 5 of his affidavit, and as further shown in the notices (Exhibits "3-B" and "3-B-1") which merely asked complainants to return to work without mentioning any condition like the signing of the contract, the signing of the lease contract by the drivers was merely intended as a confirmation of the original concept of a no employer-employee relationship, and to streamline the operation by indicating the amount of the boundary per driver, depending on the number of hours they drive and their obligation to check on the motor/engine, oil, tires, brakes and other routinary requirements in order to insure the vehicles' roadworthiness. It was never meant to be that if a driver refuses to sign the contract, he would not be allowed to continue driving. To our mind, both parties misappreciated the situation. Respondents' erroneous insistence of a no employer-employee relationship even in the face of a wellestablished contrary doctrine as postulated in the Dinglasan case 2 (98 Phil. 649) and complainants' erroneous apprehension of the loss of such employer-employee relationship if they sign the lease contract propelled the complainants to file the instant complaint. In short, this is merely a simple case of misunderstanding. To remedy the situation, we feel that the most prudent approach would be to let the parties return to the relationship that existed between them prior to May 7, 1991. 3 The Labor Arbiter thus concluded — WHEREFORE, decision is hereby rendered declaring the breakage (sic), of relationship between respondent Ricardo Capili and complainants Benigno T. Santos, Delfin Yuson, Luisito Santos, Ursino Basister, Ricardo Reyes, Joselito Santos, Jorge Binuya and Nicholas Mulingbayan, as a product of misunderstanding and misappreciation of the situation by both parties and, therefore, respondents are hereby directed to reinstate them to their former position without loss of seniority rights and other benefits, but without back wages (p. 7, Annex "F", emphasis supplied). 4 Private respondents appealed to the National Labor Relations Commission. They reiterated their prayer for separation pay equivalent to one (1) month salary for every year of service and, in addition, three (3) years back wages. Respondent NLRC upheld the finding of the Labor Arbiter that the case arose due to simple misunderstanding between the complaining drivers on one hand and their employers on the other. However, it took exception to the relief granted to private respondents and modified the appealed decision accordingly by holding that — Since there was misunderstanding between the parties and this misunderstanding resulted in animosity and strained relationship between them, we deem it proper and most prudent approach to maintain industrial peace for respondents to pay the complainants their separation pay of one half (1/2) month for every year of service, based on their daily earnings of P200.00. 5

The petitioners moved to have the above disquisition of respondent NLRC reconsidered but the latter denied the motion. They now come to us arguing that since there was a clear finding of abandonment by the Labor Arbiter consisting in the failure of private respondents to report for work without justifiable reason, the award of separation pay could not be warranted. The NLRC brushed aside the arguments of petitioners. It emphasized that if it were the finding of the Labor Arbiter that private respondents were guilty of abandonment he would not have ordered reinstatement but dismissal of the case. Thus on 9 August 1994 NLRC denied reconsideration. Petitioners impute grave abuse of discretion on the part of respondent NLRC in awarding separation pay to private respondents. We agree with petitioners. The legal basis for the award of separation pay is clearly provided by Art. 279 of the Labor Code which states that the remedy for illegal dismissal is reinstatement without loss of seniority rights plus back wages computed from the time compensation was withheld up to reinstatement. However there may be instances where reinstatement is not a viable remedy as where the relations between employer and employee have been so severely strained that it is no longer advisable to order reinstatement or where the employee decides not to be reinstated. In such events, the employer will instead be ordered to pay separation pay. 6 A reading of Art. 279 in relation to Art. 282 of the Labor Code reveals that an employee who is dismissed for cause after appropriate proceedings in compliance with the due process requirements is not entitled to an award of separation pay. Under Arts. 283 and 284 of the same Code, separation pay is authorized only in cases of dismissals due to any of these reasons: (a) installation of labor saving devices; (b) redundancy; (c) retrenchment; (d) cessation of the employer's business, and, (e) when the employee is suffering from a disease and his continued employment is prohibited by law or is prejudicial to his health and to the health of his co-employees. 7However, separation pay shall be allowed as a measure of social justice in those cases where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character, but only when he was illegally dismissed. The common denominator of those instances where payment of separation pay is warranted is that the employeewas dismissed by the employer. In the instant case there was no dismissal at all. Respondent NLRC affirmed the factual findings of the Labor Arbiter that there was only a misunderstanding between petitioners and private respondents which caused the latter to stop reporting for work. If the Labor Arbiter ordered reinstatement it should not be construed as relief proceeding from illegal dismissal; instead, it should be considered as a declaration or affirmation that private respondents may return to work because they were not dismissed in the first place, and they should be happy that their employers are accepting them back. This could be the reason why complainants asked only for separation pay — not for reinstatement — in their complaint before the Labor Arbiter. The award of separation pay cannot be justified solely because of the existence of "strained relations" between the employer and the employee. It must be given to the employee only as an alternative to reinstatement emanating from illegal dismissal. When there is no illegal dismissal, even if the relations are strained, separation pay has no legal basis. Besides, the doctrine on "strained relations" cannot be applied indiscriminately since every labor dispute almost invariably results in "strained relations;" otherwise, reinstatement can never be possible simply because some hostility is engendered between the parties as a result of their disagreement. That is human nature. 8

The constitutional policy of providing full protection to labor is not intended to oppress or destroy management. 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. 9 When respondents filed their complaint, and taking account of the allegations therein, they foreclosed reinstatement as a relief, since they prayed only for an award of separation pay. This is confirmed in their appeal to the NLRC where they prayed for a modification of the decision of the Labor Arbiter, from reinstatement without back wages to payment of three (3) years back wages and separation pay equivalent to one (1) month salary for every year of service. 10 It is therefore clear that respondents never desired to be reinstated. This being so, the Court cannot order them to return to work. 11 If private respondents voluntarily chose not to return to work anymore they must be considered as having resigned from their employment. This is without prejudice however to the willingness of both parties to continue with their former contract of employment or enter into a new one whenever they so desire. WHEREFORE, the petition is GRANTED and the employer-employee relationship between petitioners on one hand and each private respondent on the other is deemed voluntarily terminated. Consequently, the decision of respondent National Labor Relations Commission dated 28 February 1994 is REVERSED and SET ASIDE. SO ORDERED.

G.R. No. 110518 August 1, 1994 JOSE L. GARCIA, EDUARDO ALAS, NOEL APAYA, RICARDO, MARCOS AVEJERO, REYNALDO BANTIGUE, ROMEO BORRAS, MARGARITO CABICUELAS, ROLANDO CAMUA, JOSE DENNIS CASTILLO, DICOROSO CARBO, FELIPE COSCULLA, EDUARDO DE GUZMAN, SEVILLA DEMLO, DIONALDO TEODOLFO, ADEMAR DUPINO, JOSE ESCOBAR, REYNALDO FLORES, DELFIN GARCIA, FEDERICO GATDULA, FELOMINO GUTIERREZ, HILARIO EUGENIO, EUGENIO ILANO, JR., WILFREDO JALLA, RAMON LASQUITE, CESARIANO LIM, AUGUSTO LUMBANG, SALVADOR MACARAEG, ERNESTO MARQUEZ, LAURO MIRAVALLES, FRED ONIA, REYNALDO ORTIZ, LEONIZA PALALIMPA, ALFREDO ROMEO, LECERIO ROSARIO, ARMANDO SABIDURIA, RONILO SACE, REGONDOLA SANTOS, ERNESTO SALVATUS, ENRICO SANDOVAL, EUFEMIO SATURAY, VIRGILIO TINAMISAN, MACARIO VALDEZ, JOSE VILLARICA, SANTOS VIRAY, FLORENDO LOPEZ, JOSE SEGISMUNDO, DIZON GERONIMO, RUPERTO CLAVIO, JR., SEFARIN DYTIOCO, FIDEL TAGULAM, and EDITHA R. JUAN, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION and NATIONAL SERVICE CORPORATION, respondents. Samson S. Alcantara for petitioners. Vidal Corpus & Associates for private respondent.

CRUZ, J.: The main issue before the Court in this petition for certiorari is the validity of the retrenchment of the fifty-one petitioners by private respondent National Service Corporation (NASECO) as upheld by the Labor Arbiter and later by the National Labor Relations Commission. NASECO is a government-owned or controlled corporation engaged in providing manpower services such as security guards, radio operators, janitors and clerks, principally for the Philippine National Bank. The petitioners were its employees who were either members of the NASECO Employees Union (NASECO-EU) or of the Alliance of Concerned Workers of NASECO (ACW-NASECO). On November 19, 1988, they were among those who staged a strike and picketed the premises of the PNB. On November 21, 1988, the PNB filed a complaint for damages with preliminary injunction against the labor unions with the Regional Trial Court of Manila. It was docketed as Civil Case No. 88-46938 in Branch 22. On December 5, 1988, the court granted the application for a preliminary injunction and issued the writ ordering the lifting of the picket. NASECO also filed on November 21, 1988, a petition with the National Labor Relations Commission to declare the strike illegal. This was docketed as NLRC Case No. 00-11-04766-88. On February 17, 1989, the NLRC rendered its decision sustaining NASECO. 1 The union officers who knowingly and actively participated in the strike, as well as the members of the respondent union who committed illegal acts in the course of the strike, were deemed to have legally lost their employment status.

The rest of the striking members, including the herein fifty-one petitioners, were ordered to report for work immediately. The complaint of the labor union against the PNB for unfair labor practice and illegal lockout was dismissed on the ground that there was no employer-employee relationship between the PNB and the labor unions. 2 On March 1, 1989, the petitioners reported for work at the NASECO office but they could not be given assignments because the PNB had meanwhile contracted with another company to fill the positions formerly held by the petitioners. NASECO inquired from the PNB whether or not the petitioners could still be accepted to their former positions in light of the Service Agreement between NASECO and the PNB giving the latter the right to reject or replace any and all of NASECO's employees assigned to it, for inefficiency or other valid reasons. In reply, the PNB manifested that it was no longer accepting the petitioners back to their former positions as these were no longer vacant. NASECO then sought new assignments for the petitioners with its other clients, but the petitioners insisted on their reassignment to the PNB. In the meantime, starting April 1, 1989, NASECO paid the salaries and other benefits of the petitioners although they were not actually working. 3 On October 13, 1989, the petitioners received notice of separation from NASECO, effective thirty days thereafter. The reason given was the financial losses NASECO was incurring at that time due mainly to the salaries being paid to the employees who could not be posted despite efforts to place them. 4 Conformably to Art. 283 of the Labor Code, the Department of Labor and Employment was likewise given a 30-day notice of the intended retrenchment. The management of NASECO even offered a better separation package equivalent to three-fourths of the estimated new basic monthly salary for every year of service, compared to the statutory requirement of only 1/2 month pay for every year of service. 5 The petitioners refused to acknowledge receipt of the notice and instead, on October 26, 1989, filed with NLRC a complaint against NASECO for unfair labor practice, illegal dismissal, non-payment of wages and damages. 6 On November 13, 1989, NASECO sent notice to the petitioners that their termination from the service would take effect not on November 16, 1989, but on November 30, 1989, for humanitarian considerations. The effective date was again extended to December 15, 1989, and finally to December 31, 1989. On June 22, 1990, Labor Arbiter Potenciano Canizares Jr. rendered a decision finding that the petitioners had been "fairly discharged by the respondent (NASECO) in a valid act of simple retrenchment." 7 On July 11, 1990, the petitioners appealed to the NLRC. On September 11, 1992, they filed a manifestation that the private respondent had been hiring new personnel, but no proof was offered to support the charge.

On December 21, 1992, the NLRC issued a resolution affirming the decision of the labor arbiter. 8 A motion for reconsideration filed by the petitioners on January 15, 1993, was denied by the NLRC on February 10, 1993. 9 It is now asserted in this petition that the NLRC gravely abused its discretion in holding that the petitioners were validly dismissed on the ground of retrenchment; that NASECO is not guilty of unfair labor practice; and that their monetary claims for increases under Republic Acts 6640 and 6727, as well as for moral and exemplary damages and attorney's fees, should be denied. On the first two issues, the petitioners fault the NLRC for completely disregarding the requisites of a valid retrenchment as laid down in Lopez Sugar Corporation vs. Federation of Free Workers. 10 The requisites are: 1) the losses expected should be substantial and not merely de minimis in extent; 2) the substantial losses apprehended must be reasonably imminent; 3) the retrenchment must be reasonably necessary and likely to effectively prevent the expected losses; and 4) the alleged losses, if already incurred, and the expected imminent losses sought to be forestalled, must be proved by sufficient and convincing evidence. The petitioners assert that NASECO failed to show with convincing evidence that the incurred losses, if any, were substantial. The claimed losses were belied by the fact that NASECO hired new personnel before and after the dismissal of the petitioners. NASECO also failed to pursue other measures to forestall losses, short of dismissing the petitioners. It did not follow the "first in, last out" rule that in cases of retrenchment, employees with long years of service with the company, like the petitioners, should not be the first to be retrenched. They attribute their dismissal to their participation in the strike of November 19, 1988. Thus, their dismissal was an act of unfair labor practice for being discriminatory and violative of their rights to self-organization and to engage in concerted activities. We have to disagree. The losses incurred by NASECO for the year 1989 amounted to P1,457,700.42 and were adequately proved by it.11 These losses were directly caused by the salaries and other benefits paid to the petitioners during the period from April 1 to December 31, 1989. The amount of these payments is not insubstantial in light of the economic difficulties of the country during that year when several coups d' etat adversely affected the nation's economic growth. It is also not true that respondent NASECO did not look for other measures to cut back on its losses. NASECO had in fact tried to place the petitioners with its other clients but it was the petitioners themselves who refused reassignment. The particular facts of this case preclude application of the "first in, last out" rule in the retrenchment of employees. There was no discrimination against the petitioners. NASECO could not compel the PNB to take the petitioners back to their former positions in view of its contractual right to reject any employee of NASECO for inefficiency and other valid reasons. The PNB had already filled the vacated positions of the petitioners during the strike, to ensure the continued operation of its business. The monetary claim under RA 6640 and RA 6727 is another matter. RA 6640, which took effect on December 14, 1987, and RA 6727, which took effect on July 1, 1989, provide for P10.00 and a P25.00 increases respectively in the minimum wage of laborers. The NLRC denied this claim on the ground that the petitioners had failed to include it in their basic complaint. This contention is not acceptable because the claim was clearly included and prayed for in their position paper.

The Revised Rules of the NLRC provide under Sec. 3, Rule V, that parties should not be allowed to allege facts not referred to or included in the complaint, or position paper, affidavits and other documents. This would mean that although not contained in the complaint, any claim can still be averred in the position paper, as was done by the petitioners, or in an affidavit or other documents. We also hold that the increases in the petitioners' minimum wage under RA 6640 and RA 6720 should be granted since they became effective before the petitioners' retrenchment. Said increases should be considered in the computation of their separation pay in accordance with Art. 283 of the Labor Code. Moral damages are recoverable only where the dismissal of the employee was attended by bad faith or fraud or constituted an act oppressive to labor or was done in a manner contrary to morals, good customs or public policy.12 Exemplary damages may be awarded only if the dismissal was effected in a wanton, oppressive or malevolent manner.13 None of these grounds has been proven. However, the Court will grant the claim for attorney's fees in an amount equivalent to 10% of the total amount awarded to the petitioner as authorized by the Labor Code. 14 The constitutional policy of providing full protection to labor is not intended to oppress or destroy management. The employer cannot be compelled to retain employees it no longer needs, to be paid for work unreasonably refused and not actually performed. NASECO bent over backward and exerted every effort to help the petitioners look for other work, postponed the effective date of their separation, and offered them a generous termination pay package. The unflagging commitment of this Court to the cause of labor will not prevent us from sustaining the employer when it is in the right, as in this case. WHEREFORE, the decision of the Labor Arbiter dated June 22, 1990, and the resolutions of the NLRC dated December 21, 1992, and February 10, 1993, are AFFIRMED, with the modification that the monetary claim under RA 6640 and RA 6720, and for attorney's fees, should be and is hereby granted. The award of moral and exemplary damages is disallowed. SO ORDERED.

G.R. No. 112630 September 5, 1997 CORAZON JAMER and CRISTINA AMORTIZADO, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, ISETANN DEPARTMENT STORE and/or JOHN GO,respondents.

HERMOSISIMA, JR., J.: The decision 1 of public respondent National Labor Relations Commission (NLRC) 2 in NLRC NCR CA 002074-91, 3promulgated on November 12, 1993, is herein sought to be annulled for having been rendered with grave abuse of discretion, it having reversed and set aside the decision 4 of Labor Arbiter Pablo C. Espiritu, Jr. by dismissing the petitioners' complaint for illegal dismissal against private respondent Isetann Department Store (Isetann, for brevity). The decretal part of the NLRC decision reads: WHEREFORE, premises considered, the appealed decision is hereby set aside and new one promulgated declaring that the dismissal from the service of complainants Corazon Jamer and Cristina Amortizado was valid and for cause. Consequently, the order of reinstatement with backwages and attorney's fees are likewise vacated and set aside. 5 Although the Labor Arbiter 6 and the NLRC reached contrary conclusions, both agree on the following facts: Complainant, Corazon Jamer was employed on February 10, 1976 as a Cashier at "Joy Mart," a sister company of Isetann. After two (2) years, she was later on promoted to the position of counter supervisor. She was transferred to Isetann, Carriedo Branch, as a money changer. In 1982 she was transferred to the Cubao Branch of Isetann, as a money changer, till her dismissal on August 31, 1990. Complainant Cristina Amortizado, on the other hand, was employed also at "Joy Mart" in May, 1977 as a sales clerk. In 1980 she was promoted to the position as counter cashier. Thereafter, she was transferred to "Young Un Department Store" as an assistant to the money changer. Later on, or in 1985, she was transferred to Isetann, Cubao Branch where she worked as a Store Cashier till her dismissal on August 31, 1990. Both complainants were receiving a salary of P4,182.00 for eight (8) hours work at the time of their dismissal. Respondent Isetann Department Store on the other hand, is a corporation duly organized and existing under the laws of the Philippines and is engaged in retail trade and the department store business. Individual respondent, John Go is the President/General (Manager) of respondent Department Store. This complaint arose from the dismissal of the complainants by the respondents. They were both dismissed on August 31, 1990 on the alleged ground of dishonesty in their work as Store Cashiers.

Complainant's (sic) function as Store Cashiers is to accumulate, at the end of daily operations, the cash sales receipts of the selling floor cash register clerks. At the close of business hours, all the cash sales of the floor cash register clerks are turned over by them to the Store Cashiers, complainants herein, together with the tally sheets prepared by the cash register clerks. Thereafter, complainants will reconcile the cash sales with the tally sheets to determine shortages or coverages (sic) and deposit the same with the bank depositor(sic) of respondent's company. Thereafter, the recorded transactions are forwarded to the main branch of respondent's company at Carriedo for counter-checking. On July 16, 1990, complainants discovered a shortage of P15,353.78. It was complainant Corazon Jamer who first discovered the shortage. In fact at first, she thought that it was merely a P1,000.00 shortage but when she reconciled the cash receipts, from the cash register counters, with the tally sheets and the actual money on hand, the shortage amounted to P15,353.78. She informed her co-store cashier, complainant Cristina Amortizado, about the shortage. Cristina Amortizado also reconciled and re-counted the sale previous to July 16, 1990 and she also confirmed that there was a discrepancy or a shortage of P15,353.78. They did not, (sic) immediately report the shortage to management hoping to find the cause of the shortage but to no avail they failed to reconcile the same. Hence, they had no other alternative but to report the same to the management on July 17, 1990. Complainants, together with another Store Cashier, Lutgarda Inducta, were asked to explain and they submitted their respective written explanations for the shortage of P15,353.78 and the P450.00 under deposit last July 14, 1990. Respondents placed both complainants and their co-store cashier Lutgarda Inducta under preventive suspension for the alleged shortages. Thereafter, respondents conducted an administrative investigation. Finding the explanation of the complainants to be unsatisfactory, respondent dismissed the complainants from the service on August 31, 1990. Aggrieved and not satisfied with the decision of management terminating their services, complainants instituted this present action on September 26, 1990 for illegal dismissal praying for reinstatement with payment of backwages and other benefits. 7 In justifying complainants' dismissal from their employment, respondents alleged: When the transactions for July 15, 1990 were being reconciled, a shortage of P15,353.78 was discovered. Also uncovered was an under-deposit of P450.00 of cash receipts for July 14, 1990. Considering that the foregoing deficits were attributable to herein appellees and to another store cashier, Mrs. Lutgarda Inducta, who were the ones on duty those days respondent Isetann's Human Resources Division Manager, Teresita A. Villanueva, issued letters (Exhs. "1" and "5") individually addressed to herein appellees and Mrs. Inducta requiring them to submit written explanations in regard to their above malfeasance within 48 hours from receipt thereof. Pursuant to said letters, they were likewise placed under preventive suspension.

