Labor Standard.docx

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 192826

February 27, 2013

PHILIPPINE PLAZA HOLDINGS, INC., Petitioner, vs. MA. FLORA M. EPISCOPE, Respondent. DECISION PERLAS-BERNABE, J.: This is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the March 26, 2010 Decision1 and July 5, 2010 Resolution2 rendered by the Court of Appeals (CA) in CA-G.R. SP No. 102188. The CA reversed and set aside the Resolutions 3 of the National Labor Relations Commission (NLRC) dared May 30, 2007 and November 14, 2007 in NLRC NCR CA No. 04718706/NLRC NCR-12-13621-04 and thereby declared respondent to have been illegally dismissed. Petitioner Philippine Plaza Holdings, Inc. (PPHI) is the owner and operator of the Westin Philippine Plaza Hotel (Hotel). Respondent Ma. Flora M. Episcope (Episcope) was employedby PPHI since July 24, 1984 until she was terminated on November 4, 2004 for dishonesty, willful disobedience and serious misconduct amounting to loss of trust and confidence. In order to check the performance of the employees and the services in the different outlets of the Hotel, PPHI regularly employed the services of independent auditors and/or professional shoppers.For this purpose,Sycip, Gorres and Velayoauditors dined at the Hotel’s Café Plaza on August 28, 2004. After dining, the auditors were billed the total amount of P2,306.65, representing the cost of the food and drinks they had ordered under Check No. 565938. 4 Based on the audit report5 submitted to PPHI, Episcope was one of those who attended to the auditors and was the one who handed the check and received the payment of P2,400.00. She thereafter returned Check No. 565938, which was stamp marked "paid," together with the change. Upon verification of the foregoing check receipt with the sales report of Café Plaza, it was discovered that the Hotel's copy of the receipt bore a discount of P906.456on account of the use of a Starwood Privilege Discount Card registered in the name of Peter A. Pamintuan, while the receipt issued by Episcope to the auditors reflected the undiscounted amount of P2,306.65considering that none of the auditors had such discount card. In view of the foregoing, the amount actually remitted to the Hotel was only P1,400.20thus, leaving a shortage of P906.45. On September 30, 2004, the Hotel issued a Show-Cause Memo 7 directing Episcope to explain in writing why no disciplinary action should be taken against her for the questionable and invaliddiscount application on the settlement check issued to the auditors on August 28, 2004.

In her handwritten letter,8 Episcope admitted that she was on duty on the date and time in question but alleged that she could no longer recall if the concerned guests presented a Starwood Privilege Discount Card. On October 4, 2004, Episcope was placed on preventive suspension without pay.9 During the administrative hearing on October 6, 2004, Episcope, who was therein assisted by the Union President and four union representatives from National Union of Workers in Hotel Restaurant and Allied Industries (NUWHRAIN)-Philippine Plaza Hotel Chapter, confirmed the fact that she was the one who presented the subject check and received the corresponding payment from the guests. She, however, denied stampingthe said check as "paid" or that she gaveany discount without a discount card, explaining that she could not have committed such acts given that all receipts and discount applications were handled by the cashier. But when asked why the discounted receipt was not given to the guests, she merely replied that she could no longer remember. In a separate inquiry, the cashier of Café Plaza, however, maintained that a Starwood Privilege Discount Card must have been presented during the said incident given that there was a Discount Slip 10 and a stamped receipt indicating such discounted payment.11 Finding Episcope to have failed to sufficiently explain the questionable discount application on the settlement bill of the auditors, her employment was terminated for committing acts ofdishonesty, which was classified as a Class D offense under the Hotel's Code of Discipline, as well as for willful disobedience, serious misconduct and loss of trust and confidence. 12 Aggrieved, Episcope filed a complaint13 for illegal dismissal with prayer for payment of damages and attorney's fees against PPHI before the NLRC docketed as NLRC-NCR Case No. 00-12-13621-04. Rulings of the LA and the NLRC On October 20, 2005, the Labor Arbiter (LA) rendered a Decision in favor of PPHI and thus, dismissed Episcope's complaint for illegal dismissal. 14 The LA found that there was substantial evidence to support the charge of improper discount application and observed that the said act resulted to a loss on the part of the Hotel. Accordingly, the LA held that Episcope's actions rendered her unworthy of the trust and confidence demanded by her position which thus, warranted her dismissal. On appeal,15 the NLRC affirmed the LA's decision in theMay 30, 2007 Resolution. 16 Episcope's motion for reconsideration17 was likewise denied in the November 14, 2007 Resolution.18 Ruling of the CA On certiorari, the CA gave due course to the petition and reversed the NLRC's Decision. 19 It found the report submitted by the auditors grossly insufficient to support the conclusion that Episcope was guilty of the charges imputed against her. It described the report as a mere transaction account in tabular form,bereft of any evidentiary worth. It was unsigned and bore no indication of her alleged culpability. The CA likewise did not give credence to the minutes of the administrative hearing because it was based on the same unaudited report. Hence, the CA(1) declared Episcope's dismissal illegal;(2) ordered her reinstatement to her former position without loss of seniority rights and benefits under the Labor Code; and (3) remanded the case to the NLRC for further proceedings on her money claims and other benefits. The dispositive portion of the CA'sDecision reads:

WHEREFORE, in view of the foregoing, the petition is GRANTED. The assailed Resolutions dated May 30, 2007 and November 14, 2007 of the public respondent NLRC are REVERSED and SET ASIDE. Petitioner is hereby ordered reinstated to her former position without loss of seniority rights and benefits under the Labor Code. The case is hereby remanded to the NLRC for further proceedings on her money claims and other benefits. SO ORDERED.20 Dissatisfied, PPHI moved for reconsideration which was, however, denied in the assailed July 5, 2010 Resolution.21 Hence, the instant petition anchored on the sole ground that: THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED AND RULED CONTRARY TO LAW AND JURISPRUDENCE WHEN IT ACTED AS A TRIER OF FACTS AND ORDERED THE REINSTATEMENT OF THE RESPONDENT AND PAYMENT OF BACKWAGES.22 The Ruling of the Court The petition is impressed with merit. At the outset, it is settled that the jurisdiction of the Supreme Court in cases brought before it from the CA via Rule 45 of the Rules of Court is generally limited to reviewing errors of law. The Court is not the proper venue to consider a factual issue as it is not a trier of facts. The rule, however, is not ironclad and a departure therefrom may be warranted where the findings of fact of the CA are contrary to the findings and conclusions of the trial court or quasi-judicial agency,23 as in this case. There is therefore a need to review the records to determine which of them should be preferred as more conformable to evidentiary facts.24 After a judicious review of the records, as well as the respective allegations and defenses of the parties, the Court is constrained to reverse the findings and conclusion of the CA. Article 293 (formerly Article 279) of the Labor Code25 provides that the employer shall not terminate the services of an employee except only for a just or authorized cause. If an employer terminates the employment without a just or authorized cause, then the employee is considered to have been illegally dismissed and is thus, entitled to reinstatement or in certain instances, separation pay in lieu thereof, as well as the payment of backwages. Among the just causes for termination isthe employer’s loss of trust and confidence in its employee. Article 296 (c) (formerly Article 282 [c]) of the Labor Code provides that an employer may terminate the services of an employee for fraud or willful breach of the trust reposed in him. But in order for the said cause to be properly invoked, certain requirements must be complied with namely,(1) the employee concerned must be holding a position of trust and confidence and (2) there must be an act that would justify the loss of trust and confidence.26 It is noteworthy to mention that there are two classes of positions of trust: on the one hand, there are managerial employees whose primary duty consists of the management of the establishment in which they are employed or of a department or a subdivision thereof, and to other officers or members of the managerial staff; on the other hand, there are fiduciary rank-and-file employees,

such as cashiers, auditors, property custodians, or those who, in the normal exercise of their functions, regularly handle significant amounts of money or property. These employees, though rankand-file, are routinely charged with the care and custody of the employer's money or property, and are thus classified as occupying positions of trust and confidence. 27 Episcope belongs to this latter class and therefore, occupies a position of trust and confidence. As may be readily gleaned from the records, Episcope was employed by PPHI as a service attendant in its Café Plaza. In this regard, she was tasked to attend to dining guests, handle their bills and receive their payments for transmittal to the cashier. It is also apparent that whenever discount cards are presented, she maintained the responsibility to take them to the cashier for the application of discounts. Being therefore involved in the handling of company funds, Episcope is undeniably considered an employee occupying a position of trust and confidence and as such, was expected to act with utmost honesty and fidelity. Anent the second requisite, records likewise reveal that Episcope committed an act which justified her employer’s (PPHI’s) loss of trust and confidence in her. Primarily, it is apt to point out that proof beyond reasonable doubt is not required in dismissing an employee on the ground of loss of trust and confidence; it is sufficient that there lies some basis to believe that the employee concerned is responsible for the misconduct and that the nature of the employee's participation therein rendered him absolutely unworthy of trust and confidence demanded by his position. On this point, the Court, in the case of Bristol Myers Squibb (Phils.), Inc. v. Baban,28 citing Atlas Fertilizer Corporation v. National Labor Relations Commission,29 ruled as follows: As a general rule, employers are allowed a wider latitude of discretion in terminating the services of employees who perform functions by which their nature require the employer's full trust and confidence. Mere existence of basis for believing that the employee has breached the trust and confidence of the employer is sufficient and does not require proof beyond reasonable doubt. Thus, when an employee has been guilty of breach of trust or his employer has ample reason to distrust him, a labor tribunal cannot deny the employer the authority to dismiss him. In addition, it must be observed that only substantial evidence is required in order to support a finding that an employer’s trust and confidence accorded to its employee had been breached. As explained in the case of Lopez v. Alturas Group of Companies:30 xxx, the language of Article 282(c) [now, Article 296 (c)]of the Labor Code states that the loss of trust and confidence must be based on willful breach of the trust reposed in the employee by his employer. Such breach is willful if it is done intentionally, knowingly, and purposely, without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. Moreover, it must be based on substantial evidence and not on the employer's whims or caprices or suspicions otherwise, the employee would eternally remain at the mercy of the employer. Loss of confidence must not be indiscriminately used as a shield by the employer against a claim that the dismissal of an employee was arbitrary. And, in order to constitute a just cause for dismissal, the act complained of must be work-related and shows that the employee concerned is unfit to continue working for the employer. In addition, loss of confidence as a just cause for termination of employment is premised on the fact that the employee concerned holds a position of responsibility, trust and confidence or that the employee concerned is entrusted with confidence with respect to

delicate matters, such as the handling or care and protection of the property and assets of the employer. The betrayal of this trust is the essence of the offense for which an employee is penalized. (Emphasis supplied.) In the present case, records would show that Episcope committed acts of dishonesty which resulted to monetary loss on the part of PPHI and more significantly, led to the latter’s loss of trust and confidence in her. Notwithstanding the impaired probative value of the unaudited and unsigned auditor’s report, the totality of circumstances supports the foregoing findings: First, it remains unrefuted that Episcope attended to the auditors when they dined at the Café Plaza on the date and time in question. In fact, Episcope herself admitted that she tendered Check No. 565938 bearing the amount of P2,306.65 and received the amount of P2,400.00 as payment; Second, it is likewiseundisputed that the check receipt on file with the Hotel for the same transaction reflected only the amount of P1,400.20 in view of the application of a certain Starwood Privilege Discount Card registered in the name of one Peter Pamintuan, while the receipt given to the auditors bore the undiscounted amount of P2,306.65 which thus, resulted to a P906.45 discrepancy. During the proceedings, both receipts were actually presented in evidence yet, Episcope never interposed any objection on the authenticity of the same; and Third, when asked to explain the said discrepancy, Episcope merelyimputed culpability onthe part of the cashier, whom she claimed prepared all the receipts that were returned to the guests. From the foregoing incidents, it is clear that Episcope was remiss in her duty to carefully account for the money she received from the cafe's guests. It must be observed that though the receipts were prepared by the cashier, Episcope; as a service attendant,. was the one who actually handled the money tendered to her by the hotel clients. In this regard, prudence dictates that Episcope should have at least known why there was a shortage in remittance. Yet when asked, Episcope could not offer any plausible explanation but merely shifted the blame to the cashier. Irrefragably, as an employee who was routinely charged with the care and custody of her employer's money, Episcope was expected to have been more circumspect in the performance of her duties as a service attendant. This she failed to observe in the case at bar which thus, justifies PPHI's loss of trust and confidence in her as well as her consequent dismissal. Perforce, having substantially established the actual breach of duty committed by Episcope and the due observance of due process, no grave abuse of discretion can be imputed against the NLRC in sustaining the finding of the LA that her dismissal was proper under the circumstances. Finally, with respect to Episcope's other monetary claims, namely, service incentive leave credits and 13th month pay, the Court finds no error on the part of the LA when it denied the foregoing claims considering that Episcope failed to proffer any legitimate basis to substantiate her entitlement to the same. WHEREFORE, premises considered, the petition is GRANTED. The assailed March 26, 2010 Decision and July 5, 2010 Resolution of the Court of Appeals in CA-G.R. SP No. 102188 are REVERSED and SET ASIDE. The Decision of the Labor Arbiter, as affirmed by the NLRC, dismissing respondent Ma. Flora M. Episcope's complaint for illegal dismissal and other monetary claims is REINSTATED.

SO ORDERED. ESTELA M. PERLAS-BERNABE Associate Justice

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 184520

March 13, 2013

ROLANDO DS.TORRES, Petitioner, vs. RURAL BANK OF SAN JUAN, INC., ANDRES CANO CHUA, JOBEL GO CHUA, JESUS CANO CHUA, MEINRADO DALISAY, JOSE MANALANSAN III, OFELIA GINA BE and NATY ASTRERO, Respondents. DECISION REYES, J.: This Petition for Review on Certiorari,1 under Rule 45 of the Rules of Court, seeks to reverse and set aside the Decision2 dated February 21, 2008 of the Court of Appeals (CA) in CA-G.R. SP No. 94690 dismissing the complaint for illegal dismissal filed by petitioner Rolando OS. Torres (petitioner) against respondent Rural Bank of San Juan, Inc. (RBSJT) and its officers who are the herein individual respondents, namely: Andres Cano Chua (Andres), Jobel Go Chua (Jobel), Jesus Cano Chua (Jesus), Meinrado Dalisay, Jose Manalansan III (Jose), Ofelia Ginabe (Ofelia) and Naty Astrero (collectively referred to as respondents).3 Likewise assailed is the CA Resolution4 dated June 3, 2008 which denied reconsideration. The antecedents Culled from the rulings of the labor tribunals and the appellate court are the ensuing factual milieu: 5 The petitioner was initially hired by RBSJI as Personnel and Marketing Manager in 1991. After a sixmonth probationary period and finding his performance to be satisfactory, RBSJI renewed his employment for the same post to a permanent/regular status. In June 1996, the petitioner was offered the position of Vice-President for RBSJI’s newly created department, Allied Business Ventures. He accepted the offer and concomitantly relinquished his post. The vacancy created was filled by respondent Jobel who temporarily held the position concurrently as a Corporate Planning and Human Resources Development Head. On September 24, 1996, the petitioner was temporarily assigned as the manager of RBSJI’s N. Domingo branch in view of the resignation of Jacinto Figueroa (Jacinto). On September 27, 1996, Jacinto requested the petitioner to sign a standard employment clearance pertaining to his accountabilities with RBSJI. When the petitioner declined his request, Jacinto threw a fit and shouted foul invectives. To pacify him, the petitioner bargained to issue a clearance but only for Jacinto’s paid cash advances and salary loan.

About seven months later or on April 17, 1997, respondent Jesus issued a memorandum to the petitioner requiring him to explain why no administrative action should be imposed on him for his unauthorized issuance of a clearance to Jacinto whose accountabilities were yet to be audited. Jacinto was later found to have unliquidated cash advances and was responsible for a questionable transaction involving P11 million for which RBSJI is being sued by a certain Actives Builders Manufacturing Corporation. The memorandum stressed that the clearance petitioner issued effectively barred RBSJI from running after Jacinto.6 The petitioner submitted his explanation on the same day clarifying that the clearance was limited only to Jacinto’s paid cash advances and salary loan based on the receipts presented by Lily Aguilar (Lily), the cashier of N. Domingo branch. He emphasized that he had no foreknowledge nor was he forewarned of Jacinto’s unliquidated cash advances and questionable transactions and that the clearance did not extend to those matters.7 After conducting an investigation, RBSJI’s Human Resources Department recommended the petitioner’s termination from employment for the following reasons, to wit: 1. The issuance of clearance to Mr. Jacinto Figueroa by the petitioner have been prejudicial to the Bank considering that damages [sic] found caused by Mr. Figueroa during his stay with the bank; 2. The petitioner is not in any authority to issue said clearance which is a violation of the Company Code of Conduct and Discipline under Category B Grave Offense No. 1 (falsifying or misrepresenting persons or other company records, documents or papers) equivalent to termination; and 3. The nature of his participation in the issuance of the said clearance could be a reasonable ground for the Management to believe that he is unworthy of the trust and confidence demanded by his position which is also a ground for termination under Article 282 of the Labor Code.8 On May 19, 1997, RBSJI’s Board of Directors adopted the above recommendation and issued Resolution No. 97-102 terminating the petitioner from employment, the import of which was communicated to him in a Memorandum dated May 30, 1997.9 Feeling aggrieved, the petitioner filed the herein complaint for illegal dismissal, illegal deduction, non-payment of service incentive, leave pay and retirement benefits.10 The petitioner averred that the supposed loss of trust and confidence on him was a sham as it is in fact the calculated result of the respondents’ dubious plot to conveniently oust him from RBSJI. He claimed that he was deceived to accept a Vice-President position, which turned out to be a mere clerical and menial work, so the respondents can install Jobel, the son of a major stockholder of RBSJI, as Personnel and Marketing Manager. The plot to oust the petitioner allegedly began in 1996 when Jobel annexed the Personnel and Marketing Departments to the Business Development and Corporate Planning Department thus usurping the functions of and displacing the petitioner, who was put on a floating status and stripped of managerial privileges and allowances. The petitioner further alleged that he was cunningly assigned at N. Domingo branch so he can be implicated in the anomalous transaction perpetrated by Jacinto. He narrated that on September 27,

1996, the officers of RBSJI, namely: Jobel, Andres, Jose and Ofelia, were actually at the N. Domingo branch but they all suspiciously left him to face the predicament caused by Jacinto. He recounted that the next day he was assigned back at the Tarlac extension office and thereafter repeatedly harassed and forced to resign. He tolerated such treatment and pleaded that he be allowed to at least reach his retirement age. On March 7, 1996, he wrote a letter to George Cano Chua (George) expressing his detestation of how the "new guys" are dominating the operations of the company by destroying the image of pioneer employees, like him, who have worked hard for the good image and market acceptability of RBSJI. The petitioner requested for his transfer to the operations or marketing department. His request was, however, not acted upon. The petitioner claimed that on March 19, 1997, respondent Jesus verbally terminated him from employment but he later on retracted the same and instead asked the petitioner to tender a resignation letter. The petitioner refused. A month thereafter, the petitioner received the memorandum asking him to explain why he cleared Jacinto of financial accountabilities and thereafter another memorandum terminating him from employment. For their part, the respondents maintained that the petitioner was validly dismissed for loss of trust and confidence precipitated by his unauthorized issuance of a financial accountability clearance sans audit to a resigned employee. They averred that a copy of the clearance mysteriously disappeared from RBSJI’s records hence, the petitioner’s claim that it pertained only to Jacinto’s paid cash advances and salary loan cannot stand for being uncorroborated. Attempts at an amicable settlement were made but the same proved futile hence, the Labor Arbiter11 (LA) proceeded to rule on the complaint. Ruling of LA In its Decision12 dated November 27, 1998, the LA sustained the claims of the petitioner as against the factually unsubstantiated allegation of loss of trust and confidence propounded by the respondents. The LA observed that the petitioner’s selfless dedication to his job and efforts to achieve RBSJI’s stability, which the respondents failed to dispute, negate any finding of bad faith on his part when he issued a clearance of accountabilities in favor of Jacinto. As such, the said act cannot serve as a valid and justifiable ground for the respondents to lose trust and confidence in him. The LA further held that the failure of both parties to present a copy of the subject clearance amidst the petitioner’s explanation that it did not absolutely release Jacinto from liability, should work against the respondents since it is the proof that will provide basis for their supposed loss of trust and confidence. The LA upheld the petitioner’s contention that the loss of trust and confidence in him was indeed a mere afterthought to justify the respondents’ premeditated plan to ease him out of RBSJI. The LA’s conclusion was premised on the convergence of the following circumstances: (1) the petitioner’s stint from 1991-1996 was not marred with any controversy or complaint regarding his performance; (2) when Jobel joined RBSJI in the latter part of 1996, he took over the department led by the petitioner thus placing the latter in a floating status; and (3) the petitioner’s temporary transfer to the N. Domingo branch was designed to deliberately put him in a bind and blame him on whatever course of action he may take to resolve the same.

Accordingly, the petitioner was found to have been illegally dismissed and thus accorded the following reliefs in the decretal portion of the LA Decision, viz: WHEREFORE, premises considered, judgment is hereby rendered ordering respondent Bank and individual respondents, to reinstate [the petitioner to his previous or equivalent position, without loss of seniority rights and other benefits and privileges appurtaining [sic] to him, and to pay the petitioner the following: 1. The petitioner’s partial backwages and other emoluments in the form of allowances, as gasoline, maintenance, representation, uniform and membership allowances, from the time of his dismissal up to his actual date of reinstatement, which as of this date amount to: Backwages (Partial) …………………… P244,800.00 Gasoline Allowances ………………….. 63,000.00 Maintenance Allowance ………………. 45,000.00 Representation Allowance …………….. 54,000.00 Membership Allowance ……………….. 12,000.00 Uniform Allowance …………………… 8,000.00 Total ………P426,800.00 2. The petitioner’s 13th month pay from the time of his dismissal up to actual date of reinstatement, which as of this date amounts to Twenty-Seven Thousand Two Hundred (P27,200.00) Pesos; 3. Moral and exemplary damages in the amount of Fifty Thousand ([P]50,000.00) Pesos each, respectively; and 4. Attorney’s fees amounting to ten percent (10%) of the total award, specifically amounting to Fifty-Five Thousand Nine Hundred Twenty-Three Pesos and Eight ([P]55,923.08) Centavos. All other claims are hereby Dismissed for lack of merit. SO ORDERED.13 Ruling of the National Labor Relations Commission (NLRC) In its Resolution14 dated April 14, 2000, the NLRC disagreed with the LA’s conclusion and opined that it was anchored on irrelevant matters such as the petitioner’s performance and the preferential treatment given to relatives of RBSJI’s stockholders. The NLRC held that the legality of the petitioner’s dismissal must be based on an appreciation of the facts and the proof directly related to the offense charged, which NLRC found to have weighed heavily in favor of the respondents.

The NLRC remarked that the petitioner was indisputably not authorized to issue the clearance. Also, the tantrums and furious attitude exhibited by Jacinto are not valid reasons to submit to his demands. The fact that the N. Domingo branch had been sued civilly on February 25, 1997 for a tax scam while under Jacinto’s leadership, should have alerted the petitioner into issuing him a clearance. The action taken by the petitioner lacked the prudence expected from a man of his stature thus prejudicing the interests of RBSJI. Accordingly, the dispositive portion of the decision reads: WHEREFORE, the decision appealed from is hereby REVERSED and SET ASIDE. Let a new one [sic] entered DISMISSING the instant case for lack of merit. However, respondent should pay the petitioner his proportionate 13th month pay for 1997 as he was dismissed on May 30, 1997. SO ORDERED.15 The petitioner sought reconsideration16 which was admitted by the NLRC in an Order dated September 30, 2005. From such Order, the respondents filed a motion for reconsideration on the ground that the petitioner failed to present a copy of his purported motion bearing the requisite proof of filing.17 Traversing both motions, the NLRC issued its Decision18 dated March 3, 2006: (1) granting the petitioner’s plea for the reconsideration of its Resolution dated April 14, 2000 thus effectively reversing and nullifying the same; and (2) denying the respondents’ motion for reconsideration of the Order dated September 30, 2005. Anent the first disposition, the NLRC accorded weight to the explanations proffered by the petitioner that the clearance issued to Jacinto was limited only to his paid cash advances and salary loan. The NLRC further held that the offense imputed to the petitioner is not covered by Category B, Grave Offense No. 1 of RBSJI’s Code of Conduct and Discipline as it does not appear that he falsified or misrepresented personal or other company records, documents or papers. 19 Taking an entirely opposite stance, the NLRC declared that the clearance issued by the petitioner did not prejudice RBSJI’s interest as it was limited in scope and did not entirely clear Jacinto from all his financial accountabilities. Also, the petitioner was only "a day old" at the N. Domingo branch and thus he cannot be reasonably expected to be aware of the misdeeds purportedly committed by Jacinto.20 For the foregoing reasons, the NLRC reversed its earlier ruling and reinstated the LA’s Decision dated November 27, 1998, thus: WHEREFORE, the Arbiter’s decision of 27 November 1998 is hereby AFFIRMED and REINSTATED. Accordingly, the Resolution of 14 April 2000 is REVERSED and SET ASIDE. Finally, the respondents’ Motion for Reconsideration dated 2 November 2005 is DENIED for lack of merit. SO ORDERED.21 Ruling of the CA

The respondents sought recourse with the CA,22 which in its Decision23 dated February 21, 2008 reversed and set aside the NLRC Decision dated March 3, 2006 and ruled that the petitioner was dismissed for a just cause. The appellate court articulated that as the Acting Manager of RBSJI’s N. Domingo branch, the petitioner held a highly sensitive and critical position which entailed the conscientious observance of company procedures. Not only was he unauthorized to issue the clearance, he also failed to exercise prudence in clearing Jacinto of his accountabilities given the fact that the same were yet to be audited. Such omission financially prejudiced RBSJI and it amounted to gross negligence and incompetence sufficient to sow in his employer the seed of mistrust and loss of confidence.24 The decretal portion of the CA Decision thus reads: IN VIEW OF ALL THE FOREGOING, the petition is GRANTED. The March 03, 2006 Decision of the National Labor Relations Commission is REVERSED and SET ASIDE. The April 14, 2000 Decision of the National Labor Relations Commission is hereby REINSTATED. No costs. SO ORDERED.25 The petitioner moved for reconsideration26 but the motion was denied in the CA Resolution27 dated June 3, 2008. Hence, the present appeal. Arguments of the parties The petitioner avers that the respondents’ claim of loss of trust and confidence is not worthy of credence since they failed to present a copy of the clearance purportedly showing that he cleared Jacinto of all his financial accountabilities and not merely as to his paid cash advances and salary loan. He points out that RBSJI must be in custody thereof considering that it is a vital official record. The petitioner insists that the alleged loss of trust and confidence in him is a mere subterfuge to cover the respondents’ ploy to oust him out of RBSJI. He asserts that the seven-month gap between the date when he issued the subject clearance and the date when he was sent a memorandum for the said act shows that the respondents’ supposed loss of trust and confidence was a mere afterthought.28 On the other hand, the respondents invoke the ratiocinations of the CA that they were justified in losing the trust and confidence reposed on the petitioner since he failed to exercise the degree of care expected of his managerial position. They reiterate the petitioner’s admission that no audit was yet conducted as to the accountabilities of Jacinto when he issued the clearance. The respondents further assert that as a former Personnel Manager, the petitioner is well-aware of RBSJI’s policy that before a resigned employee can be cleared of accountabilities, he must be first examined or audited. However, the petitioner opted to violate this policy and yield to Jacinto’s tantrums.29 The above arguments yield the focal issue of whether or not the petitioner was validly dismissed from employment. The Court’s Ruling The petition is impressed with merit.

Settled is the rule that when supported by substantial evidence, the findings of fact of the CA are conclusive and binding on the parties and are not reviewable by this Court. 30 As such, only errors of law are reviewed by the Court in petitions for review of CA decisions. By way of exception, however, the Court will exercise its equity jurisdiction and re-evaluate, review and re-examine the factual findings of the CA when, as in this case, the same are contradicting31 with the findings of the labor tribunals. The respondents failed to prove that the petitioner was dismissed for a just cause. As provided in Article 28232 of the Labor Code and as firmly entrenched in jurisprudence,33 an employer has the right to dismiss an employee by reason of willful breach of the trust and confidence reposed in him. To temper the exercise of such prerogative and to reconcile the same with the employee’s Constitutional guarantee of security of tenure, the law imposes the burden of proof upon the employer to show that the dismissal of the employee is for just cause failing which would mean that the dismissal is not justified. Proof beyond reasonable doubt is not necessary but the factual basis for the dismissal must be clearly and convincingly established.34 Further, the law mandates that before validity can be accorded to a dismissal premised on loss of trust and confidence, two requisites must concur, viz: (1) the employee concerned must be holding a position of trust; and (2) the loss of trust must be based on willful breach of trust founded on clearly established facts.35 There is no arguing that the petitioner was part of the upper echelons of RBSJI’s management from whom greater fidelity to trust is expected. At the time when he committed the act which allegedly led to the loss of RBSJI’s trust and confidence in him, he was the Acting Manager of N. Domingo branch. It was part of the petitioner’s responsibilities to effect a smooth turn-over of pending transactions and to sign and approve instructions within the limits assigned to the position under existing regulations.36 Prior thereto and ever since he was employed, he has occupied positions that entail the power or prerogative to dictate management policies – as Personnel and Marketing Manager and thereafter as Vice-President. The presence of the first requisite is thus certain. Anent the second requisite, the Court finds that the respondents failed to meet their burden of proving that the petitioner’s dismissal was for a just cause. The act alleged to have caused the loss of trust and confidence of the respondents in the petitioner was his issuance, without prior authority and audit, of a clearance to Jacinto who turned out to be still liable for unpaid cash advances and for an P11-million fraudulent transaction that exposed RBSJI to suit. According to the respondents, the clearance barred RBSJI from running after Jacinto. The records are, however, barren of any evidence in support of these claims. As correctly argued by the petitioner and as above set forth, the onus of submitting a copy of the clearance allegedly exonerating Jacinto from all his accountabilities fell on the respondents. It was the single and absolute evidence of the petitioner’s act that purportedly kindled the respondents’ loss of trust. Without it, the respondents’ allegation of loss of trust and confidence has no leg to stand on and must thus be rejected. Moreover, one can reasonably expect that a copy of the clearance, an essential personnel document, is with the respondents. Their failure to present it and the lack of

explanation for such failure or the document’s unavailability props up the presumption that its contents are unfavorable to the respondents’ assertions. At any rate, the absence of the clearance upon which the contradicting claims of the parties could ideally be resolved, should work against the respondents. With only sworn pleadings as proof of their opposite claims on the true contents of the clearance, the Court is bound to apply the principle that the scales of justice should be tilted in favor of labor in case of doubt in the evidence presented. 37 RBSJI also failed to substantiate its claim that the petitioner’s act estopped them from pursuing Jacinto for his standing obligations. There is no proof that RBSJI attempted or at least considered to demand from Jacinto the payment of his unpaid cash advances. Neither was RBSJI able to show that it filed a civil or criminal suit against Jacinto to make him responsible for the alleged fraud. There is thus no factual basis for RBSJI’s allegation that it incurred damages or was financially prejudiced by the clearance issued by the petitioner. More importantly, the complained act of the petitioner did not evince intentional breach of the respondents’ trust and confidence. Neither was the petitioner grossly negligent or unjustified in pursuing the course of action he took. It must be pointed out that the petitioner was caught in the quandary of signing on the spot a standard employment clearance for the furious Jacinto sans any information on his outstanding accountabilities, and refusing to so sign but risk alarming or scandalizing RBSJI, its employees and clients. Contrary to the respondents’ allegation, the petitioner did not concede to Jacinto’s demands. He was, in fact, able to equalize two equally undesirable options by bargaining to instead clear Jacinto only of his settled financial obligations after proper verification with branch cashier Lily. It was only after Lily confirmed Jacinto’s recorded payments that the petitioner signed the clearance. The absence of an audit was precisely what impelled the petitioner to decline signing a standard employment clearance to Jacinto and instead issue a different one pertaining only to his paid accountabilities. Under these circumstances, it cannot be concluded that the petitioner was in any way prompted by malicious motive in issuing the clearance. He was also able to ensure that RBSJI’s interests are protected and that Jacinto is pacified. He did what any person placed in a similar situation can prudently do. He was able to competently evaluate and control Jacinto’s demands and thus prevent compromising RBSJI’s image, employees and clients to an alarming scene. The Court has repeatedly emphasized that the act that breached the trust must be willful such that it was done intentionally, knowingly, and purposely, without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently.38 The conditions under which the clearance was issued exclude any finding of deliberate or conscious effort on the part of the petitioner to prejudice his employer. Also, the petitioner did not commit an irregular or prohibited act. He did not falsify or misrepresent any company record as it was officially confirmed by Lily that the items covered by the clearance were truly settled by Jacinto. Hence, the respondents had no factual basis in declaring that the petitioner violated Category B Grave Offense No. 1 of the Company Code of Conduct and Discipline. The respondents cannot capitalize on the petitioner’s lack of authority to issue a clearance to resigned employees. First, it remains but an unsubstantiated allegation despite the several

opportunities for them in the proceedings below to show, through bank documents, that the petitioner is not among those officers so authorized. Second, it is the Court’s considered view that by virtue of the petitioner’s stature in respondent bank, it was well-within his discretion to sign or certify the truthfulness of facts as they appear in RBSJI’s records. Here, the records of RBSJI cashier Lily clearly showed that Jacinto paid the cash advances and salary loan covered by the clearance issued by the petitioner. Lastly, the seven-month gap between the clearance incident and the April 17, 1997 memorandum asking the petitioner to explain his action is too lengthy to be ignored. It likewise remains uncontroverted that during such period, respondent Jesus verbally terminated the petitioner only to recall the same and instead ask the latter to tender a resignation letter. When the petitioner refused, he was sent the memorandum questioning his issuance of a clearance to Jacinto seven months earlier. The confluence of these undisputed circumstances supports the inference that the clearance incident was a mere afterthought used to gain ground for the petitioner’s dismissal. Loss of trust and confidence as a ground for dismissal has never been intended to afford an occasion for abuse because of its subjective nature. It should not be used as a subterfuge for causes which are illegal, improper and unjustified. It must be genuine, not a mere afterthought intended to justify an earlier action taken in bad faith.39 All told, the unsubstantiated claims of the respondents fall short of the standard proof required for valid termination of employment. They failed to clearly and convincingly establish that the petitioner’s act of issuing a clearance to Jacinto rendered him unfit to continue working for RBSJI. The petitioner was illegally dismissed from employment and is entitled to back wages, to be computed from the date he was illegally dismissed until the finality of this decision.40 The disposition of the case made by the LA in its Decision dated November 27, 1998, as affirmed by the NLRC in its Decision dated March 6, 2006, is most in accord with the above disquisitions hence, must be reinstated. However, the monetary awards therein should be clarified. The petitioner is entitled to separation pay in lieu of reinstatement and his back wages shall earn legal interest. In accordance with current jurisprudence, the award of back wages shall earn legal interest at the rate of six percent (6%) per annum from the date of the petitioner’s illegal dismissal until the finality of this decision.41Thereafter, it shall earn 12% legal interest until fully paid42 in accordance with the guidelines in Eastern Shipping Lines, Inc., v. Court of Appeals.43 In addition to his back wages, the petitioner is also entitled to separation pay. It cannot be gainsaid that animosity and antagonism have been brewing between the parties since the petitioner was gradually eased out of key positions in RBSJI and to reinstate him will only intensify their hostile working atmosphere.44 Thus, based on strained relations, separation pay equivalent to one (1) month salary for every year of service, with a fraction of a year of at least six (6) months to be considered as one (1) whole year, should be awarded in lieu of reinstatement, to be computed from date of his engagement by RBSJI up to the finality of this decision.45 The award of separation pay in case of strained relations is more beneficial to both parties in that it liberates the employee from what could be a highly oppressive work environment in as much as it

releases the employer from the grossly unpalatable obligation of maintaining in its employ a worker it could no longer trust.46 The award of moral and exemplary damages is not warranted. In M+W Zander Philippines, Inc. v. Enriquez,47 the Court decreed that illegal dismissal, by itself alone, does not entitle the dismissed employee to moral damages; additional facts must be pleaded and proven to warrant the grant of moral damages, thus: 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. Such an award cannot be justified 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, i.e., that the act of dismissal 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; and, of course, that social humiliation, wounded feelings, grave anxiety, and similar injury resulted therefrom.48 (Citations omitted) Bad faith does not connote bad judgment or negligence; it imports a dishonest purpose or some moral obliquity and conscious doing of wrong; it means breach of a known duty through some motive or interest or ill will; it partakes of the nature of fraud.49 Here, the petitioner failed to prove that his dismissal was attended by explicit oppressive, humiliating or demeaning acts. The following events merely sketch the struggle for power within the upper management of RBSJI between the "old guys" and the "new guys"; they do not convincingly prove that the respondents schemed to gradually ease the petitioner out, viz: (1) his promotion as VicePresident; (2) his replacement by Jobel as Personnel and Marketing Manager; (2) his designation as Acting Manager of N. Domingo branch and the recall thereof on the very next day; (3) the presence of Andres, Jose and Ofelia at the N. Domingo branch in the morning of September 27, 1996; and (4) George’s inaction on the petitioner’s request to be transferred to the operations or marketing department. As disagreeable as they may seem, these acts cannot be equated with bad faith that can justify an award of damages. Since no moral damages can be granted under the facts of the case, exemplary damages cannot also be awarded.50 The solidary liability of individual respondents as corporate officers must be recalled. In the same vein, the individual respondents cannot be made solidarily liable with RBSJI for the illegal dismissal. Time and again, the Court has held that a corporation has its own legal personality separate and distinct from those of its stockholders, directors or officers. Hence, absent any evidence that they have exceeded their authority, corporate officers are not personally liable for their official acts. Corporate directors and officers may be held solidarily liable with the corporation for the termination of employment only if done with malice or in bad faith.51 As discussed above, the acts imputed to the respondents do not support a finding of bad faith.

In addition, the lack of a valid cause for the dismissal of an employee does not ipso facto mean that the corporate officers acted with malice or bad faith. There must be an independent proof of malice or bad faith,52 which is absent in the case at bar. The award of 13th month pay is ncorrect. Being a managerial employee, the petitioner is not entitled to 13th month pay. Pursuant to Memorandum Order No. 28, as implemented by the Revised Guidelines on the Implementation of the 13th Month Pay Law dated November 16, 1987, managerial employees are exempt from receiving such benefit without prejudice to the granting of other bonuses, in lieu of the 13th month pay, to managerial employees upon the employer’s discretion. 53 1âwphi1

The award of attorney’s fees is proper. It is settled that where an employee was forced to litigate and, thus, incur expenses to protect his rights and interest, the award of attorney’s fees is legally and morally justifiable. 54 Pursuant to Article 111 of the Labor Code, ten percent (10%) of the total award is the reasonable amount of attorney’s fees that can be awarded. WHEREFORE, the petition is GRANTED. The Decision dated February 21, 2008 and Resolution dated June 3, 2008 of the Court of Appeals in CA-G.R. SP No. 94690 are REVERSED and SET ASIDE. The Decision of the Labor Arbiter dated November 27, 1998 is REINSTATED with the following MODIFICATIONS/CLARIFICATIONS: Petitioner Rolando DS. Torres is entitled to the payment of: (a) back wages reckoned from May 30, 1997 up to the finality of this Decision, with interest at six percent (6%) per annum, and 12% legal interest thereafter until fully paid; and (b) in lieu of reinstatement, separation pay equivalent to one (1) month salary for every year of service, with a fraction of at least six (6) months to be considered as one (1) whole year, to be computed from the date of his employment up to the finality of this decision. The amounts awarded as moral damages, exemplary damages and 13th month pay are DELETED. Only respondent Rural Bank of San Juan, Inc. is liable for the illegal dismissal and the consequential monetary awards arising therefrom. The other portions of and monetary awards in the Labor Arbiter's Decision dated November 27, 1998 are AFFIRMED. SO ORDERED. BIENVENIDO L. REYES Associate Justice

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 198620

November 12, 2014

P.J. LHUILLIER, INC. and MARIO RAMON LUDENA, Petitioners, vs. FLORDELIZ VELAYO, Respondent. DECISION REYES, J.: Before this Court is a petition for review on certiorari under Rule 45 of the Decision dated June 30, 2011 of the Court of Appeals (CA) in CA-GR. SP No. 03069, affirming the finding of the National Labor Relations Commission (NLRC) that respondent Flordeliz Velayo (respondent) was illegally dismissed. The Resolution dated September 14, 2011 denied the motion for reconsideration thereof. 1

2

3

The Facts The essential antecedent facts are summarized in the assailed CA decision, to wit: On June 13, 2003, (herein petitioner) PJ (CEBU) LHUILLIER, INC. (PJ LHUILLIER for brevity) hired FLORDELIZ M. ABATAYO [sic] as Accounting Clerk at the LH-4, Cagayan de Oro City Branch with a basic monthly salary ofP9,353.00. On February 9, 2008 appellant (herein private respondent) was served with a Show Cause Memo by MARIO RAMON LUDEÑA, Area Operations Manager of PJ Lhuillier (herein petitioner), ordering her to explain within 48 hours why no disciplinary action should be taken against her for dishonesty, misappropriation, theft or embezz[le]ment of company funds inviolation of Item 11, Rule V of the Company Code of Conduct. Thereafter, (s)he was placed under preventive suspension from February 9 to March 8, 2008 while her case was under investigation. The charges against the appellant (herein private respondent) were based on the Audit Findings conducted on October 29, 2007, where the overage amount of P540.00 was not reported immediately to the supervisor, not recorded atthe end of that day. On February 11, 2008, complainant (herein private respondent) submitted her reply and admitted that she was not able to report the overage to the supervisor since the latter was on leave on that day and that she was still tracing the overage; and that the omission or failure to report immediately the overage (sic) was just a simple mistake without intent to defraud her employer. On March 10, 2008, after the conduct of a formal investigation and after finding complainant’s (herein private respondent’s) [explanations] without merit, PJ LHUILLIER (herein petitioner) terminated her employment as per Notice of Termination on grounds of serious misconduct and breach of trust. (Citation omitted) 4

On March 14, 2008, the respondent filed a complaint for illegal dismissal, separation pay and other damages against P.J. Lhuillier, Inc. (PJLI) and Mario Ramon Ludeña, Area Operations Manager

(petitioners). On July 23, 2008, the Labor Arbiter (LA) rendered judgment, the dispositive portion of which reads as follows: WHEREFORE, in view of all the foregoing, judgment is hereby entered ordering the dismissal of the instant complaint for lack of merit. SO ORDERED.

5

The LA found that the respondent’s termination was valid and based not on a mere act of simple negligence in the performance of her duties as cashier: This is not a case of simple negligence as the facts show that complainant, instead of reporting the matter immediately, had set aside the P540.00 for her personal use instead of reporting the overage or recording it in the operating system of the company. Complainant is not entitled to moral as well as exemplary damages for lack of basis.

6

On appeal, the NLRC in its Decision dated March 19, 2009 countermanded the LA, holding that the respondent was illegally dismissed since the petitioners failed to prove a just cause of serious misconduct and willful breach of trust: In fine, the Labor Arbiter a quoutterly disregarded the rule on proportionality that has been observed in a number of cases, that is, "the penalty imposed should be commensurate to the gravity of his offense." x x x xxxx In the instant case, PJ LHUILLIER was not able to discharge the burden of proving that the dismissal of the complainant was for valid or just causes of serious misconduct and willful breach of trust. Thus, We disagree with the Labor Arbiter’s findings and conclusion that complainant was validly dismissed from service. xxxx ... Significantly, the complainant’s omission or procedural lapse did not cause any loss or damage to the company. 7

Nonetheless, finding that the relations between the petitioners and the respondent have become strained, the NLRC did not order the reinstatement of the respondent. Thus: WHEREFORE, the instant appealis GRANTED. The assailed decision is hereby SET ASIDE and REVERSED, and a new one entered declaring that complainant was ILLEGALLY DISMISSED. Accordingly, respondent PJ (CEBU) LHUILLIER, INC. is hereby ORDERED: (a) to pay complainant separation pay equivalent to one (1) month salary for every year of service, a fraction of at least six (6) months being considered as one (1) whole year in lieu of reinstatement due to strained relationship, computed from June13, 2003 up to the finality of the promulgation of this judgment;

(b) to pay complainant FULL BACKWAGES in accordance with Bustamante vs. NLRC ruling (265 SCRA 061); and (c) to pay ten percent (10%) of the total money award as attorney’s fees. SO ORDERED.

8

The NLRC subsequently denied the petitioners’ motion for reconsideration thereof. On July 31,2009, the petitioners filed a petition for certiorariin the CA with prayer for issuance of a temporary restraining order (TRO) and/or writ of preliminary injunction, invoking the following issues: I WHETHER OR NOT THE RESPONDENT [NLRC] COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION WHENIT DEVIATED FROM THE FINDINGS OF FACTS OF THE HONORABLE LABOR ARBITER. II WHETHER OR NOT PETITIONERS ARE ENTITLED TO THE ISSUANCE OF A TEMPORARY RESTRAINING ORDER AND/OR WRIT OF PRELIMINARY INJUNCTION PENDING THE RESOLUTION OF THE INSTANT PETITION. 9

The respondent filed her comment on August 19, 2009. On October 8, 2009, the petitioners filed an urgent motion to resolve their petition for certiorari and prayer for TRO and/or writ of preliminary injunction. On November 9, 2009, the CA denied the petitioners’ prayerfor TRO stating that they have not shown that they stood to suffer grave and irreparable injury if the TRO was denied. The remaining issue in the CA, then, was whether the NLRC acted with grave abuse of discretion amounting to lack or excess of jurisdiction when it set aside the factual conclusion and ruling of the LA. The CA ruled in the negative: We concur with the NLRC in finding for private respondent. Time and again, the Supreme Court has held that it is cruel and unjust to impose the drastic penalty of dismissal if not commensurate to the gravity of the misdeed. In employee termination disputes, the employer bears the burden of proving that the employee’s dismissal was for just and valid cause. In the instant case, the evidence does not support the finding of the Labor Arbiter that private respondent is guilty of serious misconduct. In this jurisdiction, the Supreme Court has consistently defined misconduct as an improper or wrong conduct, a transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, implies wrongful intent and not mere error of judgment. To be a just cause for termination under Article 282 of the Labor Code of the Philippines, the misconduct must be serious, that is, it must be of such grave and aggravated character and not merely trivial or unimportant. However serious, such misconduct must nevertheless be in connection with the employee’s work; the act complained of must be related to the performance of the employee’s duties showing him to be unfit to continue working for the employer.

Private respondent’s lapse was not a "serious" one, let alone indicative of serious misconduct. In fact, she (herein private respondent) admitted that she was not able to report the overage to the supervisor since the latter was on leave on that day and that she was still tracing the overage; and that the omission or failure to report immediately the overage was just a simple mistake without intent to defraud her employer. As found by the NLRC, private respondent worked for petitioner for almost six (6) years, and it is not shown that she committed any infraction of company rules during her employment. In fact, private respondent was once awarded by petitioner due to her heroic act of defending her Manager, Ms. Lilibeth Cortez, while resisting a hold-upper. The settled rule is that when supported by substantial evidence, factual findings made by quasijudicial and administrative bodies are accorded great respect and even finality by the courts. These findings are not infallible, though; when there is a showing that they were arrived at arbitrarily or in disregard of the evidence on record, they may be examined by the courts. Hence, when factual findings of the Labor Arbiter and the NLRC are contrary to each other, there is a necessity to review the records to determine which conclusions are more conformable to the evidentiary facts. The case before Us shows that the finding of the NLRC is supported by substantive evidence as compared to the finding of the Labor Arbiter with respect to the issue of illegal dismissal. Moreover, in case of doubt, such cases should be resolved in favor of labor, pursuant to the social justice policy of labor laws and the Constitution. Finally, it is a time-honored principle that although it is the prerogative of management to employ the services of a person and likewise to discharge him, such is not without limitations and restrictions. The dismissal of an employee must be done with just cause and without abuse of discretion. It must not bedone in an arbitrary and despotic manner. To hold otherwise would render nugatory the security of tenure clause enshrined in the Constitution. (Citations omitted and emphasis ours) 10

Invoking Article 279 of the Labor Code, the CA agreed with the NLRC that the respondent should have been reinstated without loss of seniority rights and other privileges, with payment of her full backwages, inclusive of allowances and other benefits or their monetary equivalent computed from the time her compensation was withheld up to the time of actual reinstatement. However, with the parties’ relations now strained, the CA conceded that the payment of a separation pay, along with backwages as a separate and distinct relief, is an acceptable alternative to reinstatement. The CA further awarded the respondent attorney’s fees since she was forced to litigate and incur expenses to protecther rights and interests by reason of the unjustified acts of the petitioners. 11

Petition for Review in the Supreme Court In this petition, the petitioners raise the following issues: I. WHETHER OR NOT THE MISAPPROPRIATION BY A PAWNSHOP PERSONNEL IN THE AMOUNT OF [P]540.00, COUPLED WITH SUBSEQUENTDENIALS, AMOUNT TO A SERIOUS MISCONDUCT IN OFFICE? II. WHETHER OR NOT THE IMPOSITION OF THE PENALTY OF TERMINATION FROM OFFICE [UPON] A PAWNSHOP PERSONNEL WHO MISAPPROPRIATED AN AMOUNT OF P540.00 FROM THE COFFERS OF THE PAWNSHOP, AND WHO MADE SUBSEQUENT DENIALS, IS CRUEL AND UNJUST? 12

The appellate court agreed with the NLRC that the respondent’s lapse was "just a simple mistake without intent to defraud her employer;" that the incident was neither serious norindicative of serious misconduct; and that her dismissal was disproportionate to her offense. It accepted the respondent’s explanation that her failure to report her cash overage of P540.00 on October 29, 2007 to the branch manager, who was her immediate superior, was because the latter was then on leave, and that for days thereafter, she was hard-pressed in trying to trace and determine the cause thereof. The CA noted that the respondent had worked for PJLI for almost six years without any previous infractions of company rules, and that she was once commended for a heroic act of defending her former branch manager, Ms. Lilibeth Cortez, during a branch holdup. 13

On the other hand, the petitioners strongly maintain that under Rule V(A)(11) of its Code of Conduct on "Dishonesty, Misappropriation, Theft or Embezzlement of Company Funds or Property," the respondent committed a "First Level Offense" which is punishable by outright dismissal. According to the petitioners, the respondent committed the following acts which constitute dishonesty and serious misconduct: 1. The respondent did not enter the discovered cash overage in the "operating system" (computerized cash ledger) of the branch on October 29, 2007 notwithstanding that she was fully aware of the company’s policy that such unexplained receipt should be recorded at the end of the business day; 2. The respondent did not report the cash overage to her immediate superior, Branch Manager Violette Grace Tuling (Tuling), upon the latter’s return from a leave ofabsence on November 3, 2007. Neither did the respondent seek Tuling’s help concerning the matter, and just averred that she was afraid to be scolded by Tuling; 3. The respondent deliberately lied about her cash overage after Tuling confronted her on December 17, 2007; 4. Again, the respondent falsely denied the cash overage when the company auditor asked her to explain how it happened; and 5. The respondent concocted a cover-up by claiming that a computer glitch occurred when she was about to post the cash overage in the operating system. 14

Ruling of the Court There is merit in the petition. It need not be stressed that the nature or extent of the penalty imposed on an erring employee must be commensurate to the gravity of the offense as weighed against the degree of responsibility and trust expected of the employee’s position. On the other hand,the respondent is not just charged with a misdeed, but with loss of trust and confidence under Article 282(c) of the Labor Code, a cause premised on the fact that the employee holds a position whose functions may only be performed by someone who enjoys the trust and confidence of management. Needless to say, such an employee bears a greater burden of trustworthiness than ordinary workers, and the betrayal of the trust reposed is the essence of the loss of trust and confidence which is a ground for the employee’s dismissal. 15

The respondent’s misconduct must be viewed in light of the strictly fiduciary nature of her position. In addition to its pawnshop operations, the PJLI offers its "Pera Padala" cash remittance service whereby, for a fee or "sending charge," a customer may remit money to a consignee through its network of pawnshop branches all over the country. On October 29, 2007, a customer sent P500.00 through its branch in Capistrano, Cagayan de Oro City, and paid a remittance fee of P40.00. Inexplicably, however, no corresponding entry was made to recognize the cash receipt of P540.00 in the computerized accounting system (operating system) ofthe PJLI. The respondent claimed that she tried very hard but could not trace the source of her unexplained cash surplus ofP540.00, but a branch audit conducted sometime in December 2007 showed that it came from a "Pera Padala" customer. To be sure, no significant financial injury was sustained by the PJLI in the loss of a mere P540.00 in cash, which, according to the respondent she sincerely wanted to account for except that she was pre-empted by fear of what her branch manager might do once she learned of it. But in treating the respondent’s misconduct as a simple negligence or a simple mistake, both the CA and the NLRC grossly failed to consider that she held a position of utmost trust and confidence in the company. There are two classes of corporate positions of trust: on the one hand are the managerial employees whose primary duty consists of the management of the establishment in which they are employed or of a department or a subdivision thereof, and other officers or members of the managerial staff;on the other hand are the fiduciary rank-and-file employees, such as cashiers, auditors, property custodians, or those who, in the normal exercise of their functions, regularly handle significant amounts of money or property. These employees, though rank-and-file, are routinely charged with the care and custody of the employer’s money or property, and are thus classified as occupying positions of trust and confidence. 16

The respondent was first hired by the petitioners as an accounting clerk on June 13, 2003, for which she received a basic monthly salary of P9,353.00. On October 29, 2007, the date of the subject incident, she performed the function of vault custodian and cashier in the petitioners’ Branch 4 pawnshop in Capistrano, Cagayan de Oro City. In addition to her custodial duties, it was the respondent who electronically posted the day’s transactions in the books of accounts of the branch, a function that is essentially separate from that of cashier or custodian. It is plain to see then that when both functions are assigned to one person to perform, a very risky situation of conflicting interests is created whereby the cashier can purloin the money in her custody and effectively cover her tracks, at least temporarily, by simply not recording in the books the cash receipt she misappropriated. This is commonly referred to as lapping of accounts. Only a most trusted clerk would be allowed to perform the two functions, and the respondent enjoyed this trust. 17

The series of willful misconduct committed by the respondent in mishandling the unaccounted cash receipt exposes her as unworthy of the utmost trust inherent in her position as branch cashier and vault custodian and bookkeeper. The respondent insists that she never intended to appropriate the money but was afraid that Tuling would scold her, and that she kept the money for a long time in her drawer and only decided to take it home after her search for the cause of the cash overage had proved futile. Both the CA and the NLRC agreed with her, and held that what she committed was a simple mistake or simple negligence.

The Court disagrees. Granting arguendothat for some reason not due to her fault, the respondent could not trace the source of the cash surplus, she nonetheless well knew and understood the company’s policy that unexplained cash must be treated as miscellaneous income under the account "Other Income," and that the same must be so recognized and recorded at the end of the day in the branch books or "operating system." No such entry was made by the respondent, resulting in unrecorded cash in her possession of P540.00, which the company learned about only two months thereafter through a branch audit. Significantly, when Tuling returned on November 3, 2007 from her leave of absence, the respondent did not just withhold from her the fact that she had an unaccounted overage, but she refused to seek her help on what to do about it, despite having had five days to mull over the matter until Tuling’s return. In order that an employer may invoke loss of trust and confidence in terminating an employee under Article 282(c) of the Labor Code, certain requirements must be complied with, namely: (1) the employee must be holding a position of trust and confidence; and (2) there must be an act that would justify the loss of trust and confidence. While loss of trust and confidence should be genuine, it does notrequire proof beyond reasonable doubt, it being sufficient that there issome basis to believe that the employee concerned is responsible for the misconduct and thatthe nature of the employee’s participation therein rendered him unworthy of trust and confidence demanded by his position. 18

19

20

The petitioners are fully justified in claiming loss of trust and confidence in the respondent. While it is natural and understandable that the respondent should feel apprehensive about Tuling’s reaction concerning her cash overage, considering that it was their first time to be working together in the same branch, we must keep in mind thatthe unaccounted cash can only be imputed to the respondent’s own negligence in failing to keep track of the transaction from which the money came. A subsequent branch audit revealed that it came from a "Pera Padala" remittance, implying that although the amount had been duly remitted to the consignee, the sending branch failed to record the payment received from the consigning customer. For days following the overage, the respondent tried but failed to reconcile her records, and for this inept handling of a "Pera Padala" remittance, she already deserved to be sanctioned. Further, as a matter of strict company policy, unexplained cash is recognized at the end of the day as miscellaneous income. Inexplicably, despite being with the company for four years as accounting clerk and cashier, the respondent failed to makethe required entry in the branch operating system recognizing miscellaneous income. Such an entry could have been easily reversedonce it became clear how the overage came about. But the respondent obviously thought that by skipping the entry, she could keep Tuling from learning about the overage. Her trustworthiness as branch cashier and bookkeeper has been irreparably tarnished. The respondent’s untrustworthiness is further demonstrated when she began to concoct lies concerning the overage: first, by denying its existence to Tuling and again to the company auditor; later, when she falsely claimed that a computer glitch or malfunction had prevented her from posting the amount on October 29, 2007; and finally,when she was forced to admit before the company’s investigating panel that she took and spent the money. 21

Mere substantial evidence is sufficient to establish loss of trust and confidence The respondent’s actuations were willful and deliberate. A cashier who, through carelessness, lost a document evidencing a cash receipt, and then wilfully chose not to record the excess cash as miscellaneous income and instead took it home and spent it on herself, and later repeatedly denied or concealed the cash overage when confronted, deserves to be dismissed. Article 282 of the Labor Code allows an employer to dismiss an employee for willful breach of trust or loss of confidence. It has been held that a special and unique employment relationship exists between a corporation and its cashier. Truly, more than most key positions, that of a cashier calls for utmost trust and confidence, and it is the breach of this trust that results in an employer’s loss of confidence in the employee. In San Miguel Corporation v. NLRC, et al., the Court held: 22

23

24

25

As a rule this Court leans over backwards to help workers and employees continue in their employment. We have mitigated penalties imposed by management on erring employees and ordered employers to reinstate workers who have been punished enough through suspension. However, breach of trust and confidence and actsof dishonesty and infidelity in the handling of funds and properties are an entirely different matter. (Emphasis ours) 1âwphi1

26

It has been held that in dismissing a cashier on the ground of loss of confidence, it is sufficientthat there is some basis for the same or that the employer has a reasonable ground tobelieve that the employee is responsible for the misconduct, thus making him unworthy of the trust and confidence reposed in him. Therefore, if there issufficient evidence to show that the employer has ample reason to distrust the employee, the labor tribunal cannot justly deny the employer the authority to dismiss him. Indeed, employers are allowed wider latitude in dismissing an employee for loss of trust and confidence,as the Court held in Atlas Fertilizer Corporation v. NLRC: 27

28

29

As a general rule, employers are allowed a wider latitude of discretion in terminating the services of employees who perform functions which by their nature require the employer’s full trust and confidence. Mere existence of basis for believingthat the employee has breached the trust of the employer is sufficient and does not require proof beyond reasonable doubt. Thus, when an employee has been guilty of breach of trust or his employer has ample reason to distrust him, a labor tribunal cannot deny the employer the authority to dismiss him. x x x. (Citations omitted) 30

Furthermore, it must also be stressed that only substantial evidence is required in order to support a finding that an employer’s trust and confidence accorded to its employee had been breached. As explained in Lopez v. Alturas Group of Companies: 31

[T]he language of Article 282(c) of the Labor Code states that the loss of trust and confidence must be based on willful breach of the trust reposed in the employee by his employer. Such breach is willful if it is done intentionally, knowingly, and purposely, without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. Moreover, it must be based on substantial evidence and not on the employer’s whims or caprices or suspicions otherwise, the employee would eternally remain at the mercy of the employer. Loss of confidence must not be indiscriminately used as a shield by the employer against a claim that the dismissal of an employee was arbitrary. And, in order to constitute a just cause for dismissal, the act complained of must be work-related and shows that the employee concerned is unfit to continue working for the employer. In addition, loss of confidence as a just cause for termination of employment is premised on the fact that the employee concerned holds a position of responsibility, trust and confidence or that the

employee concerned is entrusted with confidence with respect to delicate matters, such as the handling or care and protection of the property and assets of the employer. The betrayal of this trust is the essence of the offense for which an employee is penalized. (Emphasis and underscoring in the original) 32

In holding a position requiring full trust and confidence, the respondent gave up some of the rigid guarantees available to ordinary employees. She insisted that her misconduct was just an "innocent mistake," and maybe it was, had it been committed by other employees. But surely not as to the respondent who precisely because of the special trust and confidence given her by her employer mustbe penalized with a more severe sanction. 33

A cashier’s inability to safeguard and account for missing cash is sufficient cause to dismiss her. The respondent insisted that she never intended to misappropriate the missing fund, but in Santos v. San Miguel Corp., the Court held that misappropriation of company funds, notwithstanding that the shortage has been restituted, is a valid ground to terminate the services of an employee for loss of trust and confidence. Also, in Cañeda v. Philippine Airlines, Inc., the Court held that it is immaterial what the respondent’s intent was concerning the missing fund, for the undisputed fact is that cash which she held in trust for the company was missing in her custody. At the very least, she was negligent and failed to meet the degree of care and fidelity demanded of her as cashier. Her excuses and failure to give a satisfactory explanation for the missing cash only gavethe petitioners sufficient reason to lose confidence in her. As it was held in Metro Drug Corporation v. NLRC: 34

35

36

37

38

It would be most unfair to require an employer to continue employing as its cashiera person whom it reasonably believes is no longer capable of giving full and whole hearted trustworthiness in the stewardship of company funds. 39

WHEREFORE, premises considered, the petition is hereby GRANTED. The Decision dated June 30, 2011 of the Court of Appeals in CA-G.R. SP No. 03069 is REVERSED and SET ASIDE. The Decision of the Labor Arbiter dated July 23, 2008 is REINSTATED. SO ORDERED. BIENVENIDO L. REYES Associate Justice

THIRD DIVISION G.R. No. 211497, March 18, 2015 HOCHENG PHILIPPINES CORPORATION, Petitioner, v. ANTONIO M. FARRALES, Respondent. DECISION REYES, J.: Before this Court on Petition for Review on Certiorari1 is the Decision2 dated October 17, 2013 of the Court of Appeals (CA) in CA-G.R. SP No. 125103, which reversed the Decision 3 dated February 29, 2012 and Resolution4 dated May 7, 2012 of the National Labor Relations Commission (NLRC) in NLRC LAC No. 08002249-11, and reinstated with modifications the Decision 5 dated April 29, 2011 of the Labor Arbiter (LA) in NLRC Case No. RAB-IV-03-00618-10-C, which found that respondent Antonio M. Farrales (Farrales) was illegally dismissed by Hocheng Philippines Corporation (HPC). The fallo of the appellate decision reads: WHEREFORE, premises considered, the Decision of the Labor Arbiter dated April 29, 2011 in NLRC Case No. RAB-IV-03-00618-10-C is reinstated with modifications. Private respondent Hocheng Philippines Corporation is liable to pay [Farrales] the following: chanRoblesvirtualLa wlibrary

chanRoble svirtualLawlibrary

(1) Full backwages from date of dismissal on February 15, 2010 until date of decision equivalent to P276,466.67; (2) Separation pay of one (1) month salary per year of service for a period of twelve years equivalent to P228,800.00; (3) Appraisal year-end bonus in the sum of P11,000.00; and, (4) Attorney’s fees equivalent to 10% of the total award. SO ORDERED.6 The Facts Farrales was first employed by HPC on May 12, 1998 as Production Operator, followed by promotions as (1) Leadman in 2004, (2) Acting Assistant Unit Chief in 2007, and (3) Assistant Unit Chief of Production in 2008, a supervisory position with a monthly salary of ?17,600.00. He was a consistent recipient of citations for outstanding performance, as well as appraisal and year-end bonuses. 7 chanroblesvirtuallawlibrary

On December 2, 2009, a report reached HPC management that a motorcycle helmet of an employee, Reymar Solas (Reymar), was stolen at the parking lot within its premises on November 27, 2009. On December 3, 2009, Security Officer Francisco Paragas III confirmed a video sequence recorded on closedcircuit television (CCTV) around 3:00 p.m. on November 27, 2009 showing Farrales taking the missing helmet from a parked motorcycle, to wit: chanRoble svirtualLawlibrary

a.

At around 3:07:44, [Farrales] was seen walking towards the motorcycle parking lot;

b.

At around 3:08:47, [Farrales] walked back towards the pedestrian gate of the company, passing by the motorcycle parking lot;

chanroble slaw

chanrobleslaw

c.

At around 3:08:51, [Farrales] walked back towards the motorcycle parking lot and returned to the pedestrian gate; chanrobleslaw

d.

At around 3:09:10, [Farrales] called on the person of Andy Lopega and instructed him to get the helmet he was pointing at; [and]

e.

At around 3:09:30, Andy gave the helmet to [Farrales]. 8

Later that day, HPC sent Farrales a notice to explain his involvement in the alleged theft. The investigation was supported by the employees’ union, ULO-Hocheng.9Below is Farrales’ explanation, as summarized by the CA: On November 27, 2009, [Farrales] borrowed a helmet from his co-worker Eric Libutan (“Eric”) since they reside in the same barangay. They agreed that Eric could get it at the house of [Farrales] or the latter could return it the next time that they will see each other. Eric told him that his motorcycle was black in color. As there were many motorcycles with helmets, he asked another employee, Andy Lopega (“Andy”) who was in the parking area where he could find Eric’s helmet. Andy handed over to him the supposed helmet which he believed to be owned by Eric, then he went home. chanRoble svirtualLawlibrary

On November 28, 2009, at around 6 o’clock in the morning, he saw Eric at theirbarangay and told him to get the helmet. But Eric was in a rush to go to work, he did not bother to get it. In the morning of December 3, 2009, upon seeing Eric in the workplace, [Farrales] asked him why he did not get the helmet from his house. Eric told him that, “Hindi po sa akin yung nakuha nyong helmet.” [Farrales] was shocked and he immediately phoned the HPC’s guard to report the situation that he mistook the helmet which he thought belonged to Eric. After several employees were asked as to the ownership of the helmet, he finally found the owner thereof, which is Jun Reyes’s (“Jun”) nephew, Reymar, who was with him on November 27, 2009. [Farrales] promptly apologized to Jun and undertook to return the helmet the following day and explained that it was an honest mistake. These all happened in the morning of December 3, 2009; [Farrales] did not know yet that HPC will send a letter demanding him to explain. 10 A hearing was held on December 10, 2009 at 1:00 p.m. Present were Farrales, Eric Libutan (Eric), Andy Lopega (Andy), Jun Reyes, Antonio Alinda, a witness, and Rolando Garciso, representing ULO-Hocheng. From Andy it was learned that at the time of the alleged incident, he was already seated on his motorcycle and about to leave the company compound when Farrales approached and asked him to hand to him a yellow helmet hanging from a motorcycle parked next to him. When Andy hesitated, Farrales explained that he owned it, and so Andy complied. But Eric had specifically told Farrales that his helmet was colored red and black and his motorcycle was a black Honda XRM-125 with plate number 8746-DI, parked near the perimeter fence away from the walkway to the pedestrian gate. The CCTV showed Farrales instructing Andy to fetch a yellow helmet from a blue Rossi 110 motorcycle with plate number 3653-DN parked in the middle of the parking lot, opposite the location given by Eric. Farrales in his defense claimed he could no longer remember the details of what transpired that time, nor could he explain why he missed Eric’s specific directions.11 chanroblesvirtuallawlibrary

On February 15, 2010, the HPC issued a Notice of Termination 12 to Farrales dismissing him for violation of Article 69, Class A, Item No. 29 of the HPC Code of Discipline, which provides that “stealing from the company, its employees and officials, or from its contractors, visitors or clients,” is akin to serious misconduct and fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative, which are just causes for termination of employment under Article 282 of the Labor Code. On March 25, 2010, Farrales filed a complaint for illegal dismissal, non-payment of appraisal and mid-year bonuses, service incentive leave pay and 13th month pay. He also prayed for reinstatement, or in lieu thereof, separation pay with full backwages, plus moral and exemplary damages and attorney’s fees. During the mandatory conference, HPC paid Farrales ?10,914.51, representing his 13th month pay for the period of January to February 2010 and vacation leave/sick leave conversion. Farrales agreed to waive his claim for incentive bonus.13 chanroblesvirtuallawlibrary

On April 29, 2011, the LA ruled in favor of Farrales,14 the fallo of which is as follows: WHEREFORE, PREMISES CONSIDERED, all the respondents Hocheng Phils. Corporation, Inc. Sam Chen[g] and Judy Geregale are found guilty of illegal dismissal and ordered jointly and severally to pay complainant the following: chanRoble svirtualLawlibrary

chanRoblesvirtualLa wlibrary

1. Full backwages from date of dismissal on February 15, 2010 until date of decision equivalent to P276,466.67.

2. Separation pay of one (1) month salary per year of service for a period of twelve years equivalent to P228,800.00. 3. Appraisal year-end bonus in the sum of P11,000.00. 4. Moral damages in the sum of P200,000.00. 5. Exemplary damages in the sum of P100,000.00. 6. 10% of all sums owing as attorney’s fees or the amount of P81,626.67. SO ORDERED.15 On appeal by HPC,16 the NLRC reversed the LA,17 and denied Farrales’ motion for reconsideration, finding substantial evidence of just cause to terminate Farrales. 18 chanroble svirtuallawlibrary

On petition for certiorari to the CA,19 Farrales sought to refute the NLRC’s factual finding that he committed theft, as well as to question NLRC’s jurisdiction over HPC’s appeal for non-payment of appeal fees. But the CA found that HPC was able to perfect its appeal by posting a bond equivalent to the monetary award of ? 897,893.37 and paying the appeal fees by postal money order in the amount of ?520.00. 20 chanroble svirtuallawlibrary

Concerning the substantive issues, the appellate court agreed with the LA that Farrales’ act of taking Reymar’s helmet did not amount to theft, holding that HPC failed to prove that Farrales’ conduct was induced by a perverse and wrongful intent to gain, in light of the admission of Eric that he did let Farrales borrow one of his two helmets, only that Farrales mistook Reymar’s helmet as the one belonging to him. Petition for Review to the Supreme Court In this petition, HPC raises the following grounds for this Court’s review: A.

chanRoblesvirtualLa wlibrary

THE HONORABLE [CA] PLAINLY ERRED AND ACTED CONTRARY TO EXISTING LAW AND JURISPRUDENCE IN REVERSING THE DECISION OF THE [NLRC] AND DECLARING ILLEGAL THE DISMISSAL FOR [HPC’s] ALLEGED FAILURE TO PROVE THE EXISTENCE OF JUST CAUSE. 1. THERE IS SUBSTANTIAL EVIDENCE TO SHOW THAT [FARRALES] COMMITTED THEFT IN [HPC’s] PREMISES. 2. THEFT IS A JUST CAUSE FOR TERMINATION. 3. BY COMMITTING THEFT, [FARRALES], BEING A SUPERVISORIAL EMPLOYEE, FORFEITED THE TRUST REPOSED IN HIM BY [HPC], THUS RENDERING HIM DISMISSIBLE FOR LOSS OF CONFIDENCE.

B.

IN DECLARING ILLEGAL THE DISMISSAL OF [FARRALES], THE HONORABLE [CA] VIOLATED DOCTRINES LAID DOWN BY THE SUPREME COURT. 1. COURTS CANNOT SUBSTITUTE THEIR JUDGMENT FOR THAT OF THE MANAGEMENT. 2. COURTS MUST ACCORD DUE RESPECT TO THE FINDINGS OF ADMINISTRATIVE AGENCIES.21

Chiefly, HPC insists that since the complaint below involves an administrative case, only substantial evidence, not proof of guilt beyond reasonable doubt, is required to prove the guilt of Farrales; 22 that what the CA has done is substitute its judgment for that of the NLRC, which is vested with statutory duty to make factual determinations based on the evidence on record. 23 chanroble svirtuallawlibrary

Ruling of the Court The Court resolves to deny the petition. To validly dismiss an employee, the law requires the employer to prove the existence of any of the valid or authorized causes,24 which, as enumerated in Article 282 of the Labor Code, are: (a) serious misconduct or willful disobedience by the employee of the lawful orders of his employer or the latter’s 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 his duly authorized representative; (d) commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representative; and (e) other causes analogous to the foregoing.25 As a supervisorial employee, Farrales is admittedly subject to stricter rules of trust and confidence, and thus pursuant to its management prerogative HPC enjoys a wider latitude of discretion to assess his continuing trustworthiness, than if he were an ordinary rank-and-file employee. 26 HPC therefore insists that only substantial proof of Farrales’ guilt for theft is needed to establish the just causes to dismiss him, as the NLRC lengthily asserted in its decision. Article 4 of the Labor Code mandates that all doubts in the implementation and interpretation of the provisions thereof shall be resolved in favor of labor. Consistent with the State’s avowed policy to afford protection to labor, as Article 3 of the Labor Code and Section 3, Article XIII of the 1987 Constitution have enunciated, particularly in relation to the worker’s security of tenure, the Court held that “[t]o be lawful, the cause for termination must be a serious and grave malfeasance to justify the deprivation of a means of livelihood. This is merely in keeping with the spirit of our Constitution and laws which lean over backwards in favor of the working class, and mandate that every doubt must be resolved in their favor.”27 Moreover, the penalty imposed on the erring employee ought to be proportionate to the offense, taking into account its nature and surrounding circumstances. The Court has always taken care, therefore, that the employer does not invoke any baseless justification, much less management prerogative, as a subterfuge by which to rid himself of an undesirable worker,28 and thus in exceptional cases the Court has never hesitated to delve into the NLRC’s factual conclusions where evidence was found insufficient to support them, or too much was deduced from the bare facts submitted by the parties, or the LA and the NLRC came up with conflicting positions, as is true in this case. 29 chanroblesvirtuallawlibrary

As aptly pointed out by the LA, while HPC has the onus probandi that the taking of Reymar’s helmet by Farrales was with intent to gain, it failed to discharge this burden, as shown by the following circumstances: Farrales sought and obtained the permission of Eric, his co-employee as well asbarangay co-resident, to borrow his helmet; at the parking lot, Farrales asked another employee, Andy, to fetch a yellow helmet from one of the parked motorcycles, mistakenly thinking it belonged to Eric (whom he knew owned two helmets); the following day, November 28, Farrales asked Eric why he had not dropped by his house to get his helmet, and Eric replied that Farrales got the wrong helmet because he still had his other helmet with him; Farrales immediately sought the help of the company guards to locate the owner of the yellow helmet, who turned out to be Reymar; Farrales apologized to Reymar for his mistake, and his apology was promptly accepted.30 All these circumstances belie HPC’s claim that Farrales took Reymar’s helmet with intent to gain, the LA said. In ruling that Farrales’ dismissal by HPC was attended with utmost malice and bad faith as to justify an award of moral and exemplary damages and attorney’s fees, the LA stated that “[i]t is succinctly clear that [the] respondents [therein] tried to blow out of proportions the indiscretion of [Farrales] for reasons known only to them,” and moreover, “[f]inding that the dismissal on the ground of theft is unavailing, [the] respondents [therein] immediately offered [Farrales] his former position when he filed [his] complaint. What does this act of [the] respondents [therein] speak [of]?” 31 chanroble svirtuallawlibrary

On the other hand, the NLRC found that Farrales lied, first, when he told Andy, then already astride his motorbike at the parking area and about to leave the company premises, that the yellow helmet belonged to him,32 and second, when he claimed that Eric was his neighbor, although they were not. It ruled as doubtful Farrales’ hazy recollection about what happened that afternoon at the parking lot, since he could not even give a description of the motorcycle from which he took the yellow helmet. These circumstances, the NLRC determined, comprise substantial proof belying Farrales’ claim of good faith. As a supervisory employee, he held a position of high responsibility in the company making him accountable to stricter rules of trust and confidence than an ordinary employee, and under Article 282 of the Labor Code, he is guilty of a serious misconduct and a willful breach of trust. The NLRC went on to cite a settled policy that in trying to protect the rights of labor, the law does not authorize the oppression or self-destruction of the employer.

Management also has its own rights, which as such, are entitled to respect and enforcement in the interest of simple fair play.33 chanroblesvirtuallawlibrary

But the Court agrees with the CA that Farrales committed no serious or willful misconduct or disobedience to warrant his dismissal. It is not disputed that Farrales lost no time in returning the helmet to Reymar the moment he was apprised of his mistake by Eric, which proves, according to the CA, that he was not possessed of a depravity of conduct as would justify HPC’s claimed loss of trust in him. Farrales immediately admitted his error to the company guard and sought help to find the owner of the yellow helmet, and this, the appellate court said, only shows that Farrales did indeed mistakenly think that the helmet he took belonged to Eric. It is not, then, difficult to surmise that when Farrales told Andy that the yellow helmet was his, his intent was not to put up a pretence of ownership over it and thus betray his intent to gain, as the NLRC held, but rather simply to assuage Andy’s reluctance to heed his passing request to reach for the helmet for him; Andy, it will be recalled, was at that moment already seated in his motorbike and about to drive out when Farrales made his request. As to Farrales’ claim that he and Eric were neighbors, suffice it to say that as the CA noted, they resided in the same barangay, and thus, loosely, were neighbors. The CA also pointed out that although the alleged theft occurred within its premises, HPC was not prejudiced in any way by Farrales’ conduct since the helmet did not belong to it but to Reymar. In light of Article 69, Class A, Item No. 29 of the HPC Code of Discipline, this observation may be irrelevant, although it may be that the LA regarded it as proving HPC’s bad faith. Theft committed by an employee against a person other than his employer, if proven by substantial evidence, is a cause analogous to serious misconduct.34 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 must be of such grave and aggravated character and not merely trivial or unimportant. Such misconduct, however serious, must, nevertheless, be in connection with the employee’s work to constitute just cause for his separation.35 chanroble svirtuallawlibrary

But where there is no showing of a clear, valid and legal cause for termination of employment, the law considers the case a matter of illegal dismissal.36 If doubts exist between the evidence presented by the employer and that of the employee, the scales of justice must be tilted in favor of the latter. The employer must affirmatively show rationally adequate evidence that the dismissal was for a justifiable cause. 37 chanroble svirtuallawlibrary

Nonetheless, the Court agrees with the CA’s dismissal of the award of moral and exemplary damages for lack of merit. There is no satisfactory proof that the concerned officers of HPC acted in bad faith or with malice in terminating Farrales. Notwithstanding the LA’s assertion to this effect, Farrales’ bare allegations of bad faith deserve no credence, and neither is the mere fact that he was illegally dismissed sufficient to prove bad faith on the part of HPC’s officers.38 But concerning the award of attorney’s fees, Farrales was dismissed for a flimsy charge, and he was compelled to litigate to secure what is due him which HPC unjustifiably withheld. WHEREFORE, premises considered, the petition for review is DENIED. SO ORDERED. Velasco, Jr., (Chairperson), Peralta, Villarama, Jr., and Jardeleza, JJ., concur. c

Republic of the Philippines

Supreme Court Manila

THIRD DIVISION ARMANDO G. YRASUEGUI, G.R. No. 168081 Petitioner, Present: YNARES-SANTIAGO, J., Chairperson, - versus - AUSTRIA-MARTINEZ, CHICO-NAZARIO, NACHURA, and REYES, JJ. Promulgated: PHILIPPINE AIRLINES, INC., Respondent. October 17, 2008 x--------------------------------------------------x DECISION REYES, R.T., J.: THIS case portrays the peculiar story of an international flight steward who was dismissed because of his failure to adhere to the weight standards of the airline company.

He is now before this Court via a petition for review on certiorari claiming that he was illegally dismissed. To buttress his stance, he argues that (1) his dismissal does not fall under 282(e) of the Labor Code; (2) continuing adherence to the weight standards of the company is not a bona fide occupational qualification; and (3) he was discriminated against because other overweight employees were promoted instead of being disciplined. After a meticulous consideration of all arguments pro and con, We uphold the legality of dismissal. Separation pay, however, should be awarded in favor of the employee as an act of social justice or based on equity. This is so because his dismissal is not for serious misconduct. Neither is it reflective of his moral character. The Facts Petitioner Armando G. Yrasuegui was a former international flight steward of Philippine Airlines, Inc. (PAL). He stands five feet and eight inches (58) with a large body frame. The proper weight for a man of his height and body structure is from 147 to 166 pounds, the ideal weight being 166 pounds, as mandated by the Cabin and Crew Administration Manual[1] of PAL. The weight problem of petitioner dates back to 1984. Back then, PAL advised him to go on an extended vacation leave from December 29, 1984 to March 4, 1985 to address his weight concerns. Apparently, petitioner failed to meet the companys weight standards, prompting another leave without pay from March 5, 1985 to November 1985. After meeting the required weight, petitioner was allowed to return to work. But petitioners weight problem recurred. He again went on leave without pay from October 17, 1988 to February 1989. On April 26, 1989, petitioner weighed 209 pounds, 43 pounds over his ideal weight. In line with company policy, he was removed from flight duty effective May 6, 1989to July 3, 1989. He was formally requested to trim down to his ideal weight and report for weight checks on several dates. He was also told that he may avail of the services of the company physician

should he wish to do so. He was advised that his case will be evaluated on July 3, 1989.[2] On February 25, 1989, petitioner underwent weight check. It was discovered that he gained, instead of losing, weight. He was overweight at 215 pounds, which is 49 pounds beyond the limit. Consequently, his off-duty status was retained. On October 17, 1989, PAL Line Administrator Gloria Dizon personally visited petitioner at his residence to check on the progress of his effort to lose weight. Petitioner weighed 217 pounds, gaining 2 pounds from his previous weight. After the visit, petitioner made a commitment [3] to reduce weight in a letter addressed to Cabin Crew Group Manager Augusto Barrios. The letter, in full, reads: Dear Sir: I would like to guaranty my commitment towards a weight loss from 217 pounds to 200 pounds from today until 31 Dec. 1989. From thereon, I promise to continue reducing at a reasonable percentage until such time that my ideal weight is achieved. Likewise, I promise to personally report to your office at the designated time schedule you will set for my weight check. Respectfully Yours, F/S Armando Yrasuegui[4]

Despite the lapse of a ninety-day period given him to reach his ideal weight, petitioner remained overweight. On January 3, 1990, he was informed of the PAL decision for him to remain grounded until such time that he satisfactorily complies with the weight standards. Again, he was directed to report every two weeks for weight checks.

Petitioner failed to report for weight checks. Despite that, he was given one more month to comply with the weight requirement. As usual, he was asked to report for weight check on different dates. He was reminded that his grounding would continue pending satisfactory compliance with the weight standards.[5] Again, petitioner failed to report for weight checks, although he was seen submitting his passport for processing at the PAL Staff Service Division. On April 17, 1990, petitioner was formally warned that a repeated refusal to report for weight check would be dealt with accordingly. He was given another set of weight check dates.[6] Again, petitioner ignored the directive and did not report for weight checks. On June 26, 1990, petitioner was required to explain his refusal to undergo weight checks.[7] When petitioner tipped the scale on July 30, 1990, he weighed at 212 pounds. Clearly, he was still way over his ideal weight of 166 pounds. From then on, nothing was heard from petitioner until he followed up his case requesting for leniency on the latter part of 1992. He weighed at 219 pounds on August 20, 1992 and 205 pounds on November 5, 1992. On November 13, 1992, PAL finally served petitioner a Notice of Administrative Charge for violation of company standards on weight requirements. He was given ten (10) days from receipt of the charge within which to file his answer and submit controverting evidence.[8]

On December 7, 1992, petitioner submitted his Answer.[9] Notably, he did not deny being overweight. What he claimed, instead, is that his violation, if any, had already been condoned by PAL since no action has been taken by the company regarding his case since 1988. He also claimed that PAL discriminated against him because the company has not been fair in treating the cabin crew members who are similarly situated.

On December 8, 1992, a clarificatory hearing was held where petitioner manifested that he was undergoing a weight reduction program to lose at least two (2) pounds per week so as to attain his ideal weight.[10] On June 15, 1993, petitioner was formally informed by PAL that due to his inability to attain his ideal weight, and considering the utmost leniency extended to him which spanned a period covering a total of almost five (5) years, his services were considered terminated effective immediately.[11] His motion for reconsideration having been denied, [12] petitioner filed a complaint for illegal dismissal against PAL. Labor Arbiter, NLRC and CA Dispositions On November 18, 1998, Labor Arbiter Valentin C. Reyes ruled[13] that petitioner was illegally dismissed. The dispositive part of the Arbiter ruling runs as follows: WHEREFORE, in view of the foregoing, judgment is hereby rendered, declaring the complainants dismissal illegal, and ordering the respondent to reinstate him to his former position or substantially equivalent one, and to pay him: a. Backwages of Php10,500.00 per month from his dismissal on June 15, 1993 until reinstated, which for purposes of appeal is hereby set from June 15, 1993 up to August 15, 1998 atP651,000.00; b. Attorneys fees of five percent (5%) of the total award. SO ORDERED.[14]

The Labor Arbiter held that the weight standards of PAL are reasonable in view of the nature of the job of petitioner.[15] However, the weight standards need not be complied with under pain of dismissal since his weight did not hamper the performance of his duties.[16] Assuming that it did, petitioner could be transferred to other positions where his weight would not be a negative factor.[17] Notably, other

overweight employees, i.e., Mr. Palacios, Mr. Cui, and Mr. Barrios, were promoted instead of being disciplined.[18] Both parties appealed to the National Labor Relations Commission (NLRC). [19]

On October 8, 1999, the Labor Arbiter issued a writ of execution directing the reinstatement of petitioner without loss of seniority rights and other benefits.[20] On February 1, 2000, the Labor Arbiter denied[21] the Motion to Quash Writ of Execution[22] of PAL. On March 6, 2000, PAL appealed the denial of its motion to quash to the NLRC.[23]

On June 23, 2000, the NLRC rendered judgment[24] in the following tenor: WHEREFORE, premises considered[,] the Decision of the Arbiter dated 18 November 1998 as modified by our findings herein, is hereby AFFIRMED and that part of the dispositive portion of said decision concerning complainants entitlement to backwages shall be deemed to refer to complainants entitlement to his full backwages, inclusive of allowances and to his other benefits or their monetary equivalent instead of simply backwages, from date of dismissal until his actual reinstatement or finality hereof. Respondent is enjoined to manifests (sic) its choice of the form of the reinstatement of complainant, whether physical or through payroll within ten (10) days from notice failing which, the same shall be deemed as complainants reinstatement through payroll and execution in case of non-payment shall accordingly be issued by the Arbiter. Both appeals of respondent thus, are DISMISSED for utter lack of merit.[25]

According to the NLRC, obesity, or the tendency to gain weight uncontrollably regardless of the amount of food intake, is a disease in itself. [26] As a consequence, there can be no intentional defiance or serious misconduct by petitioner to the lawful order of PAL for him to lose weight.[27]

Like the Labor Arbiter, the NLRC found the weight standards of PAL to be reasonable. However, it found as unnecessary the Labor Arbiter holding that petitioner was not remiss in the performance of his duties as flight steward despite being overweight. According to the NLRC, the Labor Arbiter should have limited himself to the issue of whether the failure of petitioner to attain his ideal weight constituted willful defiance of the weight standards of PAL.[28]

PAL moved for reconsideration to no avail.[29] Thus, PAL elevated the matter to the Court of Appeals (CA) via a petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure.[30] By Decision dated August 31, 2004, the CA reversed[31] the NLRC: WHEREFORE, premises considered, we hereby GRANT the petition. The assailed NLRC decision is declared NULL and VOID and is hereby SET ASIDE. The private respondents complaint is hereby DISMISSED. No costs. SO ORDERED.[32]

The CA opined that there was grave abuse of discretion on the part of the NLRC because it looked at wrong and irrelevant considerations[33] in evaluating the evidence ofthe parties. Contrary to the NLRC ruling, the weight standards of PAL are meant to be a continuing qualification for an employees position.[34] The failure to adhere to the weight standards is an analogous cause for the dismissal of an employee under Article 282(e) of the Labor Code in relation to Article 282(a). It is not willful disobedience as the NLRC seemed to suggest. [35] Said the CA, the element of willfulness that the NLRC decision cites is an irrelevant consideration in arriving at a conclusion on whether the dismissal is legally proper.[36] In other words, the relevant question to ask is not one of willfulness but one of

reasonableness of the standard and whether or not the employee qualifies or continues to qualify under this standard.[37]

Just like the Labor Arbiter and the NLRC, the CA held that the weight standards of PAL are reasonable.[38] Thus, petitioner was legally dismissed because he repeatedly failed to meet the prescribed weight standards. [39] It is obvious that the issue of discrimination was only invoked by petitioner for purposes of escaping the result of his dismissal for being overweight.[40] On May 10, 2005, the CA denied petitioners motion for reconsideration. Elaborating on its earlier ruling, the CA held that the weight standards of PAL are a bona fide occupational qualification which, in case of violation, justifies an employees separation from the service.[42] [41]

Issues In this Rule 45 petition for review, the following issues are posed for resolution: I. WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT PETITIONERS OBESITY CAN BE A GROUND FOR DISMISSAL UNDER PARAGRAPH (e) OF ARTICLE 282 OF THE LABOR CODE OF THE PHILIPPINES; II. WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT PETITIONERS DISMISSAL FOR OBESITY CAN BE PREDICATED ON THE BONA FIDE OCCUPATIONAL QUALIFICATION (BFOQ) DEFENSE; III. WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT PETITIONER WAS NOT UNDULY DISCRIMINATED AGAINST WHEN HE WAS DISMISSED WHILE OTHER OVERWEIGHT CABIN ATTENDANTS WERE EITHER GIVEN FLYING DUTIES OR PROMOTED;

IV. WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED WHEN IT BRUSHED ASIDE PETITIONERS CLAIMS FOR REINSTATEMENT [AND] WAGES ALLEGEDLY FOR BEING MOOT AND ACADEMIC.[43] (Underscoring supplied)

Our Ruling I. The obesity of petitioner is a ground for dismissal under Article 282(e) [44] of the Labor Code. A reading of the weight standards of PAL would lead to no other conclusion than that they constitute a continuing qualification of an employee in order to keep the job. Tersely put, an employee may be dismissed the moment he is unable to comply with his ideal weight as prescribed by the weight standards. The dismissal of the employee would thus fall under Article 282(e) of the Labor Code. As explained by the CA: x x x [T]he standards violated in this case were not mere orders of the employer; they were the prescribed weights that a cabin crew must maintain in order to qualify for and keep his or her position in the company. In other words, they were standards that establish continuing qualifications for an employees position. In this sense, the failure to maintain these standards does not fall under Article 282(a) whose express terms require the element of willfulness in order to be a ground for dismissal. The failure to meet the employers qualifying standards is in fact a ground that does not squarely fall under grounds (a) to (d) and is therefore one that falls under Article 282(e) the other causes analogous to the foregoing. By its nature, these qualifying standards are norms that apply prior to and after an employee is hired. They apply prior to employment because these are the standards a job applicant must initially meet in order to be hired. They apply after hiring because an employee must continue to meet these standards while on the job in order to keep his job. Under this perspective, a violation is not one of the faults for which an employee can be dismissed pursuant to pars. (a) to (d) of Article 282; the employee can be dismissed simply because he no longer qualifies for his job irrespective of whether or not the failure to qualify was willful or intentional. x x x[45]

Petitioner, though, advances a very interesting argument. He claims that obesity is a physical abnormality and/or illness.[46] Relying on Nadura v. Benguet Consolidated, Inc.,[47] he says his dismissal is illegal: Conscious of the fact that Naduras case cannot be made to fall squarely within the specific causes enumerated in subparagraphs 1(a) to (e), Benguet invokes the provisions of subparagraph 1(f) and says that Naduras illness occasional attacks of asthma is a cause analogous to them. Even a cursory reading of the legal provision under consideration is sufficient to convince anyone that, as the trial court said, illness cannot be included as an analogous cause by any stretch of imagination. It is clear that, except the just cause mentioned in sub-paragraph 1(a), all the others expressly enumerated in the law are due to the voluntary and/or willful act of the employee. How Nadurasillness could be considered as analogous to any of them is beyond our understanding, there being no claim or pretense that the same was contracted through his own voluntary act.[48]

The reliance on Nadura is off-tangent. The factual milieu in Nadura is substantially different from the case at bar. First, Nadura was not decided under the Labor Code. The law applied in that case was Republic Act (RA) No. 1787. Second, the issue of flight safety is absent in Nadura, thus, the rationale there cannot apply here. Third, in Nadura, the employee who was a miner, was laid off from work because of illness, i.e., asthma. Here, petitioner was dismissed for his failure to meet the weight standards of PAL. He was not dismissed due to illness. Fourth, the issue in Nadura is whether or not the dismissed employee is entitled to separation pay and damages. Here, the issue centers on the propriety of the dismissal of petitioner for his failure to meet the weight standards of PAL. Fifth, in Nadura, the employee was not accorded due process. Here, petitioner was accorded utmost leniency. He was given more than four (4) years to comply with the weight standards of PAL.

In the case at bar, the evidence on record militates against petitioners claims that obesity is a disease. That he was able to reduce his weight from 1984 to 1992 clearly shows that it is possible for him to lose weight given the proper attitude, determination, and self-discipline. Indeed, during the clarificatory hearing on December 8, 1992, petitioner himself claimed that [t]he issue is could I bring

my weight down to ideal weight which is 172, then the answer is yes. I can do it now.[49] True, petitioner claims that reducing weight is costing him a lot of expenses. However, petitioner has only himself to blame. He could have easily availed the assistance of the company physician, per the advice of PAL.[51] He chose to ignore the suggestion. In fact, he repeatedly failed to report when required to undergo weight checks, without offering a valid explanation. Thus, his fluctuating weight indicates absence of willpower rather than an illness. [50]

Petitioner cites Bonnie Cook v. State of Rhode Island, Department of Mental Health, Retardation and Hospitals,[52] decided by the United States Court of Appeals (First Circuit). In that case, Cook worked from 1978 to 1980 and from 1981 to 1986 as an institutional attendant for the mentally retarded at the Ladd Center that was being operated by respondent. She twice resigned voluntarily with an unblemished record. Even respondent admitted that her performance met the Centers legitimate expectations. In 1988, Cook re-applied for a similar position. At that time, she stood 52 tall and weighed over 320 pounds. Respondent claimed that the morbid obesity of plaintiff compromised her ability to evacuate patients in case of emergency and it also put her at greater risk of serious diseases.

Cook contended that the action of respondent amounted to discrimination on the basis of a handicap. This was in direct violation of Section 504(a) of the Rehabilitation Act of 1973,[53] which incorporates the remedies contained in Title VI of the Civil Rights Act of 1964. Respondent claimed, however, that morbid obesity could never constitute a handicap within the purview of the Rehabilitation Act. Among others, obesity is a mutable condition, thus plaintiff could simply lose weight and rid herself of concomitant disability. The appellate Court disagreed and held that morbid obesity is a disability under the Rehabilitation Act and that respondent discriminated against Cook based on perceived disability. The evidence included expert testimony that morbid obesity is a physiological disorder. It involves a dysfunction of both the metabolic system and the neurological appetite suppressing signal system, which is capable of causing adverse effects within the musculoskeletal, respiratory, and

cardiovascular systems. Notably, the Court stated that mutability is relevant only in determining the substantiality of the limitation flowing from a given impairment, thus mutability only precludes those conditions that an individual can easily and quickly reverse by behavioral alteration. Unlike Cook, however, petitioner is not morbidly obese. In the words of the District Court for the District of Rhode Island, Cook was sometime before 1978 at least one hundred pounds more than what is considered appropriate of her height. According to the Circuit Judge, Cook weighed over 320 pounds in 1988. Clearly, that is not the case here.At his heaviest, petitioner was only less than 50 pounds over his ideal weight. In fine, We hold that the obesity of petitioner, when placed in the context of his work as flight attendant, becomes an analogous cause under Article 282(e) of the Labor Code that justifies his dismissal from the service. His obesity may not be unintended, but is nonetheless voluntary. As the CA correctly puts it, [v]oluntariness basically means that the just cause is solely attributable to the employee without any external force influencing or controlling his actions. This element runs through all just causes under Article 282, whether they be in the nature of a wrongful action or omission. Gross and habitual neglect, a recognized just cause, is considered voluntary although it lacks the element of intent found in Article 282(a), (c), and (d).[54] II. The dismissal of petitioner can be predicated on the bona fide occupational qualification defense. Employment in particular jobs may not be limited to persons of a particular sex, religion, or national origin unless the employer can show that sex, religion, or national origin is an actual qualification for performing the job. The qualification is called a bona fide occupational qualification (BFOQ).[55] In the United States, there are a few federal and many state job discrimination laws that contain an exception allowing an employer to engage in an otherwise unlawful form of prohibited discrimination when the action is based on a BFOQ necessary to the normal operation of a business or enterprise.[56]

Petitioner contends that BFOQ is a statutory defense. It does not exist if there is no statute providing for it.[57] Further, there is no existing BFOQ statute that could justify his dismissal.[58] Both arguments must fail. First, the Constitution,[59] the Labor Code,[60] and RA No. 7277[61] or the Magna Carta for Disabled Persons[62] contain provisions similar to BFOQ. Second, in British Columbia Public Service Employee Commission (BSPSERC) v. The British Columbia Government and Service Employees Union (BCGSEU), [63] the Supreme Court of Canada adopted the so-called Meiorin Test in determining whether an employment policy is justified. Under this test, (1) the employer must show that it adopted the standard for a purpose rationally connected to the performance of the job;[64] (2) the employer must establish that the standard is reasonably necessary[65] to the accomplishment of that work-related purpose; and (3) the employer must establish that the standard is reasonably necessary in order to accomplish the legitimate work-related purpose. Similarly, in Star Paper Corporation v. Simbol,[66] this Court held that in order to justify a BFOQ, the employer must prove that (1) the employment qualification is reasonably related to the essential operation of the job involved; and (2) that there is factual basis for believing that all or substantially all persons meeting the qualification would be unable to properly perform the duties of the job.[67] In short, the test of reasonableness of the company policy is used because it is parallel to BFOQ.[68] BFOQ is valid provided it reflects an inherent quality reasonably necessary for satisfactory job performance.[69] In Duncan Association of Detailman-PTGWTO [70] v. Glaxo Wellcome Philippines, Inc., the Court did not hesitate to pass upon the validity of a company policy which prohibits its employees from marrying employees of a rival company. It was held that the company policy is reasonable considering that its purpose is the protection of the interests of the company against possible competitor infiltration on its trade secrets and procedures.

Verily, there is no merit to the argument that BFOQ cannot be applied if it has no supporting statute. Too, the Labor Arbiter,[71] NLRC,[72] and CA[73] are one in holding that the weight standards of PAL are reasonable. A common carrier, from the nature of its business and for reasons of public policy, is bound to observe extraordinary diligence for the safety of the passengers it transports. [74] It is bound to carry its passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with due regard for all the circumstances.[75] The law leaves no room for mistake or oversight on the part of a common carrier. Thus, it is only logical to hold that the weight standards of PAL show its effort to comply with the exacting obligations imposed upon it by law by virtue of being a common carrier. The business of PAL is air transportation. As such, it has committed itself to safely transport its passengers. In order to achieve this, it must necessarily rely on its employees, most particularly the cabin flight deck crew who are on board the aircraft. The weight standards of PAL should be viewed as imposing strict norms of discipline upon its employees. In other words, the primary objective of PAL in the imposition of the weight standards for cabin crew is flight safety. It cannot be gainsaid that cabin attendants must maintain agility at all times in order to inspire passenger confidence on their ability to care for the passengers when something goes wrong. It is not farfetched to say that airline companies, just like all common carriers, thrive due to public confidence on their safety records. People, especially the riding public, expect no less than that airline companiestransport their passengers to their respective destinations safely and soundly. A lesser performance is unacceptable. The task of a cabin crew or flight attendant is not limited to serving meals or attending to the whims and caprices of the passengers. The most important activity of the cabin crew is to care for the safety of passengers and the evacuation of the aircraft when an emergency occurs. Passenger safety goes to the core of the job of a cabin attendant.Truly, airlines need cabin attendants who have the necessary strength to open emergency doors, the agility to attend to passengers in cramped working conditions, and the stamina to withstand grueling flight schedules.

On board an aircraft, the body weight and size of a cabin attendant are important factors to consider in case of emergency. Aircrafts have constricted cabin space, and narrow aisles and exit doors. Thus, the arguments of respondent that [w]hether the airlines flight attendants are overweight or not has no direct relation to its mission of transporting passengers to their destination; and that the weight standards has nothing to do with airworthiness of respondents airlines, must fail. The rationale in Western Air Lines v. Criswell[76] relied upon by petitioner cannot apply to his case. What was involved there were two (2) airline pilots who were denied reassignment as flight engineers upon reaching the age of 60, and a flight engineer who was forced to retire at age 60. They sued the airline company, alleging that the age-60 retirement for flight engineers violated the Age Discrimination in Employment Act of 1967. Age-based BFOQ and being overweight are not the same. The case of overweight cabin attendants is another matter. Given the cramped cabin space and narrow aisles and emergency exit doors of the airplane, any overweight cabin attendant would certainly have difficulty navigating the cramped cabin area. In short, there is no need to individually evaluate their ability to perform their task. That an obese cabin attendant occupies more space than a slim one is an unquestionable fact which courts can judicially recognize without introduction of evidence.[77] It would also be absurd to require airline companies to reconfigure the aircraft in order to widen the aisles and exit doors just to accommodate overweight cabin attendants like petitioner. The biggest problem with an overweight cabin attendant is the possibility of impeding passengers from evacuating the aircraft, should the occasion call for it. The job of a cabin attendant during emergencies is to speedily get the passengers out of the aircraft safely. Being overweight necessarily impedes mobility. Indeed, in an emergency situation, seconds are what cabin attendants are dealing with, not minutes. Three lost seconds can translate into three lost lives. Evacuation might slow down just because a wide-bodied cabin attendant is blocking the narrow aisles. These possibilities are not remote.

Petitioner is also in estoppel. He does not dispute that the weight standards of PAL were made known to him prior to his employment. He is presumed to know the weight limit that he must maintain at all times.[78] In fact, never did he question the authority of PAL when he was repeatedly asked to trim down his weight. Bona fides exigit ut quodconvenit fiat. Good faith demands that what is agreed upon shall be done. Kung ang tao ay tapat kanyang tutuparin ang napagkasunduan. Too, the weight standards of PAL provide for separate weight limitations based on height and body frame for both male and female cabin attendants. A progressive discipline is imposed to allow non-compliant cabin attendants sufficient opportunity to meet the weight standards. Thus, the clear-cut rules obviate any possibility for thecommission of abuse or arbitrary action on the part of PAL. III. Petitioner failed to substantiate his claim that he was discriminated against by PAL. Petitioner next claims that PAL is using passenger safety as a convenient excuse to discriminate against him.[79] We are constrained, however, to hold otherwise. We agree with the CA that [t]he element of discrimination came into play in this case as a secondary position for the private respondent in order to escape the consequence of dismissal that being overweight entailed. It is a confession-and-avoidance position that impliedly admitted the cause of dismissal, including the reasonableness of the applicable standard and the private respondents failure to comply.[80] It is a basic rule in evidence that each party must prove his affirmative allegation.[81] Since the burden of evidence lies with the party who asserts an affirmative allegation, petitioner has to prove his allegation with particularity. There is nothing on the records which could support the finding of discriminatory treatment. Petitioner cannot establish discrimination by simply naming the supposed cabin attendants who are allegedly similarly situated with him. Substantial proof must be shown as to how and why they are similarly situated and the differential treatment petitioner got from PAL despite the similarity of his situation with other employees.

Indeed, except for pointing out the names of the supposed overweight cabin attendants, petitioner miserably failed to indicate their respective ideal weights; weights over their ideal weights; the periods they were allowed to fly despite their being overweight; the particular flights assigned to them; the discriminating treatment they got from PAL; and other relevant data that could have adequately established a case of discriminatory treatment by PAL. In the words of the CA, PAL really had no substantial case of discrimination to meet.[82] We are not unmindful that findings of facts of administrative agencies, like the Labor Arbiter and the NLRC, are accorded respect, even finality.[83] The reason is simple: administrative agencies are experts in matters within their specific and specialized jurisdiction.[84] But the principle is not a hard and fast rule. It only applies if the findings of facts are duly supported by substantial evidence. If it can be shown that administrative bodies grossly misappreciated evidence of such nature so as to compel a conclusion to the contrary, their findings of facts must necessarily be reversed. Factual findings of administrative agencies do not have infallibility and must be set aside when they fail the test of arbitrariness.[85] Here, the Labor Arbiter and the NLRC inexplicably misappreciated evidence. We thus annul their findings. To make his claim more believable, petitioner invokes the equal protection clause guaranty[86] of the Constitution. However, in the absence of governmental interference, the liberties guaranteed by the Constitution cannot be invoked.[87] Put differently, the Bill of Rights is not meant to be invoked against acts of private individuals.[88] Indeed, the United States Supreme Court, in interpreting the Fourteenth Amendment,[89] which is the source of our equal protection guarantee, is consistent in saying that the equalprotection erects no shield against private conduct, however discriminatory or wrongful.[90] Private actions, no matter how egregious, cannot violate the equal protection guarantee.[91]

IV. The claims of petitioner for reinstatement and wages are moot. As his last contention, petitioner avers that his claims for reinstatement and wages have not been mooted. He is entitled to reinstatement and his full backwages, from the time he was illegally dismissed up to the time that the NLRC was reversed by the CA.[92] At this point, Article 223 of the Labor Code finds relevance: In any event, the decision of the Labor Arbiter reinstating a dismissed or separated employee, insofar as the reinstatement aspect is concerned, shall immediately be executory, even pending appeal. The employee shall either be admitted back to work under the same terms and conditions prevailing prior to his dismissal or separation or, at the option of the employer, merely reinstated in the payroll. The posting of a bond by the employer shall not stay the execution for reinstatement provided herein.

The law is very clear. Although an award or order of reinstatement is selfexecutory and does not require a writ of execution,[93] the option to exercise actual reinstatement or payroll reinstatement belongs to the employer. It does not belong to the employee, to the labor tribunals, or even to the courts.

Contrary to the allegation of petitioner that PAL did everything under the sun to frustrate his immediate return to his previous position,[94] there is evidence that PALopted to physically reinstate him to a substantially equivalent position in accordance with the order of the Labor Arbiter.[95] In fact, petitioner duly received the return to work notice on February 23, 2001, as shown by his signature.[96] Petitioner cannot take refuge in the pronouncements of the Court in a case that [t]he unjustified refusal of the employer to reinstate the dismissed employee entitles him to payment of his salaries effective from the time the employer failed to reinstate him despite the issuance of a writ of execution[98] and even if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the part of the employer to reinstate and pay the wages of the employee during the period of appeal until reversal by the higher court.[99] He failed to prove that he complied with the return to work order of PAL. Neither does it appear on record that he actually rendered services for PAL from the moment he was dismissed, in order to insist on the payment of his full backwages. [97]

In insisting that he be reinstated to his actual position despite being overweight, petitioner in effect wants to render the issues in the present case moot. He asks PAL to comply with the impossible. Time and again, the Court ruled that the law does not exact compliance with the impossible.[100] V. Petitioner is entitled to separation pay. Be that as it may, all is not lost for petitioner. Normally, a legally dismissed employee is not entitled to separation pay. This may be deduced from the language of Article 279 of the Labor Code that [a]n 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. Luckily for petitioner, this is not an ironclad rule.

Exceptionally, separation pay is granted to a legally dismissed employee as an act social justice,[101] or based on equity.[102] In both instances, it is required that the dismissal (1) was not for serious misconduct; and (2) does not reflect on the moral character of the employee.[103] Here, We grant petitioner separation pay equivalent to one-half (1/2) months pay for every year of service.[104] It should include regular allowances which he might have been receiving.[105] We are not blind to the fact that he was not dismissed for any serious misconduct or to any act which would reflect on his moral character. We also recognize that his employment with PAL lasted for more or less a decade. WHEREFORE, the appealed Decision of the Court of Appeals is AFFIRMED but MODIFIED in that petitioner Armando G. Yrasuegui is entitled to separation pay in an amount equivalent to one-half (1/2) months pay for every year of service, which should include his regular allowances.

SO ORDERED.

RUBEN T. REYES Associate Justice

Republic of the Philippines

Supreme Court Manila

THIRD DIVISION ARMANDO G. YRASUEGUI, G.R. No. 168081 Petitioner, Present:

YNARES-SANTIAGO, J., Chairperson, - versus - AUSTRIA-MARTINEZ, CHICO-NAZARIO, NACHURA, and REYES, JJ. Promulgated: PHILIPPINE AIRLINES, INC., Respondent. October 17, 2008 x--------------------------------------------------x DECISION REYES, R.T., J.: THIS case portrays the peculiar story of an international flight steward who was dismissed because of his failure to adhere to the weight standards of the airline company.

He is now before this Court via a petition for review on certiorari claiming that he was illegally dismissed. To buttress his stance, he argues that (1) his dismissal does not fall under 282(e) of the Labor Code; (2) continuing adherence to the weight standards of the company is not a bona fide occupational qualification; and (3) he was discriminated against because other overweight employees were promoted instead of being disciplined. After a meticulous consideration of all arguments pro and con, We uphold the legality of dismissal. Separation pay, however, should be awarded in favor of the employee as an act of social justice or based on equity. This is so because his dismissal is not for serious misconduct. Neither is it reflective of his moral character. The Facts Petitioner Armando G. Yrasuegui was a former international flight steward of Philippine Airlines, Inc. (PAL). He stands five feet and eight inches (58) with a large body frame. The proper weight for a man of his height and body structure is from 147 to 166 pounds, the ideal weight being 166 pounds, as mandated by the Cabin and Crew Administration Manual[1] of PAL. The weight problem of petitioner dates back to 1984. Back then, PAL advised him to go on an extended vacation leave from December 29, 1984 to March 4, 1985 to address his weight concerns. Apparently, petitioner failed to meet the companys weight standards, prompting another leave without pay from March 5, 1985 to November 1985. After meeting the required weight, petitioner was allowed to return to work. But petitioners weight problem recurred. He again went on leave without pay from October 17, 1988 to February 1989. On April 26, 1989, petitioner weighed 209 pounds, 43 pounds over his ideal weight. In line with company policy, he was removed from flight duty effective May 6, 1989to July 3, 1989. He was formally requested to trim down to his ideal weight and report for weight checks on several dates. He was also told that he may avail of the services of the company physician

should he wish to do so. He was advised that his case will be evaluated on July 3, 1989.[2] On February 25, 1989, petitioner underwent weight check. It was discovered that he gained, instead of losing, weight. He was overweight at 215 pounds, which is 49 pounds beyond the limit. Consequently, his off-duty status was retained. On October 17, 1989, PAL Line Administrator Gloria Dizon personally visited petitioner at his residence to check on the progress of his effort to lose weight. Petitioner weighed 217 pounds, gaining 2 pounds from his previous weight. After the visit, petitioner made a commitment [3] to reduce weight in a letter addressed to Cabin Crew Group Manager Augusto Barrios. The letter, in full, reads: Dear Sir: I would like to guaranty my commitment towards a weight loss from 217 pounds to 200 pounds from today until 31 Dec. 1989. From thereon, I promise to continue reducing at a reasonable percentage until such time that my ideal weight is achieved. Likewise, I promise to personally report to your office at the designated time schedule you will set for my weight check. Respectfully Yours, F/S Armando Yrasuegui[4]

Despite the lapse of a ninety-day period given him to reach his ideal weight, petitioner remained overweight. On January 3, 1990, he was informed of the PAL decision for him to remain grounded until such time that he satisfactorily complies with the weight standards. Again, he was directed to report every two weeks for weight checks.

Petitioner failed to report for weight checks. Despite that, he was given one more month to comply with the weight requirement. As usual, he was asked to report for weight check on different dates. He was reminded that his grounding would continue pending satisfactory compliance with the weight standards.[5] Again, petitioner failed to report for weight checks, although he was seen submitting his passport for processing at the PAL Staff Service Division. On April 17, 1990, petitioner was formally warned that a repeated refusal to report for weight check would be dealt with accordingly. He was given another set of weight check dates.[6] Again, petitioner ignored the directive and did not report for weight checks. On June 26, 1990, petitioner was required to explain his refusal to undergo weight checks.[7] When petitioner tipped the scale on July 30, 1990, he weighed at 212 pounds. Clearly, he was still way over his ideal weight of 166 pounds. From then on, nothing was heard from petitioner until he followed up his case requesting for leniency on the latter part of 1992. He weighed at 219 pounds on August 20, 1992 and 205 pounds on November 5, 1992. On November 13, 1992, PAL finally served petitioner a Notice of Administrative Charge for violation of company standards on weight requirements. He was given ten (10) days from receipt of the charge within which to file his answer and submit controverting evidence.[8]

On December 7, 1992, petitioner submitted his Answer.[9] Notably, he did not deny being overweight. What he claimed, instead, is that his violation, if any, had already been condoned by PAL since no action has been taken by the company regarding his case since 1988. He also claimed that PAL discriminated against him because the company has not been fair in treating the cabin crew members who are similarly situated.

On December 8, 1992, a clarificatory hearing was held where petitioner manifested that he was undergoing a weight reduction program to lose at least two (2) pounds per week so as to attain his ideal weight.[10] On June 15, 1993, petitioner was formally informed by PAL that due to his inability to attain his ideal weight, and considering the utmost leniency extended to him which spanned a period covering a total of almost five (5) years, his services were considered terminated effective immediately.[11] His motion for reconsideration having been denied, [12] petitioner filed a complaint for illegal dismissal against PAL. Labor Arbiter, NLRC and CA Dispositions On November 18, 1998, Labor Arbiter Valentin C. Reyes ruled[13] that petitioner was illegally dismissed. The dispositive part of the Arbiter ruling runs as follows: WHEREFORE, in view of the foregoing, judgment is hereby rendered, declaring the complainants dismissal illegal, and ordering the respondent to reinstate him to his former position or substantially equivalent one, and to pay him: a. Backwages of Php10,500.00 per month from his dismissal on June 15, 1993 until reinstated, which for purposes of appeal is hereby set from June 15, 1993 up to August 15, 1998 atP651,000.00; b. Attorneys fees of five percent (5%) of the total award. SO ORDERED.[14]

The Labor Arbiter held that the weight standards of PAL are reasonable in view of the nature of the job of petitioner.[15] However, the weight standards need not be complied with under pain of dismissal since his weight did not hamper the performance of his duties.[16] Assuming that it did, petitioner could be transferred to other positions where his weight would not be a negative factor.[17] Notably, other

overweight employees, i.e., Mr. Palacios, Mr. Cui, and Mr. Barrios, were promoted instead of being disciplined.[18] Both parties appealed to the National Labor Relations Commission (NLRC). [19]

On October 8, 1999, the Labor Arbiter issued a writ of execution directing the reinstatement of petitioner without loss of seniority rights and other benefits.[20] On February 1, 2000, the Labor Arbiter denied[21] the Motion to Quash Writ of Execution[22] of PAL. On March 6, 2000, PAL appealed the denial of its motion to quash to the NLRC.[23]

On June 23, 2000, the NLRC rendered judgment[24] in the following tenor: WHEREFORE, premises considered[,] the Decision of the Arbiter dated 18 November 1998 as modified by our findings herein, is hereby AFFIRMED and that part of the dispositive portion of said decision concerning complainants entitlement to backwages shall be deemed to refer to complainants entitlement to his full backwages, inclusive of allowances and to his other benefits or their monetary equivalent instead of simply backwages, from date of dismissal until his actual reinstatement or finality hereof. Respondent is enjoined to manifests (sic) its choice of the form of the reinstatement of complainant, whether physical or through payroll within ten (10) days from notice failing which, the same shall be deemed as complainants reinstatement through payroll and execution in case of non-payment shall accordingly be issued by the Arbiter. Both appeals of respondent thus, are DISMISSED for utter lack of merit.[25]

According to the NLRC, obesity, or the tendency to gain weight uncontrollably regardless of the amount of food intake, is a disease in itself. [26] As a consequence, there can be no intentional defiance or serious misconduct by petitioner to the lawful order of PAL for him to lose weight.[27]

Like the Labor Arbiter, the NLRC found the weight standards of PAL to be reasonable. However, it found as unnecessary the Labor Arbiter holding that petitioner was not remiss in the performance of his duties as flight steward despite being overweight. According to the NLRC, the Labor Arbiter should have limited himself to the issue of whether the failure of petitioner to attain his ideal weight constituted willful defiance of the weight standards of PAL.[28]

PAL moved for reconsideration to no avail.[29] Thus, PAL elevated the matter to the Court of Appeals (CA) via a petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure.[30] By Decision dated August 31, 2004, the CA reversed[31] the NLRC: WHEREFORE, premises considered, we hereby GRANT the petition. The assailed NLRC decision is declared NULL and VOID and is hereby SET ASIDE. The private respondents complaint is hereby DISMISSED. No costs. SO ORDERED.[32]

The CA opined that there was grave abuse of discretion on the part of the NLRC because it looked at wrong and irrelevant considerations[33] in evaluating the evidence ofthe parties. Contrary to the NLRC ruling, the weight standards of PAL are meant to be a continuing qualification for an employees position.[34] The failure to adhere to the weight standards is an analogous cause for the dismissal of an employee under Article 282(e) of the Labor Code in relation to Article 282(a). It is not willful disobedience as the NLRC seemed to suggest. [35] Said the CA, the element of willfulness that the NLRC decision cites is an irrelevant consideration in arriving at a conclusion on whether the dismissal is legally proper.[36] In other words, the relevant question to ask is not one of willfulness but one of

reasonableness of the standard and whether or not the employee qualifies or continues to qualify under this standard.[37]

Just like the Labor Arbiter and the NLRC, the CA held that the weight standards of PAL are reasonable.[38] Thus, petitioner was legally dismissed because he repeatedly failed to meet the prescribed weight standards. [39] It is obvious that the issue of discrimination was only invoked by petitioner for purposes of escaping the result of his dismissal for being overweight.[40] On May 10, 2005, the CA denied petitioners motion for reconsideration. Elaborating on its earlier ruling, the CA held that the weight standards of PAL are a bona fide occupational qualification which, in case of violation, justifies an employees separation from the service.[42] [41]

Issues In this Rule 45 petition for review, the following issues are posed for resolution: I. WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT PETITIONERS OBESITY CAN BE A GROUND FOR DISMISSAL UNDER PARAGRAPH (e) OF ARTICLE 282 OF THE LABOR CODE OF THE PHILIPPINES; II. WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT PETITIONERS DISMISSAL FOR OBESITY CAN BE PREDICATED ON THE BONA FIDE OCCUPATIONAL QUALIFICATION (BFOQ) DEFENSE; III. WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT PETITIONER WAS NOT UNDULY DISCRIMINATED AGAINST WHEN HE WAS DISMISSED WHILE OTHER OVERWEIGHT CABIN ATTENDANTS WERE EITHER GIVEN FLYING DUTIES OR PROMOTED;

IV. WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED WHEN IT BRUSHED ASIDE PETITIONERS CLAIMS FOR REINSTATEMENT [AND] WAGES ALLEGEDLY FOR BEING MOOT AND ACADEMIC.[43] (Underscoring supplied)

Our Ruling I. The obesity of petitioner is a ground for dismissal under Article 282(e) [44] of the Labor Code. A reading of the weight standards of PAL would lead to no other conclusion than that they constitute a continuing qualification of an employee in order to keep the job. Tersely put, an employee may be dismissed the moment he is unable to comply with his ideal weight as prescribed by the weight standards. The dismissal of the employee would thus fall under Article 282(e) of the Labor Code. As explained by the CA: x x x [T]he standards violated in this case were not mere orders of the employer; they were the prescribed weights that a cabin crew must maintain in order to qualify for and keep his or her position in the company. In other words, they were standards that establish continuing qualifications for an employees position. In this sense, the failure to maintain these standards does not fall under Article 282(a) whose express terms require the element of willfulness in order to be a ground for dismissal. The failure to meet the employers qualifying standards is in fact a ground that does not squarely fall under grounds (a) to (d) and is therefore one that falls under Article 282(e) the other causes analogous to the foregoing. By its nature, these qualifying standards are norms that apply prior to and after an employee is hired. They apply prior to employment because these are the standards a job applicant must initially meet in order to be hired. They apply after hiring because an employee must continue to meet these standards while on the job in order to keep his job. Under this perspective, a violation is not one of the faults for which an employee can be dismissed pursuant to pars. (a) to (d) of Article 282; the employee can be dismissed simply because he no longer qualifies for his job irrespective of whether or not the failure to qualify was willful or intentional. x x x[45]

Petitioner, though, advances a very interesting argument. He claims that obesity is a physical abnormality and/or illness.[46] Relying on Nadura v. Benguet Consolidated, Inc.,[47] he says his dismissal is illegal: Conscious of the fact that Naduras case cannot be made to fall squarely within the specific causes enumerated in subparagraphs 1(a) to (e), Benguet invokes the provisions of subparagraph 1(f) and says that Naduras illness occasional attacks of asthma is a cause analogous to them. Even a cursory reading of the legal provision under consideration is sufficient to convince anyone that, as the trial court said, illness cannot be included as an analogous cause by any stretch of imagination. It is clear that, except the just cause mentioned in sub-paragraph 1(a), all the others expressly enumerated in the law are due to the voluntary and/or willful act of the employee. How Nadurasillness could be considered as analogous to any of them is beyond our understanding, there being no claim or pretense that the same was contracted through his own voluntary act.[48]

The reliance on Nadura is off-tangent. The factual milieu in Nadura is substantially different from the case at bar. First, Nadura was not decided under the Labor Code. The law applied in that case was Republic Act (RA) No. 1787. Second, the issue of flight safety is absent in Nadura, thus, the rationale there cannot apply here. Third, in Nadura, the employee who was a miner, was laid off from work because of illness, i.e., asthma. Here, petitioner was dismissed for his failure to meet the weight standards of PAL. He was not dismissed due to illness. Fourth, the issue in Nadura is whether or not the dismissed employee is entitled to separation pay and damages. Here, the issue centers on the propriety of the dismissal of petitioner for his failure to meet the weight standards of PAL. Fifth, in Nadura, the employee was not accorded due process. Here, petitioner was accorded utmost leniency. He was given more than four (4) years to comply with the weight standards of PAL.

In the case at bar, the evidence on record militates against petitioners claims that obesity is a disease. That he was able to reduce his weight from 1984 to 1992 clearly shows that it is possible for him to lose weight given the proper attitude, determination, and self-discipline. Indeed, during the clarificatory hearing on December 8, 1992, petitioner himself claimed that [t]he issue is could I bring

my weight down to ideal weight which is 172, then the answer is yes. I can do it now.[49] True, petitioner claims that reducing weight is costing him a lot of expenses. However, petitioner has only himself to blame. He could have easily availed the assistance of the company physician, per the advice of PAL.[51] He chose to ignore the suggestion. In fact, he repeatedly failed to report when required to undergo weight checks, without offering a valid explanation. Thus, his fluctuating weight indicates absence of willpower rather than an illness. [50]

Petitioner cites Bonnie Cook v. State of Rhode Island, Department of Mental Health, Retardation and Hospitals,[52] decided by the United States Court of Appeals (First Circuit). In that case, Cook worked from 1978 to 1980 and from 1981 to 1986 as an institutional attendant for the mentally retarded at the Ladd Center that was being operated by respondent. She twice resigned voluntarily with an unblemished record. Even respondent admitted that her performance met the Centers legitimate expectations. In 1988, Cook re-applied for a similar position. At that time, she stood 52 tall and weighed over 320 pounds. Respondent claimed that the morbid obesity of plaintiff compromised her ability to evacuate patients in case of emergency and it also put her at greater risk of serious diseases.

Cook contended that the action of respondent amounted to discrimination on the basis of a handicap. This was in direct violation of Section 504(a) of the Rehabilitation Act of 1973,[53] which incorporates the remedies contained in Title VI of the Civil Rights Act of 1964. Respondent claimed, however, that morbid obesity could never constitute a handicap within the purview of the Rehabilitation Act. Among others, obesity is a mutable condition, thus plaintiff could simply lose weight and rid herself of concomitant disability. The appellate Court disagreed and held that morbid obesity is a disability under the Rehabilitation Act and that respondent discriminated against Cook based on perceived disability. The evidence included expert testimony that morbid obesity is a physiological disorder. It involves a dysfunction of both the metabolic system and the neurological appetite suppressing signal system, which is capable of causing adverse effects within the musculoskeletal, respiratory, and

cardiovascular systems. Notably, the Court stated that mutability is relevant only in determining the substantiality of the limitation flowing from a given impairment, thus mutability only precludes those conditions that an individual can easily and quickly reverse by behavioral alteration. Unlike Cook, however, petitioner is not morbidly obese. In the words of the District Court for the District of Rhode Island, Cook was sometime before 1978 at least one hundred pounds more than what is considered appropriate of her height. According to the Circuit Judge, Cook weighed over 320 pounds in 1988. Clearly, that is not the case here.At his heaviest, petitioner was only less than 50 pounds over his ideal weight. In fine, We hold that the obesity of petitioner, when placed in the context of his work as flight attendant, becomes an analogous cause under Article 282(e) of the Labor Code that justifies his dismissal from the service. His obesity may not be unintended, but is nonetheless voluntary. As the CA correctly puts it, [v]oluntariness basically means that the just cause is solely attributable to the employee without any external force influencing or controlling his actions. This element runs through all just causes under Article 282, whether they be in the nature of a wrongful action or omission. Gross and habitual neglect, a recognized just cause, is considered voluntary although it lacks the element of intent found in Article 282(a), (c), and (d).[54] II. The dismissal of petitioner can be predicated on the bona fide occupational qualification defense. Employment in particular jobs may not be limited to persons of a particular sex, religion, or national origin unless the employer can show that sex, religion, or national origin is an actual qualification for performing the job. The qualification is called a bona fide occupational qualification (BFOQ).[55] In the United States, there are a few federal and many state job discrimination laws that contain an exception allowing an employer to engage in an otherwise unlawful form of prohibited discrimination when the action is based on a BFOQ necessary to the normal operation of a business or enterprise.[56]

Petitioner contends that BFOQ is a statutory defense. It does not exist if there is no statute providing for it.[57] Further, there is no existing BFOQ statute that could justify his dismissal.[58] Both arguments must fail. First, the Constitution,[59] the Labor Code,[60] and RA No. 7277[61] or the Magna Carta for Disabled Persons[62] contain provisions similar to BFOQ. Second, in British Columbia Public Service Employee Commission (BSPSERC) v. The British Columbia Government and Service Employees Union (BCGSEU), [63] the Supreme Court of Canada adopted the so-called Meiorin Test in determining whether an employment policy is justified. Under this test, (1) the employer must show that it adopted the standard for a purpose rationally connected to the performance of the job;[64] (2) the employer must establish that the standard is reasonably necessary[65] to the accomplishment of that work-related purpose; and (3) the employer must establish that the standard is reasonably necessary in order to accomplish the legitimate work-related purpose. Similarly, in Star Paper Corporation v. Simbol,[66] this Court held that in order to justify a BFOQ, the employer must prove that (1) the employment qualification is reasonably related to the essential operation of the job involved; and (2) that there is factual basis for believing that all or substantially all persons meeting the qualification would be unable to properly perform the duties of the job.[67] In short, the test of reasonableness of the company policy is used because it is parallel to BFOQ.[68] BFOQ is valid provided it reflects an inherent quality reasonably necessary for satisfactory job performance.[69] In Duncan Association of Detailman-PTGWTO [70] v. Glaxo Wellcome Philippines, Inc., the Court did not hesitate to pass upon the validity of a company policy which prohibits its employees from marrying employees of a rival company. It was held that the company policy is reasonable considering that its purpose is the protection of the interests of the company against possible competitor infiltration on its trade secrets and procedures.

Verily, there is no merit to the argument that BFOQ cannot be applied if it has no supporting statute. Too, the Labor Arbiter,[71] NLRC,[72] and CA[73] are one in holding that the weight standards of PAL are reasonable. A common carrier, from the nature of its business and for reasons of public policy, is bound to observe extraordinary diligence for the safety of the passengers it transports. [74] It is bound to carry its passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with due regard for all the circumstances.[75] The law leaves no room for mistake or oversight on the part of a common carrier. Thus, it is only logical to hold that the weight standards of PAL show its effort to comply with the exacting obligations imposed upon it by law by virtue of being a common carrier. The business of PAL is air transportation. As such, it has committed itself to safely transport its passengers. In order to achieve this, it must necessarily rely on its employees, most particularly the cabin flight deck crew who are on board the aircraft. The weight standards of PAL should be viewed as imposing strict norms of discipline upon its employees. In other words, the primary objective of PAL in the imposition of the weight standards for cabin crew is flight safety. It cannot be gainsaid that cabin attendants must maintain agility at all times in order to inspire passenger confidence on their ability to care for the passengers when something goes wrong. It is not farfetched to say that airline companies, just like all common carriers, thrive due to public confidence on their safety records. People, especially the riding public, expect no less than that airline companiestransport their passengers to their respective destinations safely and soundly. A lesser performance is unacceptable. The task of a cabin crew or flight attendant is not limited to serving meals or attending to the whims and caprices of the passengers. The most important activity of the cabin crew is to care for the safety of passengers and the evacuation of the aircraft when an emergency occurs. Passenger safety goes to the core of the job of a cabin attendant.Truly, airlines need cabin attendants who have the necessary strength to open emergency doors, the agility to attend to passengers in cramped working conditions, and the stamina to withstand grueling flight schedules.

On board an aircraft, the body weight and size of a cabin attendant are important factors to consider in case of emergency. Aircrafts have constricted cabin space, and narrow aisles and exit doors. Thus, the arguments of respondent that [w]hether the airlines flight attendants are overweight or not has no direct relation to its mission of transporting passengers to their destination; and that the weight standards has nothing to do with airworthiness of respondents airlines, must fail. The rationale in Western Air Lines v. Criswell[76] relied upon by petitioner cannot apply to his case. What was involved there were two (2) airline pilots who were denied reassignment as flight engineers upon reaching the age of 60, and a flight engineer who was forced to retire at age 60. They sued the airline company, alleging that the age-60 retirement for flight engineers violated the Age Discrimination in Employment Act of 1967. Age-based BFOQ and being overweight are not the same. The case of overweight cabin attendants is another matter. Given the cramped cabin space and narrow aisles and emergency exit doors of the airplane, any overweight cabin attendant would certainly have difficulty navigating the cramped cabin area. In short, there is no need to individually evaluate their ability to perform their task. That an obese cabin attendant occupies more space than a slim one is an unquestionable fact which courts can judicially recognize without introduction of evidence.[77] It would also be absurd to require airline companies to reconfigure the aircraft in order to widen the aisles and exit doors just to accommodate overweight cabin attendants like petitioner. The biggest problem with an overweight cabin attendant is the possibility of impeding passengers from evacuating the aircraft, should the occasion call for it. The job of a cabin attendant during emergencies is to speedily get the passengers out of the aircraft safely. Being overweight necessarily impedes mobility. Indeed, in an emergency situation, seconds are what cabin attendants are dealing with, not minutes. Three lost seconds can translate into three lost lives. Evacuation might slow down just because a wide-bodied cabin attendant is blocking the narrow aisles. These possibilities are not remote.

Petitioner is also in estoppel. He does not dispute that the weight standards of PAL were made known to him prior to his employment. He is presumed to know the weight limit that he must maintain at all times.[78] In fact, never did he question the authority of PAL when he was repeatedly asked to trim down his weight. Bona fides exigit ut quodconvenit fiat. Good faith demands that what is agreed upon shall be done. Kung ang tao ay tapat kanyang tutuparin ang napagkasunduan. Too, the weight standards of PAL provide for separate weight limitations based on height and body frame for both male and female cabin attendants. A progressive discipline is imposed to allow non-compliant cabin attendants sufficient opportunity to meet the weight standards. Thus, the clear-cut rules obviate any possibility for thecommission of abuse or arbitrary action on the part of PAL. III. Petitioner failed to substantiate his claim that he was discriminated against by PAL. Petitioner next claims that PAL is using passenger safety as a convenient excuse to discriminate against him.[79] We are constrained, however, to hold otherwise. We agree with the CA that [t]he element of discrimination came into play in this case as a secondary position for the private respondent in order to escape the consequence of dismissal that being overweight entailed. It is a confession-and-avoidance position that impliedly admitted the cause of dismissal, including the reasonableness of the applicable standard and the private respondents failure to comply.[80] It is a basic rule in evidence that each party must prove his affirmative allegation.[81] Since the burden of evidence lies with the party who asserts an affirmative allegation, petitioner has to prove his allegation with particularity. There is nothing on the records which could support the finding of discriminatory treatment. Petitioner cannot establish discrimination by simply naming the supposed cabin attendants who are allegedly similarly situated with him. Substantial proof must be shown as to how and why they are similarly situated and the differential treatment petitioner got from PAL despite the similarity of his situation with other employees.

Indeed, except for pointing out the names of the supposed overweight cabin attendants, petitioner miserably failed to indicate their respective ideal weights; weights over their ideal weights; the periods they were allowed to fly despite their being overweight; the particular flights assigned to them; the discriminating treatment they got from PAL; and other relevant data that could have adequately established a case of discriminatory treatment by PAL. In the words of the CA, PAL really had no substantial case of discrimination to meet.[82] We are not unmindful that findings of facts of administrative agencies, like the Labor Arbiter and the NLRC, are accorded respect, even finality.[83] The reason is simple: administrative agencies are experts in matters within their specific and specialized jurisdiction.[84] But the principle is not a hard and fast rule. It only applies if the findings of facts are duly supported by substantial evidence. If it can be shown that administrative bodies grossly misappreciated evidence of such nature so as to compel a conclusion to the contrary, their findings of facts must necessarily be reversed. Factual findings of administrative agencies do not have infallibility and must be set aside when they fail the test of arbitrariness.[85] Here, the Labor Arbiter and the NLRC inexplicably misappreciated evidence. We thus annul their findings. To make his claim more believable, petitioner invokes the equal protection clause guaranty[86] of the Constitution. However, in the absence of governmental interference, the liberties guaranteed by the Constitution cannot be invoked.[87] Put differently, the Bill of Rights is not meant to be invoked against acts of private individuals.[88] Indeed, the United States Supreme Court, in interpreting the Fourteenth Amendment,[89] which is the source of our equal protection guarantee, is consistent in saying that the equalprotection erects no shield against private conduct, however discriminatory or wrongful.[90] Private actions, no matter how egregious, cannot violate the equal protection guarantee.[91]

IV. The claims of petitioner for reinstatement and wages are moot. As his last contention, petitioner avers that his claims for reinstatement and wages have not been mooted. He is entitled to reinstatement and his full backwages, from the time he was illegally dismissed up to the time that the NLRC was reversed by the CA.[92] At this point, Article 223 of the Labor Code finds relevance: In any event, the decision of the Labor Arbiter reinstating a dismissed or separated employee, insofar as the reinstatement aspect is concerned, shall immediately be executory, even pending appeal. The employee shall either be admitted back to work under the same terms and conditions prevailing prior to his dismissal or separation or, at the option of the employer, merely reinstated in the payroll. The posting of a bond by the employer shall not stay the execution for reinstatement provided herein.

The law is very clear. Although an award or order of reinstatement is selfexecutory and does not require a writ of execution,[93] the option to exercise actual reinstatement or payroll reinstatement belongs to the employer. It does not belong to the employee, to the labor tribunals, or even to the courts.

Contrary to the allegation of petitioner that PAL did everything under the sun to frustrate his immediate return to his previous position,[94] there is evidence that PALopted to physically reinstate him to a substantially equivalent position in accordance with the order of the Labor Arbiter.[95] In fact, petitioner duly received the return to work notice on February 23, 2001, as shown by his signature.[96] Petitioner cannot take refuge in the pronouncements of the Court in a case that [t]he unjustified refusal of the employer to reinstate the dismissed employee entitles him to payment of his salaries effective from the time the employer failed to reinstate him despite the issuance of a writ of execution[98] and even if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the part of the employer to reinstate and pay the wages of the employee during the period of appeal until reversal by the higher court.[99] He failed to prove that he complied with the return to work order of PAL. Neither does it appear on record that he actually rendered services for PAL from the moment he was dismissed, in order to insist on the payment of his full backwages. [97]

In insisting that he be reinstated to his actual position despite being overweight, petitioner in effect wants to render the issues in the present case moot. He asks PAL to comply with the impossible. Time and again, the Court ruled that the law does not exact compliance with the impossible.[100] V. Petitioner is entitled to separation pay. Be that as it may, all is not lost for petitioner. Normally, a legally dismissed employee is not entitled to separation pay. This may be deduced from the language of Article 279 of the Labor Code that [a]n 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. Luckily for petitioner, this is not an ironclad rule.

Exceptionally, separation pay is granted to a legally dismissed employee as an act social justice,[101] or based on equity.[102] In both instances, it is required that the dismissal (1) was not for serious misconduct; and (2) does not reflect on the moral character of the employee.[103] Here, We grant petitioner separation pay equivalent to one-half (1/2) months pay for every year of service.[104] It should include regular allowances which he might have been receiving.[105] We are not blind to the fact that he was not dismissed for any serious misconduct or to any act which would reflect on his moral character. We also recognize that his employment with PAL lasted for more or less a decade. WHEREFORE, the appealed Decision of the Court of Appeals is AFFIRMED but MODIFIED in that petitioner Armando G. Yrasuegui is entitled to separation pay in an amount equivalent to one-half (1/2) months pay for every year of service, which should include his regular allowances.

SO ORDERED.

RUBEN T. REYES Associate Justice

FIRST DIVISION HEAVYLIFT MANILA, INC. and/or JOSEPHINE EVANGELIO, Administrative & Finance Manager,AND CAPT. * ROLANDO TOLENTINO, Petitioners,

- versus -

G.R. No. 154410 Present: Davide, Jr., C.J., (Chairman), Quisumbing, Ynares-Santiago, Carpio, and Azcuna, JJ.

THE COURT OF APPEALS, MA. DOTTIE GALAY and the NATIONAL LABOR RELATIONS COMMISSION, Respondents.

Promulgated: October 20, 2005

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

DECISION QUISUMBING, J.: Before us is a petition for certiorari assailing the Resolution[1] dated December 18, 2001 of the Court of Appeals in CA-G.R. SP No. 68072 denying the petition for failure to comply with procedural rules, as well as the Decision[2] dated August 30, 2001 and the Resolution[3] dated September 28, 2001 of the National Labor Relations Commission (NLRC) which affirmed the Labor Arbiters decision finding petitioners guilty of illegal dismissal. The factual antecedents of the case are as follows: On February 23, 1999, petitioner Heavylift, a maritime agency, thru a letter signed by petitioner Josephine Evangelio, Administrative and Finance Manager of Heavylift, informed respondent Ma. Dottie Galay, Heavylift Insurance and Provisions Assistant, of her low performance rating and the negative feedback from her team members regarding her work attitude. The letter also notified her that she was being relieved of her other functions except the development of the new Access program.

Subsequently, on August 16, 1999, Galay was terminated for alleged loss of confidence. Thereafter, she filed with the Labor Arbiter a complaint for illegal dismissal and nonpayment of service incentive leave and 13th month pay against petitioners. Before the labor arbiter, petitioners alleged that Galay had an attitude problem and did not get along with her co-employees for which she was constantly warned to improve. Petitioners aver that Galays attitude resulted to the decline in the companys efficiency and productivity. Petitioners presented a letter[4] dated February 23, 1999 and a notice of termination[5] dated August 16, 1999. The Labor Arbiter found that Galay was illegally terminated for petitioners failure to prove that she violated any company regulation, and for failure to give the proper notice as required by law.[6] Petitioner appealed to the NLRC. The latter, however, denied the appeal for lack of merit and affirmed the decision of the Labor Arbiter.[7] A motion for reconsideration was subsequently filed but which was likewise denied.[8] Petitioner elevated the case by certiorari to the Court of Appeals. But, petitioners failed to: state the full names and actual addresses of all the petitioners; attach the copies of all pleadings and supporting documents; properly verify the petition; and certify against forum-shopping. For these procedural lapses, the petition was dismissed.[9] Petitioners moved for reconsideration and attached a board resolution authorizing petitioner Tolentino to legally represent the company. Nonetheless, the Court of Appeals denied the motion for lack of justifying circumstances, and because the attached board resolution was issued after the petition was filed.[10] Hence, the instant petition for certiorari alleging that

I. The Honorable Court of Appeals grossly erred in relying too much on form rather than on the merits of the petition thereby denying petitioners of right to due process. II. The NLRC acted in a whimsical, arbitrary and despotic manner with grave abuse of discretion when it ruled that: a. Petitioners failed to submit substantial evidence that will prove petitioners had withdrawn their trust and confidence upon the respondent notwithstanding the admitted strained and irreconcilable relationship between respondent Galay and petitioners. b. The cause for terminating the employment of respondent by the petitioner appears foreign to the causes of terminating an employment either under loss of trust and confidence or under analogous causes. c. The NLRC acted in a despotic manner when it ruled that complainant is entitled to service incentive pay and 13th month pay in the absence of any claim, prayer or evidence. III. It is a grave abuse of discretion on the part of the NLRC when it made it to appear that the right of worker for security of tenure is absolute.[11]

Simply, the issues are (1) Were the petitioners denied due process with the Court of Appeals dismissal of the petition on technical grounds? (2) Is attitude problem a valid ground for the termination of an employee? (3) If in the affirmative, was this sufficiently proved? (4) Were the procedural requirements for an effectual dismissal present? and (5) Were the awards of service incentive pay and 13 th month pay proper? Anent the first issue, petitioners posit that instead of denying outright their petition on technicalities, the Court of Appeals should have given it due course. Petitioners explain that only the name and address of petitioner Heavylift were stated in the

petition because it was the real party in interest, while the rest were mere nominal parties. They also reasoned that it was not necessary to attach the pleadings submitted to the Labor Arbiter as the arguments asserted therein were sufficiently tackled and reiterated in the petition. Lastly, petitioners submit that petitioner Tolentino was authorized by the Board of Directors as the legal representative of the agency and its officers. Respondent counters that strict adherence to the rules of procedure is required to promote efficiency and orderliness. It adds that petitioners did not present any persuasive reason for a liberal application of the Rules. The Rules of Court require that the petition for certiorari shall be verified, [12]

contain the full names and actual addresses of all the petitioners and

respondents, accompanied by a certified true copy of the subject decision, order or resolution and other documents relevant or pertinent thereto, and be submitted with the certification of non-forum shopping signed by the principal.[13] We likewise have enunciated that the Rules of Court are designed for the proper and prompt disposition of cases. In not a few instances, we relaxed the rigid application of the rules to afford the parties opportunity to fully ventilate their cases on the merits. In that way, the ends of justice would be better served.[14] Additionally, verification of a pleading is a formal, not a jurisdictional requisite. It is intended to secure an assurance that what are alleged in the pleading are true and correct and not the product of the imagination or a matter of speculation, and that the pleading is filed in good faith.[15] The rule on certification against forum-shopping requires strict compliance. The requirement underscores its mandatory nature such that it cannot be altogether

dispensed with. However, under justifiable circumstances, the Court does allow substantial compliance.[16] Further, we accept petitioners inadvertence to state the names and addresses of the other petitioners as a minor defect. We also accept their explanation on their failure to incorporate the Labor Arbiters decision. Thus, mindful that the greater interest of justice would be served if the petition is adjudicated on its merits,[17] we will proceed with the remaining issues, and discuss them jointly. Was there just cause in the termination of Galay? Petitioners assert that it terminated Galay because she had an attitude problem. This situation, according to petitioners, is analogous to loss of trust and confidence. They aver that respondent did not deny the strained and irreconcilable relationship between them, in effect, admitting the same. Further, petitioners aver that having lost their trust and confidence on Galay, they could no longer make her in-charge of the confidential Crew Information System which accounts for the personnel, management and professional records of all the employees of and seamen connected with the company. Lastly, petitioners maintain that because of Galays attitude, the companys work atmosphere had become very strained and had gravely affected the workers and their outputs. Galays dismissal, according to petitioners, was merely an act of self-preservation. Petitioners explained that they sent Galay a letter of notice dated February 23, 1999, apprising her of her low performance and her attitude problem, before the letter of her termination dated August 16, 1999. Petitioners claim that the company

waited for six months, to give Galay a chance to undergo counseling before dismissing her from the service. Galay counters that petitioners failed to show a just and valid cause for her termination, and that letters of notice and termination did not comply with the twin requirement of notice and hearing. Galay argues that the letter dated February 23, 1999 neither informed her of her infraction of any company rule that warrants disciplinary action; nor required her to submit an explanation. An employee who cannot get along with his co-employees is detrimental to the company for he can upset and strain the working environment. Without the necessary teamwork and synergy, the organization cannot function well. Thus, management has the prerogative to take the necessary action to correct the situation and protect its organization. When personal differences between employees and management affect the work environment, the peace of the company is affected. Thus, an employees attitude problem is a valid ground for his termination.[18] It is a situation analogous to loss of trust and confidence that must be duly proved by the employer. Similarly, compliance with the twin requirement of notice and hearing must also be proven by the employer. However, we are not convinced that in the present case, petitioners have shown sufficiently clear and convincing evidence to justify Galays termination. Though they are correct in saying that in this case, proof beyond reasonable doubt is not required, still there must be substantial evidence to support the termination on the ground of attitude.[19] The mere mention of negative feedback from her team members, and the letter dated February 23, 1999, are not proof of her attitude problem. Likewise, her failure to refute petitioners allegations of her negative attitude does not amount to admission. Technical rules of procedure are not binding

in labor cases.[20] Besides, the burden of proof is not on the employee but on the employer who must affirmatively show adequate evidence that the dismissal was for justifiable cause.[21] In our view, neither does the February 23, 1999 letter constitute the required notice. The letter did not inform her of the specific acts complained of and their corresponding penalty. The law requires the employer to give the worker to be dismissed two written notices before terminating his employment, namely, (1) a notice which apprises the employee of the particular acts or omissions for which his dismissal is sought; and (2) the subsequent notice which informs the employee of the employers decision to dismiss him. [22] Additionally, the letter never gave respondent Galay an opportunity to explain herself, hence denying her due process. In sum, we find that Galay was illegally dismissed, because petitioners failed to show adequately that a valid cause for terminating respondent exists, and because petitioners failed to comply with the twin requirement of notice and hearing. Apropos the award of service incentive pay and 13th month pay, we find that they were properly prayed for by Galay. These were subsumed in the complaint and under the position papers general prayer of such other relief as are just and equitable under the law. Petitioners failed to present evidence that these benefits were already paid. Moreover, this issue involves a question of fact which is not proper in a petition for certiorari and the determinations of the Labor Arbiter and the NLRC are afforded great weight and respect by the courts on these matters, when these findings are supported by substantial evidence, and devoid of any unfairness or arbitrariness. [23] Hence, their findings must be sustained.

WHEREFORE, the Decision dated September 16, 2000 of the Labor Arbiter in NLRC NCR Case No. 00-08-08461-99 as well as Decision dated August 30, 2001 and the Resolution dated September 28, 2001 of the National Labor Relations Commission in NLRC NCR CA No. 026466-2000 are hereby AFFIRMED. Costs against petitioners. SO ORDERED. LEONARDO A. QUISUMBING Associate Justice

SECOND DIVISION G.R. No. 169303, February 11, 2015 PROTECTIVE MAXIMUM SECURITY AGENCY, INC., Petitioner, v. CELSO E. FUENTES, Respondent. DECISION LEONEN, J.: In this Petition for Review on Certiorari,1 Protective Maximum Security Agency, Inc. seeks to set aside the Decision2 of the Court of Appeals which affirmed the Resolutions of the National Labor Relations Commission.3 Protective Maximum Security Agency, Inc. (Protective) provides security services for commercial, industrial and agricultural firms, and personal residences.4 Celso E. Fuentes (Fuentes) was hired as a security guard by Protective sometime in November 1999. At the time of Fuentes' employment, Protective assigned him to Picop Resources, Inc. He was posted to a security checkpoint designated as Post 33 in Upper New Visayas, Agusan del Sur.5 On July 20, 2000, a group of armed persons ransacked Post 33 and took five (5) M-16 rifles, three (3) carbine rifles, and one (1) Browning Automatic Rifle, all with live ammunition and magazines. Agency-issued uniforms and personal items were also taken. 6 These armed persons inflicted violence upon Fuentes and the other security guards present at Post 33, namely: Francisco Dalacan, Rolando Gualberto Lindo, Jr. (Lindo, Jr.), Cempron (Cempron), and Wilson Maravilles.7 Francisco Dalacan was employed by Protective, while the others were employed by Meshim Security Agency.8 On the same day of the incident, Fuentes and his fellow security guards reported the raid to the Philippine National Police in Trento, Agusan del Sur. When asked by the police, Fuentes reported that he and the other security guards assigned to Post 33 were accosted at gunpoint by the New People's Army.9 After its initial investigation, the Philippine National Police found reason to believe that Fuentes conspired and acted in consort with the New People's Army.10 This was based on the two (2) affidavits executed by Lindo, Jr. and Cempron, who were both present in the July 20, 2000 raid. 11 In their affidavits, Lindo, Jr. and Cempron stated that Fuentes should be prosecuted for criminal acts done on July 20, 2000. 12 On July 24, 2000, the Philippine National Police, through Senior Police Officer IV Benjamin Corda, Jr., filed the Complaint for robbery committed by a band against Fuentes, a certain Mario Cabatlao, and others. 13 This was filed before the Second Municipal Circuit Trial Court of Trento-Sta. Josefa-Veruela in Trento, Agusan del Sur.14 The Complaint stated that Fuentes was a "cohort of the NPA in the raid[.]" 15 Immediately upon the filing of the Complaint, Fuentes was detained at the Mangagoy Police Sub-Station, Mangagoy, Bislig, Surigao del Sur.16 During his detention, he alleged that he was "mauled and tied up by the security officers of [Protective]."17 To preserve proof of these claims, Fuentes had pictures taken of his injuries while in custody and acquired a medical certificate detailing his injuries. 18 In the Order dated August 1, 2000, Judge Particio Balite of the Municipal Circuit Trial Court of Trento-Sta. Josefa-Veruela directed that Fuentes be transferred from the Mangagoy Police Sub-Station to Trento Municipal Jail in Trento, Agusan del Sur.19 In his return to this court order, however, Police Inspector Ernesto Escartin Sr. (Inspector Escartin) reported: . . . Celso Fuentes is no longer in the custody of this station and he is never detained [sic] in this station but requested that he will be put to custody for fear of his life. . . . [H]e left this station on July 28, 2000 at around 2:45 in the afternoon accompanied by his mother. The last known address of subject person is Sta. Josefa, Trento, Agusan del Sur.20 (Citation omitted) On August 15, 2001, the Office of the Provincial Prosecutor of Surigao del Sur issued the Resolution dismissing the Complaint against Fuentes.21 It found during preliminary investigation that there was no

probable cause to warrant the filing of an Information against Fuentes. 22 On March 14, 2002, Fuentes filed the Complaint "for illegal dismissal, non-payment of salaries, overtime pay, premium pay for holiday and rest day, 13th month pay, service incentive leave and damages against [Protective], Picop [Resources, Inc.], Ernie S. Dolina and Wilfredo Fuentes before [the National Labor Relations Commission] Regional Arbitration Branch XIII in Butuan City." 23 In his Position Paper, Fuentes claimed that "right after the criminal complaint for robbery against [him] was dismissed ... he demanded to return to work but he was . . . refused entry by [a certain] Mr. [Regildo] Espinosa on the ground that [Fuentes] [was] a member of the NPA and that his position had already been filled up by another security guard."24 On the other hand, Protective claims that "[a]s was usual and routine, [Fuentes] should have reported to his Team Leader or Officer-in-Charge. Since the incident of July 20, 2000, private respondent has not yet reported to his Team [L]eader or to any of the officers of [Protective]." 25 Executive Labor Arbiter Rogelio P. Legaspi (Labor Arbiter Legaspi) rendered his Decision in favor of Protective, thus: As borne out by the record, complainant was not dismissed from the service much less illegally by the respondents PMSAI and/or Ernie S. Dolina. What happened was that complainant was charged by the PNP Trento, Agusan del, Sur in the 2nd Municipal Circuit Trial Court of TRENTO-STA. JOSEFA-VERUELA, Trento, Agusan del Sur for conspiring and confederating with the purported members of the New People's Army in robbing PMSAI (Post 33) . . . mainly based on the statements of security guards Gualberto Lindo, Jr. and Rolando Cempron of Mishem Security Agency who were also assigned at Post 33. Because of this incident, complainant was detained at the Mangagoy Police Sub-Station, Mangagoy, Bislig, Surigao [d]el Sur and later at the Trento Municipal Jail, Trento, Agusan del Sur. As correctly pointed out by respondents PRI and/or Wilfredo Fuentes, complainant was unable to perform his duties and responsibilities as security guard due to the criminal charges filed against him, hence he was replaced with another guard. Complainant's claim that respondents refused to admit him back to work after it was found out that he was innocent of the charges against him is not supported by relevant and/or material evidence. Moreover, complainant even failed to state with sufficient defmiteness and/or clarity the time and date when he allegedly reported for work after the dismissal of his case on 15 August 2001. In fact, respondents PMSAI and/or Ernie S. Dolina aver that complainant has not reported to any of his superiors since 20 July 2000 up to the present (17 July 2002). Neither was [sic] his whereabouts known to PMSAI as he cannot be found despite diligent efforts. Hence, notice for him to explain his involvement in the incident of 20 July 2000 at Post 33 could not be properly served. The only manifestation of complainant's existence, respondents admit, came only when respondents were notified of a labor complaint filed by the complainant before this Branch sometime in April 2002.26 On appeal, the National Labor Relations Commission reversed the Decision of Labor Arbiter Legaspi and found that Fuentes was illegally dismissed: WHEREFORE, the foregoing premises considered, the decision appealed from is hereby MODIFIED, and a NEW judgment is rendered, thus: 1. declaring the dismissal of complaint [sic] as illegal; 2. ordering respondent Protective Maximum Security Agency to pay complainant full backwages (August 15, 2001 to May 30, 2003) amounting to P204,250.00 (P9,500 x 21.5 mos.) and to reinstate him immediately upon receipt of this decision. However, should reinstatement is no longer feasible [sic], to pay complainant in lieu thereof separation pay equivalent to one (1) month pay for every year of service; and, 3. ordering same respondent and Picop Resources Inc. to pay complainant in solidum his unpaid salary amounting to P4,750.00, without prejudice however on the part of PRI to present proof of payment/remittance to respondent security agency. SO ORDERED.27 (Citation omitted) Protective filed a Petition for Certiorari before the Court of Appeals alleging grave abuse of discretion on the part of the National Labor Relations Commission.28 Protective asserted that the evidence and the records showed that Fuentes was never dismissed because he

had been missing until the day he filed the Complaint with the Labor Arbiter.29 To support its position, Protective raised the following arguments: The determination of the respondent NLRC was without basis in law and in fact. Respondent NLRC simply brushed off the established fact that private respondent vanished after the July 20, 2000 incident. . . . [F]rom July 20, 2000 until the present time, private respondent never contacted his superior or reported to the head office of petitioner PMSAI, much less attempted to do the same, to officially manifest whether he was still interested in being employed as security guard. Furthermore, it was incumbent upon private respondent to explain why he was implicated in the crime of robbery by fellow security guards. . . . Hence, it was physically and legally impossible for petitioner to terminate, constructive, illegal or otherwise [sic], the services of private respondent since the procedure for such an action have [sic] have not been initiated. Private respondent had chose [sic] not to exercise his rights as an employee and remain unreachable for reasons known only to him.30 (Citation omitted) The Court of Appeals dismissed the Petition.31 It held that Protective failed to discharge its burden to prove a just cause for dismissal: Petitioner [Protective] bases its contention that private respondent [Fuentes] abandoned his job entirely upon its claim that the latter vanished from sight after the July 20, 2000 incident and until he filed the present action. We are not persuaded. First, the records do not support such a claim. As respondent NLRC found: [The] [r]ecord shows that after the incident on July 20, 2000, complainant was among those who reported the assault made by the group of NPA at their post in Trento Police Municipal Office, at Trento, Agusan del Sur (Annex "C", complainant's Position Paper). It was only on July 24, 2000 that a criminal complaint was filed in court leading to his arrest and detention. In fact the witnesses at the prosecution [sic] are two (2) of the security guards also assigned at Post 33 of respondent PRI, albeit from different [sic] security agency (Annex 1, 2 and 3, Respondent PMSAFs Position Paper). It is thus unbelievable that complainant's whereabouts were unknown. (NLRC's August 27, 2003 Resolution, pp. 6-7; Rollo, pp. 35-36) We note, additionally, from petitioner's own submissions, that private respondent's last known address was given to the investigating court by Police Inspector Escartin in his report to that court. That report, incidentally, also reveals the state of mind of private respondent and explains why he could not report to the offices of petitioner. Private respondent, after having been charged with a crime on the strength of affidavits of petitioner's other security guards and beaten up by them, was so traumatized that he actually asked to remain in the custody of the police because he feared for his life. The intensity of his fear is manifest by the fact that he left the custody of the police only when his mother accompanied him. His fear, incongruous as it may appear in a trained security guard, is nonetheless understandable in view of his allegations of having been beaten up. Which allegations, [w]e note, are not controverted. At any rate, the whereabouts of private respondent were available from official records. The claim of petitioner that private respondent "simply vanished" has no evidentiary support. But even granting that petitioner was ignorant of private respondent's whereabouts, still it does not suffice to establish abandonment of work. In ACD Investigation Security Agency, Inc. vs. Daquena, G.R. No. 147473, March 30, 2004, the Supreme Court held that: ... "for abandonment of work to exist, it is essential (1) that the employee must have failed to report for work or must have been absent without valid or justifiable reason; and (2) that there must have been a clear intention to sever the employer-employee relationship manifested by some overt acts. . . . Absence must be accompanied by overt acts unerringly pointing to the fact that the employee simply does not want to work anymore. And the burden of proof to show that there was unjustified refusal to go back to work rests on the employer." ... It is not enough to simply allege that the private respondent had "mysteriously disappeared" and that "[a]s usual and routine, private respondent should have reported to his Team Leader or Officer-inCharge."32 (Emphasis and underscoring in the original, citations omitted). Further, the Court of Appeals found that Fuentes should have been afforded his procedural due process rights: More is required of the employer who must afford private respondent his right to due process. As respondent NLRC states:

Granting it was so, respondents should have served a written notice to complainant at his last known address to ascertain whether he is still interested to continue his job. Feigning ignorance of the reason why complainant after being hailed in court failed to report for work is ridiculous, at best, a sham defense. What was clear is that respondents did not exert diligent efforts at all to afford complainant his right to due process. No proof has been adduced to support their defense. Moreover, considering that there was a team leader assigned by respondents to Post 33 where complainant was one of its members, the report of the incident should have come from the team leader and not from the complainant as adverted to by respondents. In sum, respondents have all the opportunities to comply with the due process requirement as mandated by law, yet they deliberately ignored and failed to do so. Such deliberate act of respondent PMSAI reflects their deprivation of due process [sic]. The dismissal is thus illegal.33 (Citation omitted) Thus, the Court of Appeals found that the National Labor Relations Commission committed no grave abuse of discretion amounting to lack or excess of jurisdiction. 34 It applied the reasoning of this court in Philippine Airlines, Inc. v. Pascua,35 where this court held that since the Decision of the National Labor Relations Commission is based on substantial evidence, it would not reverse these findings "[a]bsent any showing of patent error, or that the [National Labor Relations Commission] failed to consider a fact of substance that if considered would warrant a different result[.]"36 In this Petition, petitioner assails the Decision of the Court of Appeals and states that it is the findings of Labor Arbiter Legaspi that should have been upheld. It argues that the findings of fact and conclusions of Labor Arbiters are accorded great weight since they have the opportunity to determine the facts surrounding the case and the necessary expertise to resolve such matters.37 Petitioner relies on Gelmart Industries (Phils.), Inc. v. Hon. Leogardo, Jr.38 and argues that "[w]hen confronted with conflicting versions of factual matters, the Labor Arbiter has the discretion to determine which party deserves credence on the basis of evidence received." 39 For petitioner, Labor Arbiter Legaspi rightfully concluded that respondent abandoned his post, a finding that the National Labor Relations Commission and the Court of Appeals dismissed.40 Petitioner states that, by analogy, the Labor Arbiter's findings are akin to those of a trial judge. 41Thus, pursuant to this court's ratio decidendi in People v. Valla,42 "the trial judge's evaluation of the testimony of a witness is generally accorded not only the highest respect, but also finality, unless some weighty circumstance has been ignored or misunderstood but which could change the result." 43 For petitioner, this is a clear case of abandonment of work by respondent. Petitioner claims that since respondent "vanished"44 without reporting his whereabouts, he manifested a clear intent to leave his employment. Petitioner argues that respondent was not dismissed; no dismissal took place due to respondent's abandonment of duty. Since there was abandonment, the award of backwages and reinstatement is capricious and without basis.45 Petitioner argues that respondent never bothered to explain why it took him more than six (6) months from the date petitioner allegedly refused to allow him to work to file the Complaint for illegal dismissal. 46 For petitioner, this six-month delay in filing the Complaint showed that it was "a mere afterthought on the part of [Fuentes] ,"47 Citing Indophil Acrylic Mfg. Corporation v. National Labor Relations Commission,48 petitioner claims that respondent should have been more vigilant of his rights as an employee because at stake was not only his position but also his means of livelihood.49 Thus, he should have reported to his supervisor immediately after the July 20, 2000 raid at Post 33. Petitioner contends further that contrary to the findings of the National Labor Relations Commission and the Court of Appeals, there was no specific last known address where petitioner could have provided a written notice to respondent.50 Petitioner argues that the purported last address of respondent is "in Sta. Josefa, Trento, Agusan del Sur."51 The insufficiency of the address rendered it impossible for petitioner to provide notice to respondent.52 Thus, respondent's right to procedural due process was not violated. 53 For respondent, the Court of Appeals correctly found that the National Labor Relations Commission did not commit grave abuse of discretion. Respondent asserts that the Court of Appeals committed no reversible error in affirming the findings of the National Labor Relations Commission. He raises that the National Labor Relations Commission and the Court of Appeals correctly found that he did not abandon his job. Respondent reiterates that after the dismissal of the criminal Complaint for robbery filed against him, he tried his best to resume work. However, he was refused because he was allegedly a member of the New People's Army and he had already been replaced.54

According to respondent, the Court of Appeals found no evidence to support petitioner's allegation that he had "simply vanished."55 Respondent reiterates the findings of the Court of Appeals, particularly the report of Inspector Escartin. That report showed that respondent was traumatized from having been charged with the crime of robbery and suffering a beating from petitioner's security guards. This justified respondent's absence and initial failure to report back for work. 56 For respondent, the twin requirements of substantive and procedural due process were not observed by petitioner. He asserts that the National Labor Relations Commission and the Court of Appeals correctly found that mere allegations of "simply disappearing" and failure to report to the team leader cannot justify the violation of his substantive and procedural due process rights. Respondent asserts that his dismissal from service was clearly illegal.57 With these arguments, the principal issues are: First, whether the Court of Appeals erred in dismissing the Petition for Certiorari assailing the Decision of the National Labor Relations Commission, which reversed the findings of Labor Arbiter Legaspi; Second, whether respondent was justifiably dismissed due to abandonment; and Lastly, whether respondent's right to substantive and procedural due process was violated. This Petition must be denied. I The National Labor Relations Commission has the power to overturn the findings of fact of the Labor Arbiter. Petitioner asserts that the findings of fact of Labor Arbiter Legaspi are binding and conclusive. Petitioner raises that, between the determination of facts of the National Labor Relations Commission and the Labor Arbiter, the findings of the latter must prevail. Contrary to petitioner's claims, the National Labor Relations Commission is not bound by the findings of the Labor Arbiter. Article 223 of the Labor Code reads: Article 223. Appeal. Decisions, awards, or orders of the Labor Arbiter are final and executory unless appealed to the Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards, or orders. Such appeal may be entertained only on any of the following grounds: 1. If there is prima facie evidence of abuse of discretion on the part of the Labor Arbiter; 2. If the decision, order or award was secured through fraud or coercion, including graft and corruption; 3. If made purely on questions of law; and 4. If serious errors in the findings of facts are raised which would cause grave or irreparable damage or injury to the appellant. Article 223 provides that the decision of the Labor Arbiter is final and executory, unless appealed to the National Labor Relations Commission within ten (10) calendar days by any or both of the parties. The Labor Code vests in the National Labor Relations Commission the authority to reverse the decision of the Labor Arbiter, provided that the appellant can prove the existence of one of the grounds in Article 223. The errors in the findings of fact that will justify a modification or reversal of the Labor Arbiter's decision must be "serious" and, if left uncorrected, would lead to "grave or irreparable damage or injury to the appellant." Serious errors refer to inferences of facts without evidence, or mistakes in the interpretation of the evidence that border on arbitrariness or similar circumstances. Not only must the error be palpable, but there must also be a showing that such error would cause grave and irreparable injury to the appellant. It should affect the disposition of the cause of the appellant. The error must impact on the main issues and not some tangential matter. Evidently, a showing of bias on the part of the Labor Arbiter or a lack of due regard for the procedural rights of the parties are indicia that serious errors may be present.