Thereafter, the Committee on Discipline of appellant Isetann conducted a series of investigations probing appellees' and Mrs. Inducta's aforestated shortages. In addition to the shortage of P15,738.58 (sic) and underdeposit of P450.00, said investigation also included the following sums which appellees failed to turnover or account for: a) P1,000.00 — amount borrowed by Lutgarda Inducta from Corazon Jamer; b) P70.00 — over replenishment of petty cash expenses incurred by Cristina Amortizado. After the administrative investigation, the Committee on Discipline rendered its decision (Exhs, "3," "3-A," to "3-D") dated August 23, 1990 duly approved by the General Manager of respondent Isetann, finding the appellees and Mrs. Inducta responsible for said shortages and consequently requiring them to restitute the same to respondent Isetann. This Decision and the notices of termination were seat by respondent Isetann to the appellees, and which the latter admittedly received. On the other hand, the complainants account of the factual antecedents that let (sic) to their dismissal is as follows: Aside from the foregoing persons, Alex Mejia had and was allowed by management to have uncontrolled access to the said room including the vault. Ostensibly, the purpose was to assist in the bringing in or taking out of coin bags, monies, etc. There were therefore, at a minimum at least six (6) persons who could have had access to the company funds. To ascribe liability to the store cashiers alone, in the absence of a clear proof of any wrongdoing is not only unfair and discriminatory but is likewise illegal. Parenthetically, and within the parameters of their assigned tasks, herein complainants could not be faulted in any way for the said shortage as there is no showing that the loss occurred at the time they were in control of the funds concerned. Complainants do not dispute the fact that there appeared to be a shortage of P15,373.78 (sic) for the July 15, 1990 (a Sunday) sales and which were tallied and the loss discovered on the following day, July 16, 1990. They however vehemently deny any culpability or participation in any kind, directly or indirectly, in regard to the said loss or shortage. Given the kind of trust reposed upon them by respondents for fourteen and thirteen years respectively they were not about, although they could have done so before given the

negligence and laxity of management in regard to the control and handling of funds of the store, to break said trust. At the time the persons who had access either to the vault the money and/or the keys aside from herein complainants, were: 1) Lutgarda Inducta, also a store cashier on duty at the time; 2) the SOM Mrs. Samonte, the supervisor in charge; 3) Alex Mejia, an employee assigned as utility man; and 4) Boy Cabatuando. There where(sic) three (3) keys to the money changer's room, and these keys were assigned and distributed to: a) master key is or was with the SOM's (Mrs. Samonte) room at the 3rd floor of the building; b) another key is or was in the possession of the keeper of the keys, i.e. Boy Cabatuando; and c) the third and last key is any of the store cashiers depending on who is on duty at the time. Likewise, there were four (4) persons who were aware and knew of the vault combination. These were the three store cashiers, i.e. herein complainants, Lutgarda Inducta and their SOM, Mrs. Samonte. 8 On July 23, 1991, Labor Arbiter Nieves V. de Castro, to whom the instant controversy was originally assigned, rendered a decision 9 in favor of herein petitioners, finding that petitioners had been illegally dismissed, the dispositive portion of which reads: WHEREFORE, respondents are hereby directed to reinstate complainants to service effective August 1, 1991 with full backwages and without loss of seniority rights. SO ORDERED. 10 Expectedly, respondents Isetann and John Go appealed the aforesaid decision to the NLRC. On January 31, 1992, the NLRC issued a resolution 11 remanding this case to the NLRC National Capital Region Arbitration Branch for further proceedings in the following manner: WHEREFORE, premises considered, the challenged decision is hereby SET ASIDE and VACATED. The entire records of this case is hereby remanded to the NLRC National Capital Regional Arbitration Branch for further proceedings. Considering that the Labor Arbiter a quo rendered a decision in this case and in order to dispel any suspicion of pre-judgment of this case, the Executive Labor Arbiter is hereby directed to have this case re-raffled to another Labor Arbiter. SO ORDERED. 12 Consequently, the present case was then re-raffled to Labor Arbiter Pablo C. Espiritu, Jr. After a fullblown trial, the said Labor Arbiter found for the petitioners and declared that there was no justification, whether in fact or in law, for their dismissal. The decretal part of the decision 13 dated March 31, 1993, states:

WHEREFORE, above premises considered, judgement (sic) is hereby rendered finding the dismissal of complainants, Cristina Amortizado and Corazon Jamer to be illegal and concomitantly, (r)espondents are hereby ordered to pay complainants, Corazon Jamer the amount of P125,460.00 and Cristina Amortizado the amount of P125,460.00, representing full backwages from the time of their dismissal (August 31, 1990) till actual or payroll reinstatement at the option of the respondent (computed until promulgation only). Respondents are also hereby further ordered to reinstate the complainants to their former position as Store Cashiers without loss of seniority rights, privileges and benefits, failure to do so backwages shall continue to run but in no case to exceed three (3) years. Respondents are also ordered to pay complainants the amount of P25,092.00 representing 10% attorney's fees based in the total judgement (sic) award of P250,920.00. SO ORDERED. 14 Dissatisfied over the decision of the Labor Arbiter which struck private respondents as grossly contrary to the evidence presented, the herein private respondents once again appealed to the NLRC. And, as earlier stated, the NLRC rendered the challenged decision 15 on November 12, 1993, vacating the decision of the Labor Arbiter and entering a new one dismissing the petitioners' complaint. Hence, this petition wherein the main issue to be resolved is whether NLRC committed grave abuse of discretion in finding that petitioners were validly dismissed on the ground of loss of trust and confidence. At the outset, the Court notes petitioners inexcusable failure to move for the reconsideration of respondent NLRC's decision. Thus, the present petition suffers from a procedural defect that warrants its outright dismissal. While in some exceptional cases we allowed the immediate recourse to this Court, we find nothing herein that could warrant an exceptional treatment to this petition which will justify the omission. This premature action of petitioners constitutes a fatal infirmity as ruled in a long line of decisions, 16 most recently in the case of Building Care Corporation vs. National Labor Relations Commission, et al.: 17 The filing of such a motion is intended to afford public respondent an opportunity to correct any actual or fancied error attributed to it by way of a re-examination of the legal and factual aspects of the case. Petitioner's inaction or negligence under the circumstances is tantamount to a deprivation of the right and opportunity of the respondent Commission to cleanse itself of an error unwittingly committed or to vindicate itself of an act unfairly imputed. . . . . . . And for failure to avail of the correct remedy expressly provided by law, petitioner has permitted the subject Resolution to become final and executory after the lapse of the ten day period within which to file such motion for reconsideration. Likewise, a motion for reconsideration is an adequate remedy; hence certiorari proceedings, as in this case, will not prosper. 18 Rule 65, Section 1 of the Rules of Civil Procedure, as amended, clearly provides that: When any tribunal, board or officer exercising judicial or quasi-judicial functions has acted without or in excess of its or his jurisdiction, or with grave abuse of discretion

amounting to lack or excess of jurisdiction, and there is no appeal, or any plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment be rendered annulling or modifying the proceedings of such tribunal, board or officer, . . . The unquestioned rule in this jurisdiction is that certiorari will lie only if there is no appeal or any other plain, speedy and adequate remedy in the ordinary course of law against the acts of respondent. 19 In the case at bench, the plain and adequate remedy referred to in Rule 65, Section 1, is a motion for reconsideration of the challenged decision and the resolution thereof, which was expected to provide an adequate and a more speedy remedy than the present petition for certiorari. Petitioners asseverate that respondent NLRC committed a grave abuse of discretion when it reversed the findings of facts of the Labor Arbiter. We find said submissions untenable. In asserting that there was grave abuse of discretion, petitioners advert to alleged variances in the factual findings of the Labor Arbiter and the respondent NLRC. This is inept and erroneous. Firstly, errors of judgment, as distinguished from errors of jurisdiction, are not within the province of a special civil action for certiorari. 20Secondly, a careful reading of the records of this case would readily show that if there is any error by public respondent in its analysis of the facts and its evaluation of the evidence, it is not of such a degree as may be stigmatized as a grave abuse of discretion. Grave abuse of discretion is committed when the judgment is rendered in a capricious, whimsical, arbitrary or despotic manner. An abuse of discretion does not necessarily follow just because there is a reversal by the NLRC of the decision of the Labor Arbiter. Neither does the mere variance in the evidentiary assessment of the NLRC and that of the Labor Arbiter would, as a matter of course, so warrant another full review of the facts. The NLRC's decision, so long as it is not bereft of support from the records, deserves respect from the Court. 21 We must once more reiterate our much repeated but not well-heeded rule that the special civil action for certiorariis a remedy designed for the correction of errors of jurisdiction and not errors of judgment. The rationale for this rule is simple. When a court exercises its jurisdiction an error committed while so engaged does not deprive it of the jurisdiction being exercised when the error is committed. If it did, every error committed by a court would deprive it of its jurisdiction and every erroneous judgment would be a void judgment. This cannot be allowed. The administration of justice would not countenance such a rule. Consequently, an error of judgment that the court may commit in the exercise of its jurisdiction is not correctible through the original special civil action of certiorari.22 On the merits, we find and so hold that substantial evidence exists to warrant the finding that petitioners were validly dismissed for just cause and after observance of due process. Under the Labor Code, as amended, the requirements for the lawful dismissal of an employee by his employer are two-fold: the substantive and the procedural. Not only must the dismissal be for a valid or authorized cause as provided by law (Articles 282, 283 and 284, of the Labor Code, as amended), but the rudimentary requirements of due process, basic of which are the opportunity to be heard and to defend himself, must be observed before an employee may be dismissed. 23 With respect to the first requisite, Article 282 of the Labor Code, as amended, provides: Art. 282. Termination by Employer. — An employer may terminate an employment for any of the followings causes:

(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his 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 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. (Emphasis supplied). In the instant case, we find no difficulty in agreeing with the findings of the public respondent that the herein petitioners were guilty of acts of dishonesty by incurring several occurrences of shortages in the amounts of P15,353.78, P1,000.00, P450.00 and P70.00 which they failed to turnover and account for/and in behalf of respondent Isetann. Fittingly, the findings of the NLRC are worth stressing at this point, to wit: With regard to the several occurrences of shortages of the amounts of P15,353.78, P1,000.00 and P70.00, the Labor Arbiter has failed to consider the fact that complainants-appellees were accorded the chance to explain their side as to the shortages and that they have utterly failed to do so providing basis for their valid dismissal. This fact has been established by the respondents-appellants in the findings of the Committee on Discipline on Exhibits "3", 3-A" to "3-D", as follows: a) On the Shortage of P15,353.78: The 3 respondents, Lutgarda Inducta, Cristy Amortizado and Corazon Jamer denied any involvement in the loss of P15,353.78. Although the money is under their responsibility, not one of them gave any explanation about the shortage or loss. b) On the amount of P1,000.00 borrowed by Inducta from Jamer: On July 18, 1990, Lutgarda Inducta borrowed money from respondents (sic) Jamer amounting to P1,000.00 to cover her shortage. Ms. Jamer said that Ms. Inducta paid the amount on that day. But Ms. Jamer did not report the shortage. c) On the Underdeposit of Cash = P450.00. The computation of Ms. Amortizado's sales collections last July 14, 1990 resulted to an overage of P350.00. Amortizado turned over the amount of P350.00, to cover up a shortage incurred by her and Mrs. Inducta.

Jamer used the money given to her by Amortizado (P350.00), and borrowed (P150.00) from the change fund to cover the total shortage amounting to P500.00 which she had then. Jamer cannot trace how the shortage came about. Inducta and Jamer shouldered the total shortage amounting to P500.00, P330.00 for Jamer and P200.00 for Inducta. Jamer claimed that she returned the P350.00 in the box. However, the claim of respondent was further verified from the payroll section which revealed that a value slipwas issued last July 1990. Jamer and Inducta were charged for P200.00 each. A value slip was issued last August 10, 1990 charging P100.00 to Amortizado. Jamer admitted that she failed to inform the Audit Staff regarding the 350.00 overage which she received from Amortizado. A(s) per report of Ms. Agnes Gonzales dated 26 July 1990, there was a total under deposit of cash amounting to P450.00. Total cash admitted P65,428.05 (cash in drawer) Total cash remitted 64,978.05 (per tally sheet) ————— Overage P450.00 d) On the P70.00 Over Replenishment of Petty Cash Expenses: During the 3rd Administrative hearing, the Committee informed Mrs. Amortizado regarding the over replenishment of petty cash expenses as revealed by the Finance Manager last August 10, 1990. Mrs. Amortizado readily admitted and explained that she forgot to inform Mrs. Inducta regarding the P70.00. She admitted her failure to correct the amount from P100.00 to P30.00 (total expenses spent for the taxi fair). She added the she previously incurred a shortage amounting to P100.00. Then she used the P70.00 to cover for the shortage. The remaining balance of P30.00 was paid by Amortizado. Amortizado informed the Committee that she is willing to refund the P70.00 shortage. (Emphasis supplied). 24 From the foregoing premises, it is crystal clear that the failure of petitioners to report the aforequoted shortages and overages to management as soon as they arose resulted in the breach of the fiduciary trust reposed in them by respondent company, thereby causing the latter to lose confidence in them. This warrants their dismissal. Moreover, it must be pointed out that herein petitioners have in fact admitted the underpayment of P450.00 not only in their "Sinumpaang Salaysay" but also during the hearing conducted before Labor Arbiter Pablo C. Espirutu. 25 And, the record shows that the petitioners in fact made a last ditch effort to conceal the same. Were it not for its timely discovery

by private respondents' trusted employees, the incident could not have been discovered at all. Furthermore, it is worth stressing at this juncture that the petitioners have also expressly admitted the shortage of P15,353.78 — a substantial amount — in their respective sworn statements, and they were not able to satisfactorily explain such shortage. 26 The Court is convinced that these particular acts or omissions provided Isetann with enough basis to forfeit its trust and confidence over herein petitioners. The NLRC, therefore, did not act with grave abuse of discretion in declaring that petitioners were legally dismissed from employment. The failure of petitioners to report to management the aforementioned irregularities constitute "fraud or willful breach of the trust reposed in them by their employer or duly authorized representative" — one of the just causes in terminating employment as provided for by paragraph (c), Article 282 of the Labor Code, as amended. In other words, petitioners' admissions in their sworn statements, together with the other documentary evidences on record, constituted breach of trust on their part which justifies their dismissal. Private respondents Isetann Department Store and Mr. John Go cannot be compelled to retain employees who are clearly guilty of malfeasance as their continued employment will be prejudicial to the formers' best interest. 27 The law, in protecting the rights of the employees, authorizes neither oppression nor self-destruction of the employer. 28 The cause of social justice is not served by upholding the interest of petitioners in disregard of the right of private respondents. Social justice ceases to be an effective instrument for the "equalization of the social and economic forces" by the State when it is used to shield wrongdoing. 29 While it is true that compassion and human consideration should guide the disposition of cases involving termination of employment since it affects one's source or means of livelihood, it should not be overlooked that the benefits accorded to labor do not include compelling an employer to retain the services of an employee who has been shown to be a gross liability to the employer. It should be made clear that when the law tilts the scale of justice in favor of labor, it is but a recognition of the inherent economic inequality between labor and management. The intent is to balance the scale of justice; to put the two parties on relatively equal positions. There may be cases where the circumstances warrant favoring labor over the interests of management but never should the scale be so tilted if the result is an injustice to the employer, Justicia remini regarda est (Justice is to be denied to none). 30 Thus, this Court has held time and again, in a number of decisions, 31 that: Loss of confidence is a valid ground for dismissing an employee and proof beyond reasonable doubt of the employee's misconduct is not required to dismiss him on this charge. It is sufficient if there is "some basis" for such loss of confidence or if the employer has reasonable ground to believe or to entertain the moral conviction that the employee concerned is responsible for the misconduct and that the nature of his participation therein rendered him absolutely unworthy of the trust and confidence demanded by his position. 32 Parenthetically, the fact that petitioners Jamer and Amortizado had worked for respondent company for fourteen (14) and thirteen (13) years, respectively, should be taken against them. The infractions that they committed, notwithstanding their long years of service with the company, reflects a regrettable lack of loyalty — loyalty that they should have strengthened instead of betrayed. If the petitioners' length of service is to be regarded as a justifying circumstance in moderating the dismissal, it will actually become a prize for disloyalty, perverting the meaning of social justice and undermining the efforts of labor to cleanse its ranks of all undesirables. 33

Petitioners also maintain that the NLRC acted with grave abuse of discretion when it failed to consider the fact that, other than petitioners themselves, there were four (4) other persons who had access to the company vaults, and hence, could have been responsible for the aforesaid cash shortages imputed to them. They aver therefore, that there was a serious flaw and laxity in the supervision and handling of company funds by respondent Isetann.34 We also find this contention devoid of merit. First, it must be pointed out that the petitioners' remark that there was laxity in the accounting procedures of the company is a matter addressed to the respondent employer. However, this does not excuse dishonesty of employees and should not in any case hamper the right of the employer to terminate the employment of petitioners on the ground of loss of confidence or breach of trust. Precisely, the accounting procedure which called for improvements was based primarily on trust and confidence. 35 Secondly, it must be noted that the herein petitioners were store cashiers and as such, a special and unique employment relationship exists between them and the respondent company. More than most key positions, that of cashier calls for the utmost trust and confidence because their primary function involves basically the handling of a highly essential property of the respondent employer — the sales and revenues of the store. Employers are consequently given wider latitude of discretion in terminating the employment of managerial employees or other personnel occupying positions of responsibility, such as in the instant case, than in the case of ordinary rank-and-file employees, whose termination on the basis of these same grounds requires proof of involvement in the malfeasance in question. Mere uncorroborated assertions and accusations by the employer will not suffice. 36 In that respect, we quote with approval the observations of the NLRC: To expound further, for the position of a cashier, the honesty and integrity of the persons assuming said position are the primary considerations for the nature of her work requires that her actuation's should be beyond suspicion as they are accorded the responsibility of handling money and whatever they would do to such property of the employer largely depend on their trustworthiness. Hence, the right of the employer to dismiss a cashier guilty of breach of trust and confidence should be recognized. In a case decided by the Supreme Court it has been ruled that: Honesty and integrity are the primary considerations in petitioner's position. The nature of his work requires that the actuations should be beyond suspicion. Our empathy with the cause of labor should not blind us to the rights of management. As we have held, this Court should help stamp out, rather than tolerate, the commission of irregular acts whenever these are noted. Malpractices should not be allowed to continue but should be rebuked. (Del Carmen vs. NLRC, 203 SCRA 245) 37 Finally, we are convinced that the NLRC did not commit grave abuse of discretion in evaluating the evidence. Petitioners merely denied the charges against them. Denials are weak forms of defenses, particularly when they are not substantiated by clear and convincing evidence. 38 The petitioners' failure to satisfactorily explain the cash shortages, for which sums they are responsible, given their respective positions in respondent company, is enough reason to warrant their dismissal on the ground of loss of confidence. They cannot place the burden on somebody else given the factual circumstances of this case. As succinctly put by the NLRC:

That there were other persons who had access to the vaults of the appellant company implying that these other persons could have been responsible for the loss of the P15,353.78 is of no moment inasmuch as the appellees were the ones who took first custody of the possession of said collections. As store cashiers, it is expected of them to exercise ordinary prudence to count the collection and record the same in the tally sheet before depositing to said vault to avoid a slightest suspicion of having pocketed part of it should a shortage arise. They did not exert efforts to exercise such prudence demanded of their positions hence, appellants should not be blamed when they were called for an investigation when said shortage was discovered. xxx xxx xxx That the occurrence of shortages is merely an isolated one and therefore should not be taken against the complainant-appellees as a ground for loss of trust and confidence that would cause their termination cannot be given any credence. The shortages having been established and admitted has provided the employer sufficient basis for loss of confidence and whether such occurrence is merely an isolated one or has been repeatedly committed is no longer material. The bone of contention here is whether there is "some basis" for such loss of trust and confidence and if the employer has reasonable ground to believe or to entertain the moral conviction that the employee concerned is responsible for the misconduct which in the instant case has been established. 39 We reiterate the rule that in cases of dismissal for breach of trust and confidence, proof beyond doubt of the employees' misconduct is not required. It is sufficient that the employer had reasonable ground to believe that the employees are responsible for the misconduct which renders him unworthy of the trust and confidence demanded by their position. 40 In the case at hand, it cannot be doubted that respondents succeeded in discharging its burden of proof. As regards to the second requisite, the law requires that the employer must furnish the worker sought to be dismissed with two (2) written notices before termination may be validly effected: first, a notice apprising the employee of the particular acts or omission for which his dismissal is sought and, second, a subsequent notice informing the employee of the decision to dismiss him. 41 In accordance with this requirement, petitioners were given the required notices, on August 2, 1990 and then on August 23, 1990. The Court finds that petitioners were accorded due process before they were dismissed on August 31, 1990. It is a well-established rule that the essence of due process is simply an opportunity to be heard, or as applied to administrative proceedings, an opportunity to explain one's side or an opportunity to seek a reconsideration of the action or ruling complained of. 42 It is evident from the records, that herein petitioners were given all the opportunities to defend themselves and air their side before the Committee on Discipline, having been notified by respondent Isetann's Human Resources Division Manager, Teresita A. Villanueva, on August 2, 1990 through letters individually sent to them. However, when the petitioners were confronted with reports of the anomalies, they offered no explanation or theory which could account for money lost in their possession. Hence, the company had no other alternative but to terminate their employment. As we elucidated in the case of Philippine Savings Bank vs. National Labor Relations Commission, 43 to wit: . . . the requirement of due process is satisfied when a fair and reasonable opportunity to explain his side of the controversy is afforded the party. A formal or

trial-type hearing is not at all times and in all circumstances essential, especially when the employee chooses not to speak. WHEREFORE, the assailed decision of the National Labor Relations Commission in NLRC NCR CA 002074-91 is hereby AFFIRMED. The petition is DISMISSED for lack of merit. G.R. No. 126703 December 29, 1998 GANDARA MILL SUPPLY and MILAGROS SY, petitioner, vs. THE NATIONAL LABOR RELATIONS COMMISSION AND SILVESTRE GERMANO, respondents.

PURISIMA, J.: At bar is a special civil action for Certiorari under Rule 65 of the Revised Rules of Court, assailing the Resolution 1 of the National Labor Relations Commission 2 (NLRC) promulgated on May 22, 1996, and NLRC Resolution 3 dated July 23, 1996, denying petitioner's motion for reconsideration in NLRC NCR 00-02-1653-94. From the records on hand, it appears that. Milagros Sy, owner of Gandara Mill Supply, at No. 708 Gandara St. Binondo, Manila, was the respondent in NLRC Case No. 02-01653-94 instituted by Silvestre Germano (now the private respondent). On February 6, 1995, the private respondent, without notifying his employer, Milagros Sy, did not report for work until February 11, 1995. Like any expectant father, he chose to be near his wife who was then about to deliver. The wife gave birth on February 12, 1995. Upon private respondent's request, Milagros Sy extended some financial assistance to the Germano couple. The petition avers inter alia that Gandara Mill Supply is a small business enterprise with only two (2) employees, including the herein private respondent, to do manual work. With inadequate manpower, the absence of just one worker can spell untold difficulties in its operations. Matters became even worse when private respondent, without informing his employer, was absent for a long time, so much so that the former incurred the ire of the latter. Two (2) weeks after, private respondent returned to duty, and to his surprise, he was met by his employer to personally tell him that someone had been hired to take his place. He was advised, however, that he was to be re-admitted in June 1996. On February 27, 1995, a case of illegal dismissal was commenced by the private respondent with the Department of Labor and Employment. To buy peace, petitioner offered P5,000.00 but to no avail. The offer was flatly rejected by private respondent. When conciliation efforts proved futile, the Labor Arbiter directed the parties to submit their position papers on or before April 28, 1995, which deadline was extended to May 5, 1995. In his Order of May 9, 1995, Labor Arbiter Facundo L. Leda gave petitioner a "last opportunity to file/submit their (sic) Position Paper within seven (7) days from receipt hereof otherwise their (sic) right to be heard are (sic) deemed waived and this case will be decided on the basis of the documents on file." 4

Despite receipt of the aforesaid Order, however, petitioner still failed to comply therewith, prompting the Labor Arbiter to hand down a decision on January 29, 1996, disposing, thus: WHEREFORE, decision is hereby rendered ordering respondent/s Gandara Mill Supply and/or Milagros Sy to complainant Silvestre Germano the sum of SIXTY FIVE THOUSAND SIX HUNDRED EIGHTY FIVE PESOS AND 90/00 (P65,685.90) representing separation pay, backwages, SLIP and attorney's fee as discussed and computed abore. On March 4, 1996, petitioner appealed said decision to the NLRC. To the appeal, an Opposition was interposed on March 15, 1996. On May 22, 1996, the NLRC dismissed petitioner's appeal for failure to post a cash or surety bond. The appeal was predicated on the submission that petitioner's business is small, on which invoked ground petitioner sought exemption from posting a bond. Should its prayer for exemption of a bond be denied, petitioner asked for at least twenty (20) days to put up such bond. The petition attacks the July 23, 1996 Resolution of public respondent, affirming the decision of the Labor Arbiter dated January 29, 1996. On August 14, 1996, a Motion for Execution was presented by private respondent. NLRC entered its judgment on August 26, 1996. On September 6, 1996, private respondent sent in an Ex-parte Motion for Execution, which was granted. The corresponding Writ of Execution issued on September 13, 1996. The issues posited for resolution: FIRST, did the public respondent act with grave abuse of discretion in dismissing petitioner's appeal and in not giving petitioner a chance to prove that the private respondent was not illegally dismissed but was merely suspended for abandoning his job?: and SECOND, did the public respondent act with grave abuse of discretion in awarding to the private respondent the amount of SIXTY-FIVE THOUSAND SIX HUNDRED EIGHTY-FIVE AND 90/00 (P65,685.90), which amount petitioner assails as excessive? To be sure, the petitioner was afforded a chance to show that the private respondent was not illegally dismissed. Unfortunately, petitioner failed to discharge its burden of proof. In a long line of cases, the Court has consistently ruled that, findings of fact by quasijudicial agencies like the NLRC are conclusive upon the court in the absence of proof of grave error in the appreciation of facts. Petitioner's bare allegation that it was denied the right to be heard is negated by the Labor Arbiter's extension of much leniency to petitioner by allowing the latter to submit a position paper on April 28, 1995, then on May 5, 1995, and finally, seven (7) days from receipt of the Order dated May 9, 1995. Generally, reglementary periods are strictly observed to the end that orderly administration of justice be safeguarded. In the case under consideration, the public respondent had been quite liberal in observing and enforcing the rules. Consequently, petitioner's protestation of denial of opportunity to be heard is barren of any factual basis. The principle of laches finds a wide room for application here.Laches, in a general sense, is failure or neglect for an unreasonable length of time to do that which by exercising due diligence could or should have been done earlier; it is negligence or omission to assert a right within a reasonable time warranting a presumption that the party entitled to assert it has either abandoned or declined to raise it. The

doctrine of laches or "stale demands" is based upon grounds of public policy which require for the peace of society, discouragement of stale claims. And unlike the statute of limitations, it is not a mere question of time but is principally a question of inequity or unfairness or permitting a right or claim to be enforced or asserted. (Tijam v. Sibonghanoy, 23 SCRA 29). So also, in the Order, dated May 9, 1995, respondent Commission declared in clear and unequivocal terms that "failure to file a position paper is deemed a waiver of the right to be heard and that decisions will be based on the position paper submitted." Evidently, for making good his said Order, the Labor Arbiter cannot be faulted for acting arbitrarily. Neither can grave error be ascribed to respondent NLRC for handing down its decision without petitioner's Position Paper. By its inaction, petitioner was properly considered to have waived or forfeited the right to refute private respondent's stance. Indeed, petitioner cannot now be permitted to belatedly complain of a denial of due process. That petitioner was not represented by a lawyer in all the aforesaid proceedings was solely attributable to its own negligence or inattention to the case. While the court has held that representation by a lawyer is a fundamental right of litigants, petitioner has nobody to blame but itself for its failure to secure the services of counsel resulting to the dismissal of its case. In the case under scrutiny, petitioner was represented by a non-lawyer, Ramon Flores, who was present from the beginning of the case but failed to efficiently follow-up the case until the promulgation of judgment. While the right to due process is available to all the parties, it does not countenance selfserving excuses devised to undermine orderly administration of justice. After a careful study, and a thorough examination of the pleadings and supporting documents, it appears decisively clear that private respondent Silvestre Germane was illegally dismissed. While a prolonged absence without leave may constitute as a just cause of dismissal, its illegality stems from the non-observance of due process. Applying the WenPhil Doctrine by analogy, where dismissal was not preceded by the twin requirement of notice and hearing, the legality of the dismissal in question, is under heavy clouds and therefore illegal. While it cannot be deduced unerringly from the records on hand that private respondent was really dismissed, there is no clear indication that the latter was to be reinstated. In fact, since the inception of the case, what petitioner merely endeavored was to compromise for a measly sum of P5,000.00, and no mention of taking respondent back to his job was ever offered as part of the deal to end the controversy. What can be surmised from petitioners's offer to re-admit the private respondent, was nothing but a polite gesture couched in words intended to make the impact of his so-called suspension less severe. Invoking the plight of a working man, where "no work, no pay" is the rule of thumb, the court cannot sanction an over extended suspension. The Labor Code explicitly provides, that: No preventive suspension shall last longer than thirty (30) days. The employer shall thereafter reinstate the worker to his former or substantially equivalent position or the employer may extend the period of suspension provided that during the period of extension, he pays the wages and other benefits due to the worker. In such case, the worker shall not be bound to reimburse the amount paid to him during the extension if the employer decides after completion of the hearing to dismiss the worker. 5 In this case, the supposed suspension was expected to last for more than the period allowed by law, thus making the suspension constitutive of an illegal dismissal. Therefore, the Labor Arbiter's contention is upheld by the Court. Granting arguendo that private respondent's absence engendered undue difficulty to the smooth operations of petitioner's business, considering the predicament of respondent Silvestre Germane, his dismissal is unwarranted. In holding the constitutional mandate of protection to labor, the rigid

rules of procedure may sometimes be dispensed with to give room for compassion. The doctrine of "compassionate justice" is applicable under the premises, private respondent being the breadwinner of his family. "The Social Justice policy mandates a compassionate attitude toward the working class in its relation to management. In calling for the protection to labor, the Constitution does not condone wrongdoing by the employee, it nevertheless urges a moderation of the sanctions that may be applied to him in the light of the many disadvantages that weigh heavily on him like an albatross on his neck. 6 The timeliness of petitioner's appeal is an issue which this court endeavors to pass upon. While the rule governing the instant Petition does not fix a period within which to file an appeal, "the yardstick to measure the seasonableness of a Petition for Certiorari is the reasonableness of the duration of time that expired from the commission of the act complained of, to the institution of the proceedings to annul the same. 7 The court had the occasion to hold that where no law can be applied, resort to the fundamental law can be had. The Constitution provides that: All persons shall have the right to a speedy disposition of their cases before all judicial,guasi-judicial and administrative bodies. 8 Taking into account the interval of time that elapsed from the receipt of the assailed Resolution by petitioner, to the time the court received the present petition, an interregnum of almost three (3) months, the irresistible conclusion is that the Petition was not filed on time. All things studiedly considered, we are of the view that public respondent NLRC did not act with grave abuse of discretion in awarding to private respondent the amount of P65,685.90 which is not at all excessive under the facts and circumstances of the case. Time and again, the court held that factual findings by the Labor Arbiter are to treated as final absent any showing that he erred in his evaluation. The familiarity with the parties, circumstances and opportunity to observe their demeanor is something the court did not have the privilege to witness. Untenable is petitioner's contention that the said amount awarded, representing backwages, separation pay and attorney's fee is excessive and tantamount to a deprivation of petitioner's property without due process of law. Once a finding of illegal dismissal is established, an award of separation pay and backwages is in order and binding upon the court, unless the contrary is proved. The court shares the Labor Arbiter's observation and ratiocination that the amount of the questioned award is not excessive in light of prevailing economic conditions. WHEREFORE, the Petition for Certiorari under consideration is hereby DISMISSED on the grounds, that: (1) It was filed out of time; (2) It is devoid of merit; and (3) it was interposed for purposes of delay. Accordingly, the NLRC Resolution of July 23, 1996 is AFFIRMED in toto; the writ of execution issued on September 13, 1996 upheld; and petitioner's prayer for a restraining order DENIED. No pronouncement as to costs. SO ORDERED.

G.R. No. 175678, August 22, 2012 BANK OF THE PHILIPPINE ISLANDS, PETITIONER, VS. BANK OF THE PHILIPPINE ISLANDS EMPLOYEES UNION- METRO MANILA, 22 AUGUST 2012 RESPONDENT. DECISION PERALTA, J.: For resolution of this Court is the Petition for Review under Rule 45 of the Revised Rules of Court, dated January 20, 2007, of petitioner Bank of the Philippine Islands (BPI) which seeks to reverse and set aside the Court of Appeals' (CA) Decision[1] and Resolution,[2] dated June 8, 2006 and November 29, 2006, respectively, in CA-G.R. SP No. 83387. The antecedent facts follow. Respondent Bank of the Philippine Islands Employees Union-Metro Manila (BPIEU-MM), a legitimate labor organization and the sole and exclusive bargaining representative of all the regular rank-and-file employees of petitioner BPI in Metro Manila and petitioner BPI have an existing Collective Bargaining Agreement (CBA)[3] which took effect on April 1, 2001. The CBA provides for loan benefits and relatively low interest rates. The said provisions state: Article VIII - Fringe Benefits xxxx Section 14. Multi-Purpose Loan, Real Estate Secured Housing Loan and Car Loan. - The Bank agrees to continue and maintain its present policy and practice, embodied in its Collective Bargaining Agreement with the Union which expired on 31 March 2001, extending to qualified regular employees the multi-purpose and real estate secured housing loans, subject to the increased limits and provisions hereinbelow, to wit: (a) Multi-Purpose Loan not exceeding FORTY THOUSAND PESOS (P40,000.00), payable within the period not exceeding three (3) years via semi-monthly salary deductions, with interest at the rate of eight percent (8%) per annum computed on the diminishing balance. (b) Real Estate-Secured Housing Loan not exceeding FOUR HUNDRED FIFTY THOUSAND " PESOS (P450,000.00), payable over a period not exceeding fifteen (15) years via semi-monthly salary deductions, with interest at the rate of nine percent (9%) per annum computed on the diminishing balance. The rate of interest on real estate secured loans, however, may be reduced to six percent (6%) per annum, subject to the following conditions:

1. If the loan is accepted for coverage by the Home Insurance and Guaranty Corporation (HIGC). 2. The HIGC premium shall be paid by the borrower. 3. The borrower procures a Mortgage Redemption Insurance coverage from an insurance company selected by the BANK. 4. The BANK may increase the six percent (6%) interest if the HIGC or the Government imposes new conditions or restrictions necessitating a higher interest in order to maintain the BANK'S position before such conditions or restrictions were imposed. 5. Such other terms or conditions imposed or which may be imposed by the HIGC. 6. It is distinctly understood that the rate of interest shall automatically revert to nine percent (9%) per annum upon cancellation of the HIGC coverage for any cause. The BANK shall make strong representations with the Bangko Sentral ng Pilipinas for a second upgrade and/or availment under the Housing Loan Program. (c) Car Loan. - The BANK shall submit a revised plan for the approval of the Bangko Sentral ng Pilipinas which shall incorporate a car loan program in its existing Housing Loan Program. The said car loan shall be a sub-limit under the program such that any availment thereof shall operate to decrease the available housing loan limit. Therefore, the combined amount of both housing and car loans that may be availed of shall not exceed FOUR HUNDRED FIFTY THOUSAND PESOS (P450,000.00). This supplemental revision of the loan program shall be subject to the rules and regulations {e.g., amount of sub-limit, credit ratio, type and age of vehicle, interest rate, etc.) which the BANK may promulgate, and to the terms of the approval of the Bangko Sentral ng Pilipinas. The multi-purpose and housing loans stated in the next preceding paragraphs, as well as the car loan which shall be incorporated in the housing loan program, shall be subject further to the applicable provisions, guidelines and restrictions set forth in the Central Bank Circular No. 561, as amended by Central Bank Circular No. 689, and to the rules, regulations and policies of the BANK on such loans insofar as they do not violate the provisions, guidelines and restrictions set forth in said Central Bank Circular No. 561, as amended. Section 15. Emergency Loans. - The BANK agrees to increase the amount of emergency loans assistance, upon approval by the Central Bank of the Philippines, from a maximum amount of Ten Thousand Pesos (PI 0,000.00) to a maximum amount of Fifteen Thousand Pesos (P15,000.00) to qualified employees intended to cover emergencies only, i.e., expenses incurred but could not be foreseen such as those arising from natural calamities, emergency medical treatment and/or hospitalization of an employee and/or his immediate family and other genuine emergency cases of serious hardship as the BANK may determine. Hospital expenses for caesarian delivery of a female employee or an employee's wife not covered by the Group Hospitalization Insurance Plan shall qualify for the emergency loan.

Emergency loans shall be playable in twenty-four (24) months via semi-monthly salary deductions and shall be charged interest at the minimal rate of Seven percent (7%) per annum for the first P10,000.00 and Nine percent (9%) for the additional P5.000.00 computed on the diminishing balance. The emergency loan assistance program shall be governed by the rules, regulations and policies of the BANK and such amendments or modifications thereof which the BANK may issue from time to time.[4] Thereafter, petitioner issued a "no negative data bank policy"[5] for the implementation/availment of the manpower loans which the respondent objected to, thus, resulting into labor-management dialogues. Unsatisfied with the result of those dialogues, respondent brought the matter to the grievance machinery and afterwards, the issue, not having been resolved, the parties raised it to the Voluntary Arbitrator. In his decision, the Voluntary Arbitrator found merit in the respondent's cause. Hence, the dispositive portion of the said decision reads as follows: WHEREFORE, viewed in the light of the foregoing circumstances, this Arbitrator hereby rules: 1. That the imposition of the NO NEGATIVE DATA BANK as a new condition for the implementation and availment of the manpower loan benefits by the employees evidently violates the CBA; 2. That all employees who were not allowed or deprived of the manpower loan benefits due to the NO NEGATIVE DATA BANK POLICY be immediately granted in accordance with their respective loan benefits applied for; 3. That the respondent herein is ordered likewise to pay ten percent (10%) of the total amount of all loans to be granted to all employees concerned as Attorney's Fees; and 4. That the parties herein are directed to report compliance with the above directives within ten (10) days from receipt of this ORDER. SO ORDERED.[6] Aggrieved, petitioner appealed the case to the CA via Rule 43, but the latter affirmed the decision of the Voluntary Arbitrator with the modification that the award of attorney's fees be deleted. The dispositive portion states: WHEREFORE, premises considered, the Voluntary Arbitrator's Decision dated April 5, 2004 is hereby AFFIRMED with the MODIFICATION that the award of attorney's fees is hereby deleted. SO ORDERED.[7] Petitioner filed a motion for reconsideration, but it was denied in a Resolution[8] dated November 29, 2006. Hence, the present petition.

Petitioner raises the following arguments: A. The "No NDB policy" is a valid and reasonable requirement that is consistent with sound banking practice and is meant to inculcate among officers and employees of the petitioner the need for fiscal responsibility and discipline, especially in an industry where the element of trust is paramount. B. The "No NDB policy" does not violate the parties' Collective Bargaining Agreement. C. The "No NDB policy" conforms to existing BSP regulations and circulars, and to safe and sound banking practices.[9] Respondent, on the other hand, claims that the petition did not comply with Section 4, Rule 45 of the Revised Rules of Court and must be dismissed outright in accordance with Section 5 of the same rule; that the CA did not commit any reversible error in the questioned judgment to warrant the exercise of its discretionary appellate jurisdiction; and that the Voluntary Arbitrator and the CA duly passed upon the same issues raised in the instant petition and their decisions are based on substantial evidence and are in accordance with law and jurisprudence.[10] Tn its Reply[11] dated September 21, 2007, petitioner reiterates the issues it presented in its petition. It also argues that the present petition must not be dismissed based on mere technicality. Subsequently, the parties submitted their respective memoranda. Petitioner's arguments are mere rehash of those it raised in the CA. It insists that the rationale behind the use of the "no negative data bank policy" aims to encourage employees of a banking institution to exercise the highest standards of conduct, considering the bank's fiduciary relationship with its depositors and clients. It likewise contends that a scrutiny of the CBA reveals an express conformity to petitioner's prerogative to issue policies that would guide the parties in the availment of manpower loans under the CBA. Furthermore, petitioner avers that the subject policy does not only conform to the provisions of the parties' CBA, but it is also in harmony with the circulars and regulations of the Bangko Sentral ng Pilipinas. The petition lacks merit. In a petition for review on certiorari, this Court's jurisdiction is limited to reviewing errors of law in the absence of any showing that the factual findings complained of are devoid of support in the records or are glaringly erroneous.[13] Firm is the doctrine that this Court is not a trier of facts, and this applies with greater force in labor cases.[14] The issues presented by the petitioner are factual in nature. Nevertheless, the CA committed no error in its questioned decision and resolution. A CBA refers to the negotiated contract between a legitimate labor organization and the employer concerning wages, hours of work and all other terms and conditions of employment in a bargaining unit, including mandatory

provisions for grievances and arbitration machineries.[15] As in all other contracts, there must be clear indications that the parties reached a meeting of the minds.[16] Therefore, the terms and conditions of a CBA constitute the law between the parties.[17] The CBA in this case contains no provision on the "no negative data bank policy" as a prerequisite in the entitlement of the benefits it set forth for the employees. In fact, a close reading of the CBA would show that the terms and conditions contained therein relative to the availment of the loans are plain and clear, thus, all they need is the proper implementation in order to reach their objective. The CA was, therefore, correct when it ruled that, although it can be said that petitioner is authorized to issue rules and regulations pertinent to the availment and administration of the loans under the CBA, the additional rules and regulations, however, must not impose new conditions which are not contemplated in the CBA and should be within the realm of reasonableness. The "no negative data bank policy" is a new condition which is never contemplated in the CBA and at some points, unreasonable to the employees because it provides that before an employee or his/her spouse can avail of the loan benefits under the CBA, the said employee or his/her spouse must not be listed in the negative data bank, or if previously listed therein, must obtain a clearance at least one year or six months as the case may be, prior to a loan application. It must be remembered that negotiations between an employer and a union transpire before they agree on the terms and conditions contained in the CBA. If the petitioner, indeed, intended to include a "no negative data bank policy" in the CBA, it should have presented such proposal to the union during the negotiations. To include such policy after the effectivity of the CBA is deceptive and goes beyond the original agreement between the contracting parties. This Court also notes petitioner's argument that the "no negative data bank policy" is intended to exact a high standard of conduct from its employees. However, the terms and conditions of the CBA must prevail. Petitioner can propose the inclusion of the said policy upon the expiration of the CBA, during the negotiations for a new CBA, but in the meantime, it has to honor the provisions of the existing CBA. Article 1702 of the New Civil Code provides that, in case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent living of the laborer. Thus, this Court has ruled that any doubt or ambiguity in the contract between management and the union members should be resolved in favor of the latter.[18] Therefore, there is no doubt, in this case, that the welfare of the laborers stands supreme. WHEREFORE, the Petition for Review under Rule 45 of the Revised Rules of Court, dated January 20, 2007, of petitioner Bank of the Philippine Islands, is hereby DENIED and the Court of Appeals' Decision and Resolution, dated June 8, 2006 and November 29, 2006, respectively, are hereby AFFIRMED. SO ORDERED.

G.R. No. 80609 August 23, 1988 PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, petitioner, vs. THE NATIONAL LABOR RELATIONS COMMISSION and MARILYN ABUCAY, respondents. Nicanor G. Nuevas for petitioner.