In this case, the National Labor Relations Commission decided that there was a serious error in the factual findings of Labor Arbiter Legaspi. Labor Arbiter Legaspi found that respondent was charged by the Philippine National Police in Trento, Agusan del Sur for allegedly conspiring and confederating with the members of the New People's Army.58 Thus, respondent was detained at the Mangagoy Police Sub-Station in Surigao del Sur.59Labor Arbiter Legaspi found that respondent was "unable to perform his duties and responsibilities as security guard due to the criminal charges [that were] filed against him[.]"60 This led to petitioner replacing respondent with another security guard.61 The National Labor Relations Commission found that petitioner's claims that respondent consorted with the New People's Army and committed robbery on July 20, 2000 "were never substantiated at all[.]" 62 In fact, the Complaint for robbery against respondent was dismissed after preliminary investigation. Thus, the National Labor Relations Commission found that the refusal to admit respondent to work based on the latter's alleged conspiracy with the New People's Army during the July 20, 2000 incident had no basis. 63 As for respondent's absence from work, Labor Arbiter Legaspi found that respondent's whereabouts were unknown to petitioner.64 Labor Arbiter Legaspi found that the notice for respondent to explain his involvement in the July 20, 2000 incident could not be properly served despite "diligent efforts." 65Thus, he supported petitioner's allegation that respondent "vanished" after the July 20, 2000 incident at Post 33. On appeal, the National Labor Relations Commission found that petitioner's claim that respondent's whereabouts were unknown to the former was "unbelievable." 66 The National Labor Relations Commission found that after the July 20, 2000 incident, respondent "was among those who reported the assault [to the police]."67 Petitioner even submitted that "respondent's last known address was given to the investigating court by Police Inspector Escartin in his report to [the Municipal Circuit Trial Court]." 68 Contrary to Labor Arbiter Legaspi's findings, the National Labor Relations Commission found that petitioner did not exert diligent efforts to locate respondent and afford him his right to due process. 69It found that petitioner feigned ignorance of the reason of respondent's absence. 70 It also found petitioner's claim that respondent had "vanished" to be "ridiculous, at best, a sham defense." 71 Based on these premises, the National Labor Relations Commission found that there was a serious error in the factual determination and conclusions of Labor Arbiter Legaspi. The errors in the findings of fact directly would affect the primary issues raised by the parties and their respective claims. If the errors in the findings of fact were not corrected, respondent's right to security of tenure would have been violated. The National Labor Relations Commission acted well within the discretion provided by Article 223 in deciding appealed cases from the Labor Arbiter. II This court's power to decide a Rule 45 petition for review on certiorari, particularly in labor cases, has its limits. Petitioner prays that this court reverse the findings of fact of the National Labor Relations Commission, which were affirmed by the Court of Appeals. In St. Martin Funeral Home v. National Labor Relations Commission,72 this court established the proper mode of appeal in labor cases: [O]n this score we add the further observations that there is a growing number of labor cases being elevated to this Court which, not being a trier of fact, has at times been constrained to remand the case to the NLRC for resolution of unclear or ambiguous factual findings; that the Court of Appeals is procedurally equipped for that purpose, aside from the increased number of its component divisions; and that there is undeniably an imperative need for expeditious action on labor cases as a major aspect of constitutional protection to labor. Therefore, all references in the amended Section 9 of B.P. No. 129 to supposed appeals from the NLRC to the Supreme Court are interpreted and hereby declared to mean and refer to petitions for certiorari under Rule 65. Consequently, all such petitions should henceforth be initially filed in the Court of Appeals in strict observance of the doctrine on the hierarchy of courts as the appropriate forum for the relief desired. 73

In Bani Rural Bank, Inc. v. De Guzman,74 this court discussed the primary issues to be addressed in a Rule 45 petition for review on certiorari in labor cases: In question form, the question to ask is: Did the CA correctly determine whether the NLRC committed grave abuse of discretion in ruling on the case? This manner of review was reiterated in Holy Child Catholic School v. Hon. Patricia Sto. Tomas, etc., et al., where the Court limited its review under Rule 45 of the CA's decision in a labor case to the determination of whether the CA correctly resolved the presence or absence of grave abuse of discretion in the decision of the Secretary of Labor, and not on the basis of whether the latter's decision on the merits of the case was strictly correct. Grave abuse of discretion, amounting to lack or excess of jurisdiction, has been defined as the capricious and whimsical exercise of judgment amounting to or equivalent to lack of jurisdiction. There is grave abuse of discretion when the power is exercised in an arbitrary or despotic manner by reason of "passion or personal hostility, and must be so patent and so gross as to amount to an evasion of a positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law." 75(Emphasis supplied, citations omitted) In Career Philippines Shipmanagement, Inc. v. Serna,76 this court elaborated on its role to determine whether the Court of Appeals was correct in either granting or dismissing the petition for certiorari: In a Rule 45 review, we consider the correctness of the assailed CA decision, in contrast with the review for jurisdictional error that we undertake under Rule 65. Furthermore, Rule 45 limits us to the review of questions of law raised against the assailed CA decision. In ruling for legal correctness, we have to view the CA decision in the same context that the petition for certiorari it ruled upon was presented to it; we have to examine the CA decision from the prism of whether it correctly determined the presence or absence of grave abuse of discretion in the NLRC decision before it, not on the basis of whether the NLRC decision on the merits of the case was correct. In other words, we have to be keenly aware that the CA undertook a Rule 65 review, not a review on appeal, of the NLRC decision challenged before it. (Emphasis in the original) Accordingly, we do not re-examine conflicting evidence, re-evaluate the credibility of witnesses, or substitute the findings of fact of the NLRC, an administrative body that has expertise in its specialized field. Nor do we substitute our "own judgment for that of the tribunal in determining where the weight of evidence lies or what evidence is credible." The factual findings of the NLRC, when affirmed by the CA, are generally conclusive on this Court.77 (Emphasis supplied, citations omitted) Applying these cases, the general rule is that in a Rule 45 petition for review on certiorari, this court will not review the factual determination of the administrative bodies governing labor, as well as the findings of fact by the Court of Appeals. The Court of Appeals can conduct its own factual determination to ascertain whether the National Labor Relations Commission has committed grave abuse of discretion. 78 "In the exercise of its power of review, the findings of fact of the Court of Appeals are conclusive and binding and consequently, it is not our function to analyze or weigh evidence all over again." 79 III There are exceptions to the general rule that the findings of fact of labor tribunals, as affirmed by the Court of Appeals, are binding on this court. In Medina v. Asistio, Jr:80 It is a well-settled rule in this jurisdiction that only questions of law may be raised in a petition for certiorari under Rule 45 of the Rules of Court, this Court being bound by the findings of fact made by the Court of Appeals. The rule, however, is not without exception. Thus, findings of fact by the Court of Appeals may be passed upon and reviewed by this Court in the following instances, none of which obtain in the instant petition: (1) When the conclusion is a finding grounded entirely on speculation, surmises or conjectures (Joaquin v. Navarro, 93 Phil. 257 [1953]); (2) When the inference made is manifestly mistaken, absurd or impossible (Luna v. Linatok, 74 Phil. 15 [1942]); (3) Where there is a grave abuse of discretion (Buyco v. People, 95 Phil. 453 [1955]); (4) When the judgment is based on a misapprehension of facts (Cruz v. Sosing, L-4875, Nov. 27, 1953); (5) When the findings of fact are conflicting (Casica v. Villaseca, L-9590 Ap. 30, 1957; unrep.);** (6) When the Court of Appeals, in making its findings, went beyond the issues of the case and the same is contrary to the admissions of both appellant and appellee (Evangelista v. Alto Surety and Insurance Co., 103 Phil. 401 [1958]); (7) The findings of the Court of Appeals are contrary to those of the trial court (Garcia v. Court of Appeals, 33 SCRA 622 [1970]; Sacay v. Sandiganbayan, 142 SCRA 593 [1986]);** (8) When the findings of fact are conclusions without citation of specific evidence on which they are based (Ibid.,); (9) When the facts set forth in the petition as well as in the petitioner's main and reply briefs are not disputed by the respondents (Ibid.,); and (10) The finding of fact of the Court of Appeals is

premised on the supposed absence of evidence and is contradicted by the evidence on record (Salazar v. Gutierrez, 33 SCRA 242 [1970]).81 In labor cases, if the petitioner before this court can show grave abuse of discretion on the part of trie National Labor Relations Commission, the assailed Court of Appeals ruling (in the Rule 65 proceedings) will be reversed. "Labor officials commit grave abuse of discretion when their A factual findings are arrived at arbitrarily or in disregard of the evidence."82 If the petitioner can show that "the [labor] tribunal acted capriciously and whimsically or in total disregard of evidence material to the controversy," 83 the factual findings of the National Labor Relations Commission may be subjected to review and ultimately rejected. 84 In addition, if the findings of fact of the Labor Arbiter are in direct conflict with the National Labor Relations Commission, this court may examine the records of the case and the questioned findings in the exercise of its equity jurisdiction.85 It is the petitioner's burden to justify the existence of one of the exceptions to the general rule for this court to conduct a factual review. In this case, we find that petitioner has failed to discharge this burden. IV The absence of respondent does not constitute abandonment. Petitioner justifies its actions against respondent by maintaining that respondent never reported to his supervising officer after the July 20, 2000 raid at Post 33. Thus, this alleged prolonged absence from work constituted abandonment. Petitioner asserts that since respondent failed to report for work after the raid, there was no "actual" dismissal of respondent. Abandonment as a just cause for dismissal is based on Article 282(b) of the Labor Code: 86 Art. 282. Termination by employer. An employer may terminate an employment for any of the following causes: (b) Gross and habitual neglect by the employee of his duties[.] Abandonment constitutes a just cause for dismissal because "[t]he law in protecting the rights of the laborer, authorizes neither oppression nor self-destruction of the employer." 87 The employer cannot be compelled to maintain an employee who is remiss in fulfilling his duties to the employer, particularly the fundamental task of reporting to work. In Agabon v. National Labor Relations Commission,88 this court discussed the concept of abandonment: Abandonment is the deliberate and unjustified refusal of an employee to resume his employment. It is a form of neglect of duty, hence, a just cause for termination of employment by the employer. For a valid finding of abandonment, these two factors should be present: (1) the failure to report for work or absence without valid or justifiable reason; and (2) a clear intention to sever employer-employee relationship, with the second as the more determinative factor which is manifested by overt acts from which it may be deduced that the employees has [sic] no more intention to work. The intent to discontinue the employment must be shown by clear proof that it was deliberate and unjustified. 89 (Citations omitted) The burden to prove whether the employee abandoned his or her work rests on the employer.90Thus, it is incumbent upon petitioner to prove the two (2) elements of abandonment. First, petitioner must provide evidence that respondent failed to report to work for an unjustifiable reason. Second, petitioner must prove respondent's overt acts showing a clear intention to sever his ties with petitioner as his employer. There is no abandonment in this case. The first element of abandonment is the failure of the employee to report to work without a valid and justifiable reason. Petitioner asserts that respondent failed to report for work immediately after his release from prison.91 He also failed to abide by company procedure and report to his immediate superior.92 According to petitioner, respondent's actions constitute a failure to report to work without a valid and justifiable reason.93 The National Labor Relations Commission and the Court of Appeals found that respondent's failure to return to work was justified because of his detention and its adverse effects. The Court of Appeals found that petitioner did not refute the allegation that respondent, while in the custody of the police, suffered physical violence in the hands of its employees. Thus, the Court of Appeals gave credence to the report submitted by Inspector Escartin, which stated that respondent was "so traumatized that he actually asked to remain in

the custody of the police because he feared for his life."94 The Court of Appeals further found that respondent experienced intense fear, "manifested] by the fact that he left the custody of the police only when his mother accompanied him."95 Thus, the intervening period when respondent failed to report for work, from respondent's prison release to the time he actually reported for work, was justified. Since there was a justifiable reason for respondent's absence, the first element of abandonment was not established. The second element is the existence of overt acts which show that the employee has no intention to return to work. Petitioner alleges that since respondent "vanished" and failed to report immediately to work, he clearly intended to sever ties with petitioner. However, respondent reported for work after August 15, 2001, when the criminal Complaint against him was dropped. Further, petitioner refused to allow respondent to resume his employment because petitioner believed that respondent was a member of the New People's Army and had already hired a replacement. Respondent's act of reporting for work after being cleared of the charges against him showed that he had no intention to sever ties with his employer. He attempted to return to work after the dismissal of the Complaint so that petitioner would not have any justifiable reason to deny his request to resume his employment. Thus, respondent's actions showed that he intended to resume working for petitioner. The second element of abandonment was not proven, as well. In Standard Electric Manufacturing Corporation v. Standard Electric Employees Union-NAFLUKMU,96respondent Rogelio Javier failed to report for work on July 31, 1995. 97 He was arrested and detained on August 9, 1995 for the charge of rape upon his neighbor's complaint. 98 "[A]n Information for rape was filed in the Regional Trial Court (RTC) of Pasig, docketed as Criminal Case No. 108593." 99 On January 13, 1996, his employer, Standard Electric Manufacturing Corporation, received a letter from Javier through counsel informing them of his detention. 100 Despite receiving this letter, it terminated Javier for "(a) having been absent without leave (AWOL) for more than, fifteen days from July 31, 1995; and (b) for committing rape."101 On May 17, 1996, the Regional Trial Court of Pasig issued the Order "granting Javier's demurrer to evidence and ordered his release from jail."102 "Javier reported [to] work, but [Standard Electric Manufacturing Corporation] refused to accept him back." 103 This court found that there was no abandonment: Respondent Javier's absence from August 9, 1995 cannot be deemed as an abandonment of his work.' Abandonment is a matter of intention and cannot lightly be inferred or legally presumed from certain equivocal acts. To constitute as such, two requisites must concur: first, the employee must have failed to report for work or must have been absent without valid or justifiable reason; and second, there must have been a clear intention on the part of the employee to sever the employer-employee relationship as manifested by some overt acts, with the second element being the more determinative factor. Abandonment as a just ground for dismissal requires clear, willful, deliberate, and unjustified refusal of the employee to resume his employment. Mere absence or failure to report for work, even after notice to return, is not tantamount to abandonment. Moreover, respondent Javier's acquittal for rape makes it more compelling to view the illegality of his dismissal. The trial court dismissed the case for "insufficiency of evidence," and such ruling is tantamount to an acquittal of the crime charged, and proof that respondent Javier's arrest and detention were without factual and legal basis in the first place.104 (Citation omitted) In deciding that there was no abandonment, this court applied its ruling in Magtoto v. National Labor Relations Commission.105 In Magtoto, Alejandro Jonas Magtoto was arrested by virtue of the Arrest, Search and Seizure Order dated September 1, 1980.106 Magtoto was charged with violating Article 136 (Conspiracy and Proposal to Commit Rebellion) and Article 138 (Inciting to Rebellion or Insurrection) of the Revised Penal Code.107 On April 10, 1981, seven months after his arrest, Magtoto was released after the City Fiscal dismissed the case due to lack of evidence.108 On the same day, Magtoto informed his employer of his intention to resume working, but the employer rejected his request to return to work. 109 According to his employer, Magtoto's prolonged absence justified his dismissal from work. 110 In its Decision, this court did not' find Magtoto's dismissal to be justified:

The employer tries to distance itself from the detention by stressing that the petitioner was dismissed due to prolonged absence. . . . Since the causes for the detention, which in turn gave the employer a ground to dismiss the petitioner, proved to be non-existent, we rule that the termination was illegal and reinstatement is warranted. A non-existent cause for dismissal was explained in Pepito v. Secretary of Labor (96 SCRA 454): ". . . . Petitioner was separated because of his alleged involvement in the pilferage in question. However, he was absolved from any responsibility therefor by the court. The cause for his dismissal having been proved non-existent or false, his reinstatement is warranted. It would be unjust and unreasonable for the Company to dismiss petitioner after the latter had proven himself innocent of the cause for which he was dismissed."111 In Standard Electric and Magtoto, the employees reported for work after the charges against them were dropped. This court found that the employers' refusal to allow these employees to resume work had no basis. This is the same premise in this case. Here, Labor Arbiter Legaspi found that petitioner was justified in refusing respondent to resume work "due to the criminal charges filed against him[.]" 112 However, the National Labor Relations Commission found that "[petitioner] utterly failed to establish by convincing evidence [respondent's] culpability[,]"113 and reversed the Decision of Labor Arbiter Legaspi. The Court of Appeals affirmed this finding of fact. Thus, the act of reporting to work after the Complaint had been dropped showed that respondent had no intention to sever his employer-employee relationship with petitioner. Respondent did not commit any overt act which would show his intention to sever this relationship. He clearly intended to resume employment. V Petitioner failed to discharge its burden to prove a just cause for dismissal. Based on the findings of the National Labor Relations Commission and the Court of Appeals, petitioner was unable to prove the two (2) concurrent elements necessary to constitute abandonment. Outside of the allegation that respondent "simply vanished" and failed to report to petitioner, they found that petitioner was unable to provide additional evidence that would have justified its actions. Taking all these into consideration, the Court of Appeals did not err in affirming the findings of the National Labor Relations Commission. In Stolt-Nielsen Marine Services, Inc. v. National Labor Relations Commission:114 It is a basic rule in evidence that each party must prove his affirmative allegation. While technical rules are not strictly followed in the NLRC, this does not mean that the rules on proving allegations are entirely dispensed with. Bare allegations are not enough; these must be supported by substantial evidence at the very least. The rule is well established that in termination cases, the burden of proving just and valid cause for dismissing an employee rests on the employer and his failure to do so shall result in a finding that the dismissal is unjustified.115 The burden to prove a just cause for dismissal must be met by the employer. Petitioner was unable to discharge its evidentiary burden before the National Labor Relations Commission and the Court of Appeals. Thus, the illegality of the dismissal stands. VI The six-month period from the alleged date of dismissal by petitioner to the date of filing of the complaint is justified. Petitioner alleges that the Complaint of illegal dismissal filed by respondent had no basis since petitioner filed it six (6) months from the date he was allegedly dismissed. According to petitioner, this delay in the filing of the Complaint strengthens its claim that this was a mere afterthought on the part of respondent. Petitioner cites the actions of the respondent-employee in Philippine Industrial Security Agency Corporation v. Dapiton116 to contrast with the actions of respondent in this case.117 In Philippine Industrial, Virgilio Dapiton "reported to petitioner's office regularly for a new posting[,] but to no avail." 118 Virgilio Dapiton then

"lost no time in filing the illegal dismissal case."119 The immediate filing of the illegal dismissal case, therefore, constituted evidence that Virgilio Dapiton did not wish to be separated from his employment. 120 In Arriola v. Pilipino Star Ngayon, Inc.,121 this court made the distinction between money claims under Article 291 and the claims for backwages under Article 1146 of the Civil Code: . . . Article 291 of the Labor Code . . . requires that money claims arising from employer-employee relations [should] be filed within three years from the time the cause of action accrued: Art. 291. MONEY CLAIMS. All money claims arising from employer-employee relations accruing during the effectivity of this Code shall be filed within three (3) years from the time the cause of action accrued; otherwise they shall be forever barred. Article 291 covers claims for overtime pay, holiday pay, service incentive leave pay, bonuses, salary differentials, and illegal deductions by an employer. It also covers money claims arising from seafarer contracts. The provision, however, does not cover "money claims" consequent to an illegal dismissal such as backwages. It also does not cover claims for damages due to illegal dismissal. These claims are governed by Article 1146 of the Civil Code of the Philippines, which provides: Art. 1146. The following actions must be instituted within four years: (1) Upon injury to the rights of the plaintiff[.] This four-year prescriptive period applies to claims for backwages, not the three-year prescriptive period under Article 291 of the Labor Code. A claim for backwages, according to this court, may be a money claim "by reason of its practical effect." Legally, however, an award of backwages "is merely one of the reliefs which an illegally dismissed employee prays the labor arbiter and the NLRC to render in his favor as a consequence of the unlawful act committed by the employer." Though it results "in the enrichment of the individual [illegally dismissed], the award of backwages is not in redress of a private right, but, rather, is in the nature of a command upon the employer to make public reparation for his violation of the Labor Code." Actions for damages due to illegal dismissal are likewise actions "upon an injury to the rights of the plaintiff." Article 1146 of the Civil Code of the Philippines, therefore, governs these actions. 122 (Citations omitted) Petitioner admits that respondent filed the Complaint for illegal dismissal six (6) months after the first time petitioner had refused to allow respondent to work. This is well within the four-year prescriptive period provided by Article 1146 of the Labor Code, as mentioned in Arriola. In Azcor Manufacturing, Inc. v. National Labor Relations Commission,123 the employee filed a Complaint for illegal dismissal with a prayer for reinstatement four (4) months after the incident of illegal dismissal. 124 This court held that Article 1146 still applied: In addition, an action for reinstatement by reason of illegal dismissal is one based on an injury which may be brought within four (4) years from the time of dismissal pursuant to Art. 1146 of the Civil Code. Hence, Capulso's case which was filed after a measly delay of four (4) months should not be treated with skepticism or cynicism. By law and settled jurisprudence, he has four (4) years to file his complaint for illegal dismissal. A delay of merely four (4) months in instituting an illegal dismissal case is more than sufficient compliance with the prescriptive period. It may betray an unlettered man's lack of awareness of his rights as a lowly worker but, certainly, he must not be penalized for his tarrying. 125 In this case, the six-month period from the date of dismissal to the filing of the Complaint was well within reason and cannot be considered "inexcusable delay." The cases filed before the courts and administrative tribunals originate from human experience. Thus, this court will give due consideration to the established facts which would justify the gap of six (6) months prior to the filing of the complaint. First, respondent received a beating from petitioner's employees at the time of his detention. Even after the dismissal of the Complaint against him, it would have been reasonable for him to take time to recover from the physical and emotional trauma he received. Second, after the charges against him were dropped, respondent averred that he "repeatedly" 126asked petitioner if he could resume employment. The Court of Appeals affirmed this finding. Prior to the filing of the Complaint on March 14, 2002, respondent did not sleep on his right to resume work. Lastly, this court takes notice of the considerable distance between respondent's last known address at Sta. Josefa, Trento, Agusan del Sur and Post 33 at Picop Resources, Inc., Upper New Visayas, Agusan del Sur. The distance he had to travel to ask petitioner to resume work would have placed an understandable constraint on respondent's time and resources.

Respondent cannot be prejudiced by the six-month period. Petitioner's argument on this matter must fail. VII Indophil is not applicable as a defense against petitioner's dismissal of respondent. According to petitioner, respondent should have made a more substantial effort to comply with its orders, pursuant to Indophil.127 This application, however, is misplaced. In Indophil, the employer gave the employee a letter requiring him to report and explain his unauthorized absences.128 The employer gave the employee three (3) days to respond to the letter.129 Instead, the employee filed a complaint alleging illegal dismissal against the employer.130This court held that by failing to respond to the letter, the employee effectively resigned from his employment. Thus, to begin with, there was no dismissal of the employee.131 The employee in that case should have acted promptly in the interest of protecting his employment.132 In this case, the National Labor Relations Commission and the Court of Appeals did not find evidence that petitioner afforded respondent the opportunity to explain his failure or inability to report for work. They found that petitioner's allegation that respondent "simply vanished" did not discharge its burden of proving that respondent was dismissed for a just cause. In Functional, Inc. v. Granfil:133 Being a matter of intention, moreover, abandonment cannot be inferred or presumed from equivocal acts. As a just and valid ground for dismissal, it requires the deliberate, unjustified refusal of the employee to resume his employment, without any intention of returning. . . . The burden of proving abandonment is once again upon the employer who, whether pleading the same as a ground for dismissing an employee or as a mere defense, additionally has the legal duty to observe due process. Settled is the rule that mere absence or failure to report to work is not tantamount to abandonment of work.134 (Emphasis supplied, citations omitted) Unlike Indophil, illegal dismissal occurred in this case. Respondent was illegally dismissed from the time petitioner refused to allow him to resume work. Further, People v. Valla,135 relied upon by petitioner, does not apply to this case. People v. Valla is a criminal case. This, however, is a labor case. Criminal cases and labor cases have different evidentiary requirements and procedures. Criminal cases are first heard in trial courts, while labor cases are first heard by administrative agencies. They are not analogous, and a trial judge is not in the same position as the Labor Arbiter. Petitioner's arguments based on this case must fail. VIII Applying the doctrine of "no work, no pay," the computation of backwages should only begin from the date of the filing of the Complaint. The dispositive portion of the Decision of the National Labor Relations Commission states that respondent should be paid full backwages from August 15, 2001 to May 30, 2003. 136 The Court of Appeals affirmed this award.137 This court finds that this amount should be reduced in view of the principle of "no work, no pay." In Republic v. Pacheo:138 If there is no work performed by the employee there can be no wage or pay, unless of course the laborer was able, willing and ready to work but was illegally locked out,dismissed or suspended. The "No work, no pay" principle contemplates a "no work" situation where the employees voluntarily absent themselves.139(Emphasis in the original) It would be unjust if petitioner were ordered to pay respondent for the period of time that respondent could not and did not work. In Standard Electric, respondent Javier was not entitled to the entirety of the backwages during the time of his detention: Finally, in line with the rulings of this Court in Magtoto and Pedroso on the matter of backwages, respondent Javier is not entitled to any salary during the period of his detention. His entitlement to full backwages commenced from the time the petitioner refused his reinstatement. In the instant case, when respondent Javier was freed on May 24, 1996 by virtue of the judgment of acquittal dated May 17, 1996, he

immediately proceeded to the petitioner but was not accepted back to work; hence, the reckoning point for the grant of backwages started therefrom.140 In Standard Electric, the period of computation of backwages commenced from the date petitioner refused to allow respondent to return to work, and not from the date the charges against respondent were dismissed. In this case, the date of petitioner's refusal to allow respondent's return to work was not established in the findings of fact of the labor tribunals and the Court of Appeals. Petitioner alleged that the filing of the Complaint took place six (6) months after the alleged date that respondent's request to return to work was refused. The date when the incident took place was not specified. Applying Standard Electric, respondent is not entitled to backwages from August 15, 2001, the date of the Resolution dismissing the Complaint against respondent. The facts do not categorically state that petitioner refused to allow respondent to resume working on August 15, 2001. Absent proof of the actual date that respondent first reported for work and was refused by petitioner, the date of the filing of the Complaint should serve as the basis from which the computation of backwages should begin. Thus, this court finds that respondent is entitled to full backwages starting only on March 14, 2002 until actual reinstatement. IX Respondent's right to procedural due process was not observed. The employer must always observe the employee's right to due process. In Agabon: Procedurally ... if the dismissal is based on a just cause under Article 282, the employer must give the employee two written notices and a hearing or opportunity to be heard if requested by the employee before terminating the employment: a notice specifying the grounds for which dismissal is sought a hearing or an opportunity to be heard and after hearing or opportunity to be heard, a notice of the decision to dismiss. . . . Due process under the Labor Code, like Constitutional due process, has two aspects: substantive, i.e., the valid and authorized causes of employment termination under the Labor Code; and procedural, i.e., the manner of dismissal. Procedural due process requirements for dismissal are found in the Implementing Rules of P.D. 442, as amended, otherwise known as the Labor Code of the Philippines in Book VI, Rule I, Sec. 2, as amended by Department Order Nos. 9 and 10. Breaches of these due process requirements violate the Labor Code. . . . Constitutional due process protects the individual from the government and assures him of his rights in criminal, civil or administrative proceedings; while statutory due process found in the Labor Code and Implementing Rules protects employees from being unjustly terminated without just cause after notice and hearing.141 (Citation omitted) In this case, petitioner violated respondent's right to procedural due process. The two-notice requirement was not followed. Petitioner sought to excuse itself by claiming that there was no address where the proper notice could have been served. However, petitioner admitted before the Court of Appeals that "respondent's last known address was given to the investigating court by Police Inspector Escartin.]" 142 There was no attempt from petitioner to serve the proper notice on respondent at the address contained in its employment records. Respondent was replaced without being given an opportunity to explain his absence. In Agabon, this court awarded an amount as indemnity to the dismissed employee due to the violation of the right to procedural due process. 143 This court deems it just to confer an additional award of P30,000.00 to respondent. Petitioner has violated respondent's right to security of tenure, as well as his right to procedural due process. For these violations, petitioner must be held accountable. WHEREFORE, the Petition is DENIED. The Court of Appeals Decision dated June 24, 2005 and Resolution dated August 10, 2005 in CA-G.R. SP No. 81336 are AFFIRMED with MODIFICATION in that the amount of backwages to be awarded to respondent Celso E. Fuentes should begin on March 14, 2002 until his actual reinstatement. Petitioner Protective Maximum Security Agency, Inc. is further ordered to pay respondent

Celso Fuentes the amount of P30,000.00 as indemnity for violation of respondent's right to procedural due process. Legal interest shall be computed at the rate of 6% per annum of the total award from date of finality of this Decision until full satisfaction.144Costs against petitioner. SO ORDERED. Carpio, (Chairperson), Velasco, Jr.,* Del Castillo, and Mendoza, JJ., concur.

Republic of the Philippines Supreme Court Manila SECOND DIVISION G.R. No. 166411 ELPIDIO CALIPAY, Petitioner, - versus -

Present: CARPIO, J., Chairperson, NACHURA, PERALTA, ABAD, and MENDOZA, JJ.

NATIONAL LABOR RELATIONS Promulgated: COMMISSION, TRIANGLE ACE CORPORATION and JOSE LEE, August 3, 2010 Respondents. x-----------------------------------------------------------------------------------------x DECISION PERALTA, J.: Before the Court is a petition for review on certiorari seeking to annul and set aside the Decision[1] and Resolution[2] of the Court of Appeals (CA), dated August 24, 2004 andDecember 10, 2004, respectively, in CA-G.R. SP No. 79277. The CA Decision dismissed the special civil action for certiorari filed by petitioner, while the CA Resolution denied petitioners motion for reconsideration. The pertinent facts of the case are as follows:

On July 16, 1999, a Complaint [3] for illegal dismissal, unfair labor practice, underpayment of wages and 13th month pay, non-payment of service incentive leave pay, overtime pay, premium pay for holiday, rest day, night shift allowances and separation pay was filed by herein petitioner Elpidio Calipay, together with Alfredo Mission and Ernesto Dimalanta against herein private respondents Triangle Ace Corporation (Triangle) and Jose Lee. Calipay and the other complainants alleged in their Position Paper that in the course of their employment, they were not given any specific work assignment; they performed various kinds of work imposed upon them by Lee; in discharging their functions, they were required by Lee to work for nine (9) hours a day, beginning from 7:00 a.m. and ending at 6:00 p.m. with a break of one hour at 12:00 noon; they were also required to report from Monday to Sunday; for work rendered from Mondays to Saturdays beyond the normal eight (8) working hours in a day, they were paid a uniform daily wage in the amount of P140.00 even during holidays; for work performed on Sundays, they were not paid any wage due to the policy of Lee that his workers must provide work without pay at least a day in the week under his so-called bayanihan system; in receiving their wages, they were not given any duly accomplished payslips; instead, they were forced to sign a blank form of their daily time records and salary vouchers. It was further alleged that in May 1998, Lee confronted Calipay and Mission regarding their alleged participation and assistance in Dimalantas claim for disability benefits with the Social Security System; despite their denials, Lee scolded Calipay and Mission; this incident later led to their dismissal in the same month. In their Position Paper, private respondents countered that the termination of Calipay and the other complainants was for a valid or just cause and that due process was observed. They claimed, among others, that Calipay was on absence without leave (AWOL) status from November 2, 1998 up to November 17, 1998; a memorandum dated November 17, 1998, requiring him to explain why his services should not be terminated, was sent by mail but he refused to receive the same; for failure to explain his side, another memorandum dated December 11, 1998 was issued terminating Calipays employment on the ground of abandonment of work; there is no unfair labor practice because there is no union; there is full compliance with the law regarding payment of wages and other benefits due to their

employees; non-payment of nightshift premium is true, because the company does not operate at night. On July 10, 2000, the Labor Arbiter handling the case rendered a Decision[4] dismissing the Complaint for lack of merit. Calipay and the other complainants filed an appeal with the National Labor Relations Commission (NLRC).[5] On February 1, 2002, the NLRC rendered judgment via a Resolution [6] based on the findings that: (a) in dismissing the complainants from their employment, respondents failed to faithfully observe the requirements of notice and hearing rendering the said dismissals invalid and illegal; (b) the dismissals were not based on any of the just causes provided in Article 282 of the Labor Code; (3) the complainants failure to report for work were justified by their sudden termination from employment which nullified respondents contention that complainants were guilty of abandonment of work. The dispositive portion of the NLRC Decision reads as follows: WHEREFORE, the Decision appealed from is hereby MODIFIED, ordering respondents Triangle Ace Corporation Inc./Jose Lee to reinstate the complainants to their former position without loss of seniority rights and benefits and to pay them full backwages reckoned from the date of dismissals up to actual reinstatement which as of even date amount to P149,017.57 for Alfredo Mission, P148,705.44 for Elpidio Calipay, and P165,961.77 for Ernesto Dimalanta, plus ten (10%) percent of the total award as and for attorneys fees totaling P46,368.47 computed as follows: xxxx Should reinstatement be not feasible, the payment of separation pay in lieu thereof is awarded. The Decision is AFFIRMED in all other respects. SO ORDERED.[7]

Aggrieved, private respondents filed a Motion for Reconsideration.

On September 24, 2002, the NLRC issued a Resolution[8] granting private respondents Motion for Reconsideration, the dispositive portion of which reads: WHEREFORE, the instant motion being meritorious is GIVEN DUE COURSE. Accordingly, Our Resolution promulgated on February 1, 2002 is hereby RECONSIDERED and the decision of the Arbiter a quo dated 10 July 2002 is REINSTATED and AFFIRMED en (sic) toto. SO ORDERED.[9]

As a consequence, Calipay and the other complainants moved for the reconsideration of the above-quoted Resolution, but the same was denied by the NLRC in a Resolution dated June 30, 2003. Calipay and the other complainants then filed a special civil action for certiorari, with the CA assailing the September 24, 2002 and June 30, 2003 Resolutions of the NLRC. On August 24, 2004, the CA rendered its presently disputed Decision dismissing the abovementioned petition for certiorari. Calipay filed a Motion for Reconsideration, but the CA denied it in its Resolution dated December 10, 2004. Hence, the instant petition of Calipay raising the following issues: I. WHETHER OR NOT PUBLIC RESPONDENT COURT OF APPEALS COMMITTED A REVERSIBLE ERROR WHEN IT ISSUED ITS DECISION DATED 24 AUGUST 2004 AND RESOLUTION DATED 10 DECEMBER 2004 DISMISSING THE PETITION FOR CERTIORARI AND AFFIRMING THE RESOLUTIONS OF PUBLIC RESPONDENT NLRC DATED 30 JUNE 2003 AND 24 SEPTEMBER 2002, WHICH RESOLUTIONS DISMISSED PETITIONERS COMPLAINT FOR ILLEGAL DISMISSAL BY REVERSING RESPONDENT NLRCS PREVIOUS RESOLUTION DATED 01 FEBRUARY 2002.

II. WHETHER OR NOT PUBLIC RESPONDENT COURT OF APPEALS COMMITTED A REVERSIBLE ERROR WHEN IT AFFIRMED THE SUBJECT RESOLUTIONS OF PUBLIC RESPONDENT NLRC DISMISSING THE APPEAL FILED BY PETITIONER AND REINSTATED THE DECISION OF LABOR ARBITER PANGANIBAN ORDERING THE DISMISSAL OF THE COMPLAINT FOR ILLEGAL TERMINATION NOTWITHSTANDING THE PREVIOUS RESOLUTION OF PUBLIC RESPONDENT NLRC DATED 01 FEBRUARY 2002 DECLARING THE ILLEGALITY OF PETITIONERS DISMISSAL FROM EMPLOYMENT. III. WHETHER OR NOT SUBSTANTIAL JUSTICE WAS UNDULY COMPROMISED WHEN PUBLIC RESPONDENT COURT OF APPEALS AFFIRMED NLRCS DISMISSAL OF PETITIONERS APPEAL DATED 06 SEPTEMBER 2000 AND RULED AGAINST PETITIONERS COMPLAINT FOR ILLEGAL DISMISSAL BASED SOLELY ON TECHNICAL RULES OF PROCEDURE WHEN THE SAME SHOULD HAVE BEEN RELAXED TO GIVE WAY TO MERITORIOUS AND JUDICIOUS CASES SUCH AS THIS INVOLVING DISMISSAL FROM WORK OF AN EMPLOYEE.[10]

Petitioners basic contention is that the CA erred in dismissing the petition filed with it on the basis of strictly adhering to purely technical grounds. Petitioner argues that he cannot be solely faulted for his failure to timely file his appeal with the NLRC, considering that his former counsel suddenly and unexpectedly withdrew his services at the time that said counsel should have been preparing his appeal, leaving petitioner without anyone to help him prepare his appeal on time. Petitioner avers that in a number of cases, this Court allowed the late filing of an appeal where such appeal by a dismissed worker is, like in the present case, impressed with merit in order that the ends of substantial justice would be served.

The petition lacks merit. It bears to reiterate the settled rule that the timely perfection of an appeal is a mandatory requirement, which cannot be trifled with as a mere technicality to suit the interest of a party.[11] The rules on periods for filing appeals are to be observed religiously, and parties who seek to avail themselves of the privilege must comply with the rules.[12] Procedural rules setting the period for perfecting an appeal or filing a petition for review are generally inviolable.[13] It is doctrinally entrenched that appeal is not a constitutional right, but a mere statutory privilege. [14] Hence, parties who seek to avail themselves of it must comply with the statutes or rules allowing it.[15] The requirements for perfecting an appeal within the reglementary period specified in law must, as a rule, be strictly followed. [16] Such requirements are considered indispensable interdictions against needless delays and are necessary for the orderly discharge of the judicial business.[17] Furthermore, the perfection of an appeal in the manner and within the period permitted by law is not only mandatory, but also jurisdictional.[18] Failure to perfect the appeal renders the judgment of the court final and executory.[19] Just as a losing party has the privilege to file an appeal within the prescribed period, so does the winner also have the correlative right to enjoy the finality of the decision.[20] It is true that procedural rules may be waived or dispensed with in the interest of substantial justice.[21] This Court may deign to veer away from the general rule if, on its face, the appeal appears to be absolutely meritorious. [22] Indeed, in a number of instances, procedural rules are relaxed in order to serve substantial justice. However, the Court sees no reason to do so in this case as there is no reason to reverse the findings of the CA, to wit: It must be considered that his [Calipays] former counsel had manifested in his Withdrawal of Appearance (p. 80, Rollo) that he was withdrawing as counsel by reason of his (Calipay) desire to engage the services of another counsel for purposes of perfecting his appeal from the Labor Arbiters Decision and said Withdrawal of Appearance was duly signed by his former counsel with the petitioners conformity thereto

and which therefore showed that the latter had assented to such withdrawal by reason stated therein. Hence, petitioner Calipay could not blame their former counsel for the non-perfection of their appeal. And even if it were true, that there was untimely withdrawal of his counsel, the latter should not be totally blamed as the herein petitioner is duty bound to protect his interests and he should have been more vigilant and circumspect of his right in pursuing his case by observing the rule on perfection of appeal.[23]

Moreover, the Court notes private respondents contention that petitioner again did not comply with procedural requirements when he failed to attach to the instant petition a verification and certificate against forum shopping as required under Section, Rule 45 of the Rules of Court. On this basis alone, the petition should be dismissed. Even if the Court were to disregard petitioners violation of the above-cited procedural rules, a careful review of his contentions, as well as the records of the case, would show that on its merits, the present petition should still fail. A perusal of the assailed Decision of the CA would readily confirm that the appellate courts dismissal of the petition filed by herein petitioner was not based solely on procedural or technical grounds. Thus, the CA held: Be that as it may, even if We would set aside the technicalities in the interest of substantial justice as proffered by petitioner Calipay that the belated filing of his appeal should nevertheless be considered in order to completely resolve the case on its merits, We opine that the instant case would likewise fail. We agree with the Labor Arbiters finding that petitioner Calipay had abandoned his work. x x x In the instant case, petitioner Calipay had failed to report for work for unknown reasons x x x His continued absences without the private respondents approval constituted gross and habitual neglect which is a just cause for termination under Article 282 of the Labor Code of the Philippines.[24]

Petitioner harps on the fact that on February 1, 2002, the NLRC issued a Resolution which was in his favor. While petitioner relies heavily on the said Resolution, he, however, always fails to mention that in a subsequent Resolution dated September 24, 2002, the NLRC reversed itself and reinstated the Decision of the Labor Arbiter dismissing the complaint filed by petitioner and his former coemployees. Furthermore, petitioner insists that he is not guilty of abandoning his job and that his failure to report for work was justified by his unceremonious dismissal from employment.However, the Labor Arbiter made the following categorical findings: Complainant Ernesto Dimalanta claimed that he was dismissed on January 30, 1998. x x x Complainants Alfredo Mission and Elpidio Calipay, for their part, alleged that they were dismissed by the respondent[s] on May 25, 1998 and May 27, 1998, respectively x x x. The record, however, shows that complainants actually reported for work and were paid wages by the respondent company even after their alleged termination as evidenced by their Daily Time Records and Salary Vouchers submitted by respondents. Complainant Mission worked with the respondent untilJuly 15, 1998, complainant Calipay up to November 2, 1998 while complainant Dimalanta until May 17, 1998. After those dates, they absented themselves from their work without any permission from the management or without filing any leave of absence. Thus, two (2) written notices were sent to each complainant and the Department of Labor and Employment by the respondent through its General Manager. [25]

Calipay and the other complainants failed to sufficiently refute these findings of the Labor Arbiter in their appeal filed with the NLRC. They simply insisted that they did not report for work, because they were already terminated. However, they did not present any evidence to prove their allegation. On the other hand, as held by the Labor Arbiter, private respondents were able to present the DTRs and Salary Vouchers of Calipay and the other complainants showing that they indeed reported for work even after their alleged termination from employment. [26] Calipay and the other complainants also failed to present evidence to prove their allegation that they were forced to sign blank forms of their DTRs and Salary Vouchers.

Indeed, if petitioner was dismissed, as he claims, on May 27, 1998, why did the DTRs and Salary Vouchers presented by private respondents show that he continued to receive wages until October 31, 1998? Moreover, why did petitioner file his complaint for illegal dismissal only on July 16, 1999, or more than one year after he claims to have been illegally dismissed? On the basis of the foregoing, the Court arrives at the conclusion that the filing of the complaint for illegal dismissal appears only as a convenient afterthought on the part of petitioner and the other complainants after they were dismissed in accordance with law. Jurisprudence has held time and again that abandonment is totally inconsistent with the immediate filing of a complaint for illegal dismissal, more so if the same is accompanied by a prayer for reinstatement. [27] In the present case, however, petitioner filed his complaint more than one year after his alleged termination from employment.Moreover, petitioner and the other complainants inconsistency in their stand is also shown by the fact that in the complaint form which they personally filled up and filed with the NLRC, they only asked for payment of separation pay and other monetary claims. They did not ask for reinstatement. It is only in their Position Paper later prepared by their counsel that they asked for reinstatement. This is an indication that petitioner and the other complainants never had the intention or desire to return to their jobs. In fact, there is no evidence to prove that petitioner and his former co-employees ever attempted to return to work after they were dismissed from employment. On the other hand, private respondents were able to present memoranda or show-cause letters served on petitioner and the other complainants at their last known address requiring them to explain their absence, with a warning that their failure would be construed as abandonment of work. Also, private respondents served on petitioner and the other complainants a notice of termination as required by law. Private respondents compliance with said requirements, taken together with the other circumstances above-discussed, only proves petitioner and the other complainants abandonment of their work. Finally, it bears to point out that the Decision of the Labor Arbiter was affirmed by the NLRC and the CA. The settled rule is that the factual findings of

the Labor Arbiter and the NLRC, especially when affirmed by the CA, are accorded not only great respect but also finality, and are deemed binding upon this Court so long as they are supported by substantial evidence. [28] In the present case, the Court finds no cogent reason to depart from this rule. WHEREFORE, the petition is DENIED. The assailed Decision and Resolution of the Court of Appeals, dated August 24, 2004 and December 10, 2004, respectively, in CA-G.R. SP No. 79277, are AFFIRMED.

Republic of the Philippines

Supreme Court Manila SECOND DIVISION

MANILA ELECTRIC COMPANY, Petitioner,

G.R. Nos. 191304

191288

Present: CARPIO, J., Chairperson, BRION, PEREZ, - versus -

SERENO, and REYES, JJ. Promulgated:

March 7, 2012 JAN CARLO GALA,

&

Respondent. x------------------------------------------------------------------------------------x

DECISION

BRION, J.:

We resolve the petition for review on certiorari,[1] seeking to annul the decision[2] dated August 25, 2009 and the resolution[3] dated February 10, 2010 of the Court of Appeals (CA) rendered in CA-G.R. SP. Nos. 105943 and 106021. The Antecedents The facts are summarized below.

On March 2, 2006, respondent Jan Carlo Gala commenced employment with the petitioner Meralco Electric Company (Meralco) as a probationary lineman. He was assigned at Meralcos Valenzuela Sector. He initially served as member of the crew of Meralcos Truck No. 1823 supervised by Foreman Narciso

Matis. After one month, he joined the crew of Truck No. 1837 under the supervision of Foreman Raymundo Zuiga, Sr. On July 27, 2006, barely four months on the job, Gala was dismissed for alleged complicity in pilferages of Meralcos electrical supplies, particularly, for the incident which took place on May 25, 2006. On that day, Gala and other Meralco workers were instructed to replace a worn-out electrical pole at the Pacheco Subdivision in Valenzuela City. Gala and the other linemen were directed to join Truck No. 1891, under the supervision of Foreman Nemecio Hipolito. When they arrived at the worksite, Gala and the other workers saw that Truck No. 1837, supervised by Zuiga, was already there. The linemen of Truck No. 1837 were already at work. Gala and the other members of the crew of Truck No. 1891 were instructed to help in the digging of a hole for the pole to be installed. While the Meralco crew was at work, one Noberto Bing Llanes, a non-Meralco employee, arrived. He appeared to be known to the Meralco foremen as they were seen conversing with him. Llanes boarded the trucks, without being stopped, and took out what were later found as electrical supplies. Aside from Gala, the foremen and the other linemen who were at the worksite when the pilferage happened were later charged with misconduct and dishonesty for their involvement in the incident. Unknown to Gala and the rest of the crew, a Meralco surveillance task force was monitoring their activities and recording

everything with a Sony video camera. The task force was composed of Joseph Aguilar, Ariel Dola and Frederick Riano. Meralco called for an investigation of the incident and asked Gala to explain. Gala denied involvement in the pilferage, contending that even if his superiors might have committed a wrongdoing, he had no participation in what they did. He claimed that: (1) he was at some distance away from the trucks when the pilferage happened; (2) he did not have an inkling that an illegal activity was taking place since his supervisors were conversing with Llanes, giving him the impression that they knew him; (3) he did not call the attention of his superiors because he was not in a position to do so as he was a mere lineman; and (4) he was just following instructions in connection with his work and had no control in the disposition of company supplies and materials. He maintained that his mere presence at the scene of the incident was not sufficient to hold him liable as a conspirator. Despite Galas explanation, Meralco proceeded with the investigation and eventually terminated his employment on July 27, 2006.[4] Gala responded by filing an illegal dismissal complaint against Meralco.[5] The Compulsory Arbitration Rulings In a decision dated September 7, 2007,[6] Labor Arbiter Teresita D. Castillon-Lora dismissed the complaint for lack of merit. She held that Galas participation in the pilferage of Meralcos property rendered him unqualified to become a regular employee.

Gala appealed to the National Labor Relations Commission (NLRC). In its decision of May 2, 2008,[7] the NLRC reversed the labor arbiters ruling. It found that Gala had beenillegally dismissed, since there was no concrete showing of complicity with the alleged misconduct/dishonesty[.] [8] The NLRC, however, ruled out Galas reinstatement, stating that his tenure lasted only up to the end of his probationary period. It awarded him backwages and attorneys fees. Both parties moved for partial reconsideration; Gala, on the ground that he should have been reinstated with full backwages, damages and interests; and Meralco, on the ground that the NLRC erred in finding that Gala had been illegally dismissed. The NLRC denied the motions. Relying on the same grounds, Gala and Meralco elevated the case to the CA through a petition for certiorari under Rule 65 of the Rules of Court. The CA Decision In its decision of August 25, 2009,[9] the CA denied Meralcos petition for lack of merit and partially granted Galas petition. It concurred with the NLRC that Gala had been illegally dismissed, a ruling that was supported by the evidence. It opined that nothing in the records show Galas knowledge of or complicity in the pilferage. It found insufficient the joint affidavit [10] of the members of Meralcos task force testifying that Gala and two other linemen knew Llanes. The CA modified the NLRC decision of May 2, 2008[11] and ordered Galas reinstatement with full backwages and other benefits. The

CA also denied Meralcos motion for reconsideration. Hence, the present petition for review on certiorari.[12] The Petition The petition is anchored on the ground that the CA seriously erred and gravely abused its discretion in 1. ruling that Gala was illegally dismissed; and 2. directing Galas reinstatement despite probationary status.

his

Meralco faults the CA for not giving credit to its witnesses Aguilar, Dola and Riano, and instead treated their joint affidavit (Samasamang Sinumpaang Salaysay) asinconclusive to establish Galas participation in the pilferage of company property on May 25, 2006. It submits that the affidavit of the three Meralco employees disproves the CAs findings, considering that their statements were based on their first-hand account of the incident during their day-long surveillance on May 25, 2006. It points out that thethree Meralco employees categorically stated that all of the companys foremen and linemen present at that time, including Gala, had knowledge of the pilferage that was happening at the time. According to Aguilar, Dola and Riano, the trucks crew, including Gala, was familiar with Llanes who acted as if his presence particularly, that of freely collecting materials and supplies was a regular occurrence during their operations.

Meralco maintains that Gala himself admitted in his own testimony[13] that he had been familiar with Llanes even before the May 25, 2006 incident where he saw Zuiga, the foreman of Truck No. 1837, conversing with Llanes. Meralco submits that Galas admission, instead of demonstrating his feigned innocence, [14] even highlights his guilt, especially considering that by design, his misfeasance assisted Llanes in pilfering company property; Gala neither intervened to stop Llanes, nor did he report the incident to the Meralco management. Meralco posits that because of his undeniable knowledge of, if not participation in, the pilferage activities done by their group, the company was well within its right in terminating his employment as a probationary employee for his failure to meet the basic standards for his regularization. The standards, it points out, were duly explained to him and outlined in his probationary employment contract. For this reason and due to the expiration of Galas probationary employment, the CA should not have ordered his reinstatement with full backwages. Finally, Meralco argues that even if Gala was illegally dismissed, he was entitled to just his backwages for the unexpired portion of his employment contract with the company. Galas Case By way of his Comment (to the Petition) dated September 2, 2010,[15] Gala asks for a denial of the petition because of (1) serious and fatal infirmities in the petition; (2) unreliable

statements of Meralcos witnesses; and (3) clear lack of basis to support the termination of his employment. Gala contends, in regard to the alleged procedural defects of the petition, that the Verification and Certification, Secretarys Certificate and Affidavit of Service do not contain the details of the Community or Residence Tax Certificates of the affiants, in violation of Section 6 of Commonwealth Act No. 465 (an Act to Impose a Residence Tax). Additionally, the lawyers who signed the petition failed to indicate their updated Mandatory Continuing Legal Education (MCLE) certificate numbers, in violation of the rules. With respect to the merits of the case, Gala bewails Meralcos reliance on the joint affidavit[16] of Aguilar, Dola and Riano not only because it was presented for the first time on appeal to the CA, but also because it was a mere afterthought. He explains that Aguilar and Dola were the very same persons who executed a much earlier sworn statement or transcription dated July 7, 2006. This earlier statement did not even mention Gala, but the later joint affidavit splashes GALAs name in a desperate attempt to link him to an imagined wrongdoing.[17] Zeroing in on what he believes as lack of credibility of Meralcos evidence, Gala posits that there is clear lack of basis for the termination of his employment. Thus, he wonders why Meralco did not present as evidence the video footage of the entire incident which it claims exists. He suspects that the footage was adverse to Meralcos position in the case.

Gala adds that the allegations of a reported pilferage or rampant theft or pilferage committed prior to May 25, 2006 by his superiors were not established, for even the labor arbiter did not make a finding on the foremens involvement in the incident. He stresses that the same is true in his case as there is no proof of his participation in the pilferage. Gala further submits that even if he saw Llanes on May 25, 2006 at about the time of the occurrence of the pilferage near or around the Meralco trucks, he was not aware that a wrongdoing was being committed or was about to be committed. He points out at that precise time, his superiors were much nearer to the trucks than he as he was among the crew digging a hole. He presumed at the time that his own superiors, being the more senior employees, could be trusted to protect company property. Finally, Gala posits that his reinstatement with full backwages is but a consequence of the illegality of his dismissal. He argues that even if he was on probation, he is entitled to security of tenure. Citing Philippine Manpower Services, Inc. v. NLRC,[18] he claims that in the absence of any justification for the termination of his probationary employment, he is entitled to continued employment even beyond the probationary period. The Courts Ruling The procedural issue Gala would want the petition to be dismissed outright on procedural grounds, claiming that the Verification and Certification, Secretarys Certificate and Affidavit of Service

accompanying the petition do not contain the details of the Community Tax Certificates of the affiants, and that the lawyers who signed the petition failed to indicate their updated MCLE certificate numbers, in violation of existing rules. We stress at this point that it is the spirit and intention of labor legislation that the NLRC and the labor arbiters shall use every reasonable means to ascertain the facts in each case speedily and objectively, without regard to technicalities of law or procedure, provided due process is duly observed. [19] In keeping with this policy and in the interest of substantial justice, we deem it proper to give due course to the petition, especially in view of the conflict between the findings of the labor arbiter, on the one hand, and the NLRC and the CA, on the other. As we said in S.S. Ventures International, Inc. v. S.S. Ventures Labor Union,[20] the application of technical rules of procedure in labor cases may be relaxed to serve the demands of substantial justice. The substantive aspect of the case We find merit in the petition. Contrary to the conclusions of the CA and the NLRC, there is substantial evidence supporting Meralcos position that Gala had become unfit to continue his employment with the company. Gala was found, after an administrative investigation, to have failed to meet the standards expected of him to become a regular employee and this failure was mainly due to his undeniable knowledge, if not participation, in the pilferage activities done by their group, all to the prejudice of the Companys interests. [21]

Gala insists that he cannot be sanctioned for the theft of company property on May 25, 2006. He maintains that he had no direct participation in the incident and that he was not aware that an illegal activity was going on as he was at some distance from the trucks when the alleged theft was being committed. He adds that he did not call the attention of the foremen because he was a mere lineman and he was focused on what he was doing at the time. He argues that in any event, his mere presence in the area was not enough to make him a conspirator in the commission of the pilferage. Gala misses the point. He forgets that as a probationary employee, his overall job performance and his behavior were being monitored and measured in accordance with the standards (i.e., the terms and conditions) laid down in his probationary employment agreement.[22] Under paragraph 8 of the agreement, he was subject to strict compliance with, and nonviolation of the Company Code on Employee Discipline, Safety Code, rules and regulations and existing policies. Par. 10 required him to observe at all times the highest degree of transparency, selflessness and integrity in the performance of his duties and responsibilities, free from any form of conflict or contradicting with his own personal interest. The evidence on record established Galas presence in the worksite where the pilferage of company property happened. It also established that it was not only on May 25, 2006that Llanes, the pilferer, had been seen during a Meralco operation. He had been previously noticed by Meralco employees, including Gala

(based on his admission), [23] in past operations. If Gala had seen Llanes in earlier projects or operations of the company, it is incredulous for him to say that he did not know why Llanes was there or what Zuiga and Llanes were talking about. To our mind, the Meralco crew (the foremen and the linemen) allowed or could have even asked Llanes to be there during their operations for one and only purpose to serve as their conduit for pilfered company supplies to be sold to ready buyers outside Meralco worksites. The familiarity of the Meralco crew with Llanes, a non-Meralco employee who had been present in Meralco field operations, does not contradict at all but rather support the Meralco submission that there had been reported pilferage or rampant theft, by the crew, of company property even before May 25, 2006. Gala downplays this particular point with the argument that the labor arbiter made no such finding as she merely assumed it to be a fact,[24] her only basis being the statement that may natanggap na balita na ang mga crew na ito ay palagiang hindi nagsasauli ng mga electric facilities na kanilang ginagamit o pinapalitan bagkus ito ay ibinenta palabas.[25] Gala impugns the statement as hearsay. He also wonders why Meralcos supposed video footage of the incident on May 25, 2006 was never presented in evidence. The established fact that Llanes, a non-Meralco employee, was often seen during company operations, conversing with the foremen, for reason or reasons connected with the ongoing company operations, gives rise to the question: what was he doing there? Apparently, he had been visiting Meralco worksites, at least in the Valenzuela Sector, not simply to socialize, but to do

something else. As testified to by witnesses, he was picking up unused supplies and materials that were not returned to the company. From these factual premises, it is not hard to conclude that this activity was for the mutual pecuniary benefit of himself and the crew who tolerated the practice. For one working at the scene who had seen or who had shown familiarity with Llanes (a non-Meralco employee), not to have known the reason for his presence is to disregard the obvious, or at least the very suspicious. We consider, too, and we find credible the company submission that the Meralco crew who worked at the Pacheco Subdivision in Valenzuela City on May 25, 2006 had not been returning unused supplies and materials, to the prejudice of the company. From all these, the allegedly hearsay evidence that is not competent in judicial proceedings (as noted above), takes on special meaning and relevance. With respect to the video footage of the May 25, 2006 incident, Gala himself admitted that he viewed the tape during the administrative investigation, particularly in connection with the accusation against him that he allowed Llanes (binatilyong may kapansanan sa bibig) to board the Meralco trucks.[26] The choice of evidence belongs to a party and the mere fact that the video was shown to Gala indicates that the video was not an evidence that Meralco was trying to suppress. Gala could have, if he had wanted to, served a subpoena for the production of the video footage as evidence. The fact that he did not does not strengthen his case nor weaken the case of Meralco.

On the whole, the totality of the circumstances obtaining in the case convinces us that Gala could not but have knowledge of the pilferage of company electrical supplies on May 25, 2006; he was complicit in its commission, if not by direct participation, certainly, by his inaction while it was being perpetrated and by not reporting the incident to company authorities. Thus, we find substantial evidence to support the conclusion that Gala does not deserve to remain in Meralcos employ as a regular employee. He violated his probationary employment agreement, especially the requirement for him to observe at all times the highest degree of transparency, selflessness and integrity in the performance of their duties and responsibilities[.][27] He failed to qualify as a regular employee.[28] For ignoring the evidence in this case, the NLRC committed grave abuse of discretion and, in sustaining the NLRC, the CA committed a reversible error. WHEREFORE, premises considered, the petition is GRANTED. The assailed decision and resolution of the Court of Appeals are SET ASIDE. The complaint is DISMISSEDfor lack of merit. SO ORDERED.

Republic of the Philippines

Supreme Court Manila

SECOND DIVISION BLUE SKY TRADING COMPANY,

G.R. No. 190559

INC. and/or JOSE TANTIANSU and

Present:

LINDA TANTIANSU, Petitioners,

CARPIO, J., Chairperson,

- versus -

BRION, PEREZ, SERENO, and

ARLENE P. BLAS and

REYES, JJ.

JOSEPH D. SILVANO, Respondents.

Promulgated:

March 7, 2012

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

DECISION

REYES, J.:

The Case

Before us is a Petition for Review on Certiorari[1] under Rule 45 of the Rules of Court assailing the October 26, 2009 Decision [2] and the December 14, 2009 Resolution[3] of the Court of Appeals (CA) in CA G.R. SP No. 108432. The dispositive portion of the assailed decision reads: WHEREFORE, premises considered, the instant Petition is GRANTED. The challenged resolution of the NLRC dated 30 January 2009 is hereby REVERSED and SET ASIDE. Accordingly, the Decision of the NLRC dated 29 November 2007 is hereby REINSTATED.

SO ORDERED.[4]

The assailed resolution denied the Reconsideration[5] to the foregoing.

petitioners'

Motion

for

Antecedent Facts

Petitioner Blue Sky Trading Company, Inc. (Blue Sky) is a duly registered domestic corporation engaged in the importation and sale of medical supplies and equipment. Petitioner Jose G. Tantiansu, Jr. (Jose) is Blue Sky's vice president for operations while petitioner Linda G. Tantiansu (Linda) is its assistant corporate secretary. The respondents Arlene P. Blas (Arlene) and Joseph D. Silvano (Joseph) were regular employees of Blue Sky and they respectively held the positions of stock clerk and warehouse helper before they were dismissed from service on February 5, 2005.

On January 29, 2005, Lorna N. Manalastas (Lorna), Blue Sky's warehouse supervisor, wrote Jose a memorandum [6] informing the latter that six pairs of intensifying screens were missing. Lorna likewise stated that when a certain Boy conducted an inventory on October 2004, the screens were still completely accounted for.

On January 31, 2005, Helario Adonis, Jr. (Helario), warehouse personnel, was summoned by Linda, Jose's wife Alice Tantiansu, and human resources department head Jean B. De La Paz (Jean). Helario was asked to admit his participation in the theft of the missing screens. While he was offered to be paid a separation pay if he would confess complicity with the alleged theft, he pleaded utter innocence.

On February 1, 2005, Jean notified Helario of his termination from service on the ground of his failure to properly account for and maintain a balance of the company's stock inventories, hence, resulting in Blue Sky's loss of trust and confidence in him. [7] The day after, Blue Sky promptly filed with the Department of Labor

and Employment (DOLE) an establishment termination [8] report indicating therein Helario's dismissal from service for cause.

On February 3, 2005, Jean issued notices to explain/preventive suspension[9] to Arlene, Joseph, delivery personnel Jayde Tano-an (Jayde) and maintenance personnel/driver Wilfredo Fasonilao (Wilfredo). The notices informed them that they were being accused of gross dishonesty in connection with their alleged participation in and conspiracy with other employees in committing theft against company property, specifically relative to the loss of the six intensifying screens. They were placed under preventive suspension pending investigation and were thus required to file their written explanations within 48 hours from receipt of the notices.

On February 4, 2005, Arlene submitted to Jean a handwritten memorandum denying knowledge or complicity with the theft of the intensifying screens. In part, the memorandum reads: I'm not the supervisor of that dep't. para tanungin sa lahat ng nangyayari. Second, hindi naman ako ang naginventory ng stocks na yan. Third, nag-oout lang ako ng stocks kapag wala sila at kailangan na ang stocks. And lastly, ano ba talaga ang trabaho ko dito, kc all I know is pag-re-record ng stocks but parang lumalabas guard ako na kailangan kong malaman ang lahat ng kilos at galaw ng lahat ng employee dito. Dahil ako lagi ang tinatanong tungkol sa nangyayari sa mezz. Bakit ako lang ba ang tao doon? So it means that, dapat lahat kami ay may memo para mag-explain regarding that matter. Maging fair naman kayo sa akin.

Anyway, regarding sa nawawalang IS, ang alam ko inimventory ni Kuya Boy yan last Oct. According to him, complete daw lahat yun. Nang bumaba si Sir Jun mga last week ng Dec. para magpalinis ng stocks, na-found out nya na kulang ang stocks. So we did, we compare the bincard to the stockcard. But tally silang pareho. Kaya, we did we trace it is sa mga possible records like shipment sa Cebu or sales. But wala doon. Ang naiisip naming dahilan ay baka nagpakabit si Ate Lorna ng cassette with IS sa technical and she forgot to report it. Yun lang ang possible reason na alam ko. At wala na akong alam pang iba. x x x[10]

On the other hand, Joseph proffered the following explanation: Tungkol po sa nawawalang intensifying screen, wala po akong alam. Kasi po sa messanin[,] pumapasok lang po ako pag may inutos o may pagagawa, tsaka hindi po ako naghahanda ng lumang stocks. Nagbababa po kami ng stock at nag-aakyat sa 2nd flor pag kami po ay inutusan ng nakakataas sa akin o may katungkulan. Yun lang po ang aking trabaho sa mesanin. Eto lang po ang aking masasabi.[11]

Jayde and Wilfredo also filed their written explanations denying any involvement in the theft which took place and professing their dedication and loyalty to Blue Sky.[12]

On February 5, 2005, Jean issued to Arlene, Joseph, Jayde and Wilfredo notices of dismissal for cause[13] stating therein that

evidence that they had conspired with each other to commit theft against company property was too glaring to ignore. Blue Sky had lost its trust and confidence on them and as an act of selfpreservation, their termination from service was in order.

On February 7, 2005, Blue Sky filed with the DOLE an establishment termination report stating therein the dismissal of Arlene, Joseph, Jayde and Wilfredo.[14]

On February 8, 2005, Arlene, Joseph, Helario, Jayde and Wilfredo filed with the National Labor Relations Commission (NLRC) a complaint for illegal dismissal and suspension, underpayment of overtime pay, and non-payment of emergency cost of living allowance (ECOLA), with prayers for reinstatement and payment of full backwages. The complaint was docketed as NLRC NCR Case No. 00-02-01351-05.

Meanwhile, an entrapment operation was conducted by the police during which Jayde and Helario were caught allegedly attempting to sell to an operative an ultrasound probe worth around P400,000.00 belonging to Blue Sky. On April 22, 2005, Quezon City Inquest Prosecutor Arleen Tagaban issued a resolution[15] recommending the filing in court of criminal charges against Jayde and Helario.

On May 2005, before the complaint which was filed with the NLRC can be resolved, Helario, Jayde and Wilfredo executed affidavits of desistance[16] stating therein that their termination by Blue Sky was for cause and after observance of due process.

The Ruling of the Labor Arbiter

On November 17, 2005, Labor Arbiter Gaudencio P. Demaisip, Jr. (LA Demaisip) dismissed the complaint relative to Helario, Jayde and Wilfredo as a consequence of their filing of the affidavits of desistance. As to Arlene and Joseph, LA Demaisip denied their claims of illegal suspension and dismissal and for payment of ECOLA and overtime pay based on the following grounds: [T]he duties of Ms. Blas [Arlene] was to take out stocks. Also, Mr. Silvano's [Joseph] work consisted of removing, storing, or furnishing of stocks or supplies.

Further, Ms. Blas [Arlene] was tasked to make written monitoring of stocks or supplies.

Complainants therefore, are charged with the care and custody of respondents' property. They may not be given such functions or allowed entrance and exit from respondents' bodega if they were untrustworthy.

Indeed, the functions consisting of removing, storing, furnishing, monitoring and gaining ingress to and egress from the bodega, where the stocks or supplies are kept, involved trust and confidence.

Article 282 of the Labor Code allows the employer to terminate the services of the employees, among others, for breach of trust and confidence.

Loss of confidence however, apply (sic) to the following: x x x (2) to those situations where the employee is routinely

charged with the care and custody of the employer's money or property such as auditors, cashier; property custodians, or those who regularly handle significant amount of money or property.

The dismissal must rest on actual breach of duty committed by the employee.

Further, proof beyond reasonable doubt is not necessary. It is sufficient if there is some basis for such loss of confidence.

xxx

The basis, for the dismissal of the complainants, is the fact that six (6) pairs of assorted sizes of Intensifying Screen of the company at the bodega were lost x x x.

An entrapment was conducted against Tano-an [Jayde] and Adonis [Helario] x x x:

xxx

Simply put, the contention, about the missing items or supplies, is credible and reliable.

It is not necessary that proof of taking or conspiracy must exist.

The existence of the fact, that items or supplies were missing at the bodega of the company, would suffice to prove loss of confidence.

Complainants failed in their duties to exercise utmost protection, care, or custody of respondent's property. Hence, their dismissal from the service is warranted.

xxx

Claims for ECOLA and overtime pay were not discussed by the complainants[,] hence, they should be denied.[17]

Arlene and Joseph assailed before the NLRC the decision rendered by LA Demaisip.[18]

The Rulings of the NLRC

On November 29, 2007, the NLRC ordered the reinstatement of Arlene and Joseph and the payment to them of full backwages and ten percent attorney's fees. The decision, in part, reads: [T]he respondents [Blue Sky, Jose and Linda] accused complainants [Arlene and Joseph] of theft of company property. It was, thus, incumbent upon the respondents to prove the alleged theft by the appellants [Arlene and Joseph] with clear and substantial evidence. A reading of the record will, however, show that respondents have not presented any evidence to show the involvement of the

complaint [sic] Arlene Blas and Joseph Silvano x x x in the theft. To start with, appellants were not caught red handed. No specific acts or deeds were imputed upon appellants to prove the allegation that they committed theft against the respondents. While there may be articles which may have been lost, the respondents have not shown how these were lost and how appellants participated in the theft. The fact that appellants had access to the lost items is not sufficient to prove their guilt. As shown, there were several other persons who had unlimited access to the warehouse where the items stolen were stacked. No witnesses were also presented implicating appellants in the theft.

As it is, all respondents have are general allegations that appellants conspired with the other complainants in stealing the lost items. Allegations, no matter how convincing they may sound, while they remain to be so, cannot be considered as clear and substantial evidence sufficient to justify the dismissal of an employee. While proof beyond reasonable doubt is not required, still respondents should have presented substantial evidence to support the grounds they have relied upon. x x x

xxx

Finally, [w]e do not see appellants as holding positions of trust and confidence. Before an employee may be dismissed due to willful breach of trust, he must hold a position of trust and confidence (Estiva [v]s. NLRC, G.R. No. 95145, August 5, 1993). A position of trust and confidence is one where a person is entrusted with confidence on delicate matters, or with the custody, handling, or care and protection of the employers

property (Panday vs. NLRC, G.R. No. 67664, May 20, 1994) and/or funds (Gonzales vs. NLRC, 335 SCRA 197).

Appellant Arlene Blas is a Stock Clerk while Joseph Silvano is a warehouse helper. While they may have access to the lost items, they were not entrusted with confidence on delicate matters or custody of the employer's property. They do not have the authority to withdraw, transfer or release items in the warehouse. They are mere low keyed employees who deal with the handling of stocks only when ordered to by their superiors.[19]

Both parties filed their motions for reconsideration [20] to the foregoing.

Claiming that their relations with Blue Sky had been strained, Arlene and Joseph sought the payment of separation pay, in lieu of reinstatement. Further, they lamented that the NLRC failed to specifically address the issue relative to their monetary claims. Hence, they reiterated the said claims, in addition to service incentive leave and 13th month pay for the year 2005, arguing that the burden to prove payment of benefits pertained to Blue Sky which miserably failed in this regard.

On the other hand, Blue Sky averred that substantial evidence existed to support its claim that Arlene and Joseph participated in, or at the least knew about, the theft of the missing screens.

On January 30, 2009, the NLRC issued a resolution reversing its earlier decision and reinstating LA Demaisip's dismissal of the complaint filed by Arlene and Joseph on the basis of the following: In our Decision promulgated on November 29, 2007, we advanced the view that complainants Blas [Arlene] and Silvano [Joseph] were ordinary employees not occupying positions of trust, without however taking a profound appreciation of the fact that complainants' duties as stock clerk and warehouse helper routinely involved having unlimited access to company's properties and stocks. The fact that same properties which were subject of losses and thievery as established from the subsequent entrapment operations conducted by the respondents with the assistance of PNP operatives against the two (2) other complainants, namely Jayde [Tano-an] and Helario Adonis, who are presently facing charges for attempting to sell respondents' property, convinced this Commission to reconsider its previous finding and be in agreement with the respondents' position.

xxx

While we are not unmindful of the fact that complainants Blas and Silvano were not part of the group who were apprehended during the entrapment operations, however, had they not been remiss in their respective duties [as] stock clerk and warehouse helper or not aided their former co-workers Tano-an and Adonis, thievery or losses of company's property could not have been committed.

xxx

The loss of company's property having been substantially proven, complainants Blas [Arlene] and Silvano [Blas] cannot just make a general denial and wash their hands clean. Their termination not only due to loss of trust but also for gross neglect of duties is therefore found justified. xxx

xxx

Finally, as regards complainants' claim for alleged unpaid 13th month pay and service incentive leave pay for 2005, contrary evidence however showed that respondents [Blue Sky] had paid the said claims as shown by the payment of their final monetary benefits which the complainants had duly received.[21]

Aggrieved, Arlene and Joseph filed before the CA a Petition for Certiorari[22] under Rule 65 of the Rules of Court to challenge the above quoted NLRC resolution.

The Ruling of the CA

In the decision rendered on October 26, 2009, which is now the subject of the instant petition, the CA found merit in the claims advanced by Arlene and Joseph. In reversing the January 30, 2009 Resolution of the NLRC, the CA ratiocinated that: Prefatorily, the basic requisite for dismissal on the ground of loss of trust and confidence is that the employee concerned must be one holding a position of trust and

confidence. A position of trust and confidence is one where a person is entrusted with confidence on delicate matters, or with the custody, handling or care and protection of the employer's property. And, in order to constitute a just cause for dismissal, the act complained of must be work-related and shows that the employee concerned is unfit to continue to work for the employer.

In General Bank and Trust Company vs. Court of Appeals, the Supreme Court laid down the following guidelines for the application of the doctrine of loss of confidence as a justification in the termination of erring employees, viz:

(a) loss of confidence which should not be simulated; (b) it should not be used as a subterfuge for causes which are improper, illegal or unjustified; (c) it should not be arbitrarily asserted in the face of overwhelming evidence to the contrary; and (d) it must be genuine, not a mere afterthought to justify earlier action taken in bad faith.

xxx

To [o]ur mind, the NLRC is correct insofar as it considered the nature of [p]etitioner BLAS and [p]etitioner SILVANO as stock clerk and warehouse helper, respectively, as positions of trust and confidence. On account of their positions in the company, the [p]etitioners were given access to the [r]espondents' warehouse w[h]ere the company products and goods are kept. Likewise, by the nature of the work the [p]etitioners performed for the [r]espondents, it is logical to conclude that the former were charged with the custody of [r]espondents' property,

thus making their positions as one reposed with trust and confidence.

However, [w]e hold that the [r]espondents failed to sufficiently establish the charge against [p]etitioners which was the basis for its loss of trust and confidence that warranted their dismissal. Concededly, it is settled that proof beyond reasonable doubt is not required in dismissing an employee on the ground of loss of trust and confidence. It is sufficient that there is some basis for such loss of confidence or that there must be some reasonable grounds to believe, if not 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 trust and confidence demanded by his position. However, loss of confidence as a valid cause to terminate an employee must nonetheless rest on actual breach of duty committed by the employee and not on the employer's imagined whim or caprice.