CRUZ, J.: The only issue presented in the case at bar is the legality of the award of financial assistance to an employee who had been dismissed for cause as found by the public respondent. Marilyn Abucay, a traffic operator of the Philippine Long Distance Telephone Company, was accused by two complainants of having demanded and received from them the total amount of P3,800.00 in consideration of her promise to facilitate approval of their applications for telephone installation. 1 Investigated and heard, she was found guilty as charged and accordingly separated from the service. 2 She went to the Ministry of Labor and Employment claiming she had been illegally removed. After consideration of the evidence and arguments of the parties, the company was sustained and the complaint was dismissed for lack of merit. Nevertheless, the dispositive portion of labor arbiter's decision declared: WHEREFORE, the instant complaint is dismissed for lack of merit. Considering that Dr. Helen Bangayan and Mrs. Consolacion Martinez are not totally blameless in the light of the fact that the deal happened outhide the premises of respondent company and that their act of giving P3,800.00 without any receipt is tantamount to corruption of public officers, complainant must be given one month pay for every year of service as financial assistance. 3 Both the petitioner and the private respondent appealed to the National Labor Relations Board, which upheld the said decision in toto and dismissed the appeals. 4 The private respondent took no further action, thereby impliedly accepting the validity of her dismissal. The petitioner, however, is now before us to question the affirmance of the above- quoted award as having been made with grave abuse of discretion. In its challenged resolution of September 22, 1987, the NLRC said: ... Anent the award of separation pay as financial assistance in complainant's favor, We find the same to be equitable, taking into consideration her long years of service to the company whereby she had undoubtedly contributed to the success of respondent. While we do not in any way approve of complainants (private respondent) mal feasance, for which she is to suffer the penalty of dismissal, it is for reasons of equity and compassion that we resolve to uphold the award of financial assistance in her favor. 5 The position of the petitioner is simply stated: It is conceded that an employee illegally dismissed is entitled to reinstatement and backwages as required by the labor laws. However, an employee dismissed for cause is entitled to neither reinstatement nor backwages and is not allowed any relief

at all because his dismissal is in accordance with law. In the case of the private respondent, she has been awarded financial assistance equivalent to ten months pay corresponding to her 10 year service in the company despite her removal for cause. She is, therefore, in effect rewarded rather than punished for her dishonesty, and without any legal authorization or justification. The award is made on the ground of equity and compassion, which cannot be a substitute for law. Moreover, such award puts a premium on dishonesty and encourages instead of deterring corruption. For its part, the public respondent claims that the employee is sufficiently punished with her dismissal. The grant of financial assistance is not intended as a reward for her offense but merely to help her for the loss of her employment after working faithfully with the company for ten years. In support of this position, the Solicitor General cites the cases of Firestone Tire and Rubber Company of the Philippines v. Lariosa 6 and Soco v. Mercantile Corporation of Davao, 7 where the employees were dismissed for cause but were nevertheless allowed separation pay on grounds of social and compassionate justice. As the Court put it in the Firestone case: In view of the foregoing, We rule that Firestone had valid grounds to dispense with the services of Lariosa and that the NLRC acted with grave abuse of discretion in ordering his reinstatement. However, considering that Lariosa had worked with the company for eleven years with no known previous bad record, the ends of social and compassionate justice would be served if he is paid full separation pay but not reinstatement without backwages by the NLRC. In the said case, the employee was validly dismissed for theft but the NLRC nevertheless awarded him full separation pay for his 11 years of service with the company. In Soco, the employee was also legally separated for unauthorized use of a company vehicle and refusal to attend the grievance proceedings but he was just the same granted one-half month separation pay for every year of his 18-year service. Similar action was taken in Filipro, Inc. v. NLRC, 8 where the employee was validly dismissed for preferring certain dealers in violation of company policy but was allowed separation pay for his 2 years of service. In Metro Drug Corporation v. NLRC, 9 the employee was validly removed for loss of confidence because of her failure to account for certain funds but she was awarded separation pay equivalent to one-half month's salary for every year of her service of 15 years. In Engineering Equipment, Inc. v. NLRC, 10 the dismissal of the employee was justified because he had instigated labor unrest among the workers and had serious differences with them, among other grounds, but he was still granted three months separation pay corresponding to his 3-year service. In New Frontier Mines, Inc. v. NLRC, 11 the employee's 3- year service was held validly terminated for lack of confidence and abandonment of work but he was nonetheless granted three months separation pay. And in San Miguel Corporation v. Deputy Minister of Labor and Employment, et al ., 12 full separation pay for 6, 10, and 16 years service, respectively, was also allowed three employees who had been dismissed after they were found guilty of misappropriating company funds. The rule embodied in the Labor Code is that a person dismissed for cause as defined therein is not entitled to separation pay. 13 The cases above cited constitute the exception, based upon considerations of equity. Equity has been defined as justice outside law, 14 being ethical rather than jural and belonging to the sphere of morals than of law. 15 It is grounded on the precepts of conscience and not on any sanction of positive law. 16 Hence, it cannot prevail against the expressed provision of the labor laws allowing dismissal of employees for cause and without any provision for separation pay. Strictly speaking, however, it is not correct to say that there is no express justification for the grant of separation pay to lawfully dismissed employees other than the abstract consideration of equity. The

reason is that our Constitution is replete with positive commands for the promotion of social justice, and particularly the protection of the rights of the workers. The enhancement of their welfare is one of the primary concerns of the present charter. In fact, instead of confining itself to the general commitment to the cause of labor in Article II on the Declaration of Principles of State Policies, the new Constitution contains a separate article devoted to the promotion of social justice and human rights with a separate sub- topic for labor. Article XIII expressly recognizes the vital role of labor, hand in hand with management, in the advancement of the national economy and the welfare of the people in general. The categorical mandates in the Constitution for the improvement of the lot of the workers are more than sufficient basis to justify the award of separation pay in proper cases even if the dismissal be for cause. The Court notes, however, that where the exception has been applied, the decisions have not been consistent as to the justification for the grant of separation pay and the amount or rate of such award. Thus, the employees dismissed for theft in the Firestone case and for animosities with fellow workers in the Engineering Equipment case were both awarded separation pay notnvithstanding that the first cause was certainly more serious than the second. No less curiously, the employee in the Soco case was allowed only one-half month pay for every year of his 18 years of service, but in Filipro the award was two months separation pay for 2 years service. In Firestone, the emplovee was allowed full separation pay corresponding to his 11 years of service, but in Metro, the employee was granted only one-half month separation pay for every year of her 15year service. It would seem then that length of service is not necessarily a criterion for the grant of separation pay and neither apparently is the reason for the dismissal. The Court feels that distinctions are in order. We note that heretofore the separation pay, when it was considered warranted, was required regardless of the nature or degree of the ground proved, be it mere inefficiency or something graver like immorality or dishonesty. The benediction of compassion was made to cover a multitude of sins, as it were, and to justify the helping hand to the validly dismissed employee whatever the reason for his dismissal. This policy should be reexamined. It is time we rationalized the exception, to make it fair to both labor and management, especially to labor. There should be no question that where it comes to such valid but not iniquitous causes as failure to comply with work standards, the grant of separation pay to the dismissed employee may be both just and compassionate, particularly if he has worked for some time with the company. For example, a subordinate who has irreconcilable policy or personal differences with his employer may be validly dismissed for demonstrated loss of confidence, which is an allowable ground. A working mother who has to be frequently absent because she has also to take care of her child may also be removed because of her poor attendance, this being another authorized ground. It is not the employee's fault if he does not have the necessary aptitude for his work but on the other hand the company cannot be required to maintain him just the same at the expense of the efficiency of its operations. He too may be validly replaced. Under these and similar circumstances, however, the award to the employee of separation pay would be sustainable under the social justice policy even if the separation is for cause. But where the cause of the separation is more serious than mere inefficiency, the generosity of the law must be more discerning. There is no doubt it is compassionate to give separation pay to a salesman if he is dismissed for his inability to fill his quota but surely he does not deserve such generosity if his offense is misappropriation of the receipts of his sales. This is no longer mere incompetence but clear dishonesty. A security guard found sleeping on the job is doubtless subject to dismissal but may be allowed separation pay since his conduct, while inept, is not depraved. But if he was in fact not really sleeping but sleeping with a prostitute during his tour of duty and in the company premises, the situation is changed completely. This is not only inefficiency but immorality and the grant of separation pay would be entirely unjustified.

We hold that henceforth separation pay shall be allowed as a measure of social justice only in those instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character. Where the reason for the valid dismissal is, for example, habitual intoxication or an offense involving moral turpitude, like theft or illicit sexual relations with a fellow worker, the employer may not be required to give the dismissed employee separation pay, or financial assistance, or whatever other name it is called, on the ground of social justice. A contrary rule would, as the petitioner correctly argues, have the effect, of rewarding rather than punishing the erring employee for his offense. And we do not agree that the punishment is his dismissal only and that the separation pay has nothing to do with the wrong he has committed. Of course it has. Indeed, if the employee who steals from the company is granted separation pay even as he is validly dismissed, it is not unlikely that he will commit a similar offense in his next employment because he thinks he can expect a like leniency if he is again found out. This kind of misplaced compassion is not going to do labor in general any good as it will encourage the infiltration of its ranks by those who do not deserve the protection and concern of the Constitution. The policy of social justice is not intended to countenance wrongdoing simply because it is committed by the underprivileged. At best it may mitigate the penalty but it certainly will not condone the offense. Compassion for the poor is an imperative of every humane society but only when the recipient is not a rascal claiming an undeserved privilege. Social justice cannot be permitted to be refuge of scoundrels any more than can equity be an impediment to the punishment of the guilty. Those who invoke social justice may do so only if their hands are clean and their motives blameless and not simply because they happen to be poor. This great policy of our Constitution is not meant for the protection of those who have proved they are not worthy of it, like the workers who have tainted the cause of labor with the blemishes of their own character. Applying the above considerations, we hold that the grant of separation pay in the case at bar is unjustified. The private respondent has been dismissed for dishonesty, as found by the labor arbiter and affirmed by the NLRC and as she herself has impliedly admitted. The fact that she has worked with the PLDT for more than a decade, if it is to be considered at all, should be taken against her as it reflects a regrettable lack of loyalty that she should have strengthened instead of betraying during all of her 10 years of service with the company. If regarded as a justification for moderating the penalty of dismissal, it will actually become a prize for disloyalty, perverting the meaning of social justice and undermining the efforts of labor to cleanse its ranks of all undesirables. The Court also rules that the separation pay, if found due under the circumstances of each case, should be computed at the rate of one month salary for every year of service, assuming the length of such service is deemed material. This is without prejudice to the application of special agreements between the employer and the employee stipulating a higher rate of computation and providing for more benefits to the discharged employee. 17 WHEREFORE, the petition is GRANTED. The challenged resolution of September 22,1987, is AFFIRMED in totoexcept for the grant of separation pay in the form of financial assistance, which is hereby DISALLOWED. The temporary restraining order dated March 23, 1988, is LIFTED. It is so ordered.

CHERRY J. PRICE, STEPHANIE G. DOMINGO AND LOLITA ARBILERA, Petitioners,

G.R. No. 178505 Present:

- versus YNARES-SANTIAGO, J., Chairperson,

INNODATA PHILS. INC.,/ INNODATA CORPORATION, LEO RABANG AND JANE NAVARETTE, Respondents.

AUSTRIA-MARTINEZ, CHICO-NAZARIO, NACHURA, and REYES, JJ. Promulgated: September 30, 2008

x------------------------------------------------x DECISION CHICO-NAZARIO, J.: This Petition for Review on Certiorari under Rule 45 of the Rules of Court assails the Decision1 dated 25 September 2006 and Resolution2 dated 15 June 2007 of the Court of Appeals in CA-G.R. SP No. 72795, which affirmed the Decision dated 14 December 2001 of the National Labor Relations Commission (NLRC) in NLRC NCR Case No. 30-03-01274-2000 finding that petitioners were not illegally dismissed by respondents. The factual antecedents of the case are as follows: Respondent Innodata Philippines, Inc./Innodata Corporation (INNODATA) was a domestic corporation engaged in the data encoding and data conversion business. It employed encoders, indexers, formatters, programmers, quality/quantity staff, and others, to maintain its business and accomplish the job orders of its clients. Respondent Leo Rabang was its Human Resources and Development (HRAD) Manager, while respondent Jane Navarette was its Project Manager. INNODATA had since ceased operations due to business losses in June 2002. Petitioners Cherry J. Price, Stephanie G. Domingo, and Lolita Arbilera were employed as formatters by INNODATA. The parties executed an employment contract denominated as a "Contract of Employment for a Fixed Period," stipulating that the contract shall be for a period of one year,3 to wit: CONTRACT OF EMPLOYMENT FOR A FIXED PERIOD xxxx WITNESSETH: That WHEREAS, the EMPLOYEE has applied for the position of FORMATTER and in the course thereof and represented himself/herself to be fully qualified and skilled for the said position;

WHEREAS, the EMPLOYER, by reason of the aforesaid representations, is desirous of engaging that the (sic) services of the EMPLOYEE for a fixed period; NOW, THEREFORE, for and in consideration of the foregoing premises, the parties have mutually agreed as follows: TERM/DURATION The EMPLOYER hereby employs, engages and hires the EMPLOYEE and the EMPLOYEE hereby accepts such appointment as FORMATTER effective FEB. 16, 1999 to FEB. 16, 2000 a period of ONE YEAR. xxxx TERMINATION 6.1 In the event that EMPLOYER shall discontinue operating its business, this CONTRACT shall also ipso facto terminate on the last day of the month on which the EMPLOYER ceases operations with the same force and effect as is such last day of the month were originally set as the termination date of this Contract. Further should the Company have no more need for the EMPLOYEE’s services on account of completion of the project, lack of work (sic) business losses, introduction of new production processes and techniques, which will negate the need for personnel, and/or overstaffing, this contract maybe pre-terminated by the EMPLOYER upon giving of three (3) days notice to the employee. 6.2 In the event period stipulated in item 1.2 occurs first vis-à-vis the completion of the project, this contract shall automatically terminate. 6.3 COMPANY’s Policy on monthly productivity shall also apply to the EMPLOYEE. 6.4 The EMPLOYEE or the EMPLOYER may pre-terminate this CONTRACT, with or without cause, by giving at least Fifteen – (15) notice to that effect. Provided, that such pre-termination shall be effective only upon issuance of the appropriate clearance in favor of the said EMPLOYEE. 6.5 Either of the parties may terminate this Contract by reason of the breach or violation of the terms and conditions hereof by giving at least Fifteen (15) days written notice. Termination with cause under this paragraph shall be effective without need of judicial action or approval.4 During their employment as formatters, petitioners were assigned to handle jobs for various clients of INNODATA, among which were CAS, Retro, Meridian, Adobe, Netlib, PSM, and Earthweb. Once they finished the job for one client, they were immediately assigned to do a new job for another client. On 16 February 2000, the HRAD Manager of INNODATA wrote petitioners informing them of their last day of work. The letter reads: RE: End of Contract Date: February 16, 2000

Please be informed that your employment ceases effective at the end of the close of business hours on February 16, 2000.5 According to INNODATA, petitioners’ employment already ceased due to the end of their contract. On 22 May 2000, petitioners filed a Complaint6 for illegal dismissal and damages against respondents. Petitioners claimed that they should be considered regular employees since their positions as formatters were necessary and desirable to the usual business of INNODATA as an encoding, conversion and data processing company. Petitioners also averred that the decisions in Villanueva v. National Labor Relations Commission7 and Servidad v. National Labor Relations Commission,8 in which the Court already purportedly ruled "that the nature of employment at Innodata Phils., Inc. is regular,"9 constituted stare decisis to the present case. Petitioners finally argued that they could not be considered project employees considering that their employment was not coterminous with any project or undertaking, the termination of which was predetermined. On the other hand, respondents explained that INNODATA was engaged in the business of data processing, typesetting, indexing, and abstracting for its foreign clients. The bulk of the work was data processing, which involved data encoding. Data encoding, or the typing of data into the computer, included pre-encoding, encoding 1 and 2, editing, proofreading, and scanning. Almost half of the employees of INNODATA did data encoding work, while the other half monitored quality control. Due to the wide range of services rendered to its clients, INNODATA was constrained to hire new employees for a fixed period of not more than one year. Respondents asserted that petitioners were not illegally dismissed, for their employment was terminated due to the expiration of their terms of employment. Petitioners’ contracts of employment with INNODATA were for a limited period only, commencing on 6 September 1999 and ending on 16 February 2000.10 Respondents further argued that petitioners were estopped from asserting a position contrary to the contracts which they had knowingly, voluntarily, and willfully agreed to or entered into. There being no illegal dismissal, respondents likewise maintained that petitioners were not entitled to reinstatement and backwages. On 17 October 2000, the Labor Arbiter11 issued its Decision12 finding petitioners’ complaint for illegal dismissal and damages meritorious. The Labor Arbiter held that as formatters, petitioners occupied jobs that were necessary, desirable, and indispensable to the data processing and encoding business of INNODATA. By the very nature of their work as formatters, petitioners should be considered regular employees of INNODATA, who were entitled to security of tenure. Thus, their termination for no just or authorized cause was illegal. In the end, the Labor Arbiter decreed: FOREGOING PREMISES CONSIDERED, judgment is hereby rendered declaring complainants’ dismissal illegal and ordering respondent INNODATA PHILS. INC./INNODATA CORPORATION to reinstate them to their former or equivalent position without loss of seniority rights and benefits. Respondent company is further ordered to pay complainants their full backwages plus ten percent (10%) of the totality thereof as attorney’s fees. The monetary awards due the complainants as of the date of this decision are as follows: A. Backwages 1. Cherry J. Price 2/17/2000 – 10/17/2000 at 223.50/day P5,811.00/mo/ x 8 mos. P46,488.00 2. Stephanie Domingo 46,488.00

(same computation) 3. Lolita Arbilera 46,488.00 (same computation) Total Backwages P139,464.00 B. Attorney’s fees (10% of total award) 13,946.40 Total Award P153,410.40 Respondent INNODATA appealed the Labor Arbiter’s Decision to the NLRC. The NLRC, in its Decision dated 14 December 2001, reversed the Labor Arbiter’s Decision dated 17 October 2000, and absolved INNODATA of the charge of illegal dismissal. The NLRC found that petitioners were not regular employees, but were fixed-term employees as stipulated in their respective contracts of employment. The NLRC applied Brent School, Inc. v. Zamora13 and St. Theresa’s School of Novaliches Foundation v. National Labor Relations Commission,14 in which this Court upheld the validity of fixed-term contracts. The determining factor of such contracts is not the duty of the employee but the day certain agreed upon by the parties for the commencement and termination of the employment relationship. The NLRC observed that the petitioners freely and voluntarily entered into the fixed-term employment contracts with INNODATA. Hence, INNODATA was not guilty of illegal dismissal when it terminated petitioners’ employment upon the expiration of their contracts on 16 February 2000. The dispositive portion of the NLRC Decision thus reads: WHEREFORE, premises considered, the decision appealed from is hereby REVERSED and SET ASIDE and a new one entered DISMISSING the instant complaint for lack of merit.15 The NLRC denied petitioners’ Motion for Reconsideration in a Resolution dated 28 June 2002.16 In a Petition for Certiorari under Rule 65 of the Rules of Court filed before the Court of Appeals, petitioners prayed for the annulment, reversal, modification, or setting aside of the Decision dated 14 December 2001 and Resolution dated 28 June 2002 of the NLRC.lawphil.net On 25 September 2006, the Court of Appeals promulgated its Decision sustaining the ruling of the NLRC that petitioners were not illegally dismissed. The Court of Appeals ratiocinated that although this Court declared in Villanueva and Servidad that the employees of INNODATA working as data encoders and abstractors were regular, and not contractual, petitioners admitted entering into contracts of employment with INNODATA for a term of only one year and for a project called Earthweb. According to the Court of Appeals, there was no showing that petitioners entered into the fixed-term contracts unknowingly and involuntarily, or because INNODATA applied force, duress or improper pressure on them. The appellate court also observed that INNODATA and petitioners dealt with each other on more or less equal terms, with no moral dominance exercised by the former on latter. Petitioners were therefore bound by the stipulations in their contracts terminating their employment after the lapse of the fixed term.

The Court of Appeals further expounded that in fixed-term contracts, the stipulated period of employment is governing and not the nature thereof. Consequently, even though petitioners were performing functions that are necessary or desirable in the usual business or trade of the employer, petitioners did not become regular employees because their employment was for a fixed term, which began on 16 February 1999 and was predetermined to end on 16 February 2000. The appellate court concluded that the periods in petitioners’ contracts of employment were not imposed to preclude petitioners from acquiring security of tenure; and, applying the ruling of this Court in Brent, declared that petitioners’ fixed-term employment contracts were valid. INNODATA did not commit illegal dismissal for terminating petitioners’ employment upon the expiration of their contracts. The Court of Appeals adjudged: WHEREFORE, the instant petition is hereby DENIED and the Resolution dated December 14, 2001 of the National Labor Relations Commission declaring petitioners were not illegally dismissed is AFFIRMED.17 The petitioners filed a Motion for Reconsideration of the afore-mentioned Decision of the Court of Appeals, which was denied by the same court in a Resolution dated 15 June 2007. Petitioners are now before this Court via the present Petition for Review on Certiorari, based on the following assignment of errors: I. THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW AND GRAVE ABUSE OF DISCRETION WHEN IT DID NOT APPLY THE SUPREME COURT RULING IN THE CASE OF NATIVIDAD & QUEJADA THAT THE NATURE OF EMPLOYMENT OF RESPONDENTS IS REGULAR NOT FIXED, AND AS SO RULED IN AT LEAST TWO OTHER CASES AGAINST INNODATA PHILS. INC. II. THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW IN RULING THAT THE STIPULATION OF CONTRACT IS GOVERNING AND NOT THE NATURE OF EMPLOYMENT AS DEFINED BY LAW. III. THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION WHEN IT DID NOT CONSIDER THE EVIDENCE ON RECORD SHOWING THAT THERE IS CLEAR CIRCUMVENTION OF THE LAW ON SECURITY OF TENURE THROUGH CONTRACT MANIPULATION.18 The issue of whether petitioners were illegally dismissed by respondents is ultimately dependent on the question of whether petitioners were hired by INNODATA under valid fixed-term employment contracts.

After a painstaking review of the arguments and evidences of the parties, the Court finds merit in the present Petition. There were no valid fixed-term contracts and petitioners were regular employees of the INNODATA who could not be dismissed except for just or authorized cause. The employment status of a person is defined and prescribed by law and not by what the parties say it should be.19 Equally important to consider is that a contract of employment is impressed with public interest such that labor contracts must yield to the common good.20 Thus, provisions of applicable statutes are deemed written into the contract, and the parties are not at liberty to insulate themselves and their relationships from the impact of labor laws and regulations by simply contracting with each other.21 Regular employment has been defined by Article 280 of the Labor Code, as amended, which reads: Art. 280. Regular and Casual Employment. The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of engagement of the employee or where the work or services to be performed is seasonal in nature and employment is for the duration of the season. An employment shall be deemed to be casual if it is not covered by the preceding paragraph. Provided, That, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists. (Underscoring ours). Based on the afore-quoted provision, the following employees are accorded regular status: (1) those who are engaged to perform activities which are necessary or desirable in the usual business or trade of the employer, regardless of the length of their employment; and (2) those who were initially hired as casual employees, but have rendered at least one year of service, whether continuous or broken, with respect to the activity in which they are employed. Undoubtedly, petitioners belong to the first type of regular employees. Under Article 280 of the Labor Code, the applicable test to determine whether an employment should be considered regular or non-regular is the reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer.22 In the case at bar, petitioners were employed by INNODATA on 17 February 1999 as formatters. The primary business of INNODATA is data encoding, and the formatting of the data entered into the computers is an essential part of the process of data encoding. Formatting organizes the data encoded, making it easier to understand for the clients and/or the intended end users thereof. Undeniably, the work performed by petitioners was necessary or desirable in the business or trade of INNODATA. However, it is also true that while certain forms of employment require the performance of usual or desirable functions and exceed one year, these do not necessarily result in regular employment under Article 280 of the Labor Code.23 Under the Civil Code, fixed-term employment contracts are not limited, as they are under the present Labor Code, to those by nature seasonal or for specific projects with predetermined dates of completion; they also include those to which the parties by free choice have assigned a specific date of termination.24

The decisive determinant in term employment is the day certain agreed upon by the parties for the commencement and termination of their employment relationship, a day certain being understood to be that which must necessarily come, although it may not be known when. Seasonal employment and employment for a particular project are instances of employment in which a period, where not expressly set down, is necessarily implied.25 Respondents maintain that the contracts of employment entered into by petitioners with INNDOATA were valid fixed-term employment contracts which were automatically terminated at the expiry of the period stipulated therein, i.e., 16 February 2000. The Court disagrees. While this Court has recognized the validity of fixed-term employment contracts, it has consistently held that this is the exception rather than the general rule. More importantly, a fixed-term employment is valid only under certain circumstances. In Brent, the very same case invoked by respondents, the Court identified several circumstances wherein a fixed-term is an essential and natural appurtenance, to wit: Some familiar examples may be cited of employment contracts which may be neither for seasonal work nor for specific projects, but to which a fixed term is an essential and natural appurtenance: overseas employment contracts, for one, to which, whatever the nature of the engagement, the concept of regular employment with all that it implies does not appear ever to have been applied, Article 280 of the Labor Code notwithstanding; also appointments to the positions of dean, assistant dean, college secretary, principal, and other administrative offices in educational institutions, which are by practice or tradition rotated among the faculty members, and where fixed terms are a necessity without which no reasonable rotation would be possible. Similarly, despite the provisions of Article 280, Policy Instructions No. 8 of the Minister of Labor implicitly recognize that certain company officials may be elected for what would amount to fixed periods, at the expiration of which they would have to stand down, in providing that these officials, "x x may lose their jobs as president, executive vice-president or vice president, etc. because the stockholders or the board of directors for one reason or another did not reelect them."26 As a matter of fact, the Court, in its oft-quoted decision in Brent, also issued a stern admonition that where, from the circumstances, it is apparent that the period was imposed to preclude the acquisition of tenurial security by the employee, then it should be struck down as being contrary to law, morals, good customs, public order and public policy.27 After considering petitioners’ contracts in their entirety, as well as the circumstances surrounding petitioners’ employment at INNODATA, the Court is convinced that the terms fixed therein were meant only to circumvent petitioners’ right to security of tenure and are, therefore, invalid. The contracts of employment submitted by respondents are highly suspect for not only being ambiguous, but also for appearing to be tampered with. Petitioners alleged that their employment contracts with INNODATA became effective 16 February 1999, and the first day they reported for work was on 17 February 1999. The Certificate of Employment issued by the HRAD Manager of INNODATA also indicated that petitioners Price and Domingo were employed by INNODATA on 17 February 1999. However, respondents asserted before the Labor Arbiter that petitioners’ employment contracts were effective only on 6 September 1999. They later on admitted in their Memorandum filed with this Court that petitioners were originally hired on 16 February 1999 but the project for which they were

employed was completed before the expiration of one year. Petitioners were merely rehired on 6 September 1999 for a new project. While respondents submitted employment contracts with 6 September 1999 as beginning date of effectivity, it is obvious that in one of them, the original beginning date of effectivity, 16 February 1999, was merely crossed out and replaced with 6 September 1999. The copies of the employment contracts submitted by petitioners bore similar alterations. The Court notes that the attempt to change the beginning date of effectivity of petitioners’ contracts was very crudely done. The alterations are very obvious, and they have not been initialed by the petitioners to indicate their assent to the same. If the contracts were truly fixed-term contracts, then a change in the term or period agreed upon is material and would already constitute a novation of the original contract. Such modification and denial by respondents as to the real beginning date of petitioners’ employment contracts render the said contracts ambiguous. The contracts themselves state that they would be effective until 16 February 2000 for a period of one year. If the contracts took effect only on 6 September 1999, then its period of effectivity would obviously be less than one year, or for a period of only about five months. Obviously, respondents wanted to make it appear that petitioners worked for INNODATA for a period of less than one year. The only reason the Court can discern from such a move on respondents’ part is so that they can preclude petitioners from acquiring regular status based on their employment for one year. Nonetheless, the Court emphasizes that it has already found that petitioners should be considered regular employees of INNODATA by the nature of the work they performed as formatters, which was necessary in the business or trade of INNODATA. Hence, the total period of their employment becomes irrelevant. Even assuming that petitioners’ length of employment is material, given respondents’ muddled assertions, this Court adheres to its pronouncement in Villanueva v. National Labor Relations Commission,28 to the effect that where a contract of employment, being a contract of adhesion, is ambiguous, any ambiguity therein should be construed strictly against the party who prepared it. The Court is, thus, compelled to conclude that petitioners’ contracts of employment became effective on 16 February 1999, and that they were already working continuously for INNODATA for a year. Further attempting to exonerate itself from any liability for illegal dismissal, INNODATA contends that petitioners were project employees whose employment ceased at the end of a specific project or undertaking. This contention is specious and devoid of merit. In Philex Mining Corp. v. National Labor Relations Commission,29 the Court defined "project employees" as those workers hired (1) for a specific project or undertaking, and wherein (2) the completion or termination of such project has been determined at the time of the engagement of the employee. Scrutinizing petitioners’ employment contracts with INNODATA, however, failed to reveal any mention therein of what specific project or undertaking petitioners were hired for. Although the contracts made general references to a "project," such project was neither named nor described at all therein. The conclusion by the Court of Appeals that petitioners were hired for the Earthweb project is not supported by any evidence on record. The one-year period for which petitioners were hired was simply fixed in the employment contracts without reference or connection to the period required for the completion of a project. More importantly, there is also a dearth of evidence that such project or undertaking had already been completed or terminated to justify the dismissal of petitioners. In fact, petitioners alleged - and respondents failed to dispute that petitioners did not

work on just one project, but continuously worked for a series of projects for various clients of INNODATA. In Magcalas v. National Labor Relations Commission,30 the Court struck down a similar claim by the employer therein that the dismissed employees were fixed-term and project employees. The Court here reiterates the rule that all doubts, uncertainties, ambiguities and insufficiencies should be resolved in favor of labor. It is a well-entrenched doctrine that in illegal dismissal cases, the employer has the burden of proof. This burden was not discharged in the present case. As a final observation, the Court also takes note of several other provisions in petitioners’ employment contracts that display utter disregard for their security of tenure. Despite fixing a period or term of employment, i.e., one year, INNODATA reserved the right to pre-terminate petitioners’ employment under the following circumstances: 6.1 x x x Further should the Company have no more need for the EMPLOYEE’s services on account of completion of the project, lack of work (sic) business losses, introduction of new production processes and techniques, which will negate the need for personnel, and/or overstaffing, this contract maybe pre-terminated by the EMPLOYER upon giving of three (3) days notice to the employee. xxxx 6.4 The EMPLOYEE or the EMPLOYER may pre-terminate this CONTRACT, with or without cause, by giving at least Fifteen – (15) [day] notice to that effect. Provided, that such pre-termination shall be effective only upon issuance of the appropriate clearance in favor of the said EMPLOYEE. (Emphasis ours.) Pursuant to the afore-quoted provisions, petitioners have no right at all to expect security of tenure, even for the supposedly one-year period of employment provided in their contracts, because they can still be pre-terminated (1) upon the completion of an unspecified project; or (2) with or without cause, for as long as they are given a three-day notice. Such contract provisions are repugnant to the basic tenet in labor law that no employee may be terminated except for just or authorized cause. Under Section 3, Article XVI of the Constitution, it is the policy of the State to assure the workers of security of tenure and free them from the bondage of uncertainty of tenure woven by some employers into their contracts of employment. This was exactly the purpose of the legislators in drafting Article 280 of the Labor Code – to prevent the circumvention by unscrupulous employers of the employee’s right to be secure in his tenure by indiscriminately and completely ruling out all written and oral agreements inconsistent with the concept of regular employment. In all, respondents’ insistence that it can legally dismiss petitioners on the ground that their term of employment has expired is untenable. To reiterate, petitioners, being regular employees of INNODATA, are entitled to security of tenure. In the words of Article 279 of the Labor Code: ART. 279. Security of Tenure. – In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement.

By virtue of the foregoing, an illegally dismissed employee is entitled to reinstatement without loss of seniority rights and other privileges, with full back wages computed from the time of dismissal up to the time of actual reinstatement. Considering that reinstatement is no longer possible on the ground that INNODATA had ceased its operations in June 2002 due to business losses, the proper award is separation pay equivalent to one month pay31 for every year of service, to be computed from the commencement of their employment up to the closure of INNODATA. The amount of back wages awarded to petitioners must be computed from the time petitioners were illegally dismissed until the time INNODATA ceased its operations in June 2002.32 Petitioners are further entitled to attorney’s fees equivalent to 10% of the total monetary award herein, for having been forced to litigate and incur expenses to protect their rights and interests herein. Finally, unless they have exceeded their authority, corporate officers are, as a general rule, not personally liable for their official acts, because a corporation, by legal fiction, has a personality separate and distinct from its officers, stockholders and members. Although as an exception, corporate directors and officers are solidarily held liable with the corporation, where terminations of employment are done with malice or in bad faith,33 in the absence of evidence that they acted with malice or bad faith herein, the Court exempts the individual respondents, Leo Rabang and Jane Navarette, from any personal liability for the illegal dismissal of petitioners. WHEREFORE, the Petition for Review on Certiorari is GRANTED. The Decision dated 25 September 2006 and Resolution dated 15 June 2007 of the Court of Appeals in CA-G.R. SP No. 72795are hereby REVERSED and SET ASIDE. RespondentInnodata Philippines, Inc./Innodata Corporation isORDERED to pay petitioners Cherry J. Price, Stephanie G. Domingo, and Lolita Arbilera: (a) separation pay, in lieu of reinstatement, equivalent to one month pay for every year of service, to be computed from the commencement of their employment up to the date respondent Innodata Philippines, Inc./Innodata Corporation ceased operations; (b) full backwages, computed from the time petitioners’ compensation was withheld from them up to the time respondent Innodata Philippines, Inc./Innodata Corporation ceased operations; and (3) 10% of the total monetary award as attorney’s fees. Costs against respondent Innodata Philippines, Inc./Innodata Corporation. SO ORDERED.

G.R. No. 177114

January 21, 2010

MANOLO A. PEÑAFLOR, Petitioner, vs. OUTDOOR CLOTHING MANUFACTURING CORPORATION, NATHANIEL T. SYFU, President, MEDYLENE M. DEMOGENA, Finance Manager, and PAUL U. LEE, Chairman, Respondents. BRION, J.; PETITIONER Manolo A. Peñaflor (Peñaflor) seeks the reversal of the Court of Appeals (CA) decision1 dated December 29, 2006 and its resolution2 dated March 14, 2007, through the present petition for review on certiorari filed under Rule 45 of the Rules of Court. The assailed CA decision affirmed the September 24, 2002 decision3 of the National Labor Relations Commission (NLRC) that in turn reversed the August 15, 2001 decision4 of the Labor Arbiter.5 THE FACTUAL ANTECEDENTS Peñaflor was hired on September 2, 1999 as probationary Human Resource Department (HRD) Manager of RESPONDENT Outdoor Clothing Manufacturing Corporation (Outdoor Clothing or the company). As HRD head, Peñaflor was expected to (1) secure and maintain the right quality and quantity of people needed by the company; (2) maintain the harmonious relationship between the employees and management in a role that supports organizational goals and individual aspirations; and (3) represent the company in labor cases or proceedings. Two staff members were assigned to work with him to assist him in undertaking these functions. Peñaflor claimed that his relationship with Outdoor Clothing went well during the first few months of his employment; he designed and created the company’s Policy Manual, Personnel Handbook, Job Expectations, and Organizational Set-Up during this period. His woes began when the company’s Vice President for Operations, Edgar Lee (Lee), left the company after a big fight between Lee and Chief Corporate Officer Nathaniel Syfu (Syfu). Because of his close association with Lee, Peñaflor claimed that he was among those who bore Syfu’s ire. When Outdoor Clothing began undertaking its alleged downsizing program due to negative business returns, Peñaflor alleged that his department had been singled out. On the pretext of retrenchment, Peñaflor’s two staff members were dismissed, leaving him as the only member of Outdoor Clothing’s HRD and compelling him to perform all personnel-related work. He worked as a one-man department, carrying out all clerical, administrative and liaison work; he personally went to various government offices to process the company’s papers. When an Outdoor Clothing employee, Lynn Padilla (Padilla), suffered injuries in a bombing incident, the company required Peñaflor to attend to her hospitalization needs; he had to work outside office premises to undertake this task. As he was acting on the company’s orders, Peñaflor considered himself to be on official business, but was surprised when the company deducted six days’ salary corresponding to the time he assisted Padilla. According to Finance Manager Medylene Demogena (Demogena), he failed to submit his trip ticket, but Peñaflor belied this claim as a trip ticket was required only when a company vehicle was used and he did not use any company vehicle when he attended to his off-premises work.6 After Peñaflor returned from his field work on March 13, 2000, his officemates informed him that while he was away, Syfu had appointed Nathaniel Buenaobra (Buenaobra) as the new HRD Manager. This information was confirmed by Syfu’s memorandum of March 10, 2000 to the entire office stating that Buenaobra was the concurrent HRD and Accounting Manager.7 Peñaflor was

surprised by the news; he also felt betrayed and discouraged. He tried to talk to Syfu to clarify the matter, but was unable to do so. Peñaflor claimed that under these circumstances, he had no option but to resign. He submitted a letter to Syfu declaring his irrevocable resignation from his employment with Outdoor Clothing effective at the close of office hours on March 15, 2000.8 Peñaflor then filed a complaint for illegal dismissal with the labor arbiter, claiming that he had been constructively dismissed. He included in his complaint a prayer for reinstatement and payment of backwages, illegally deducted salaries, damages, attorney’s fees, and other monetary claims. Outdoor Clothing denied Peñaflor’s allegation of constructive dismissal. It posited instead that Peñaflor had voluntarily resigned from his work. Contrary to Peñaflor’s statement that he had been dismissed from employment upon Syfu’s appointment of Buenaobra as the new HRD Manager on March 10, 2000, Peñaflor had in fact continued working for the company until his resignation on March 15, 2000. The company cited as evidence the security report that Peñaflor himself prepared and signed on March 13, 2000.9 Outdoor Clothing disclaimed liability for any of Peñaflor’s monetary claims. Since Peñaflor had voluntarily resigned, Outdoor Clothing alleged that he was not entitled to any backwages and damages. The company likewise denied making any illegal deduction from Peñaflor’s salary; while deductions were made, they were due to Peñaflor’s failure to report for work during the dates the company questioned. As a probationary employee, he was not yet entitled to any leave credit that would offset his absences. In his August 15, 2001 decision, the labor arbiter found that Peñaflor had been illegally dismissed.10 Outdoor Clothing was consequently ordered to reinstate Peñaflor to his former or to an equivalent position, and to pay him his illegally deducted salary for six days, proportionate 13th month pay, attorney’s fees, moral and exemplary damages. Outdoor Clothing appealed the labor arbiter’s decision with the NLRC. It insisted that Peñaflor had not been constructively dismissed, claiming that Peñaflor tendered his resignation on March 1, 2000 because he saw no future with the corporation due to its dire financial standing. Syfu alleged that he was compelled to appoint Buenaobra as concurrent HRD Manager through a memorandum dated March 1, 2000 to cover the position that Peñaflor would soon vacate.11 The appointment was also made to address the personnel matters that had to be taken cared of while Peñaflor was on unauthorized leave. Incidentally, Outdoor Clothing alleged that Peñaflor had already been given two notices, on March 6 and 11, 2000 (absence without official leave memoranda or the AWOL memoranda), for his unauthorized absences. In a memorandum dated March 3, 2000 addressed to Syfu, Buenaobra accepted the appointment.12 Peñaflor contested Syfu’s March 1, 2000 memorandum, Buenaobra’s March 3, 2000 memorandum, and the AWOL memoranda, claiming these pieces of evidence were fabricated and were never presented before the labor arbiter. He pointed out that nothing in this resignation letter indicated that it was submitted to and received by Syfu on March 1, 2000. He claimed that it was submitted on March 15, 2000, the same date he made his resignation effective. The AWOL memoranda could not be relied on, as he was never furnished copies of these. Moreover, he could not be on prolonged absence without official leave, as his residence was just a few meters away from the office. The NLRC apparently found Outdoor Clothing’s submitted memoranda sufficient to overturn the labor arbiter’s decision.13 It characterized Peñaflor’s resignation as a response, not to the allegedly degrading and hostile treatment that he was subjected to by Syfu, but to Outdoor Clothing’s

downward financial spiral. Buenaobra’s appointment was made only after Peñaflor had submitted his resignation letter, and this was made to cover the vacancy Peñaflor’s resignation would create. Thus, Peñaflor was not eased out from his position as HRD manager. No malice likewise was present in the company’s decision to dismiss Peñaflor’s two staff members; the company simply exercised its management prerogative to address the financial problems it faced. Peñaflor, in fact, drafted the dismissal letters of his staff members. In the absence of any illegal dismissal, no basis existed for the monetary awards the labor arbiter granted. Peñaflor anchored his certiorari petition with the CA on the claim that the NLRC decision was tainted with grave abuse of discretion, although he essentially adopted the same arguments he presented before the labor arbiter and the NLRC. In a decision dated December 29, 2006,14 the CA affirmed the NLRC’s decision, stating that Peñaflor failed to present sufficient evidence supporting his claim that he had been constructively dismissed. The CA ruled that Peñaflor’s resignation was knowingly and voluntarily made. Accordingly, it dismissed Peñaflor’s certiorari petition. It likewise denied the motion for reconsideration that Peñaflor subsequently filed.15 Faced with these CA actions, Peñaflor filed with us the present petition for review on certiorari. THE PARTIES’ ARGUMENTS Peñaflor insists that, contrary to the findings of the NLRC and the CA, he had been constructively dismissed from his employment with Outdoor Clothing. He alleges that the dismissal of his two staff members, the demeaning liaison work he had to perform as HRD Manager, the salary deduction for his alleged unauthorized absences, and the appointment of Buenaobra as the new HRD manager even before he tendered his resignation, were clear acts of discrimination that made his continued employment with the Outdoor Clothing unbearable. He was thus forced to resign. Outdoor Clothing claims that Peñaflor voluntarily resigned from his work and his contrary allegations were all unsubstantiated. The HRD was not singled out for retrenchment, but was simply the first to lose its staff members because the company had to downsize. Thus, all HRD work had to be performed by Peñaflor. Instead of being grateful that he was not among those immediately dismissed due to the company’s retrenchment program, Peñaflor unreasonably felt humiliated in performing work that logically fell under his department; insisted on having a full staff complement; absented himself from work without official leave; and demanded payment for his unauthorized absences. THE ISSUE and THE COURT’S RULING The Court finds the petition meritorious. A preliminary contentious issue is Outdoor Clothing’s argument that we should dismiss the petition outright because it raises questions of facts, not the legal questions that should be raised in a Rule 45 petition.16 We see no merit in this argument as the rule that a Rule 45 petition deals only with legal issues is not an absolute rule; it admits of exceptions. In the labor law setting, we wade into factual issues when conflict of factual findings exists among the labor arbiter, the NLRC, and the CA. This is the exact situation that obtains in the present case since the labor arbiter found facts supporting the conclusion that there had been constructive dismissal, while the NLRC’s and the CA’s factual findings contradicted the labor arbiter’s findings.17 Under this situation, the conflicting factual findings