Verily, [w]e are convinced that the [r]espondents failed to adduce any substantial proof showing that the [p]etitioners committed an actual breach of their duty which destroyed the trust and confidence reposed upon them by their employer. Clearly, there is no ample evidence to show that [p]etitioners conspired with the thieves in stealing six (6) pairs of intensifying screens from [r]espondents['] warehouse. Nor is there any shred of evidence that tends to prove that the [p]etitioners had a direct hand in the larceny committed against the [r]espondents. In fact, the verity of the [p]etitioners' innocence on the thievery committed against the [r]espondents was recognized by the NLRC in the assailed Resolution, viz:

xxx

While we are not unmindful of the fact that complainants Blas [Arlene] and Silvano [Joseph] were not part of the group who were apprehended during the entrapment operations, however, had they not been remiss in their respective duties [as] stock clerk and warehouse helper or not aided their former coworkers Tano-an and Adonis, thievery or losses of company's property could not have been committed. x x x

xxx

The ratiocination of the NLRC in reversing its initial pronouncement is that the [p]etitioners were remiss in their duty is flawed. It bears noting that the NLRC offered no explanation to justify this finding nor is there any scintilla of evidence in the records to support the conclusion that the [p]etitioners had aided, expressly or impliedly, their former co-workers in committing theft against the company.[23] (Citations omitted)

The CA denied the petitioners' motion for reconsideration, hence, the instant petition.

The Issues

The petitioners submit the following for resolution: I.

WHETHER OR NOT THE EVIDENCE ADDUCED BEFORE THE NLRC BY PETITIONERS ARE SUFFICIENT TO ESTABLISH THE CHARGES WHICH WAS (sic) BASIS FOR THE LOSS OF TRUST AND CONFIDENCE AGAINST RESPONDENTS[-]EMPLOYEES.

II.

WHETHER OR NOT THE CA WAS CORRECT IN GRANTING THE PETITION FOR CERTIORARI FILED BY RESPONDENTS AND LATER, DENYING PETITIONERS' MOTION FOR RECONSIDERATION.[24]

The Petitioners' Arguments

In Salvador v. Philippine Mining Service Corporation,[25] it was ruled that proof beyond reasonable doubt of the employee's misconduct or dishonesty is not required to justify loss of confidence, it being sufficient that there is substantial basis for loss of trust. Thus, an employer should not be held liable for dismissing the services of an employee sincerely believed to have at least known or participated in the commission of theft against company property. The employer is not required to present proofs of the employee's actual taking or unlawful possession of company property. In fact, in Dole Philippines, Inc. v. NLRC, et al., [26] the court held that where the dismissal for loss of confidence is

based on suspected theft of company property on the part of the employee, it remains a valid cause for dismissal even if the employee is subsequently acquitted.

It is immaterial that Arlene and Joseph were not among those who were entrapped attempting to sell an ultrasound probe to a police operative. The nature of their tasks at Blue Sky and the fact of loss of the intensifying screens dictated Arlene and Joseph's liabilities. Arlene's daily work routine involved (a) receiving and releasing of stocks; and (b) preparing stock cards for purposes of checking and monitoring the items in the warehouse. On the other hand, Joseph carried and moved stocks in and out of the warehouse. The six intensifying screens were discovered missing while Arlene, Joseph, Helario, Jayde and Wilfredo were supposedly performing their tasks, hence, the logical inference that they conspired to commit the theft or at least, knowingly allowed it to happen. Had the employees exercised due or even ordinary diligence to protect company property, no loss would have been incurred. Further, the defense interposed by Arlene in her written explanation that she was not employed by Blue Sky as a security guard, showed her utter lack of concern for the company's welfare, which rendered her undeserving of an employer's trust and confidence.

Findings of fact of quasi-judicial agencies, like the NLRC, are accorded not only respect but even finality when they are supported by substantial evidence.[27] Thus, the CA erred when it ruled that the NLRC gravely abused its discretion in ordering the dismissal of the respondents' complaint.

The Respondents' Contentions

In their Comment,[28] the respondents cited Section 1, Rule 45 of the Rules of Court to argue that only questions of law can be raised in a petition for review on certiorari. In the case at bar, the petitioners raise a factual question, to wit, the alleged sufficiency of the evidence they presented to justify the dismissal of Arlene and Joseph on the basis of loss of trust and confidence. The petitioners thus call for an examination of the probative value of the evidence offered by the parties, which is beyond the province of a petition filed under Rule 45 of the Rules of Court.

This Court's Ruling While a petition for review on certiorari under Rule 45 of the Rules of Court generally precludes us from resolving factual issues, the instant case falls among the exceptions as the LA, the NLRC and the CA were at odds as to their findings.

We deem it proper to first resolve the procedural challenge interposed by the respondents against the instant petition and we find it lacking in merit.

It bears stating that Rule 45 limits us merely to the review of questions of law raised against the assailed CA decision. [29] Further, the Court is generally bound by the CA's factual findings. The foregoing rules, however, admit of exceptions, among which is when the CA's findings are contrary to those

of the trial court or administrative body exercising quasi-judicial functions from which the action originated. [30] The case before us now falls under the aforementioned exception as the LA, NLRC and the CA were at odds as to their findings. Substantial evidence of actual breach by an employee is required from an employer to be able to justify the former's dismissal from service on the basis of an alleged participation in theft of company property. However, in the case at bar, Blue Sky had failed to discharge the burden of proof imposed upon it.

We note that the petitioners essentially raise the sole question of whether they had proven by substantial evidence the charges of theft against Arlene and Joseph which led to the latter's termination from service on the ground of loss of trust and confidence.

We rule in the negative.

In Functional, Inc. v. Samuel Granfil,[31] we declared: The rule is long and well settled that, in illegal dismissal cases like the one at bench, the burden of proof is upon the employer to show that the employees termination

from service is for a just and valid cause. The employers case succeeds or fails on the strength of its evidence and not on the weakness of that adduced by the employee, in keeping with the principle that the scales of justice should be tilted in favor of the latter in case of doubt in the evidence presented by them. Often described as more than a mere scintilla, the quantum of proof is substantial evidence which is understood as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion, even if other equally reasonable minds might conceivably opine otherwise. Failure of the employer to discharge the foregoing onus would mean that the dismissal is not justified and therefore illegal.

Further, in Baron v. NLRC,[32] we held that for there to be a valid dismissal based on loss of trust and confidence, the breach of trust must be willful, meaning it must be done intentionally, knowingly, and purposely, without justifiable excuse.

In the case at bar, we agree with the petitioners that mere substantial evidence and not proof beyond reasonable doubt is required to justify the dismissal from service of an employee charged with theft of company property. However, we find no error in the CA's findings that the petitioners had not adequately proven by substantial evidence that Arlene and Joseph indeed participated or cooperated in the commission of theft relative to the six missing intensifying screens so as to justify the latter's termination from employment on the ground of loss of trust and confidence.

Blue Sky alleged that Arlene, who was a stock clerk, and Joseph, a warehouse helper, had free access to the missing items. Arlene,

who kept the stock cards, was supposed to be monitoring on a daily basis the incoming and outgoing stocks stored in or taken out of the warehouse. Joseph took the stocks from the warehouse to the vehicles for transport or delivery purposes. Arlene and Joseph averred otherwise. They insisted that they were mere lowly employees who did not have actual custody of company property, specifically, of the missing items. Arlene claimed that she was not responsible for conducting inventories and that she released stocks only when urgently necessary and only in the absence of those authorized to do so. Joseph alleged that he only went to the mezzanine, where the missing items were stored, when ordered to do so by his superiors.

We note that the parties disagree as to what tasks were actually and regularly performed by Arlene and Joseph. They are at odds as to the issue of whether or not Arlene and Joseph had custody of the missing screens. We observe though that neither of the parties presented any documentary evidence, such as employment contracts, to establish their claims relative to the actual nature of Arlene and Joseph's daily tasks. It bears emphasizing though that the photocopies of the identification cards issued by Blue Sky, which were annexed to the respondents' position paper filed with the LA, indicated that Arlene was assigned at the customer service department while Joseph was part of the warehouse department.[33]

During the entrapment operation conducted by police operatives, Jayde and Helario were caught attempting to sell an ultrasound probe allegedly belonging to Blue Sky. Thereafter, Jayde, Helario and Wilfredo withdrew their complaints for illegal dismissal against the company. Arlene and Joseph, however, pursued their claims. Nonetheless, Blue Sky construed the result of the entrapment operation to mean that there was a conspiracy among the five employees to commit theft of company property.

In the reply filed by the petitioners to the respondents' position paper filed before the LA, the former alleged that in a letter, Jayde, Helario and Wilfredo implicated Arlene and Joseph as participants and conspirators in the commission of theft. [34] However, we note that the petitioners' allegation was bare since the letter supposedly written by Jayde, Helario and Wilfredo was not offered as evidence. Further, Blue Sky alleged that the ultrasound probe was among the items found missing in the inventory conducted in December 2004. We observe though that the employees were dismissed for alleged theft of six intensifying screens. In the termination notices, no references were made at all to a missing ultrasound probe.

Further, we notice that both parties mentioned a certain Boy who conducted the inventory in October 2004. There is no dispute that at that time, the six intensifying screens were still completely accounted for. Further, Arlene and Joseph claimed that it was Lorna who had control and custody of the stocks as she was the warehouse supervisor. Boy and Lorna were not called upon by either of the parties to corroborate their claims. Boy and Lorna could have provided important information as to the time line and the manner the intensifying screens were lost. If Boy and Lorna remain under Blue Sky's employ, it is the company which is in a better position to require the two to execute affidavits relative to what they know about the missing screens.

The petitioners also argue that if Arlene and Joseph had not been grossly negligent in the performance of their duties, Blue Sky would not have incurred the loss. We observe though that in the notices sent to Arlene and Joseph, first charging them with theft, and later, informing them of their dismissal from service, gross negligence was not stated therein as a ground. Hence, Arlene and Joseph could not have defended themselves against the charge of

gross negligence. They cannot be dismissed on that ground lest due process be violated.

Only the following had been established without dispute: (a) the fact of loss of the six intensifying screens; (b) an entrapment operation was successfully conducted by the police operatives who caught Jayde and Helario in the act of attempting to sell an ultrasound probe which allegedly belonged to Blue Sky; and (c) Jayde, Helario and Wilfredo filed their affidavits of desistance to withdraw their complaints for illegal dismissal against Blue Sky while Arlene and Joseph pursued their complaints.

In its November 29, 2007 Decision, the NLRC found that Arlene and Joseph, a stock clerk and a warehouse helper, respectively, did not have unlimited access to or custody over Blue Sky's property. The CA, in the decision and resolution assailed herein, while ordering the reinstatement of the November 29, 2007 NLRC Decision, found that Arlene and Joseph exercised custody over company property. Be that as it may, we observe that the nature of Arlene and Joseph's regular duties while under Blue Sky's employ and their specific participation in or knowledge of the theft of the intensifying screens remain uncertain. Thus, whether or not Arlene and Joseph had actual custody over company property, we agree with the CA that the petitioners had failed to establish by substantial evidence the charges which led to Arlene and Joseph's dismissal from service.

While we empathize with Blue Sky's loss and understand that its actions were merely motivated by its intent to protect the interests of the company, no blanket authority to terminate all employees whom it merely suspects as involved in the commission of theft resides in its favor. We thus reiterate the doctrine enunciated in Functional, Inc.[35] that the employers case

succeeds or fails on the strength of its evidence and not on the weakness of that adduced by the employee, in keeping with the principle that the scales of justice should be tilted in favor of the latter in case of doubt in the evidence presented by them.

Notwithstanding our affirmation of the CA's petitioners had failed to discharge the burden upon them to justify the dismissal of Arlene and it proper to modify the assailed decision and manner to be discussed hereunder.

finding that the of proof imposed Joseph, we deem resolution in the

Blue Sky committed no impropriety in imposing preventive suspension against Arlene and Joseph pending investigation of the theft allegedly committed against the company.

We, however, find no merit in the challenge made by Arlene and Joseph against the legality of the preventive suspension imposed by Blue Sky upon them pending the investigation of the alleged theft.

In Mandapat v. Add Force Personnel Services, Inc.,[36] we explained that preventive suspension may be legally imposed on an employee whose alleged violation is the subject of an investigation. The purpose of the suspension is to prevent an employee from causing harm or injury to his colleagues and to the employer. The maximum period of suspension is 30 days, beyond

which the employee should either be reinstated or be paid wages and benefits due to him.

In Arlene and Joseph's case, Blue Sky issued to them notices to explain on February 3, 2005. They submitted their written explanation the day after and they were dismissed from service on February 5, 2005. While we do not agree with Blue Sky's subsequent decision to terminate them from service, we find no impropriety in its act of imposing preventive suspension upon the respondents since the period did not exceed the maximum imposed by law and there was a valid purpose for the same. In lieu of reinstatement, Arlene and Joseph are entitled to an award of separation pay.

If reinstatement proves impracticable, and hardly in the best interest of the parties, perhaps due to the lapse of time since the employees dismissal, or if the employee decides not to be reinstated, the latter should be awarded separation pay in lieu of reinstatement.[37]

In the case at bar, Arlene and Joseph were dismissed from service on February 5, 2005. We find that the lapse of more than seven years already renders their reinstatement impracticable. Further, from the stubborn stances of the parties, to wit, the petitioners' insistence that dismissal was valid on one hand, and the respondents' express prayer for the payment of separation pay on the other, we find that reinstatement would no longer be in the best interest of the contending parties.

Arlene and Joseph are entitled to the payment of ECOLA, but not to 13th month, service incentive leave and overtime pay.

It is well-settled that in labor cases, the burden of proving payment of monetary claims rests on the employer. [38]

We find nothing in the records to indicate that the petitioners had indeed paid ECOLA to Arlene and Joseph.

In the resolution issued on January 30, 2009, the NLRC found proof by way of the petitioners' annex to their position paper that Arlene and Joseph already received their 13 thmonth and service incentive leave pay for the year 2005.[39] The respondents had not specifically refuted the NLRC's findings, hence, we sustain the same.

Anent the respondents' claim for overtime pay, we find no ample basis to grant it as they had not offered any proof to show that they in fact rendered such service.

The decision rendered by the NLRC on November 29, 2007, which the CA affirmed, did not

award in favor of Arlene and Joseph moral and exemplary damages. Consequently, we delete the award in the respondents' favor of ten percent attorney's fees.

If there is no evidence to show that the dismissal of an employee had been carried out arbitrarily, capriciously and maliciously and with personal ill-will, moral damages cannot be awarded. [40] If moral damages cannot be awarded, the consequence is that there can also be no award of exemplary damages and attorney's fees. [41]

In the case at bar, albeit we find Arlene and Joseph's dismissal from service as illegal, we cannot attribute bad faith on the part of Blue Sky which merely acted with an intent to protect its interest. Hence, we find as lacking in basis the NLRC's award of ten percent attorney's fees in the respondents' favor. Jose and Linda cannot be held solidarily liable for the dismissal of Arlene and Joseph in the absence of proof that they acted with malice and bad faith.

As a general rule, a corporate officer cannot be held liable for acts done in his official capacity because a corporation, by legal fiction, has a personality separate and distinct from its officers,

stockholders, and members.[42] In illegal dismissal cases, corporate officers may only be held solidarily liable with the corporation if the termination was done with malice or bad faith. [43] We find that the aforementioned circumstance did not obtain in the case of Jose and Linda relative to Arlene and Joseph's dismissal from service.

IN VIEW OF THE FOREGOING, the October 26, 2009 Decision and December 14, 2009 Resolution issued by the Court of Appeals, finding that the dismissal from service of respondents Arlene and Joseph was illegal and awarding in their favor full backwages, are AFFIRMED but with the following MODIFICATIONS:

(a) Blue Sky is directed to pay ECOLA and separation pay to the respondents;

(b) The award in favor of the respondents of ten percent attorney's fees made by the National Labor Relations Commission in its November 29, 2007 Decision and which was affirmed by the Court of Appeals in the herein assailed decision and resolution is deleted; and

(c) Pursuant to our ruling in Eastern Shipping Lines, Inc. v. CA, [44] an interest of 12% per annum is imposed on the total sum of the monetary award to be computed from the date of finality of this Decision until full satisfaction thereof.

The case is remanded to the National Labor Relations Commission which is hereby ORDERED to COMPUTE the

monetary benefits awarded in accordance with this Decision and to submit its compliance thereon within thirty (30) days from notice hereof.

Republic of the Philippines

Supreme Court Manila SECOND DIVISION CANADIAN OPPORTUNITIES UNLIMITED, INC., Petitioner,

G.R. No. 172223 Present: CARPIO, J., Chairperson, BRION, PEREZ,

- versus -

SERENO, and REYES, JJ. Promulgated: BART Q. DALANGIN, JR., Respondent.

February 6, 2012

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

DECISION BRION, J.:

For resolution is the petition for review on certiorari[1] to nullify the decision dated December 19, 2005[2] and the resolution dated March 30, 2006[3] of the Court of Appeals (CA) rendered in CA-G.R. SP No. 84907.

The Antecedents

On November 20, 2001, respondent Bart Q. Dalangin, Jr. filed a complaint for illegal dismissal, with prayer for reinstatement and backwages, as well as damages (moral and exemplary) and attorneys fees, against petitioner Canadian Opportunities Unlimited, Inc. (company). The company, based in Pasong Tamo, Makati City, provides assistance and related services to applicants for permanent residence in Canada.

Dalangin was hired by the company only in the previous month, or in October 2001, as Immigration and Legal Manager, with a monthly salary of P15,000.00. He was placed on probation for six months. He was to report directly to the Chief Operations Officer, Annie Llamanzares Abad. His tasks involved principally the review of the clients applications for immigration to Canada to ensure that they are in accordance with Canadian and Philippine laws.

Through a memorandum[4] dated October 27, 2001, signed by Abad, the company terminated Dalangins employment, declaring him unfit and unqualified to continue as Immigration and Legal Manager, for the following reasons: a)

Obstinacy and utter disregard of company policies. Propensity to take prolonged and extended lunch breaks, shows no interest in familiarizing oneself with the policies and objectives.

b)

Lack of concern for the companys interest despite having just been employed in the company. (Declined to attend company sponsored activities, seminars intended to familiarize company employees with Management objectives and enhancement of company interest and objectives.)

c)

d)

Showed lack of enthusiasm toward work.

Showed lack of interest in fostering relationship with his co-employees.[5]

The Compulsory Arbitration Proceedings

Dalangins submission

Dalangin alleged, in his Position Paper, [6] that the company issued a memorandum requiring its employees to attend a Values Formation Seminar scheduled for October 27, 2001 (a Saturday) at 2:00 p.m. onwards. He inquired from Abad about the subject and purpose of the seminar and when he learned that it bore no relation to his duties, he told Abad that he would not attend the seminar. He said that he would have to leave at 2:00 p.m. in order to be with his family in the province. Dalangin claimed that Abad insisted that he attend the seminar so that the other employees would also attend. He replied that he should not be treated similarly with the other employees as there are marked differences between their respective positions and duties. Nonetheless, he signified his willingness to attend the seminar, but requested Abad to have it conducted within office hours to enable everybody to attend.

Dalangin further alleged that Abad refused his request and stressed that all company employees may be required to stay beyond 2:00 p.m. on Saturdays which she considered still part of office hours. Under his employment contract, [7] his work schedule was from 9:00 a.m. to 6:00 p.m., Monday to Friday, and 9:00 a.m. to 2:00 p.m. on Saturdays. Dalangin argued that it has been an established company practice that on Saturdays, office hours end at 2:00 p.m.; and that an employee cannot be made to stay in the office beyond office hours, except under circumstances provided in Article 89 of the Labor Code.

On October 26, 2001, Dalangin claimed that Abad issued a memorandum[8] requiring him to explain why he could not attend the seminar scheduled for October 27, 2001 and the other forthcoming seminars. The following day, October 27, 2001, Abad informed him that Mr. Yadi N. Sichani, the companys Managing Director, wanted to meet with him regarding the matter. He alleged that at the meeting, he was devastated to hear from Sichani that his services were being terminated because Sichani could not keep in his company people who are hard-headed and who refuse to follow orders from management. [9] Sichani also told him that since he was a probationary employee, his employment could be terminated at any time and at will. Sichani refused to accept his letter-reply to the company memorandum dated October 26, 2001 and instead told him to just hand it over to Abad.

The companys defense

Through their position paper,[10] the company and its principal officers alleged that at the time of Dalangins engagement, he was advised that he was under probation for six months and his employment could be terminated should he fail to meet the standards to qualify him as a regular employee. He was informed that he would be evaluated on the basis of the results of his work; on his attitude towards the company, his work and his coemployees, as spelled out in his job description; [11] and on the basis of Abads affidavit.[12]

They further alleged that during his brief employment in the company, Dalangin showed lack of enthusiasm towards his work and was indifferent towards his co-employees and the company

clients. Dalangin refused to comply with the companys policies and procedures, routinely taking long lunch breaks, exceeding the one hour allotted to employees, and leaving the company premises without informing his immediate superior, only to call the office later and say that he would be unable to return because he had some personal matters to attend to. He also showed lack of interpersonal skills and initiative which he manifested when the immigration application of a company client, Mrs. Jennifer Tecson, was denied by the Canadian Embassy. Dalangin failed to provide counsel to Tecson; he also should have found a way to appeal her denied application, but he did not. As it turned out, the explanation he gave to Tecson led her to believe that the company did not handle her application well. Dalangins lack of interest in the company was further manifested when he refused to attend company-sponsored seminars designed to acquaint or update the employees with the companys policies and objectives.

The company argued that since Dalangin failed to qualify for the position of Immigration and Legal Manager, the company decided to terminate his services, after duly notifying him of the companys decision and the reason for his separation.

The Compulsory Arbitration Rulings

In his decision dated April 23, 2003,[13] Labor Arbiter Eduardo G. Magno declared Dalangins dismissal illegal, and awarded him backwages of P75,000.00, moral damages ofP50,000.00 and exemplary damages of P50,000.00, plus 10% attorneys fees. The labor arbiter found that the charges against Dalangin, which led to his dismissal, were not established by clear and substantial proof.

On appeal by the company, the National Labor Relations Commission (NLRC) rendered a decision on March 26, 2004[14] granting the appeal, thereby reversing the labor arbiters ruling. It found Dalangins dismissal to be a valid exercise of the companys management prerogative because Dalangin failed to meet the standards for regular employment. Dalangin moved for reconsideration, but the NLRC denied the motion, prompting him to go to the CA on a petition for certiorari under Rule 65 of the Rules of Court.

The CA Decision

In its now assailed decision,[15] the CA held that the NLRC erred when it ruled that Dalangin was not illegally dismissed. As the labor arbiter did, the CA found that the company failed to support, with substantial evidence, its claim that Dalangin failed to meet the standards to qualify as a regular employee.

Citing a ruling of the Court in an earlier case, [16] the CA pointed out that the company did not allow Dalangin to prove that he possessed the qualifications to meet the reasonable standards for his regular employment; instead, it dismissed Dalangin peremptorily from the service. It opined that it was quite improbable that the company could fully determine Dalangins performance barely one month into his employment. [17]

The CA denied the companys subsequent motion for reconsideration in its resolution of March 30, 2006. [18] Hence, this appeal.

The Companys Case

Through its submissions the Petition, [19] the Reply[20] and the Memorandum[21] the company seeks a reversal of the CA rulings, raising the following issues: (1) whether the requirements of notice and hearing in employee dismissals are applicable to Dalangins case; and (2) whether Dalangin is entitled to moral and exemplary damages, and attorneys fees.

On the first issue, the company argues that the notice and hearing requirements are to be observed only in termination of employment based on just causes as defined in Article 282 of the Labor Code. Dalangins dismissal, it maintains, was not based on a just cause under Article 282, but was due to his failure to meet the companys standards for regular employment. It contends that under the Labor Codes Implementing Rules and Regulations, [i]f the termination is brought about x x x by failure of an employee to meet the standards of the employer in the case of probationary employment, it shall be sufficient that a written notice is served the employee within a reasonable time from the effective date of termination.[22] It points out that it properly observed the notice requirement when it notified Dalangin of his dismissal on October 27, 2001,[23] after it asked him to explain (memorandum of October 26, 2001) why he could not attend the seminar scheduled for October 27, 2001; Dalangin failed to submit his explanation. It posits that contrary to the CAs conclusion, the companys finding that Dalangin failed to meet its standards for regular employment was supported by substantial evidence. With respect to the second issue, the company submits that Dalangin is not entitled to moral and exemplary damages, and attorneys fees. It maintains that Dalangin failed to present convincing evidence establishing bad faith or ill-motive on its part. It insists that it dismissed Dalangin in good faith with the belief that he would not contribute any good to the company, as manifested by his behavior towards his work and co-employees.

The Case for Dalangin

Through his Comment[24] and Memorandum,[25] Dalangin asks the Court to deny the petition. He argues that (1) probationary employees, under existing laws and jurisprudence, are entitled to notice and hearing prior to the termination of their employment; and (2) he is entitled to moral and exemplary damages, and attorneys fees.

Dalangin disputes the companys submission that under the Labor Codes implementing rules, only a written notice is required for the dismissal of probationary employees. He argues that the rules cited by the company clearly mandate the employer to (1) serve the employee a written notice and (2) within a reasonable time before effecting the dismissal. He stresses that for the dismissal to be valid, these requirements must go hand in hand.

He explains that in the present case, the company did not observe the above two requirements as he was dismissed the day after he was asked, by way of a memorandum dated October 26, 2001,[26] to explain within twenty-four hours why he could not attend the October 27, 2001 seminar. He adds that on the assumption that the termination letter datedOctober 27, 2001 refers to the written notice contemplated under the rules, still the company did not observe the second requirement of providing him a reasonable time before he was dismissed. He posits that the company disregarded the security of tenure guarantee under the Constitution which makes no distinction between regular and probationary employees.

On the companys claim that he failed to perform in accordance with its standards, Dalangin argues that a perusal of the grounds in support of his dismissal reveals that none of the charges leveled against him is supported by concrete and tangible evidence. He maintains that the company miserably failed to cite a single company policy which he allegedly violated and defied. He refutes the companys claim that his job description and his employment contract apprise him of the company policy that he is to observe for the duration of his employment. He, thus, maintains that he had not been previously informed of the company standards he was supposed to satisfy. He stresses that the CA did not err in holding that the companys general averments regarding his failure to meet its standards for regular employment were not corroborated by any other evidence and, therefore, are insufficient to justify his dismissal.

Dalangin insists that he is entitled to backwages, moral and exemplary damages, as well as attorneys fees, claiming that his dismissal was unjust, oppressive, tainted with bad faith, and contrary to existing morals, good customs and public policy. There was bad faith, he argues, because he was dismissed without the requisite notice and hearing required under the law; and merely on the basis of the companys bare, sweeping and general allegations that he is difficult to deal with and that he might cause problems to the companys future business operations. He is entitled to attorneys fees, he submits, because he was forced to litigate and vindicate his rights.

He bewails what he considers as a pre-conceived plan and determined design[27] on the part of Sichani and Abad to immediately terminate his employment. Elaborating, he points out that the company, through Abad, prepared two memoranda, both dated October 26, 2001, one is the memo to him requiring his written explanation[28] and the other, addressed to Sichani,

recommending his dismissal.[29] He was surprised that Sichani did not bother to ask Abad why she gave him two conflicting memos on the same day; neither did Sichani or Abad investigate the surrounding circumstances on the matter nor did they give him the opportunity to explain his side.

The Courts Ruling

As a rule, the Court is not a trier of facts, the resolution of factual issues being the function of lower courts whose findings are received with respect and are binding on the Court subject to certain exceptions.[30] A recognized exception to the rule is the circumstance in which there are conflicting findings of fact by the CA, on the one hand, and the trial court or government agency concerned, on the other, as in the present case. The factual findings of the NLRC on the dispute between Dalangin and the company are at variance with those of the CA, thus necessitating our review of the case, especially the evidence on record. [31]

We now resolve the core issue of whether Dalangin, a probationary employee, was validly dismissed.

In International Catholic Migration Commission v. NLRC, [32] the Court explained that a probationary employee, as understood under Article 281 of the Labor Code, is one who is on trial by an employer, during which, the latter determines whether or not he is qualified for permanent employment. A probationary appointment gives the employer an opportunity to observe the fitness of a probationer while at work, and to ascertain whether he would be a proper and efficient employee.

Dalangin was barely a month on the job when the company terminated his employment. He was found wanting in qualities that would make him a proper and efficient employee or, as the company put it, he was unfit and unqualified to continue as its Immigration and Legal Manager.

Dalangins dismissal was viewed differently by the NLRC and the CA. The NLRC upheld the dismissal as it was, it declared, in the exercise of the companys management prerogative. On the other hand, the CA found that the dismissal was not supported by substantial evidence and that the company did not allow Dalangin to prove that he had the qualifications to meet the companys standards for his regular employment. The CA did not believe that the company could fully assess Dalangins performance within a month. It viewed Dalangins dismissal as arbitrary, considering that the company had very little time to determine his fitness for the job.

We disagree.

The essence of a probationary period of employment fundamentally lies in the purpose or objective of both the employer and the employee during the period. While the employer observes the fitness, propriety and efficiency of a probationer to ascertain whether he is qualified for permanent employment, the latter seeks to prove to the former that he has the qualifications to meet the reasonable standards for permanent employment.[33]

The trial period or the length of time the probationary employee remains on probation depends on the parties agreement, but it shall not exceed six (6) months under Article 281 of the Labor

Code, unless it is covered by an apprenticeship agreement stipulating a longer period. Article 281 provides: Probationary employment. Probationary employment shall not exceed six (6) months from the date the employee started working, unless it is covered by an apprenticeship agreement stipulating a longer period. The services of an employee who has been engaged on a probationary basis may be terminated for a just cause or when he fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the time of his engagement. An employee who is allowed to work after a probationary period shall be considered a regular employee.

As the Court explained in International Catholic Migration Commission, the word probationary, as used to describe the period of employment, implies the purpose of the term or period, but not its length.[34] Thus, the fact that Dalangin was separated from the service after only about four weeks does not necessarily mean that his separation from the service is without basis.

Contrary to the CAs conclusions, we find substantial evidence indicating that the company was justified in terminating Dalangins employment, however brief it had been.Time and again, we have emphasized that substantial evidence is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.[35]

Dalangin overlooks the fact, wittingly or unwittingly, that he offered glimpses of his own behavior and actuations during his four-week stay with the company; he betrayed his negative attitude and regard for the company, his co-employees and his work.

Dalangin admitted in compulsory arbitration that the proximate cause for his dismissal was his refusal to attend the companys Values Formation Seminar scheduled for October 27, 2001, a Saturday. He refused to attend the seminar after he learned that it had no relation to his duties, as he claimed, and that he had to leave at 2:00 p.m. because he wanted to be with his family in the province. When Abad insisted that he attend the seminar to encourage his co-employees to attend, he stood pat on not attending, arguing that marked differences exist between their positions and duties, and insinuating that he did not want to join the other employees. He also questioned the scheduled 2:00 p.m. seminars on Saturdays as they were not supposed to be doing a company activity beyond 2:00 p.m. He considers 2:00 p.m. as the close of working hours on Saturdays; thus, holding them beyond 2:00 p.m. would be in violation of the law.

The Values Formation Seminar incident is an eye-opener on the kind of person and employee Dalangin was. His refusal to attend the seminar brings into focus and validates what was wrong with him, as Abad narrated in her affidavit [36] and as reflected in the termination of employment memorandum. [37] It highlights his lack of interest in familiarizing himself with the companys objectives and policies. Significantly, the seminar involved acquainting and updating the employees with the companys policies and objectives. Had he attended the seminar, Dalangin could have broadened his awareness of the companys policies, in addition to Abads briefing him about the companys policies on punctuality and attendance, and the procedures to be

followed in handling the clients applications. No wonder the company charged him with obstinacy.

The incident also reveals Dalangins lack of interest in establishing good working relationship with his co-employees, especially the rank and file; he did not want to join them because of his view that the seminar was not relevant to his position and duties. It also betrays an arrogant and condescending attitude on his part towards his co-employees, and a lack of support for the company objective that company managers be examples to the rank and file employees.

Additionally, very early in his employment, Dalangin exhibited negative working habits, particularly with respect to the one hour lunch break policy of the company and the observance of the companys working hours. Thus, Abad stated that Dalangin would take prolonged lunch breaks or would go out of the office without leave of the company only to call the personnel manager later to inform the latter that he would be unable to return as he had to attend to personal matters. Without expressly countering or denying Abads statement, Dalangin dismissed the charge for the companys failure to produce his daily time record. [38]

The same thing is true with Dalangins handling of Tecsons application for immigration to Canada, especially his failure to find ways to appeal the denial of Tecsons application, as Abad stated in her affidavit. Again, without expressly denying Abads statement or explaining exactly what he did with Tecsons application, Dalangin brushes aside Abads insinuation that he was not doing his job well, with the ready argument that the company did not even bother to present Tecsons testimony.

In the face of Abads direct statements, as well as those of his co-employees, it is puzzling that Dalangin chose to be silent about the charges, other than saying that the company could not cite any policy he violated. All along, he had been complaining that he was not able to explain his side, yet from the labor arbiters level, all the way to this Court, he offered no satisfactory explanation of the charges. In this light, coupled with Dalangins adamant refusal to attend the companys Values Formation Seminar and a similar program scheduled earlier, we find credence in the companys submission that Dalangin was unfit to continue as its Immigration and Legal Manager. As we stressed earlier, we are convinced that the company had seen enough from Dalangins actuations, behavior and deportment during a four-week period to realize that Dalangin would be a liability rather than an asset to its operations.

We, therefore, disagree with the CA that the company could not have fully determined Dalangins performance barely one month into his employment. As we said inInternational Catholic Migration Commission, the probationary term or period denotes its purpose but not its length. To our mind, four weeks was enough for the company to assess Dalangins fitness for the job and he was found wanting. In separating Dalangin from the service before the situation got worse, we find the company not liable for illegal dismissal.

The procedural due process issue

Section 2, Rule I, Book VI of the Labor Codes Implementing Rules and Regulations provides:

If the termination is brought about by the completion of a contract or phase thereof, or by failure of an employee to meet the standards of the employer in the case of probationary employment, it shall be sufficient that a written notice is served the employee within a reasonable time from the effective date of termination.

The company contends that it complied with the above rule when it asked Dalangin, through Abads Memorandum dated October 26, 2001,[39] to explain why he could not attend the seminar scheduled for October 27, 2001. When he failed to submit his explanation, the company, again through Abad, served him a notice the following day, October 27, 2001, terminating his employment. Dalangin takes strong exception to the companys submission. He insists that the company failed to comply with the rules as he was not afforded a reasonable time to defend himself before he was dismissed.

The records support Dalangins contention. The notice served on him did not give him a reasonable time, from the effective date of his separation, as required by the rules. He was dismissed on the very day the notice was given to him, or, on October 27, 2001. Although we cannot invalidate his dismissal in light of the valid cause for his separation, the companys non-compliance with the notice requirement entitles Dalangin to indemnity, in the form of nominal damages in an amount subject to our discretion. [40] Under the circumstances, we consider appropriate an award of nominal damages of P10,000.00 to Dalangin.

Damages and attorneys fees

Finally, given the valid reason for Dalangins dismissal, the claim for moral and exemplary damages, as well as attorneys fees, must necessarily fail.

WHEREFORE, premises considered, the petition is hereby GRANTED. The assailed decision and resolution of the Court of Appeals are hereby SET ASIDE. The complaint isDISMISSED for lack of merit.

Petitioner Canadian Opportunities Unlimited, Inc. is DIRECTED to pay respondent Bart Q. Dalangin, Jr. nominal damages in the amount of P10,000.00.

Costs against the respondent.

SO ORDERED. SECOND DIVISION [G.R. No. 122876. February 17, 2000] CHENIVER DECO PRINT TECHNICS CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION (SECOND DIVISION), CFW-MAGKAKAISANG LAKAS NG MGA MANGGAGAWA SA CHENIVER DECO PRINT TECHNIC CORPORATION, EDGARDO VIGUESILLA, respondents. DECISION QUISUMBING, J.: This special civil action for certiorari seeks to annul the resolution of public respondent promulgated on May 31, 1995, in NLRC NCR CA 007946-94, and its resolution dated August 14, 1995, which denied petitioners motion for reconsideration. Petitioner is a duly organized corporation operating its printing business in Visita St., Barangay Sta. Cruz, Makati. Private respondent CFWMagkakaisang Lakas ng mga Manggagawa sa Cheniver Deco Print Technic Corporation is a registered labor union affiliated with the Confederation of Free Workers (CFW). Private respondent Edgardo Viguesilla and twenty-two (22) others are members of aforesaid union and former employees of petitioner. The records disclose that on June 5, 1992, petitioner informed its workers about the transfer of the company from its site in Makati to Sto. Tomas, Batangas. Petitioner decided to relocate its business in view of the expiration of the lease contract on the premises it occupied in Makati and the refusal of the lessor to renew the same. Earlier, the local authorities also took action to force out petitioner from Makati because of the alleged hazards petitioners plant posed to the residents nearby. In view of the impending transfer, petitioner gave its employees up to the end of June 1992 to inform management of their willingness to go with petitioner, otherwise, it would hire replacements. On June 27, 1992, petitioner reminded its workers of the following schedule to be followed:

June 29, 1992 - last day of operation in Makati July 1-31, 1992 - temporary shutdown to give way to transfer of operation August 1, 1992 - start of operation at new site in Sto. Tomas, Batangas. On August 4, 1992, petitioner wrote its employees to report to the new location within seven days, otherwise, they would be considered to have lost interest in their work and would be replaced. Five days later, the union advised petitioner that its members are not willing to go along with the transfer to the new site. Nonetheless, petitioner gave its workers additional time within which to report to the new work place. Later on, the labor federation informed petitioner that the employees decided to continue working for petitioner. However, not one reported for work at petitioners new site. It appears that several employees namely, Edgar Paquit, Dexter Mitschek, Nicanor Quebec, Maricris Polvorosa, Vicente Solis, Eugene De la Cruz, Rodel Gomez, Marylin Macaraig, Diomedis Poblio, Albert Pimentel, Marieta Ramos, Gilbert Saquibal, Marlon Tafalla, Eduardo Jolbitado, Solitario Andres, Maria Cecilia Perez and Wilfredo Flores, decided not to work at the new site but just opted to be paid financial assistance offered by petitioner. On the other hand, the remaining workers (private respondents herein) filed a complaint against petitioner for unfair labor practice, illegal dismissal, underpayment of wages, non-payment of legal holiday pay, 13th month pay, incentive leave pay and separation pay. On October 27, 1994, the labor arbiter rendered a decision declaring the transfer of petitioners operation valid and absolving petitioner of the charges of unfair labor practice and illegal dismissal. However, the labor arbiter directed petitioner to pay private respondents their separation pay and other money claims as well as attorneys fees, decreeing as follows: "WHEREFORE, premises considered, judgment is hereby rendered: 1. Declaring respondent company not guilty of unfair labor practice. (ULP); 2. Declaring respondent company not guilty of illegal dismissal and illegal lay-off but directing it to pay the individual complaints their separation pay, to wit:

a) Adeser, Tarcisio ----------- P 20,280.00 b) Albino, Silveria ----------- 36,816.00 c) Arizala, Imelda ----------- 18,408.00 d) Canares, Danilo ----------- 36,816.00 e) Carin, Elena ---------- 12,272.00 f) Cabanatan, Lourdes ----------- 9,204.00 g) Dizon, Juanito ----------- 12,272.00 h) Domingo, Salome -------- 24,544.00 i) Esguerra, Bonifacio ---------- 21,476.00 j) Famillaran, Benjamin ----------- 27,612.00 k) Gabucan, Amelia ------------ 15,340.00 l) Ibardolaza, Hadjie ------------- 21,476.00 m) Jores, Nelita ------------- 18,408.00 n) Largadas, Mario ------------- 9,204.00 o) Mitschek, Dexter ------------- 33,748.00 p) Paquit, Edgar ------------- 15,340.00 q) Panotes, Roel ------------- 12,272.00 r) Pedrigosa, Lerma ------------- 18,408.00 s) Pedrigosa, Liza ------------- 18,408.00 t) Ulzoron, Yolanda ------------- 9,204.00 u) Viguesilla, Edgardo ------------ 21,476.00 v) Viray, Ruel ---------------- 9,204.00

_____________ P 422,188.00 3. Directing respondent company to pay complainants the sum of P280,010.00 as to their other money claims aforestated, distributed as follows: a) Adeser, Tarcisio ---------------- P 5,330.00 b) Albino, Silveria -------------- 13,080.00 c) Arizala, Imelda -------------- 13,080.00 d) Canares, Danilo -------------- 13,080.00 e) Carin, Elena -------------- 13,080.00 f) Cabanatan, Lourdes ------------- 13,080.00 g) Dizon, Juanito -------------- 13,080.00 h) Domingo, Salome -------------- 13,080.00 i) Esguerra, Bonifacio ------------- 13,080.00 j) Famillaran, Benjamin ----------- 13,080.00 k) Gabucan, Amelia -------------- 13,080.00 l) Ibardolaza, Hadjie -------------- 13,080.00 m) Jores, Nelita -------------- 13,080.00 n) Largadas, Mario -------------- 13,080.00 o) Mitschek, Dexter -------------- 13,080.00 p) Paquit, Edgar -------------- 13,080.00 q) Panotes, Roel -------------- 13,080.00 r) Pedrigosa, Lerma -------------- 13,080.00

s) Pedrigosa, Liza -------------- 13,080.00 t) Ulzoron, Yolanda -------------- 13,080.00 u) Viguesilla, Edgardo ------------ 13,080.00 v) Viray, Ruel -------------- 13,080.00 ______________ P 280,010.00 4. Directing respondent company to pay complainants attorneys fees of ten (10%) percent based on the totality of the monetary award. Other claims are hereby dismissed for lack of factual and legal basis. SO ORDERED."

[1]

On appeal, respondent NLRC affirmed with modification the decision of the labor arbiter by deleting the award of attorneys fees, thus: "For all of the foregoing the decision appealed from is hereby AFFIRMED with modification that the award of attorneys fees be deleted for lack of legal and factual basis. SO ORDERED."

[2]

Its motion for reconsideration having been denied, petitioner filed the instant petition alleging that public respondent committed grave abuse of discretion in: "I

AFFIRMING THE LABOR ARBITERS AWARD OF SEPARATION PAY TO PRIVATE RESPONDENTS; II

AFFIRMING THE AWARD OF OTHER MONEY CLAIMS TO PRIVATE RESPONDENTS WITHOUT BASIS IN FACT AND [IN]

LAW AS SHOWN BY LACK OF COMPUTATION OF THE SAME." [3]

Petitioner contends that the transfer of its business is neither a closure nor retrenchment, hence, separation pay should not be awarded to the private respondents. It also avers that private respondents were not terminated from the service but they resigned from their job because they find the new work site too far from their residences. The foregoing contention lacks factual and legal basis, hence, bereft of merit. Broadly speaking, there appears no complete dissolution of petitioners business undertaking but the relocation of petitioners plant to Batangas, in our view, amounts to cessation of petitioners business operations in Makati. It must be stressed that the phrase "closure or cessation of operation of an establishment or undertaking not due to serious business losses or reverses" under Article 283 of the Labor Code includes both the complete cessation of all business operations and the cessation of only part of a companys business. In Philippine Tobacco Flue-Curing & Redrying Corp. vs. NLRC, a company transferred its tobacco processing plant in Balintawak, Quezon City to Candon, Ilocos Sur. The company therein did not actually close its entire business but merely relocated its tobacco processing and redrying operations to another place. Yet, this Court considered the transfer as closure not due to serious business losses for which the workers are entitled to separation pay. [4]

[5]

There is no doubt that petitioner has legitimate reason to relocate its plant because of the expiration of the lease contract on the premises it occupied. That is its prerogative. But even though the transfer was due to a reason beyond its control, petitioner has to accord its employees some relief in the form of severance pay. Thus, in E. Razon, Inc. vs. Secretary of Labor and Employment, petitioner therein provides arrastre services in all piers in South Harbor, Manila, under a management contract with the Philippine Ports Authority. Before the expiration of the term of the contract, the PPA cancelled the said contract resulting in the termination of employment of workers engaged by petitioner. Obviously, the cancellation was not sought, much less desired by petitioner. Nevertheless, this Court required petitioner therein to pay its workers separation pay in view of the cessation of its arrastre operations. [6]

Now, let it be noted that the termination of employment by reason of closure or cessation of business is authorized under Article 283 of the Labor Code which provides:

"ART. 283. Closure of establishment and reduction of personnel. -- The employer may terminate the employment of any employee due to the installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or 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." Consequently, petitioner herein must pay his employees their termination pay in the amount corresponding to their length of service. Since the closure of petitioners business is not on account of serious business losses, petitioner shall give private respondents separation pay equivalent to at least one (1) month or one-half (1/2) month pay for every year of service, whichever is higher. Petitioners contention that private respondents resigned from their jobs, does not appear convincing. As public respondent observed, the subsequent transfer of petitioner to another place hardly accessible to its workers resulted in the latters untimely separation from the service not to their own liking, hence, not construable as resignation. Resignation must be voluntary and made with the intention of relinquishing the office, accompanied with an act of relinquishment. Indeed, it would have been illogical for private respondents herein to resign and then file a complaint for illegal dismissal. Resignation is inconsistent with the filing of the said complaint. [7]

[8]

[9]

As to petitioners assertion that private respondents resorted to forum shopping, the same deserves scant consideration. As noted by the Solicitor General, private respondents claims in this case are based on underpayment of wages, legal holiday pay, service incentive leave pay and 13th month pay.

On the other hand, the other cases separately filed in different fora by Danilo Canares, Aurelia Gabucan, Dexter Mitschek and Ruel Viray involved different issues which are distinct and have no bearing on the case at bar. The case pursued by Canares is for diminution of salary on account of his demotion which was decided in his favor with finality by this Court; Gabucans case involves reinstatement to her job; Mitscheks case pertains to diminution of his salary; and Virays complaint was dismissed without prejudice for failure to prosecute. Thus, there is no basis for petitioners forum shopping charge as the instant case and the others do not raise identical causes of action, subject matter and issues. [10]

[11]

[12]

Lastly, petitioner alleges that claims of other private respondents have already been paid upon the enforcement of the order dated February 26, 1992 in case number NRC-00-9112-CI-001. This is not correct. As correctly pointed out by the Solicitor General, the aforesaid order refers to the enforcement of Wage Order No. NCR-02 mandating P2.00 wage increase. Certainly, the wage differential received by private respondents by virtue of the mandated wage increase is different from the monetary benefits herein being claimed by private respondents. Hence, public respondent cannot be faulted for grave abuse of discretion on this score. [13]

WHEREFORE, the instant petition is DENIED, and the assailed RESOLUTIONS of public respondent are AFFIRMED. Costs against petitioner. SO ORDERED.

SECOND DIVISION G.R. No. 188753, October 01, 2014 AM-PHIL FOOD CONCEPTS, INC., Petitioner, v. PAOLO JESUS T. PADILLA, Respondent. DECISION LEONEN, J.: This is a petition for review on certiorari1 under Rule 45 of the Rules of Court, praying that the February 25, 2009 decision2 of the Court of Appeals sustaining the February 28, 2007 resolution 3 of the National Labor Relations Commission, and the July 3, 2009 resolution 4 of the Court of Appeals denying petitioner Am-Phil Food Concept, Inc.’s (Am-Phil) motion for reconsideration, be annulled. The February 28, 2007 decision of the National Labor Relations Commission affirmed the May 9, 2005 decision 5 of Labor Arbiter Eric V. Chuanico that held that respondent Paolo Jesus T. Padilla (Padilla) was illegally dismissed. Padilla’s position paper6 states that he was hired on April 1, 2002 as a Marketing Associate by Am-Phil, a corporation engaged in the restaurant business.7 On September 29, 2002, Am-Phil sent Padilla a letter confirming his regular employment.8 Sometime in the first week of March 2004, three (3) of Am-Phil’s officers (Marketing Supervisor Elaine de Jesus, Area Director Art Latinazo, and Human Resources Officer Eunice Tugab) informed Padilla that Am-Phil would be implementing a retrenchment program that would be affecting three (3) of its employees, Padilla being one of them. The retrenchment program was allegedly on account of serious and adverse business conditions, i.e., lack of demand in the market, stiffer competition, devaluation of the Philippine peso, and escalating operation costs. 9 cralawla wlibrary

Padilla questioned Am-Phil’s choice to retrench him. He noted that Am-Phil had six (6) contractual employees, while he was a regular employee who had a good evaluation record. He pointed out that AmPhil was actually then still hiring new employees. He also noted that Am-Phil's sales have not been lower relative to the previous year.10 cralawlawlibrary

In response, Am-Phil's three (3) officers gave him two options: (1) be retrenched with severance pay or (2) be transferred as a waiter in Am-Phil’s restaurant, a move that entailed his demotion. 11 cralawla wlibrary

On March 17, 2004, Am-Phil sent Padilla a memorandum notifying him of his retrenchment. 12 Padilla was paid separation pay in the amount of ?26,245.38. On April 20, 2004, Padilla executed a quitclaim and release in favor of Am-Phil.13 cralawlawlibrary

On July 28, 2004, Padilla filed the complaint14 for illegal dismissal (with claims for backwages, damages, and attorney’s fees), which is now subject of this petition. Apart from Am-Phil, Padilla impleaded Am-Phil’s officers: Luis L. Vera, Jr., Winston L. Chan, Robert B. Epes, Richmond S. Yang, John Arthur Latinazo, and Eunice D. Tugab. For its defense, Am-Phil claimed that Padilla was not illegally terminated and that it validly exercised a management prerogative. It asserted that Padilla was hired merely as part of an experimental marketing program. It added that in 2003, it did suffer serious and adverse business losses and that, in the first quarter of 2004, it was compelled to retrench employees so as to avoid further losses. Am-Phil also underscored that Padilla executed a quitclaim and release in its favor. With respect to its impleaded officers, Am-Phil claimed that the complaint should be dismissed as they have a personality distinct and separate from Am-Phil.15 cralawlawlibrary

On May 9, 2005, Labor Arbiter Eric V. Chuanico (Labor Arbiter Chuanico) rendered the decision finding that Padilla was illegally dismissed.16 He noted that Am-Phil failed to substantiate its claim of serious business losses and that it failed to comply with the procedural requirement for a proper retrenchment (i.e., notifying the Department of Labor and Employment).17 He also held that the quitclaim and release executed by Padilla is contrary to law.18 Finding, however, that Padilla failed to show bad faith on the part of Am-Phil’s officers, Labor Arbiter Chuanico dismissed the complaint with respect to the latter and held that only Am-Phil was liable to Padilla.19 cralawlawlibrary

The dispositive portion of Labor Arbiter Chuanico’s decision reads:

chanRoblesvirtualLa wlibrary

Prescinding from the forgoing, this office orders the respondent to pay the complainant limited backwages from the time of his dismissal up to the time of rendition of this judgment. The computation of backwages as prepared by the NLRC Computation Unit is herewith attached and made an integral part of this decision. Given that the position had already been abolished and since separation pay had already been received by the complainant, reinstatement is no longer viable [sic] remedy under the present situation. As the complainant was constrained to hire the services of a lawyer, attorneys [sic] fees are ordered paid equivalent to ten percent of the total award thereof [sic]. Complainants [sic] claim for damages are [sic] denied for lack of merit. For failure of the complainant to properly substantiate that individual respondents are guilty of bad faith or conduct towards him (in Sunio et. al. vs. NLRC GRN L 57767 [sic] January 31, 1984) only respondent AmPhil Food Concepts, Inc. is held solidarily liable towards [sic] the complainant. SO ORDERED.20

chanrobleslaw

On August 15, 2005, Am-Phil filed an appeal21 with the National Labor Relations Commission. Apart from asserting its position that Padilla was validly retrenched, Am-Phil claimed that Labor Arbiter Chuanico was in error in deciding the case despite the pendency of its motion for leave to file supplemental rejoinder.22 Through this supplemental rejoinder, Am-Phil supposedly intended to submit its audited financial statements for the years 2001 to 2004 and, thereby, prove that it had suffered business losses. Am-Phil claimed that its right to due process was violated by Labor Arbiter Chuanico’s refusal to consider its 2001 to 2004 audited financial statements.23 cralawlawlibrary

On February 28, 2007, the National Labor Relations Commission issued the resolution affirming Labor Arbiter Chuanico’s ruling, albeit clarifying that Labor Arbiter Chuanico wrongly used the word “solidarily” in describing Am-Phil’s liability to Padilla.24 cralawlawlibrary

With respect to Am-Phil’s claim that Labor Arbiter Chuanico erroneously ignored its 2001 to 2004 audited financial statements, the National Labor Relations Commission noted that a supplemental rejoinder was not a necessary pleading in proceedings before labor arbiters. It added that, with the exception of the 2004 audited financial statements, all of Am-Phil’s relevant audited financial statements were already available at the time it submitted its position paper, reply, and rejoinder, but that Am-Phil failed to annex them to these pleadings. The National Labor Relations Commission added that, granting that this failure was due to mere oversight, Am-Phil was well in a position to attach them in its memorandum of appeal but still failed to do so.25 Holding that Labor Arbiter Chuanico could not be faulted for violating Am-Phil’s right to due process, the National Labor Relations Commission emphasized that: chanRoble svirtualLawlibrary

[O]mission by a party to rebut that which would have naturally invited an immediate pervasive and stiff competition creates an adverse inference that either the controverting evidence to be presented will only prejudice its case or that the uncontroverted evidence speaks the truth. 26 (Citation omitted)

The dispositive portion of this National Labor Relations Commission resolution reads:

chanRoblesvirtualLa wlibrary

WHEREFORE, the foregoing premises considered, the instant appeal is DIMISSED for lack of merit. Accordingly, the decision appealed from is AFFIRMED. However, the word “solidarily” in the last sentence of the decision should be deleted to conform with the Labor Arbiter’s finding that the complainant-appellee failed to properly substantiate that individual respondents-appellants were guilty of bad faith or conduct towards him. SO ORDERED.27

chanrobleslaw

In the resolution28 dated April 27, 2007, the National Labor Relations Commission denied Am-Phil’s motion

for reconsideration. Am-Phil then filed with the Court of Appeals a petition for certiorari29 under Rule 65 of the 1997 Rules of Civil Procedure. On February 25, 2009, the Court of Appeals rendered the assailed decision 30 dismissing Am-Phil’s petition for certiorari and affirming the National Labor Relations Commission’s February 28, 2007 and April 27, 2007 resolutions. The Court of Appeals denied Am-Phil's motion for reconsideration in its July 3, 2009 resolution. Hence, this petition. Am-Phil insists on its position that it was denied due process and posits that the National Labor Relations Commission’s contrary findings are founded on “illogical ratiocinations.”31 It asserts that the evidence support the conclusion that Padilla was validly dismissed, that it was an error to ignore the quitclaim and release which Padilla had executed, and that Padilla’s retrenchment was a valid exercise of management prerogative.32 cralawla wlibrary

For resolution is the issue of whether respondent Paolo Jesus T. Padila was dismissed through a valid retrenchment implemented by petitioner Am-Phil Food Concepts, Inc. Related to this, we must likewise resolve the underlying issue of whether it was proper for Labor Arbiter Eric V. Chuanico to have ruled that Padilla was illegally dismissed despite Am-Phil’s pending motion for leave to file supplemental rejoinder. Am-Phil’s right to due process was not violated Am-Phil faults Labor Arbiter Chuanico for not having allowed its motion for leave to file supplemental rejoinder that included its 2001 to 2004 audited financial statements as annexes. These statements supposedly show that Am-Phil suffered serious business losses. Thus, it claims that its right to due process was violated. Am-Phil’s motion for leave to file supplemental rejoinder,33 dated May 20, 2005,34 was filed on May 31, 2005,35 well after Labor Arbiter Chuanico promulgated his May 9, 2005 decision. Common sense dictates that as the motion for leave to file supplemental rejoinder was filed after the rendition of the decision, the decision could not have possibly taken into consideration the motion. Giving consideration to a motion filed after the promulgation of the decision is not only unreasonable, it is impossible. It follows that it is completely absurd to fault Labor Arbiter Chuanico for not considering a May 31 motion in his May 9 decision Even if we were to ignore the curious fact that the motion was filed after the rendition of the decision, Labor Arbiter Chuanico was under no obligation to admit the supplemental rejoinder. Rule V of the 2002 National Labor Relations Commission Rules of Procedure (2002 Rules), which were in effect when Labor Arbiter Chuanico promulgated his decision on May 9, 2005, 36 provides: chanRoblesvirtualLa wlibrary

SECTION 4. SUBMISSION OF POSITION PAPERS / MEMORANDA. Without prejudice to the provisions of the last paragraph, SECTION 2 of this Rule, the Labor Arbiter shall direct both parties to submit simultaneously their position papers with supporting documents and affidavits within an inextendible period of ten (10) days from notice of termination of the mandatory conference. These verified position papers to be submitted shall cover only those claims and causes of action raised in the complaint excluding those that may have been amicably settled, and shall be accompanied by all supporting documents including the affidavits of their respective witnesses which shall take the place of the latter’s direct testimony. The parties shall thereafter not be allowed to allege facts, or present evidence to prove facts, not referred to and any cause or causes of action not included in the complaint or position papers, affidavits and other documents.37(Emphasis supplied) .... SECTION 11. ISSUANCE OF AN ORDER SUBMITTING THE CASE FOR DECISION. After the parties have submitted their position papers and supporting documents, and upon evaluation of the case the Labor Arbiter finds no necessity of further hearing, he shall issue an order expressly declaring the submission of the case for decision.38 chanrobleslaw

From the provisions of the 2002 Rules, it is clear that a supplemental rejoinder, as correctly ruled by the National Labor Relations Commission,39 is not a pleading which a labor arbiter is duty-bound to accept. 40 Even following changes to the National Labor Relations Commission Rules of Procedure in 2005 and 2011, a rejoinder has not been recognized as a pleading that labor arbiters must necessarily admit. The 2005 and 2011 National Labor Relations Commission Rules of Procedure only go so far as to recognize that a reply “may” be filed by the parties.41 cralawla wlibrary

Thus, Labor Arbiter Chuanico was under no obligation to grant Am-Phil’s motion for leave to admit supplemental rejoinder and, thereby, consider the supplemental rejoinder’s averments and annexes. That Am-Phil had to file a motion seeking permission to file its supplemental rejoinder (i.e., motion for leave to file) is proof of its own recognition that the labor arbiter is under no compulsion to accept any such pleading and that the supplemental rejoinder’s admission rests on the labor arbiter’s discretion. The standard of due process in labor cases was explained by this court in Sy v. ALC Industries, Inc.:42

cralawlawlibrary

Due process is satisfied when the parties are afforded fair and reasonable opportunity to explain their respective sides of the controversy. In Mariveles Shipyard Corp. v. CA,we held: chanRoble svirtualLawlibrary

The requirements of due process in labor cases before a Labor Arbiter is satisfied when the parties are given the opportunity to submit their position papers to which they are supposed to attach all the supporting documents or documentary evidence that would prove their respective claims, in the event that the Labor Arbiter determines that no formal hearing would be conducted or that such hearing was not necessary.43 (Emphasis in the original)

Am-Phil filed three (3) pleadings with Labor Arbiter Chuanico: first, its position paper 44 on September 9, 2004; second, its reply45 on September 30, 2004; and third, its rejoinder46 on October 11, 2004. It was more than six (6) months after it had filed its rejoinder that it filed its motion for leave to admit supplemental rejoinder on May 31, 2005. Its three (3) pleadings having been allowed, Am-Phil had no shortage of opportunities to plead its claims and to adduce its evidence. It has no basis for claiming that it was not “afforded [a] fair and reasonable opportunity to explain [its side] of the controversy.”47 The filing of its motion for leave to admit supplemental rejoinder represents nothing more than a belated and procedurally inutile attempt at resuscitating its case. Retrenchment and its requirements Article 283 of the Labor Code recognizes retrenchment as an authorized cause for terminating employment. It states: chanRoble svirtualLawlibrary

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 thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of 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.

In Sebuguero v. National Labor Relations Commission,48 this court explained the concept of retrenchment as follows: chanRoble svirtualLawlibrary

Retrenchment . . . is used interchangeably with the term "lay-off." It is the termination of employment initiated by the employer through no fault of the employee's and without prejudice to the latter, resorted to by management during periods of business recession, industrial depression, or seasonal fluctuations, or during lulls occasioned by lack of orders, shortage of materials, conversion of the plant for a new production program or the introduction of new methods or more efficient machinery, or of automation. Simply put, it is an act of the employer of dismissing employees because of losses in the operation of a business, lack of work, and considerable reduction on the volume of his business, a right consistently recognized and affirmed by this Court.49 chanroble slaw

As correctly pointed out by Am-Phil, retrenchment entails an exercise of management prerogative. In Andrada v. National Labor Relations Commission,50 this court stated: chanRoblesvirtualLa wlibrary

Retrenchment is an exercise of management’s prerogative to terminate the employment of its employees en masse, to either minimize or prevent losses, or when the company is about to close or cease operations for causes not due to business losses. 51 chanrobleslaw

Nevertheless, as has also been emphasized in Andrada, the exercise of management prerogative is not absolute: chanRoblesvirtualLa wlibrary

A company’s exercise of its management prerogatives is not absolute. It cannot exercise its prerogative in a cruel, repressive, or despotic manner. We held in F.F. Marine Corp. v. NLRC: chanRoblesvirtualLa wlibrary

This Court is not oblivious of the significant role played by the corporate sector in the country’s economic and social progress. Implicit in turn in the success of the corporate form in doing business is the ethos of business autonomy which allows freedom of business determination with minimal governmental intrusion to ensure economic independence and development in terms defined by businessmen. Yet, this vast expanse of management choices cannot be an unbridled prerogative that can rise above the constitutional protection to labor. Employment is not merely a lifestyle choice to stave off boredom. Employment to the common man is his very life and blood, which must be protected against concocted causes to legitimize an otherwise irregular termination of employment.Imagined or undocumented business losses present the least propitious scenario to justify retrenchment.52 (Underscoring supplied, citation omitted)

Thus, retrenchment has been described as “a measure of last resort when other less drastic means have been tried and found to be inadequate.”53 cralawla wlibrary

Retrenchment is, therefore, not a tool to be wielded and used nonchalantly. To justify retrenchment, it “must be due to business losses or reverses which are serious, actual and real.”54 cralawlawlibrary

There are substantive requirements relating to the losses or reverses that must underlie a retrenchment. That these losses are serious relates to their gravity and that they are actual and real relates to their veracity and verifiability. Likewise, that a retrenchment is anchored on serious, actual, and real losses or reverses is to say that the retrenchment is done in good faith and not merely as a veneer to disguise the illicit termination of employees. Equally significant is an employer’s basis for determining who among its employees shall be retrenched. Apart from these substantive requirements are the procedural requirements imposed by Article 283 of the Labor Code. Thus, this court has outlined the requirements for a valid retrenchment, each of which must be shown by clear and convincing evidence, as follows: chanRoblesvirtualLa wlibrary

(1) that the retrenchment is reasonably necessary and likely to prevent business losses which, if already incurred, are not merely de minimis, but substantial, serious, actual and real, or if only expected, are reasonably imminent as perceived objectively and in good faith by the employer; (2) that the employer served written notice both to the employees and to

the Department of Labor and Employment at least one month prior to the intended date of retrenchment; (3) that the employer pays the retrenched employees separation pay equivalent to one month pay or at least ½ month pay for every year of service, whichever is higher; (4) that the employer exercises its prerogative to retrench employees in good faith for the advancement of its interest and not to defeat or circumvent the employees’ right to security of tenure; and (5) that the employer used fair and reasonable criteria in ascertaining who would be dismissed and who would be retained among the employees, such as status (i.e., whether they are temporary, casual, regular or managerial employees), efficiency, seniority, physical fitness, age, and financial hardship for certain workers.55(Citations omitted) Am-Phil failed to establish compliance with the requisites for a valid retrenchment Am-Phil’s 2001 to 2004 audited financial statements, the sole proof upon which Am-Phil relies on to establish its claim that it suffered business losses, have been deemed unworthy of consideration. These audited financial statements were mere annexes to the motion for leave to admit supplemental rejoinder which Labor Arbiter Chuanico validly disregarded. No credible explanation was offered as to why these statements were not presented when the evidence-in-chief was being considered by the labor arbiter. It follows that there is no clear and convincing evidence to sustain the substantive ground on which the supposed validity of Padilla’s retrenchment rests. Moreover, it is admitted that Am-Phil did not serve a written notice to the Department of Labor and Employment one (1) month before the intended date of Padilla’s retrenchment, as required by Article 283 of the Labor Code.56 cralawla wlibrary

While it is true that Am-Phil gave Padilla separation pay, compliance with none but one (1) of the many requisites for a valid retrenchment does not absolve Am-Phil of liability. Padilla’s quitclaim and release does not negate his having been illegally dismissed It is of no consequence that Padilla ostensibly executed a quitclaim and release in favor of Am-Phil. This court’s pronouncements in F.F. Marine Corporation v. National Labor Relations Commission,57which similarly involved an invalid retrenchment, are of note: chanRoble svirtualLawlibrary

Considering that the ground for retrenchment availed of by petitioners was not sufficiently and convincingly established, the retrenchment is hereby declared illegal and of no effect. The quitclaims executed by retrenched employees in favor of petitioners were therefore not voluntarily entered into by them. Their consent was similarly vitiated by mistake or fraud. The law looks with disfavor upon quitclaims and releases by employees pressured into signing by unscrupulous employers minded to evade legal responsibilities. As a rule, deeds of release or quitclaim cannot bar employees from demanding benefits to which they are legally entitled or from contesting the legality of their dismissal. The acceptance of those benefits would not amount to estoppel. The amounts already received by the retrenched employees as consideration for signing the quitclaims should, however, be deducted from their respective monetary awards. 58 (Citations omitted)

In sum, the Court of Appeals committed no error in holding that there was no grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the National Labor Relations Commission in affirming the May 9, 2005 decision of Labor Arbiter Eric V. Chuanico holding that respondent Paolo Jesus T.

Padilla was illegally dismissed. WHEREFORE, the petition for review on certiorari is DENIED. The February 25, 2009 decision and the July 3, 2009 resolution of the Court of Appeals are AFFIRMED. SO ORDERED.

cralawred

Carpio, (Chairperson), Brion, Del Castillo, Mendoza, and Leonen, JJ., concur. THIRD DIVISION G.R. No. 187621, September 24, 2014 MOUNT CARMEL COLLEGE EMPLOYEES UNION (MCCEU)/RUMOLO S. BASCAR, MARIBEL TESALUNA, ROLANDO TESALUNA, KENNETH BENIGNOS, MARILYN MANGULABNAN, EMELINA I. NACIONAL, JODELYN REBOTON, EVERSITA S. BASCAR, MAE BAYLEN, ERNA E. MAHILUM, EVELYN R. ANTONES, Petitioners, v. MOUNT CARMEL COLLEGE, INCORPORATED, Respondent. DECISION REYES, J.: This is a petition for review assailing the Decision1 dated November 19, 2008 of the Court of Appeals (CA) and the Resolution dated March 25, 2009 denying the motion for reconsideration thereof in CA-G.R. SP No. 02237. Facts The petitioners were elementary and high school academic and non-academic personnel employed by Mount Carmel College (respondent), located in New Escalante, Negros Occidental. In April 1999, the petitioners were informed of their retrenchment by the respondent due to the closure of the elementary and high school departments of the school. The petitioners contend that such closure was merely a subterfuge of their termination due to their union activities. According to the petitioners, they organized a union in 1997 (Mount Carmel College Employees Union [MCCEU]), and were in the process of negotiating with the respondent as regards their collective bargaining agreement when the respondent decided to close the two departments in June 1999.2 The petitioners alleged that such closure was motivated by ill-will just to get rid of the petitioners who were all union members because in June 2001, the school re-opened its elementary and high school departments with newly-hired teachers. They claimed for the remaining separation pay differentials since what they received was only computed at 15 days for every year of service when they were retrenched.3 cralawlawlibrary

The respondent, on the other hand, denied committing any act of unfair labor practice and alleged that their retrenchment was valid as it was due to the financial losses it suffered as result of a decline in its enrolment. The respondent claimed that as it was, the expenses for its academic and non-academic personnel were already eating into its budget portion allocated for capital and administrative development, and that the teachers’ demand for increased salaries and benefits, coupled with the decline in the enrolment, left the school with no choice but to close down its grade school and high school departments. 4

cralawla wlibrary

Ruling of the Labor Arbiter In the Decision dated May 7, 2004, the Labor Arbiter (LA) declared the petitioners to have been illegally dismissed, among others. According to the LA, the respondent’s alleged losses were not serious as its financial statements even showed a net surplus. Thus, the LA ordered the respondent to pay the petitioners separation pay in lieu of reinstatement, plus attorney’s fees. 5 cralawla wlibrary

The dispositive portion of the LA Decision provides:

chanRoblesvirtualLa wlibrary

WHEREFORE, premises considered, judgment is hereby rendered as follows:

1.

DECLARING that respondents had committed unfair labor practice against complainants;

2.

DECLARING that complainants were illegally dismissed by respondents;

3.

ORDERING respondents to pay complainants their corresponding separation pay in lieu of reinstatement, in the amount equivalent to their remaining 15 days for every year of service and their back wages including the retirement benefits of Milagros Gempesala in the total amount of P3,257,637.90 as per computation in the hereto attached sheet;

4.

ORDERING respondents to pay complainants attorney’s fees in an amount equivalent to 10% of the total judgment award which is P325,763.79 thereby making a total claim of P3,583,401.69, the same to be deposited with the Cashier of this Office within ten (10) days from receipt of this Decision for proper disposition.

All other claims are hereby dismissed for lack of merit. SO ORDERED.6 Ruling of the NLRC Aggrieved, the respondent appealed to the National Labor Relations Commission (NLRC). The petitioners, on the other hand, questioned the appeal bond posted by the respondent. Subsequently, in the Decision dated May 25, 2005, the NLRC reversed the LA decision, ruling that: (1) the respondent’s failure to attach a copy of the appeal bond and other documents to the Appeal Memorandum furnished to the petitioners is a minor defect; (2) the respondent acted in good faith when it procured the appeal bond from Country Bankers and Insurance Corporation (CBIC), which, it turned out, was blacklisted at that time (March 15, 2004); and since CBIC was already included in the list of the Supreme Court’s accredited bonding companies from February 1, 2005 until July 31, 2005, there is no more impediment for CBIC to “make good” its bond; and (3) the petitioners’ retrenchment is an exercise by the respondent of its management prerogative and the latter’s state of finances justifies the same. 7 cralawlawlibrary

Ruling of the Court of Appeals In the assailed decision promulgated on November 19, 2008, the CA did not find any grave abuse of discretion committed by the NLRC and thus, affirmed its decision. The CA found no factual basis for the petitioners’ allegation that the school closed down for purposes of union busting, and that the school cannot be compelled to operate at a loss, as shown by its financial statements. The CA also ruled that the respondent cannot be compelled to re-hire the petitioners when it later re-opened as it has the discretion in the hiring of its employees.8 cralawlawlibrary

The petitioners sought reconsideration of the assailed decision, which was denied by the CA in its Resolution dated March 25, 2009.9 cralawla wlibrary

Hence, this petition, where the following issues were raised: I.

II.

chanRoble svirtualLawlibrary

THE HONORABLE COURT OF APPEALS ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT INTENTIONALLY IGNORED THE ISSUES RAISED IN THE PETITION REGARDING THE BLATANT VIOLATIONS COMMITTED BY RESPONDENT IN NOT COMPLYING WITH THE STRICT REQUIREMENTS LAID DOWN IN SECTION 6 RULE VI OF THE 2002 NEW RULES OF THE NLRC AS WELL AS THE MEMORANDUM NO. 1-01 DATED JANUARY 13, 2004 OF THE HONORABLE CHAIRMAN ROY V. SEÑERES; THE HONORABLE COURT [OF] APPEALS ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN SUSTAINING THE DECISION OF THE HONORABLE NLRC DESPITE THE ESTABLISHED FACT ON RECORD THAT THE NLRC BLATANTLY IGNORED THE MARCH 15, 2004 MEMORANDUM OF HONORABLE CHAIRMAN ROY V. SEÑERES;

III.

THE HONORABLE COURT OF APPEALS ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN SUSTAINING THE DECISION OF THE HONORABLE NLRC DESPITE THE ESTABLISHED FACT ON RECORD THAT THE GROUNDS CITED BY THE PUBLIC RESPONDENT TO SUPPORT CLOSURE ARE BEREFT OF EVEN JUST SUBSTANTIAL EVIDENCE WHILE THE PRESENCE OF BAD FAITH/MALICE ARE OBVIOUS.10

Settled is the rule that when supported by substantial evidence, factual findings made by quasi-judicial and administrative bodies are accorded great respect and even finality by the courts. These findings are not infallible, though; when there is a showing that they were arrived at arbitrarily or in disregard of the evidence on record, they may be examined by the courts. 11 In this case, inasmuch as the LA’s conclusions differ from that of the NLRC and the CA, the Court must now exercise its power of review and resolve the issues raised by the petitioners. In undertaking such review, the Court bears in mind that the CA decision must be examined from the prism of whether it correctly determined the presence or absence of grave abuse of discretion in the NLRC decision before it, not on the basis of whether the NLRC decision on the merits of the case was correct.12 cralawla wlibrary

Thus, the first question that must be resolved is whether the CA correctly ruled that the NLRC did not commit any grave abuse of discretion when it allowed the respondent’s appeal despite the blacklisting of CBIC at the time it issued the appeal bond. Article 223 of the Labor Code, as amended, sets forth the rules on appeal from the LA’s monetary award:

chanRoble svirtualLawlibrary

Art. 223. Appeal. – x x x. xxxx In case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission in the amount equivalent to the monetary award in the judgment appealed from. (Emphasis ours) At the time of the respondent’s filing of its appeal from the LA decision in 2004, the rules of procedure in force was the New Rules of Procedure of the NLRC, as amended by NLRC Resolution No. 01-02, Series of 2002, Section 6 of which provides: chanRoblesvirtualLa wlibrary

Sec. 6. BOND. - In case the decision of the Labor Arbiter or the Regional Director involves a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond. The appeal bond shall either be in cash or surety in an amount equivalent to the monetary award, exclusive of damages and attorney’s fees. In case of surety bond, the same shall be issued by a reputable bonding companyduly accredited by the Commission or the Supreme Court, and shall be accompanied by: chanRoblesvirtualLa wlibrary

(a) a joint declaration under oath by the employer, his counsel, and the bonding company, attesting that the bond posted is genuine, and shall be in effect until final disposition of the case. (b)

a copy of the indemnity agreement between the employer-appellant and bonding company; and

(c)

a copy of security deposit or collateral securing the bond.