below are not binding on us, and we retain the authority to pass on the evidence presented and draw conclusions therefrom.18 The petition turns on the question of whether Peñaflor’s undisputed resignation was a voluntary or a forced one, in the latter case making it a constructive dismissal equivalent to an illegal dismissal. A critical fact necessary in resolving this issue is whether Peñaflor filed his letter of resignation before or after the appointment of Buenaobra as the new/concurrent HRD manager. This question also gives rise to the side issue of when Buenaobra’s appointment was made. If the resignation letter was submitted before Syfu’s appointment of Buenaobra as new HRD manager, little support exists for Peñaflor’s allegation that he had been forced to resign due to the prevailing abusive and hostile working environment. Buenaobra’s appointment would then be simply intended to cover the vacancy created by Peñaflor’s resignation. On the other hand, if the resignation letter was submitted after the appointment of Buenaobra, then factual basis exists indicating that Peñaflor had been constructively dismissed as his resignation was a response to the unacceptable appointment of another person to a position he still occupied. The question of when Peñaflor submitted his resignation letter arises because this letter – undisputably made – was undated. Despite Peñaflor’s claim of having impressive intellectual and academic credentials,19 his resignation letter, for some reason, was undated. Thus, the parties have directly opposing claims on the matter. Peñaflor claims that he wrote and filed the letter on the same date he made his resignation effective – March 15, 2000. Outdoor Clothing, on the other hand, contends that the letter was submitted on March 1, 2000, for which reason Syfu issued a memorandum of the same date appointing Buenaobra as the concurrent HRD manager; Syfu’s memorandum cited Peñaflor’s intention to resign so he could devote his time to teaching. The company further cites in support of its case Buenaobra’s March 3, 2000 memorandum accepting his appointment. Another piece of evidence is the Syfu memorandum of March 10, 2000, which informed the office of the appointment of Buenaobra as the concurrent Head of HRD – the position that Peñaflor occupied. Two other memoranda are alleged to exist, namely, the AWOL memoranda of March 6 and 11, 2000, allegedly sent to Penaflor. Several reasons arising directly from these pieces of evidence lead us to conclude that Peñaflor did indeed submit his resignation letter on March, 15, 2000, i.e., on the same day that it was submitted. First, we regard the Syfu memorandum of March 1, 2000 and the memorandum of Buenaobra of March 3, 2000 accepting the position of HRD Head to be highly suspect. In our view, these memoranda, while dated, do not constitute conclusive evidence of their dates of preparation and communication. Surprisingly, Peñaflor was never informed about these memoranda when they directly concerned him, particularly the turnover of responsibilities to Buenaobra if indeed Peñaflor had resigned on March 1, 2000 and a smooth turnover to Buenaobra was intended. Even the recipients of these communications do not appear to have signed for and dated their receipt. The AWOL memoranda, to be sure, should have been presented with proof of service if they were to have any binding effect on Peñaflor. Second,we find it surprising that these pieces of evidence pointing to a March 1, 2000 resignation – specifically, Syfu’s March 1, 2000 memorandum to Buenaobra about Penaflor’s resignation and Buenaobra’s own acknowledgment and acceptance – were only presented to the NLRC on appeal, not before the labor arbiter. The matter was not even mentioned in the company’s position paper filed with the labor arbiter.20 While the presentation of evidence at the NLRC level on appeal is not unheard of in labor cases,21 still sufficient explanation must be adduced to explain why this irregular practice should be allowed. In the present case, Outdoor Clothing totally failed to explain

the reason for its omission. This failure, to us, is significant, as these were the clinching pieces of evidence that allowed the NLRC to justify the reversal of the labor arbiter’s decision. Third, the circumstances and other evidence surrounding Peñaflor’s resignation support his claim that he was practically compelled to resign from the company. Foremost among these is the memorandum of March 10, 2000 signed by Syfu informing the whole office ("To: All concerned") about the designation of Buenaobra as concurrent Accounting and HRD Manager. In contrast with the suspect memoranda we discussed above, this memorandum properly bore signatures acknowledging receipt and dates of receipt by at least five company officials, among them the readable signature of Demogene and one Agbayani; three of them acknowledged receipt on March 13, 2000, showing that indeed it was only on that day that the appointment of Buenaobra to the HRD position was disclosed. This evidence is fully consistent with Peñaflor’s position that it was only in the afternoon of March 13, 2000 that he was told, informally at that, that Buenaobra had taken over his position. It explains as well why as late as March 13, 2000, Peñaflor still prepared and signed a security report,22 and is fully consistent with his position that on that day he was still working on the excuse letter of certain sales personnel of the company.23 We note that the company only belatedly questioned the motivation that Peñaflor cited for his discriminatory treatment, i.e., that he was caught in the bitter fight between Syfu and Lee, then Vice President for Operations, that led the latter to leave the company.24 After Lee left, Peñaflor alleged that those identified with Lee were singled out for adverse treatment, citing in this regard the downsizing of HRD that occurred on or about this time and which resulted in his one-man HRD operation. We say this downsizing was only "alleged" as the company totally failed – despite Penaflor’s claim of discriminatory practice – to adduce evidence showing that there had indeed been a legitimate downsizing. Other than its bare claim that it was facing severe financial problems, Outdoor Clothing never presented any evidence to prove both the reasons for its alleged downsizing and the fact of such downsizing. No evidence was ever offered to rebut Peñaflor’s claim that his staff members were dismissed to make his life as HRD Head difficult. To be sure, Peñaflor’s participation in the termination of his staff members’ employment cannot be used against him, as the termination of employment was a management decision that Peñaflor, at his level, could not have effectively contested without putting his own job on the line. Peñaflor’s own service with the company deserves close scrutiny. He started working for the company on September 2, 1999 so that by March 1, 2000, his probationary period would have ended and he would have become a regular employee. We find it highly unlikely that Peñaflor would resign on March 1, 2000 and would then simply leave given his undisputed record of having successfully worked within his probationary period on the company’s Policy Manual, Personnel Handbook, Job Expectations, and Organizational Set-up. It does not appear sound and logical to us that an employee would tender his resignation on the very same day he was entitled by law to be considered a regular employee, especially when a downsizing was taking place and he could have availed of its benefits if he would be separated from the service as a regular employee. It was strange, too, that he would submit his resignation on March 1, 2000 and keep completely quiet about this development until its effective date on March 15, 2000. In the usual course, the turnover alone of responsibilities and work loads to the successor in a small company would have prevented the matter from being completely under wraps for 10 days before any announcement was ever made. That Peñaflor was caught by surprise by the turnover of his post to Buenaobra is in fact indicated by the company’s own evidence that Peñaflor still submitted a security report on March 13, 2000. On the whole, Peñaflor’s record with the company is not that of a company official who would simply and voluntarily tender a precipitate resignation on the excuse that he would devote his time to teaching – a lame excuse at best considering that March is the month the semester usually ends and is two or three months away from the start of another school year.

In our view, it is more consistent with human experience that Peñaflor indeed learned of the appointment of Buenaobra only on March 13, 2000 and reacted to this development through his resignation letter after realizing that he would only face hostility and frustration in his working environment. Three very basic labor law principles support this conclusion and militate against the company’s case. The FIRST is the settled rule that in employee termination disputes, the employer bears the burden of proving that the employee’s dismissal was for just and valid cause.25 That Peñaflor did indeed file a letter of resignation does not help the company’s case as, other than the fact of resignation, the company must still prove that the employee voluntarily resigned.26 There can be no valid resignation where the act was made under compulsion or under circumstances approximating compulsion, such as when an employee’s act of handing in his resignation was a reaction to circumstances leaving him no alternative but to resign.27 In sum, the evidence does not support the existence of voluntariness in Peñaflor’s resignation.1 a vv p h i 1 SECOND basic principle is that expressed in Article 4 of the Labor Code – that all doubts in the interpretation and implementation of the Labor Code should be interpreted in favor of the workingman. This principle has been extended by jurisprudence to cover doubts in the evidence presented by the employer and the employee.28 As shown above, Peñaflor has, at very least, shown serious doubts about the merits of the company’s case, particularly in the appreciation of the clinching evidence on which the NLRC and CA decisions were based. In such contest of evidence, the cited Article 4 compels us to rule in Peñaflor’s favor. Thus, we find that Peñaflor was constructively dismissed given the hostile and discriminatory working environment he found himself in, particularly evidenced by the escalating acts of unfairness against him that culminated in the appointment of another HRD manager without any prior notice to him. Where no less than the company’s chief corporate officer was against him, Peñaflor had no alternative but to resign from his employment.29 Last but not the least, we have repeatedly given significance in abandonment and constructive dismissal cases to the employee’s reaction to the termination of his employment and have asked the question: is the complaint against the employer merely a convenient afterthought subsequent to an abandonment or a voluntary resignation? We find from the records that Peñaflor sought almost immediate official recourse to contest his separation from service through a complaint for illegal dismissal.30 This is not the act of one who voluntarily resigned; his immediate complaints characterize him as one who deeply felt that he had been wronged. WHEREFORE, we GRANT the petitioner’s petition for review on certiorari, and REVERSE the decision and resolution of the Court of Appeals in CA-G.R. SP No. 87865 promulgated on December 29, 2006 and March 14, 2007, respectively. We REINSTATE the decision of the labor arbiter dated August 15, 2001, with the MODIFICATION that, due to the strained relations between the parties, respondents are additionally ordered to pay separation pay equivalent to the petitioner’s one month’s salary. Costs against the respondents. SO ORDERED.

G.R. No. 95816 October 27, 1992 PHILIPPINE NATIONAL CONSTRUCTION CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and JEOFREY G. GABAYA, EGMEDIO ARINES, JAIME ALLAPITAN, ROBERTO BALAJADIA, LUCIANO LACORTA, AGAPITO LUNDANG, PONCIANO PEPITO, REMIGIO MEQUIOTA, ERNESTO A. VENANCIO, ISABELO DE CASTRO, RICARDO DIMANLIG, PERFECTO REYMUNDO, ALFREDO T. GABRIEL and ALFREDO RAMOS, respondents.

GRIÑO-AQUINO, J.: This is a petition for review on certiorari assailing the Resolution * dated October 19, 1990 of public respondent National Labor Relations Commission (First Division) (hereinafter referred to as NLRC for brevity) which affirmed the November 19, 1989 decision of Labor Arbiter Jose de Vera in NCR Cases No. 00-04-1890-89, 00-05-02388-89, 00-06-02633-89 and 00-06-02078-89 granting separation pay to the complainants, herein private respondents. Petitioner Philippine National Construction Corporation (PNCC for brevity) is a government owned and controlled corporation engaged in general construction work both in the Philippines and abroad. Private respondents were employed by the PNCC until their retrenchment as specified hereunder: Employee Date Nature of Employed Employment Separated 1. Jeoffrey Gabaya 6-01-76 H.E Operator 3-15-89 2. Egmedio Arines 3-27-73 Foreman 3-18-89 3. Jaime Allapitan 3-15-72 Instrumentman 3-18-89 4. Roberto Balajadia 7-04-74 Carpenter 3-18-89 5. Luciano Lacorta 10-10-71 Carpenter Welder 3-07-89 6. Agapito Lundang 12-18-73 Survey Aide 3-18-89 7. Ponciano Pepito 9-22-72 Welder III 3-15-89 8. Remigio Maquiota 4-15-75 Loader Operator 3-15-89 9. Ernesto Venancio 7-12-74 Truck Driver 4-12-89 10. Isabelo de Castro 10-11-74 Plant Tender 6-30-89 11. Ricardo Dimanlig March/78 Mechanic 6-30-89

12. Perfecto Raymundo 9-01-75 Plant Mechanic 6-30-89 13. Alfredo Gabriel 2-14-72 Storekeeper 7-05-89 14. Alfredo Ramos 2-04-78 Truck Driver 4-03-89 (p. 65, Rollo.) Sometime in February, 1989, PNCC embarked upon a retrenchment program and notified its employees, including the private respondents, through individual form letters which reads in part: As we all know, it is the declared policy of the State that whenever and wherever possible, the government shall privatize all business enterprises owned or controlled by it, one of which is the construction business of PNCC. This matter has been announced by a management memorandum at a much earlier date. You will also note that we have avoided bidding for new projects and have slowed down operations in some areas. In view of this, we are constrained to reduce the company's workforce gradually until the sale of the construction business shall have been completed. It is my painful task to advice you that your employment with PNCC will be terminated effective 30 days from date hereof under a special separation program which provides more benefits than what the law requires. You will receive separation benefits according to the following formula: 1. One Hundred Percent (100%) of the Latest Monthly Basic Salary for entitled employees with at least one (1) year but less than (10) years of completed/credited service in the Company. 2. One Hundred Twenty-Five Percent (125%) of the Latest Monthly Basic Salary for entitled employees with at least (10) years and above completed/credited service in the Company. 3. For entitled employees who have completed at least one (1) full year service, a fraction of at least six (6) months in their succeeding months/years of the service shall be considered as one (1) year for the purpose of computing their separation benefits entitled. (pp. 3334, Rollo.) Believing that they had been underpaid their separation benefits (or not paid at all, as in the case of Alfredo T. Gabriel ), the private respondent filed four (4) separate complaints in the NLRC (NCR Cases No. 00-04-01890-89, 00-05-02388-89, 00-06-02633-89 and 00-06-02078-89) for the payment of said benefits. During the proceedings before the Labor Arbiter, it was established that, except for respondent Egmedio Arines, the other respondents had been assigned to foreign projects of the company. Under the "Agreement for Overseas Assignment," a temporary foreign assignment would not interrupt the employees length of service in the company or in any employee who completed his foreign assignment would be credited 1.5 years of service for every year of continuous service in

such foreign assignment. Petitioner PNCC did not deny the overseas assignments of the following employees: 1. Jeoffrey Gabaya –– December 5, 1978 to December 6, 1980 August 6, 1981 to August 9, 1983 (Malaysia) 2. Jaime Allapitan –– March 11, 1981 to February 11, 1983 (Iraq) 3. Roberto Balajadia –– October 4, 1981 to August 21, 1983 (Iraq) 4. Luciano Lacorta –– June 7, 1979 to July 11, 1985 (Malaysia) 5. Agapito Lundang –– December 15, 1978 to June 1, 1982 (Saudi Arabia) 6. Ponciano Pepito –– 1979 to 1984 (Malaysia) 7. Remigio Mequiota –– 1978 to 1984 (Malaysia) 8. Ernesto Vanancio –– January 11, 1979 to August 8, 1983 (Saudi Arabia) 9. Isabelo de Castro –– 1981 to 1983 (Iraq) 10. Ricardo Dimanlig –– October 30, 1981 to September 30, 1983 (Iraq) 11. Perfecto Raymundo –– 1981 to 1983 (Iraq) 12. Alfredo Gabriel –– 1979 to 1982 (Saudi Arabia) 13. Alredo Ramos –– September 4, 1952 to December 15, 1983 (Iraq) On the other, the above private respondents admitted that they had no project assignments on the following dates: 1. Jeoffrey Gabaya –– August 10, 1983 to January 8, 1986 2. Egmedio Arines –– 1985 to 1986 3. Jaime Allapitan –– February 12, 1983 to March 13, 1985 4. Roberto Balajadia –– August 22, 1983 to February 15, 1985

5. Luciaano Lacorta –– June 7, 1985 to February 4, 1987 6. Agapito Lundang –– June 1, 1982 to March 5, 1985 7. Ponciano Pepito –– October 7, 1984 to January 13, 1986 8. Remigio Mequiota –– November 18, 1984 to January 2, 1985 9. Ernesto Venancio –– August 10, 1983 to January 2, 1985 10. Isabelo de Castro –– 1983 to 1986 11. Ricardo Dimanlig –– October, 1983 to September, 1987 12. Perfecto Raymundo –– 1983 to February 1988 13. Alfredo Gabriel –– October 24, 1985 to August 22, 1988 14. Afredo Ramos –– December 16, 1983 to January, 1985 Thus, based on their employment records, both local and overseas, less the period when they had no project assignment, the Labor Arbiter credited each private respondent with the following length of service with the PNCC. 1. Jeoffrey Gabaya –– 16 years, 4 months & 15 days 2. Egmedio Arines –– 13 years, 11 months & 19 days 3. Jaime Allapitan –– 17 years, 11 months & 27 days 4. Roberto Balajadia –– 15 years, 2 months & 10 days 5. Luciano Lacorta –– 24 years, 9 months & 10 days 6. Agapito Lundang –– 18 years, 6 months & 4 days 7. Ponciano Pepito –– 22 years, 8 months & 17 days 8. Remigio Mequiota –– 20 years, 10 months & 10 days 9. Ernesto Venancio –– 19 years, 4 months & 14 days 10. Isabelo de Castro –– 13 years, 8 months & 19 days 11. Ricardo Dimanlig –– 10 years & 3 months 12. Perfecto Raymundo –– 11 years, 9 months & 29 days 13. Alfredo Gabriel –– 19 years & 8 days

14. Alfredo Ramos –– 11 years & 7 months In a decision dated November 19, 1989, the Labor Arbiter ruled that in providing a retrenchment program for its employees, the PNCC expressly admitted that respondents were not project employees. Hence, pursuant to the provision of the retrenchment program that employees with more than (10) years of credited service shall receive separation benefits equivalent to 125% of the latest monthly basic salary for each year of service, the Labor Arbiter ordered the payment of the separation benefits as follows: WHEREFORE, all the foregoing premises being considered, judgment is hereby rendered ordering respondent company to pay complainants the latter's separation benefits as follows: Alfredo Gabaya –– P48,826.40 Egmedio Arines –– 58,065.00 Jaime Allapitan –– 59,436.00 Roberto Balajadia –– 41,250.00 Luciano Lacorta –– 66,950.00 Agapito Lundang –– 56,050.00 Ponciano Pepito –– 68,367.50 Remigio Meguiota –– 60,900.00 Ernesto Venancio –– 59,280.00 Isabelo de Castro –– 37,856,.00 Ricardo Dimanlig –– 26,520.00 Perfecto Raymundo –– 28,860.00 Alfredo Gabriel –– 46,193.75 Alfredo Ramos –– 34,476.00 less whatever sums of money paid by respondent to the abovenamed complainants by way of separation pay. Further, respondent is also ordered to pay complainants attorney's fees at the rate of 10% of whatever sum herein adjudicated in favor of the complainants in accordance with the above disposition. (pp. 39-40, Rollo.) On appeal to NLRC, the commission affirmed the decision of the Labor Arbiter and dismissed the appeal for lack of merit.

Hence, this petition for review on certiorari by the PNCC which maintains that respondents are project employees within the purview of Policy Instruction No. 20, hence, they are not entitled to separation pay. The company hires workers only if it has an on-going project and terminate employment once the project is completed. It has been the policy of the company to inform the workers hired that their employment is coterminous with the particular project for which they are hired and the continuation of their service is dependent upon the continued demand for the worker's particular skill. When there is no project for them to work on, respondent are free to seek employment with other contractors. Petitioner PNCC further submits that respondent's claims against the company are already barred by estoppel and prescription. When the services of the respondents were terminated due to the completion of the project, they signed the quitclaim incorporated in the Personnel Action Form. Not one of them registered his objection to his procedure which had been followed several time in the past. For failure to object to quitclaims which they had voluntarily signed, the private respondents are in estoppel to assert their present claims against the company. Petitioner further alleges that while the retrenchment program of the company is intended to include only the project employees currently employed in the project of the company, the separation pay demanded by the private respondents pertains to their past employment in the company's project way back in 1976 and for which they have already received the corresponding benefits. Respondents rights of action has prescribed. Private respondents, on the other hand, hold that they are not project employees because they are hired continuously for a series of projects for several years. They were described as either "regular" or "probationary" employees in their employment papers and were given separation pay only in 1989. As held in Philippine National Construction Corporation vs. NLRC (174 SCRA 191), PNCC's practice of rehiring an employee after the completion of every project for several years, without reporting to the nearest public employment everytime a project is completed, as required under Policy Instruction No. 20, shows that the employee is a regular employee and not a mere project employee. The petition is bereft of merits. Project employees are those whose work is coterminous with the project for which they were hired (Sandoval Shipyards, Inc. vs. NLRC, 136 SCRA 674). As distinguished from regular or non-project employees, they are those who are hired "for a specific project or undertaking the completion or termination or which has been determined at the time of the engagement of the employee, or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season." (Art. 280, Labor Code.) However, in Philippine National Construction Corporation vs. NLRC, (supra), a case involving the petitioner and an oiler who had worked in the company for thirteen (13) years, the court affirmed the Labor Arbiter's ruling that since the company had rehired the oiler after the completion of every project and this rehiring continued throughout the oiler's period of employment, the latter was a regular employee. The same conclusion should be arrived at in his case where the private respondents had been hired and rehired for the period of their respective employment with the company which ranged from eleven years to more than twenty-four years. Indeed, if the private respondents were project employees, the petitioner should have submitted a report their termination to the nearest public employment office everytime their employment was terminated due to the completion of the project, as required under Policy Instruction No. 20 which provides:

Project employees are not entitled to termination pay if they are terminated as the result of the completion of the project or any phase thereof in which they are employed, regardless of the number of projects in which they have been employed by a particular construction company. Moreover, the company is not required to obtain a clearance from the Secretary of Labor in connection which such termination. What is required of the company is a report to the nearest Public Employment Office for the statistical purposes. (PNCC vs. NLRC, 174 SCRA 191; Magante vs. NLRC, 185 SCRA 21, 28.) The termination letter which PNCC sent to each of the private respondents expressly promised them separation benefits. As observed by the Labor Arbiter, this is an express admission by the petitioner that the private respondents are not project employees for, as provided in Policy Instruction No. 20, "project employees are not entitled to termination pay if they are terminated as a result of the completion of the project or any phase thereof in which they are employed." (p. 13, Rollo.) The fact that the respondent-employees signed quitclaims will not bar them for pursuing their claims against the company for quitclaims executed by laborers are frowned upon as contrary to public policy, and are ineffective to bar claims for the full measure of the worker's legal rights (Lopez Sugar Corporation vs. Federation of Free Workers, 189 SCRA 179). Petitioner's contention that the respondent's cause of action has prescribed is not well taken. The three-year prescriptive period under Article 291 of the Labor Code is counted from the time the cause of action accrues. Respondent's cause of action accrued only in March, 1989. The complaint for the underpayment of separation pay was filed on April 18, 1989, barely a month after their separation from employment. Clearly, prescription had not yet extinguished their claims. WHEREFORE, the petition for certiorari is DENIED for lack of merit and the Resolution dated October 19, 1990 of the NLRC is AFFIRMED. SO ORDERED.