A certified true copy of the bond shall be furnished by the appellant to the appellee who shall verify the regularity and genuineness thereof and immediately report to the Commission any irregularity. Upon verification by the Commission that the bond is irregular or not genuine, the Commission shall cause the immediate dismissal of the appeal. xxxx

Section 6 requiring the issuance of a bond by a reputable bonding company duly accredited by the NLRC or the Supreme Court was substantially carried over to the 2005 Revised Rules of Procedure of the NLRC 13 and the 2011 NLRC Rules of Procedure.14 In this regard, the Court has ruled that in a judgment involving a monetary award, the appeal shall be perfected only upon: (1) proof of payment of the required appeal fee; (2) posting of a cash or surety bond issued by a reputable bonding company; and (3) filing of a memorandum of appeal.15 cralawlawlibrary

In this case, it was not disputed that at the time CBIC issued the appeal bond, it was already blacklisted by the NLRC. The latter, however, opined that “respondents should not be faulted if the Bacolod branch office of the bonding company issued the surety bond” and that “[r]espondents acted in good faith when they transacted with the bonding company for the issuance of the surety bond.”16 cralawlawlibrary

Good faith, however, is not an excuse for setting aside the mandatory and jurisdictional requirement of the law. In Cawaling v. Menese,17 the Court categorically ruled that the defense of good faith does not render the issued bond valid. The Court further ruled that – It was improper to honor the appeal bond issued by a surety company which was no longer accredited by this Court. Having no authority to issue judicial bonds not only does Intra Strata cease to be a reputable surety company — the bond it likewise issued was null and void. x x x It is not within respondents’ discretion to allow the filing of the appeal bond issued by a bonding company with expired accreditation regardless of its pending application for renewal of accreditation. x x x.18 (Emphasis ours) The condition of posting a cash or surety bond is not a meaningless requirement – it is meant to assure the workers that if they prevail in the case, they will receive the money judgment in their favor upon the dismissal of the former’s appeal.19 Such aim is defeated if the bond issued turned out to be invalid due to the surety company’s expired accreditation.20 Much more in this case where the bonding company was blacklisted at the time it issued the appeal bond. The blacklisting of a bonding company is not a whimsical exercise. When a bonding company is blacklisted, it meant that it committed certain prohibited acts and/or violations of law, prescribed rules and regulations.21 Trivializing it would release a blacklisted bonding company from the effects sought to be achieved by the blacklisting and would make the entire process insignificant. Also, the lifting of CBIC’s blacklisting on January 24, 2005 does not render the bond it issued on March 15, 2004 subsequently valid. It should be stressed that what the law requires is that the appeal bond must be issued by a reputable bonding company duly accredited by the NLRC or the Supreme Court at the time of the filing of the appeal. To rule otherwise would make the requirement ineffective, and employers using “fly-by-night” and untrustworthy bonding companies could easily manipulate their obligation to post a valid bond by raising such justification. On the foregoing point alone, it is clear that the CA committed a reversible error when it ruled out any grave abuse of discretion on the part of the NLRC in admitting the respondent’s appeal and reversing the decision of the LA. It should be stressed that the requirement of the posting of an appeal bond by a reputable company is jurisdictional.22 It cannot be subject to the NLRC’s discretion and there is a “little leeway for condoning a liberal interpretation of the rule.”23 cralawla wlibrary

Even if the Court were to relax the rules and consider the respondent’s appeal, the Court still finds that the CA committed an error when it ruled that the NLRC did not commit grave abuse of discretion in finding that the petitioners’ retrenchment was valid under the circumstances of the case. Retrenchment, as an authorized cause for the dismissal of employees, finds basis in Article 283 24 of the Labor Code, which states: chanRoble svirtualLawlibrary

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. x x x. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of

establishment or undertaking not due to serious business losses or 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. Standards25 have been laid down by the Court in order to prevent its abuse by an employer, to wit:

chanRoble svirtualLawlibrary

(1) That retrenchment is reasonably necessary and likely to prevent business losses which, if already incurred, are not merely de minimis, but substantial, serious, actual and real, or if only expected, are reasonably imminent as perceived objectively and in good faith by the employer; (2) That the employer served written notice both to the employees and to the Department of Labor and Employment at least one month prior to the intended date of retrenchment; (3) That the employer pays the retrenched employees separation pay equivalent to one (1) month pay or at least one-half (½) month pay for every year of service, whichever is higher; (4) That the employer exercises its prerogative to retrench employees in good faith for the advancement of its interest and not to defeat or circumvent the employees’ right to security of tenure; and (5) That the employer used fair and reasonable criteria in ascertaining who would be dismissed and who would be retained among the employees, such as status, efficiency, seniority, physical fitness, age, and financial hardship for certain workers.26 (Emphasis ours) In the present case, the respondent’s justification for implementing the retrenchment of the petitioners was due to the alleged closure or cessation of its elementary and high school departments. According to them, the continued operations of these departments was an exercise of management prerogative to protect its business and it was no longer viable to maintain the two departments as it was already being subsidized by the college department. As proof thereof, the respondent submitted its audited Financial Statements for the years 1997, 1998 and 1999. Respondent also alleged that such closure was recognized by the “Tuition Fee Law,” which mandates that 70% of the tuition incremental proceeds should be allocated for salaries, wages and other benefits of its personnel. Respondent claimed that in its case, personnel benefits are already “eating into” the portion of the budget allocated for capital and administrative development, and faced further with the demands of the employees of additional increase in salaries and benefits, it had “no choice” but to close down.27 cralawlawlibrary

The burden of proving that the termination of services is for a valid or authorized cause rests upon the employer. In termination by retrenchment, not every loss incurred or expected to be incurred by an employer can justify retrenchment.28 The employer must prove, among others, that the losses are substantial and that the retrenchment is reasonably necessary to avert such losses. 29 In this case, while the respondent may have presented its Financial Statements, the respondent, nevertheless, failed to establish with reasonable certainty that the proportion of its revenues are largely expended for its elementary and high school personnel salaries, wages and other benefits. Its Financial Statements30 showed the following figures, among others: chanRoble svirtualLawlibrary

Financial Statement Gross Revenues Personnel Expenses Net Surplus

1997

1998

1999

10,529,810.39

12,603,283.12

12,438,060.00

6,273,646.00

7,199,859.58

6,688,710.32

405,091.76

769,460.93

130,681.44

The Financial Statements pertain to its assets, liabilities, gross revenues and expenses for the entire college system, that is, from elementary, high school to the college department. The expenses for the elementary and high school departments were not set out in detail and instead, were lumped together with the college department. Such detail becomes material in the light of the respondent’s claim that the personnel expenses for the elementary and high school departments were “eating into” the portion of its budget allocated for other purposes. There could be no practical basis from which the respondent’s claim finds support. Aside from this, the respondent failed to present any proof establishing how the continued operations of the elementary and high school departments has become impracticable. The respondent merely assumed, which the NLRC and CA improperly sustained, that “[f]aced with the intractable demands of complainant Union for additional increases in salaries and economic benefits, with the steady decline in enrolment and the increase in overhead expenses, respondent had no choice but to close down the two departments and make do with the College Department x x x.”31 There is nothing on record showing how the respondent came up with such conclusion, save for the alleged decline in its elementary and high school enrolment, and no feasibility studies, analysis, or at the very least, an academic projection was presented to validate its “forecast.” Note that the Financial Statements show that the respondent was not operating at a loss but actually had surplus, albeit at a minimum. Thus, it has been held that – Not every loss incurred or expected to be incurred by a company will justify retrenchment. The losses must be substantial and the retrenchment must be reasonably necessary to avert such losses. The employer bears the burden of proving the existence or the imminence of substantial losses with clear and satisfactory evidence that there are legitimate business reasons justifying a retrenchment. Should the employer fail to do so, the dismissal shall be deemed unjustified. 32 (Emphasis ours) The respondent, likewise, cannot rely on the alleged condition in the Tuition Fee Law that “70% of tuition incremental proceeds should be allocated for the payment of salaries, wages and other benefits of the school’s academic and non-academic personnel.”33 In the first place, the Tuition Fee Law34 alluded to by the respondent refers to R.A. No. 6728, as amended35 or the “Government Assistance to Students and Teachers in Private Education Act.” Section 5 of R.A. No. 6728 allows the increase in tuition fees in private educational institutions and provides for the allocation of the increment, to wit: chanRoble svirtualLawlibrary

(2) Assistance under paragraph (1), subparagraphs (a) and (b) shall be granted and tuition fees under subparagraph (c) may be increased, on the condition that seventy percent (70%) of the amount subsidized allotted for tuition fee or of the tuition fee increases shall go to the payment of salaries, wages, allowances and other benefits of teaching and non-teaching personnel x x x and may be used to cover increases as provided for in the collective bargaining agreements existing or in force at the time when this Act is approved and made effective: x x x At least twenty percent (20%) shall go to the improvement or modernization of buildings, equipment, libraries, laboratories, gymnasia and similar facilities and to the payment of other costs of operation. x x x. The 70% allocation presupposes an increase in a school’s tuition fee, which was not established in this case. Moreover, the Court has already ruled that the 70% allocation set by law is only theminimum, and not the maximum percentage, and there is actually a 10% portion the disposition of which the law does not regulate.36 Even assuming that the allocation provided by law is applicable in the respondent’s situation, the bare fact that the expenses allotted for the salaries, wages and benefits of the respondent’s personnel exceeded the minimum allocation, without more, does not constitute reasonable justification for the closure of its elementary and high school departments, and the retrenchment of the petitioners. The respondent must establish by substantial and convincing evidence that the impending losses it expected to incur, based on such allocation, were imminent and that the retrenchment it conducted was necessary to prevent such losses. Another factor that militates against the respondent’s reason was that it re-opened after two years, due to the “clamor” for its re-opening. This is contrary to the respondent’s “perceived” impending loss considering that there was actually a demand for its educational services. While enrolment may have declined, the Court is not convinced that the closure of the elementary and high school departments was a reasonable necessity, especially in the absence of any showing on the part of the respondent that it explored other less drastic and/or cost-saving measures to avoid serious financial or economic problems. 37 cralawla wlibrary

Finally, on the petitioners’ allegation that the closure and their retrenchment amounted to unfair labor practice, suffice it to say that the petitioners failed to discharge its burden of proving that the retrenchment was motivated by ill will, bad faith or malice, or that it was aimed at interfering with their right to selforganize. While the confluence of the circumstances make it suspect, the Court is not convinced that the respondent’s acts affected, in whatever manner, the petitioners’ right to self-organization.38 cralawla wlibrary

WHEREFORE, the petition is GRANTED. The Decision dated November 19, 2008 and Resolution dated March 25, 2009 of the Court of Appeals in CA-G.R. SP No. 02237 are SET ASIDE. The Labor Arbiter Decision dated May 7, 2004 is REINSTATED with the MODIFICATION in that its finding of unfair labor practice is REVERSED. In all other respects, the same is AFFIRMED. SO ORDERED.

cralawred

Velasco, Jr., (Chairperson), Peralta, Villarama, Jr., and Jardeleza, JJ., concur.

SECOND DIVISION [G.R. No. 118978. May 23, 1997]

PHILIPPINE TELEGRAPH AND TELEPHONE COMPANY, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and GRACE DE GUZMAN,respondents. *

DECISION REGALADO, J.:

Seeking relief through the extraordinary writ of certiorari, petitioner Philippine Telegraph and Telephone Company (hereafter, PT&T) invokes the alleged concealment of civil status and defalcation of company funds as grounds to terminate the services of an employee. That employee, herein private respondent Grace de Guzman, contrarily argues that what really motivated PT&T to terminate her services was her having contracted marriage during her employment, which is prohibited by petitioner in its company policies. She thus claims that she was discriminated against in gross violation of law, such a proscription by an employer being outlawed by Article 136 of the Labor Code. Grace de Guzman was initially hired by petitioner as a reliever, specifically as a Supernumerary Project Worker, for a fixed period from November 21, 1990 until April 20, 1991 vice one C.F. Tenorio who went on maternity leave. Under the Reliever Agreement which she signed with petitioner company, her employment was to be immediately terminated upon expiration of the agreed period. Thereafter, from June 10, 1991 to July 1, 1991, and from July 19, 1991 to August 8, 1991, private respondents services as reliever were again engaged by petitioner, this time in replacement of one Erlinda F. Dizon who went on leave during both periods. After August 8, 1991, and pursuant to their Reliever Agreement, her services were terminated. [1]

[2]

On September 2, 1991, private respondent was once more asked to join petitioner company as a probationary employee, the probationary period to cover 150 days. In the job application form that was furnished her to be filled up for the purpose, she indicated in the portion for civil status therein that she was single although she had contracted marriage a few months earlier, that is, on May 26, 1991. [3]

It now appears that private respondent had made the same representation in the two successive reliever agreements which she signed on June 10, 1991 and July 8, 1991. When petitioner supposedly learned about the same later, its branch supervisor in Baguio City, Delia M. Oficial, sent to private respondent a memorandum dated January 15, 1992 requiring her to explain the discrepancy. In that memorandum, she was reminded about the companys policy of not accepting married women for employment. [4]

In her reply letter dated January 17, 1992, private respondent stated that she was not aware of PT&Ts policy regarding married women at the time, and that all along she had not deliberately hidden her true civil status. Petitioner nonetheless remained unconvinced by her explanations. Private respondent was dismissed from the company effective January 29, 1992, which she readily contested by initiating a complaint for illegal dismissal, coupled with a claim for non-payment of cost of living allowances (COLA), before the Regional Arbitration Branch of the National Labor Relations Commission in Baguio City. [5]

[6]

At the preliminary conference conducted in connection therewith, private respondent volunteered the information, and this was incorporated in the stipulation of facts between the parties, that she had failed to remit the amount of P2,380.75 of her collections. She then executed a promissory note for that amount in favor of petitioner. All of these took place in a formal proceeding and with the agreement of the parties and/or their counsel. [7]

On November 23, 1993, Labor Arbiter Irenarco R. Rimando handed down a decision declaring that private respondent, who had already gained the status of a regular employee, was illegally dismissed by petitioner. Her reinstatement, plus payment of the corresponding back wages and COLA, was correspondingly ordered, the labor arbiter being of the firmly expressed view that the ground relied upon by petitioner in dismissing private respondent was clearly insufficient, and that it was apparent that she had been

discriminated against on account of her having contracted marriage in violation of company rules. On appeal to the National Labor Relations Commission (NLRC), said public respondent upheld the labor arbiter and, in its decision dated April 29, 1994, it ruled that private respondent had indeed been the subject of an unjust and unlawful discrimination by her employer, PT&T. However, the decision of the labor arbiter was modified with the qualification that Grace de Guzman deserved to be suspended for three months in view of the dishonest nature of her acts which should not be condoned. In all other respects, the NLRC affirmed the decision of the labor arbiter, including the order for the reinstatement of private respondent in her employment with PT&T. The subsequent motion for reconsideration filed by petitioner was rebuffed by respondent NLRC in its resolution of November 9, 1994, hence this special civil action assailing the aforestated decisions of the labor arbiter and respondent NLRC, as well as the denial resolution of the latter. 1. Decreed in the Bible itself is the universal norm that women should be regarded with love and respect but, through the ages, men have responded to that injunction with indifference, on the hubristic conceit that women constitute the inferior sex. Nowhere has that prejudice against womankind been so pervasive as in the field of labor, especially on the matter of equal employment opportunities and standards. In the Philippine setting, women have traditionally been considered as falling within the vulnerable groups or types of workers who must be safeguarded with preventive and remedial social legislation against discriminatory and exploitative practices in hiring, training, benefits, promotion and retention. The Constitution, cognizant of the disparity in rights between men and women in almost all phases of social and political life, provides a gamut of protective provisions. To cite a few of the primordial ones, Section 14, Article II on the Declaration of Principles and State Policies, expressly recognizes the role of women in nation-building and commands the State to ensure, at all times, the fundamental equality before the law of women and men. Corollary thereto, Section 3 of Article XIII (the progenitor whereof dates back to both the 1935 and 1973 Constitution) pointedly requires the State to afford full protection to labor and to promote full employment and equality of employment opportunities for all, including an assurance of entitlement to [8]

[9]

tenurial security of all workers. Similarly, Section 14 of Article XIII mandates that the State shall protect working women through provisions for opportunities that would enable them to reach their full potential. [10]

2. Corrective labor and social laws on gender inequality have emerged with more frequency in the years since the Labor Code was enacted on May 1, 1974 as Presidential Decree No. 442, largely due to our countrys commitment as a signatory to the United Nations Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW). [11]

Principal among these laws are Republic Act No. 6727 which explicitly prohibits discrimination against women with respect to terms and conditions of employment, promotion, and training opportunities; Republic Act No. 6955 which bans the mail-order-bride practice for a fee and the export of female labor to countries that cannot guarantee protection to the rights of women workers; Republic Act No. 7192, also known as the Women in Development and Nation Building Act, which affords women equal opportunities with men to act and to enter into contracts, and for appointment, admission, training, graduation, and commissioning in all military or similar schools of the Armed Forces of the Philippines and the Philippine National Police; Republic Act No. 7322 increasing the maternity benefits granted to women in the private sector; Republic Act No. 7877 which outlaws and punishes sexual harassment in the workplace and in the education and training environment; and Republic Act No. 8042, or the Migrant Workers and Overseas Filipinos Act of 1995, which prescribes as a matter of policy,inter alia, the deployment of migrant workers, with emphasis on women, only in countries where their rights are secure. Likewise, it would not be amiss to point out that in the Family Code, womens rights in the field of civil law have been greatly enhanced and expanded. [12]

[13]

[14]

[15]

[16]

[17]

[18]

In the Labor Code, provisions governing the rights of women workers are found in Articles 130 to 138 thereof. Article 130 involves the right against particular kinds of night work while Article 132 ensures the right of women to be provided with facilities and standards which the Secretary of Labor may establish to ensure their health and safety. For purposes of labor and social legislation, a woman working in a nightclub, cocktail lounge, massage clinic, bar or other similar establishments shall be considered as an employee under Article 138. Article 135, on the other hand, recognizes a womans right against discrimination with respect to terms and conditions of employment on account

simply of sex. Finally, and this brings us to the issue at hand, Article 136 explicitly prohibits discrimination merely by reason of the marriage of a female employee. 3. Acknowledged as paramount in the due process scheme is the constitutional guarantee of protection to labor and security of tenure. Thus, an employer is required, as a conditionsine qua non prior to severance of the employment ties of an individual under his employ, to convincingly establish, through substantial evidence, the existence of a valid and just cause in dispensing with the services of such employee, ones labor being regarded as constitutionally protected property. On the other hand, it is recognized that regulation of manpower by the company falls within the so-called management prerogatives, which prescriptions encompass the matter of hiring, supervision of workers, work assignments, working methods and assignments, as well as regulations on the transfer of employees, lay-off of workers, and the discipline, dismissal, and recall of employees. As put in a case, an employer is free to regulate, according to his discretion and best business judgment, all aspects of employment, from hiring to firing, except in cases of unlawful discrimination or those which may be provided by law. [19]

[20]

In the case at bar, petitioners policy of not accepting or considering as disqualified from work any woman worker who contracts marriage runs afoul of the test of, and the right against, discrimination, afforded all women workers by our labor laws and by no less than the Constitution. Contrary to petitioners assertion that it dismissed private respondent from employment on account of her dishonesty, the record discloses clearly that her ties with the company were dissolved principally because of the companys policy that married women are not qualified for employment in PT&T, and not merely because of her supposed acts of dishonesty. That it was so can easily be seen from the memorandum sent to private respondent by Delia M. Oficial, the branch supervisor of the company, with the reminder, in the words of the latter, that youre fully aware that the company is not accepting married women employee (sic), as it was verbally instructed to you. Again, in the termination notice sent to her by the same branch supervisor, private respondent was made to understand that her severance from the service was not only by reason of her concealment of her married [21]

status but, over and on top of that, was her violation of the companys policy against marriage (and even told you that married women employees are not applicable [sic] or accepted in our company.) Parenthetically, this seems to be the curious reason why it was made to appear in the initiatory pleadings that petitioner was represented in this case only by its said supervisor and not by its highest ranking officers who would otherwise be solidarily liable with the corporation. [22]

[23]

Verily, private respondents act of concealing the true nature of her status from PT&T could not be properly characterized as willful or in bad faith as she was moved to act the way she did mainly because she wanted to retain a permanent job in a stable company. In other words, she was practically forced by that very same illegal company policy into misrepresenting her civil status for fear of being disqualified from work. While loss of confidence is a just cause for termination of employment, it should not be simulated. It must rest on an actual breach of duty committed by the employee and not on the employers caprices. Furthermore, it should never be used as a subterfuge for causes which are improper, illegal, or unjustified. [24]

[25]

[26]

In the present controversy, petitioners expostulations that it dismissed private respondent, not because the latter got married but because she concealed that fact, does have a hollow ring. Her concealment, so it is claimed, bespeaks dishonesty hence the consequent loss of confidence in her which justified her dismissal. Petitioner would asseverate, therefore, that while it has nothing against marriage, it nonetheless takes umbrage over the concealment of that fact. This improbable reasoning, with interstitial distinctions, perturbs the Court since private respondent may well be minded to claim that the imputation of dishonesty should be the other way around. Petitioner would have the Court believe that although private respondent defied its policy against its female employees contracting marriage, what could be an act of insubordination was inconsequential. What it submits as unforgivable is her concealment of that marriage yet, at the same time, declaring that marriage as a trivial matter to which it supposedly has no objection. In other words, PT&T says it gives its blessings to its female employees contracting marriage, despite the maternity leaves and other benefits it would consequently respond for and which obviously it would have wanted to avoid. If that employee confesses such fact of marriage, there will be no sanction; but if such employee conceals the same instead of

proceeding to the confessional, she will be dismissed. This line of reasoning does not impress us as reflecting its true management policy or that we are being regaled with responsible advocacy. This Court should be spared the ennui of strained reasoning and the tedium of propositions which confuse through less than candid arguments. Indeed, petitioner glosses over the fact that it was its unlawful policy against married women, both on the aspects of qualification and retention, which compelled private respondent to conceal her supervenient marriage. It was, however, that very policy alone which was the cause of private respondents secretive conduct now complained of. It is then apropos to recall the familiar saying that he who is the cause of the cause is the cause of the evil caused. Finally, petitioners collateral insistence on the admission of private respondent that she supposedly misappropriated company funds, as an additional ground to dismiss her from employment, is somewhat insincere and self-serving. Concededly, private respondent admitted in the course of the proceedings that she failed to remit some of her collections, but that is an altogether different story. The fact is that she was dismissed solely because of her concealment of her marital status, and not on the basis of that supposed defalcation of company funds. That the labor arbiter would thus consider petitioners submissions on this supposed dishonesty as a mere afterthought, just to bolster its case for dismissal, is a perceptive conclusion born of experience in labor cases. For, there was no showing that private respondent deliberately misappropriated the amount or whether her failure to remit the same was through negligence and, if so, whether the negligence was in nature simple or grave. In fact, it was merely agreed that private respondent execute a promissory note to refund the same, which she did, and the matter was deemed settled as a peripheral issue in the labor case. Private respondent, it must be observed, had gained regular status at the time of her dismissal. When she was served her walking papers on January 29, 1992, she was about to complete the probationary period of 150 days as she was contracted as a probationary employee on September 2, 1991. That her dismissal would be effected just when her probationary period was winding down clearly raises the plausible conclusion that it was done in order to prevent her from earning security of tenure. On the other hand, her earlier stints with the company as reliever were undoubtedly those of a regular [27]

employee, even if the same were for fixed periods, as she performed activities which were essential or necessary in the usual trade and business of PT&T. The primary standard of determining regular employment is the reasonable connection between the activity performed by the employee in relation to the business or trade of the employer. [28]

[29]

As an employee who had therefore gained regular status, and as she had been dismissed without just cause, she is entitled to reinstatement without loss of seniority rights and other privileges and to full back wages, inclusive of allowances and other benefits or their monetary equivalent. However, as she had undeniably committed an act of dishonesty in concealing her status, albeit under the compulsion of an unlawful imposition of petitioner, the three-month suspension imposed by respondent NLRC must be upheld to obviate the impression or inference that such act should be condoned. It would be unfair to the employer if she were to return to its fold without any sanction whatsoever for her act which was not totally justified.Thus, her entitlement to back wages, which shall be computed from the time her compensation was withheld up to the time of her actual reinstatement, shall be reduced by deducting therefrom the amount corresponding to her three months suspension. [30]

4. The government, to repeat, abhors any stipulation or policy in the nature of that adopted by petitioner PT&T. The Labor Code states, in no uncertain terms, as follows: ART. 136. Stipulation against marriage. - It shall be unlawful for an employer to require as a condition of employment or continuation of employment that a woman shall not get married, or to stipulate expressly or tacitly that upon getting married, a woman employee shall be deemed resigned or separated, or to actually dismiss, discharge, discriminate or otherwise prejudice a woman employee merely by reason of marriage. This provision had a studied history for its origin can be traced to Section 8 of Presidential Decree No. 148, better known as the Women and Child Labor Law, which amended paragraph (c), Section 12 of Republic Act No. 679, entitled An Act to Regulate the Employment of Women and Children, to Provide Penalties for Violations Thereof, and for Other Purposes. The forerunner to Republic Act No. 679, on the other hand, was Act No. 3071 which became law on March 16, 1923 and which regulated the employment of [31]

[32]

women and children in shops, factories, industrial, agricultural, and mercantile establishments and other places of labor in the then Philippine Islands. It would be worthwhile to reflect upon and adopt here the rationalization in Zialcita, et al. vs. Philippine Air Lines, a decision that emanated from the Office of the President. There, a policy of Philippine Air Lines requiring that prospective flight attendants must be single and that they will be automatically separated from the service once they marry was declared void, it being violative of the clear mandate in Article 136 of the Labor Code with regard to discrimination against married women. Thus: [33]

Of first impression is the incompatibility of the respondents policy or regulation with the codal provision of law. Respondent is resolute in its contention that Article 136 of the Labor Code applies only to women employed in ordinary occupations and that the prohibition against marriage of women engaged in extraordinary occupations, like flight attendants, is fair and reasonable, considering the pecularities of their chosen profession. We cannot subscribe to the line of reasoning pursued by respondent. All along, it knew that the controverted policy has already met its doom as early as March 13, 1973 when Presidential Decree No. 148, otherwise known as the Women and Child Labor Law, was promulgated. But for the timidity of those affected or their labor unions in challenging the validity of the policy, the same was able to obtain a momentary reprieve. A close look at Section 8 of said decree, which amended paragraph (c) of Section 12 of Republic Act No. 679, reveals that it is exactly the same provision reproduced verbatim in Article 136 of the Labor Code, which was promulgated on May 1, 1974 to take effect six (6) months later, or on November 1, 1974. It cannot be gainsaid that, with the reiteration of the same provision in the new Labor Code, all policies and acts against it are deemed illegal and therefore abrogated. True, Article 132 enjoins the Secretary of Labor to establish standards that will ensure the safety and health of women employees and in appropriate cases shall by regulation require employers to determine appropriate minimum standards for termination in special occupations, such as those of flight attendants, but that is precisely the factor that militates against the policy of respondent. The standards have not yet been established as set forth in the first paragraph, nor has the Secretary of Labor issued any regulation affecting flight attendants.

It is logical to presume that, in the absence of said standards or regulations which are as yet to be established, the policy of respondent against marriage is patently illegal. This finds support in Section 9 of the New Constitution, which provides: Sec. 9. The State shall afford protection to labor, promote full employment and equality in employment, ensure equal work opportunities regardless of sex, race, or creed, and regulate the relations between workers and employees. The State shall assure the rights of workers to self-organization, collective bargaining, security of tenure, and just and humane conditions of work x x x. Moreover, we cannot agree to the respondents proposition that termination from employment of flight attendants on account of marriage is a fair and reasonable standard designed for their own health, safety, protection and welfare, as no basis has been laid therefor. Actually, respondent claims that its concern is not so much against the continued employment of the flight attendant merely by reason of marriage as observed by the Secretary of Labor, but rather on the consequence of marriagepregnancy. Respondent discussed at length in the instant appeal the supposed ill effects of pregnancy on flight attendants in the course of their employment. We feel that this needs no further discussion as it had been adequately explained by the Secretary of Labor in his decision of May 2, 1976. In a vain attempt to give meaning to its position, respondent went as far as invoking the provisions of Articles 52 and 216 of the New Civil Code on the preservation of marriage as an inviolable social institution and the family as a basic social institution, respectively, as bases for its policy of non-marriage. In both instances, respondent predicates absence of a flight attendant from her home for long periods of time as contributory to an unhappy married life. This is pure conjecture not based on actual conditions, considering that, in this modern world, sophisticated technology has narrowed the distance from one place to another. Moreover, respondent overlooked the fact that married flight attendants can program their lives to adapt to prevailing circumstances and events. Article 136 is not intended to apply only to women employed in ordinary occupations, or it should have categorically expressed so. The sweeping intendment of the law, be it on special or ordinary occupations, is reflected in the whole text and supported by Article 135 that speaks of non-discrimination on the employment of women. The judgment of the Court of Appeals in Gualberto, et al. vs. Marinduque Mining & Industrial Corporation considered as void a policy of the same [34]

nature. In said case, respondent, in dismissing from the service the complainant, invoked a policy of the firm to consider female employees in the project it was undertaking as separated the moment they get married due to lack of facilities for married women. Respondent further claimed that complainant was employed in the project with an oral understanding that her services would be terminated when she gets married. Branding the policy of the employer as an example of discriminatory chauvinism tantamount to denying equal employment opportunities to women simply on account of their sex, the appellate court struck down said employer policy as unlawful in view of its repugnance to the Civil Code, Presidential Decree No. 148 and the Constitution. Under American jurisprudence, job requirements which establish employer preference or conditions relating to the marital status of an employee are categorized as a sex-plus discrimination where it is imposed on one sex and not on the other. Further, the same should be evenly applied and must not inflict adverse effects on a racial or sexual group which is protected by federal job discrimination laws. Employment rules that forbid or restrict the employment of married women, but do not apply to married men, have been held to violate Title VII of the United States Civil Rights Act of 1964, the main federal statute prohibiting job discrimination against employees and applicants on the basis of, among other things, sex. [35]

Further, it is not relevant that the rule is not directed against all women but just against married women. And, where the employer discriminates against married women, but not against married men, the variable is sex and the discrimination is unlawful. Upon the other hand, a requirement that a woman employee must remain unmarried could be justified as a bona fide occupational qualification, or BFOQ, where the particular requirements of the job would justify the same, but not on the ground of a general principle, such as the desirability of spreading work in the workplace. A requirement of that nature would be valid provided it reflects an inherent quality reasonably necessary for satisfactory job performance. Thus, in one case, a no-marriage rule applicable to both male and female flight attendants, was regarded as unlawful since the restriction was not related to the job performance of the flight attendants. [36]

[37]

5. Petitioners policy is not only in derogation of the provisions of Article 136 of the Labor Code on the right of a woman to be free from any kind of

stipulation against marriage in connection with her employment, but it likewise assaults good morals and public policy, tending as it does to deprive a woman of the freedom to choose her status, a privilege that by all accounts inheres in the individual as an intangible and inalienable right. Hence, while it is true that the parties to a contract may establish any agreements, terms, and conditions that they may deem convenient, the same should not be contrary to law, morals, good customs, public order, or public policy. Carried to its logical consequences, it may even be said that petitioners policy against legitimate marital bonds would encourage illicit or common-law relations and subvert the sacrament of marriage. [38]

[39]

Parenthetically, the Civil Code provisions on the contract of labor state that the relations between the parties, that is, of capital and labor, are not merely contractual, impressed as they are with so much public interest that the same should yield to the common good. It goes on to intone that neither capital nor labor should visit acts of oppression against the other, nor impair the interest or convenience of the public. In the final reckoning, the danger of just such a policy against marriage followed by petitioner PT&T is that it strikes at the very essence, ideals and purpose of marriage as an inviolable social institution and, ultimately, of the family as the foundation of the nation. That it must be effectively interdicted here in all its indirect, disguised or dissembled forms as discriminatory conduct derogatory of the laws of the land is not only in order but imperatively required. [40]

[41]

[42]

ON THE FOREGOING PREMISES, the petition of Philippine Telegraph and Telephone Company is hereby DISMISSED for lack of merit, with double costs against petitioner. SO ORDERED. Romero, Puno, Mendoza, and Torres, Jr., JJ., concur. Republic of the Philippines SUPREME COURT Manila FIRST DIVISION

G.R. No. 106256 December 28, 1994

MAYA FARMS EMPLOYEES ORGANIZATION, MAYA REALTY AND LIVESTOCK SUPERVISORY UNION, MAYA FARMS EMPLOYEES ASSOCIATION, and MAYA FARMS, INC. SUPERVISORY UNION, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, MAYA REALTY & LIVESTOCK, INC., MAYA FARMS, INC., and LIBERTY FLOUR MILLS, INC., respondents. Paterno D. Menzon Law Office for petitioners. Angara, Abello, Concepcion, Regala & Cruz for private respondents.

KAPUNAN, J.: This petition for review on certiorari seeks to set aside the decision of public respondent National Labor Relations Commission (NLRC) which upheld the legality of the separation of sixty-six (66) employees who are members of petitioner unions, thereby dismissing petitioners' complaint against private respondents for violation of collective bargaining agreement (CBA) and unfair labor practice. Private respondents Maya Farms, Inc. and Maya Realty and Livestock Corporation belong to the Liberty Mills group of companies whose undertakings include the operation of a meat processing plant which produces ham, bacon, cold cuts, sausages and other meat and poultry products. Petitioners, on the other hand, are the exclusive bargaining agents of the employees of Maya Farms, Inc. and the Maya Realty and Livestock Corporation. On April 12, 1991, private respondents announced the adoption of an early retirement program as a cost-cutting measure considering that their business operations suffered major setbacks over the years. The program was voluntary and could be availed of only by employees with at least eight (8) years of service. 1 Dialogues were thereafter conducted to give the parties an opportunity to discuss the details of the program. Accordingly, the program was amended to reduce the minimum requirement of eight (8) years of service to only five (5) years. However, the response to the program was nil. There were only a few takers. To avert further losses, private respondents were constrained to look into the companies' organizational set-up in order to streamline operations. Consequently, the early retirement program was converted into a special redundancy program intended to reduce the work force to an optimum number so as to make operations more viable. In December 1991, a total of sixty-nine (69) employees from the two companies availed of the special redundancy program. On January 17, 1992, the two companies sent letters to sixty-six (66) employees informing them that their respective positions had been declared redundant. The notices likewise stated that their services would be terminated effective thirty (30) days from receipt thereof. Separation benefits, including the conversion of all earned leave credits and other benefits due under existing CBAs were thereafter paid to those affected. On January 24, 1992, a notice of strike was filed by the petitioners which accused private respondents, among others, of unfair labor practice, violation of CBA and discrimination. Conciliation

proceedings were held by the National Conciliation and Mediation Board (NCMB) but the parties failed to arrive at a settlement. On February 6, 1992, the two companies filed a petition with the Secretary of Labor and Employment asking the latter to assume jurisdiction over the case and/or certify the same for compulsory arbitration. Thus, on February 12, 1992, the then Acting Labor Secretary (now Secretary) Nieves Confesor certified the case to herein public respondent for compulsory arbitration. On March 4, 1992, the parties were called to a hearing to identify the issues involved in the case. Thereafter, they were ordered to submit their respective position papers. In their position paper, petitioners averred that in the dismissal of sixty-six (66) union officers and members on the ground of redundancy, private respondents circumvented the provisions in their CBA, more particularly, Section 2, Article III thereof. Said provision reads: Sec. 2. LIFO RULE. — In all cases of lay-off or retrenchment resulting in termination of employment in the line of work, the Last-In-First-Out (LIFO) Rule must always be strictly observed. Petitioners also alleged that the companies' claim that they were in economic crisis was fabricated because in 1990, a net income of over 83 million pesos was realized by Liberty Flour Mills Group of Companies. 2Furthermore, with the termination of the sixty-six (66) employees pursuant to the special redundancy program, the remaining work force, especially the drivers, became overworked and overburdened so much so that they found themselves doing overtime work and reporting for duty even during rest days. Invoking the workers' constitutional right to security of tenure, petitioners prayed for the reinstatement of the sixty-six (66) employees and the payment of attorney's fees as they were constrained to hire the services of counsel in order to protect the workers' rights. On their part, private respondents contend that their decision to implement a special redundancy program was an exercise of management prerogative which could not be interfered with unless it is shown to be tainted with bad faith and ill motive. Private respondents explained that they had no choice but to reduce their work force, otherwise, they would suffer more losses. Furthermore, they denied that the program violated CBA provisions. On June 29, 1992, public respondent rendered a decision, 3 the dispositive portion of which reads: WHEREFORE, in view of the foregoing, judgment is hereby rendered confirming the legality of the separation of the 66 employees of management thereby dismissing the charges of violation of CBA and unfair labor practice on the part of management. Accordingly, Maya Farms Incorporated and Maya Realty and Livestocks Inc. are hereby ordered to comply with its (sic) undertaking per the notice of termination dated January 17, 1992 issued to the remaining fifty three (53) employees paying them their respective separation benefits as listed in the attached sheet considered part of this Decision. Said awards (sic) is in addition to other benefits as extended by the companies in the letter of termination. SO ORDERED. 4

Not satisfied with the above-quoted decision, petitioners interposed the instant petition. Petitioners maintain that public respondent grossly erred and gravely abused its discretion when it ruled that: (a) the termination of the sixty-six (66) employees was in accordance with the LIFO rule in the CBA; (b) the termination of the sixty-six (66) employees was in accordance with Article 283 of the Labor Code; and (c) the payment or offer of payment can substitute for the 30-day required notice prior to termination. 5 A close scrutiny of these assigned errors however, shows that the same primarily deal with the factual findings of public respondent which we are not at liberty to set aside in the absence of grave abuse of discretion amounting to lack or in excess of jurisdiction. This Court has consistently ruled that findings of fact of administrative agencies and quasi-judicial bodies which have acquired expertise because their jurisdiction is confined to specific matters are generally accorded not only respect but even finality 6 and are binding upon this Court unless there is a showing of grave abuse of discretion, 7 or where it is clearly shown that they were arrived at arbitrarily or in disregard of the evidence on record. 8 Nevertheless, we will look into the factual findings of public respondent if only to determine whether there was grave abuse of discretion amounting to lack or in excess of jurisdiction. The termination of the sixty-six employees was done in accordance with Article 283 of the Labor Code. The basis for this was the companies' study to streamline operations so as to make them more viable. Positions which overlapped each other, or which are in excess of the requirements of the service, were declared redundant. Article 283 provides: Art. 283. Closure of establishment and reduction of personnel. — The employer may also terminate the employment of any employee due to the installation of laborsaving devises, 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 in the provisions of this title, by serving a written notice on the workers and the Department of Labor and Employment at least one (1) month before the intended date thereof. In case of retrenchment to prevent losses of operations of establishment or undertaking not due to serious business losses or financial reverses, the one (1) month pay or at least one-half (1/2) pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year. We fully agree with the findings and conclusions of the public respondent on the issue of termination, to wit: We sustain the companies' prerogative to adopt the alleged redundancy/retrenchment program to minimize if not, to avert losses in the conduct of its operations. This has been recognized in a line of cases. (Wiltshire File Co. vs. NLRC, G.R. No. L-82249, February 7, 1991). However, the companies' decision on this matter is not absolute. The basis for such an action must be far from being whimsical and the same must be proved by substantial evidence. In addition, the implementation of such a decision or policy must be in accordance with existing laws, rules and procedure and provisions of the CBA between the parties, if there be any.

Short of any of these conditions, management policy to pursue and terminate its employees allegedly to avert losses, must fail. In subject case, the 66 complaining employees were separated from service as a result of the decision of management to limit its operations and streamline positions and personnel requirements. In the case of Maya Farms, Inc. its meat processing department, prior to the adoption of special redundancy program had four (4) sections each of which is headed by an assistant superintendent. These 3 sections are: (a) meat processing; (b) slaughterhouse; (c) packing. With the implementation of the decision of management to limit meat processing with sausages as the only output, only one position for assistant superintendent was retained that of Asst. Superintendent for meat processing held by Lydia Bandong. (Plantilla attached to the letter of May 24, 1992; also Exh. "E." Likewise, positions of slicer/seater operator, debonner/skinner, ham and bacon operative, were scrapped. Similarly, positions for packers were decreased retaining only five positions out of 21 packers. Also affected were the positions of egg sorters/stockers as only 4 positions were retained out of ten (10) positions. A close examination of the positions retained by management show that said positions such as egg sorter, debonner were but the minimal positions required to sustain the limited functions/operations of the meat processing department. In the absence of any evidence to prove bad faith on the part of management in arriving at such decision, which records on hand failed to show in instant case, the rationality of the act of management in this regard must be sustained. While it may be true that the Liberty Flour Mills Group of Companies as a whole posted a net income of P83.3 Million, it is admitted that with respect to operations of the meat processing and livestock which were undertaken by herein companies sustained losses in the sum of P2,257,649.88 (Exh. "3"). This is the reason, as advanced by management, for its decision to streamline positions resulting in the reduction of manpower compliment (sic). 9 In Abbott Laboratories (Phils.) Inc. vs. NLRC, 10 we had occasion to uphold the employer in its exercise of what are clearly management prerogatives, thus: The hiring, firing, transfer, demotion, and promotion of employees has been traditionally, identified as a management prerogative subject to limitations found in law, a collective bargaining agreement or general principles of fair play and justice. This is a function associated with the employer's inherent right to control and manage effectively its enterprise. Even as the law is solicitous of the welfare of the employees, it must also protect the right of an employer to exercise what are clearly management prerogatives. The free will of management to conduct its own business affairs to achieve its purpose cannot be denied (see Dangan vs. National Labor Relations Commission, 127 SCRA 706). The rule is well-settled that labor laws discourage interference with an employer's judgment in the conduct of his business. Even as the law is solicitous of the welfare of employees, it must also protect the right of an employer to exercise what are clearly management prerogatives. 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 laws or valid agreements, such exercise will be upheld. 11

The NLRC correctly held that private respondents did not violate the LIFO rule under Section 2, Article III of the CBA which provides: Sec. 2. LIFO RULE. In all cases of lay-off or retrenchment resulting in termination of employment in the line of work, the Last-in-First-Out (LIFO) Rule must always be strictly observed. It is not disputed that the LIFO rule applies to termination of employment in the line of work. 12 Verily, what is contemplated in the LIFO rule is that when there are two or more employees occupying the same position in the company affected by the retrenchment program, the last one employed will necessarily be the first to go. Moreover, the reason why there was no violation of the LIFO rule was amply explained by public respondent in this wise: . . . . The LIFO rule under the CBA is explicit. It is ordained that in cases of retrenchment resulting in termination of employment in line of work, the employee who was employed on the latest date must be the first one to go. The provision speaks of termination in the line of work. This contemplates a situation where employees occupying the same position in the company are to be affected by the retrenchment program. Since there ought to be a reduction in the number of personnel in such positions, the length of service of each employees is the determining factor, such that the employee who has a longer period of employment will be retained. In the case under consideration, specifically with respect to Maya Farms, several positions were affected by the special involuntary redundancy program. These are packers, egg sorters/stockers, drivers. In the case of packers, prior to the involuntary redundancy program, twenty-one employees occupied the position of packers. Out of this number, only 5 were retained. In this group of employees, the earliest date of employment was October 27, 1969, and the latest packer was employed in 1989. The most senior employees occupying the position of packers who were retained are as follows: Santos, Laura C. Oct. 27, 1969 Estrada, Mercedes Aug. 20, 1970 Hortaleza, Lita June 11, 1971 Jimenez, Lolita April 25, 1972 Aquino, Teresita June 25, 1975 All the other packers employed after June 2, 1975 (sic) were separated from the service. The same is true with respect to egg sorters. The egg sorters employed on or before April 26, 1972 were retained. All those employed after said date were separated. With respect to the position of drivers, there were eight drivers prior to the involuntary redundancy program. Thereafter only 3 positions were retained. Accordingly, the three drivers who were most senior in terms of period of employment, were retained. They are: Ceferino D. Narag, Efren Macaraig and Pablito Macaraig.

The case of Roberta Cabrera and Lydia C. Bandong, Asst. Superintendent for packing and Asst. Superintendent for meat processing respectively was presented by the union as an instance where the LIFO rule was not observed by management. The union pointed out that Lydia Bandong who was retained by management was employed on a much later date than Roberta Cabrera, and both are Assistant Superintendent. We cannot sustain the union's argument. It is indeed true that Roberta Cabrera was employed earlier (January 28, 1961) and (sic) Lydia Bandong (July 9, 1966). However, it is maintained that in meat processing department there were 3 Asst. Superintendents assigned as head of the 3 sections thereat. The reason advanced by the company in retaining Bandong was that as Asst. Superintendent for meat processing she could "already take care of the operations of the other sections." The nature of work of each assistant superintendent as well as experience were taken into account by management. Such criteria was not shown to be whimsical nor carpricious (sic). 13 (Emphasis supplied). Finally, contrary to petitioners' contention, there is nothing on record to show that the 30-day notice of termination to the workers was disregarded and that the same substituted with separation pay by private respondents. As found by public respondent, written notices of separation were sent to the employees on January 17, 1992. The notices expressly stated that the termination of employment was to take effect one month from receipt thereof. Therefore, the allegation that separation pay was given in lieu of the 30-day notice required by law is baseless. WHEREFORE, finding no grave abuse of discretion amounting to lack or in excess of jurisdiction on the part of public respondent, the instant petition is hereby DISMISSED. SO ORDERED. Padilla, Davide, Jr., Bellosillo and Quiason, JJ., concur.

SECOND DIVISION [G.R. No. 119157. March 11, 1999] GOLDEN THREAD KNITTING INDUSTRIES, INC., GEORGE NG and WILFREDO BICO, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, GEORGE MACASPAC, MARY ANN MACASPAC, ROMULO ALBASIN, MELCHOR CACHUCHA, GILBERT RIVERA and FLORA BALBINO,respondents. DECISION BELLOSILLO, J.:

From 16 July to 2 September 1992 four (4) separate complaints were filed against petitioners Golden Thread Knitting Industries, Inc., George Ng and Wilfredo Bico by their

employees: the first, on 16 July 1992 for unfair labor practice, illegal dismissal, overtime pay, premium pay, holiday pay and illegal rotation by Gilbert Rivera, Mary Ann Macaspac, Deogracias Balingit, Lolita Geraldez, Mila Santos, Perlita Matias, Lourdes Barranco, Melchor Cachucha, Romulo Albasin, Lani Agudo, Rosalie Cachucha, Cristina Balingit, Rossie Rejuso, Carmen Balingit, George Macaspac, Flora Balbino, Ma. LuisaBalbino, Angelina Albasin, Vilma Ballesteros, Evelyn Carlos and Letty Bejamonde; the second, on 22 July 1992, for unfair labor practice, illegal dismissal, reduction of working days, fabrication/frame-up of union member and union busting, by Flora Balbino, Mary Ann Macaspac, Rossie Rejuso, Rosalie Cachucha, Lolita Geraldez, Angelina Albasin, Ma. Luisa Balbino, Vilma Ballesteros and Carmen Balingit; the third, on 24 August 1992, for unfair labor practice and withholding of wages filed by Deogracias Balingit; and the fourth, on 2 September 1992, for unfair labor practice and illegal dismissal, by Gilbert Rivera and Mary Ann Macaspac. Thereafter, the four (4) complaints had to be, as they in fact were, consolidated. During the pendency of these cases, Lolita Geraldez, Perlita Matias, Mila Santos and Angelina Albasin moved that they be dropped as complainants in view of their subsequent resignation/ separation from employment. The complainants alleged that in the first week of May 1992 they organized a labor union. On 22 May 1992 Cristina Balingit, wife of the union Chairman, was dismissed from employment as sewer. In the last week of May union Chairman Deogracias Balingit himself was suspended from work as knitting operator. On 1 June 1992 petitioners shortened the number of working days of the union officers and members from six (6) to three (3) days a week. On 1 July 1992 the union filed a petition for certification election. On 6 July 1992 union members Romulo Albasin, Melchor Cachucha and George Macaspac, who worked as printers, were barred from entering the company premises. On 5 August 1992 Flora Balbino was suspended, then on the same day terminated from her job as sewer. On 14 August 1992 union Vice Chairman Gilbert Rivera, as artist, was dismissed from employment together with union Secretary Mary Ann Macaspac. On 10 September 1992 Mila Santos was suspended. The complainants thus considered the foregoing acts as retaliatory measures of petitioners on account of the former having established a union. Petitioners contended that they resorted to rotation of work, which affected practically all employees, because of the low demand for their towels and shirts. Petitioners also avowed that they validly dismissed five (5) of the complainants, namely, Romulo Albasin, George Macaspac, Gilbert Rivera, Mary Ann Macaspac and Flora Balbino. According to petitioners, Romulo Albasin and George Macaspac slashed several bundles of towels on 3 July 1992, while the positions of Gilbert Rivera and Mary Ann Macaspac became redundant. Flora Balbino threatened the Personnel Manager and violated company rules by removing her time card from the rack, while Melchor Cachucha was not dismissed but abandoned his employment on 7 July 1992.

On 17 March 1993 the Labor Arbiter partly ruled in favor of the complainants. On the issue of unfair labor practice, he opined that the reduction of working days and suspension or dismissal of union officers or members were not shown to have been done in retaliation to the complainants' act of organizing a union. He noted that those events transpired before petitioners came to know about the existenceof the union which was in the later part of July 1992 when they received the notice of hearing on the petition for certification election. Moreover, he was convinced that the reduction of working days which was company wide was brought about by the low demand for the company's products. With respect to the dismissals of Romulo Albasin, George Macaspac, Gilbert Rivera, Mary Ann Macaspac and Flora Balbino, the Labor Arbiter upheld petitioners on the validity thereof except that Gilbert Rivera and Mary Ann Macaspac should be paid separation pay of one-half (1/2) month for every year of service or P4,602.00 each. On the other hand, Flora Balbino should be paid her two (2) days' salary of P236.00 that was withheld from her. As for Melchor Cachucha, the Labor Arbiter sustained petitioners' contention that he was guilty of abandonment. Regarding the claims of Deogracias and Cristina Balingit, the Labor Arbiter found that these were barred by their previous separate complaints, one of which was pending appeal while the other was already dismissed. The rest of the claims was dismissed for lack of merit.[1] Public respondent National Labor Relations Commission evaluated the evidence in a different manner. Except for the dismissal of the charge of unfair labor practice and the award of unpaid wages to Flora Balbino, the rest of the Labor Arbiter's ruling was set aside on 22 November 1994. According to the NLRC George Macaspac, Mary Ann Macaspac, Romulo Albasin, Melchor Cachucha, Gilbert Rivera and Flora Balbino were illegally dismissed so that petitioners were directed to immediately reinstate them with full back wages and other benefits. Furthermore, the NLRC found merit in the claim for holiday pay for 1990, 1991 and 1992 and thus ordered petitioners to give complainants their pay for ten (10) regular holidays for each year. Finally, it required petitioners to pay attorney's fees equivalent to ten (10%) percent of the total monetary awards.[2] Petitioners maintain that valid causes exist for the termination of the five (5) complainants earlier mentioned. Romulo Albasin and George Macaspac were caught by security guards M. Abelgas and E. Antonio slashing with razor blades several bundles of towels in the warehouse at about 12:30 o'clock in the afternoon of 3 July 1992. The incident, which constituted serious misconduct, was witnessed by another employee, Jose Arnel Mejia. Gilbert Rivera and Mary Ann Macaspac were terminated on 14 August 1992 due to redundancy, i.e., the Design Section where they worked as artists became overmanned when the volume of work was drastically reduced. Flora Balbino was guilty of serious misconduct by hurling invectives at petitioner Bico and threatening him in front of several workers, and taking her time card off the rack on 5 August 1992.

In the case of Melchor Cachucha, petitioners insist that he unjustifiably left his employment on 7 July 1992 and refused to return to work despite notice sent through his wife, who was also employed by petitioner company, through a memorandum dated 22 July 1992[3] and personal notification by another employee, Nilo Wales. [4] Petitioners insist that private respondents are not entitled to holiday pay on the basis of bare allegations and without specifying the unpaid holidays. Clearly, there are only two (2) issues that confront this Court: (1) whether respondent NLRC committed grave abuse of discretion in ordering petitioners to reinstate private respondents Romulo Albasin, George Macaspac, Gilbert Rivera, Mary Ann Macaspac, Flora Balbino and Melchor Cachucha; and, (2) whether these private respondents are entitled to holiday pay. The factual findings of administrative bodies, being considered experts in their field, are binding on this Court. But this is a general rule which holds true only when established exceptions do not obtain.One of these exceptions is where the findings of the Labor Arbiter and the NLRC are contrary to each other, as in the present case. Thus, there is a necessity to review the records to determine which conclusions are more conformable to the evidentiary facts.[5] With regard to George Macaspac and Romulo Albasin, security guards M. Abelgas and E. Antonio submitted an incident report to the Manager of petitioner company regarding the destruction of several bundles of towels by Macaspac and Albasin with the use of razor blades. [6] In fact, on 20 July 1992 petitioner Bico as Supervisor of petitioner company filed a complaint for malicious mischief against them the property destroyed being worth P3,800.00.[7] In this connection, another employee of petitioners, Jose Arnel Mejia, executed a sworn statement on the same day before the State Prosecutor regarding the incident xxxx 03. T: Ano naman ang iyong titistiguhan na nakita mo? S: Nakita ko po na hinihiwa ng dalawang kasamahan ko sa trabaho iyong nakarolliong tuwalya at ito ay kanilang ikinalat at iyong nakabalot na plastic sa mga nakarollio ay kanilang pinagsisira. 04. T: Sino naman itong dalawang kasamahan mo na sumira sa mga nakarolliong tuwalya? S: Sila ay sina R(O)M(U)LO ALBASIN at GEORGE MACASPAC, na pawang mga kasamahan ko sa trabaho. 05. T: Kailan at saan naman nangyari ang mga bagay na ito? S: Noon pong ika-3 ng (H)ul(y)o 1992, mga bandang alas 12:00 ng tanghali, doon po sa warehouse ng Golden Thread (K)nitting (I)ndustries, sa no. 270 Tangka St., Malinta, Valenzuela, Metro Manila. 06. T: Nakita mo ba n(an)g kasalukuyan nilang sinisira iyong mga tuwalya?

S: Opo, nakita ko dahil sabay-sabay kaming lumabas at isa lamang ang aming dinadaanan. 07. T: Kasama mo ba si(l)a sa isang department? S: Opo, at lunch break na po iyon at maglalabasan kami para kumain at pagdaan nila doon sa mga nakakamadang tuwalya ay ginulo nila iyong mga kamada at pinaghihiwa nila. 08. T: Alam mo ba ang dahilan at kung bakit ginawa nila ang bagay na iyon? S: Nagalit po siguro sila dahil inalis ni Manager iyong pinaskil nilang karatula tungkol sa labor x x x x[8]

On 5 November 1992 Mejia executed another affidavit substantially reiterating his prior narrations.[9] On 6 August 1992 Macaspac and Albasin executed a counter-affidavit denying the accusation against them. They claim that they were having lunch outside the company premises during the time and date of the alleged incident.[10] Their denial and alibi were substantiated by the joint affidavits of Mary Ann Macaspac, Perlita Matias, Lolita Geraldez, Melchor Cachucha and Ma. Luisa Balbino.[11] NLRC did not find lawful cause for the dismissal of Macaspac and Albasin since -

x x x x Records show that respondents failed to give the aforenamed complainants an opportunity to be heard. There was no investigation conducted, calling the attention of the aforenamed complainants (to) the charge imputed against them and requiring them to explain and/or answer the same. Respondents' lone witness in the person of Jose Arnel Mejia was not presented for confrontation by the said complainants. Thus, with the vehement denial of the complainants, together with their own witnesses (pp. 157163, Records), We find the charge imputed against them of questionable veracity x x x x[12] The ruling is correct. We find that petitioners were unable to substantiate the charge of serious misconduct against Macaspac and Albasin. The incident report of the two (2) security guards was on its face categorical on the culpability of subject respondents, yet it is perplexing that the report was not utilized as supporting evidence in the criminal proceedings. The affidavit of petitioner Bico sworn to before the State Prosecutor only mentioned that xxxx 03. T: Ano ang dahilan at naririto ka sa aming tang(g)apan at nagbibigay ng salaysay? S: Dahil sa ako po ang napag(-)utusan ng aming Manager upang maghain ng reklamo laban doon sa dalawang trabahador n(a) sumira sa produktong tuwalya x x x x

09. T: Papaano mo naman nalaman na sila ang nagsira ng mga produktong tuwalya? S: Nagpunta po sa akin iyong lady guard at sinabi niya na iyong mga nakarolliong tuwalya na nakaka(l)at ay mga (h)iniwa at sira. (A)ng ginawa ko ay pumunta ako doon sa lugar ng mga tuwalya at nakita ko na sira nga ang mga tuwalya, pinagtanong ko kung sino ang nakakita na sumira sa mga tuwalya at doon ay mayroon umamin sa akin at sinabi na sila R(o)m(u)lo Albasin at George Macaspac ang sumira x x x x[13]

As previously stated, the incident report was addressed to the Manager of the company. Considering that it was the Manager who instructed petitioner Bico to lodge the criminal complaint, and if the report was submitted after the incident, then there was no reason for it not to form part of the evidence in the criminal proceedings. As it is, we can gather from the narration of petitioner Bico that the person who revealed to him the identities of the culprits was not one of the security guards but Mejia who supplied the supporting affidavit. These circumstances inevitably lead us to the conclusion that the incident report was merely concocted by petitioners in view of the filing of the labor cases against them. The narration of Mejia regarding the alleged slashing incident is obviously another fabrication. In answer to the query, "Nakita mo ba n(an)g kasalukuyan nilang sinisira iyong mga tuwalya?" Mejia replied, "Opo, nakita ko dahil sabay-sabay kaming lumabas at isa lamang ang aming dinadaanan." Indeed, it is hard to believe that Macaspac and Albasin destroyed company properties in Mejia's full view who did not appear to be with them in the controversy. Often, misdeeds are committed either in the presence of an ally, if nobody is around to blow the whistle, or when darkness has adequately shrouded the surroundings. Moreover, it has not been shown that Macaspac and Albasin were such feckless individuals who would resort to destruction of company properties in total disregard of its dire consequences. On the contrary, they were union members fighting for their rights as employees. Even the reason advanced by Mejia for their misconduct banks on speculation. Further still, it does not appear that the criminal case filed by petitioner Bico primarily on the strength of the affidavit of Mejia ever prospered at the prosecutor's level. Macaspac and Albasin were likewise denied procedural due process. As correctly observed by respondent NLRC, petitioners failed to afford Macaspac and Albasin the benefit of hearing and investigation before termination. It is also our observation that neither did petitioners comply with the requirement on notices. An established rule of long standing is that to effect a completely valid and unassailable dismissal, an employer must show not only sufficient ground therefor but must also prove that procedural due process has been observed by giving the employee two (2) notices: one, of the intention to dismiss, indicating therein his acts or omissions complained against, and two, notice of the decision to dismiss. [14] Macaspac and Albasin were summarily eased out of employment when they were refused entry into the company premises three (3) days after allegedly slashing the bundles of towels or on 6 July 1992.

As regards Gilbert Rivera and Mary Ann Macaspac, petitioners claim that they were constrained to trim down the number of their artists in the Design Section from five (5) to two (2) as a consequence of the drastic reduction of their volume of work, and Rivera and Macaspac were among the three (3) employees dismissed for redundancy. Rivera and Macaspac assail the alleged redundancy as the events that transpired prior to their termination proved otherwise. According to Rivera, on 27 July 1992 he was dismissed on account allegedly of poor revenues and was in fact offered separation pay, which he refused. He further said that the following day he was dismissed, he sent a letter to petitioners Ng and Bico protesting his dismissal, claiming that he had not done anything wrong to them nor to the company.[15] Further still, Rivera claimed that on 4 August 1992 he was advised by petitioner Ng to report for work immediately,[16] although upon his return he was again offered separation pay but opted instead to continue working. On her part, Macaspac claims that she was also offered separation pay on the same ground but she also rejected the offer. Both Rivera and Macaspac requested evidence of the company's financial setback but petitioners failed to furnish them any. Rivera's working days were further reduced from three (3) to two (2) days a week.[17] Insisting on the redundancy of the positions of Rivera and Macaspac, petitioners finally dismissed them on 14 August 1992. The circumstances recounted by Rivera and Macaspac were considered by the NLRC to have cast serious doubt on the validity and propriety of their termination. Moreover, the NLRC found that their dismissal was not reported by petitioners to the Department of Labor and Employment (DOLE) as required by law. Again, we agree with respondent NLRC. The characterization of an employee's services as no longer necessary or sustainable, and therefore properly terminable, is an exercise of business judgment on the part of the employer. The wisdom or soundness of such characterization or decision is not subject to discretionary review on the part of the Labor Arbiter nor the NLRC provided, of course, that violation of law or arbitrary or malicious action is not shown. [18] In the instant case, we question petitioners' exercise of management prerogative because it was not shown that Rivera and Macaspac's positions were indeed unnecessary, much less was petitioners' claim supported by any evidence. It is not enough for a company to merely declare that it has become overmanned. It must produce adequate proof that such is the actual situation in order to justify the dismissal of the affected employees for redundancy.[19] Furthermore, we have laid down the principle that in selecting the employees to be dismissed, a fair and reasonable criteria must be used, such as but not limited to: (a) less preferred status (e. g., temporary employee), (b) efficiency, and (c) seniority.[20] The records disclose that no criterion whatsoever was adopted by petitioners in dismissing Rivera and Macaspac. Another procedural lapse committed by petitioners is the lack of written notice to the DOLE required under Art. 283 of the Labor Code.[21] The purpose of such notice is to ascertain the verity of the cause of termination of employment.[22]

Quite related to the alleged drastic reduction of their volume of work, petitioners further contended in the proceedings below that they resorted to rotation of employees due to the low demand for their products. But respondent NLRC was not persuaded since, other than petitioners' bare contention, they miserably failed to support it with concrete evidence.[23] On the part of Flora Balbino, petitioner Bico submitted a certification dated 5 August 1992 stating that on that day he explained to Flora Balbino the company memorandum on her 3-day suspension on the ground that she repeatedly slowed down her production. He told her to sign the memorandum which, according to Bico, obviously infuriated her thus prompting her to hurl invectives at him in the presence of many persons inside his office. She even threatened him, "Humanda ka sa darating na araw ipatitiklo kita." The certification was attested to by five (5) witnesses.[24] Security guard Abelgas submitted a written report regarding Balbino's act of stealing the time card in her name after bad mouthing petitioner Bico and refusing to sign the memorandum on her suspension.[25] Another employee submitted her own report corroborating Balbino's act of removing her time card from the rack.[26] Balbino's story is completely different. According to her, she was dismissed outright by Bico on the same date she asked for a memorandum on her suspension. She was however silent on the other charge that she stole the time card in her name. The NLRC lent full credence to the version of Balbino. Here, we disagree. As between the uncorroborated account of Balbino and the narration of petitioner Bico, which was attested to by witnesses and substantiated by other employees, we accord weight to the latter. The utterances by an employee of obscene, insulting or offensive words against a superior justify his dismissal for gross misconduct. The scornful attitude is also destructive of his co-employees' morale. [27] However, the dismissal will not be upheld where it appears, as in this case, that the employee's act of disrespect was provoked by the employer.[28] It may be recalled that Balbino was suspended because she allegedly continually slowed down in her production. Yet, as found by the NLRC, to which we agree, petitioners failed to show that there was an established quota for production as a point of reference to determine whether an employee was performing below or above the quota to warrant the charge.[29] What surfaces from our assessment of the evidence of petitioners is that Balbino hurled invectives at petitioner Bico because she was provoked by the baseless suspension imposed on her. The penalty of dismissal must be commensurate with the act, conduct or omission imputed to the employee.[30] Under the circumstances, we believe that dismissal was a harsh penalty; one (1) week suspension would have sufficed. Balbino might have taken the time card in her name but the Court considers this act as a mere emotional outburst and an offshoot of her suspension. Anyway, no material damage was demonstrated to have been suffered by petitioners on account thereof. A time card shows the actual number of hours and days in a certain period performed by an employee such that the loss thereof will surely pose a problem. But not so in the case of Balbino since only her work performed on 31 July and 3 August 1992 was unpaid. These circumstances on non-payment were

uncontroverted by petitioners, rightfully entitling Balbino to an award therefor which the NLRC determined to be P236.00. Also worth mentioning is the fact that Balbino was denied procedural due process when she was summarily dismissed.[31] Insofar as Melchor Cachucha is concerned, petitioners insist that he abandoned his work on 7 July 1992 and refused to return despite notice sent through his wife, through a memorandum dated 22 July 1992, and personal notification by co-employee Nilo Wales. But disputing the charge, Cachucha claimed that together with Macaspac and Albasin, he was prevented by the company security guards from reporting for work on 6 July 1992. The NLRC sustained Cachucha that he did not abandon his work considering that he seasonably filed a complaint for illegal dismissal against petitioners on 16 July 1992 and positively disavowed any notice to return to work allegedly sent to him by petitioners. The NLRC is correct. For abandonment to exist, it is essential that (1) the employee must have failed to report for work or must have been absent without valid or justifiable reason; and, (2) there must have been a clear intention to sever the employer-employee relationship manifested by some overt acts.[32] The circumstance that Cachucha lost no time in filing a complaint for illegal dismissal against petitioners on 16 July 1992 is incompatible with the charge of abandonment[33] and confirms in fact that he was refused entry into the company premises on 6 July 1992. Petitioners' allegation that they informed Cachucha's wife that Cachucha must report to work immediately is unsubstantiated and self-serving. The alleged notification through the memorandum of 22 July 1992 has not been shown to have been received by Cachucha. On the other hand, the affidavit of Wales stating that on 23 July 1992 he relayed to Cachucha the directive to return to work which the latter turned down for lack of interest does not inspire belief. If Wales' narrations were true, then Cachucha would have simply abided by the directive and moved for the dismissal of his complaint which was filed earlier. After all, it was precisely reinstatement that he was seeking.[34] Dismissal is the ultimate penalty that can be meted to an employee. It must therefore be based on a clear and not on an ambiguous or ambivalent ground .[35] From our assessment of the records, we find that petitioners exercised their authority to dismiss without due regard to the pertinent exacting provisions of the Labor Code. The right to terminate should be utilized with extreme caution because its immediate effect is to put an end to an employee's present means of livelihood while its distant effect, upon a subsequent finding of illegal dismissal, is just as pernicious to the employer who will most likelybe required to reinstate the subject employee and grant him full back wages and other benefits.[36] The award of compensation for ten (10) regular holidays for 1990, 1991 and 1992 by the NLRC is proper. The dismissed workers distinctly set forth in their Position Paper that they were not remunerated for ten (10) regular holidays for the years 1990, 1991 and 1992. [37] This claim stands undisputed.

WHEREFORE, the Resolution of public respondent National Labor Relations Commission of 22 November 1994 directing petitioners GOLDEN THREAD KNITTING INDUSTRIES, INC., GEORGE NG and WILFREDO BICO to immediately reinstate private respondents George Macaspac, Mary Ann Macaspac, Romulo Albasin, Melchor Cachucha, Gilbert Rivera and Flora Balbino to their former positions without loss of seniority rights and other privileges and with full back wages, inclusive of allowances, and to their other benefits or their monetary equivalent computed from the time of their dismissal up to actual reinstatement, is AFFIRMED but with modification as regards private respondent Balbino whose date of termination should be 12 August 1992, taking into account her one (1) week suspension. All the rest of the dispositive portion, particularly the order to petitioners to pay private respondents for ten (10) regular holidays for 1990, 1991 and 1992; to pay private respondent Balbino her wages for two (2) days amounting to P236.00; and, to pay private respondents attorney's fees equivalent to ten per cent (10%) of the total monetary awards, is likewise AFFIRMED. Costs against petitioners. SO ORDERED. Puno, Mendoza, Quisumbing, and Buena, JJ., concur. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 174184

January 28, 2015

G.J.T. REBUILDERS MACHINE SHOP, GODO FREDO TRILLANA, and JULIANA TRILLANA, Petitioners, vs. RICARDO AMBOS, BENJAMIN PUTIAN, and RUSSELL AMBOS, Respondents. DECISION LEONEN, J.: To prove serious business losses, employers must present in evidence financial statements showing the net losses suffered by the business within a sufficient period of time. Generally, it cannot be based on a single financial statement showing losses. Absent this proof, employers closing their businesses must pay the dismissed employees separation pay equivalent to one-month pay or to at least one-half-month pay for every year of service, whichever is higher. This is a Petition for Review on Certiorari of the Court of Appeals' Decision, granting Ricardo Ambos, Russell Ambos, and Benjamin Putian's Petition for Certiorari. The Court of Appeals found that G.J.T. Rebuilders Machine Shop (G.J.T. Rebuilders) failed to prove its alleged serious business losses. Thus, when it closed its establishment on December 15, 1997, G.J.T. Rebuilders should have paid the affected employees separation pay. 1

2

3

4

G.J.T. Rebuilders is a single proprietorship owned by the Spouses Godofredo and Juliana Trillana (Trillana spouses). It was engaged in steel works and metal fabrication, employing Ricardo Ambos (Ricardo), Russell Ambos (Russell), and Benjamin Putian (Benjamin) as machinists. 5

G.J.T. Rebuilders rented space in the Far East Asia (FEA) Building in Shaw Boulevard, Mandaluyong City, which served as the site of its machine shop. On September 8, 1996, a fire partially destroyed the FEA Building. 6

Due to the damage sustained by the building, its owner notified its tenants to vacate their rented units by the end of September 1996 "to avoid any unforeseen accidents which may arise due to the damage." 7

Despite the building owner’s notice to vacate, G.J.T. Rebuilders continued its business in the condemned building. When the building owner finally refused to accommodate it, G.J.T. Rebuilders left its rented space and closed the machine shop on December 15, 1997. It then filed an Affidavit of Closure before the Department of Labor and Employment on February 16, 1998 and a sworn application to retire its business operations before the Mandaluyong City Treasurer’s Office on February 25, 1998. 8

9

Having lost their employment without receiving separation pay, Ricardo, Russell, and Benjamin filed a Complaint for illegal dismissal before the Labor Arbiter. They prayed for payment of allowance, separation pay, and attorney’s fees. 10

In their defense, G.J.T. Rebuilders and the Trillana spouses argued that G.J.T. Rebuilders suffered serious business losses and financial reverses, forcing it to close its machine shop. Therefore, Ricardo, Russell, and Benjamin were not entitled to separation pay. 11

Labor Arbiter Facundo L. Leda (Labor Arbiter Leda) decided the Complaint, finding no convincing proof of G.J.T. Rebuilders’ alleged serious business losses. Labor Arbiter Leda, in the Decision dated December 28, 1999, found that Ricardo, Russell, and Benjamin were entitled to separation pay under Article 283 of the Labor Code. In addition, they were awarded attorney’s fees, having been constrained to litigate their claims. 12

13

14

Even assuming that G.J.T. Rebuilders’ closure was due to serious business losses, Labor Arbiter Leda held that the employees affected were still entitled to separation pay "based on social justice and equity." 15

G.J.T. Rebuilders and the Trillana spouses appealed Labor Arbiter Leda’s Decision before the National Labor Relations Commission. 16

In contrast with the Labor Arbiter’s finding, the National Labor Relations Commission found G.J.T. Rebuilders to have suffered serious business losses. Because of the fire that destroyed the building where G.J.T. Rebuilders was renting space, the demand for its services allegedly declined as "no same customer would dare to entrust machine works to be done for them in a machine shop lying in a ruined and condemned building." The National Labor Relations Commission then concluded that the fire "proximately caused" G.J.T. Rebuilders’ serious business losses, with its financial statement for the fiscal year 1997 showing a net loss of 316,210.00. 17

18

19

In the Decision dated January 25, 2001, the National Labor Relations Commission vacated and set aside Labor Arbiter Leda’s Decision and dismissed the Complaint for lack of merit. Since the Commission found that G.J.T. Rebuilders ceased operations due to serious business losses, it held 20

that G.J.T. Rebuilders and the Trillana spouses need not pay Ricardo, Russell, and Benjamin separation pay. Ricardo, Russell, and Benjamin filed a Motion for Reconsideration, which the National Labor Relations Commission denied in the Resolution dated March 5, 2001. 21

Because of the alleged grave abuse of discretion of the National Labor Relations Commission, a Petition for Certiorari was filed before the Court of Appeals. 22

The Court of Appeals reversed the National Labor Relations Commission’s Decision, agreeing with Labor Arbiter Leda that G.J.T. Rebuilders failed to prove its alleged serious business losses. The Court of Appeals conceded that G.J.T. Rebuilders had to close the machine shop for reasons connected with the fire that partially destroyed the building where it was renting space. Nevertheless, G.J.T. Rebuilders continued its business for more than one year after the fire. Thus, according to the Court of Appeals, G.J.T. Rebuilders did not suffer from serious business losses but closed the machine shop to prevent losses. 23

With respect to G.J.T. Rebuilders’ financial statement showing an alleged net loss in 1997, the Court of Appeals refused to admit it in evidence since it was not subscribed under oath by the Certified Public Accountant who prepared it. According to the Court of Appeals, the financial statement was subscribed under oath only after G.J.T. Rebuilders had submitted it to Labor Arbiter Leda as an annex to its Motion to re-open proceedings and to submit additional evidence. Thus, the Court of Appeals gave G.J.T. Rebuilders’ financial statement "scant consideration." 24

In the Decision dated January 17, 2006, the Court of Appeals granted the Petition for Certiorari, vacating and setting aside the National Labor Relations Commission’s Decision. It reinstated Labor Arbiter Leda’s Decision dated December 28, 1999. 25

G.J.T. Rebuilders and the Trillana spouses filed a Motion for Reconsideration, which the Court of Appeals denied in the Resolution dated August 11, 2006. 26

Petitioners G.J.T. Rebuilders and the Trillana spouses filed before this court a Petition for Review on Certiorari. Respondents Ricardo, Russell, and Benjamin commented on the Petition, after which petitioners filed a Reply. 27

28

29

In their Petition for Review on Certiorari, petitioners maintain that G.J.T. Rebuilders suffered serious business losses as evidenced by its financial statement covering the years 1996 and 1997. Petitioners admit that the financial statement was belatedly subscribed under oath. Nevertheless, "the credibility or veracity of the entries" in the financial statement was not affected since the Bureau of Internal Revenue received the same unsubscribed financial statement when G.J.T. Rebuilders allegedly filed its income tax return on April 15, 1998. 30

31

32

Considering that petitioners sufficiently proved G.J.T. Rebuilders’ serious business losses, petitioners argue that respondents are not entitled to separation pay. As for respondents, they contend that G.J.T. Rebuilders failed to prove its alleged serious business losses. They argue that the financial statement showing a net loss for the year 1997 was not credible, having been belatedly subscribed under oath by the Certified Public Accountant who prepared it. 33

With no credible proof of G.J.T. Rebuilders’ supposed serious business losses, respondents argue that petitioners must pay them separation pay under Article 283 of the Labor Code. 34

The issue for our resolution is whether petitioners sufficiently proved that G.J.T. Rebuilders suffered from serious business losses. This petition should be denied. I G.J.T. Rebuilders must pay respondents their separation pay for failure to prove its alleged serious business losses Article 283 of the Labor Code allows an employer to dismiss an employee due to the cessation of operation or closure of its establishment or undertaking, thus: 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 Department of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to installation of labor saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of 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 to at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year. The decision to close one’s business is a management prerogative that courts cannot interfere with. Employers can "lawfully close shop at anytime," even for reasons of their own. "Just as no law forces anyone to go into business, no law can compel anybody to continue in it." In Mac Adams Metal Engineering Workers Union-Independent v. Mac Adams Metal Engineering, this court said: 35

36

37

38

It would indeed be stretching the intent and spirit of the law if [courts] were to unjustly interfere with the management’s prerogative to close or cease its business operations just because [the] business operation or undertaking is not suffering from any loss or simply to provide the workers continued employment. 39

However, despite this management prerogative, employers closing their businesses must pay the affected workers separation pay equivalent to one-month pay or to at least one-half-month pay for every year of service, whichever is higher. The reason is that an employee dismissed, even for an authorized cause, loses his or her means of livelihood. 40

41

The only time employers are not compelled to pay separation pay is when they closed their establishments or undertaking due to serious business losses or financial reverses. 42

Serious business losses are substantial losses, not de minimis. "Losses" means that the business must have operated at a loss for a period of time for the employer "to [have] perceived objectively and in good faith" that the business’ financial standing is unlikely to improve in the future. 43

44

The burden of proving serious business losses is with the employer. The employer must show losses on the basis of financial statements covering a sufficient period of time. The period covered must be sufficient for the National Labor Relations Commission and this court to appreciate the nature and vagaries of the business. 45

In North Davao Mining Corporation v. NLRC, North Davao Mining Corporation presented in evidence financial statements showing a continuing pattern of loss from 1988 until its closure in 1992. The company suffered net losses averaging 3 billion a year, with an aggregate loss of 20 billion by the time of its closure. This court found that North Davao suffered serious business losses. 46

47

48

In Manatad v. Philippine Telegraph and Telephone Corporation, the Philippine Telegraph and Telephone Corporation presented in evidence financial statements showing a continuing pattern of loss from 1995 to 1999. By 2000, the corporation suffered an aggregate loss of 2.169 billion, constraining it to retrench some of its employees. This court held that the Philippine Telegraph and Telephone Corporation was "fully justified in implementing a retrenchment program since it was undergoing business reverses, not only for a single fiscal year, but for several years prior to and even after the program." 49

50

51

In LVN Pictures Employees and Workers Association (NLU) v. LVN Pictures, Inc., a case G.J.T. Rebuilders cited, LVN Pictures, Inc. presented in evidence financial statements showing a continuing pattern of loss from 1957 to 1961. By the time the corporation closed its business, it had suffered an aggregate loss of 1,560,985.14. This court found that LVN Pictures, Inc. suffered serious business losses. 52

53

54

Aside from the obligation to pay separation pay, employers must comply with the notice requirement under Article 283 of the Labor Code. Employers must serve a written notice on the affected employees and on the Department of Labor and Employment at least one month before the intended date of closure. Failure to comply with this requirement renders the employer liable for nominal damages. 55

We uphold G.J.T. Rebuilders’ decision to close its establishment as a valid exercise of its management prerogative. G.J.T. Rebuilders closed its machine shop, believing that its "former customers . . . seriously doubted [its] capacity . . . to perform the same quality [of service]" after the fire had partially damaged the building where it was renting space. 56

Nevertheless, we find that G.J.T. Rebuilders failed to sufficiently prove its alleged serious business losses. The financial statement G.J.T. Rebuilders submitted in evidence covers the fiscal years 1996 and 1997. Based on the financial statement, G.J.T. Rebuilders earned a net income of 61,157.00 in 1996 and incurred a net loss of 316,210.00 in 1997. 57

We find the two-year period covered by the financial statement insufficient for G.J.T. Rebuilders to have objectively perceived that the business would not recover from the loss. Unlike in North Davao Mining Corporation, Manatad, and LVN Pictures Employees and Workers Association (NLU), no continuing pattern of loss within a sufficient period of time is present in this case. In fact, in one of the two fiscal years covered by the financial statement presented in evidence, G.J.T. Rebuilders earned

a net income. We, therefore, agree with the Labor Arbiter and the Court of Appeals that G.J.T. Rebuilders closed its machine shop to prevent losses, not because of serious business losses.

58

Considering that G.J.T. Rebuilders failed to prove its alleged serious business losses, it must pay respondents their separation pay equivalent to one-month pay or at least one-half-month pay for every year of service, whichever is higher. In computing the period of service, a fraction of at least six months is considered a year. 59

Ricardo began working as a machinist on February 9, 1978. Since he last worked for G.J.T. Rebuilders on December 15, 1997, he worked a total of 19 years, 10 months, and six days. This period is rounded off to 20 years, with the last 10 months and six days being considered a year. 60

61

Ricardo had a daily salary of 230.00 and worked 13 days a month. His one-month pay, therefore, is equal to 2,990.00. On the other hand, his one-half-month pay for every year of service is equal to 29,250.00. The latter amount being higher, Ricardo must receive 29,250.00 as separation pay. 62

With respect to Russell, he began his employment on September 1, 1992. Since he last worked for G.J.T. Rebuilders on December 15, 1997, he worked a total of five years, three months, and 14 days. This period is rounded off to five years, not six years, since the last three months and 14 days are less than the six months required to be considered a year. 63

64

Russell had a daily salary of 225.00 and worked 13 days a month. His one-month pay, therefore, is equal to 2,925.00. On the other hand, his one-half-month pay for every year of service is equal to 7,312.50. The latter amount being higher, Russell must receive 7,312.50 as separation pay. 65

As for Benjamin, he began working as a machinist on February 1, 1994. Since he last worked for G.J.T. Rebuilders on December 15, 1997, he worked a total of three years, 10 months, and 14 days. This period is rounded off to four years, with the last 10 months and 14 days being considered a year. 66

67

Benjamin had a daily salary of 225.00 and worked 13 days a month. His one-month pay, therefore, is equal to 2,925.00. On the other hand, his one-half-month pay for every year of service is equal to 5,850.00. The latter amount being higher, Benjamin must receive 5,850.00 as separation pay. 68

II G.J.T. Rebuilders must pay respondents nominal damages for failure to comply with the procedural requirements for closing its business In addition to separation pay, G.J.T. Rebuilders must pay each of the respondents nominal damages for failure to comply with the notice requirement under Article 283 of the Labor Code. Notice of the eventual closure of establishment is a "personal right of the employee to be personally informed of his [or her] proposed dismissal as well as the reasons therefor." The reason for this requirement is to "give the employee some time to prepare for the eventual loss of his [or her] job." 69

70

The requirement "is not a mere technicality or formality which the employer may dispense with." Should employers fail to properly notify their employees, they shall be liable for nominal damages even if they validly closed their businesses. 71

72

Generally, employers that validly closed their businesses but failed to comply with the notice requirement are liable in the amount of 50,000.00. This amount of nominal damages, however, may be reduced depending on "the sound discretion of the court." In Sangwoo Philippines, Inc. v. Sangwoo Philippines, Inc. Employees Union-OLALIA, we said that: 73

74

75

[i]n the determination of the amount of nominal damages which is addressed to the sound discretion of the court, several factors are taken into account: (1) the authorized cause invoked . . .; (2) the number of employees to be awarded; (3) the capacity of the employers to satisfy the awards, taking into account their prevailing financial status as borne by the records; (4) the employer’s grant of other termination benefits in favor of the employees; and (5) whether there was bona fide attempt to comply with the notice requirements as opposed to giving no notice at all. 76

G.J.T. Rebuilders allegedly "conferred with all [of its employees] of [its] intention to cease business operations" one month before closing its business. It allegedly submitted an Affidavit of Closure to the Department of Labor and Employment on February 16, 1998. 77

78

"Conferring with employees" is not the notice required under Article 283 of the Labor Code. The law requires a written notice of closure served on the affected employees. As to when the written notice should be served on the Department of Labor and Employment, the law requires that it be served at least one month before the intended date of closure. G.J.T. Rebuilders served the written notice on the Department of Labor and Employment on February 16, 1998, two months after it had closed its business on December 15, 1997. 1âwphi1

With G.J.T. Rebuilders failing to comply with the notice requirement under Article 283 of the Labor Code, we find that it deprived respondents of due process. However, considering that G.J.T. Rebuilders attempted to comply with the notice requirement, we find the nominal damages of 10,000.00 for each of the respondents sufficient. 79

III Respondents are not entitled to attorney’s fees Attorney’s fees "represent the reasonable compensation [a client pays his or her lawyer] [for legal service rendered]." The award of attorney’s fees is the exception rather than the rule. Specifically in labor cases, attorney’s fees are awarded only when there is unlawful withholding of wages or when the attorney’s fees arise from collective bargaining negotiations that may be charged against union funds in an amount to be agreed upon by the parties. For courts and tribunals to properly award attorney’s fees, they must make "an express finding of fact and [citation] of applicable law" in their decisions. 80

81

82

83

84

In the present case, there is no unlawful withholding of wages or an award of attorney’s fees arising from collective bargaining negotiations. Neither did the Labor Arbiter nor the Court of Appeals make findings of fact or cite the applicable law in awarding attorney’s fees. That respondents were "constrained to engage the services of counsel to prosecute their claims" is not enough justification since "no premium should be placed on the right to litigate." 85

86

For these reasons, we delete the award of attorney’s fees. All told, G.J.T. Rebuilders failed to prove that it closed its machine shop due to serious business losses. Moreover, it failed to comply with Article 283 of the Labor Code on the notice requirement.

Therefore, petitioners must pay respondents Ricardo Ambos, Russell Ambos, and Benjamin Putian separation pay and nominal damages. WHEREFORE, the Petition for Review on Certiorari is DENIED. The Court of Appeals’ Decision dated January 17, 2006 is AFFIRMED with MODIFICATION. Petitioners are ordered to PAY respondents their separation pay with 6% legal interest87 from the finality of this Decision until full payment: Ricardo Ambos P29,250.00 Russell Ambos P7,312.50 Benjamin Putian P5,850.00. Furthermore, petitioners shall PAY each of the respondents P10,000.00 as nominal damages with 6% legal interest88 from the finality of this Decision until full payment. The award of attorney's fees is DELETED. SO ORDERED. MARVIC M.V.F. LEONEN Associate Justice

Republic of the Philippines Supreme Court Manila FIRST DIVISION SHIMIZU PHILS. CONTRACTORS, INC.,⃰ Petitioner,

- versus -

VIRGILIO P. CALLANTA, Respondent.

G.R. No. 165923 Present: CORONA, C. J., Chairperson, VELASCO, JR., LEONARDO-DE CASTRO, DEL CASTILLO, and PEREZ, JJ. Promulgated: September 29, 2010

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

DECISION DEL CASTILLO, J.: By this Petition for Review on Certiorari,[1] Shimizu Phils. Contractors, Inc. (petitioner) assails the Decision[2] dated June 10, 2004 and Resolution[3] dated October 5, 2004 of the Court of Appeals (CA) in CA-G.R. SP. No. 66888, which reversed the Decision [4] dated December 14, 2000 of the National Labor Relations Commission (NLRC) and ordered petitioner to reinstate Virgilio P. Callanta (respondent) and pay him his backwages for not having been validly dismissed. Antecedent Facts Petitioner, a corporation engaged in the construction business, employed respondent on August 23, 1994 as Safety Officer assigned at petitioners Yutaka-Giken Project and eventually as Project Administrator of petitioners Structural Steel Division (SSD) in 1995. In a Memorandum dated June 7, 1997,[5] respondent was informed that his services will be terminated effective July 9, 1997 due to the lack of any vacancy in other projects and the need to re-align the companys personnel requirements brought about by the imperatives of maximum financial commitments. Respondent then filed an illegal dismissal complaint against petitioner assailing his dismissal as without any valid cause. Petitioner advanced that respondents services was terminated in accordance with a valid retrenchment program being implemented by the company since 1996 due to financial crisis that plague the construction industry. To prove its financial deficit, petitioner presented financial statements for the years 1995 to 1997 as well as the Securities and Exchange Commissions approval of petitioners application for a new paidin capital amounting to P330,000,000. Petitioner alleged that in order not to jeopardize

the completion of its projects, the abolition of several departments and the concomitant termination of some employees were implemented as each project is completed. When respondents Honda Project was completed, petitioner offered respondent his separation pay which the latter refused to accept and instead filed an illegal dismissal complaint. Respondent claimed that petitioner failed to comply with the requirements called for by law before implementing a retrenchment program thereby rendering it legally infirmed. First, it did not comply with the provision of the Labor Code mandating the service of notice of retrenchment. He pointed out that the notice sent to him never mentioned retrenchment but only project completion as the cause of termination. Also, the notice sent to the Department of Labor and Employment (DOLE) did not conform to the 30-day prior notice requirement. Second, petitioner failed to use fair and reasonable criteria in determining which employees shall be retrenched or retained. As shown in the termination report[6] submitted to DOLE, he was the only one dismissed out of 333 employees. Worse, junior and inexperienced employees were appointed/assigned in his stead to new projects thus also ignoring seniority in hiring and firing employees. In reply, petitioner reiterated its progressive implementation of the retrenchment program and finds this as basis why respondents termination coincided with project completion. Petitioner argued that when it submitted the retrenchment notice/termination report to DOLE, there was already substantial compliance with the requirement. It explained that such termination report reflects only the number of employees retrenched for the particular month of July of 1997 and cannot be deemed as evidence of the total number of employees affected by the retrenchment program. Petitioner also accused respondent of giving false narration of facts about his employment position and further disclosed that respondent has been saddled with complaints subject of administrative investigations for violations of several company rules, i.e., cited for discrepancies in his time sheet,[7] unauthorized use of company vehicle,[8] stealing of company property[9]and abandonment of work,[10] so much so that petitioners decision to appoint more competent and more senior employees in his stead cannot be questioned. Ruling of the Labor Arbiter On April 14, 2000, the Labor Arbiter rendered a Decision [11] holding that respondent was validly retrenched. He found that sufficient evidence was presented to establish company losses; that petitioner offered respondent his separation pay; and that petitioner duly notified DOLE about the retrenchment. The Labor Arbiter further relied on petitioners

factual version relating to respondents employment background with regard to his position and behavioral conduct. Pertinent portions of the Labor Arbiters Decision read: In terminating the services of complainant, respondent Shimizu had complied with the requirements of law on retrenchment. It had prepared a check for the amount of P 29,320.30 as payment for his separation pay and other entitlements. However, as afore-stated, complainant refused to receive the amount, for reasons known only to him. Also, respondent company had duly notified the Department of Labor and Employment (DOLE) about the retrenchment of the complainant. WHEREFORE, in view of the foregoing premises, judgment is hereby rendered dismissing the instant complaint for lack of merit. SO ORDERED.[12]

Ruling of the National Labor Relations Commission Upon appeal, the NLRC upheld the ruling that there was valid ground for respondents termination but modified the Labor Arbiters Decision by holding that petitioner violated respondents right to procedural due process. The NLRC found that petitioner failed to comply with the 30-day prior notice to the DOLE and that there is no proof that petitioner used fair and reasonable criteria in the selection of employees to be retrenched. The dispositive portion of the NLRC Decision reads: WHEREFORE, in view of the foregoing, the finding of the Labor Arbiter a quo is MODIFIED. Respondent Shimizu Philippine Contractor, Inc., is ordered to pay complainant-appellant Virgilio P. Callanta his separation pay equivalent to one (1) month pay for every year of service. For want of due notice, respondent is further directed to pay complainant an indemnity equivalent to one (1) month salary. SO ORDERED.[13]

Both parties sought reconsideration of the NLRCs Decision. Respondent, in his Motion for Reconsideration,[14] attributed grave error upon the NLRC in ruling that the absence of fair and reasonable criteria in effecting the retrenchment affected only the requirements of due process, arguing that such failure should have invalidated the entire retrenchment program. Petitioner, for its part, filed a Motion for Partial Reconsideration [15] questioning the amount of separation pay awarded to respondent. The NLRC, in its Resolution[16] dated June 29, 2001, denied respondents motion and found merit in petitioners motion by modifying the amount of separation pay to an amount equivalent to one month or one-half month pay for every year of service, whichever is higher, in consonance with Article 283 of the Labor Code. Thus: WHEREFORE, premises considered, the complainants Motion for Reconsideration is hereby DENIED for lack of merit. The respondents partial motion for reconsideration is hereby GRANTED.Consequently, our Decision promulgated on December 14, 2000 is hereby MODIFIED in that the separation pay granted to complainant should be one (1) month pay or onehalf (1/2) month pay for every year of service, whichever is higher, a fraction of at least six months to be considered one (1) whole year. Other dispositions in our said Decision stand Affirmed. SO ORDERED.[17]

Ruling of the Court of Appeals Undaunted, respondent filed a petition for certiorari with the CA. On June 10, 2004, the CA reversed and set aside the NLRCs ruling. The CA opined that petitioner failed to prove that there were employees other than respondent who were similarly dismissed due to retrenchment and that respondents alleged replacements held much higher ranks and were more deserving employees. Moreover, there were no proofs to sustain that petitioner used fair and reasonable criteria in determining which employees to retrench. According to the CA, petitioners failure to produce evidence raises the presumption that such evidence will be adverse to it. Consequently, the CA invalidated the retrenchment, held respondent to have been illegally dismissed, and ordered respondents reinstatement and payment of backwages.

The dispositive portion of the Decision reads: WHEREFORE, the assailed Decision dated December 14, 2000 and the Resolution dated June 29, 2001 both of the National Labor Relations Commission, Third Division in NLRC Case No. CA 024643-00 are REVERSED and SET ASIDE. Private Respondent Shimizu Philippine Contractors, Inc. is hereby ORDERED to reinstate Petitioner VIRGILIO P. CALLANTA with backwages computed from the date of his dismissal on July 9, 1997 up to the finality of this Decision without loss of seniority rights and benefits appurtenant to his position. SO ORDERED.[18]

The CA denied petitioners Motion for Reconsideration [19] and reiterated that petitioner offered no proof of any standard or program intended to implement the retrenchment program. Issues Thus, the instant petition raising the following issues: A. WHETHER X X X THE HONORABLE COURT OF APPEALS EXCEEDED ITS JURISDICTION WHEN IT REVERSED THE FACTUAL FINDINGS OF THE LABOR ARBITER AND THE NLRC BY REEVALUATING THE EVIDENCE ON RECORD. B. WHETHER X X X THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN FINDING THAT PETITIONER FAILED TO OBSERVE FAIR AND REASONABLE STANDARDS OR CRITERIA IN EFFECTING THE DISMISSAL OF [RESPONDENT].[20]

Petitioner contends that the CAs corrective power in petitions for certiorari is confined only to jurisdictional issues and a determination of whether there is grave abuse of

discretion amounting to lack or excess of jurisdiction. It does not encompass the reevaluation and reassessment of factual findings and conclusions of the Labor Arbiter which should be accorded great weight and respect when affirmed by the NLRC. According to petitioner, the CA gravely erred in finding that no valid retrenchment exists contrary to the prior findings of the Labor Arbiter and NLRC. Petitioner also insists that all the requisites for a valid retrenchment have been established by substantial evidence and that it observed fair and reasonable standards in implementing its retrenchment program, to wit: ability to perform work efficiently and seniority. As succinctly found by the Labor Arbiter, respondent is notorious for violating company rules which adversely reflected on his ability to perform work effectively. Petitioner further denies that junior officers/employees were retained and that respondent was singled out for termination. Our Ruling We find the petition meritorious. At the outset, the power of the CA to review a decision of the NLRC in a petition for certiorari under Rule 65 of the Rules of Court does not normally include an inquiry into the correctness of the NLRCs evaluation of the evidence. [21] However, under certain circumstances, the CA is allowed to review the factual findings or the legal conclusions of the NLRC in order to determine whether these findings are supported by the evidence presented and the conclusions derived therefrom are accurately ascertained.[22] It has been held that [i]t is within the jurisdiction of the CA x x x to review the findings of the NLRC. [23]

From the foregoing, the CA, in the present case, cannot be faulted in re-evaluating the NLRCs findings as it can undoubtedly affirm, modify or reverse the same if the evidence warrants.Having settled thus, we shall now proceed to review whether the CA correctly appreciated the NLRCs finding and if the CAs resultant decision was in accord with law and evidentiary facts. There was substantial compliance for a valid retrenchment; petitioner used fair and reasonable criteria in effecting retrenchment.

As an authorized cause for separation from service under Article 283 of the Labor Code, retrenchment is a valid exercise of management prerogative subject to the strict requirements set by jurisprudence: [24]

(1)

That the retrenchment is reasonably necessary and likely to prevent business losses which, if already incurred, are not merely de minimis, but substantial, serious, actual and real, or if only expected, are reasonably imminent as perceived objectively and in good faith by the employer;

(2)

That the employer served written notice both to the employees and to the Department of Labor and Employment at least one month prior to the intended date of retrenchment;

(3)

That the employer pays the retrenched employees separation pay equivalent to one month pay or at least month pay for every year of service, whichever is higher;

(4)

That the employer exercises its prerogative to retrench employees in good faith for the advancement of its interest and not to defeat or circumvent the employees right to security of tenure; and

(5)

That the employer used fair and reasonable criteria in ascertaining who would be dismissed and who would be retained among the employees, such as status, x x x efficiency, seniority, physical fitness, age, and financial hardship for certain workers.[25]

In the present case, both the Labor Arbiter and the NLRC found sufficient compliance with these substantive requirements, there being enough evidence to prove that petitioner was sustaining business losses, that separation pay was offered to respondent, and that notices of termination of service were furnished respondent and DOLE. However, the NLRC modified the Decision of the Labor Arbiter by granting respondent indemnity since the notice to DOLE was served short of the 30-day notice requirement and that there is no proof of the use of fair and reasonable criteria in the selection of employees to be retrenched or retained. The CA, then, reversed the Decision of the NLRC by ruling that the absence of fair and reasonable criteria in implementing the retrenchment invalidates altogether the retrenchment.

Petitioner presented proof that it incurred substantial losses as shown by its financial statements and that it substantially complied with the requirements of serving written notices of retrenchment. It was also shown that it offered to pay respondents separation pay. The CA, however, ruled that petitioner failed to show that it implemented its retrenchment program in a just and proper manner in the absence of reasonable criteria in effecting such. We disagree. In implementing its retrenchment scheme, petitioner was constrained to streamline its operations and to downsize its complements in a progressive manner in order not to jeopardize the completion of its projects. Thus, several departments like the Civil Works Division, Electro-mechanical Works Division and the Territorial Project Management Offices, among others, were abolished in the early part of 1996 and thereafter the Structural Steel Division, of which respondent was an Administrator. Respondent was among the last batch of employees who were retrenched and by the end of year 1997, all of the employees of the Structural Steel Division were severed from employment. Respondent, in any of the pleadings filed by him, never refuted the foregoing facts. Respondents argument that he was singled out for termination as allegedly shown in petitioners monthly termination report for the month of July 1997 filed with the DOLE does not persuade this Court. Standing alone, this document is not proof of the total number of retrenched employees or that respondent was the only one retrenched. It merely serves as notice to DOLE of the names of employees terminated/ retrenched only for the month of July. In other words, it cannot be deemed as an evidence of the number of employees affected by the retrenchment program. Thus we cannot conclude that no other employees were previously retrenched. Respondent then claimed that petitioner did not observe seniority in retrenching him. He further alleged that he is more qualified and efficient than those retained by petitioner. Notably, however, the records do not bear any proof that these allegations were substantiated. On the contrary, the Labor Arbiter found respondents notoriety due to pieces of evidence showing numerous company violations imputed against respondent. This fact of being subject of several administrative investigations, respondent failed to refute. Moreover, the Labor Arbiter likewise found respondent guilty of several misrepresentations in the pleadings filed before the tribunal with regard to the latters employment position. By advancing that other employees were less efficient, qualified

and senior than him, respondent has the burden of proving these allegations which he failed to discharge. On the contrary, we find that petitioner implemented its retrenchment program in good faith because it undertook several measures in cutting down its costs, to wit, withdrawing certain privileges of petitioners executives and expatriates; limiting the grant of additional monetary benefits to managerial employees and cutting down expenses; selling of company vehicles; and infusing fresh capital into the company. Respondent did not attempt to refute that petitioner adopted these measures before implementing its retrenchment program. In fine, we hold that petitioner was able to prove that it incurred substantial business losses, that it offered to pay respondent his separation pay, that the retrenchment scheme was arrived at in good faith, and lastly, that the criteria or standard used in selecting the employees to be retrenched was work efficiency which passed the test of fairness and reasonableness. The termination notice sent to DOLE did not comply with the 30-day notice requirement, thus, respondent is entitled to indemnity for violation of due process. However, although there was authorized cause to dismiss respondent from the service, we find that petitioner did not comply with the 30-day notice requirement. Petitioner maintains that it substantially complied with the requirement of the law in that it, in fact, submitted two notices or reports with the DOLE. However, petitioner admitted that the reports were submitted 21 days, in the case of the first notice, and 16 days, in the case of the second notice, before the intended date of respondents dismissal. The purpose of the one month prior notice rule is to give DOLE an opportunity to ascertain the veracity of the cause of termination.[26] Non-compliance with this rule clearly violates the employees right to statutory due process. Consequently, we affirm the NLRCs award of indemnity to respondent for want of sufficient due notice. But to be consistent with our ruling in Jaka Food Processing

Corporation v. Pacot,[27] the indemnity in the form of nominal damages should be fixed in the amount of P50,000.00. WHERFORE, the petition is GRANTED. The challenged June 10, 2004 Decision and October 5, 2004 Resolution of the Court of Appeals in CA- G.R. SP. No. 66888 are REVERSED and SET ASIDE. The Decision and Resolution of the National Labor Relations Commission dated December 14, 2000 and June 29, 2001, respectively, upholding the legality of respondents dismissal and awarding him separation pay equivalent to one (1) month pay or one-half (1/2) month pay for every year of service, whichever is higher, are REINSTATED and AFFIRMEDwith MODIFICATION that the indemnity to be awarded to respondent is fixed in the amount of P50,000.00 as nominal damages. SO ORDERED. Republic of the Philippines Supreme Court Baguio City

THIRD DIVISION

INTERNATIONAL MANAGEMENT SERVICES/MARILYN PASCUAL,

G.R. No. 163657 C.

Present:

Petitioner, VELASCO, JR., J., Chairperson, PERALTA, - versus -

ABAD, MENDOZA, and PERLAS-BERNABE, JJ. Promulgated: April 18, 2012

ROEL P. LOGARTA, Respondent. x-----------------------------------------------------------------------------------------x

DECISION

PERALTA, J.:

This is a petition for review on certiorari assailing the Decision[1] dated January 8, 2004 of the Court of Appeals (CA) in CA-G.R. SP No. 58739, and the Resolution[2]dated May 12, 2004 denying petitioners motion for reconsideration.

The factual and procedural antecedents are as follows:

Sometime in 1997, the petitioner recruitment agency, International Management Services (IMS), a single proprietorship owned and operated by Marilyn C. Pascual, deployed respondent Roel P. Logarta to work for Petrocon Arabia Limited (Petrocon) in Alkhobar, Kingdom of Saudi Arabia, in connection with general engineering services of Petrocon for the Saudi Arabian Oil Company (Saudi Aramco). Respondent was employed for a period of two (2) years, commencing on October 2, 1997, with a monthly salary of eight hundred US Dollars (US$800.00). In October 1997, respondent started to work for Petrocon as Piping Designer for works on the projects of Saudi Aramco.

Thereafter, in a letter[3] dated December 21, 1997, Saudi Aramco informed Petrocon that for the year 1998, the former is allotting to the latter a total work load level of 170,850 man-hours, of which 100,000 man-hours will be allotted for cross-country pipeline projects.

However, in a letter[4] dated April 29, 1998, Saudi Aramco notified Petrocon that due to changes in the general engineering services

work forecast for 1998, the man-hours that were formerly allotted to Petrocon is going to be reduced by 40%.

Consequently, due to the considerable decrease in the work requirements of Saudi Aramco, Petrocon was constrained to reduce its personnel that were employed as piping designers, instrument engineers, inside plant engineers, etc., which totaled to some 73 personnel, one of whom was respondent.

Thus, on June 1, 1998, Petrocon gave respondent a written notice[5] informing the latter that due to the lack of project works related to his expertise, he is given a 30-day notice of termination, and that his last day of work with Petrocon will be on July 1, 1998. Petrocon also informed respondent that all due benefits in accordance with the terms and conditions of his employment contract will be paid to respondent, including his ticket back to the Philippines.

On June 23, 1998, respondent, together with his co-employees, requested Petrocon to issue them a letter of Intent stating that the latter will issue them a No Objection Certificate once they find another employer before they leave Saudi Arabia. [6] On June 27, 1998, Petrocon granted the request and issued a letter of intent to respondent.[7]

Before his departure from Saudi Arabia, respondent received his final paycheck[8] from Petrocon amounting SR7,488.57.

Upon his return, respondent filed a complaint with the Regional Arbitration Branch VII, National Labor Relations Commission (NLRC), Cebu City, against petitioner as the recruitment agency which employed him for employment abroad. In filing the complaint, respondent sought to recover his unearned salaries covering the unexpired portion of his employment contract with Petrocon on the ground that he was illegally dismissed.

After the parties filed their respective position papers, the Labor Arbiter rendered a Decision[9] in favor of the respondent, the dispositive portion of which reads:

WHEREFORE, premises considered, judgment is hereby rendered ordering the respondent Marilyn C. Pascual, doing business under the name and style International Management Services, to pay the complainant Roel Logarta the peso equivalent of US $5,600.00 based on the rate at the time of actual payment, as payment of his wages for the unexpired portion of his contract of employment.

The other claims are dismissed for lack of merit.

So Ordered.[10]

Aggrieved, petitioner filed an Appeal[11] before the NLRC. On October 29, 1999, the NLRC, Fourth Division, Cebu City rendered a Decision[12] affirming the decision of the Labor Arbiter, but reduced the amount to be paid by the petitioner, to wit:

WHEREFORE, premises considered, the decision of the Labor Arbiter is hereby AFFIRMED with MODIFICATION reducing the award to only US $4,800.00 or its peso equivalent at the time of payment.

SO ORDERED.[13]

Petitioner filed a motion for reconsideration, but it was denied in the Resolution[14] dated April 17, 2000.

[15]

Not satisfied, petitioner sought recourse before the CA, arguing that the NLRC gravely abused its discretion:

(a) in holding that while Petrocons retrenchment was justified, Petrocon failed to observe the legal procedure for a valid retrenchment when, in fact, Petrocon did observe the legal procedural requirements for a valid implementation of its retrenchment scheme; and

(b) in making an award under Section 10 of R.A. No. 8042 which is premised on a termination of employment without just, valid or authorized cause as defined by law or contract, notwithstanding that NLRC itself found Petrocons retrenchment to be justified. [16]

On January 8, 2004, the CA rendered the assailed Decision dismissing the petition, the decretal portion of which reads:

WHEREFORE, premises considered, the petition is DISMISSED and the impugned Decision dated October 29, 1999 and Resolution dated April 17, 2000 are AFFIRMED. Costs against the petitioner.

SO ORDERED.[17]

In ruling in favor of the respondent, the CA agreed with the findings of the NLRC that retrenchment could be a valid cause to terminate respondents employment with Petrocon. Considering that there was a considerable reduction in Petrocons work allocation from Saudi Aramco, the reduction of its work personnel was a valid exercise of management prerogative to reduce the number of its personnel, particularly in those fields affected by the reduced work allocation from Saudi Aramco. However, although there was a valid ground for retrenchment, the same was implemented without complying with the requisites of a valid retrenchment. Also, the CA concluded that although the respondent was given a 30-day notice of his termination, there was no showing that the Department of Labor and Employment (DOLE) was also sent a copy of the said notice as required by law. Moreover, the CA found that a perusal of the check payroll details would readily show that respondent was not paid his separation pay.

Petitioner filed a motion for reconsideration, but it was denied in the Resolution[18] dated May 12, 2004.

Hence, the petition assigning the following errors:

I. THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN RULING THAT THE 30-DAY NOTICE TO DOLE PRIOR TO RETRENCHMENT IS NOT APPLICABLE IN THIS CASE.

II. THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN RULING THAT RESPONDENT EMPLOYEE DID NOT CONSENT TO HIS SEPARATION FROM THE PRINCIPAL COMPANY.

III. THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN RULING THAT JARIOL VS. IMS IS NOT APPLICABLE TO THE INSTANT CASE.

IV. THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN RULING THAT RESPONDENT DID NOT RECEIVE THE SEPARATION PAY REQUIRED BY LAW.[19]

Petitioner argues that the 30-day notice of termination, as required in Serrano v. NLRC,[20] is not applicable in the case at bar, considering that respondent was in fact given the 30-day notice. More importantly, Republic Act (R.A.) No. 8042, or the Migrant Workers and Overseas Filipino Act of 1995 nor its Implementing Rules do not require the sending of notice to the DOLE, 30 days before the effectivity of a retrenchment of an Overseas Filipino Worker (OFW) based on grounds under Article 283 of the Labor Code.

Petitioner maintains that respondent has consented to his termination, since he raised no objection to his retrenchment and actually sought another employer during his 30-day notice of

termination. Respondent even requested from Petrocon a No Objection Certificate, which the latter granted to facilitate respondents application to other Saudi Arabian employers.

Petitioner also posits that the CA should have applied the case of Jariol v. IMS[21] even if the said case was only decided by the NLRC, a quasi-judicial agency. The said case involved similar facts, wherein the NLRC categorically ruled that employers of OFWs are not required to furnish the DOLE in the Philippines a notice if they intend to terminate a Filipino employee.

Lastly, petitioner insists that respondent received his separation pay. Moreover, petitioner contends that Section 10 of R.A. No. 8042 does not apply in the present case, since the termination of respondent was due to a just, valid or authorized cause. At best, respondent is only entitled to separation pay in accordance with Article 283 of the Labor Code, i.e., one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher.

On his part, respondent maintains that the CA committed no reversible error in rendering the assailed decision.

The petition is partly meritorious.

Retrenchment is the reduction of work personnel usually due to poor financial returns, aimed to cut down costs for operation

particularly on salaries and wages. [22] It is one of the economic grounds to dismiss employees and is resorted by an employer primarily to avoid or minimize business losses. [23]

Retrenchment programs are purely business decisions within the purview of a valid and reasonable exercise of management prerogative. It is one way of downsizing an employers workforce and is often resorted to by the employer during periods of business recession, industrial depression, or seasonal fluctuations, and during lulls in production occasioned by lack of orders, shortage of materials, conversion of the plant for a new production program, or introduction of new methods or more efficient machinery or automation. It is a valid management prerogative, provided it is done in good faith and the employer faithfully complies with the substantive and procedural requirements laid down by law and jurisprudence. [24]

In the case at bar, despite the fact that respondent was employed by Petrocon as an OFW in Saudi Arabia, still both he and his employer are subject to the provisions of the Labor Code when applicable. The basic policy in this jurisdiction is that all Filipino workers, whether employed locally or overseas, enjoy the protective mantle of Philippine labor and social legislations. [25] In the case of Royal Crown Internationale v. NLRC,[26] this Court has made the policy pronouncement, thus:

x x x. Whether employed locally or overseas, all Filipino workers enjoy the protective mantle of Philippine labor and social legislation, contract stipulations to the contrary notwithstanding. This pronouncement is in keeping with the basic public policy of the State to afford protection to

labor, promote full employment, ensure equal work opportunities regardless of sex, race or creed, and regulate the relations between workers and employers. x x x[27]

Philippine Law recognizes retrenchment as a valid cause for the dismissal of a migrant or overseas Filipino worker under Article 283 of the Labor Code, which provides: 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 operations 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 Department of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closure or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to at least 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 as one (1) whole year.

Thus, retrenchment is a valid exercise of management prerogative subject to the strict requirements set by jurisprudence, to wit: (1) That the retrenchment is reasonably necessary and likely to prevent business losses which, if already incurred, are not merely de minimis, but substantial, serious, actual and real, or if only expected, are reasonably imminent as perceived objectively and in good faith by the employer;

(2) That the employer served written notice both to the employees and to the Department of Labor and Employment at least one month prior to the intended date of retrenchment;

(3) That the employer pays the retrenched employees separation pay equivalent to one month pay or at least month pay for every year of service, whichever is higher;

(4) That the employer exercises its prerogative to retrench employees in good faith for the advancement of its interest and not to defeat or circumvent the employees' right to security of tenure; and

(5) That the employer used fair and reasonable criteria in ascertaining who would be dismissed and who would be retained among the employees, such as status, x x x efficiency, seniority, physical fitness, age, and financial hardship for certain workers. [28]

Applying the above-stated requisites for a valid retrenchment in the case at bar, it is apparent that the first, fourth and fifth requirements were complied with by respondents employer. However, the second and third requisites were absent when Petrocon terminated the services of respondent.

As aptly found by the NLRC and justly sustained by the CA, Petrocon exercised its prerogative to retrench its employees in good faith and the considerable reduction of work allotments of Petrocon by Saudi Aramco was sufficient basis for Petrocon to reduce the number of its personnel, thus:

Moreover, from the standard form of employment contract relied upon by the Labor Arbiter, it is clear that unilateral cancellation (sic) may be effected for legal, just and valid cause or causes. Clearly, contrary to the Labor Arbiters perception, the enumerated causes for employment termination by the employer in the standard form of employment contract is not exclusive in the same manner that the listed grounds for termination by the employer is not exclusive. As pointed out above, under Sec. 10 of RA 8042, it is clear that termination of employment may be for just, valid or authorized cause as defined by law or contract. Retrenchment being indubitably a legal and authorized cause may be availed of by the respondent.

From the records, it is clearly shown that there was a drastic reduction in Petrocons 1998 work allocation from 250,000 man-hours to only 80,000 man-hours. Under these circumstances over which respondents principal, Petrocon had no control, it was clearly a valid exercise of management prerogative to reduce personnel particularly those without projects to work on. To force Petrocon to continue maintaining all its workers even those without projects is tantamount to oppression. The determination to cease operation is a prerogative of management which the state does not usually interfere with as no business or undertaking must be required to continue at a loss simply because it has to maintain its employees in employment. Such an act would be tantamount to a taking of property without due process of law. (Industrial Timber Corp. vs. NLRC, 273 SCRA 200) [29]

As to complying with the fifth requirement, the CA was correct when it ruled that: As to the fifth requirement, the NLRC considered the following criteria fair and reasonable in ascertaining who would be dismissed and who would be retained among the employees; (i) less preferred status; (ii) efficiency rating; (iii) seniority; and (iv) proof of claimed financial losses.

The primary reason for respondents termination is lack of work project specifically related to his expertise as piping designer. Due to the highly specialized nature of Logartas job, we find that the availability of work and number of allocated man-hours for pipeline

projects are sufficient and reasonable criteria in determining who would be dismissed and who would be retained among the employees. Consequently, we find the criterion of less preferred status and efficiency rating not applicable.

The list of terminated employees submitted by Petrocon, shows that other employees, with the same designation as Logartas (Piping Designer II), were also dismissed. Terminated, too, were employees designated as Piping Designer I and Piping Designer. Hence, employees whose job designation involves pipeline works were without bias terminated.

As to seniority, at the time the notice of termination was given to him, Logartas employment was eight (8) months, clearly, he has not accumulated sufficient years to claim seniority.

As to proof of claimed financial losses, the NLRC itself has recognized the drastic reduction of Petrocons work allocation, thereby necessitating the retrenchment of some of its employees. [30]

As for the notice requirement, however, contrary to petitioners contention, proper notice to the DOLE within 30 days prior to the intended date of retrenchment is necessary and must be complied with despite the fact that respondent is an overseas Filipino worker. In the present case, although respondent was duly notified of his termination by Petrocon 30 days before its effectivity, no allegation or proof was advanced by petitioner to establish that Petrocon ever sent a notice to the DOLE 30 days before the respondent was terminated. Thus, this requirement of the law was not complied with.

to

Also, petitioners contention that respondent freely consented his dismissal is unsupported by substantial

evidence. Respondents recourse of finding a new employer during the 30-day period prior to the effectivity of his dismissal and eventual return to the Philippines is but logical and reasonable under the circumstances. Faced with the eventuality of his termination from employment, it is understandable for respondent to seize the opportunity to seek for other employment and continue working in Saudi Arabia.

Moreover, petitioners insistence that the case of Jariol v. IMS should be applied in the present case is untenable. Being a mere decision of the NLRC, it could not be considered as a precedent warranting its application in the case at bar. Suffice it to state that although Article 8 of the Civil Code [31] recognizes judicial decisions, applying or interpreting statutes as part of the legal system of the country, such level of recognition is not afforded to administrative decisions.[32]

Anent the proper amount of separation pay to be paid to respondent, petitioner maintains that respondent was paid the appropriate amount as separation pay. However, a perusal of his Payroll Check Details,[33] clearly reveals that what he received was his compensation for the month prior to his departure, and hence, was justly due to him as his salary. Furthermore, the amounts which he received as his End of Contract Benefit and Other Earning/Allowances: for July 1998 [34] form part of his wages/salary, as such, cannot be considered as constituting his separation pay.

Verily, respondent is entitled to the payment of his separation pay. However, this Court disagrees with the conclusion of the Labor Arbiter, the NLRC and the CA, that respondent should be paid his separation pay in accordance with the provision of Section 10 of R.A. No. 8042. A plain reading of the said provision clearly reveals that it applies only to an illegally dismissed overseas contract worker or a worker dismissed from overseas employment without just, valid or authorized cause, the pertinent portion of which provides:

Sec. 10. Money Claims. x x x In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, x x x

In the case at bar, notwithstanding the fact that respondents termination from his employment was procedurally infirm, having not complied with the notice requirement, nevertheless the same remains to be for a just, valid and authorized cause, i.e., retrenchment as a valid exercise of management prerogative. To stress, despite the employers failure to comply with the one-month notice to the DOLE prior to respondents termination, it is only a procedural infirmity which does not render the retrenchment illegal. In Agabon v. NLRC, [35] this Court ruled that when the dismissal is for a just cause, the absence of proper notice should not nullify the dismissal or render it illegal or ineffectual. Instead, the employer should indemnify the employee for violation of his statutory rights. [36]

Consequently, it is Article 283 of the Labor Code and not Section 10 of R.A. No. 8042 that is controlling. Thus, respondent is entitled to payment of separation pay equivalent to one (1) month pay, or at least one-half (1/2) month pay for every year of service, whichever is higher. Considering that respondent was employed by Petrocon for a period of eight (8) months, he is entitled to receive one (1) month pay as separation pay. In addition, pursuant to current jurisprudence,[37] for failure to fully comply with the statutory due process of sufficient notice, respondent is entitled to nominal damages in the amount P50,000.00. WHEREFORE, premises considered, the petition is DENIED. The Decision dated January 8, 2004 and the Resolution dated May 12, 2004 of the Court of Appeals areAFFIRMED with MODIFICATIONS. Petitioner is ORDERED to pay Roel P. Logarta one (1) month salary as separation pay and P50,000.00 as nominal damages.

SO ORDERED.

EN BANC

[G.R. No. 112546. March 13, 1996]

NORTH DAVAO MINING CORPORATION and ASSET PRIVATIZATION TRUST, petitioners, vs. NATIONAL LABOR RELATIONS

COMMISSION, LABOR ARBITER ANTONIO M. VILLANUEVA and WILFREDO GUILLEMA, respondents. DECISION PANGANIBAN, J.:

Is a company which is forced by huge business losses to close its business, legally required to pay separation benefits to its employees at the time of its closure in an amount equivalent to the separation pay paid to those who were separated when the company was still a going concern? This is the main question brought before this Court in this petition for certiorari under Rule 65 of the Revised Rules of Court, which seeks to reverse and set aside the Resolutions dated July 29, 1993 and September 27, 1993 of the National Labor Relations Commision (NLRC) in NLRC-CA No. M-001395-93. [1]

[2]

[3]

The Resolution dated July 29, 1993 affirmed in tow the decision of the Labor Arbiter in RAB-1 1-08-00672-92 and RAB- 11-08-00713-92 ordering petitioners to pay the complainants therein certain monetary claims. The Resolution dated September 27, 1993 denied the motion for reconsideration of the said July 29, 1993 Resolution. The Facts Petitioner North Davao Mining Corporation (North Davao) was incorporated in 1974 as a 100% privately-owned company. Later, the Philippine National Bank (PNB) became part owner thereof as a result of a conversion into equity of a portion of loans obtained by North Davao from said bank. On June 30, 1986, PNB transferred all its loans to and equity in North Davao in favor of the national government which, by virtue of Proclamation No. 50 dated December 8, 1986, later turned them over to petitioner Asset Privatization Trust (APT). As of December 31, 1990 the national government held 81.8% of the common stock and 100% of the preferred stock of said company. [4]

Respondent Wilfredo Guillema is one among several employees of North Davao who were separated by reason of the companys closure on May 31, 1992, and who were the complainants in the cases before the respondent labor arbiter. On May 31, 1992, petitioner North Davao completely ceased operations due to serious business reverses. From 1988 until its closure in 1992, North Davao suffered net losses averaging three billion pesos (P3,000,000,000.00) per year, for each of the five years prior to its closure. All told, as of December 31, 1991, or five months prior to its closure, its total liabilities had exceeded its assets by 20.392 billion pesos, as shown by its financial statements audited by the Commission on Audit. When it ceased operations, its remaining employees were separated and given the equivalent of 12.5 days pay for every year of service, computed on their basic monthly pay, in addition to the commutation to cash of their unused vacation and sick leaves. However, it appears that, during the life of the petitioner corporation, from the beginning of its operations in

1981 until its closure in 1992, it had been giving separation pay equivalent to thirty (30) days pay for every year of service. Moreover, inasmuch as the region where North Davao operated was plagued by insurgency and other peace and order problems, the employees had to collect their salaries at a bank in Tagum, Davao del Norte, some 58 kilometers from their workplace and about 2 hours travel time by public transportation; this arrangement lasted from 1981 up to 1990. Subsequently, a complaint was filed with respondent labor arbiter by respondent Wilfredo Guillema and 271 other seperated employees for: (1) additional separation pay of 17.5 days for every year of service; (2) back wages equivalent to two days a month; (3) transportation allowance; (4) hazard pay; (5) housing allowance; (6) food allowance; (7) post-employment medical clearance; and (8) future medical allowance, all of which amounted to P58,022,878.31 as computed by private respondent. [5]

On May 6, 1993, respondent Labor Arbiter rendered a decision ordering petitioner North Davao to pay the complainants the following:

(a) Additional separation pay of 17.5 days for every year of service; (b) Backwages equivalent to two (2) days a month times the number of years of service but not to exceed three (3) years; (c) Transportation allowance at P80 a month times the number of years of service but not to exceed three (3) years. The benefits awarded by respondent Labor Arbiter amounted to P10,240,517.75. Attorneys fees equivalent to ten percent (10%) thereof were also granted. [6]

On appeal, respondent NLRC affirmed the decision in toto. Petitioner North Davaos motion for reconsideration was likewise denied. Hence, this petition. The Parties Submissions and the Issues In affirming the Labor Arbiters decision, respondent NLRC ruled that since (North Davao) has been paying its employees separation pay equivalent to thirty (30) days pay for every year of service, knowing fully well that the law provides for a lesser separation pay, then such company policy has ripened into an obligation, and therefore, depriving now the herein private respondent and others similarly situated of the same benefits would be discriminatory. Quoting from Businessday Information Systems and Services. Inc. (BISSI) vs. NLRC. it said that petitioners may not pay separation benefits unequally for such discrimination breeds resentment and ill-will among those who have been treated less generously than others. It also citedAbella vs. NLRC, as authority for saying that Art. 283 of the Labor Code protects workers in case of the closure of the establishment. [7]

[8]

[9]

To justify the award of two days a month in backwages and P80 per month of transportation allowance, respondent Commission ruled:

As to the appellants claim that complainants-appeallees time spent in collecting their wages at Tagum, Davao is not compensable allegedly because it was on official time can not be given credence. No iota of evidence has been presented to back up said contention. The same is true with appellants assertion that the claim for transportation expenses is without basis since they were incurred by the complainants.Appellants should have submitted the payrolls to prove that complainants-appellees were not the ones who personally collected their wages and/or the bus/jeep trip tickets or vouchers to show that the complainants-appellees were provided with free transportation as claimed. Petitioner, through the Government Corporate Counsel, raised the following grounds for the allowance of the petition:

1. The NLRC acted with grave abuse of discretion in affirming without legal basis the award of additional separation pay to private respondents who were separated due to serious business losses on the part of petitioner. 2. The NLRC acted with grave abuse of discretion in affirming without sufficient factual basis the award of backwages and transportation expenses to private respondents. 3. There is no appeal, nor any plain, speedy and adequate remedy in the ordinary course of the law. and the following issues:

1. Whether or not an employer whose business operations ceased due to serious business losses or financial reverses is obliged to pay separation pay to its employees separated by reason of such closure. 2. Whether or not time spent in collecting wages in a place other than the place of employment is compensable notwithstanding that the same is done during official time. 3. Whether or not private respondents are entitled to transportation expenses in the absence of evidence that these expenses were incurred. The First Issue: Separation Pay

To resolve this issue, it is necessary to revisit the provision of law adverted to by the parties in their submissions, namely Art. 283 of the Labor Code, which reads as follows:

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 under-taking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of 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 () 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. (italics supplied) The underscored portion of Art. 283 governs the grant of seperation benefits in case of closures or cessation of operation of business establishments NOT due to serious business losses or financial reverses x x x. Where, however, the closure was due to business losses - as in the instant case, in which the aggregate losses amounted to over P20 billion - the Labor Code does not impose any obligation upon the employer to pay separation benefits, for obvious reasons. There is no need to belabor this point. Even the public respondents, in their Comment filed by the Solicitor General, impliedly concede this point. [10]

However, respondents tenaciously insist on the award of separation pay, anchoring their claim solely on petitioner North Davaos long-standing policy of giving separation pay benefits equivalent to 30- days pay, which policy had been in force in the years prior to its closure. Respondents contend that, by denying the same separation benefits to private respondent and the others similarly situated, petitioners discriminated against them. They rely on this Courts ruling in Businessday Information Systems and Services, Inc. (BISSI) vs. NLRC, (supra). In said case, petitioner BISSI, after experiencing financial reverses, decided as a retrenchment measure to lay-off some employees on May 16, 1988 and gave them separation pay equivalent to one-half () month pay for every year of service. BISSI retained some employees in an attempt to rehabilitate its business as a trading company. However, barely two and a half months later, these remaining employees were likewise discharged because the company decided to cease business operations altogether. Unlike the earlier terminated employees, the second batch received separation pay equivalent to a full months salary for every year of service, plus a mid-year bonus. This Court ruled that there was impermissible discrimination against the private respondents in the payment of their separation benefits. The law requires an employer to extend equal treatment to its employees. It

may not, in the guise of exercising management prerogatives, grant greater benefits to some and less to others. x x x In resolving the present case, it bears keeping in mind at the outset that the factual circumstances of BISSI are quite different from the current case. The Court noted that BISSI continued to suffer losses even after the retrenchment of the first batch of employees; clearly, business did not improve despite such drastic measure. That notwithstanding, when BISSI finally shut down, it could well afford to (and actually did) pay off its remaining employees with MORE separation benefits as compared with those earlier laid off; obviously, then, there wasno reason for BISSI to skimp on separation pay for the first batch of discharged employees. That it was able to pay one-month separation benefit for employees at the time of closure of its business meant that it must have been also in a position to pay the same amount to those who were separated prior to closure. That it did not do so was a wrongful exercise of management prerogatives. That is why the Court correctly faulted it with impermissible discrimination. Clearly, it exercised its management prerogatives contrary to general principles of fair play and justice. In the instant case however, the companys practice of giving one months pay for every year of service could no longer be continued precisely because the company could not afford it anymore. It was forced to close down on account of accumulated losses of over P20 billion. This could not be said of BISSI. In the case of North Davao, it gave 30-days separation pay to its employees when it was still a going concern even if it was already losing heavily. As a going concern, its cash flow could still have sustained the payment of such separation benefits. But when a business enterprise completely ceases operations, i.e., upon its death as a going business concern, its vital lifeblood -its cashflow - literally dries up. Therefore, the fact that less separation benefits were granted when the company finally met its business death cannot be characterized as discrimination. Such action was dictated not by a discriminatory management option but by its complete inability to continue its business life due to accumulated losses. Indeed, one cannot squeeze blood out of a dry stone. Nor water out of parched land. As already stated, Art. 283 of the Labor Code does not obligate an employer to pay separation benefits when the closure is due to losses. In the case before us, the basis for the claim of the additional separation benefit of 17.5 days is alleged discrimination, i.e., unequal treatment of employees, which is proscribed as an unfair labor practice by Art. 248 (e) of said Code.Under the facts and circumstances of the present case, the grant of a lesser amount of separation pay to private respondent was done, not by reason of discrimination, but rather, out of sheer financial bankruptcy - a fact that is not controlled by management prerogatives. Stated differently, the total cessation of operation due to mind-boggling losses was a supervening fact that prevented the company from continuing to grant the more generous amount of separation pay. The fact that North Davao at the point of its forced closure voluntarily paid any separation benefits at all - although not required by law - and 12.5-days worth at that, should have elicited admiration instead of condemnation. But to require it to continue being generous when it is no longer in a position to do so would certainly be unduly oppressive, unfair and most revolting to the conscience. As this Court held in Manila Trading & Supply Co. vs. Zulueta, and reiterated in San Miguel Corporation vs. NLRC and later, in Allied [11]

[12]

Banking Corporation vs. Castro, (t)he law, in protecting the rights of the laborer, authorizes neither oppression nor self-destruction of the employer. [13]

At this juncture, we note that the Solicitor General in his Comment challenges the petitioners assertion that North Davao, having closed down, no longer has the means to pay for the benefits. The Solicitor General stresses that North Davao was among the assets transferred by PNB to the national government, and that by virtue of Proclamation No. 50 dated December 8, 1986, the APT was constituted trustee of this government asset. He then concludes that (i)t would, therefore, be incongruous to declare that the National Government, which should always be presumed to be solvent, could not pay now private respondents money claims. Such argumentation is completely misplaced. Even if the national government owned or controlled 81.8% of the common stock and 100% of the preferred stock of North Davao, it remains only a stockholder thereof, and under existing laws and prevailing jurisprudence, a stockholder as a rule is not directly, individually and/or personally liable for the indebtedness of the corporation. The obligation of North Davao cannot be considered the obligation of the national government, hence, whether the latter be solvent or not is not material to the instant case. The respondents have not shown that this case constitutes one of the instances where the corporate veil may be pierced. From another angle, the national government is not the employer of private respondent and his co-complainants, so there is no reason to expect any kind of bailout by the national government under existing law and jurisprudence. [14]

The Second and Third Issues: Back Wages and Transportation Allowance Anent the award of back wages and transportation allowance, the issues raised in connection therewith are factual, the determination of which is best left to the respondent NLRC. It is well settled that this Court is bound by the findings of fact of the NLRC, so long as said findings are supported by substantial evidence. [15]

As the Solicitor General pointed out in his comment:

It is undisputed that because of security reasons, from the time of its operations, petitioner NDMC maintained its policy of paying its workers at a bank in Tagum, Davao del Norte, which usually took the workers about two and a half (2 1/2) hours of travel from the place of work and such travel time is not official. Records also show that on February 12,1992, when an inspection was conducted by the Department of Labor and Employment at the premises of petitioner NDMC at Amacan, Maco, Davao del Norte, it was found out that petitioners had violated labor standards law, one of which is the place of payment of wages (p.109, Vol. 1, Record). Section 4, Rule VIII, Book III of the Omnibus Rules Implementing the Labor Code provides that:

Section 4. Place of payment. - (a) As a general rule, the place of payment shall be at or near the place of undertaking. Payment in a place other than the workplace shall be permissible only under the following circumstances: (1) When payment cannot be effected at or near the place of work by reason of the deterioration of peace and order conditions, or by reason of actual or impending emergencies caused by fire, flood, epidemic or other calamity rendering payment thereat impossible; (2) When the employer provides free transportation to the employees back and forth; and (3) Under any analogous circumstances; provided that the time spent by the employees in collecting their wages shall be considered as compensable hours worked. (b) xxx xxx xxx. (Italics supplied) Accordingly, in his Order dated April 14, 1992 (p. 109, Vol. 1, Record), the Regional Director, Regional Office No. XI, Department of Labor and Employment, Davao City, ordered petitioner NDMC, among others, as follows:

WHEREFORE, x x x. Respondent is further ordered to pay its workers salaries at the plantsite at Amacan, New Leyte, Maco, Davao del Norte or whenever not possible, through the bank in Tagum, Davao del Norte as already been practiced subject, however to the provisions of Section 4 of Rule VIII, Book III of the rules implementing the Labor Code as amended. Thus, public respondent Labor Arbiter Antonio M. Villanueva correctly held that:

From the evidence on record, we find that the hours spent by complainants in collecting salaries at a bank in Tagum, Davao del Norte shall be considered compensable hours worked. Considering further the distance between Amacan, Maco to Tagum which is 2 hours by travel and the risks in commuting all the time in collecting complainants salaries, would justify the granting of backwages equivalent to two (2) days in a month as prayed for. Corollary to the above findings, and for equitable reasons, we likewise hold respondents liable for the transportation expenses incurred by complainants at P40.00 round trip fare during pay days.

(p. 10, Decision; p. 207, Vol. 1, Record) On the contrary, it will be petitioners burden or duty to present evidence of compliance of the law on labor standards, rather than for private respondents to prove that they were not paid/provided by petitioners of their backwages and transportation expenses. Other than the bare denials of petitioners, the above findings stands uncontradicted. Indeed we are not at liberty to set aside findings of facts of the NLRC, absent any capriciousness, arbitrariness, or abuse or complete lack of basis. In Maya Farms Employees Organizations vs. NLRC, we held: [16]

This Court has consistently ruled that findings of fact of administrative agencies and quasi-judicial bodies which have acquired expertise because their jurisdiction is confined to specific matters are generally accorded not only respect but even finality and are binding upon this Court unless there is a showing of grave abuse of discretion, or where it is clearly shown that they were arrived at arbitrarily or in disregard of the evidence on record. WHEREFORE, judgment is hereby rendered MODIFYING the assailed Resolution by SETTING ASIDE and deleting the award for additional separation pay of 17.5 days for every year of service, and AFFIRMING it in all other aspects. No costs. SO ORDERED. Narvasa, C.J., Padilla, Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza, Francisco, and Hermosisima, JJ., concur.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 200746

August 6, 2014

BENSON INDUSTRIES EMPLOYEES UNION-ALU-TUCP and/or VILMA GENON, EDISA HORTELANO, LOURDES ARANAS, TONY FORMENTERA, RENEBOY LEYSON, MA. ALONA ACALDO, MA. CONCEPCION ABAO, TERESITA CALINAWAN, NICIFORO CABANSAG, STELLA BARONGO, MARILYN POTOT, WELMER ABANID, LORENZO ALIA, LINO PARADERO, DIOSDADO ANDALES, LUCENA ABESIA, and ARMANDO YBAÑEZ, Petitioners, vs. BENSON INDUSTRIES, INC., Respondent. DECISION PERLAS-BERNABE, J.:

Before the Court is a petition for review on certiorari assailing the Decision dated September 27, 2011 and the Resolution dated January 31, 2012 of the Court of Appeals (CA)in CA-G.R. SP No. 03842 which reversed and set aside the Decision dated October 24, 2008 of the Voluntary Arbitrator (VA) of the National Conciliation and Mediation Board (NCMB), and accordingly deleted the award to petitioners Vilma Genon, Edisa Hortelano, Lourdes Aranas, Tony Formentera, Reneboy Leyson, Ma. Alona Acaldo, Ma. Concepcion Abao, Teresita Calinawan, Niciforo Cabansag, Stella Barongo, Marilyn Potot, Welmer Abanid, Lorenzo Alia, Lino Paradero, Diosdado Andales, Lucena Abesia, and Armando Ybañez (petitioners) of additional separation pay equivalent to four (4) days of work for every year of service. 1

2

3

4

The Facts Respondent Benson Industries, Inc. (Benson) is a domestic corporation engaged in the manufacturing of greencoils with the brand name Lion-Tiger Mosquito Killer. OnFebruary 12, 2008, Benson sent its employees, including herein petitioners, a notice informing them of their intended termination from employment, to be effected on March 15, 2008 on the ground of closure and/or cessation of business operations. In consequence, the majority of Benson’s employees resigned. Meanwhile, petitioners, through Benson Industries Employees Union-ALU-TUCP (Union), filed a notice of strike, claiming that the company’s supposed closure was merely a ploy to replace the union members with lower paid workers, and, as a result, increase its profit at their expense. The strike did not, however, push through due to the parties’ amicable settlement during the conciliation proceedings before the NCMB, whereby petitioners accepted Benson’s payment of separation pay, computed at 15 days for every year of service, as per the parties’ Memorandum of Agreement dated April 9, 2008. 5

6

7

8

9

This notwithstanding, petitioners proffered a claim for the payment of additional separation pay atthe rate of four (4) days for every year of service. As basis, petitioners invoked Section 1, Article VIII of the existing collective bargaining agreement (CBA) executed by and between the Union and Benson which states that "[Benson]shall pay to any employee/laborer who is terminated from the service without any fault attributable to him, a ‘Separation Pay’ equivalentto not less than nineteen (19) days’ pay for every year of service based upon the latest rate of pay of the employee/laborer concerned." Benson opposed petitioners’ claim, averring that the separation pay already paid to them was already more than what the law requires. Reaching an impasse on the conflict, the parties referred the issue to voluntary arbitration, wherein the validityof Benson’s closure was brought up as well. 10

11

The VA Ruling In a Decision dated October 24, 2008 (October 24, 2008 VA Decision), the VA ruled in favor of petitioners, and, thus, ordered Benson to pay each of them separation benefits in "an amount equivalent to four (4) days for every year of service based on the latest rate of pay of the [individual petitioner] concerned subject to whatever legally valid deductions chargeable against [said individual petitioner] whenever applicable." 12

13

The VA ratiocinated that in computing the amount of separation benefits due to petitioners, the basis should be the provision of the existing CBA between Benson and the Union which explicitly states that should the employees be terminated through no fault of their own, they should be awarded separation benefits at the rate of 19 days for every year of service. In this regard, the VA opined that the provisions of the CBA should be given effect because it expresses the latest agreement of the union and the company, not to mention the fact that it gives more benefits to the employees. 14

Separately, the VA found adequate proof to support Benson’s position that it was indeed in a state of insolvency, which, therefore, justified its closure and/or cessation of business operations on the ground of serious business losses and/or financial reverses. 15

Dissatisfied, Benson elevated the matter on appeal before the CA. The CA Ruling In a Decision dated September 27, 2011, the CA reversed and set aside the VA’s ruling, and accordingly deleted the award of additional separation benefits equivalent to four (4) days of work for every year of service. It held that despite the express provision in the CBA stating that Benson should pay its employees who were terminated without their fault separation benefits equivalent to at least 19 days’ pay for every year of service, Benson cannot be compelled to do so considering its current financial status. 16

17

Aggrieved, petitioners moved for reconsideration, which was, however, denied by the CA in a Resolution dated January 31, 2012, hence, this petition. 18

The Issue Before the Court The sole issue for the Court’s resolution is whether or not the CA correctly deleted the award to petitioners of additional separation benefits equivalent to four (4) days of work for every year of service. The Court’s Ruling The petition is impressed with merit. Closure of business may be consideredas a reversal of an employer’s fortune whereby there is a complete cessation of business operations and/or an actual locking-up of the doors ofthe establishment, usually due to financial losses. Under the Labor Code, it is treated as an authorized cause for termination, aimed at preventing further financial drain upon an employer who cannot anymore pay its employees since business has already stopped. As a form of recompense, the employer is required to pay its employees separation benefits, except when the closure is due to serious business losses. Article 297 (formerly Article 283) of the Labor Code, as amended, states this rule: 19

20

Art. 297. Closure of Establishment and Reduction of Personnel. The employer may also terminate the employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent losses or the closing or cessation ofoperation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, x x x. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or 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) monthsshall be considered one (1) whole year. (Emphasis and underscoring supplied) While serious business losses generally exempt the employer from paying separation benefits, it must bepointed that the exemption only pertains to the obligation of the employer under Article 297 of the Labor Code. This is because of the law’s express parameter thatmandates payment of separation benefits "in case of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses." The policy distinction underlying Article 297

– that is, the distinction between closures due to serious business losses and those which are not – was deftly discussed by the Court in the case of Cama v. Joni’s Food Services, Inc., as follows: 21

The Constitution, while affording full protection to labor, nonetheless, recognizes "theright of enterprises to reasonable returns on investments, and to expansion and growth." In line with this protection afforded to business by the fundamental law, Article283 [(now, Article 297)] of the Labor Code clearly makes a policy distinction. It is only in instances of "retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses" that employees whose employment has been terminated as a result are entitled to separation pay. In other words, Article 283 [(now, Article 297)] of the Labor Code does not obligate an employer to pay separation benefits when the closure is due to serious losses. To require anemployer to be generous when it is no longer in a position todo so, in our view, would be unduly oppressive, unjust, and unfair to the employer. Ours is a system of laws, and the law in protecting the rights of the working man, authorizes neither the oppression nor the self-destruction of the employer. x x x. (Emphasis supplied) 22

When the obligation to pay separation benefits, however, is not sourced from law (particularly, Article297 of the Labor Code), but from contract, such as an existing collective bargaining agreement between the employer and its employees, an examination of the latter’s provisions becomes necessary in order to determine the governing parameters for the said obligation. To reiterate, an employer which closes shop due to serious business losses is exempt from paying separation benefits under Article 297 of the Labor Code for the reason that the said provision explicitly requires the same only when the closure is not due to serious business losses; conversely, the obligation is maintained when the employer’s closure is not due to serious business losses. For a similar exemption to obtain against a contract, such as a CBA, the tenor ofthe parties’ agreement ought to be similar to the law’s tenor. When the parties, however, agree to deviate therefrom, and unqualifiedly covenant the payment of separation benefits irrespective of the employer’sfinancial position, thenthe obligatory force of that contract prevails and its terms should be carried out to its full effect. Verily, it is fundamental that obligations arising from contracts have the force of law between the contracting parties and thus should be complied with in good faith; and parties are bound by the stipulations, clauses, terms and conditions they have agreed to, the only limitation being that these stipulations, clauses, terms and conditions are not contrary to law, morals, public order or public policy. Hence, if the terms of a CBA are clear and there is no doubt as to the intention ofthe contracting parties, the literal meaning of its stipulations shall prevail. As enunciated in Honda Phils., Inc. v. Samahan ng Malayang Manggagawa sa Honda: 23

24

25

26

27

A collective bargaining agreement 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. As in all contracts, the parties in a CBA may establish such stipulations, clauses, terms and conditions as they may deem convenient provided these are not contrary to law, morals, good customs, public order or public policy. Thus, where the CBA is clear and unambiguous, it becomes the law between the parties and compliance therewith is mandated by the express policy of the law. 28

In this case, it is undisputed thata CBA was forged by the employer, Benson, and its employees, through the Union, to govern their relations effective July 1, 2005 to June 30, 2010.It is equally undisputed that Benson agreed to and was thus obligated under the CBA to pay its employees who had been terminated without any fault attributable to them separation benefits at the rate of 19 days for every year of service. This is particularly found in Section 1, Article VIII of the same contract, to wit:

Section 1. Separation Pay – The Company shall pay to any employee/laborer who is terminated from the service without any fault attributable to him, a "Separation Pay"equivalent to not less than nineteen (19) days’ pay for every year of service based upon the latest rate of pay of the employee/laborer concerned. 29

As may be gleaned from the following whereas clauses in a Memorandum of Agreement dated November 20, 2003 between the parties, Benson had been fully aware of its distressed financial condition even at the time of the previous CBA (effective from July 1, 2000 to June 30, 2005): 30

WHEREAS, on February 01, 2001 the Company and the Union entered into a Collective Bargaining Agreement (CBA) with effectivity from July 01, 2000 to June 30, 2005; xxxx WHEREAS, the Company and the Union recognize that the Philippines is at present in grave economic crisis; WHEREAS, the Union recognizes and acknowledges that the Company in particular is in grave financial difficulties and that the Company is hard up to meet its financial obligations to creditor banksthat said creditor banks have even threatened to foreclose the mortgages on and toseize the Company’s factory, realties, machineries and assets and in fact, the Bank of the Philippine Islands, one of the creditor banks scheduled on November 17, 1998 a foreclosure sale of the Company’s factory, realties, machineries and assets in Extrajudicial Foreclosure Case No. EJF-2773-CEB; x x x x (Emphases supplied) Benson even admits in its Comment that it was already saddled with loan from banks as early as 1997 and that it had been unable to service its loan obligations. And yet, nothing appears on record to discount the fact that it still unqualifiedly and freely agreedto the separation pay provision in the July 1, 2005 to June 30, 2010 CBA, its distressed financial condition notwithstanding. 31

32

Thus, in view of the foregoing, the Court disagrees with the CA in negating Benson’s obligation to pay petitioners their full separation benefits under the said agreement. The postulation that Benson had closed its establishment and ceased operations due to serious business losses cannot be accepted as an excuse to clear itself of any liability since the ground of serious business losses is not, unlike Article 297 of the Labor Code, considered as an exculpatory parameter under the aforementioned CBA. Clearly, Benson, with full knowledge of its financial situation, freely and voluntarily entered into such agreement with petitioners. Hence, having failed to show that the subject CBA provision on separation benefits is contrary to law, morals, public order orpublic policy, or that the same can be interpreted as one with a condition – for instance, that the parties actually contemplated non-payment of separation benefits in the event of closure due to serious business losses – the Court isconstrained to reinstate the October 24, 2008 VA Decision ordering Benson to pay each of the petitioners separation benefits in "an amount equivalent to four (4) days for every year of service based on the latest rate of pay of the [individual petitioner] concerned, subject to whatever legallyvalid deductions chargeable against [said individual petitioner], whenever applicable." 33

Analogous to the foregoing is the Court’s disquisition in Lepanto Ceramics, Inc. v. Lepanto Ceramics Employees Association, whereby the employer therein was held liable for the payment of Christmas bonus benefits, considering that the grant thereof was voluntarily and unqualifiedly agreed upon by the parties under the CBA despite the employer’s full awareness of its distressed financial position (as Benson in this case), viz.: 34

It is a familiar and fundamental doctrine in labor law that the CBA is the law between the parties and they are obliged to comply with its provisions. This principle stands strong and true in the case at bar. A reading of the provision of the CBA reveals that the same provides for the giving of a "Christmas gift package/bonus" without qualification. Terse and clear, the said provision did not state that the Christmas package shall be made to depend on the petitioner’s financial standing. The records are also bereft of any showing that the petitioner made it clear during the CBA negotiations that the bonus was dependent on any condition. Indeed, if the petitioner and respondent Association intended that the 3,000.00 bonus would be dependent on the company earnings, such intention should have been expressed in the CBA. It is noteworthy that in petitioner’s 1998 and 1999 financial Statements, it took note that"the 1997 financial crisis in the Asian region adversely affected the Philippine economy." From the foregoing, petitioner cannot insist on business losses as a basis for disregarding its undertaking. It is manifestly clear that petitioner was very much aware of the imminence and possibility of business losses owing to the 1997 financial crisis.In 1998, petitioner suffered a net loss of P14,347,548.00. Yet it gave a P3,000.00 bonus to the members of the Association. In 1999, when petitioner’s very own financial statement reflected that "the positive developments in the economy have yet to favorably affect the operations of the company," and reported a loss of P346,025,733.00, it entered into the CBA with the respondent Association whereby it contracted to grant a Christmas gift package/bonus to the latter. Petitioner supposedly continued to incur losses on the years 2000 and 2001. Still and all, this did not deter it from honoring the CBA provision onChristmas bonus as it continued to give P3,000.00 each to the members of the respondent Association in the years 1999, 2000 and 2001. All given, business losses are a feeble ground for petitioner to repudiate its obligation under the CBA.The rule is settled that any benefit and supplement being enjoyed by the employees cannot be reduced, diminished, discontinued oreliminated by the employer. The principle of non-diminution of benefits is founded on the constitutional mandate to protect the rights of workers and to promote their welfare and to afford labor full protection. Hence, absent any proof that petitioner’s consent was vitiated by fraud, mistake or duress, it is presumed that it entered into the CBA voluntarily and had full knowledge of the contents thereof and was aware of its commitments under the contract. (Emphases and underscoring supplied; citations omitted) 35

A similar disposition was also made in the case of Eastern Telecommunications Philippines, Inc.v. Eastern Telecoms Employees Union, wherein the Court held as follows: 36

The parties to the contract must be presumed to have assumed the risks of unfavorable developments. Itis, therefore, only in absolutely exceptional changes of circumstances that equity demands assistance for the debtor. In the case at bench, the Court determines that ETPI’s claimed depressed financial state will not release it from the binding effect of the 2001-2004 CBA Side Agreement. 1âwphi1

ETPI appears to be well aware ofits deteriorating financial condition when it entered into the 20012004 CBA Side Agreement with ETEU and obliged itself to pay bonuses to the members of ETEU. Considering that ETPI had been continuously suffering huge losses from 2000 to 2002, its business losses in the year 2003 were not exactly unforeseen or unexpected. Consequently, it cannot be said that the difficulty in complying with its obligation under the Side Agreement was "manifestly beyond

the contemplation ofthe parties." Besides, as held in Central Bank of the Philippines v. Court of Appeals, mere pecuniary inability to fulfill anengagement does not discharge a contractual obligation. Contracts, once perfected, are binding between the contracting parties. Obligations arising therefrom have the force of law and should be complied with in good faith. ETPI cannot renege from the obligation it has freely assumed when it signed the 2001-2004 CBA Side Agreement. (Emphases and underscoring supplied; citations omitted) 37

To quell any doubts, it bears pointing out that the CA’s reliance on Galaxie Steel Workers Union (GSWU-NAFLU-KMU) v. NLRC and Cama v. Joni’s Food Services, Inc. was actually misplaced since no CBA was involved in those cases. As such, consistent with the parameters of Article 297 of the Labor Code asabove-discussed, the payment of separation benefits in view of the employer’s serious business losses in those cases was not in order. In the same light, North Davao Mining Corporation v. NLRC was speciously applied by the CA given that the payment of separation benefits in that case was not sourcedfrom a contractual CBA obligation but merely from a unilateral company practice which was deemed as an act of generosity on the part. of the employer. It was in this context that the Court held that "to require [the company] to continue being generous when it is no longer in a position to do so would certainly be unduly oppressive, unfair and most revolting to the conscience." The factual dissimilarity of these cases to Benson and petitioners' situation therefore precludes the application of the same ruling. Accordingly, finding no cogent reason for Benson not to comply with its obligations under the July 1, 2005 to June 30, 2010 CBA, and considering further that the interpretation of any law or provision affecting labor should be interpreted in favor of labor, the Court hereby reverses the CA Decision and reinstates the October 24, 2008 VA Decision. 38

39

40

41

42

WHEREFORE, the petition is GRANTED. The Decision dated September 27, 2011 and the Resolution dated January 31, 2012 of the Court of Appeals in CA-G.R. SP No. 03842 are hereby REVERSED and SET ASIDE. The Decision dated October 24, 2008 of the Voluntary Arbitrator of the National Conciliation and Mediation Board is REINSTATED. SO ORDERED. ESTELA M. PERLAS-BERNABE Associate Justice Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 207253

August 20, 2014

CRISPIN B. LOPEZ, Petitioner, vs. IRVINE CONSTRUCTION CORP. and TOMAS SY SANTOS, Respondents. DECISION PERLAS-BERNABE, J.: Assailed in this petition for review on certiorari are the Decision dated September 14, 2012 and the Resolution dated April 12, 2013 of the Court of Appeals (CA) in CA-GR. SP No. 108385-MIN which 1

3

2

annulled and set aside the Resolutions dated October 31, 2008 and February 12, 2009 of the National Labor Relations Commission (NLRC) in NLRC LAC No. 01-000428-2008, and thereby dismissed petitioner Crispin B. Lopez's (Lopez) complaint for illegal dismissal. 4

5

The Facts Respondent Irvine Construction Corp. (Irvine) is a construction firm with office address at San Juan, Manila. It initially hired Lopez as laborer in November 1994 and, thereafter, designated him as a guard at its warehouse in Dasmarifias, Cavite in the year 2000, with a salary of P238.00 per day and working hours from 7 o'clock in the morning until 4 o'clock in the afternoon, without any rest day. On December 18, 2005, Lopez was purportedly terminated from his employment, whereupon he was told "Jkaw ay lay-off muna." Thus, on January 10, 2006, he filed a complaint for illegal dismissal with prayer for the payment of separation benefits against Irvine before the NLRC Sub-Regional Arbitration Branch No. IV in San Pablo City, Laguna, docketed as NLRC Case No. SRAB-IV 1-869306-Q. 6

7

8

9

For its part, Irvine denied Lopez's claims, alleging that he was employed only as a laborer who, however, sometimes doubled as a guard. As laborer, Lopez's duty was to bring construction materials from the suppliers' vehicles to the company warehouse when there is a construction project in Cavite. As evidenced by an Establishment Termination Report dated December 28, 2005 which Irvine previously submitted before the Department of Labor and Employment (DOLE), Lopez was, however, temporarily laid-off on December 27, 2005 after the Cavite project was finished. Eventually, Lopez was asked to return to work through a letter dated June 5, 2006 (return to work order), allegedly sent to him within the six ( 6) month period under Article 286 of the Labor Code which pertinently provides that "[t]he bona-fide suspension of the operation of a business or undertaking for a period not exceeding six (6) months x x x shall not terminate employment." As such, Irvine argued that Lopez's filing of the complaint for illegal dismissal was premature. 10

11

12

13

14

The LA Ruling On December 6, 2007, the Labor Arbiter (LA) rendered a Decision ruling that Lopez was illegally dismissed. The LA did not give credence to Irvine's argument that the lack of its project in Cavite resulted in the interruption of Lopez's employment in view of Irvine's contradictory averment that Lopez was merely employed on temporary detail and that he only doubled as a guard. Granting that Lopez's work as a laborer or as a guard was really affected by the suspension of the operations of Irvine in Cavite, the LA still discredited Irvine's lay-off claims considering that the return to work order Irvine supposedly sent to Lopez was not even attached to its pleadings. Hence, without any proof that Lopez was asked to return to work, the LA concluded that the dismissal of Lopez went beyond the six-month period fixed by Article 286 of the Labor Code and was therefore deemed to be a permanent one effectuated without a valid cause and due process. Accordingly, Irvine was ordered to pay Lopez the sum of P272,222.l 7, consisting of Pl 76,905.70 as backwages and other statutory benefits, andP95,316.00 as separation pay. 15

16

17

At odds with the LA's ruling, Irvine elevated the matter on appeal to the NLRC. 18

The NLRC Ruling On October 31, 2008, the NLRC rendered a Resolution upholding the LA's ruling. 19

It debunked Irvine's contention that Lopez was not illegally dismissed since he was merely placed on temporary lay-off due to the lack of project in Cavite for the reason that there was no indication, much less substantial evidence, that Lopez was a project employee who was assigned to carry out a

specific project or undertaking, with the duration and scope specified at the time of the engagement. In this relation, it observed that Lopez worked with Irvine since 1994 and therefore earned the disputable presumption that he was a regular employee entitled to security of tenure. Thus, since Lopez was not relieved for any just or authorized cause under Articles 282 and 283 of the Labor Code, the NLRC upheld the LA's finding that he was illegally dismissed. 20

21

Dissatisfied, Irvine filed a motion for reconsideration which was, however, denied in a Resolution dated February 12, 2009; hence, it filed a petition for certiorari before the CA. 22

23

24

The CA Ruling The CA granted Irvine's certiorari petition in a Decision dated September 14, 2012, thereby reversing the NLRC. 25

It held that Lopez's complaint for illegal dismissal was prematurely filed since there was no indicia that Lopez was actually prevented by Irvine from returning to work or was deprived of any work assignments or duties. On the contrary, the CA found that Lopez was asked to return to work within the six-month period under Article 286 of the Labor Code. Accordingly, it concluded that Lopez was merely temporarily laid off, and, thus, he could not have been dismissed. 26

27

Aggrieved, Lopez sought reconsideration but the same was denied in a Resolution dated April 12, 2013, hence, this petition. 28

29

The Issue Before the Court The core issue for the Court's resolution is whether or not the CA erred in finding that the NLRC gravely abused its discretion in affirming the LA's ruling that Lopez was illegally dismissed. The Court's Ruling The petition is meritorious. Ruling on the propriety of Irvine's course of action in this case preliminarily calls for a determination of Lopez's employment status - that is, whether Lopez was a project or a regular employee. Case law states that the principal test for determining whether particular employees are properly characterized as "project employees" as distinguished from "regular employees," is whether or not the "project employees" were assigned to carry out a "specific project or undertaking," the duration and scope of which were specified at the time the employees were engaged for that project. The project could either be (1) a particular job or undertaking that is within the regular or usual business of the employer company, but which is distinct and separate, and identifiable as such, from the other undertakings of the company; or (2) a particular job or undertaking that is not within the regular business of the corporation. In order to safeguard the rights of workers against the arbitrary use of the word "project" to prevent employees from attaining the status of regular employees, employers claiming that their workers are project employees should not only prove that the duration and scope of the employment was specified at the time they were engaged, but also that there was indeed a project. 30

In this case, the NLRC found that no substantial evidence had been presented by Irvine to show that Lopez had been assigned to carry out a "specific project or undertaking," with its duration and scope specified at the time of engagement. In view of the weight accorded by the courts to factual findings

of labor tribunals such as the NLRC, the Court, absent any cogent reason to hold otherwise, concurs with its ruling that Lopez was not a project but a regular employee. This conclusion is bolstered by the undisputed fact that Lopez had been employed by Irvine since November 1994, or more than 10 years from the time he was laid off on December 27, 2005. Article 280 of the Labor Code provides 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: 31

32

33

Art. 280. Regular and casual employment. The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season. An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee x x x. (Emphasis supplied) As a regular employee, Lopez is entitled to security of tenure, and, hence, dismissible only if a just or authorized cause exists therefor. Article 279 of the Labor Code states this fundamental rule: 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. (Emphasis supplied) Among the authorized causes for termination under Article 283 of the Labor Code is retrenchment, or what is sometimes referred to as a "lay-off': 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 thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of 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. (Emphases supplied) It is defined as the severance of employment, through no fault of and without prejudice to the employee, resorted to by management during the periods of business recession, industrial depression, or seasonal fluctuations, or during lulls caused by lack of orders, shortage of materials, conversion of the plant to a new production program or the introduction of new methods or more efficient machinery, or of automation. Elsewise stated, lay-off is an act of the employer of dismissing employees because of losses in the operation, lack of work, and considerable reduction on the 34

volume of its business, a right recognized and affirmed by the Court. However, a lay-off would be tantamount to a dismissal only if it is permanent. When a lay-off is only temporary, the employment status of the employee is not deemed terminated, but merely suspended. 35

36

Pursuant to Article 286 of the Labor Code, the suspension of the operation of business or undertaking in a temporary lay-off situation must not exceed six (6) months: 37

ART. 286. When Employment not Deemed Terminated. The bona-fide suspension of the operation of a business or undertaking for a period not exceeding six (6) months, or the fulfillment by the employee of a military or civic duty shall not terminate employment. In all such cases, the employer shall reinstate the employee to his former position without loss of seniority rights if he indicates his desire to resume his work not later than one (1) month from the resumption of operations of his employer or from his relief from the military or civic duty. (Emphasis supplied) Within this six-month period, the employee should either be recalled or permanently retrenched. Otherwise, the employee would be deemed to have been dismissed, and the employee held liable therefor. As pronounced in the case of PT & T Corp. v. NLRC: 38

[Article 283 of the Labor Code as above-cited] x x x speaks of a permanent retrenchment as opposed to a temporary lay-off as is the case here. There is no specific provision of law which treats of a temporary retrenchment or lay-off and provides for the requisites in effecting it or a period or duration therefor. These employees cannot forever be temporarily laid-off. To remedy this situation or fill the hiatus, Article 286 may be applied but only by analogy to set a specific period that employees may remain temporarily laid-off or in floating status. Six months is the period set by law that the operation of a business or undertaking may be suspended thereby suspending the employment of the employees concerned. The temporary lay-off wherein the employees likewise cease to work should also not last longer than six months. After six months, the employees should either be recalled to work or permanently retrenched following the requirements of the law, and that failing to comply with this would be tantamount to dismissing the employees and the employer would thus be liable for such dismissal. (Emphasis supplied) 39

Notably, in both a permanent and temporary lay-off, jurisprudence dictates that the one-month notice rule to both the DOLE and the employee under Article 283 of the Labor Code, as above cited, is .mandatory. Also, in both cases, the lay-off, being an exercise of the employer's management prerogative, must be exercised in good faith - that is, one which is intended for the advancement of employers' interest and not for the purpose of defeating or circumventing the rights of the employees under special laws or under valid agreements. Instructive on the nature of a lay-off as a management prerogative is the following excerpt from the case of Industrial Timber Corporation v. NLRC: 40

41

42

Closure or [suspension] of operations for economic reasons is, therefore, recognized as a valid exercise of management prerogative. The determination to cease [or suspend] operations is a prerogative of management, which the State does not usually interfere with, as no business or undertaking [is] required to continue operating at a loss simply because it has to maintain its workers in employment. Such an act would be tantamount to a taking of property without due process of law. 43

In the case at bar, Irvine asserts that it only temporarily laid-off Lopez from work on December 27, 2005 for the reason that its project in Cavite had already been finished. To support its claim, it submitted the following pieces of evidence: (a) a copy of an Establishment Termination Report evidencing Lopez's lay-off; (b) a copy of the return to work order dated June 5, 2006; and (c) an affidavit from Irvine's personnel manager, Aguinaldo Santos, which purports that said return 44

45

46

to work order was sent to Lopez by ordinary mail on June 5, 2006. The CA gave credence to the foregoing and thus granted Irvine's certiorari petition against the NLRC ruling which affirmed the LA's finding of illegal dismissal. The CA is mistaken. As the NLRC correctly ruled in this case, Lopez, who, as earlier discussed was a regular employee of Irvine, was not merely temporarily laid off from work but was terminated from his employment without any valid cause therefor; thus, the proper disposition is to affirm the LA's ruling that Lopez had been illegally dismissed. Although the NLRC did not expound on the matter, it is readily apparent that the supposed lay-off of Lopez was hardly justified considering the absence of any causal relation between the cessation of Irvine's project in Cavite with the suspension of Lopez's work. To repeat, Lopez is a regular and not a project employee. Hence, the continuation of his engagement with Irvine, either in Cavite, or possibly, in any of its business locations, should not have been affected by the culmination of the Cavite project alone. In light of the well-entrenched rule that the burden to prove the validity and legality of the termination of employment falls on the employer, Irvine should have established the bona fide suspension of its business operations or undertaking that would have resulted in the temporary lay-off of its employees for a period not exceeding six (6) months in accordance with Article 286 of the Labor Code. As enunciated in Nasipit Lumber Co. v. National Organization of Workingmen (NOWM), citing Somerville Stainless Steel Corporation v. NLRC: 47

48

49

[T]he burden of proving, with sufficient and convincing evidence, that such closure or suspension is bona fide falls upon the employer. As we ruled in Somerville Stainless Steel Corporation v. NLRC: Considering the severe consequences occasioned by retrenchment on the livelihood of the employee(s) to be dismissed, and the avowed policy of the State - under Sec. 3, Art. XIII of the Constitution, and Art. 3 of the Labor Code - to afford full protection to labor and to assure the employee's right to enjoy security of tenure, the Court reiterates that "not every loss incurred or expected to be incurred by a company will justify retrenchment. The losses must be substantial and the retrenchment must be reasonably necessary to avert such losses. Settled is the rule that the employer bears the burden of proving this allegation of the existence or imminence of substantial losses, which by its nature is an affirmative defense. It is the duty of the employer to prove with Clear and satisfactory evidence that legitimate business reasons exist to justify retrenchment. Failure to do so "inevitably results in a finding that the dismissal is. unjustified." And the determination of whether an employer has sufficiently and successfully discharged this burden of proof "is essentially a question of fact for the Labor Arbiter and the NLRC to determine." Otherwise, such ground for termination would be susceptible to abuse by scheming employers who might be merely feigning business losses or reverses in their business ventures to ease out employees. (Emphasis supplied; citations omitted) 50

In this case, Irvine failed to prove compliance with the parameters of Article 286 of the Labor Code. As the records would show, it merely completed one of its numerous construction projects which does not, by and of itself, amount to a bona .fide suspension of business operations or undertaking. In invoking Article 286 of the Labor Code, the paramount consideration should be the dire exigency of the business of the employer that compels it to put some of its employees temporarily out of work. This means that the employer should be able to prove that it is faced with a clear and compelling economic reason which reasonably forces it to temporarily shut down its business operations or a particular undertaking, incidentally resulting to the temporary lay-off of its employees. 51

Due to the grim economic consequences to the employee, case law states that the employer should also bear the burden of proving that there are no posts available to which the employee temporarily out of work can be assigned. Thus, in the case of Mobile Protective & Detective Agency v. Ompad, the Court found that the security guards therein were constructively dismissed considering that their employer was not able to show any dire exigency justifying the latter's failure to give said employees any further assignment, viz.: 52

53

[Article 286 of the Labor Code] has been applied by analogy to security guards in a security agency who are placed "off detail" or on "floating" status. In security agency parlance, to be placed "off detail" or on "floating" status means "waiting to be posted." Pursuant to Article 286 of the Labor Code, to be put off detail or in floating status requires no less than the dire exigency of the employer's bona fide suspension of operation, business or undertaking. In security services, this happens when there is a surplus of security guards over available assignments as when the clients that do not renew their contracts with the security agency are more than those clients that do and the new ones that the agency gets. Again, petitioners only alleged that respondent's last assignment was with VVCC for the period of September 29 to October 31, 1997. He was not given further assignment as he allegedly went on AWOL and lost interest to work. As explained, these claims are unconvincing. Worse still, they are inadequate under the law. The records do not show that there was a lack of available post after October 1997. It appears that petitioners simply stopped giving respondent any assignment. Absent any dire exigency justifying their failure to give respondent further assignment, the only logical conclusion is that respondent was constructively dismissed. (Emphases supplied) 1âwphi1

54

The same can be said of the employee in this case as no evidence was submitted by Irvine to show any dire exigency which rendered it incapable of assigning Lopez to any of its projects. Add to this the fact that Irvine did not proffer any sufficient justification for singling out Lopez for lay-off among its other three hundred employees, thereby casting a cloud of doubt on Irvine's good faith in pursuing this course of action. Verily, Irvine cannot conveniently suspend the work of any of its employees in the guise of a temporary lay-off when it has not shown compliance with the legal parameters under Article 286 of the Labor Code. With Irvine failing to prove such compliance, the resulting legal conclusion is that Lopez had been constructively dismissed; and since the same was effected without any valid cause and due process, the NLRC properly affirmed the LA's ruling that Lopez's dismissal was illegal. In light of the foregoing, the CA therefore erred in granting Irvine's certiorari petition. Indeed, a petition for certiorari should only be granted when grave abuse of discretion exists - that. is, when a court or tribunal acts in a capricious or whimsical exercise of judgment as is equivalent to lack of jurisdiction. These qualities of capriciousness and whimsicality the Court finds wanting in any of the NLRC's actions in this case; as such, the reversal of the CA's Decision is hereby warranted. 55

WHEREFORE, the petition is GRANTED. The Decision dated September 14, 2012 and the Resolution dated April 12, 2013 of the Court of Appeals in CA-G.R. SP No. 108385-MIN are hereby REVERSED and SET ASIDE. The Resolutions dated October 31, 2008 and February 12, 2009 of the National Labor Relations Commission in NLRC LAC No. 01-000428-2008 are REINSTATED. SO ORDERED. ESTELA M. PERLAS-BERNABE Associate Justice

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 186475

June 26, 2013

POSEIDON INTERNATIONAL MARITIME SERVICES, INC., Petitioner, vs. TITO R. TAMALA, FELIPE S. SAURIN, JR., ARTEMIO A. BO-OC and JOEL S. FERNANDEZ, Respondents. DECISION BRION, J.: We resolve in this petition for review on certiorari1 the challenge to the September 30, 2008 Decision2 and the February 11, 20093 Resolution of the Court of Appeals (CA) in CA-G.R. SP No. 98783. These CA rulings set aside the December 29, 2006 and February 12, 2007 Resolutions 4 of the National Labor Relations Commission (NLRC) in NLRC CA No. 049479-06. The NLRC, in turn, affirmed in toto the May 2006 Decision5 of the labor arbiter (LA) dismissing the complaint for illegal termination of employment filed by respondents Tito R. Tamala, Felipe S. Saurin, Jr., Artemio A. Booc and Joel S. Fernandez against petitioner Poseidon International Maritime Services, Inc. (Poseidon), and its principal, Van Doorn Fishing Pty, Ltd. (Van Doorn). The Factual Antecedents In 2004, Poseidon hired the respondents, in behalf of Van Doorn, to man the fishing vessels of Van Doorn and those of its partners – Dinko Tuna Farmers Pty. Ltd. (Dinko) and Snappertuna Cv. Lda. (Snappertuna) - at the coastal and offshore area of Cape Verde Islands. The respondents’ contracting dates, positions, vessel assignments, duration of the contract, basic monthly salaries, guaranteed overtime pay and vacation leave pay, as reflected in their approved contracts, 6 are summarized below: Artemio A. Bo-oc

Joel S. Fernandez

Felipe S. Saurin, Jr.