G.R. No. 174593

August 25, 2010

ALEX GURANGO, Petitioner, vs. BEST CHEMICALS AND PLASTICS INC. and MOON PYO HONG, Respondents. DECISION CARPIO, J.: The Case This is a petition1 for review on certiorari under Rule 45 of the Rules of Court. The petition challenges the 20 July 2006 Decision2 and 11 September 2006 Resolution3 of the Court of Appeals in CA-G.R. SP No. 94004. The Court of Appeals set aside the 17 October 20054 and 24 January 20065 Resolutions of the National Labor Relations Commission (NLRC) in CA No. 044428-05, affirming the 6 July 2004 Decision6 of the Labor Arbiter in NLRC NCR Case No. 05-06181-03. The Facts Respondent Best Chemicals and Plastics, Inc. (BCPI) is a corporation engaged in the manufacture of biaxially oriented polypropylene and related products. Respondent Moon Pyo Hong (Hong) is the president and chief executive officer of BCPI. Petitioner Alex R. Gurango (Gurango) and Romeo S. Albao (Albao) worked as boiler operator and security guard, respectively, in BCPI. In a memorandum7 dated 2 May 2003, BCPI prohibited its empoyees from bringing personal items to their work area. Erring employees would be suspended for six days. BCPI stated that: Please be reminded of the following existing rules and regulations that all employees are expected to strictly observe and adhere to: xxxx Bringing in to work station/area of personal belongings other than those required in the performance of one’s duty which disrupt/obstruct Company’s services and operations, except those authorized by higher authorities. This offense shall include the following items [sic]: radios, walkman, discman, make-up kits, ladies’ bags, workers’ knapsacks and the like which must be left behind and safe kept [sic] in the employees’ respective lockers. This being a Serious Offense, the penalty of which is six (6) days suspension from work without pay.81avvphi1 Gurango and Albao presented two conflicting sets of facts as to what happened on 5 May 2003. According to Gurango, at 4 a.m., he performed his routine check-up inside the production area. He had in his pocket a camera without film. On his way out of the production area, he saw Albao standing near the bundy clock. Albao pulled him, grabbed his pocket, and tried to confiscate the camera. Gurango refused to give the camera because there was no reason to surrender it. Albao held Gurango’s arm and punched him on the face. Gurango shouted for help. Another security guard, Rodenio I. Pablis (Pablis), arrived. Instead of pacifying Albao, Pablis joined in punching and

kicking Gurango. Albao and Pablis banged Gurango’s head against the floor and provoked him to fight back. Gurango’s co-worker, Elvin Juanitas (Juanitas), saw what happened and asked Albao and Pablis to stop hitting Gurango. Albao and Pablis brought Gurango to the guardhouse. Officer-in-charge Rommel M. Cordero (Cordero) locked the guardhouse, then ordered Albao and Pablis to continue hitting Gurango. Freddie Infuerto arrived at the guardhouse and asked the security guards to stop hitting Gurango. Gurango agreed to surrender the camera on the condition that the security guards would prepare a document acknowledging receipt of the camera. Albao, on the other hand, alleged that he was on duty at the main entrance of the production area from 7 p.m. of 4 May 2003 to 7 a.m. of 5 May 2003. At 4:20 a.m., Gurango tried to enter the production area bringing a camera. Albao told Gurango that he could not bring the camera inside the production area. Gurango got mad and tried to grab Albao’s gun. Albao and Gurango engaged in a fistfight. Cordero, Pablis, and another security guard, Fredrick Lañada, arrived and stopped the fight. On 5 May 2003, at 8:35 a.m., Gurango went to Dr. Homer L. Aguinaldo (Dr. Aguinaldo) for examination and treatment. Dr. Aguinaldo issued a medical report9 and advised Gurango to rest for three days. In a letter10 dated 5 May 2003, BCPI asked Gurango to explain in writing why no disciplinary action should be taken against him and then placed him under preventive suspension effective 6 May 2003. On 6 May 2003, Gurango wrote a letter11 to BCPI narrating what happened. On 8 May 2003, Gurango wrote another letter12 to BCPI stating that: I already explained my side of the story regarding the alleged fistfight between Romeo Albao and me. I would like to reiterate that I was never involved in any fistfight nor commit any violation of our Company’s Code of Discipline. Another issue is the preventive suspension I’m undergoing with [sic]. I would like to question the propriety of such action. Be reminded that you are putting me under indefinite preventive suspension. Under the law, an employee may be placed under preventive suspension only if his continued employment poses a serious and imminent threat to the life and property of the employer or of his co-employees. Consequently, without this kind of threat, preventive suspension is improper.13 On 9 May 2003, Juanitas wrote a letter14 to BCPI narrating what he saw. Juanitas stated that: Noong May 5 bandang alas 4:20 ng madaling araw ako po ay lumabas ng electral [sic] shop upang pumunta saproduction upang mag monitor. Ng sa bandang locker room pa lang ako may nakita ako tatlong tao na nakasuot ng kulay puti na nagpaikot-ikot (sa harapan banda ng bandi [sic] clock). Medyo madilim pa kaya hindi ko nakita siAlex Gurango kasi nakasoot sya ng kulay dark blue na T-shirt. Ng medyo malapit na ako nakarinig ako ng boses na (tama na nasasaktan na ako) at may sumagot na ibigay mo na masasaktan ka lang. Ng makalapit na ako sa kanila nakita ko na iniipit na ng kanang braso ni Albao (Guard) ang leeg ni Alex. Akala ko nagbibiroan lang sila.Tinanong ko kung ano yan pero bago ako tumanong sa kanila nakita ko na nasasaktan na si Alex dahil sa pagkaipit sa kanyang leeg. Sagot ni Alex sa akin pre (ako) kinukuha nila ang kamera sa akin to eh. Sabi pa niAlex hindi ko to ibibigay sa inyo kahit ako’y saktan nyo, hindi ako lalaban sa inyo. May pagbibigyan ako, ibibigay ko to sa management. Sabi ko ano ba yan nasasaktan na ang tao. Nagtataka naman ako sa kanila ni Pables atLañada bakit hindi nila inaawat, nakatingin lang sila at kasamahan pa nila. Ako naman natatakot akong paghiwalayin sila kasi may baril si Albao na naka

sabit sa beywang nya baka pag inawat ko baka sasabihin niAlbao na kumampi ako kay Alex dahil parehas kaming maintenance. Sinabihan ko si Albao na bitiwan mo si Alexayusin natin to. Hindi pa rin binitiwan ni Albao ang pagkaipit sa leeg ni Alex hanggang sa naitulak ko sila papunta sa guardhouse. Ng sa loob na ng guardhouse hindi pa rin binitiwan ni Albao si Alex kaya hinahanap ko ang kanilang O.I.C. Para ayusin na. Maya maya lumabas si Cordero (O.I.C.). Sabi ko awatin niya si Albao pero hindi manlang nya inawat pati na ang kanyang mga kasama dahil nandoon pa rin sa loob ng guardhouse sina Pables, Lañada at Cordero. Lumabas ako at tinawag ko si Pong sa kanilang shop. Bumalik ako sa guardhouse kasama siPong, ganon pa rin nakakapit pa rin ang braso ni Albao sa leeg ni Alex. Ngayon naglakas loob na lang ako na paghiwalayin sila. Nahirapan ako dahil malakas si Albao. Napaghiwalay ko sila pero muntik pa nga ako tamaan ng kamay ni Albao at ng maghiwalay na pinaupo ko si Alex sa upuan sa tabi at hinarang ko si Albao dahil gusto pa nyang lumapit kay Alex at nagsabi ako kay Pong na bantayan mo si Alex dahil tatawag ako ng Korean osupervisor para ayusin.15 On 10 May 2003, BCPI wrote a letter to Gurango finding him guilty of engaging in a fistfight and violating company policy by bringing a camera. On 14 May 2003, Gurango wrote a letter16 to BCPI stating that: I again would like to reiterate that I was never involved nor commit [sic] any violation of Company’s Code of Discipline. For me to further explain, could you please be more specific what company policies are you referring to when you said that bringing of camera inside the production area and refusal to surrender the same camera constitute infractions of company policy.17 On 15 May 2003, Gurango filed with the 5th Municipal Circuit Trial Court (MCTC), Carmona, Cavite, a criminal complaint18 against Albao, Cordero and Pablis for slight physical injury. In a letter19 dated 19 May 2003, BCPI dismissed Gurango effective 20 May 2003. BCPI stated that: After a thorough evaluation and intensive deliberation on the facts attendant to your case, Management has found you to have committed the following Offenses under the Company’s Code of Discipline: 1. Concealing and bringing in to work station/area of personal belongings (e.g., a camera), other than those required in the performance of one’s duty which disrupt/obstruct Company services and operations, except those authorized by higher authorities. (Table II, Serious, No. 10 of Code of Discipline); 2. Utter disregard for or refusal to submit to reasonable inspection connected within [sic] the Company premises by authorized Company security personnel in the conduct of their business. (Table IV, Minor, No. 1 of Code of Discipline); 3. Starting or provoking a fight, i.e., involvement in a fist fight with a security guard last May 5, 2003. (Table I, Grave, No. 6 of Code of Discipline); 4. Attempting to inflict or inflicting bodily injury upon any Company official (e.g., security guard who is a peacekeeping officer of the company) or employee. (Table I, Grave, No. 05 of Code of Discipline); and

5. Intentionally causing personal injury to another person (i.e., the security guard) within the Company premises. (Table I, Grave, No. 12 of Code of Discipline). xxxx Based on the foregoing, and in view of the gravity of the offenses that you have committed which constitute gross misconduct, the Company is constrained to terminate your employment for cause effective May 20, 2003, at the close of business hours.20 On 26 May 2003, Gurango filed with the NLRC a complaint against BCPI and Hong for illegal dismissal. The Labor Arbiter’s Ruling In his 6 July 2004 Decision, the Labor Arbiter found BCPI liable for illegal dismissal. The Labor Arbiter ordered BCPI to pay Gurango backwages and separation pay. The Labor Arbiter held that: I find that the complainant was illegally dismissed from employment. He was dismissed from [sic] trying to bring an alleged prohibited item, a camera, inside the Production Area but company rules did not prohibit the bringing of camera. How can an unloaded camera be said to "disrupt/obstruct company services and operations"? It cannot. As to the alleged fistfight between the complainant and security guard Albao, I am more inclined to believe and find credible complainant’s version that he was mauled by Albao and, later, by some of the guards. His letter/statement was made on May 6, 2003, or only a day after the incident. The statement of guard Albao was made on May 28, 2003, several days after the incident. I find that complainant’s statement is freshly unblemished, and, therefore, very credible while Albao’s contradictory statement is the fruit of afterthought. Moreover, I don’t find the complainant was foolish enough to try to snatch the gun of Albao during the incident. I am convinced Albao lied in his statement. xxxx In the present case, no solid cause exists to dismiss complainant from employment as to warrant a dismissal.21 BCPI and Hong appealed to the NLRC. The NLRC’s Ruling In its 17 October 2005 Resolution, the NLRC affirmed in toto the Labor Arbiter’s 6 July 2004 Decision. The NLRC held that:

Although fighting within company premises constitute serious misconduct, this however, does not apply in this case. Complainant did not start nor provoke the fight. It was precipitated, instead, by guard Albao when he tried to get the complainant’s camera for no valid reason. The statement of Albao that complainant tried to snatch his service firearm is not only unbelievable but is also exaggerated. The Labor Arbiter is correct and we concur in his finding that the complainant was not foolish enough to try to snatch the gun of Albao. The camera is undisputably owned by complainant. Bringing it inside his workplace is not a crime. So why would he try to snatch a gun for a very trivial misunderstanding. What is clear is that the security guards over acted in the performance of their duty. xxxx x x x The prohibition against the bringing of personal belongings in to the work station/area is qualified by a condition that such belongings will disrupt/obstruct company’s services and operations. That is why in the enumerations the following are included, radios, walkman, discman, make-up kits, ladies’ bag workers’ knapsacks and the like. An unloaded camera is not listed and we cannot imagine how such camera could "disrupt or obstruct company services and operations. Moreover, even if we assume that the complainant indeed violated this Inter-Office Memorandum, still, this will not justify complainant’s dismissal because the penalty provided therein is only six (6) days suspension from work without pay, not dismissal.22 BCPI and Hong filed a motion for reconsideration, which the NLRC denied. BCPI and Hong filed with the Court of Appeals a petition for certiorari under Rule 65 of the Rules of Court. The Court of Appeals’ Ruling In its 20 July 2006 Decision, the Court of Appeals set aside the 17 October 2005 and 24 January 2006 Resolutions of the NLRC. The Court of Appeals held that "private respondent engaged himself in a fistfight with the security guard"23 and that engaging in a fistfight constituted serious misconduct. Gurango filed a motion24 for reconsideration, which the Court of Appeals denied in its 11 September 2006 Resolution. Hence, the present petition. The Issue Gurango raises as issue that the Court of Appeals erred in ruling that he was legally dismissed. BCPI failed to prove that he engaged in a fistfight and that there was just cause for his dismissal. The Court’s Ruling The petition is meritorious. As a general rule, only questions of law may be raised in petitions for certiorari under Rule 45 of the Rules of Court. Section 1 of Rule 45 states that, "The petition shall raise only questions of law." In Triumph International (Phils.), Inc. v. Apostol,25 the Court enumerated exceptions to the rule. Among the exceptions are when the findings of fact are conflicting and when the findings are conclusions without citation of specific evidence on which they are based.26

In the present case, the findings of fact of the Court of Appeals conflict with the findings of fact of the NLRC and the Labor Arbiter. Also, the finding of the Court of Appeals that Gurango engaged in a fistfight is a conclusion without citation of specific evidence on which it is based. In termination cases, the employer has the burden of proving, by substantial evidence, that the dismissal is for just cause. If the employer fails to discharge the burden of proof, the dismissal is deemed illegal. In AMA Computer College — East Rizal v. Ignacio,27 the Court held that: In termination cases, the burden of proof rests on the employer to show that the dismissal is for just cause. When there is no showing of a clear, valid and legal cause for the termination of employment, the law considers the matter a case of illegal dismissal and the burden is on the employer to prove that the termination was for a valid or authorized cause.1avvphi1 And the quantum of proof which the employer must discharge is substantial evidence. An employee’s dismissal due to serious misconduct must be supported by substantial evidence. Substantial evidence is that amount of relevant evidence as a reasonable mind might accept as adequate to support a conclusion, even if other minds, equally reasonable, might conceivably opine otherwise.28 In the present case, aside from Albao’s statement, BCPI did not present any evidence to show that Gurango engaged in a fistfight. Moreover, there is no showing that Gurango’s actions were performed with wrongful intent. In AMA Computer College – East Rizal, the Court held that: The Labor Code provides that an employer may terminate the services of an employee for a just cause.1âwphi1 Among the just causes in the Labor Code is serious misconduct. Misconduct is improper or wrong conduct. It is the transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment. The misconduct to be serious within the meaning of the Labor Code must be of such a grave and aggravated character and not merely trivial or unimportant. x x x In National Labor Relations Commission v. Salgarino, the Court stressed that "[i]n order to constitute serious misconduct which will warrant the dismissal of an employee under paragraph (a) of Article 282 of the Labor Code, it is not sufficient that the act or conduct complained of has violated some established rules or policies. It is equally important and required that the act or conduct must have been performed with wrongful intent." After a thorough examination of the records of the case, however, the Court finds that petitioner AMACCI miserably failed to prove by substantial evidence its charges against respondent. There is no showing at all that respondent’s actions were motivated by a perverse and wrongful intent, as required by Article 282(a) of the Labor Code.29 (Emphasis supplied) The surrounding circumstances show that Gurango did not engage in a fistfight: (1) in his 9 May 2003 letter to BCPI, Juanitas corroborated Gurango’s version of the facts; (2) nobody corroborated Albao’s version of the facts; (3) in his medical report, Dr. Aguinaldo found that Gurango suffered physical injuries; (4) Gurango filed with the MCTC a complaint against Albao, Cordero and Pablis for slight physical injury; (5) the Labor Arbiter found Gurango’s statement credible and unblemished; (6) the Labor Arbiter found Albao’s statement contradictory; (7) the Labor Arbiter stated, "I am convinced Albao lied in his statement"; (8) the NLRC found that Gurango did not start a fight; (9) the NLRC found Albao’s statement unbelievable and exaggerated; and (10) the Court of Appeals’ reversal of the findings of fact of the Labor Arbiter and the NLRC is baseless. In Triumph International (Phils.), Inc., the Court held that factual findings of labor officials, who are deemed to have acquired expertise in matters within their jurisdiction, are accorded not only respect but finality when supported by susbstantial evidence.30

WHEREFORE, we GRANT the petition. We SET ASIDE the 20 July 2006 Decision and 11 September 2006 Resolution of the Court of Appeals in CA-G.R. SP No. 94004 and REINSTATE the 17 October 2005 and 24 January 2006 Resolutions of the NLRC in CA No. 044428-05. SO ORDERED.

G.R. No. 172295

December 23, 2008

LILIA P. LABADAN, petitioner, vs. FOREST HILLS ACADEMY/NAOMI CABALUNA and PRESIDING COMISSIONER SALIC B. DUMARPA, COMMISSIONER PROCULO T. SARMEN, COMMISSIONER NOVITO C. CAGAYAN, respondents. DECISION CARPIO MORALES, J.: Lilian L. Labadan (petitioner) was hired by private respondent Forest Hills Mission Academy (Forest Hills) in July 1989 as an elementary school teacher. From 1990 up to 2002, petitioner was registrar and secondary school teacher. On August 18, 2003, petitioner filed a complaint1 against respondent Forest Hills and its administrator respondent Naomi Cabaluna for illegal dismissal, non-payment of overtime pay, holiday pay, allowances, 13th month pay, service incentive leave, illegal deductions, and damages. In her Position Paper,2 petitioner alleged that she was allowed to go on leave from Forest Hills, and albeit she had exceeded her approved leave period, its extension was impliedly approved by the school principal because she received no warning or reprimand and was in fact retained in the payroll up to 2002.3 Petitioner further alleged that since 1990, tithes to the Seventh Day Adventist church have been illegally deducted from her salary; and she was not paid overtime pay for overtime service, 13th month pay, five days service incentive leave pay, and holiday pay; and that her SSS contributions have not been remitted. Claiming that strained relations between her and Forest Hill have rendered reinstatement not feasible, petitioner prayed for separation pay in lieu of reinstatement. In its Position Paper,4 Forest Hills claimed as follows: In July 2001, petitioner was permitted to go on leave for two weeks but did not return for work after the expiration of the period. Despite petitioner’s undertaking to report "soon," she never did even until the end of School Year 2001-2002. It thus hired a temporary employee to accomplish the needed reports. When she finally returned for work, classes for the School Year 2002-2003 were already on-going. To belie petitioner’s claim that she was dismissed, Forest Hills submitted a list of faculty members and staff from School Year 1998-1999 up to School Year 2001 to 2002 which included her name.5 With regard to the charge for illegal deduction, Forest Hills claimed that the Seventh Day Adventist Church requires its members to pay tithes equivalent to 10% of their salaries, and petitioner was hired on account of her being a member thereof, and petitioner never questioned the deduction of the tithe from her salary. With regard to the charge for non-payment of overtime pay, holiday pay, and allowances, Forest Hills noted that petitioner proffered no evidence to support the same. The Labor Arbiter decided in favor of petitioner, disposing as follows:

WHEREFORE, judgment is hereby rendered: 1. Finding respondents Forest Hills Academy and/or Naomi Cabaluna guilty of illegally dismissing the complainant; 2. Directing respondent to pay complainant Lilia P. Labadan the total amount of P152,501.02 representing her monetary award x x x. Complainant’s other claim[s] are hereby dismissed for lack of merit and/or failure to substantiate. SO ORDERED.6 The National Labor Relations Commission (NLRC), finding the Labor Arbiter to have misappreciated the facts of the case, reversed and set aside his decision and dismissed petitioner’s complaint by Resolution of June 30, 2005.7 On petitioner’s Petition for Certiorari,8 the Court of Appeals, by Resolution9 of December 15, 2005, dismissed the petition for deficient amount of appellate docket fee, non-attachment of Affidavit of Service, absence of written explanation why the petition was filed through registered mail instead of through personal service, and non-attachment of copies of the Complaint and the Answer filed before the Labor Arbiter. Petitioner’s Motion for Reconsideration having been denied,10 she filed the present Petition for Review on Certiorari,11 faulting the Court of Appeals x x x IN DISMISSING THE PETITION ON THE GROUND OF TECHNICALITIES[;] x x x IN NOT DECIDING ON THE MERITS WHETHER OR NOT HONORABLE COMMISSIONERS OF THE 5TH DIVISION HAVE COMMITTED AN ACT OF GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION: A. IN REVERSING THE FINDINGS OF THE EXECUTIVE LABOR ARBITER THAT HEREIN PETITIONER-COMPLAINANT WAS NOT DISMISSED FROM HER WORK AS A TEACHER and AT THE SAME TIME THE REGISTRAR; B. IN FINDING THAT BY A PROLONGED ABSENCE OF ONE YEAR MORE OR LESS, PETITIONER WAIVED HER 13TH MONTH PAY AND SERVICE INCENTIVE LEAVES AS SHE FAILED TO STATE SUCH CLAIMS IN HER AFFIDAVIT THAT WAS ATTACHED [TO] HER POSITION PAPER, and; C. THAT THE DECISION/RESOLUTION RENDERED BY THE HONORABLE COMMISSIONERS OF THE 5TH DIVISION WAS TAINTED WITH GRAVE ABUSE OF DISCRETION AS IT WAS INCOMPLETE AND UNLAWFUL[.]12 (Italics and emphasis in the original) Non-payment of docket fee at the time of the filing of a petition does not automatically call for its dismissal as long as the fee is paid within the applicable prescriptive or reglementary period.13 While petitioner paid the P30 deficient amount of the docket fee on February 7, 2006,14 it was beyond the 60-day period for filing the petition for certiorari. Nevertheless, the Court, in the interest of substantial justice, brushes aside this and the other technicalities cited by the Court of Appeals in its Resolution of December 15, 200515 and, instead of remanding the case to the appellate court, now hereby decides the case on the merits.