Tito R. Tamala

Date Contracted

June 1, 2004

June 24, 2004

July 19, 20047

October 20, 2004

Position

Third Engineer

Chief Mate

Third Engineer

Ordinary Seaman

Vessel Assignment

M/V "Lukoran DVA"

M/V "Lukoran DVA"

M/V "Lukoran Cetriri"

M/V "Lukoran DVA"

Contract Duration

Twelve (12) months

Twelve (12) months

Twelve (12) months

Twelve (12) months

Basic Monthly

US$800.00

US$1,120.00

US$800.00

US$280.00

Salary Guaranteed Overtime Pay

US$240.00/mo

US$336.00/mo

US$240.00/mo

US$84.00/mo

Vacation Leave Pay

US$66.66

US$93.33

US$66.66

US$23.33

The fishing operations for which the respondents were hired started on September 17, 2004. On November 20, 2004, the operations abruptly stopped and did not resume. On May 25, 2005, before the respondents disembarked from the vessels, Goran Ekstrom of Snappertuna (the respondents’ immediate employer on board the fishing vessels) and the respondents executed an agreement (May 25, 2005 agreement) regarding the respondents’ salaries.8 The agreement provided that the respondents would get the full or 100% of their unpaid salaries for the unexpired portion of their preterminated contract in accordance with Philippine laws. The respective amounts the respondents would receive per the May 25, 2005 agreement are: Artemio A. Bo-oc

US$6,047.99

Joel S. Fernandez

US$7,767.90

Felipe S. Saurin, Jr.

US$6,647.99

Tito R. Tamala

US$7,047.99

On May 26, 2005, however, Poseidon and Van Doorn, with Goran of Snappertuna and Dinko Lukin of Dinko, entered into another agreement (letter of acceptance) reducing the previously agreed amount to 50% of the respondents’ unpaid salaries (settlement pay) for the unexpired portion of their contract.9 On May 28, 2005, the respondents arrived in Manila. On June 10, 2005, the respondents received the settlement pay under their letter of acceptance. The respondents then signed a waiver and quitclaim10 and the corresponding cash vouchers.11 On November 16, 2005, the respondents filed a complaint 12 before the Labor Arbitration Branch of the NLRC, National Capital Region for illegal termination of employment with prayer for the payment of their salaries for the unexpired portion of their contracts; and for non-payment of salaries, overtime pay and vacation leave pay.13 The respondents also prayed for moral and exemplary damages and attorney’s fees. The respondents anchored their claim on their May 25, 2005 agreement with Goran, and contended that their subsequent execution of the waiver and quitclaim in favor of Poseidon and Van Doorn should not be given weight nor allowed to serve as a bar to their claim. The respondents alleged that their dire need for cash for their starving families compelled and unduly influenced their decision to sign their respective waivers and quitclaims. In addition, the complicated language employed in the document rendered it highly suspect. In their position paper,14 Poseidon and Van Doorn argued that the respondents had no cause of action to collect the remaining 50% of their unpaid wages. To Poseidon and Van Doorn, the respondents’ voluntary and knowing agreement to the settlement pay, which they confirmed when they signed the waivers and quitclaims, now effectively bars their claim. Poseidon and Van Doorn submitted before the LA the signed letter of acceptance, the waiver and quitclaim, and the cash vouchers to support their stance.

In a Decision15 dated May 2006, the LA dismissed the respondents’ complaint for lack of merit, declaring as valid and binding their waivers and quitclaims. The LA explained that while quitclaims executed by employees are generally frowned upon and do not bar them from recovering the full measure of what is legally due, excepted from this rule are the waivers knowingly and voluntarily agreed to by the employees, such as the waivers assailed by the respondents. Citing jurisprudence, the LA added that the courts should respect, as the law between the parties, those legitimate waivers and quitclaims that represent voluntary and reasonable settlement of employees’ claims. In the respondents’ case, this pronouncement holds more weight, as they understood fully well the contents of their waivers and knew the consequences of their acts. The LA did not give probative weight to the May 25, 2005 agreement considering that the entities which contracted the respondents’ services - Poseidon and Van Doorn – did not actively participate. Moreover, the LA noted that the respondents’ signed letter of acceptance superseded this agreement. The LA likewise considered the respondents’ belated filing of the complaint as a mere afterthought. Finally, the LA dismissed the issue of illegal dismissal, noting that the respondents already abandoned this issue in their pleadings. The respondents appealed16 the LA’s decision before the NLRC. The Ruling of the NLRC By Resolution17 dated December 29, 2006, the NLRC affirmed in toto the LA’s decision. As the LA did, the NLRC ruled that the respondents’ knowing and voluntary acquiescence to the settlement and their acceptance of the payments made bind them and effectively bar their claims. The NLRC also regarded the amounts the respondents received as settlement pay to be reasonable; despite the cessation of the fishing operations, the respondents were still paid their full wages from December 2004 to January 2005 and 50% of their wages from February 2005 until their repatriation in May 2005. On February 12, 2007, the NLRC denied18 the respondents’ motion for reconsideration,19 prompting them to file with the CA a petition for certiorari20 under Rule 65 of the Rules of Court. The Ruling of the CA In its September 30, 2008 Decision,21 the CA granted the respondents’ petition and ordered Poseidon and Van Doorn to pay the respondents the amounts tabulated below, representing the difference between the amounts they were entitled to receive under the May 25, 2005 agreement and the amounts that they received as settlement pay: Artemio A. Bo-oc

US$3,705.00

Joel S. Fernandez

US$4,633.57

Felipe S. Saurin, Jr.

US$4,008.62

Tito R. Tamala

US$4,454.20

In setting aside the NLRC’s ruling, the CA considered the waivers and quitclaims invalid and highly suspicious. The CA noted that the respondents in fact questioned in their pleadings the letter’s due execution. In contrast with the NLRC, the CA observed that the respondents were coerced and unduly influenced into accepting the 50% settlement pay and into signing the waivers and quitclaims

because of their financial distress. The CA moreover considered the amounts stated in the May 25, 2005 agreement with Goran to be more reasonable and in keeping with Section 10 of Republic Act (R.A.) No. 8042 or the Migrant Workers and Overseas Filipinos Act of 1995. The CA also pointed out with emphasis that the pre-termination of the respondents’ employment contract was simply the result of Van Doorn’s decision to stop its operations. Finally, the CA did not consider the respondents’ complaint as a mere afterthought; the respondents are precisely given under the Labor Code a three-year prescriptive period to allow them to institute such actions. Poseidon filed the present petition after the CA denied its motion for Reconsideration 22 in the CA’s February 11, 2009 Resolution.23 The Petition Poseidon’s petition argues that the labor tribunals’ findings are not only binding but are fully supported by evidence. Poseidon contends that the CA’s application of Section 10 of R.A. No. 8042 to justify the amounts it awarded to the respondents is misplaced, as the respondents never raised the issue of illegal dismissal before the NLRC and the CA. It claims that the respondents, in assailing the NLRC ruling before the CA, mainly questioned the validity of the waivers and quitclaims they signed and their binding effect on them. While the respondents raised the issue of illegal dismissal before the LA, they eventually abandoned it in their pleadings – a matter the LA even pointed out in her May 2006 Decision. Poseidon further argues that the NLRC did not exceed its jurisdiction nor gravely abuse its discretion in deciding the case in its favor, pointing out that the respondents raised issues pertaining to mere errors of judgment before the CA. Thus, as matters stood, these issues did not call for the grant of a writ of certiorari as this prerogative writ is limited to the correction of errors of jurisdiction committed through grave abuse of discretion, not errors of judgment. Finally, Poseidon maintains that it did not illegally dismiss the respondents. Highlighting the CA’s observation and the respondents’ own admission in their various pleadings, Poseidon reiterates that it simply ceased its fishing operations as a business decision in the exercise of its management prerogative. The Case for the Respondents The respondents point out in their comment24 that the petition raises questions of fact, which are not proper for a Rule 45 petition. They likewise point out that the petition did not specifically set forth the grounds as required under Rule 45 of the Rules of Court. On the merits, and relying on the CA ruling, the respondents argue that Poseidon dismissed them without a valid cause and without the observance of due process. The Issues At the core of this case are the validity of the respondents’ waivers and quitclaims and the issue of whether these should bar their claim for unpaid salaries. At the completely legal end is the question of whether Section 10 of R.A. No. 8042 applies to the respondents’ claim. The Court’s Ruling

We resolve to partly GRANT the petition. Preliminary considerations The settled rule is that a petition for review on certiorari under Rule 45 is limited to the review of questions of law,25 i.e., to legal errors that the CA may have committed in its decision,26 in contrast with the review for jurisdictional errors that we undertake in original certiorari actions under Rule 65.27 In reviewing the legal correctness of a CA decision rendered under Rule 65 of the Rules of Court, we examine the CA decision from the prism of whether it correctly determined the presence or absence of grave abuse of discretion in the NLRC decision before it, and not strictly on the basis of whether the NLRC decision under review is intrinsically correct.28 In other words, we have to be keenly aware that the CA undertook a Rule 65 review, not a review on appeal, of the NLRC decision challenged before it.29 Viewed in this light, we do not re-examine the factual findings of the NLRC and the CA, nor do we substitute our own judgment for theirs,30 as their findings of fact are generally conclusive on this Court. We cannot touch on factual questions "except in the course of determining whether the CA correctly ruled in determining whether or not the NLRC committed grave abuse of discretion in considering and appreciating the factual [issues before it]."31 On the Merits of the Case The core issue decided by the tribunals below is the validity of the respondents’ waivers and quitclaims. The CA set aside the NLRC ruling for grave abuse of discretion; the CA essentially found the waivers and quitclaims unreasonable and involuntarily executed, and could not have superseded the May 25, 2005 agreement. In doing so, and in giving weight to the May 25, 2005 agreement, the CA found justification under Section 10 of R.A. No. 8042. The respondents are not entitled to the unpaid portion of their salaries under Section 10 of R.A. No. 8042 The application of Section 10 of R.A. No. 8042 presumes a finding of illegal dismissal. The pertinent portion of Section 10 of R.A. No. 8042 reads: SEC. 10. MONEY CLAIMS. – x x x xxxx In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract. [emphasis and italics ours] A plain reading of this provision readily shows that it applies only to cases of illegal dismissal or dismissal without any just, authorized or valid cause and finds no application in cases where the overseas Filipino worker was not illegally dismissed. 32 We found the occasion to apply this rule in International Management Services v. Logarta,33where we held that Section 10 of R.A. No. 8042 applies only to an illegally dismissed overseas contract worker or a worker dismissed from overseas employment without just, valid or authorized cause.34 Whether the respondents in the present case were illegally dismissed is a question we resolve in the negative for three reasons.

First, the respondents’ references to illegal dismissal in their several pleadings were mere cursory declarations rather than a definitive demand for redress. The LA’s May 2006 Decision clearly enunciated this point when she dismissed the respondents’ claim of illegal dismissal "as complainants themselves have lost interest to pursue the same." 35 Second, the respondents, in their motion for reconsideration filed before the NLRC, positively argued that the fishing operations for which they were hired ceased as a result of the business decision of Van Doorn and of its partners;36 thus, negating by omission any claim for illegal dismissal. Third, the CA, in its assailed decision, likewise made the very same inference – that the fishing operations ceased as a result of a business decision of Van Doorn and of its partners. In other words, the manner of dismissal was not a contested issue; the records clearly showed that the respondents’ employment was terminated because Van Doorn and its partners simply decided to stop their fishing operations in the exercise of their management prerogative, which prerogative even our labor laws recognize. We confirm in this regard that, by law and subject to the State’s corollary right to review its determination,37management has the right to regulate the business and control its every aspect.38 Included in this management right is the freedom to close or cease its operations for any reason, as long as it is done in good faith and the employer faithfully complies with the substantive and procedural requirements laid down by law and jurisprudence.39 Article 283 of our Labor Code provides: 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 [Department of Labor and Employment] at least one (1) month before the intended date thereof. x x x In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or 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 as one (1) whole year. [Italics, underscores and emphases ours] This provision applies in the present case as under the contract the employer and the workers signed and submitted to the Philippine Overseas Employment Agency (POEA), the Philippine labor law expressly applies. This legal reality is reiterated under Section 18-B, paragraph 2,40 in relation with Section 2341 of the POEA Standard Employment Contract (POEA-SEC) (which is deemed written into every overseas employment contract) which recognizes the validity of the cessation of the business operations as a valid ground for the termination of an overseas employment. This recognition is subject to compliance with the following requisites: 1. The decision to close or cease operations must be bona fide in character; 2. Service of written notice on the affected employees and on the Department of Labor and Employment (DOLE) at least one (1) month prior to the effectivity of the termination; and 3. Payment to the affected employees of termination or separation pay equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher.42

We are sufficiently convinced, based on the records, that Van Doorn’s termination of the respondents’ employment arising from the cessation of its fishing operations complied with the above requisites and is thus valid. We observe that the records of the case do not show that Van Doorn ever intended to defeat the respondents’ rights under our labor laws when it undertook its decision to close its fishing operations on November 20, 2004. From this date until six months after, the undertaking was at a complete halt. That Van Doorn and its partners might have suffered losses during the six-month period is not entirely remote. Yet, Van Doorn did not immediately repatriate the respondents or hire another group of seafarers to replace the respondents in a move to resume its fishing operations. Quite the opposite, the respondents, although they were no longer rendering any service or doing any work, still received their full salary for November 2004 up to January 2005. In fact, from February 2005 until they were repatriated to the Philippines in May 2005, the respondents still received wages, albeit half of their respective basic monthly salary rate. Had Van Doorn intended to stop its fishing operations simply to terminate the respondents’ employment, it would have immediately repatriated the respondents to the Philippines soon after, in order that it may hire other seafarers to replace them – a possibility that did not take place. Considering therefore the absence of any indication that Van Doorn stopped its fishing operations to circumvent the protected rights of the respondents, our courts have no basis to question the reason that might have impelled Van Doorn to reach its closure decision. 43 In sum, since Poseidon ceased its fishing operations in the valid exercise of its management prerogative, Section 10 of R.A. No. 8042 finds no application. Consequently, we find that the CA erroneously imputed grave abuse of discretion on the part of the NLRC in not applying Section 10 of R.A. No. 8042 and in awarding the respondents the unpaid portion of their full salaries. The waivers and quitclaims signed by the respondents are valid and binding We cannot support the CA’s act of giving greater evidentiary weight to the May 25, 2005 agreement over the respondents’ waivers and quitclaims; not only do we find the latter documents to be reasonable and duly executed, we also find that they superseded the May 25, 2005 agreement. Generally, this Court looks with disfavor at quitclaims executed by employees for being contrary to public policy.44Where the person making the waiver, however, has done so voluntarily, with a full understanding of its terms and with the payment of credible and reasonable consideration, we have no option but to recognize the transaction to be valid and binding. 45 We find the requisites for the validity of the respondents’ quitclaim present in this case. We base this conclusion on the following observations: First, the respondents acknowledged in their various pleadings, as well as in the very document denominated as "waiver and quitclaim," that they voluntarily signed the document after receiving the agreed settlement pay. Second, the settlement pay is reasonable under the circumstances, especially when contrasted with the amounts to which they were respectively entitled to receive as termination pay pursuant to Section 23 of the POEA-SEC and Article 283 of the Labor Code. The comparison of these amounts is tabulated below:

1âwphi1

Settlement Pay

Termination Pay

Joel S. Fernandez

US$3134.33

US$1120.00

Artemio A. Bo-oc

US$2342.37

US$800.00

Felipe S. Saurin, Jr.

US$2639.37

US$800.00

Tito R. Tamala

US$2593.79

US$280.00

Thus, the respondents undeniably received more than what they were entitled to receive under the law as a result of the cessation of the fishing operations. Third, the contents of the waiver and quitclaim are clear, unequivocal and uncomplicated so that the respondents could fully understand the import of what they were signing and of its consequences.46 Nothing in the records shows that what they received was different from what they signed for. Fourth, the respondents are mature and intelligent individuals, with college degrees, and are far from the naive and unlettered individuals they portrayed themselves to be. 1âwphi1

Fifth, while the respondents contend that they were coerced and unduly influenced in their decision to accept the settlement pay and to sign the waivers and quitclaims, the records of the case do not support this claim. The respondents’ claims that they were in "dire need for cash" and that they would not be paid anything if they would not sign do not constitute the coercion nor qualify as the undue influence contemplated by law sufficient to invalidate a waiver and quitclaim, 47 particularly in the circumstances attendant in this case. The records show that the respondents, along with their other fellow seafarers, served as each other’s witnesses when they agreed and signed their respective waivers and quitclaims. Sixth, the respondents’ voluntary and knowing conformity to the settlement pay was proved not only by the waiver and quitclaim, but by the letters of acceptance and the vouchers evidencing payment. With these documents on record, the burden shifts to the respondents to prove coercion and undue influence other than through their bare self-serving claims. No such evidence appeared on record at any stage of the proceedings. In these lights and in the absence of any evidence showing that fraud, deception or misrepresentation attended the execution of the waiver and quitclaim, we are sufficiently convinced that a valid transaction took place. Consequently, we find that the CA erroneously imputed grave abuse of discretion in misreading the submitted evidence, and in relying on the May 25, 2005 agreement and on Section 10 of R.A. No. 8042. The respondents are entitled to nominal damages for failure of Van Doorn to observe the procedural requisites for the termination of employment under Article 283 of the Labor Code As a final note, we observe that while Van Doorn has a just and valid cause to terminate the respondents’ employment, it failed to meet the requisite procedural safeguards provided under Article 283 of the Labor Code. In the termination of employment under Article 283, Van Doorn, as the employer, is required to serve a written notice to the respondents and to the DOLE of the intended

termination of employment at least one month prior to the cessation of its fishing operations. Poseidon could have easily filed this notice, in the way it represented Van Doorn in its dealings in the Philippines. While this omission does not affect the validity of the termination of employment, it subjects the employer to the payment of indemnity in the form of nominal damages. 48 Consistent with our ruling in Jaka Food Processing Corporation v. Pacot, 49 we deem it proper to award the respondents nominal damages in the amount of P30,000.00 as indemnity for the violation of the required statutory procedures. Poseidon shall be solidarily liable to the respondents for the payment of these damages.50 WHEREFORE, in view of these considerations, we hereby GRANT in PART the petition and accordingly REVERSE and SET ASIDE the Decision dated September 30, 2008 and the Resolution dated February 11, 2009 of the Court of Appeals in CA-G.R. SP No. 98783. We REINSTATE the Resolution dated December 29, 2006 of the National Labor Relations Commission with the MODIFICATION that petitioner Poseidon International Maritime Services, Inc. is ordered to pay each of the respondents nominal damages in the amount of P30,000.00. Costs against the respondents. SO ORDERED. ARTURO D. BRION Associate Justice Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 182800

April 20, 2015

MANILA MINING CORPORATION, Petitioner, vs. LOWITO AMOR, ET. AL., Respondents. DECISION PEREZ, J.: Compliance with the requirements for the perfection of an appeal from the decision of a Labor Arbiter is at issue in this Rule 45 Petition for Review on Certiorari which primarily seeks the nullification of the 29 November 2007 Decision rendered by the then Twenty-Second Division of · the Court of Appeals (CA) in CA-G.R. SP No. 00609, the decretal portion of which states: 1

2

WHEREFORE, the petition is hereby GRANTED. The Resolutions of the NLRC dated 25 April 2005 and 30 June 2007, respectively, are ANNULLED and SET ASIDE. The 25 October 2004 Resolution of the Labor Arbiter is REINSTATED. SO ORDERED.

3

The facts are not in dispute.

Respondents Lowito Amor, Rollybie Ceredon, Julius Cesar, Ronito Martinez and Fermin Tabili, Jr. were regular employees of petitioner Manila Mining Corporation, a domestic corporation which operated a mining claim in Placer, Surigao del Norte, in pursuit of its business of large-scale open-pit mining for gold and copper ore. In compliance with existing environmental laws, petitioner maintained Tailing Pond No. 7 (TP No. 7), a tailings containment facility required for the storage of waste materials generated by its mining operations. When the mine tailings being pumped into TP No. 7 reached the maximum level in December 2000, petitioner temporarily shut down its mining operations pending approval of its application to increase said facilty’s capacity by the Department of Environment and Natural Resources-Environment Management Bureau (DENR-EMB), Butuan City. Although the DENR-EMB issued a temporary authority on 25 January 2001 for it to be able to continue operating TP No. 7 for another six (6) months and to increase its capacity, petitioner failed to secure an extension permit when said temporary authority eventually lapsed. 4

On 27 July 2001, petitioner served a notice, informing its employees and the Department of Labor and Employment Regional Office No. XII (DOLE) of the temporary suspension of its operations for six months and the temporary lay-off of two-thirds of its employees. After the lapse of said period, petitioner notified the DOLE on 11 December 2001 that it was extending the temporary shutdown of its operations for another six months. Adversely affected by petitioner’s continued failure to resume its operations, respondents filed the complaint for constructive dismissal and monetary claims which was docketed as NLRC Case No. RAB-13-10-00226-2003 before the Regional Arbitration Branch No. XIII of the National Labor Relations Commission (NLRC). On 25 October 2004, Executive Labor Arbiter Benjamin E. Pelaez rendered a Decision holding petitioner liable for constructive dismissal in view of the suspension of its operations beyond the six-month period allowed under Article 286 of the Labor Code of the Philippines. Finding that the cause of suspension of petitioner’s business was not beyond its control, the Labor Arbiter applied Article 283 of the same Code and disposed of the case in the following wise: 5

6

7

8

9

WHEREFORE, premises considered, judgment is hereby entered: 1) Declaring [respondents] to have been constructively dismissed from their employment; and 2) Ordering [petitioner] to pay xxx [respondents] their separation pay equivalent to one (1) month pay or to at least one-half (1/2) month pay for every year of service, whichever is higher, a fraction of at least six (6) months shall be considered as one whole year, moral damages and exemplary damages in the amount of Ten Thousand Pesos (P10,000.00) and Five Thousand Pesos (P5,000.00), respectively, for each of the [respondents] and attorney’s fees equivalent to ten (10%) percent in the total amount of TWO MILLION ONE HUNDRED THIRTY EIGHT THOUSAND ONE HUNDRED NINETY & 02/100 PESOS (P2,138,190.02) ONLY x x x x All other claims are dismissed for lack of merit. SO ORDERED.

10

Aggrieved, petitioner filed its memorandum of appeal before the NLRC11 and moved for the reduction of the appeal bond to P100,000.00, on the ground that its financial losses in the preceding years had rendered it unable to put up one in cash and/or surety equivalent to the monetary award. In opposition, respondents moved for the dismissal of the appeal in view of the fact that, despite receipt of the appealed decision on 24 November 2004, petitioner mailed their copy of the memorandum of appeal only on 7 February 2005. Respondents also argued that the appeal bond tendered by petitioner was so grossly disproportionate to monetary award for the same to be considered substantial compliance with the requirements for the perfection of an appeal from a Labor Arbiter’s decision. Without addressing the procedural issues raised by respondents, however, the NLRC Fifth Division went on to render a Resolution dated 25 April 2005 in NLRC CA No. M12

13

008433-2005, reversing the appealed decision and dismissing the complaint for lack of merit. Finding that the continued suspension of petitioner’s operations was due to circumstances beyond its control, the NLRC ruled that, under Article 283 of the Labor Code, respondents were not even entitled to separation pay considering the eventual closure of their employer’s business due to serious business losses or financial reverses. 14

Unfazed by the denial of their motion for reconsideration in the NLRC’s 30 June 2005 Resolution, respondents filed the Rule 65 petition for certiorari which was docketed as CA-G.R. SP No. 00609 before the Mindanao Station of the CA. Insisting that petitioner’s memorandum of appeal was filed 65 days after the lapse of reglementary period for appeal, respondents called attention to the fact that, as grossly inadequate as it already was vis-à-vis the P2,138,190.02 monetary award adjudicated in their favor, the check in the sum of P100,000.00 deposited by petitioner by way of appeal bond was dishonored upon presentment for payment. Aside from the fact that the Labor Arbiter’s25 October 2004 Decision had already attained finality, respondents faulted the NLRC for applying Article 283 of the Labor Code absent allegation and proof of compliance with the requirements for the closure of an employer’s business due to serious business losses. In its comment, on the other hand, petitioner claimed that, having caused the same to be immediately funded, the check it issued for the appeal bond had since been deposited by the NLRC. Insisting that the cessation of its operations was due to causes beyond its control, petitioner argued that the subsequent closure of its business due to business losses exempted it from paying separation pay. 15

16

17

18

On 29 November 2007, the CA’s then Twenty-Second Division rendered the herein assailed decision, granting respondents’ petition and nullifying the NLRC’s 25 April 2005 Resolution. In reinstating the Labor Arbiter’s 25 October 2004 Decision, the CA ruled that petitioner failed to perfect its appeal therefrom considering that the copy of its 3 December 2004 Memorandum of Appeal intended for respondents was served the latter by registered mail only on 7 February 2005. Aside from posting an unusually smaller sum as appeal bond, petitioner was likewise faulted for replenishing the check it issued only on 1 April 2005 or 24 days before the rendition of the assailed NLRC Decision. Applying the principle that the right to appeal is merely a statutory remedy and that the party who seeks to avail of the same must strictly follow the requirements therefor, the CA decreed that the Labor Arbiter’s Decision had already attained finality and, for said reason, had been placed beyond the NLRC’s power of review. Petitioner’s motion for reconsideration of the foregoing decision was denied for lack of merit in the CA’s 2 May 2008 Resolution, hence, this Rule 45 petition for review on certiorari. Petitioner seeks the reversal of the CA’s 29 November 2007 Decision and 2 May 2008 Resolution on the following grounds: 19

20

21

THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT PETITIONER’S APPEAL FILED WITH THE NATIONAL LABOR RELATIONS COMMISSION WAS FATALLY DEFECTIVE [SINCE IT] HAD FULLY COMPLIED WITH THE REQUIREMENTS OF THE LABOR CODE FOR PERFECTING AN APPEAL. THE COURT OF APPEALS COMMITTED A GRAVE ABUSE OF DISCRETION IN IMMEDIATELY SETTING ASIDE THE DECISION OF THE NLRC WITHOUT REVIEWING THE MERITS OF THE CASE. AT THE TIME OF THE PROMULGATION OF THE ASSAILED DECISION BY THE COURT OFAPPEALS, THE HONORABLE SUPREME COURT HAD ALREADY AFFIRMED THE FINDING THAT PETITIONER WAS ALREADY PERMANENTLY CLOSED DUE TO MASSIVE FINANCIAL LOSSES. 22

Time and again, it has been held that the right to appeal is not a natural right or a part of due process; it is merely a statutory privilege, and may be exercised only in the manner and in

accordance with the provisions of law. A party who seeks to avail of the right must, therefore, comply with the requirements of the rules, failing which the right to appeal is invariably lost. Insofar as appeals from decisions of the Labor Arbiter are concerned, Article 223 of the Labor Code of the Philippines provides that, "(d)ecisions, awards, or orders of the Labor Arbiter are final and executory unless appealed to the [NLRC] by any or both parties within ten (10) calendar days from the receipt of such decisions, awards or orders." In case of a judgment involving a monetary award, the same provision mandates that, "an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the [NLRC] in the amount equivalent to the monetary award in the judgment appealed from." Alongside the requirement that "the appellant shall furnish a copy of the memorandum of appeal to the other party," the foregoing requisites for the perfection of an appeal are reiterated under Sections 1, 4 and 6, Rule VI of the NLRC Rules of Procedure in force at the time petitioner appealed the Labor Arbiter’s 25 October 2004 Decision, viz.: 23

24

25

SECTION 1. PERIODS OF APPEAL. - Decisions, resolutions or orders of the Labor Arbiter shall be final and executory unless appealed to the Commission by any or both parties within ten (10)calendar days from receipt of such decisions, resolutions or orders of the Labor Arbiter x x x x. If the 10th x x x x day x x x x falls on a Saturday, Sunday or a holiday, the last day to perfect the appeal shall be the next working day. SECTION 4. REQUISITES FOR PERFECTION OF APPEAL. - (a) The Appeal shall be filed within the reglementary period as provided in Section 1 of this Rule; shall be verified by appellant himself in accordance with Section 4, Rule 7 of the Rules of Court, with proof of payment of the required appeal fee and the posting of a cash or surety bond as provided in Section 6 of this Rule; shall be accompanied by memorandum of appeal in three (3) legibly typewritten copies which shall state the grounds relied upon and the arguments in support thereof; the relief prayed for; and a statement of the date when the appellant received the appealed decision, resolution or order and a certificate of non-forum shopping with proof of service on the other party of such appeal. A mere notice of appeal without complying with the other requisites aforestated shall not stop the running of the period for perfecting an appeal. (Italics supplied) xxxx SECTION 6. BOND. - In case the decision of the Labor Arbiter or the Regional Director involves a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond. The appeal bond shall either be in cash or surety in an amount equivalent to the monetary award, exclusive of damages and attorney’s fees. xxxx No motion to reduce bond shall be entertained except on meritorious grounds and upon the posting of a bond in a reasonable amount in relation to the monetary award. The filing of the motion to reduce bond without compliance with the requisites in the preceding paragraph shall not stop the running of the period to perfect an appeal. Having received the Labor Arbiter’s Decision on 24 November 2004, petitioner had ten (10) calendar days or until 4 December 2004 within which to perfect an appeal. Considering that the latter date fell on a Saturday, petitioner had until the next working day, 6 December 2004, within which to comply with the requirements for the perfection of its appeal. Our perusal of the record shows that, despite bearing the date 3 December 2004, petitioner’s memorandum of appeal was subscribed before Notary Public Ronald Rex Recidoro only on 6 December 2004. Without proof as to the actual 26

27

date of filing of said pleading being presented by both parties, the CA discounted the timeliness of its filing in light of the established fact that the copy thereof intended for respondents was only served by registered mail on 7 February 2005. Since proof of service of the memorandum on appeal is required for the perfection of an appeal from the decision of the Labor Arbiter, the CA ruled that "respondents filed its appeal not earlier than 07 February 200[5], which is way beyond the ten-day reglementary period to appeal." 28

29

As allegation is not evidence, however, the rule is settled that the burden of evidence lies with the party who asserts the affirmative of an issue. As the parties claiming the non-perfection of petitioner’s appeal, it was, therefore, respondents who had the burden of proving that said memorandum of appeal was, indeed, filed out of time. By and of itself, the fact that the copy of memorandum of appeal intended for respondents was served upon them by registered mail only on 7 February 2005 does not necessarily mean that petitioner’s appeal from the Labor Arbiter’s decision was filed out of time. On the principle that justice should not be sacrificed for technicality, it has been ruled that the failure of a party to serve a copy of the memorandum to the opposing party is not a jurisdictional defect and does not bar the NLRC from entertaining the appeal. Considering that such an omission is merely regarded as a formal lapse or an excusable neglect, the CA reversibly erred in ruling that, under the circumstances, petitioner could not have filed its appeal earlier than 7 February 2005. 30

31

32

33

The question regarding the appeal bond rises from the record which shows that, in addition to its memorandum of appeal, petitioner filed a 6 December 2004 motion for the reduction of the appeal bond on the ground that the cash equivalent of the monetary award and/or cost of the surety bond have proven to be prohibitive in view of the tremendous business losses it allegedly sustained. As supposed measure of its good faith in complying with the Rules, petitioner attached to its motion Philam Bank Check No. 0000627153, dated 6 December2004, in the amount of P100,000.00 only. As pointed out by respondents, however, said check was subsequently dishonored upon presentment for payment for insufficiency of funds. In its 1 April 2005 Ex-Parte Manifestation, petitioner informed the NLRC that it "only learned belatedly that the same check was dishonored" as there appeared to be "an inadvertent mix-up as other checks issued for [its] other obligations were negotiated ahead [thereof], leaving an insufficient balance in its account." As a consequence, petitioner claimed that "the deficiency in deposit has been promptly and immediately replenished as soon as the check's dishonor was reported" and that the same may already be re-deposited at any of NLRC's depositary banks. 34

The issue that has be devilled labor litigation for long has been clarified by the ruling in McBurnie v. Ganzon, et al., which built on and extended the ruling that while it is true that reduction of the appeal bond has been allowed in meritorious cases on the principle that substantial justice is better served by allowing appeals on the merits, it has been ruled that the employer should comply with the following conditions: (1) the motion to reduce the bond shall be based on meritorious grounds; and (2) a reasonable amount in relation to the monetary award is posted by the appellant, otherwise the filing of the motion to reduce bond shall not stop the running of the period to perfect an appeal. 35

36

37

38

The McBurnie ruling pronounced: xxx Furthermore, on the matter of the filing and acceptance of motions to reduce appeal bond, as provided in Section 6, Rule VI of the 2011 NLRC Rules of Procedure, the Court hereby RESOLVES that henceforth, the following guidelines shall be observed:

(a) The filing of a motion to reduce appeal bond shall be entertained by the NLRC subject to the following conditions: (1) there is meritorious ground; and (2) a bond in a reasonable amount is posted; (b) For purposes of compliance with condition no. (2), a motion shall be accompanied by the posting of a provisional cash or surety bond equivalent to ten percent (10), of the monetary award subject of the appeal, exclusive of damages and attorney's fees; (c) Compliance with the foregoing conditions shall suffice to suspend the running of the 10day reglementary period to perfect an appeal from the labor arbiter's decision to the NLRC; (d) The NLRC retains its authority and duty to resolve the motion to reduce bond and determine the final amount of bond that shall be posted by the appellant, still in accordance with the standards of meritorious grounds and reasonable amount; and (e) In the event that the NLRC denies the motion to reduce bond, or requires a bond that exceeds the amount of the provisional bond, the appellant shall be given a fresh period of ten (10) days from notice of the NLRC order within which to perfect the appeal by posting the required appeal bond. 39

In this case, we see that with no proof to substantiate its claim, petitioner moved for a reduction of the appeal bond on the proferred basis of serious losses and reverses it supposedly sustained in the years prior to the rendition of the Labor Arbiter's decision. The first condition may be left for the nonce. As to the second condition, we may consider that the amount ofP100,000.00 supposedly posted was provisional bond sufficient to suspend the running of the 10-day reglementary period to perfect an appeal from the Labor Arbiter's decision. That would however not improve petitioner's position one bit. Respondent correctly called attention to the fact that the check submitted by petitioner was dishonored upon presentment for payment, thereby rendering the tender thereof ineffectual. Although the NLRC chose not to address the issue of the perfection of the appeal as well as the reduction of the bond in its Resolution dated 25 April 2005, the record shows that petitioner only manifested its deposit of the funds for the check 24 days before the resolution of its appeal or 116 days after its right to appeal the Labor Arbiter’s decision had expired. Having filed its motion and memorandum on the very last day of the reglementary period for appeal, moreover, petitioner had no one but itself to blame for failing to post the full amount pending the NLRC’s action on its motion for reduction of the appeal bond. If redundancy be risked it must be emphasized that the posting of a bond is indispensable to the perfection of an appeal in cases involving monetary awards from the decision of the Labor Arbiter. Since it is the posting of a cash or surety bond which confers jurisdiction upon the NLRC, the rule is settled that non-compliance is fatal and has the effect of rendering the award final and executory. 40

41

Viewed in the light of the foregoing considerations, the CA cannot be faulted for no longer discussing the merits of petitioner’s case. Although appeal is an essential part of our judicial process, it has been held, time and again, that the right thereto is not a natural right or a part of due process but is merely a statutory privilege. Thus, the perfection of an appeal in the manner and within the period prescribed by law is not only mandatory but also jurisdictional and failure of a party to conform to the rules regarding appeal will render the judgment final and executory. Once a decision attains finality, it becomes the law of the case and can no longer be revised, reviewed, changed or altered. The basic rule of finality of judgment is grounded on the fundamental principle of public policy and sound 1avvphi1

practice that, at the risk of occasional error, the judgment of courts and the award of quasi-judicial agencies must become final at some definite date fixed by law. 42

Without necessarily resulting to a termination of employment, an employer may at any rate, bona fide suspend the operation of its business for a period of not exceeding six months under Article 286 of the Labor Code. While the employer is, on the one hand, duty bound to reinstate his employees to their former positions without loss of seniority rights if the operation of the business is resumed within six months, employment is deemed terminated where the suspension exceeds said period. Not having resumed its operations within six months from the time it suspended its operations on 27 July 2001, it necessarily follows that petitioner is liable to pay respondents’ separation pay computed at one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher, as well as the damages and attorney’s fees adjudicated by the Labor Arbiter. Without proof of the serious business losses it allegedly sustained and/or compliance with the reportorial requirements under Article 283 of the Labor Code, petitioner cannot expediently plead exemption from said liabilities due to the supposed financial reverses which led to the eventual closure of its business. It is essentially required that the alleged losses in business operations must be proven for, otherwise, said ground for termination would be susceptible to abuse by scheming employers who might be merely feigning business losses or reverses in their business ventures in order to ease out employees. The condition of business losses justifying retrenchment is normally shown by audited financial documents like yearly balance sheets and profit and loss statements as well as annual income tax returns which were not presented in this case. 43

44

45

46

47

48

Neither can petitioner evade said liabilities on the strength of the 28 July 2005 Decision rendered by the CA's Twenty-Second Division in CAG.R. SP No. 00072, entitled Rosita Asumen, et al. v. National Labor Relations Commission, et al., where its employees' claim for separation pay was denied on account of the subsequent closure of its business due to serious business losses and financial reverses. Although the employees Rule 45 petition for review on certiorari had been denied in the 7 February 2007 Resolution issued by this Court's Second Division in UDK-13776, the ruling in said case can hardly be considered binding on respondents who were not parties thereto. As for the inequality in benefits which would supposedly result if the CA's assailed decision and resolution were not reversed, suffice it to say that this Court had sustained the claim for . separation pay of petitioner's employees in the case of Manila Mining Corp Employees Association-Federation of Free Workers Chapter, et al. v. Manila Mining Corporation, et al. Stare decisis is inapplicable; the matter of separation pay for petitioner's employees has been decided case to case. 49

50

51

WHEREFORE, premises considered, the petition is DENIED for lack of merit. SO ORDERED. JOSE PORTUGAL PEREZ Associate Justice THIRD DIVISION G.R. No. 197011, January 28, 2015 ESSENCIA Q. MANARPIIS, Petitioner, v. TEXAN PHILIPPINES, INC., RICHARD TAN AND CATHERINE P. RIALUBIN-TAN, Respondent. DECISION VILLARAMA, JR., J.:

Before us is a petition for review on certiorari under Rule 45 assailing the Decision1 dated March 24, 2010, and Resolution2 dated May 19, 2011 of the Court of Appeals (CA) in CA-G.R. SP No. 106661. The CA reversed and set aside the Decision3 dated January 25, 2008 and Resolution4 dated September 22, 2008 of the First Division of the National Labor Relations Commission (NLRC) in NLRC CA No. 029806-01, which affirmed the Decision5 dated June 28, 2001 of the Labor Arbiter (LA) in NLRC Case No. 00-08-04110-2000. Texan Philippines, Inc. (TPI), which is owned and managed by Catherine Rialubin-Tan and her Singaporean husband Richard Tan (respondents), is a domestic corporation engaged in the importation, distribution and marketing of imported fragrances and aroma and other specialized products and services. In July 1999, respondents hired Essencia Q. Manarpiis (petitioner) as Sales and Marketing Manager of the company’s Aroma Division with a monthly salary of P33,800.00.6 chanRoblesvirtualLa wlibrary

Claiming insurmountable losses, respondents served a written notice (July 27, 2000) addressed to all their employees that TPI will cease operations by August 31, 2000. 7 chanRoblesvirtualLa wlibrary

On August 7, 2000, petitioner filed a complaint for illegal dismissal, non-payment of overtime pay, holiday pay, service incentive leave pay, unexpired vacation leave and 13th month pay and with prayer for moral and actual damages. Subsequently, petitioner amended her complaint to state the true date of her dismissal which is July 27, 2000 and not August 31, 2000. She averred that on the same day she was served with notice of company closure, respondents barred her from reporting for work and paid her last salary up to the end of July 2000.8 chanRoblesvirtualLa wlibrary

On September 18, 2000, petitioner received the following memorandum 9: September 15, 2000

ChanRoblesVirtualawlibrary

MEMO TO : MS. ESSENCIA MANARPIIS Sales and Marketing Manager Aroma Division SUBJECT : Notice Of Investigation And Grounding Dear Ms. Manarpiis, You are hereby notified that an investigation will be conducted on 20 September 2000 at 2:00 p.m. in our office regarding your alleged violation of company rules and regulations, specifically: I (par. B) - - Fraudulent Expense/Disbursement expenses ChanRoblesVirtualawlibrary

I (par. G) - - Collusion/Connivance with Intent to Defraud II (Section 6) - - Sabotage II (Section 12) - - Loss of Confidence III (Section 2) - - Libel/Slander III (Section 8 par. e) - - Other acts of Insubordination V (par. C & D) - - AWOL/Abandonment V (par. I) - - Committing other acts of gross inefficiency or incompetence said acts constitutive of gross misconduct, gross insubordination and dishonesty. You may bring your witnesses and counsel if you so desire. In the meantime, you will not be allowed to perform your usual functions, but will instead report to the undersigned. Additionally, you are directed to submit to the undersigned your explanation in writing, within (72) hours from receipt hereof (but in no case later than 20 September 2000), why no appropriate disciplinary action and/or penalties may be imposed against you relative to the foregoing. Failure to submit said written explanation within the prescribed period and/or attend the investigation hearing on 20 September 2000 shall constitute an implied admission of the charges and waiver on your part to due process.

For your information and compliance. (SGD.) RICHARD TAN (President) Petitioner alleged that as sales and marketing manager, she received the agreed commission based on actual sales collection on the first quarter of 2000 and was expecting to also receive such commission on the 2nd, 3rd and 4th quarters. However, on July 27, 2000, after receiving a text message from respondent Richard Tan, she proceeded to her office and learned that her table drawers were forcibly opened and her files confiscated. She protested the company closure asserting that the alleged business losses were belied by TPI’s financial documents. But despite her pleas, she was asked to pack up her things and by the end of the month her salary was discontinued. She then received the memorandum regarding the company closure and was required to turn over the company car, pager and cellphone. She was told not to report for work anymore.10 chanRoble svirtualLawlibrary

After receiving the September 15, 2000 memorandum, petitioner’s counsel sent a reply stating that there was no point in the investigation because respondents already dismissed petitioner purportedly on the ground of cessation of business due to insurmountable losses, and also it was impossible for petitioner to respond to the charges which are devoid of particulars as to the alleged irregularities she committed. It was pointed out that respondents should have investigated the supposed violations of company rules and fraudulent acts earlier and not when petitioner had filed an illegal dismissal complaint. 11 chanRoble svirtualLawlibrary

Subsequently, petitioner received the following memorandum 12: September 25, 2000

ChanRoblesVirtualawlibrary

TO : MS. ESSENCIA MANARPIIS Sales and Marketing Manager Aroma Division SUBJECT : NOTICE OF TERMINATION Ms. Manarpiis, This is to inform you that your employment with the Company is terminated effective today, September 25, 2000, due to Dishonesty, Loss of Confidence, and Abandonment of Work. An internal audit of the Company shows that several obligations of the Company were paid twice to the same supplier. Considering the level of your position, the inescapable conclusion is that you have colluded with the Company supplier to defraud the Company of its finances. Moreover, you have fraudulently caused to be reimbursed representation expenses and other expense statements purporting to be that of your sales representatives while in truth and in fact they were yours, and you received the corresponding payments therefor. Also, your attendance record showed that you have been absent without official leave (AWOL) since August 3, 2000 up to date. A notice of AWOL dated September 14, 2000 has been sent to you but you refused to accept the same, much less, refused to act on it. For your information and guidance (SGD.) RICHARD TAN President Believing that her dismissal was without just cause, petitioner prayed for reinstatement if still viable, and if not, award of separation pay with back wages from August 1, 2000, and payment of her monetary claims for sales commissions, pro-rated 13th month pay, five days service incentive leave pay and sick leaves, as well as moral and exemplary damages plus attorney’s fees.13 chanRoblesvirtualLa wlibrary

Respondents denied the charge of illegal dismissal and explained that TPI’s closure was averted by a new financing package obtained by respondent Richard Tan. They asserted that the requisite notices of business

closure to government authorities and to their employees were complied with, and notwithstanding that TPI has in fact continued its operations, petitioner was found to have committed infractions resulting in loss of confidence which was the ground for the termination of her employment. They likewise averred that respondent Rialubin-Tan gave specific instructions to petitioner for her to continue reporting for work even after August 31, 2000 but she instead went AWOL and subsequently abandoned her job, to the utmost prejudice of the company.14 chanRoblesvirtualLa wlibrary

On June 28, 2001, LA Melquiades Sol D. Del Rosario rendered a Decision declaring the dismissal of petitioner as illegal: CONFORMABLY WITH THE FOREGOING, judgment is hereby rendered finding complainant’s dismissal to be illegal. Consequently, she should be paid in solidum by respondents the following: ChanRoblesVirtualawlibrary

a) b) c) d)

P304,200.00 as backwages as of May 31, 2001[;] P101,400.00 as separation pay for 3 years[;] 1% of the gross sales of complainant and .75% on other sales as determined by the parties as complainant’s commissions; 10% for and as attorney’s fees of the money awards.

SO ORDERED.15 Respondents appealed to the NLRC which affirmed the LA’s decision. Their motion for reconsideration was also denied. In a petition for certiorari filed with the CA, respondents argued that the subsequent termination of petitioner on the grounds of dishonesty, loss of confidence and abandonment, after TPI was able to regain financial viability, was made in view of the fact that commission of the said offenses surfaced only during the audit investigation conducted after notice of cessation of business operation was sent to the employees. Despite advice for her to continue reporting for work after August 31, 2000, the effectivity date of the intended closure, petitioner just stopped doing so and instead filed the complaint for illegal dismissal and likewise failed to turn over all company documents and records in her possession. They also discovered that petitioner put up her own company “Vita VSI Scents,” enticing clients to buy the same products they used to purchase from TPI. By Decision dated March 24, 2010, the CA reversed the NLRC and ruled that petitioner was validly dismissed: WHEREFORE, the petition is hereby GRANTED. The assailed Decision dated January 25, 2008 and the Resolution dated September 22, 2008 of the National Labor Relations Commission are hereby REVERSED and SET ASIDE. Resultantly, Essencia Manarpiis’ complaint for illegal dismissal against Texan Philippines, Inc., Richard Tan and Catherine Realubin-Tan is hereby DISMISSED for lack of merit. No costs. ChanRoblesVirtualawlibrary

SO ORDERED.16 Petitioner filed a motion for reconsideration but it was denied by the CA. Hence, this petition arguing that the CA committed patent reversible errors when it: (1) granted the unverified/unsworn certification of non-forum shopping accompanying respondents’ petition for certiorari; (2) granted respondents’ petition for certiorari without finding any grave abuse of discretion on the part of NLRC; (3) disturbed the consistent factual findings of the LA and NLRC which were duly supported by substantial evidence and devoid of any unfairness and arbitrariness; and (4) substituted its own findings of facts to those of the LA and NLRC, the CA’s findings being unsupported by substantial evidence. 17 chanRoblesvirtualLa wlibrary

The petition is meritorious. We first address petitioner’s contention on the alleged formal infirmity of the petition for certiorari filed before the CA. Petitioner argued that the same was defective as the jurat therein was based on the mere community tax certificate of respondent Rialubin-Tan, instead of a government-issued identification card required under the 2004 Rules on Notarial Practice. Such ground was never raised by herein petitioner in her comment on the CA petition, thus, it cannot be validly raised by the petitioner at this stage. 18 chanRoble svirtualLawlibrary

Furthermore, we have consistently held that verification of a pleading is a formal, not a jurisdictional, requirement intended to secure the assurance that the matters alleged in a pleading are true and correct.

Thus, the court may simply order the correction of unverified pleadings or act on them and waive strict compliance with the rules. It is deemed substantially complied with when one who has ample knowledge to swear to the truth of the allegations in the complaint or petition signs the verification; and when matters alleged in the petition have been made in good faith or are true and correct. 19 chanRoble svirtualLawlibrary

Under the Rules of Court and settled doctrine, a petition for review on certiorari under Rule 45 of the Rules of Court is limited to questions of law. As a rule, the findings of fact of the CA are final and conclusive, and this Court will not review them on appeal.20 chanRoblesvirtualLa wlibrary

However, there are instances in which factual issues may be resolved by this Court, to wit: (1) the conclusion is a finding grounded entirely on speculation, surmise and conjecture; (2) the inference made is manifestly mistaken; (3) there is grave abuse of discretion; (4) the judgment is based on a misapprehension of facts; (5) the findings of fact are conflicting; (6) the CA goes beyond the issues of the case and its findings are contrary to the admissions of both appellant and appellee; (7) the findings of fact of the CA are contrary to those of the trial court; (8) said findings of facts are conclusions without citation of specific evidence on which they are based; (9) the facts set forth in the petition as well as in the petitioner’s main and reply briefs are not disputed by the respondent; and (10) the findings of fact of the CA are premised on the supposed absence of evidence and contradicted by the evidence on record. 21 chanRoble svirtualLawlibrary

Considering that the findings of facts and the conclusions of the CA are contrary to those of the LA and the NLRC, we find it necessary to evaluate such findings. On the issue of illegal dismissal, both the LA and NLRC found no just or authorized cause for the termination of petitioner’s employment. LA Del Rosario observed that respondents flip-flopped on the issue of petitioner’s termination as when they claimed she was dismissed due to insurmountable losses so that TPI’s personnel were notified of the company closure effective August 31, 2000, and at the same time they accused petitioner of fraudulent acts and abandonment of work resulting in loss of trust and confidence which caused her dismissal. He also found there was no compliance with the legal requisites of the said grounds for dismissal under Article 283 (business closure) such as the lack of termination report sent to the Department of Labor and Employment (DOLE), financial documents which are audited and signed by an independent auditor, and the two-notice requirement sent to the last known address of the employee alleged to have abandoned work under Book V, Rule XIV, Section 2 of the Omnibus Rules Implementing the Labor Code. It was noted that while TPI’s financial documents have BIR stampmark, they were not shown to have been prepared by an independent auditor. The NLRC upheld the LA’s ruling that petitioner’s dismissal was not valid, viz: As between the above, conflicting allegations, We find the version of the complainant more credible. Record of the instant case would provide that other than respondents’ bare allegations that complainant was instructed to continue working even beyond 31 August 2000, no evidence was presented to substantiate the same. If respondents could easily issue a notice of business closure to all its employees, and at the same time, immediately require the complainant to surrender all company properties assigned to her, We could not understand why they could not easily issue another letter, this time, intended only for the complainant informing her that her employment was still necessary. ChanRoblesVirtualawlibrary

Relative to the company’s closure due to business losses, prevailing jurisprudence would dictate that the same should be substantiated by competent evidence. Financial statements audited by independent external auditors constitute the normal method of proof of the profit and loss performance of the company. To exempt an employer [from] the payment of separation pay, he or she must establish by sufficient and convincing evidence that the losses were serious, substantial and actual x x x. In the instant case, respondents may have presented before the Labor Arbiter its Statement of Income for the year 1999. While its preparation may be in compliance with the requirements of the Bureau of Internal Revenue for taxation purposes, based on the jurisprudence provided above, the same would not suffice for purposes of respondents’ defense in the instant case. In their appeal, respondents alleged that on the basis of the audited Statement of Income and Retained Earnings For the Year Ending 31 December 2000, the company incurred a net loss of almost half a million pesos. Assuming the same to be true since we cannot find a copy of said statement attached to [the] record, it would appear that the company had attained a better position in year 2000 as compared to year 1999 when they incurred a net loss of more than Two Million Pesos. Furthermore, said evidence is already immaterial considering that the company’s intended closure did not actually take effect.

Upon a finding that complainant was not instructed to continue working even beyond 31 August 2000 but was told not to report to work upon receipt of the notice of company’s closure, it certainly follows that respondents would no longer inform complainant of the company’s continued operation after respondent Tan had allegedly succeeded in searching for funds. In fact, We are not even persuaded that the company’s closure was prevented by the new funds sought by respondent Tan when in the first place, there was no intended closure at all but only a decision to dismiss complainant in a manner that would enable respondents evade liabilities under the Labor Code. With regard to the alleged violation of company rules and regulations, We agree with the finding that respondent[s’] acts of issuing the two notices setting the case [for] investigation were mere afterthoughts. As highlighted in the assailed Decision, the first notice was issued after respondents had already received the summons in the instant case. More importantly, the above discussion would provide that prior to issuance of said first notice, complainant was already illegally dismissed. Furthermore, assuming for the sake of argument that complainant was not yet terminated, a reading of the said first notice would show that it does not conform with the requirements of due process. The same had failed to discuss the circumstances under which each of the charges therein was committed by the complainant. As can be noted from the letter dated 19 September 2000 sent by complainant’s counsel to respondent Tan, it was impossible for his client to submit a written explanation thereto since the notice to explain is devoid of particulars regarding the alleged irregularities. As a consequence of complainant[’s] double termination, initially through the purported cessation of business operations, and thereafter, by imputing offenses violative of company rules and regulations, we agree with the finding [that] she was illegally dismissed, and as such, entitled to backwages. She would have been entitled to reinstatement but we believe that the charges lodged by the respondents against the complainant had rendered reinstatement non-viable. Thus, she should be granted separation pay instead.22 (Citations omitted) The CA, however, considered the evidence of respondents sufficient to prove the alleged business losses and their good faith in resorting to closure of the company. It cited the 1999 Annual Income Tax Return showing a net loss of P2,290,580.48 and financial statement indicating a net loss of P2,301,228.61 for the year ended December 31, 1999; respondents’ claim that it was forced to sell six company cars; and the DOLE termination report. On the other grounds invoked by respondents to justify petitioner’s termination, the CA cited the following infractions: (a) several company obligations towards a supplier which were paid twice during her term as Marketing and Sales Manager; (b) company funds procured by petitioner, represented to be “under the table” expenditures for the Bureau of Customs which she cannot explain when queried; (c) divulging confidential company matters to the customers; and (d) establishing her own company while still employed with TPI. We reverse the CA and reinstate the LA’s decision as affirmed by the NLRC. Closure or cessation of business is the complete or partial cessation of the operations and/or shut-down of the establishment of the employer. It is carried out to either stave off the financial ruin or promote the business interest of the employer. Closure of business as an authorized cause for termination of employment is governed by Article 28323 of the Labor Code, as amended. If the business closure is due to serious losses or financial reverses, the employer must present sufficient proof of its actual or imminent losses; it must show proof that the cessation of or withdrawal from business operations was bona fide in character.24 A written notice to the DOLE thirty days before the intended date of closure is also required, the purpose of which is to inform the employees of the specific date of termination or closure of business operations, and which must be served upon each and every employee of the company one month before the date of effectivity to give them sufficient time to make the necessary arrangement.25 chanRoblesvirtualLa wlibrary

The ultimate test of the validity of closure or cessation of establishment or undertaking is that it must be bona fide in character. And the burden of proving such falls upon the employer.26 chanRoble svirtualLawlibrary

After evaluating the evidence on record, we uphold the factual findings and conclusions of the labor tribunals that petitioner was dismissed without just or authorized cause, and that the announced cessation of business operations was a subterfuge for getting rid of petitioner. While the introduction of additional evidence before the NLRC is not proscribed, the said tribunal was still not persuaded by the company closure

purportedly averted only by the alleged fresh funding procured by respondent Tan, for the latter claim remained unsubstantiated. The CA’s finding of serious business losses is not borne by the evidence on record. The financial statements supposedly bearing the stamp mark of BIR were not signed by an independent auditor. Besides, the non-compliance with the requirements under Article 283 of the Labor Code, as amended, gains relevance in this case not for the purpose of proving the illegality of the company closure or cessation of business, which did not materialize, but as an indication of bad faith on the part of respondents in hastily terminating petitioner’s employment. Under the circumstances, the subsequent investigation and termination of petitioner on grounds of dishonesty, loss of confidence and abandonment of work, clearly appears as an afterthought as it was done only after petitioner had filed an illegal dismissal case and respondents have been summoned for hearing before the LA. We have laid down the two elements which must concur for a valid abandonment, viz: (1) the failure to report to work or absence without valid or justifiable reason, and (2) a clear intention to sever the employeremployee relationship, with the second element as the more determinative factor being manifested by some overt acts.27 Abandonment as a just ground for dismissal requires the deliberate, unjustified refusal of the employee to perform his employment responsibilities. Mere absence or failure to work, even after notice to return, is not tantamount to abandonment.28 chanRoblesvirtualLa wlibrary

Furthermore, it is well-settled that the filing by an employee of a complaint for illegal dismissal with a prayer for reinstatement is proof enough of his desire to return to work, thus, negating the employer’s charge of abandonment.29 An employee who takes steps to protest his dismissal cannot logically be said to have abandoned his work.30 chanRoble svirtualLawlibrary

Abandonment in this case was a trumped up charge, apparently to make it appear that petitioner was not yet terminated when she filed the illegal dismissal complaint and to give a semblance of truth to the belated investigation against the petitioner. Petitioner did not abandon her work but was told not to report for work anymore after being served a written notice of termination of company closure on July 27, 2000 and turning over company properties to respondent Rialubin-Tan. On the issue of loss of confidence, we have held that proof beyond reasonable doubt is not needed to justify the loss as long as the employer has reasonable ground to believe that the employee is responsible for the misconduct and his participation therein renders him unworthy of the trust and confidence demanded of his position.31 Nonetheless, the right of an employer to dismiss employees on the ground of loss of trust and confidence, however, must not be exercised arbitrarily and without just cause. Unsupported by sufficient proof, loss of confidence is without basis and may not be successfully invoked as a ground for dismissal. Loss of confidence as a ground for dismissal has never been intended to afford an occasion for abuse by the employer of its prerogative, as it can easily be subject to abuse because of its subjective nature, as in the case at bar, and the loss must be founded on clearly established facts sufficient to warrant the employee’s separation from work.32 chanRoblesvirtualLa wlibrary

Here, loss of confidence was belatedly raised by the respondents who initiated an investigation on the alleged irregularities committed by petitioner only after the latter had questioned the legality of her earlier dismissal due to the purported company closure. As correctly observed by the NLRC, assuming to be true that respondents had not yet actually dismissed the petitioner, the notice of cessation of operations (memo dated July 27, 2000) addressed to all employees never mentioned the supposed charges against the petitioner who was also never issued a separate memorandum to that effect. Moreover, the turn over of company properties by petitioner on the same date as demanded by respondent Rialubin-Tan belies the latter’s claim that she verbally instructed the former to continue reporting for work in view of the audit of the company’s finances. Indeed, considering the gravity of the accusations of fraud against the petitioner, it is strange that respondents have not at least issued her a separate memorandum on her accountability for the alleged business losses. To prove the dishonesty imputed to petitioner, respondents submitted before the NLRC a letter dated August 4, 2000 from one of TPI’s suppliers advising the company of a supposed double payment made in February and March 2000. However, there is no showing that such payment was made or ordered by petitioner, and neither was it shown that this overpayment was reflected in the account books of TPI. Respondents likewise failed to prove their accusation that petitioner put up a competing business while she was still employed with TPI, and their bare allegation that petitioner divulged confidential company matters to customers. As to the supposed failure of petitioner to account for funds intended for “under the table” transactions at the Bureau of Customs, the same was never raised before the labor tribunals and not a shred of evidence was presented by respondent to prove this allegation.

Apropos we recall our pronouncement in Lima Land, Inc., et al. v. Cuevas33: As a final note, the Court is wont to reiterate that while an employer has its own interest to protect, and pursuant thereto, it may terminate a managerial employee for a just cause, such prerogative to dismiss or lay off an employee must be exercised without abuse of discretion. Its implementation should be tempered with compassion and understanding. The employer should bear in mind that, in the execution of the said prerogative, what is at stake is not only the employee’s position, but his very livelihood, his very breadbasket. Indeed, the consistent rule is that if doubts exist between the evidence presented by the employer and the employee, the scales of justice must be tilted in favor of the latter. The employer must affirmatively show rationally adequate evidence that the dismissal was for justifiable cause. Thus, when the breach of trust or loss of confidence alleged is not borne by clearly established facts, as in this case, such dismissal on the cited grounds cannot be allowed.34 (Emphasis supplied) ChanRoblesVirtualawlibrary

The normal consequences of petitioner’s illegal dismissal are reinstatement without loss of seniority rights, and payment of back wages computed from the time compensation was withheld up to the date of actual reinstatement. Where reinstatement is no longer viable as an option, separation pay equivalent to one month salary for every year of service should be awarded as an alternative. The payment of separation pay is in addition to payment of back wages. 35 Given the strained relations between the parties, the award of separation pay, in lieu of reinstatement, is in order. Finally, on the solidary liability of respondents Richard Tan and Catherine Rialubin-Tan for the monetary awards. It is basic that a corporation being a juridical entity, may act only through its directors, officers and employees. Obligations incurred by them, acting as such corporate agents are not theirs but the direct accountabilities of the corporation they represent. However, in certain exceptional situations, solidary liability may be incurred by corporate officers. In labor cases for instance, this Court has held corporate directors and officers solidarily liable with the corporation for the termination of employment of employees done with malice or bad faith.36 chanRoblesvirtualLa wlibrary

We sustain the NLRC’s conclusion that the schemes implemented by the respondents to justify petitioner’s baseless dismissal, and the manner by which such schemes were effected showed malice and bad faith on their part. Consequently, its affirmance of the order of the LA that the amounts awarded to petitioner are “payable in solidum by respondents” is proper. The NLRC likewise correctly upheld the award of attorney’s fees considering that petitioner was assisted by a private counsel to prosecute her illegal dismissal complaint and enforce her rights under our labor laws. WHEREFORE, the petition is GRANTED. The Decision dated March 24, 2010 and Resolution dated May 19, 2011 of the Court of Appeals in CA-G.R. SP No. 106661 are hereby REVERSED and SET ASIDE. The Decision dated June 28, 2001 of the Labor Arbiter in NLRC Case No. 00-08-04110-2000, as affirmed by the Decision dated January 25, 2008 of the National Labor Relations Commission in NLRC CA No. 02980601, is hereby REINSTATED. No pronouncement as to costs. SO ORDERED.

cralawla wlibrary

Velasco, Jr., (Chairperson), Peralta, Reyes, and Jardeleza, JJ., concur.

Republic of the Philippines SUPREME COURT Baguio City FIRST DIVISION G.R. No. 191154

April 7, 2014

SPI TECHNOLOGIES, INC. and LEA VILLANUEVA, Petitioners, vs. VICTORIA K. MAPUA, Respondent.

DECISION REYES, J.: The Court remains steadfast on its stand that the determination of the continuing necessity of a particular officer or position in a business corporation is a management prerogative, and the courts will not interfere unless arbitrary or malicious action on the part of management is shown. Indeed, an employer has no legal obligation to keep more employees than are necessary for the operation of its business. In the instant case however, we find our intrusion indispensable, to look into matters which we would otherwise consider as an exercise of management prerogative. "Management prerogative" are not magic words uttered by an employer to bring him to a realm where our labor laws cannot reach. 1

This is a petition for review on certiorari under Rule 45 of the Rules of Court of the Decision dated October 28, 2009 and Resolution dated January 18, 2010 of the Court of Appeals (CA) in CA-G.R. SP. No. 107879. 2

3

4

The Facts Victoria K. Mapua (Mapua) alleged that she was hired in 2003 by SPI Technologies, Inc. (SPI) and was the Corporate Development’s Research/Business Intelligence Unit Head and Manager of the company. Subsequently in August 2006, the then Vice President and Corporate Development Head, Peter Maquera (Maquera) hired Elizabeth Nolan (Nolan) as Mapua’s supervisor. 5

Sometime in October 2006, the hard disk on Mapua’s laptop crashed, causing her to lose files and data. Mapua informed Nolan and her colleagues that she was working on recovering the lost data and asked for their patience for any possible delay on her part in meeting deadlines. 6

On November 13, 2006, Mapua retrieved the lost data with the assistance of National Bureau of Investigation Anti-Fraud and Computer Crimes Division. Yet, Nolan informed Mapua that she was realigning Mapua’s position to become a subordinate of co-manager Sameer Raina (Raina) due to her missing a work deadline. Nolan also disclosed that Mapua’s colleagues were "demotivated" [sic] because she was "taking things easy while they were working very hard," and that she was "frequently absent, under timing, and coming in late every time [Maquera] goes on leave or on vacation." 7

On November 16, 2006, Mapua obtained a summary of her attendance for the last six months to prove that she did not have frequent absences or under time when Maquera would be on leave or vacation. When shown to Nolan, she was merely told not to give the matter any more importance and to just move on. 8

In December 2006, Mapua noticed that her colleagues began to ostracize and avoid her. Nolan and Raina started giving out majority of her research work and other duties under Healthcare and Legal Division to the rank-and-file staff. Mapua lost about 95% of her work projects and job responsibilities. 9

Mapua consulted these work problems with SPI’s Human Resource Director, Lea Villanueva (Villanueva), and asked if she can be transferred to another department within SPI. Subsequently, Villanueva informed Mapua that there is an intra-office opening and that she would schedule an exploratory interview for her. However, due to postponements not made by Mapua, the interview did not materialize.

On February 28, 2007, Mapua allegedly saw the new table of organization of the Corporate Development Division which would be renamed as the Marketing Division. The new structure showed that Mapua’s level will be again downgraded because a new manager will be hired and positioned between her rank and Raina’s. 10

On March 21, 2007, Raina informed Mapua over the phone that her position was considered redundant and that she is terminated from employment effective immediately. Villanueva notified Mapua that she should cease reporting for work the next day. Her laptop computer and company mobile phone were taken right away and her office phone ceased to function. 11

Mapua was shocked and told Raina and Villanueva that she would sue them. Mapua subsequently called her lawyer to narrate the contents of the termination letter, which reads: 12

March 21, 2007 xxxx Dear Ms. MAPUA, xxxx This notice of separation, effective March 21, 2007 should be regarded as redundancy. Your separation pay will be computed as one month’s salary for every year of service, a fraction of at least six months will be considered as one year. Your separation pay will be released on April 20, 2007 subject to your clearance of accountabilities and as per Company policy. xxxx

13

Mapua’s lawyer, in a phone call, advised Villanueva that SPI violated Mapua’s right to a 30-day notice. On March 27, 2007, Mapua filed with the Labor Arbiter (LA) a complaint for illegal dismissal, claiming reinstatement or if deemed impossible, for separation pay. Afterwards, she went to a meeting with SPI, where she was given a second termination letter, the contents of which were similar to the first one. 14

15

On April 25, 2007, Mapua received through mail, a third Notice of Termination dated March 21, 2007 but the date of effectivity of the termination was changed from March 21 to April 21, 2007. It further stated that her separation pay will be released on May 20, 2007 and a notation was inscribed, "refused to sign and acknowledge" with unintelligible signatures of witnesses. 16

On May 13, 2007, a recruitment advertisement of SPI was published in the Philippine Daily Inquirer (Inquirer advertisement, for brevity). It listed all vacancies in SPI, including a position for Marketing Communications Manager under Corporate Support – the same group where Mapua previously belonged. 17

SPI also sent a demand letter dated May 15, 2007 to Mapua, asking her to pay for the remaining net book value of the company car assigned to her under SPI’s car plan policy. Under the said plan, 18

Mapua should pay the remaining net book value of her car if she resigns within five years from start of her employment date. In her Reply and Rejoinder, Mapua submitted an affidavit and alleged that on July 16, 2007, Prime Manpower Resources Development (Prime Manpower) posted an advertisement on the website of Jobstreet Philippines for the employment of a Corporate Development Manager in an unnamed Business Process Outsourcing (BPO) company located in Parañaque City. Mapua suspected that this advertisement was for SPI because the writing style used was similar to Raina’s. She also claimed that SPI is the only BPO office in Parañaque City at that time. Thereafter, she applied for the position under the pseudonym of "Jeanne Tesoro". On the day of her interview with Prime Manpower’s consultant, Ms. Portia Dimatulac (Dimatulac), the latter allegedly revealed to Mapua that SPI contracted Prime Manpower’s services to search for applicants for the Corporate Development Manager position. 19

20

21

Because of these developments, Mapua was convinced that her former position is not redundant. According to her, she underwent psychiatric counseling and incurred medical expenses as a result of emotional anguish, sleepless nights, humiliation and shame from being jobless. She also averred that the manner of her dismissal was unprofessional and incongruous with her rank and stature as a manager as other employees have witnessed how she was forced to vacate the premises on the same day of her termination. On the other hand, SPI stated that the company regularly makes an evaluation and assessment of its corporate/organizational structure due to the unexpected growth of its business along with its partnership with ePLDT and the acquisition of CyMed. As a result, SPI underwent a reorganization of its structure with the objective of streamlining its operations. This was embodied in an Inter-Office Memorandum dated August 28, 2006 issued by the company’s Chief Executive Officer. It was then discovered after assessment and evaluation that the duties of a Corporate Development Manager could be performed/were actually being performed by other officers/managers/departments of the company. As proof that the duties of Mapua are being/could be performed by other SPI officers and employees, Villanueva executed an affidavit attesting that Mapua’s functions are being performed by other SPI managers and employees. 22

23

24

25

On March 21, 2007, the company, through Villanueva, served a written notice to Mapua, informing her of her termination effective April 21, 2007. Mapua refused to receive the notice, thus, Villanueva made a notation "refused to sign and acknowledge" on the letter. On that same day, SPI filed an Establishment Termination Report with the Office of the Regional Director of the Department of Labor and Employment-National Capital Region (DOLE-NCR) informing the latter of Mapua’s termination. Mapua was offered her separation and final pay, which she refused to receive. Before the effective date of her termination, she no longer reported for work. SPI has not hired a Corporate Development Manager since then. SPI denied contracting the services of Prime Manpower for the hiring of a Corporate Development Manager and emphasized that Prime Manpower did not even state the name of its client in the Jobstreet website. SPI also countered that Dimatulac’s alleged revelation to Mapua that its client is SPI must be struck down as mere hearsay because only Mapua executed an affidavit to prove that such disclosure was made. While SPI admitted the Inquirer advertisement, the company stated that Mapua was a Corporate Development Manager and not a Marketing Communications Manager, and that from the designations of these positions, it is obvious that the functions of one are entirely different from that of the other. 26

LA Decision

On June 30, 2008, the LA rendered a Decision, with the following dispositive portion: 27

WHEREFORE, prescinding from the foregoing, the redundancy of [Mapua’s] position being in want of factual basis, her termination is therefore hereby declared illegal. Accordingly, she should be paid her backwages, separation pay in lieu of reinstatement, moral and exemplary damages and attorney’s fees as follows: a)

Backwages: 03/21/07-06/30/08 P67,996 x 15.30 mos. =

P1,040,338.80

13th Month Pay: P1,040,338.80/12= b)

P520,169.40

P1,560,508.20

Separation Pay: (1 mo. per year of service) 12/01/03-06/30/08 = 5.7 or 6 yrs. P67,996.00 x 6 =

407,976.00

c)

Moral Damages:

P500,000.00

d)

Exemplary Damages:

250,000.00

e)

Attorney’s Fees:

196,848.42 Total Award

P2,915,332.62

or a grand total of TWO MILLION NINE HUNDRED FIFTEEN THOUSAND THREE HUNDRED THIRTY-TWO and 62/100 (P2,915,332.62)Pesos only. Respondents are further ordered to award herein complainant the car assigned to her. SO ORDERED.

28

Unrelenting, SPI appealed the LA decision to the National Labor Relations Commission (NLRC). NLRC Ruling On October 24, 2008, the NLRC rendered its Decision, with the fallo, as follows: 29

WHEREFORE, the foregoing premises considered, the instant appeal is hereby GRANTED. The Decision appealed from is REVERSED and SET ASIDE, and a new one is issued finding the appellants not guilty of illegal dismissal. However, appellants are ordered to pay the sum of Three Hundred Thirty[-]Four Thousand Five Hundred Thirty[-]Eight Pesos and Thirty[-]Four Centavos ([P]334,538.34) representing her separation benefits and final pay in the amount of [P]203,988.00 and [P]130,550.34, respectively. SO ORDERED.

30

In ruling so, the NLRC held that "[t]he determination of whether [Mapua’s] position as Corporate Development Manager is redundant is not for her to decide. It essentially and necessarily lies within the sound business management." As early as August 28, 2006, Ernest Cu, SPI’s Chief Executive Officer, announced the corporate changes in the company. 31

A month earlier, the officers held their Senior Management Strategic Planning Session with the theme, "Transformation" or re-invention of SPI purposely to create an organizational structure that is streamlined, clear and efficient. In fact, Nolan and Raina, Mapua’s superiors were actually doing her functions with the assistance of the pool of analysts, as attested to by Villanueva. 32

At odds with the NLRC decision, Mapua elevated the case to the CA by way of petition for certiorari, arguing that based on evidence, the LA decision should be reinstated. CA Ruling Mapua’s petition was initially dismissed by the CA in its Resolution dated March 25, 2009 for lack of counsel’s MCLE Compliance number, outdated IBP and PTR numbers of counsel, and lack of affidavit of service attached to the petition. 33

Mapua filed a motion for reconsideration which was granted by the CA, reinstating the petition in its Resolution dated May 26, 2009. 34

On October 28, 2009, the CA promulgated its Decision, reinstating the LA’s decree, viz: 35

WHEREFORE, in view of the foregoing, the assailed decision dated October 24, 2008, as well as the resolution dated December 23, 2008 of the National Labor Relations Commission in NLRC LAC No. 09-003262-08 (8) NLRC NCR CN. 00-03-02761-07 are hereby REVERSED and SET ASIDE. The decision of the Labor Arbiter dated June 30, 2008 in NLRC-NCR Case No. 0003-02761-07 is hereby REINSTATED with MODIFICATION in that the amount of 13th month pay of [P]520,169.40 is hereby reduced to [P]86,694.90. SO ORDERED.