While in cases of illegal dismissal, the employer bears the burden of proving that the dismissal is for a valid or authorized cause, the employee must first establish by substantial evidence the fact of dismissal.16 The records do not show that petitioner was dismissed from the service. They in fact show that despite petitioner’s absence from July 2001 to March 2002 which, by her own admission, exceeded her approved leave,17 she was still considered a member of the Forest Hills faculty18 which retained her in its payroll.19 Petitioner argues, however, that she was constructively dismissed when Forest Hills merged her class with another "so much that when she reported back to work, she has no more claims to hold and no more work to do."20 Petitioner, however, failed to refute Forest Hills’ claim that when she expressed her intention to resume teaching, classes were already ongoing for School Year 2002-2003. It bears noting that petitioner simultaneously held the positions of secondary school teacher and registrar and, as the NLRC noted, she could have resumed her work as registrar had she really wanted to continue working with Forest Hills.21 Petitioner’s affidavit and those of her former colleagues,22 which she attached to her Position Paper, merely attested that she was dismissed from her job without valid cause, but gave no particulars on when and how she was dismissed. There being no substantial proof that petitioner was dismissed, she is not entitled to separation pay or backwages. Respecting petitioner’s claim for holiday pay, Forest Hills contends that petitioner failed to prove that she actually worked during specific holidays. Article 94 of the Labor Code provides, however, that (a) Every worker shall be paid his regular daily wage during regular holidays, except in retail and service establishments regularly employing less than ten (10) workers; (b) The employer may require an employee to work on any holiday but such employee shall be paid a compensation equivalent to twice his regular rate[.] The provision that a worker is entitled to twice his regular rate if he is required to work on a holiday implies that the provision entitling a worker to his regular rate on holidays applies even if he does not work. The petitioner is likewise entitled to service incentive leave under Article 95 of the Labor Code which provides that (a) Every employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave of five days with pay. (b) This provision shall not apply to those who are already enjoying the benefit herein provided, those enjoying vacation leave with pay of at least five days and those employed in establishments regularly employing less than ten employees or in establishment exempted from granting this benefit by the Secretary of Labor after considering the viability or financial condition of such establishment.

x x x x, and to 13th month pay under Presidential Decree No. 851.23 As for petitioner’s claims for overtime pay, it must be denied, for other than the uncorroborated affidavits of her colleagues, there is no concrete proof that she is entitled thereto.24 And so must her claim for allowances, no proof to her entitlement thereto having been presented On the deduction of 10% tithe, Article 113 of the Labor Code instructs: ART. 113. No employer, in his own behalf or in behalf of any person, shall make any deduction from the wages of his employees, except: (a) In cases where the worker is insured with his consent by the employer, and the deduction is to recompense the employer for the amount paid by him as premium on the insurance; (b) For union dues, in cases where the right of the worker or his union to check-off has been recognized by the employer or authorized in writing by the individual worker concerned; and (c) In cases where the employer is authorized by law or regulations issued by the Secretary of Labor, as does Rule VIII, Section 10 of the Rules Implementing Book III of the Labor Code reading: SEC. 10. Deductions from the wages of the employees may be made by the employer in any of the following cases: (a) When the deductions are authorized by law, including deductions for the insurance premiums advanced by the employer in behalf of the employee as well as union dues where the right to check-off has been recognized by the employer or authorized in writing by the individual employee himself; (b) When the deductions are with the written authorization of the employees for payment to a third person and the employer agrees to do so, provided that the latter does not receive any pecuniary benefit, directly or indirectly, from the transaction. (Emphasis and underscoring supplied) In the absence then of petitioner’s written conformity to the deduction of the 10% tithe from her salary, the deduction made by Forest Hills was illegal. Finally, on petitioner’s claim that Forest Hills did not remit her SSS contributions, Villar v. National Labor Relations Commission25 enlightens: x x x [T]he burden of proving payment of monetary claims rests on the employer. x x x xxxx 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.26 (Underscoring supplied) Forest Hills having glossed over this claim, the same must be granted. Finally, insofar as petitioner was compelled to litigate her money claims, an award of attorney’s fees equivalent to 10% of the final judgment award is in order.27 WHEREFORE, the Court of Appeals Resolution of December 15, 2005 is SET ASIDE. The petition is GRANTEDinsofar as petitioner’s claims for illegal deductions, holiday pay, service incentive leave pay, 13th month pay, and non-remittance of SSS contributions are concerned. Respondents are accordingly ORDERED to refund to petitioner the amount of the illegal deductions from her salary; to pay her holiday pay, service incentive leave pay, and 13th month pay; to remit her contributions to the SSS; and to pay her attorney’s fees equivalent to 10% of the final judgment award. The case is accordingly REMANDED to the Labor Arbiter for computation of the amount of such money claims. SO ORDERED.

G.R. No. L-12582

January 28, 1961

LVN PICTURES, INC., petitioner-appellant, vs. PHILIPPINE MUSICIANS Guild (FFW) and COURT OF INDUSTRIAL RELATIONS, respondentsappellees. x---------------------------------------------------------x G.R. No. L-12598

January 28, 1961

SAMPAGUITA PICTURES, INC., petitioner-appellant, vs. PHILIPPINE MUSICIANS Guild (FFW) and COURT OF INDUSTRIAL RELATIONS, respondentsappellees. Nicanor S. Sison for petitioner-appellant. Jaime E. Ilagan for respondent-appellee Court of Agrarian Relations. Gerardo P. Cabo Chan for respondent-appellee Philippine Musicians Guild. CONCEPCION, J.: Petitioners herein, LVN Pictures, Inc. and Sampaguita Pictures, Inc. seek a review by certiorari of an order of the Court of Industrial Relations in Case No. 306-MC thereof, certifying the Philippine Musicians Guild (FFW), petitioner therein and respondent herein, as the sole and exclusive bargaining agency of all musicians working with said companies, as well as with the Premiere Productions, Inc., which has not appealed. The appeal of LVN Pictures, Inc., has been docketed as G.R. No. L-12582, whereas G.R. No. L-12598 is the appeal of Sampaguita Pictures, Inc. Involving as they do the same order, the two cases have been jointly heard in this Court, and will similarly be disposed of. In its petition in the lower court, the Philippine Musicians Guild (FFW), hereafter referred to as the Guild, averred that it is a duly registered legitimate labor organization; that LVN Pictures, Inc., Sampaguita Pictures, Inc., and Premiere Productions, Inc. are corporations, duly organized under the Philippine laws, engaged in the making of motion pictures and in the processing and distribution thereof; that said companies employ musicians for the purpose of making music recordings for title music, background music, musical numbers, finale music and other incidental music, without which a motion picture is incomplete; that ninety-five (95%) percent of all the musicians playing for the musical recordings of said companies are members of the Guild; and that the same has no knowledge of the existence of any other legitimate labor organization representing musicians in said companies. Premised upon these allegations, the Guild prayed that it be certified as the sole and exclusive bargaining agency for all musicians working in the aforementioned companies. In their respective answers, the latter denied that they have any musicians as employees, and alleged that the musical numbers in the filing of the companies are furnished by independent contractors. The lower court, however, rejected this pretense and sustained the theory of the Guild, with the result already adverted to. A reconsideration of the order complained of having been denied by the Court en banc, LVN Pictures, inc., and Sampaguita Pictures, Inc., filed these petitions for review forcertiorari. Apart from impugning the conclusion of the lower court on the status of the Guild members as alleged employees of the film companies, the LVN Pictures, Inc., maintains that a petition for certification cannot be entertained when the existence of employer-employee relationship between

the parties is contested. However, this claim is neither borne out by any legal provision nor supported by any authority. So long as, after due hearing, the parties are found to bear said relationship, as in the case at bar, it is proper to pass upon the merits of the petition for certification. It is next urged that a certification is improper in the present case, because, "(a) the petition does not allege and no evidence was presented that the alleged musicians-employees of the respondents constitute a proper bargaining unit, and (b) said alleged musicians-employees represent a majority of the other numerous employees of the film companies constituting a proper bargaining unit under section 12 (a) of Republic Act No. 875." The absence of an express allegation that the members of the Guild constitute a proper bargaining unit is fatal proceeding, for the same is not a "litigation" in the sense in which this term is commonly understood, but a mere investigation of a non-adversary, fact finding character, in which the investigating agency plays the part of a disinterested investigator seeking merely to ascertain the desires of employees as to the matter of their representation. In connection therewith, the court enjoys a wide discretion in determining the procedure necessary to insure the fair and free choice of bargaining representatives by employees.1 Moreover, it is alleged in the petition that the Guild it a duly registered legitimate labor organization and that ninety-five (95%) percent of the musicians playing for all the musical recordings of the film companies involved in these cases are members of the Guild. Although, in its answer, the LVN Pictures, Inc. denied both allegations, it appears that, at the hearing in the lower court it was merely the status of the musicians as its employees that the film companies really contested. Besides, the substantial difference between the work performed by said musicians and that of other persons who participate in the production of a film, and the peculiar circumstances under which the services of that former are engaged and rendered, suffice to show that they constitute a proper bargaining unit. At this juncture, it should be noted that the action of the lower court in deciding upon an appropriate unit for collective bargaining purposes is discretionary (N.L.R.B. v. May Dept. Store Co., 66 Sup. Ct. 468. 90 L. ed. 145) and that its judgment in this respect is entitled to almost complete finality, unless its action is arbitrary or capricious (Marshall Field & Co. v. N.L.R.B. [C.C.A. 19431, 135 F. 2d. 891), which is far from being so in the cases at bar. Again, the Guild seeks to be, and was, certified as the sole and exclusive bargaining agency for the musicians working in the aforesaid film companies. It does not intend to represent the other employees therein. Hence, it was not necessary for the Guild to allege that its members constitute a majority of all the employees of said film companies, including those who are not musicians. The real issue in these cases, is whether or not the musicians in question are employees of the film companies. In this connection the lower court had the following to say: As a normal and usual course of procedure employed by the companies when a picture is to be made, the producer invariably chooses, from the musical directors, one who will furnish the musical background for a film. A price is agreed upon verbally between the producer and musical director for the cost of furnishing such musical background. Thus, the musical director may compose his own music specially written for or adapted to the picture. He engages his own men and pays the corresponding compensation of the musicians under him. When the music is ready for recording, the musicians are summoned through 'call slips' in the name of the film company (Exh 'D'), which show the name of the musician, his musical instrument, and the date, time and place where he will be picked up by the truck of the film company. The film company provides the studio for the use of the musicians for that particular recording. The musicians are also provided transportation to and from the studio by the company. Similarly, the company furnishes them meals at dinner time.

During the recording sessions, the motion picture director, who is an employee of the company, supervises the recording of the musicians and tells what to do in every detail. He solely directs the performance of the musicians before the camera as director, he supervises the performance of all the action, including the musicians who appear in the scenes so that in the actual performance to be shown on the screen, the musical director's intervention has stopped. And even in the recording sessions and during the actual shooting of a scene, the technicians, soundmen and other employees of the company assist in the operation. Hence, the work of the musicians is an integral part of the entire motion picture since they not only furnish the music but are also called upon to appear in the finished picture. The question to be determined next is what legal relationship exits between the musicians and the company in the light of the foregoing facts. We are thus called upon to apply R.A. Act 875. which is substantially the same as and patterned after the Wagner Act substantially the same as a Act and the Taft-Hartley Law of the United States. Hence, reference to decisions of American Courts on these laws on the point-at-issue is called for. Statutes are to be construed in the light of purposes achieved and the evils sought to be remedied. (U.S. vs. American Tracking Association, 310 U.S. 534, 84 L. ed. 1345.) . In the case of National Labor Relations Board vs. Hearts Publication, 322 U.S. 111, the United States Supreme Court said the Wagner Act was designed to avert the 'substantial obstruction to the free flow of commerce which results from strikes and other forms of industrial unrest by eliminating the causes of the unrest. Strikes and industrial unrest result from the refusal of employers' to bargain collectively and the inability of workers to bargain successfully for improvement in their working conditions. Hence, the purposes of the Act are to encourage collective bargaining and to remedy the workers' inability to bargaining power, by protecting the exercise of full freedom of association and designation of representatives of their own choosing, for the purpose of negotiating the terms and conditions of their employment.' The mischief at which the Act is aimed and the remedies it offers are not confined exclusively to 'employees' within the traditional legal distinctions, separating them from 'independent contractor'. Myriad forms of service relationship, with infinite and subtle variations in the term of employment, blanket the nation's economy. Some are within this Act, others beyond its coverage. Large numbers will fall clearly on one side or on the other, by whatever test may be applied. Inequality of bargaining power in controversies of their wages, hours and working conditions may characterize the status of one group as of the other. The former, when acting alone may be as helpless in dealing with the employer as dependent on his daily wage and as unable to resist arbitrary and unfair treatment as the latter.' To eliminate the causes of labor dispute and industrial strike, Congress thought it necessary to create a balance of forces in certain types of economic relationship. Congress recognized those economic relationships cannot be fitted neatly into the containers designated as 'employee' and 'employer'. Employers and employees not in proximate relationship may be drawn into common controversies by economic forces and that the very dispute sought to be avoided might involve 'employees' who are at times brought into an economic relationship with 'employers', who are not their 'employers'. In this light, the language of the Act's definition of 'employee' or 'employer' should be determined broadly in doubtful situations, by

underlying economic facts rather than technically and exclusively established legal classifications. (NLRB vs. Blount, 131 F [2d] 585.) In other words, the scope of the term 'employee' must be understood with reference to the purposes of the Act and the facts involved in the economic relationship. Where all the conditions of relation require protection, protection ought to be given . By declaring a worker an employee of the person for whom he works and by recognizing and protecting his rights as such, we eliminate the cause of industrial unrest and consequently we promote industrial peace, because we enable him to negotiate an agreement which will settle disputes regarding conditions of employment, through the process of collective bargaining. The statutory definition of the word 'employee' is of wide scope. As used in the Act, the term embraces 'any employee' that is all employees in the conventional as well in the legal sense expect those excluded by express provision. (Connor Lumber Co., 11 NLRB 776.). It is the purpose of the policy of Republic Act 875; (a) To eliminate the causes of industrial unrest by protecting the exercise of their right to self-organization for the purpose of collective bargaining. (b) To promote sound stable industrial peace and the advancement of the general welfare, and the best interests of employers and employees by the settlement of issues respecting terms and conditions of employment through the process of collective bargaining between employers and representatives of their employees. The primary consideration is whether the declared policy and purpose of the Act can be effectuated by securing for the individual worker the rights and protection guaranteed by the Act. The matter is not conclusively determined by a contract which purports to establish the status of the worker, not as an employee. The work of the musical director and musicians is a functional and integral part of the enterprise performed at the same studio substantially under the direction and control of the company. In other words, to determine whether a person who performs work for another is the latter's employee or an independent contractor, the National Labor Relations relies on 'the right to control' test. Under this test an employer-employee relationship exist where the person for whom the services are performed reserves the right to control not only the end to be achieved, but also the manner and means to be used in reaching the end. (United Insurance Company, 108, NLRB No. 115.). Thus, in said similar case of Connor Lumber Company, the Supreme Court said:. 'We find that the independent contractors and persons working under them are employees' within the meaning of Section 2 (3) of its Act. However, we are of the opinion that the independent contractors have sufficient authority over the persons working under their immediate supervision to warrant their exclusion from the unit. We shall include in the unit the employees working under the supervision of the independent contractors, but exclude the contractors.' 'Notwithstanding that the employees are called independent contractors', the Board will hold them to be employees under the Act where the extent of the employer's control over them

indicates that the relationship is in reality one of employment. (John Hancock Insurance Co., 2375-D, 1940, Teller, Labor Dispute Collective Bargaining, Vol.). The right of control of the film company over the musicians is shown (1) by calling the musicians through 'call slips' in 'the name of the company; (2) by arranging schedules in its studio for recording sessions; (3) by furnishing transportation and meals to musicians; and (4) by supervising and directing in detail, through the motion picture director, the performance of the musicians before the camera, in order to suit the music they are playing to the picture which is being flashed on the screen. Thus, in the application of Philippine statutes and pertinent decisions of the United States Courts on the matter to the facts established in this case, we cannot but conclude that to effectuate the policies of the Act and by virtue of the 'right of control' test, the members of the Philippine Musicians Guild are employees of the three film companies and, therefore, entitled to right of collective bargaining under Republic Act No. 875. In view of the fact that the three (3) film companies did not question the union's majority, the Philippine Musicians Guild is hereby declared as the sole collective bargaining representative for all the musicians employed by the film companies." We are fully in agreement with the foregoing conclusion and the reasons given in support thereof. Both are substantially in line with the spirit of our decision in Maligaya Ship Watchmen Agency vs. Associated Watchmen and Security Union, L-12214-17 (May 28, 1958). In fact, the contention of the employers in the Maligaya cases, to the effect that they had dealt with independent contractors, was stronger than that of the film companies in these cases. The third parties with whom the management and the workers contracted in the Maligaya cases were agencies registered with the Bureau of Commerce and duly licensed by the City of Manila to engage in the business of supplying watchmen to steamship companies, with permits to engage in said business issued by theCity Mayor and the Collector of Customs. In the cases at bar, the musical directors with whom the film companies claim to have dealt with had nothing comparable to the business standing of said watchmen agencies. In this respect, the status of said musical directors is analogous to that of the alleged independent contractor in Caro vs. Rilloraza, L-9569 (September 30, 1957), with the particularity that the Caro case involved the enforcement of the liability of an employer under the Workmen's Compensation Act, whereas the cases before us are merely concerned with the right of the Guild to represent the musicians as a collective bargaining unit. Hence, there is less reason to be legalistic and technical in these cases, than in the Caro case. Herein, petitioners-appellants cite, in support of their appeal, the cases of Sunripe Coconut Product Co., Inc vs. CIR (46 Off. Gaz., 5506, 5509), Philippine Manufacturing Co. vs. Santos Vda. de Geronimo, L-6968 (November 29, 1954), Viana vs. Al-Lagadan, L-8967 (May 31, 1956), and Josefa Vda. de Cruz vs. The Manila Hotel Co. (53 Off. Gaz., 8540). Instead of favoring the theory of said petitioners-appellants, the case of the Sunripe Coconut Product Co., Inc. is authority for herein respondents-appellees. It was held that, although engaged as piece-workers, under the "pakiao" system, the "parers" and "shellers" in the case were, not independent contractor, butemployees of said company, because "the requirement imposed on the 'parers' to the effect that 'the nuts are pared whole or that there is not much meat wasted,' in effect limits or controls the means or details by which said workers are to accomplish their services" — as in the cases before us. The nature of the relation between the parties was not settled in the Viana case, the same having been remanded to the Workmen's Compensation Commission for further evidence.

The case of the Philippine Manufacturing Co. involved a contract between said company and Eliano Garcia, who undertook to paint a tank of the former. Garcia, in turn engaged the services of Arcadio Geronimo, a laborer, who fell while painting the tank and died in consequence of the injuries thus sustained by him. Inasmuch as the company was engaged in the manufacture of soap, vegetable lard, cooking oil and margarine, it was held that the connection between its business and the painting aforementioned was purely casual; that Eliano Garcia was an independent contractor; that Geronimo was not an employee of the company; and that the latter was not bound, therefore, to pay the compensation provided in the Workmen's Compensation Act. Unlike the Philippine Manufacturing case, the relation between the business of herein petitioners-appellants and the work of the musicians is not casual. As held in the order appealed from which, in this respect, is not contested by herein petitioners-appellants — "the work of the musicians is an integral part of the entire motion picture." Indeed, one can hardly find modern films without music therein. Hence, in the Caro case (supra), the owner and operator of buildings for rent was held bound to pay the indemnity prescribed in the Workmen's Compensation Act for the injury suffered by a carpenter while working as such in one of said buildings even though his services had been allegedly engaged by a third party who had directly contracted with said owner. In other words, the repair work had not merely a casual connection with the business of said owner. It was a necessary incident thereof, just as music is in the production of motion pictures. The case of Josefa Vda. de Cruz vs. The Manila Hotel Co., L-9110 (April 30, 1957) differs materially from the present cases. It involved the interpretation of Republic Act No. 660, which amends the law creating and establishing the Government Service Insurance System. No labor law was sought to be construed in that case. In act, the same was originally heard in the Court of First Instance of Manila, the decision of which was, on appeal, affirmed by the Supreme Court. The meaning or scope if the term "employee," as used in the Industrial Peace Act (Republic Act No. 875), was not touched therein. Moreover, the subject matter of said case was a contract between the management of the Manila Hotel, on the one hand, and Tirso Cruz, on the other, whereby the latter greed to furnish the former the services of his orchestra, consisting of 15 musicians, including Tirso Cruz, "from 7:30 p.m. to closing time daily." In the language of this court in that case, "what pieces the orchestra shall play, and how the music shall be arranged or directed, the intervals and other details — such are left to the leader'sdiscretion." This is not situation obtaining in the case at bar. The musical directors above referred to have no such control over the musicians involved in the present case. Said musical directors control neither the music to be played, nor the musicians playing it. The film companies summon the musicians to work, through the musical directors. The film companies, through the musical directors, fix the date, the time and the place of work. The film companies, not the musical directors, provide the transportation to and from the studio. The film companies furnish meal at dinner time. What is more — in the language of the order appealed from — "during the recording sessions, the motion picture director who is an employee of the company" — not the musical director — "supervises the recording of the musicians and tells them what to do in every detail". The motion picture director — not the musical director — "solely directs and performance of the musicians before the camera". The motion picture director "supervises the performance of all the actors, including the musicians who appear in the scenes, so that in the actual performance to be shown in the screen, the musical director's intervention has stopped." Or, as testified to in the lower court, "the movie director tells the musical director what to do; tells the music to be cut or tells additional music in this part or he eliminates the entire music he does not (want) or he may want more drums or move violin or piano, as the case may be". The movie director "directly controls the activities of the musicians." He "says he wants more drums and the drummer plays more" or "if he wants more violin or he does not like that.".

It is well settled that "an employer-employee relationship exists . . .where the person for whom the services are performed reserves a right to control not only the end to be achieved but also the means to be used in reaching such end . . . ." (Alabama Highway Express Co., Express Co., v. Local 612, 108S. 2d. 350.) The decisive nature of said control over the "means to be used", is illustrated in the case of Gilchrist Timber Co., et al., Local No. 2530 (73 NLRB No. 210, pp. 1197, 1199-1201), in which, by reason of said control, the employer-employee relationship was held to exist between the management and the workers, notwithstanding the intervention of an alleged independent contractor, who had, and exercise, the power to hire and fire said workers. The aforementioned control over the means to be used" in reading the desired end is possessed and exercised by the film companies over the musicians in the cases before us. WHEREFORE, the order appealed from is hereby affirmed, with costs against petitioners herein. It is so ordered.