36

SPI’s motion for reconsideration was denied on January 18, 2010. Thus, through a petition for review on certiorari, SPI submitted the following grounds for the consideration of this Court: I THE CA DECLARED AS ILLEGAL [MAPUA’S] SEPARATION FROM SERVICE SOLELY ON THE BASIS OF HER SELF-SERVING AND UNFOUNDED ALLEGATION OF A SUPPOSED JOB ADVERTISEMENT II THE CA COMPLETELY DISREGARDED THE FACT THAT [MAPUA] WAS VALIDLY SEPARATED FROM SERVICE ON THE GROUND OF REDUNDANCY WHICH IS AN AUTHORIZED CAUSE FOR TERMINATION OF EMPLOYMENT UNDER ARTICLE 283 OF THE LABOR CODE AND PREVAILING JURISPRUDENCE III

THE CA FOUND THAT [MAPUA] WAS NOT ACCORDED HER RIGHT TO DUE PROCESS IN UTTER DEROGATION OF THE APPLICABLE PROVISIONS OF THE LABOR CODE AND THE PERTINENT JURISPRUDENCE IV THE CA COMPLETELY AFFIRMED THE AWARDS OF SEPARATION PAY, BACKWAGES, DAMAGES AND ATTORNEY’S FEES IN THE [LA’S] DECISION IN TOTAL DISREGARD OF THE APPLICABLE LAW AND JURISPRUDENCE V THE CA UPHELD THE [LA’S] DECISION HOLDING INDIVIDUAL PETITIONER SOLIDARILY AND PERSONALLY LIABLE TO [MAPUA] WITHOUT SHOWING ANY BASIS THEREFOR 37

Our Ruling The Court sustains the CA’s ruling. Mapua was dismissed from employment supposedly due to redundancy. However, she contended that her position as Corporate Development Manager is not redundant. She cited that SPI was in fact actively looking for her replacement after she was terminated. Furthermore, SPI violated her right to procedural due process when her termination was made effective on the same day she was notified of it. Article 283 of the Labor Code provides for the following: ART. 283. Closure of establishment and reduction of personnel. – The employer may also terminate the employment of any employee due to 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 worker and the Department of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to installation of labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses and 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 as one (1) whole year. (Emphasis ours) Expounding on the above requirements of written notice and separation pay, this Court in Asian Alcohol Corporation v. NLRC pronounced that for a valid implementation of a redundancy program, the employer must comply with the following requisites: (1) written notice served on both the employee and the DOLE at least one month prior to the intended date of termination; (2) payment of separation pay equivalent to at least one month pay or at least one month pay for every year of service, whichever is higher; (3) good faith in abolishing the redundant position; and (4) fair and reasonable criteria in ascertaining what positions are to be declared redundant. 38

39

Anent the first requirement which is written notice served on both the employee and the DOLE at least one month prior to the intended date of termination, SPI had discharged the burden of proving that it submitted a notice to the DOLE on March 21, 2007, stating therein that the effective date of termination is on April 21, 2007. It is, however, quite peculiar that two kinds of notices were served to Mapua. One termination letter stated that its date of effectivity is on the same day, March 21, 2007. The other termination letter sent through mail to Mapua’s residence stated that the effective date of her termination is on April 21, 2007. Explaining the discrepancy, SPI alleged that the company served a notice to Mapua on March 21, 2007, which stated that the effective date of termination is on April 21, 2007. However she refused to acknowledge or accept the letter. Later on, Mapua requested for a copy of the said letter but due to inadvertence and oversight, a draft of the termination letter bearing a wrong effectivity date was given to her. To correct the oversight, a copy of the original letter was sent to her through mail. 40

Our question is, after Mapua initially refused to accept the letter, why did SPI make a new letter instead of just giving her the first one – which the Court notes was already signed and witnessed by other employees? Curiously, there was neither allegation nor proof that the original letter was misplaced or lost which would necessitate the drafting of a new one. SPI did not even explain in the second letter that the same was being sent in lieu of the one given to her. Hence, SPI must shoulder the consequence of causing the confusion brought by the variations of termination letters given to Mapua. Also, crucial to the determination of the effective date of termination was that Mapua was very specific as regards what happened immediately after: "Ms. Villanueva had Ms. Mapua’s assigned laptop computer and cellphone immediately taken by Human Resources supervisor, Ms. Dhang Rondael. Within about an hour, Ms. Mapua’s landline phone ceased to function after Ms. Villanueva’s and Mr. Raina’s announcement." Her company I.D. was taken away from her that very same day. To counter these statements, SPI merely stated that before the effective date of Mapua’s termination on April 21, 2007, she no longer reported for work. To this Court, this is insufficient rebuttal to the precise narrative of Mapua. 41

On the matter of separation pay, there is no question that SPI indeed offered separation pay to Mapua, but the offer must be accompanied with good faith in the abolishment of the redundant position and fair and reasonable criteria in ascertaining the redundant position. It is insignificant that the amount offered to Mapua is higher than what the law requires because the Court has previously noted that "a job is more than the salary that it carries. There is a psychological effect or a stigma in immediately finding one’s self laid off from work." 42

Moving on to the issue of the validity of redundancy program, SPI asserted that an employer has the unbridled right to conduct its own business in order to achieve the results it desires. To prove that Villanueva’s functions are redundant, SPI submitted an Inter-Office Memorandum and affidavit executed by its Human Resources Director, Villanueva. The pertinent portions of the memorandum read: 43

ORGANIZATION STRUCTURE One of the most important elements of successfully effecting change is to create an organization structure that is streamlined, clear and efficient. We think we have done that and the new format is illustrated in Attachment A. The upper part shows my direct reports who are heads of the various shared services departments and the lower part shows the set up of

the business units. The important features of the structure are discussed in the following sections. For brevity, I have purposely not summarized the roles that will remain the same. xxxx Corporate Development Peter Maquera will continue to head Corporate Development but the group’s scope will be expanded to include Marketing across the whole company. Essentially, Marketing will be taken out of the business units and centralized under Corporate Development. Elizabeth Nolan will move from her role as Publishing’s VP of Sales and Marketing to become the head of Global Marketing. The unit will continue to focus on strengthening the SPI brand, while at the same time maximizing the effectiveness of our spending. Josie Gonzales, head of Corporate Relations, will also be transitioned to Corporate Development. 44

The memorandum made no mention that the position of the Corporate Development Manager or any other position would be abolished or deemed redundant. In this regard, may the affidavit of Villanueva which enumerated the various functions of a Corporate Development Manager being performed by other SPI employees be considered as sufficient proof to uphold SPI’s redundancy program? In AMA Computer College, Inc. v. Garcia, et al., the Court held that the presentation of the new table of the organization and the certification of the Human Resources Supervisor that the positions occupied by the retrenched employees are redundant are inadequate as evidence to support the college’s redundancy program. The Court quotes the related portion of its ruling: 45

In the case at bar, ACC attempted to establish its streamlining program by presenting its new table of organization. ACC also submitted a certification by its Human Resources Supervisor, Ma. Jazmin Reginaldo, that the functions and duties of many rank and file employees, including the positions of Garcia and Balla as Library Aide and Guidance Assistant, respectively, are now being performed by the supervisory employees. These, however, do not satisfy the requirement of substantial evidence that a reasonable mind might accept as adequate to support a conclusion. As they are, they are grossly inadequate and mainly selfserving. More compelling evidence would have been a comparison of the old and new staffing patterns, a description of the abolished and newly created positions, and proof of the set business targets and failure to attain the same which necessitated the reorganization or streamlining. (Citations omitted and emphasis ours) 46

Also connected with the evidence negating redundancy was SPI’s publication of job vacancies after Mapua was terminated from employment. SPI maintained that the CA erred when it considered Mapua’s self-serving affidavit as regards the Prime Manpower advertisement because the allegations therein were based on Mapua’s unfounded suspicions. Also, the failure of Mapua to present a sworn statement of Dimatulac renders the former’s statements hearsay. Even if we disregard Mapua’s affidavit as regards the Prime Manpower advertisement, SPI admitted that it caused the Inquirer advertisement for a Marketing Communications Manager position. Mapua alleged that this advertisement belied the claim of SPI that her position is redundant because the Corporate Development division was only renamed to Marketing division. 47

Instead of explaining how the functions of a Marketing Communications Manager differ from a Corporate Development Manager, SPI hardly disputed Mapua when it stated that, "[j]udging from the titles or designation of the positions, it is obvious that the functions of one are entirely different from that of the other." SPI, being the employer, has possession of valuable information concerning the functions of the offices within its organization. Nevertheless, it did not even bother to differentiate the two positions. 48

Furthermore, on the assumption that the functions of a Marketing Communications Manager are different from that of a Corporate Development Manager, it was not even discussed why Mapua was not considered for the position. While SPI had no legal duty to hire Mapua as a Marketing Communications Manager, it could have clarified why she is not qualified for that position. In fact, Mapua brought up the subject of transfer to Villanueva and Raina several times prior to her termination but to no avail. There was even no showing that Mapua could not perform the duties of a Marketing Communications Manager. Therefore, even though the CA based its ruling only on the Prime Manpower advertisement coupled with the purported disclosure to Mapua, the Court holds that the confluence of other factors supports the said ruling. The Court does not agree with the rationalization of the NLRC that "[i]f it were true that her position was not redundant and indispensable, then the company must have already hired a new one to replace her in order not to jeopardize its business operations. The fact that there is none only proves that her position was not necessary and therefore superfluous." 49

What the above reasoning of the NLRC failed to perceive is that "[o]f primordial consideration is not the nomenclature or title given to the employee, but the nature of his functions." "It is not the job title but the actual work that the employee performs." Also, change in the job title is not synonymous to a change in the functions. A position cannot be abolished by a mere change of job title. In cases of redundancy, the management should adduce evidence and prove that a position which was created in place of a previous one should pertain to functions which are dissimilar and incongruous to the abolished office. 50

51

Thus, in Caltex (Phils.), Inc. (now Chevron Phils., Inc.) v. NLRC, the Court dismissed the employer’s claim of redundancy because it was shown that after declaring the employee’s position of Senior Accounting Analyst as redundant, the company opened other accounting positions (Terminal Accountant and Internal Auditor) for hiring. There was no showing that the private respondent therein could not perform the functions demanded of the vacant positions, to which he could be transferred to instead of being dismissed. 52

On the issue of the solidary obligation of the corporate officers impleaded vis-à-vis the corporation for Mapua’s illegal dismissal, "[i]t is hornbook principle that personal liability of corporate directors, trustees or officers attaches only when: (a) they assent to a patently unlawful act of the corporation, or when they are guilty of bad faith or gross negligence in directing its affairs, or when there is a conflict of interest resulting in damages to the corporation, its stockholders or other persons; (b) they consent to the issuance of watered down stocks or when, having knowledge of such issuance, do not forthwith file with the corporate secretary their written objection; (c) they agree to hold themselves personally and solidarily liable with the corporation; or (d) they are made by specific provision of law personally answerable for their corporate action." 53

While the Court finds Mapua’s averments against Villanueva, Nolan, Maquera and Raina as detailed and exhaustive, the Court takes notice that these are mostly suppositions on her

part. Thus, the Court cannot apply the above-enumerated exceptions when a corporate officer becomes personally liable for the obligation of a corporation to this case. With respect to the vehicle under the company car plan which the LA awarded to Mapua, the Court rules that the subject matter is not within the jurisdiction of the LA but with the regular courts, the remedy being civil in nature arising from a contractual obligation, following this Court’s ruling in several cases. 54

The Court sustains the CA’s award of moral and exemplary damages. Award of moral and exemplary damages for an illegally dismissed employee is proper where the employee had been harassed and arbitrarily terminated by the employer. Moral damages may be awarded to compensate one for diverse injuries such as mental anguish, besmirched reputation, wounded feelings, and social humiliation occasioned by the employer’s unreasonable dismissal of the employee. The Court has consistently accorded the working class a right to recover damages for unjust dismissals tainted with bad faith; where the motive of the employer in dismissing the employee is far from noble. The award of such damages is based not on the Labor Code but on Article 220 of the Civil Code. However, the Court observes that the CA decision affirming the LA’s award of P500,000.00 and P250,000.00 as moral and exemplary damages, respectively, is evidently excessive because the purpose for awarding damages is not to enrich the illegally dismissed employee. Consequently, the Court hereby reduces the amount ofP50,000.00 each as moral and exemplary damages. 1âwphi1

55

56

Mapua is also entitled to attorney’s fees but the Court is modifying the amount of P196,848.42 awarded by the LA and fix such attorney’s fees in the amount of ten percent (10%) of the total monetary award, pursuant to Article 111 of the Labor Code. 57

WHEREFORE, the Decision dated October 28, 2009 and Resolution dated January 18, 2010 of the Court of Appeals in CA-G.R. SP. No. 107879 are hereby AFFIRMED with the following MODIFICATIONS: 1. Moral and exemplary damages is hereby reduced to P50,000.00 each; and 2. Attorney's fees shall be computed at ten percent (10%) of the aggregate monetary award. The monetary awards shall earn interest at the rate of six percent (6%) per annum from the time of respondent Victoria K. Mapua's illegal dismissal until finality of this Decision, and twelve percent (12%) legal interest thereafter until fully paid. Petitioner SPI Technologies, Inc. shall be liable for the foregoing awards. SO ORDERED. BIENVENIDO L. REYES Associate Justice Republic of the Philippines SUPREME COURT Manila THIRD DIVISION

G.R. No. 82249

February 7, 1991

WILTSHIRE FILE CO., INC., petitioner, vs. THE NATIONAL LABOR RELATIONS COMMISSION and VICENTE T. ONG, respondents. Angara, Abello, Concepcion, Regala & Cruz for petitioner. Jose R. Millares & Associates for private respondent.

FELICIANO, J.: Private respondent Vicente T. Ong was the Sales Manager of petitioner Wiltshire File Co., Inc. ("Wiltshire") from 16 March 1981 up to 18 June 1985. As such, he received a monthly salary of P14,375.00 excluding commissions from sales which averaged P5,000.00 a month. He also enjoyed vacation leave with pay equivalent to P7,187,50 per year, as well as hospitalization privileges to the extent of P10,000.00 per year. On 13 June 1985, upon private respondent's return from a business and pleasure trip abroad, he was informed by the President of petitioner Wiltshire that his services were being terminated. Private respondent maintains that he tried to get an explanation from management of his dismissal but to no avail. On 18 June 1985, when private respondent again tried to speak with the President of Wiltshire, the company's security guard handed him a letter which formally informed him that his services were being terminated upon the ground of redundancy. Private respondent filed, on 21 October 1985, a complaint before the Labor Arbiter for illegal dismissal alleging that his position could not possibly be redundant because nobody (save himself) in the company was then performing the same duties. Private respondent further contended that retrenching him could not prevent further losses because it was in fact through his remarkable performance as Sales Manager that the Company had an unprecedented increase in domestic market share the preceding year. For that accomplishment, he continued, he was promoted to Marketing Manager and was authorized by the President to hire four (4) Sales Executives five (5) months prior to his termination. In its answer, petitioner company alleged that the termination of respondent's services was a costcutting measure: that in December 1984, the company had experienced an unusually low volume of orders: and that it was in fact forced to rotate its employees in order to save the company. Despite the rotation of employees, petitioner alleged; it continued to experience financial losses and private respondent's position, Sales Manager of the company, became redundant. On 2 December 1986, during the proceedings before the Labor Arbiter, petitioner, in a letter addressed to the Regional Director of the then Ministry of Labor and Employment, notified that official that effective 2 January 1987, petitioner would close its doors permanently due to substantial business losses. 1

In a decision dated 11 March 1987, the Labor Arbiter declared the termination of private respondent's services illegal and ordered petitioner to pay private respondent backwages in the amount of P299,000.00, unpaid salaries in the amount of P22,352.11, accumulated sick and vacation leaves in the amount of P12,543.91, hospitalization benefit package in the amount of

P10,000.00, unpaid commission in the amount of P57,500,00, moral damages in the amount of P100,000.00 and attorney's fees in the amount of P51,639.60. On appeal by petitioner Wiltshire, the National Labor Relations Commission ("NLRC") affirmed in toto on 9 February 1988 the decision of the Labor Arbiter. The NLRC held that: The termination letter clearly spelled out that the main reason in terminating the services of complainant isREDUNDANT and not retrenchment. The supposed duplication of work of herein complainant and Mr. Deliva, the Vice-President is absent that would justify redundancy. . . . On the claim for moral damages, the NLRC pointed out that the effective date of private respondent's termination was 18 July 1985, although it was only 18 June 1985 that he received the letter of termination, and concluded that he was not given any opportunity to explain his position on the matter. The NLRC held that the termination was attended by malice and bad faith on the part of petitioner, considering the manner of private respondent was ordered by the President to pack up and remove his personal belongings from the office. Private respondent was said to have been embarrassed before his immediate family and other acquaintance due to his inability to explain the reasons behind the termination of his services. In this Petition for Certiorari, it is submitted that private respondent's dismissal was justified and not illegal. Petitioner maintains that it had been incurring business losses beginning 1984 and that it was compelled to reduce the size of its personnel force. Petitioner also contends that redundancy as a cause for termination does not necessarily mean duplication of work but a "situation where the services of an employee are in excess of what is demanded by the needs of an undertaking . . ." Having reviewed the record of this case, the Court has satisfied itself that indeed petitioner had serious financial difficulties before, during and after the termination of the services of private respondent. For one thing, the audited financial statements of the petitioner for its fiscal year ending on 31 July 1985 prepared by a firm of independent auditors, showed a net loss in the amount of P4,431,321.00 and a total deficit or capital impairment at the end of year of P6,776,493.00. 2

In the preceding fiscal year (1983-1984), while the company showed a net after tax income of P843,506.00, it actually suffered a deficit or capital impairment of P2,345,172.00. Most importantly, petitioner Wiltshire finally closed its doors and terminated all operations in the Philippines on January 1987, barely two (2) years after the termination of private respondent's employment. We consider that finally shutting down business operations constitutes strong confirmatory evidence of petitioner's previous financial distress. The Court finds it very difficult to suppose that petitioner Wiltshire would take the final and irrevocable step of closing down its operations in the Philippines simply for the sole purpose of easing out a particular officer or employee, such as the private respondent. Turning to the legality of the termination of private respondent's employment, we find merit in petitioner's basic argument. We are unable to sustain public respondent NLRC's holding that private respondent's dismissal was not justified by redundancy and hence illegal. In the first place, we note that while the letter informing private respondent of the termination of his services used the word "redundant", that letter also referred to the company having "incur[red] financial losses which [in] fact has compelled [it] to resort to retrenchment to prevent further losses". 3

Thus, what the letter was in effect saying was that because of financial losses, retrenchment was necessary, which retrenchment in turn resulted in the redundancy of private respondent's position.

In the second place, we do not believe that redundancy in an employer's personnel force necessarily or even ordinarily refers to duplication of work. That no other person was holding the same position that private respondent held prior to the termination of his services, does not show that his position had not become redundant. Indeed, in any well-organized business enterprise, it would be surprising to find duplication of work and two (2) or more people doing the work of one person. We believe that redundancy, for purposes of our Labor Code, exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise. Succinctly put, a position is redundant where it is superfluous, and superfluity of a position or positions may be the outcome of a number of factors, such as overhiring of workers, decreased volume of business, or dropping of a particular product line or service activity previously manufactured or undertaken by the enterprise. 4

The employer has no legal obligation to keep in its payroll more employees than are necessarily for the operation of its business. In the third place, in the case at bar, petitioner Wiltshire, in view of the contraction of its volume of sales and in order to cut down its operating expenses, effected some changes in its organization by abolishing some positions and thereby effecting a reduction of its personnel. Thus, the position of Sales Manager was abolished and the duties previously discharged by the Sales Manager simply added to the duties of the General Manager, to whom the Sales Manager used to report. It is of no legal moment that the financial troubles of the company were not of private respondent's making. Private respondent cannot insist on the retention of his position upon the ground that he had not contributed to the financial problems of Wiltshire. The characterization of private respondent's services as no longer necessary or sustainable, and therefore properly terminable, was an exercise of business judgment on the part of petitioner company. The wisdom or soundness of such characterization or decision was not subject to discretionary review on the part of the Labor Arbiter nor of the NLRC so long, of course, as violation of law or merely arbitrary and malicious action is not shown. It should also be noted that the position held by private respondent, Sales Manager, was clearly managerial in character. In D.M. Consunji, Inc. v. National Labor Relations Commission, the Court held: 5

An employer has a much wider discretion in terminating the employment relationship of managerial personnel as compared to rank and file employees. However, such prerogative of management to dismiss or lay off an employee must be made without abuse of discretion, for what is at stake is not only the private respondent's position but also his means of livelihood . . . . 6

The determination of the continuing necessity of a particular officer or position in a business corporation is management's prerogative, and the courts will not interfere with the exercise of such so long as no abuse of discretion or merely arbitrary or malicious action on the part of management is shown. 7

On the issue of moral damages, petitioner assails the finding of the NLRC that the dismissal was done in bad faith. Petitioner argues that it had complied with the one-month notice required by law; that there was no need for private respondent to be heard in his own defense considering that the termination of his services was for a statutory or authorized cause; and that whatever humiliation might have been suffered by private respondent arose from a lawful cause and hence could not be the basis of an award of moral damages. Termination of an employee's services because of retrenchment to prevent further losses or redundancy, is governed by Article 283 of the Labor Code which provides as follows:

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 thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of 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 of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year. Termination of services for any of the above described causes should be distinguished from termination of employment by reason of some blameworthy act or omission on the part of the employee, in which case the applicable provision is Article 282 of the Labor Code which provides as follows: Art. 282. Termination by employer. –– An employer may terminate an employment for any of the following causes: (a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or 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. Sections 2 and 5 of Rule XIV entitled "Termination of Employment:" of the "Rules to Implement the Labor Code" read as follows: Sec. 2. Notice of dismissal. –– Any employer who seeks to dismiss a worker shall furnish him a written notice stating the particular acts or omission constituting the grounds for his dismissal. In cases of abandonment of work, the notice shall be served at the worker's last known address. xxx

xxx

xxx

Sec. 5. Answer and hearing. –– The worker may answer the allegations stated against him in the notice of dismissal within a reasonable period from receipt of such notice. The employer shall afford the worker ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires. (emphasis supplied)

We note that Section 2 of Rule XIV quoted above requires the notice to specify "the particular acts or omissions constituting the ground for his dismissal", a requirement which is obviously applicable where the ground for dismissal is the commission of some act or omission falling within Article 282 of the Labor Code. Again, Section 5 gives the employee the right to answer and to defend himself against "the allegations stated against him in the notice of dismissal". It is such allegations by the employer and any counter-allegations that the employee may wish to make that need to be heard before dismissal is effected. Thus, Section 5 may be seen to envisage charges against an employee constituting one or more of the just causes for dismissal listed in Article 282 of the Labor Code. Where, as in the instant case, the ground for dismissal or termination of services does not relate to a blameworthy act or omission on the part of the employee, there appears to us no need for an investigation and hearing to be conducted by the employer who does not, to begin with, allege any malfeasance or non-feasance on the part of the employee. In such case, there are no allegations which the employee should refute and defend himself from. Thus, to require petitioner Wiltshire to hold a hearing, at which private respondent would have had the right to be present, on the business and financial circumstances compelling retrenchment and resulting in redundancy, would be to impose upon the employer an unnecessary and inutile hearing as a condition for legality of termination. This is not to say that the employee may not contest the reality or good faith character of the retrenchment or redundancy asserted as grounds for termination of services. The appropriate forum for such controversion would, however, be the Department of Labor and Employment and not an investigation or hearing to be held by the employer itself. It is precisely for this reason that an employer seeking to terminate services of an employee or employees because of "closure of establishment and reduction of personnel", is legally required to give a written notice not only to the employee but also to the Department of Labor and Employment at least one month before effectivity date of the termination. In the instant case, private respondent did controvert before the appropriate labor authorities the grounds for termination of services set out in petitioner's letter to him dated 17 June 1985. We hold, therefore, that the NLRC's finding that private respondent had not been accorded due process, is bereft of factual and legal bases. The award of moral damages that rests on such ground must accordingly fall. While private respondent may well have suffered personal embarrassment by reason of termination of his services, such fact alone cannot justify the award of moral damages. Moral damages are simply a species of damages awarded to compensate one for injuries brought about by a wrongful act. As discussed above, the termination of private respondent's services was not a wrongful act. There is in this case no clear and convincing evidence of record showing that the termination of private respondent's services, while due to an authorized or statutory cause, had been carried out in an arbitrary, capricious and malicious manner, with evident personal ill-will. Embarrassment, even humiliation, that is not proximately caused by a wrongful act does not constitute a basis for an award of moral damages. 8

Private respondent is, of course, entitled to separation pay and other benefits under Act 283 of the Labor Code and petitioner's letter dated 17 June 1985. ACCORDINGLY, the Court Resolved to GRANT due course to the Petition for Certiorari. The Resolutions of the National Labor Relations Commission dated 9 February 1988 and 7 March 1988 are hereby SET ASIDE and NULLIFIED. The Temporary Restraining Order issued by this Court on 21 March 1988 is hereby made PERMANENT. No pronouncement as to costs. SO ORDERED.

Fernan, C.J., Gutierrez, Jr., Bidin and Davide, Jr., JJ., concur. THIRD DIVISION [G.R. No. 99359. September 2, 1992.] ORLANDO M. ESCAREAL, Petitioner, v. NATIONAL LABOR RELATIONS COMMISSION, HON. MANUEL P. ASUNCION, Labor Arbiter, NLRC, National Capital Region, PHILIPPINE REFINING COMPANY, INC., CESAR BAUTISTA and GEORGE B. DITCHING, Respondents. R.S. Arlanza & Associates for Petitioner. Siguion Reyna, Montecillo & Ongsiako for Private Respondents.

SYLLABUS

1. LABOR LAWS AND SOCIAL LEGISLATION; TERMINATION OF EMPLOYMENT; REDUNDANCY IN PERSONNEL FORCE AS A GROUND; DEFINED. — In Wiltshire File Co., Inc. v. NLRC, (193 SCRA 665 [1991]) this Court held that redundancy, for purposes of the Labor Code, exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise; a position is redundant when it is superfluous, and superfluity of a position or positions may be the outcome of a number of factors, such as the overhiring of workers, a decreased volume of business or the dropping of a particular product line or service activity previously manufactured or undertaken by the enterprise. Redundancy in an employer’s personnel force, however, does not necessarily or even ordinarily refer to duplication of work. That no other person was holding the same position which the dismissed employee held prior to the termination of his services does not show that his position had not become redundant. 2. ID.; ID.; ID.; NOT JUSTIFIED IN CASE AT BAR; REASON THEREFOR. — Private respondent PRC had no valid and acceptable basis to declare the position of Pollution Control and Safety Manager redundant as the same may not be considered as superfluous; by the express mandate of the provisions earlier cited, said positions are required by law. Thus, it cannot be gainsaid that the services of the petitioner are in excess of what is reasonably required by the enterprise. Otherwise, PRC would not have allowed ten (10) long years to pass before opening its eyes to that fact; neither would it have increased the petitioner’s salary to P23,100.00 a month effective 1 April 1988. The latter by itself is an unequivocal admission of the specific and special need for the position and an open recognition of the valuable services rendered by the petitioner. Such admission and recognition are inconsistent with the proposition that petitioner’s positions are redundant. If based on the ground of redundancy, a substitution of the petitioner by Miguelito S. Navarro would be invalid as the creation of said position is mandated by the law; the same cannot therefore be declared redundant. If the change was effected to consolidate the functions of the pollution control and safety officer with the duties of the Industrial Engineering Manager, as private respondent postulates, such substitution was done in bad faith for as had already been pointed out, Miguelito S. Navarro was hardly qualified for the position. If the aim was to generate savings in terms of the salaries that PRC would not be paying the petitioner any more as a result of the streamlining of operations for improved efficiency, such a move could hardly be justified in the face of PRC’s hiring of ten (10) fresh graduates for the position of Management Trainee and advertising for vacant positions in the Engineering/Technical Division at around the time of the termination. Besides, there would seem to be no compelling reason to save money by removing such an important position. As shown by their recent financial statements, PRC’s year-end net profits had steadily increased from 1987 to 1990. While concededly, Article 283 of the Labor Code does not require that the employer should be suffering financial losses before he can terminate the services of the employee on the ground of redundancy, it does not mean either that a company which is doing well can effect such a dismissal whimsically or capriciously. The fact that a company is suffering from business losses merely provides stronger justification for the termination. 3. ID.; ID.; RIGHT OF EMPLOYEE ILLEGALLY DISMISSED; RULE; CASE AT BAR. — Since We have concluded that the petitioner’s dismissal was illegal and can not be justified under a valid redundancy initiative, Article 283 of the Labor Code, as amended, on the benefits to be received by the dismissed employee in the case of redundancy, retrenchment to prevent losses, closure of business or the installation of labor saving devices, is not applicable. Instead, We apply Article 279 thereof which provides, in part, that an "employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other

privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. 4. ID.; RIGHT OF EMPLOYEE TO SECURITY OF TENURE; CONSTRUED IN CASE AT BAR. — It is evident that petitioner’s right to security of tenure was violated by the private respondent PRC. Both the Constitution (Section 3, Article XIII) and the Labor Code (Article 279, P.D. 442, as amended) enunciate this right as available to an employee. In a host of cases, this Court has upheld the employee’s right to security of tenure in the face of oppressive management behavior and management prerogative. (Dosch v. NLRC, 123 SCRA 296 [1983]; Tolentino v. NLRC, 152 SCRA 717 [1987]; Cebu Royal Plant v. Deputy Minister of Labor, 153 SCRA 38 [1987]; PT&T v. NLRC, 183 SCRA 451 [1990]; Filipinas Manufacturers Bank v. NLRC, 182 SCRA 848 [1990]; Batongbacal v. Associated Bank, 168 SCRA 600 [1988]; International Harvester Macleod v. NLRC, 149 SCRA 641 [1987]; Remerco Garments v. Minister of Labor, 135 SCRA 167 [1985]; Cebu Royal Plant v. Deputy Minister of Labor, 153 SCRA 38 [1987]) Security of tenure is a right which may not be denied on mere speculation of any unclear and nebulous basis. (Tolentino v. NLRC, 152 SCRA 717 [1987]) In this regard, it could be concluded that the respondent PRC was merely in a hurry to terminate the services of the petitioner as soon as possible in view of the latter’s impending retirement; it appears that said company was merely trying to avoid paying the retirement benefits the petitioner stood to receive upon reaching the age of sixty (60). PRC acted in bad faith. 5. ID.; EMPLOYMENT CONTRACT; PERIOD OF EMPLOYMENT STIPULATED THEREIN; EXPLAINED; CASE AT BAR. — An examination of the contents of the contract of employment yields the conclusion arrived at by the Solicitor General. There is no indication that PRC intended to offer uninterrupted employment until the petitioner reached the mandatory retirement age; it merely informs the petitioner of the compulsory retirement age and the terms pertaining to the retirement. In Brent School, Inc. v. Zamora, (181 SCRA 702 [1990]) this Court, in upholding the validity of a contract of employment with a fixed or specific period, declared that the "decisive determinant in term employment should not be the activities that the employee is called upon to perform, but 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.’" (Id., citing Article 1193 (third paragraph), Civil Code) The term period was further defined to be, "Length of existence; duration. A point of time marking a termination as of a cause or an activity; an end, a limit, a bound; conclusion; termination. A series of years, months or days in which something is completed. A time of definite length. . . . the period from one fixed date to another fixed date . . . ." (Id., citing Capiral v. Manila Electric Co., 119 Phil. 124 [1963], cited in MORENO, Philippine Law Dictionary, 3rd ed.) 6. ID.; SEPARATION PAY; DISTINGUISHED FROM BACKWAGES. — In Torillo v. Leogardo, Jr., (197 SCRA 471 [1991]) an amplification was made on Article 279 of the Labor Code and the distinction between separation pay and backwages. Citing the case of Santos v. NLRC, (154 SCRA 166 [1987]), We held in the former: "The normal consequences of a finding that an employee has been illegally dismissed are, firstly, that the employee becomes entitled to reinstatement to his former position without loss of seniority rights and, secondly, the payment of backwages corresponding to the period from his illegal dismissal up to actual reinstatement . . . Though the grant of reinstatement commonly carries with it an award to backwages, the inappropriateness or non-availability of one does not carry with it the inappropriateness or non-availability the other . . . Put a little differently, payment of backwages is a form of relief that restores the income that was lost by reason of unlawful dismissal; separation pay, in contrast, is oriented towards the immediate future, the transitional period the dismissed employee must undergo before locating a replacement job."

DECISION

DAVIDE, JR., J.:

Petitioner seeks to set aside the Decision 1 dated 14 January 1991 and the Resolution 2 dated 13 May 1991 of the respondent National Labor Relations Commission (hereinafter, NLRC) in NLRC Case No. 00-08-0341288 entitled Orlando M. Escareal v. Philippine Refining Company, Inc. The said Decision affirmed with modification the 19 February 1990 Decision 3 of the respondent Labor Arbiter Manuel P. Asuncion while the Resolution denied the motion for a reconsideration of the former. cralawnad

The dispositive portion of the respondent Labor Arbiter’s Decision reads:

jgc:chanrobles.com .ph

"WHEREFORE, the respondent is hereby ordered to pay the complainant his redundancy pay in accordance with existing company policy on the matter. This is without prejudice to the grant of additional benefits offered by the respondent during the negotiation stage of the case, though it never materialized for failure of the parties to reach an agreement. SO ORDERED."

cralaw virtua1aw library

The controversy stemmed from the dismissal of the petitioner from the private respondent Philippine Refining Company, Inc. (hereinafter, PRC) after almost eleven (11) years of gainful employment. Petitioner was hired by the PRC for the position of Pollution Control Manager effective on 16 September 1977 with a starting monthly pay of P4,230 00; 4 the employment was made permanent effective on 16 March 1978. 5 The contract of employment provides, inter alia, that his "retirement date will be the day you reach your 60th birthday, but there is provision (sic) for voluntary retirement when you reach your 50th birthday. Bases for the hiring of the petitioner are Letter of Instruction (LOI) No. 588 implementing the National Pollution Control Decree, P.D No. 984, dated 19 August 1977, the pertinent portion of which reads: jgc:chanroble s.com.ph

"1. All local governments, development authorities, government-owned or controlled corporations, industrial, commercial and manufacturing establishments, and all other public and private entities, whose functions involve the discharge or emission of pollutants into the water, air and/or land resources or the operation, installation or construction of any anti-pollution device, treatment work or facility, sewerage or sewerage disposal system, shall each appoint and/or designate a Pollution Control Officer." chanrobles law library

and Memorandum Circular No. 02, 6 dated 3 August 1981 and implementing LOI No. 588, which amended Memorandum Circular No. 007, Series of 1977, issued by the National Pollution Control Commission (NPCC), the pertinent portions of which read: jgc:chanrobles.com .ph

"Section 3. Appointment/Designation of Pollution Control Officer. — All local governments, development authorities, government-owned or controlled corporations, industrial and manufacturing establishments, and public and private entities falling within the purview of Letter of Instruction No. 588, shall each appoint and/or designate a Pollution Control Officer. x

x

x

Section 6. Employment Status-In the employment of Pollution Control Officer, the following additional requirements shall be observed: chanrob1es virtual 1aw library

x

x

x

(b) Private Entities — 1. Industrial and Manufacturing establishment and other private entities with capitalization of one million pesos and above shall employ a full time pollution control officer. x

x

x

Section 9. Accreditation of Pollution Control Officer. — A (sic) duly appointed and/or designated pollution control officers shall submit copies of their designation and/or appointments to the Commission within thirty (30) days from the date of such designation/appointment together with their biodata and curriculum vitae for accreditation purposes. In case of the termination of the appointment/designation of a pollution control officer for any reason whatsoever, it shall be the responsibility of his employer to inform the Commission of the same immediately to appoint/designate his successor within thirty (30) days after said termination. (Emphasis supplied)" On 1 April 1979, petitioner was also designated as Safety Manager pursuant to Article 162 of the Labor Code (P.D. 442, as amended) and the pertinent implementing rule thereon. At the time of such designation, petitioner was duly accredited as a Safety Practitioner by the Bureau of Labor Standards, Department of

Labor and Employment (DOLE) and the Safety Organization of the Philippines. Article 162 of the Labor Code, as amended, provides: chanrobles virtual lawlibrary

ARTICLE 162. Safety and Health Standard. — The Secretary of Labor shall, by appropriate orders, set and enforce mandatory occupational safety and health standards to eliminate or reduce occupational safety and health hazards in all workplaces and institute new, and update existing, programs to ensure safe and healthful working conditions in all places of employment." cralaw virtua1aw library

In addition, the pertinent rules on Occupational Health and Safety implementing the Labor Code provide for the designation of full-time safety men to ensure compliance with the safety requirements prescribed by the Bureau of Labor Standards. 7 Consequently, petitioner’s designation was changed to Pollution Control and Safety Manager. In the course of his employment, petitioner’s salary was regularly upgraded; the last pay hike was granted on 28 March 1988 when he was officially informed 8 that his salary was being increased to P23,100.00 per month effective 1 April 1988. This last increase is indisputably a far cry from his starting monthly salary of P4,230.00. Sometime in the first week of November 1987, private respondent George B. Ditching, who was then PRC’s Personnel Administration Manager, informed petitioner about the company’s plan to declare the position of Pollution Control and Safety Manager redundant. Ditching attempted to convince petitioner to accept the redundancy offer or avail of the company’s early retirement plan. Petitioner refused and instead insisted on completing his contract as he still had about three and a half (3 1/2) years left before reaching the mandatory retirement age of sixty (60). On 15 June 1988, Jesus P. Javelona, PRC’s Engineering Department Manager and petitioner’s immediate superior, formally informed the petitioner that the position of "Safety and Pollution Control Manager will be declared redundant effective at the close of work hours on 15th July 1988." 9 Petitioner was also notified that the functions and duties of the position to be declared redundant will be absorbed and integrated with the duties of the Industrial Engineering Manager; as a result thereof, the petitioner "will receive full separation benefits provided under the PRC Retirement Plan and additional redundancy payment under the scheme applying to employees who are 50 years old and above and whose jobs have been declared redundant by Management." chanroble s law library : red

Petitioner protested his dismissal via his 22 June 1988 letter to Javelona. 10 This notwithstanding, the PRC unilaterally circulated a clearance 11 dated 12 July 1988, to take effect on 15 July 1988, indicating therein that its purpose is for the petitioner’s "early retirement" — and not redundancy. Petitioner confronted Javelona; the latter, in his letter dated 13 July 1988, advised the former that the employment would be extended for another month, or up to 15 August 1988. 12 Petitioner responded with a letter dated 25 July 1988 threatening legal action. 13 Subsequently, or on 14 July 1988, Bernardo N. Jambalos III, respondent company’s Industrial Relations Manager, sent a Notice of Termination 14 to the Ministry of Labor and Employment (MOLE) informing the latter that the petitioner was being terminated on the ground of redundancy effective 15 August 1988. On 5 August 1988, petitioner had a meeting with private respondent Cesar Bautista and Dr. Reynaldo Alejandro, PRC’s President and Corporate Affairs Director, respectively. To his plea that he be allowed to finish his contract of employment as he only had three (3) years left before reaching the mandatory retirement age, Bautista retorted that the termination was final. On 8 August 1988, petitioner presented to Javelona a computation 15 showing the amount of P2,436,534.50 due him (petitioner) by way of employee compensation and benefits. On the date of the effectivity of his termination, petitioner was only fifty-seven (57) years of age. He had until 21 July 1991, his sixtieth (60th) birth anniversary, before he would have been compulsorily retired. Also, on the date of effectivity of petitioner’s termination, 16 August 1988, Miguelito S. Navarro, PRC’s Industrial Engineering Manager, was designated as the Pollution Control and Safety Officer. Such appointment is evidenced by two (2) company correspondences. In its letter dated 6 September 1988 to the Laguna Lake Development Authority, 16 PRC informed the said Authority, to wit: jgc:chanroble s.com.ph

"With effect from 16 August 1988 the functions and duties of our Safety and Pollution Control Officer has (sic) been integrated and absorbed with those of our Industrial Engineering Manager. x

x

x

The main tasks of our Industrial Engineering Manager, Mr. Miguelito S. Navarro, now includes (sic) safety and pollution control. chanroble s.com:cralaw:red

Attached to (sic) the bio-data of Mr. Navarro for your accreditation as our designated Pollution Control Officer." cralaw virtua1aw library

In its letter to the Safety Organization of the Philippines 17 dated 14 December 1988, PRC articulated Mr. Miguelito S. Navarro’s designation as "Safety Officer of Phil. Refining Company." cralaw virtua1aw library

In view of all this, petitioner filed a complaint for illegal dismissal with damages against the private respondent PRC before the Arbitration Branch, NLRC, National Capital Region; the case was docketed as NLRC-NCR Case No. 00-08-03412-88. 18 After trial, respondent Labor Arbiter Manuel P. Asuncion rendered a decision dated 19 February 1990, the dispositive portion of which was quoted earlier. Petitioner appealed the said decision to the NLRC which, in its decision of 14 January 1991, made the following findings: jgc:chanrobles.com .ph

"Respondent contended that complainant Orlando M. Escareal was employed as Safety and Pollution Control Engineer on September 16, 1977; that as part of the Company’s policy to streamline the work force and to keep the Organization more effective, it allegedly declared redundant several positions from all levels and departments of the company; that the position of ‘Safety and Pollution Control Manager’ which the herein complainant was holding at the time of dismissal, is one of those that were affected; that the functions of Mr. Escareal were fused with the Industrial Engineering Department, the latter being under the control and supervision of Mr. Miguelito S. Navarro; that no replacement and/or new appointment to said questioned position have (sic) been made; that respondent terminated complainant on the ground of redundancy and offered him P458,929.00 a separation pay; and that the above mentioned amount, is far above what complainant can get under the Labor Code, as amended. x

x

x

The determination as to the usefulness of a particular department or section as an integral aspect of company prerogative, may not be questioned, the objective of which being to (sic) achieve profitability. (Special Events Control Shipping Office Workers Union v. San Miguel Corporation, 122 SCRA 557). x

x

x

To submit to the argument of herein Complainant that there is no basis in the management’s decision to declare his position redundant is to deny the company of its inherent prerogative, without due process of law. x

x

x

Turning to another issue of whether or not a fixed period of employment has been concluded, suffice it to say that it lacks legal and factual basis. chanroble s virtual lawlibrary

x

x

x

If indeed, a fixed period of contract of employment has been concluded under the circumstances, the complainant would not have acceded to have undergone a probationary period. The (sic) latter being a condition sine-qua non before he became a regular worker. Consequently, the averment of breach of Contract pursuant to Article 1159, 1306 and 1308 of the New Civil Code of the Phils., is not in point.

Additionally, to subscribe to the protestation of herein complainant that the reference of the retirement age at 60 in the company’s letter dated August 22, 1977 meant fixed duration is to tie the hands of management in doing what is necessary to meet the exigencies of the business . . ." cralaw virtua1aw library

and then ruled that:

jgc:chanrobles.com .ph

"WHEREFORE, the appealed decision is hereby Affirmed, with modification ordering respondent-company to pay complainant his retirement pay in accordance with the company policy and other benefits granted to him thereunder, less outstanding obligations of the complainant with the company at the time of his dismissal." 19 Undaunted by this second setback, the petitioner filed a Motion for Reconsideration 20 of this decision on 25 January 1991. Private respondent PRC also filed its own motion for reconsideration on the ground that petitioner is entitled to only one (1) benefit, and not to both. In a Resolution promulgated on 13 May 1991, the NLRC’s First Division 21 ruled as follows: jgc:chanrobles.com .ph

"WHEREFORE, in view thereof, the complainant’s motion for reconsideration other than his pecuniary interest is hereby Dismissed for lack of merit. Accordingly, respondent-company (PRC) is ordered to pay Mr. Escareal’s redundancy benefits in accordance with the company policy on the matter as follows: chanrob1es virtual 1aw library

(a) Retirement credit of 1.5 months pay for every year of service in the amount of P363,825.00; and (b) Ex-gratia, amounting to:

chanrob1es virtual 1aw library

P81,496.80 —————— TOTAL P445,321.80" As a consequence thereof, the instant petition was filed on 29 May 1991. 22 Private respondent PRC filed its Comment on 21 August 1991 23 while the public respondent, through the Office of the Solicitor General, filed its Comment on 10 October 1991. 24 On 16 October 1991, 25 this Court resolved, inter alia, to give due course to the petition and require the parties to file their respective Memoranda Petitioner complied with this Resolution on 12 December 1991; 26 public respondent NLRC, on the other hand, filed its Memorandum only on 24 March 1992. 27 In his thorough and exhaustive Memorandum, herein petitioner makes the following assignment of errors:

chanroble s law library :

red

"I RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR IN (sic) EXCESS OF JURISDICTION IN AFFIRMING THE DECISION OF THE RESPONDENT LABOR ARBITER THAT PETITIONER’S TERMINATION AS POLLUTION CONTROL AND SAFETY MANAGER OF RESPONDENT PRC ON THE GROUND OF REDUNDANCY WAS VALID — TOTALLY IGNORING THE FACT THAT PETITIONER’S POSITION WAS NEVER ABOLISHED BUT WAS MERELY GIVEN TO ANOTHER EMPLOYEE (MIGUELITO S. NAVARRO) WHO WAS IMMEDIATELY DESIGNATED AS A REPLACEMENT. II RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR IN (sic) EXCESS OF JURISDICTION IN DECLARING THAT PETITIONER’S WRITTEN CONTRACT OF EMPLOYMENT WITH RESPONDENT PRC WAS NOT FOR A DEFINITE PERIOD, AND THAT IT IS NOT VIOLATED NOTWITHSTANDING THE FACT THAT RESPONDENT PRC PREMATURELY SHORTENED PETITIONER’S RETIREMENT AGE AT 57 INSTEAD OF 60. III

RESPONDENT NLRC COMMITTED A VERY SERIOUS ERROR AMOUNTING TO LACK OR IN (sic) EXCESS OF JURISDICTION IN DECLARING THAT THE PETITIONER IS NOT ENTITLED TO ANY SEPARATION PAY SUCH AS CASH EQUIVALENT OF HIS ACCUMULATED VACATION AND SICK LEAVE CREDITS, REDUNDANCY PAY, BONUSES, ETC., BUT ONLY TO HIS RETIREMENT BENEFITS UNDER THE PRC RETIREMENT PLAN UP TO AUGUST 16, 1988 (DATE OF HIS TERMINATION). IV RESPONDENT NLRC SERIOUSLY ERRED IN DECLARING THAT PETITIONER IS NOT ENTITLED TO DAMAGES, NOTWITHSTANDING RESPONDENT PRC’S AND ITS OFFICERS’ EVIDENT BAD FAITH, WANTON AND PATENT VIOLATION OF PETITIONER’S WRITTEN CONTRACT OF EMPLOYMENT. V RESPONDENT NLRC GRAVELY ERRED IN NOT AWARDING PETITIONER AN AMOUNT FOR ATTORNEY’S FEE EQUIVALENT TO TEN (10%) PERCENT OF THE AMOUNT DUE, NOTWITHSTANDING THAT PETITIONER WAS COMPELLED TO LITIGATE BY REASON OF HIS ILLEGAL DISMISSAL AND OF RESPONDENT PRC’S AND ITS OFFICERS’ MALICIOUS AND WANTON ACTS." 28 We find for the petitioner.

chanrobles law library : red

Article 283 of the Labor Code provides:

jgc:chanroble s.com.ph

"ARTICLE 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 thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of 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." cralaw virtua1aw library

In Wiltshire File Co., Inc. v. NLRC, 29 this Court held that redundancy, for purposes of the Labor Code, exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise; a position is redundant when it is superfluous, and superfluity of a position or positions may be the outcome of a number of factors, such as the overhiring of workers, a decreased volume of business or the dropping of a particular product line or service activity previously manufactured or undertaken by the enterprise. 30 Redundancy in an employer’s personnel force, however, does not necessarily or even ordinarily refer to duplication of work. That no other person was holding the same position which the dismissed employee held prior to the termination of his services does not show that his position had not become redundant. Private respondent PRC had no valid and acceptable basis to declare the position of Pollution Control and Safety Manager redundant as the same may not be considered as superfluous; by the express mandate of the provisions earlier cited, said positions are required by law. Thus, it cannot be gainsaid that the services of the petitioner are in excess of what is reasonably required by the enterprise. Otherwise, PRC would not have allowed ten (10) long years to pass before opening its eyes to that fact; neither would it have increased the petitioner’s salary to P23,100.00 a month effective 1 April 1988. The latter by itself is an unequivocal admission of the specific and special need for the position and an open recognition of the valuable services rendered by the petitioner. Such admission and recognition are inconsistent with the proposition that petitioner’s positions are redundant. It cannot also be argued that the said functions were duplicative, and hence could be absorbed by the duties pertaining to the Industrial Engineering Manager. If indeed they were, and assuming that the Industrial Engineering department of the PRC had been created earlier, petitioner’s positions should not have been created and filled up. If, on the other hand, the department was created later, and there is no evidence to this effect, and it was to absorb the petitioner’s positions, then there would be no reason for the unexplained delay in its implementation, the restructuring

then should have been executed long before the salary increases in petitioner’s favor. That petitioner’s positions were not duplicitous is best evidenced by the PRC’s recognition of their imperative need thereof, this is underscored by the fact that Miguelito S. Navarro, the company’s Industrial Engineering Manager, was designated as Pollution Control and Safety Manager on the very same day of petitioner’s termination. While the petitioner had over ten (10) years of experience as a pollution control and safety officer, Navarro was a virtual greenhorn lacking the requisite training and experience for the assignment. A cursory perusal of his bio-data 31 reveals that it was only several months after his appointment that he attended his first Occupational Safety & Health Seminar (14-17 November 1988), moreover, it was only after his second seminar (Loss Control Management Seminar — 6-9 December 1988) that the PRC requested his accreditation with the Safety Organization of the Philippines. 32 In trying to prop up Navarro’s competence for the position, PRC alleges that the former finished from the University of the Philippines with a degree in Chemical Engineering, took some units in pollution in the process and had "undergone job training in pollution in cement firms through the Bureau of Mines." 33 Compared to the training and experience of the petitioner, Navarro’s orientation would seem to pale. chanrobles virtual lawlibrary

The private respondent alleges further 34 that its decision to declare petitioner’s position as redundant "stemmed from its well-considered view that in order for the corporation’s safety and pollution program to be more effective, such program would have to be tied up with the functions of the Industrial Engineering Manager." It is further posited that since the job of safety and pollution engineer "requires coordination with operating departments, knowledge of the manufacturing processes, and adequate presence in plant areas, a task which the company’s safety and pollution control officer would not be up to as he works singlehandedly, it is only the Industrial Engineer, commanding a department of five (5) engineers and one (1) clerk, who can live up to corporate expectations. Indeed, the proposition that a department manned by a number of engineers presumably because of the heavy workload, could still take on the additional responsibilities which were originally reposed in an altogether separate section headed by the petitioner, is difficult to accept. It seems more reasonable to view the set-up which existed before the termination as being more conducive to efficient operations. And even if We were to sustain PRC’s explanation, why did it so suddenly incorporate functions after the separate position of Pollution and Safety Control Manager had existed for over ten (10) years? No effort whatsoever was undertaken to gradually integrate both functions over this span of time. Anent this specific point, all that the private respondent has to say is that the declaration of redundancy was made pursuant to its continuing program, which has been ongoing for the past ten (10) years, of streamlining the personnel complement and maintaining a lean and effective organization. 35 Furthermore, if PRC felt that either the petitioner was incompetent or that the task could be performed by someone more qualified, then why is it that the person designated to the position hardly had any experience in the field concerned? And why reward the petitioner, barely five (5) months before the dismissal, with an increase in salary? Assuming PRC’s good faith, it would still seem quite surprising that it did not at least provide a transition period wherein the Industrial Engineering Manager would be adequately trained for his new assignment; such reckless conduct is not the expected behavior of a well-oiled and progressive multinational company. Petitioner himself could have very well supervised a training and familiarization program which could have taken the remaining three (3) years of his employment. But no such move was initiated. Instead, a clever scheme to oust the petitioner from a position held for so long was hatched and implemented. On the very same day of petitioner’s termination, the position vacated was resurrected and reconstituted as a component of the position of Industrial Engineering Manager. After more than ten (10) years of unwavering service and loyalty to the company, the petitioner was so cruelly and callously dismissed. chanroble s.com:cralaw:red

What transpired then was a substitution of the petitioner by Miguelito S. Navarro. If based on the ground of redundancy, such a move would be invalid as the creation of said position is mandated by the law; the same cannot therefore be declared redundant. If the change was effected to consolidate the functions of the pollution control and safety officer with the duties of the Industrial Engineering Manager, as private respondent postulates, such substitution was done in bad faith for as had already been pointed out, Miguelito S. Navarro was hardly qualified for the position. If the aim was to generate savings in terms of the salaries that PRC would not be paying the petitioner any more as a result of the streamlining of operations for improved efficiency, such a move could hardly be justified in the face of PRC’s hiring of ten (10) fresh graduates for the position of Management Trainee 36 and advertising for vacant positions in the Engineering/Technical Division at around the time of the termination. 37 Besides, there would seem to be no compelling reason to save money by removing such an important position. As shown by their recent financial statements, PRC’s year-end net profits had steadily increased from 1987 to 1990. 38 While concededly, Article 283 of the Labor Code does not require that the employer should be suffering financial losses before he can terminate the services of the employee on the ground of redundancy, it does not mean either that a company which is doing well can effect such a dismissal whimsically or capriciously. The fact that a company

is suffering from business losses merely provides stronger justification for the termination. The respondent NLRC 39 relied on Wiltshire File Co., v. NLRC 40 in declaring that the employer has no legal obligation to keep in its payroll more employees than are necessary for the operation of its business. Aside from the fact that in the case at bar, there was no compelling reason to dismiss the petitioner as the company was not incurring any losses, the position declared redundant in the Wiltshire case was that of a Sales Manager, a management created position. In the case at bar, petitioner’s position is one created by law. The NLRC adds further that the termination was effected in the exercise of management prerogative and that account should also be taken of the "life of the company which is . . . an active pillar of our economy and upon whose existence still depends the livelihood of a great number of workers." 41 It goes on to observe that" [t]he records are bereft of proof which could have been the basis of vengeful termination other than the company’s legitimate objective to trim its work force." 42 In the face of the circumstances surrounding the dismissal, this Court finds it extremely difficult to give credence to such conclusions. Thus, it is evident from the foregoing that petitioner’s right to security of tenure was violated by the private respondent PRC. Both the Constitution (Section 3, Article XIII) and the Labor Code (Article 279, P.D. 442, as amended) enunciate this right as available to an employee. In a host of cases, this Court has upheld the employee’s right to security of tenure in the face of oppressive management behavior and management prerogative. 43 Security of tenure is a right which may not be denied on mere speculation of any unclear and nebulous basis. 44 In this regard, it could be concluded that the respondent PRC was merely in a hurry to terminate the services of the petitioner as soon as possible in view of the latter’s impending retirement; it appears that said company was merely trying to avoid paying the retirement benefits the petitioner stood to receive upon reaching the age of sixty (60). PRC acted in bad faith. chanrobles law library : red

Both the Labor Arbiter and the respondent NLRC clearly acted with grave abuse of discretion in disregarding the facts and in deliberately closing their eyes to the unlawful scheme resorted to by the PRC. We cannot, however, subscribe to the theory of petitioner that his employment was for a fixed definite period to end at the celebration of his sixtieth (60th) birthday because of the stipulation as to the retirement age of sixty (60) years. The Solicitor General’s refutation, to wit: jgc:chanroble s.com.ph

"A perusal of the provision in the August 22, 1977 letter cited by petitioner merely informs him of the company policy which pegs the compulsory retirement age of its employees at 60 and which commences on the date of the employee’s 60th birthday. It likewise informs him that the company recognizes the right of the employee to retire voluntarily, which option can be availed of when the employee reaches his 50th birthday. Clearly, the cited provision is limited solely to the pertinent issue of retirement." 45 is correct. An examination of the contents of the contract of employment 46 yields the conclusion arrived at by the Solicitor General. There is no indication that PRC intended to offer uninterrupted employment until the petitioner reached the mandatory retirement age, it merely informs the petitioner of the compulsory retirement age and the terms pertaining to the retirement. In Brent School, Inc. v. Zamora, 47 this Court, in upholding the validity of a contract of employment with a fixed or specific period, declared that the "decisive determinant in term employment should not be the activities that the employee is called upon to perform, but 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.’" 48 The term period was further defined to be, "Length of existence; duration. A point of time marking a termination as of a cause or an activity; an end, a limit, a bound; conclusion; termination. A series of years, months or days in which something is completed. A time of definite length. . . . the period from one fixed date to another fixed date . . ." 49 The letter to the petitioner confirming his appointment does not categorically state when the period of employment would end. It stands to reason then that petitioner’s employment was not one with a specific period. chanroble s law library

Coming to the third assigned error, since We have concluded that the petitioner’s dismissal was illegal and can not be justified under a valid redundancy initiative, Article 283 of the Labor Code, as amended, on the benefits to be received by the dismissed employee in the case of redundancy, retrenchment to prevent losses, closure of business or the installation of labor saving devices, is not applicable. Instead, We apply Article 279 thereof which provides, in part, that an "employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement." cralaw virtua1aw library

In Torillo v. Leagardo, Jr., 50 an amplification was made on Article 279 of the Labor Code and the distinction between separation pay and backwages. Citing the case of Santos v. NLRC, 51 We held in the former: jgc:chanroble s.com.ph

"The normal consequences of a finding that an employee has been illegally dismissed are, firstly, that the employee becomes entitled to reinstatement to his former position without loss of seniority rights and, secondly, the payment of backwages corresponding to the period from his illegal dismissal up to actual reinstatement. x

x

x

Though the grant of reinstatement commonly carries with it an award of backwages, the inappropriateness or non-availability of one does not carry with it the inappropriateness or non-availability of the other. x

x

x

Put a little differently, payment of backwages is a form of relief that restores the income that was lost by reason of unlawful dismissal, separation pay, in contrast, is oriented towards the immediate future, the transitional period the dismissed employee must undergo before locating a replacement job." cralaw virtua1aw library

Reinstatement then of the petitioner would have been proper. However, since he reached the mandatory retirement age on 21 July 1991, reinstatement is no longer feasible. He should thus be awarded his backwages from 16 August 1988 to 21 July 1991, inclusive of allowances and the monetary equivalent of the other benefits due him for that period, plus retirement benefits under the PRC’s compulsory retirement scheme which he would have been entitled to had he not been illegally dismissed. Finally, anent the last two (2) assigned errors, this Court notes that in his complaint and the attached Affidavit-Complaint, 52 petitioner does not mention any claim for damages and attorney s fees; furthermore, no evidence was offered to prove them. An award therefor would not be justified. chanroblesvirtualawlibrary

WHEREFORE, judgment is hereby rendered GRANTING the petition, SETTING ASIDE the Decision and Resolution of respondent National Labor Relations Commission, dated 14 January 1991 and 13 May 1991, respectively in Labor Case No. NLRC-NCR-00-08-03412-88 and ORDERING private respondent Philippine Refining Co., Inc. to pay petitioner Orlando M. Escareal his backwages from 16 August 1988 to 21 July 1991 inclusive of allowances and the monetary equivalent of other benefits due him for that period, as well as his retirement pay and other benefits provided under the former’s compulsory retirement scheme. The respondent Labor Arbiter or his successor is hereby directed to make the appropriate computation of these awards within twenty (20) days from receipt of a copy of this Decision, which respondent Philippine Refining Co., Inc. shall pay to the petitioner within ten (10) days from notice thereof. Costs against private respondent Philippine Refining Co., Inc.

chanroble s.com : virtual law library

SO ORDERED.

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION

G.R. No. 101539 September 4, 1992 CECILE DE OCAMPO, WILFREDO SAN PEDRO, REYNALDO DOVICAR, BIEN MEDINA, CESAR ABRIOL, ARTEMIO CASTRO, LARRY ALCANTARA, MICHAEL NOCUM, JESUS DEO JR., PUBLEO DARAG, EDUARDO BINO, EDUARDO VELES, ERVIN DAVID, PROTACIO PEREZ, NOEL VICTOR, ELENO DACATIMBAN, ANTONIO BERNARDO, CARLITO VICTORIA, TIMOTEO MIJARES, ALEX RAMOS, REYNALDO CRUZ, MODESTO MAMESIA, DOMINGO SILARDE, RENATO PUENTAS, RENE VILLANUEVA, MARCELO DELA CRUZ and HERNANDO LEGASPI, petitioners vs. NATIONAL LABOR RELATIONS COMMISSION and BALIWAG MAHOGANY CORPORATION, respondents.

MEDIALDEA, J.: This Petition for certiorari seeks to annul and set aside the resolution issued by the respondent National Labor Relations Commission on July 8, 1991, in Certified Case No. 0548 entitled "In Re: Labor Dispute at Baliwag Mahogany Corporation," affirming with modification its previous decision dated October 23, 1990, declaring the union officers and/or members who participated in the illegal strike staged on February 6, 1990 to have lost their status of employment; and directing private respondent Baliwag Mahogany Corporation to pay separation pay to certain employees and to reinstate without backwages all union Members not found to have committed prohibited acts. The antecedent facts are as follows: Petitioners Cecile de Ocampo, Wilfredo San Pedro, Reynaldo Dovicar, Bien Medina, Cesar Abriol, Artemio Castro, Larry Alcantara, Michael Nocum, Jesus Deo, Jr., Publeo Darag, Eduardo Bino, Eduardo Veles, Ervin David, Prostacio Perez, Noel Victor, Eleno Dacatimban, Antonio Bernardo, Carlito Victoria, Timoteo Mijares, Alex Ramos, Reynaldo Cruz, Modesto Mamesia, Domingo Silarde, Renato Puertas, Rene Villanueva, Marcelo dela Cruz and Hernando Legaspi are employees of private respondent Baliwag Mahogany Corporation. They are either officers or members of the Baliwag Mahogany Corporation Union-CFW, the existing collective bargaining agent of the rank and file employees in the company. Private respondent Baliwag Mahogany Corporation is an enterprise engaged in the production of wooden doors and furniture and has a total workforce of about 900 employees. In 1988, private respondent Baliwag Mahogany Corporation (company) and Baliwag Mahogany Corporation Union-CFW (union) entered into a collective bargaining agreement containing, among other things, provisions on conversion into cash of unused vacation and sick leaves; grievance machinery procedure; and the right of the company to schedule work on Sundays and holidays. In November, 1989, the union made several requests from the company, one of which was the cash conversion of unused vacation and sick leave for 1987-1988 and 1988-1989. Acting on the matter, the company ruled to allow payment of unused vacation and sick leaves for the period of 1987-1988 but disallowed cash conversion of the 1988-1989 unused leaves.

On January 3, 1990, the company issued suspension orders affecting twenty (20) employees for failure to render overtime work on December 30, 1989. The suspension was for a period of three (3) days effective January 3, 1996 to January 5, 1990. On the same day, the union filed a notice of strike on the grounds of unfair labor practice particularly the violation of the CBA provisions on non-payment of unused leaves and illegal dismissal of seven (7) employees in November, 1989. On January 13, 1990, the company issued a notice of termination to three (3) employees or union members, namely, Cecile de Ocampo, Rene Villanueva and Marcelo dela Cruz, of the machinery department, allegedly to effect cost reduction and redundancy. The members of the union conducted a picket at the main gate of the company on January 18, 1990. On the same day, the company filed a petition to declare the strike illegal with prayer for injunction against the union, Cecile de Ocampo, Wilfredo San Pedro and Rene Aguilar. An election of officers was conducted by the union on January 19, 1990. Consequently, Cecile de Ocampo was elected as president. During the conciliation meeting held at National Conciliation and Mediation Board (NCMB) on January 22, 1990 relative to the notice of strike filed by the union on January 3, 1990, the issue pertaining to the legality of the termination of three (3) union members was raised by the union. However, both parties agreed to discuss it separately. Subsequently, in a letter dated January 28, 1990, the union requested for the presence of a NCMB representative during a strike vote held by the union. The strike vote resulted to 388 votes out of 415 total votes in favor of the strike. Consequently, the union staged a strike on February 6, 1990. On February 7, 1990, the company filed a petition to assume jurisdiction with the Department of Labor and Employment. On February 16, 1990, the company filed an amended petition, praying among other things, that the strike staged by the union on February 6, 1990 be declared illegal, there being no genuine strikeable issue and the violation of the no-strike clause of the existing CBA between the parties. The Secretary of Labor in an order dated February 15, 1990, certified the entire labor dispute to the respondent Commission for compulsory arbitration and directed all striking workers including the dismissed employees to return to work and the management to accept them back. The company filed an urgent motion for assignment of a sheriff to enforce the order of the Secretary. In an order dated February 22, 1990, the Secretary of Labor directed Sheriff Alfredo Antonio, Jr., to implement the order. On February 23, 1990, the sheriff, with the assistance of the PC/INP of San Rafael, removed the barricades and opened the main gate of the company.

Criminal complaints for illegal assembly, grave threats, and grave coercion were filed against Cecile de Ocampo, Timoteo Mijares, Modesto Mamesia and Domingo Silarde by the local police authorities on February 24, 1990. On February 25, 1990, the company caused the publication of his return to work order in two (2) newspapers, namely NGAYON and ABANTE. In its letter dated February 27, 1990, the union, through its President Cecile de Ocampo, requested the Regional Director of DOLE, Region III to intervene in the existing dispute with management. Meanwhile, the company extended the February 26, 1990 deadline for the workers to return to work until March 15, 1990. The respondent Commission rendered a decision on October 23, 1990, declaring the strikes staged on January 18, 1990 and February 6, 1990 illegal, the dispositive portion of which provides as follows, to wit: WHEREFORE, judgment is hereby rendered as follows: 1. The strike staged on January 18, 1990 is hereby declared illegal and all employees who participated therein are reprimanded therefor or an further warned that future similar acts shall be dealt more severely; 2. The strike staged on February 6, 1990 is hereby declared illegal and the Union officers/members are deemed suspended from March 15, 1990 the last deadline of the company for them to report to the date of promulgation of this Decision. In short, the Union officers/members are ordered reinstated to their positions but without backwages;. 3. Baliwag Mahogany Corporation is hereby directed to immediately reinstate Cecile de Ocampo, Rene Villanueva and Marcelo dela Cruz to their former positions without loss of seniority rights to pay them full backwages for the period from January 17, 1990 to March 15, 1990 only; 4. The Baliwag Mahogany Corporation is hereby directed to immediately reinstate Alex Ramos, Ronaldo Cruz, Fernando Hernandez, Renato Puertas, Hernando Legaspi to their former positions and to pay them backwages from date of dismissal to March 15, 1990 only; 5. The Baliwag Mahogany Corporation is hereby exonerated of the charge of unfair labor practice; 6. The Baliwag Mahogany Corporation is directed to pay its employment the cash equivalent of unused sick leaves for year 1989; 7. The Baliwag Mahogany Corporation is directed to remit to the Union the dues for the month of January 1990. SO ORDERED. (Rollo, pp. 68-69)

Such decision prompted the company to file a motion for reconsideration substantially on the ground that public respondent seriously erred in not dismissing the employees particularly the union officers, who participated in the illegal strike. In its supplemental motion for reconsideration, the company contended that as a result of the strike, it failed to meet the purchase orders for the quarter valued at fifteen million pesos. Petitioners filed an opposition to the company's motion for reconsideration and subsequently a supplemental comment/opposition to motion for reconsideration. On December 13, 1990, the respondent Commission directed the Labor Arbiter to receive evidence on the issues raised in the motion for reconsideration and additional evidence on the issues already passed upon and to submit a report thereon. On July 8, 1991, the respondent Commission rendered a resolution affirming with modification the decision dated October 23, 1990, the dispositive portion of which provides as follows: WHEREFORE, premises considered, the Decision of October 23, 1990 is hereby MODIFIED, to wit: 1. The strike staged on February 6, 1990 is hereby declared illegal and the Union officers/members who participated in said strike committed prohibited acts are deemed to have lost their status of employment, to wit: 1. Cecile de Ocampo 2. Wilfredo San Pedro 3. Reynaldo Aguilar 4. Bren Medina (Bien Medina) 5. Cesar Abriol 6. Artemio Castro 7. Larry Alcantara 8. Melie Nocum (Michael Nocum) 9. Jesus Deo, Jr. 10. Publeo Darag 11. Eduardo Bino 12. Eduardo Vices (Eduardo Veles) 13. Abroin David (Ervin David) 14. Protacio Perez (Prostacio Perez) 15. Celso Sarmiento 16. Neol Vicbon (Noel Victor) 17. Alano Dacatimban (Eleno Dacatimban) 18. Antonio Bernardo 19. Carlito Victoria 20. Timoteo Mijares 21. Alex Ramos 22. Reynaldo Cruz 23. Modesto Manesia 24. Domingo Silarde 25. Renato Puertas 26. Hernando Legaspi

2. The Baliwag Mahogany Corporation is directed to pay Cecile de Ocampo, Rene Villanueva and Marcelo Cruz separation pay computed at one month per year of service in addition to one month pay as indemnification pay for lack of notice (Art. 283, Labor Code). 3. The Baliwag Mahogany Corporation is directed to pay Alex Ramos, Reynaldo Cruz, Renato Puertas, Hernando Legaspi separation pay computed at one (1) month per year of service in addition to backwages limited to six (6) months. 4. The Baliwag Mahogany Corporation is directed to reinstate but without backwages all Union members not found herein to have committed prohibited acts nor found to have accepted settlement from it nor have voluntarily left the Company for reasons of their own. 5. All other findings in the questioned Decision are affirmed. SO ORDERED. (Rollo, pp. 45-47) Hence, this present petition raising three (3) issues, to wit: 1. Whether or not there is legal basis for declaring the loss of employment status by petitioners on account of the strike in respondent Company. 2. Whether or not the dismissals of petitioners Cecile de Ocampo, Rene Villanueva, and Marcelo dela Cruz from their positions by the company on the ground of redundancy was done in good faith. 3. Whether or not respondent NLRC acted correctly in allowing respondent company to submit additional evidence in support of its Motion for Reconsideration and in giving credence to the said evidence despite the fact that the same were not newlydiscovered evidence as defined under the Rules of Court. (Rollo, p. 11) After a careful review of the records of this case, the Court finds the petition devoid of merit. Petitioners insist that there is no specific finding by the respondent commision regarding the particular participation of the individual petitioners in the supposed acts of violence or commission of prohibited acts during the strike such as denial of free ingress to the premises of the company and egress therefrom as well as illegal acts of coercion during the February, 1990 strike. The Solicitor General disagrees and claims that it is undisputed that the union resorted to illegal acts during the strike arguing that private respondent's personnel manager specifically identified the union officers and members who committed the prohibited acts and actively participated therein. Moreover, the Solicitor General maintains that the illegality of the strike likewise stems from the failure of the petitioners to honor the certification order and heed the return-to-work order issued by the Secretary of Labor. Answering this contention, the petitioners argued that their failure to immediately return to work was not impelled by any malicious or malevolent motive but rather, by their apprehension regarding their physical safety due to the presence of military men in the factory who might cause them harm.

The law on the matter is Article 264 (a) of the Labor Code, to wit: Article 264. (a) Prohibited activities. (a) –– No strike or lockout shall be declared after assumption of jurisdiction by the President or the Minister or after certification or submission of the dispute to compulsory or voluntary arbitration or during the pendency of cases involving the same grounds for the strike or lockout. Any worker whose employment has been terminated as a consequence of an unlawful lockout shall be entitled to reinstatement with full backwages. Any union officer who knowingly participates in an illegal strike and any worker or union officer who knowingly participates in the commission of illegal acts during a strike may be declared to have lost his employment status: Provided, That mere participation of a worker in a lawful strike shall not constitute sufficient ground for termination of his employment, even if a replacement had been hired by the employer during such lawful strike. The clear mandate of the aforequoted article was stressed in the case of Union of Filipro Employees v. Nestle Philippines, Inc. (G.R. Nos. 88710-13, December 19, 1990, 192 SCRA 396, 411) where it was held that a strike that is undertaken despite the issuance by the Secretary of Labor of an assumption or certification order becomes a prohibited activity and thus illegal, pursuant to the second paragraph of Art. 264 of the Labor Code as Amended and the Union officers and members, as a result, are deemed to have lost their employment status for having knowingly participated in an illegal act. Unrebutted evidence shows that the individual petitioners defied the return-to-work order of the Secretary of Labor issued on February 15, 1990. As a matter of fact, it was only on February 23, 1990 when the barricades were removed and the main gate of the company was opened. Hence, the termination of the services of the individual petitioners is justified on this ground alone. Anent the contention that the respondent Commission gravely abused its discretion when it allowed the presentation of additional evidence to prove the loss suffered by the company despite the fact that they were mere afterthoughts and just concocted by the company, time and again, We emphasize that "technical rules of evidence are not binding in labor cases. Labor officials should use every and reasonable means to ascertain the facts in each case speedily and objectively, without regard to technicalities of law or procedure, all in the interest of due process" (Philippine Telegraph and Telephone Corporation v. National Labor Relations Commission, G.R. No. 80600, March 21, 1990, 183 SCRA 451, 457). Turning to the legality of the termination of three (3) of the individual petitioners, petitioners contend that the company acted in bad faith when it terminated the services of the three mechanics because the positions held by them were not at all abolished but merely given to Gemac Machineries. On the contrary, the company stresses that when it contracted the services of Gemac Machineries for the maintenance and repair of its industrial machinery, it only adopted a cost saving and costconsciousness program in order to improve production efficiency. We sustain respondent Commission's finding that petitioners' dismissal was justified by redundancy due to superfluity and hence legal.

We believe that redundancy, for purposes of our Labor Code, exists where the services of an employee are in excess of what is reasonably demanded by the actual requirement of the enterprise. Succinctly put, a position is redundant where it is superfluous, and superfluity of a position or positions may be the outcome of a number of factors, such as over hiring of workers, decreased volume of business, or dropping of a particular product line or service activity previously manufactured or undertaken by the enterprise. The employer had no legal obligation to keep in its payroll more employees, than are necessary for the operation of its business. (Wiltshire File Co., Inc. v. National Labor Relations Commission, G.R. No. 82249, February 7, 1991; 193 SCRA 665,672). The reduction of the number of workers in a company made necessary by the introduction of the services of Gemac Machineries in the maintenance and repair of its industrial machinery is justified. There can be no question as to the right of the company to contract the services of Gemac Machineries to replace the services rendered by the terminated mechanics with a view to effecting more economic and efficient methods of production. In the same case, We ruled that "(t)he characterization of (petitioners') services as no longer necessary or sustainable, and therefore properly terminable, was an exercise of business judgment on the part of (private respondent) company. The wisdom or soundness of such characterization or decision was not subject to discretionary review on the part of the Labor Arbiter nor of the NLRC so long, of course, as violation of law or merely arbitrary and malicious action is not shown" (ibid, p. 673). In contracting the services of Gemac Machineries, as part of the company's cost-saving program, the services rendered by the mechanics became redundant and superfluous, and therefore properly terminable. The company merely exercised its business judgment or management prerogative. And in the absence of any proof that the management abused its discretion or acted in a malicious or arbitrary manner, the court will not interfere with the exercise of such prerogative. Well-settled is the rule that the factual findings of administrative bodies are entitled to great weight, and these findings are accorded not only respect but even finality when supported by substantial evidence (Family Planning Organization of the Philippines, Inc. v. National Labor Relations Commission, G.R. No. 75987, March 23, 1992, p. 7 citing Asian Construction and Development Corporation v. National Labor Relations Commission, G.R. No. 85866, July 24, 1998, 187 SCRA 784, 787). Hence, the truth or the falsehood of alleged facts is not for this Court now to re-examine. In the light of the foregoing considerations, it is clear that the assailed resolution of the respondent Commission is not tainted with arbitrariness nor grave abuse of discretion. ACCORDINGLY, the petition is DISMISSED for lack of merit and the resolution of the respondent Commission dated July 8, 1991 is hereby AFFIRMED. SO ORDERED. Cruz, Griño-Aquino and Bellosillo, JJ., concur.

SECOND DIVISION [G.R. No. 142293. February 27, 2003]

VICENTE SY, TRINIDAD PAULINO, 6BS TRUCKING CORPORATION, and SBT TRUCKING CORPORATION, petitioners, vs. HON. COURT OF APPEALS and JAIME SAHOT, respondents. [1]

DECISION QUISUMBING, J.:

This petition for review seeks the reversal of the decision of the Court of Appeals dated February 29, 2000, in CA-G.R. SP No. 52671, affirming with modification the decision of the National Labor Relations Commission promulgated on June 20, 1996 in NLRC NCR CA No. 010526-96. Petitioners also pray for the reinstatement of the decision of the Labor Arbiter in NLRC NCR Case No. 00-09-06717-94. [2]

[3]

[4]

Culled from the records are the following facts of this case: Sometime in 1958, private respondent Jaime Sahot started working as a truck helper for petitioners family-owned trucking business named Vicente Sy Trucking. In 1965, he became a truck driver of the same family business, renamed T. Paulino Trucking Service, later 6Bs Trucking Corporation in 1985, and thereafter known as SBT Trucking Corporation since 1994.Throughout all these changes in names and for 36 years, private respondent continuously served the trucking business of petitioners. [5]

In April 1994, Sahot was already 59 years old. He had been incurring absences as he was suffering from various ailments. Particularly causing him pain was his left thigh, which greatly affected the performance of his task as a driver. He inquired about his medical and retirement benefits with the Social Security System (SSS) on April 25, 1994, but discovered that his premium payments had not been remitted by his employer. Sahot had filed a week-long leave sometime in May 1994. On May 27 , he was medically examined and treated for EOR, presleyopia, hypertensive retinopathy G II (Annexes G-5 and G-3, pp. 48, 104, respectively), HPM, UTI, Osteoarthritis (Annex G4, p. 105), and heart enlargement (Annex G, p. 107). On said grounds, Belen Paulino of the SBT Trucking Service management told him to file a formal request for extension of his leave. At the end of his week-long absence, Sahot applied for extension of his leave for the whole month of June, 1994. It was at this time when petitioners allegedly threatened to terminate his employment should he refuse to go back to work. th

[6]

[7]

[8]

At this point, Sahot found himself in a dilemma. He was facing dismissal if he refused to work, But he could not retire on pension because petitioners never paid his correct SSS premiums. The fact remained he could no longer work as his left thigh hurt

abominably. Petitioners ended his dilemma. They carried out their threat and dismissed him from work, effective June 30, 1994. He ended up sick, jobless and penniless. On September 13, 1994, Sahot filed with the NLRC NCR Arbitration Branch, a complaint for illegal dismissal, docketed as NLRC NCR Case No. 00-09-06717-94. He prayed for the recovery of separation pay and attorneys fees against Vicente Sy and Trinidad Paulino-Sy, Belen Paulino, Vicente Sy Trucking, T. Paulino Trucking Service, 6Bs Trucking and SBT Trucking, herein petitioners. For their part, petitioners admitted they had a trucking business in the 1950s but denied employing helpers and drivers. They contend that private respondent was not illegally dismissed as a driver because he was in fact petitioners industrial partner. They add that it was not until the year 1994, when SBT Trucking Corporation was established, and only then did respondent Sahot become an employee of the company, with a monthly salary that reached P4,160.00 at the time of his separation. Petitioners further claimed that sometime prior to June 1, 1994, Sahot went on leave and was not able to report for work for almost seven days. On June 1, 1994, Sahot asked permission to extend his leave of absence until June 30, 1994. It appeared that from the expiration of his leave, private respondent never reported back to work nor did he file an extension of his leave. Instead, he filed the complaint for illegal dismissal against the trucking company and its owners. Petitioners add that due to Sahots refusal to work after the expiration of his authorized leave of absence, he should be deemed to have voluntarily resigned from his work. They contended that Sahot had all the time to extend his leave or at least inform petitioners of his health condition. Lastly, they cited NLRC Case No. RE-4997-76, entitled Manuelito Jimenez et al. vs. T. Paulino Trucking Service, as a defense in view of the alleged similarity in the factual milieu and issues of said case to that of Sahots, hence they are in pari material and Sahots complaint ought also to be dismissed. The NLRC NCR Arbitration Branch, through Labor Arbiter Ariel Cadiente Santos, ruled that there was no illegal dismissal in Sahots case. Private respondent had failed to report to work. Moreover, said the Labor Arbiter, petitioners and private respondent were industrial partners before January 1994. The Labor Arbiter concluded by ordering petitioners to pay financial assistance of P15,000 to Sahot for having served the company as a regular employee since January 1994 only. On appeal, the National Labor Relations Commission modified the judgment of the Labor Arbiter. It declared that private respondent was an employee, not an industrial partner, since the start. Private respondent Sahot did not abandon his job but his employment was terminated on account of his illness, pursuant to Article 284 of the Labor Code. Accordingly, the NLRC ordered petitioners to pay private respondent [9]

separation pay in the amount of P60,320.00, at the rate of P2,080.00 per year for 29 years of service. Petitioners assailed the decision of the NLRC before the Court of Appeals. In its decision dated February 29, 2000, the appellate court affirmed with modification the judgment of the NLRC. It held that private respondent was indeed an employee of petitioners since 1958. It also increased the amount of separation pay awarded to private respondent to P74,880, computed at the rate of P2,080 per year for 36 years of service from 1958 to 1994. It decreed:

WHEREFORE, the assailed decision is hereby AFFIRMED with MODIFICATION. SB Trucking Corporation is hereby directed to pay complainant Jaime Sahot the sum of SEVENTY-FOUR THOUSAND EIGHT HUNDRED EIGHTY (P74,880.00) PESOS as and for his separation pay. [10]

Hence, the instant petition anchored on the following contentions: I

RESPONDENT COURT OF APPEALS IN PROMULGATING THE QUESTION[ED] DECISION AFFIRMING WITH MODIFICATION THE DECISION OF NATIONAL LABOR RELATIONS COMMISSION DECIDED NOT IN ACCORD WITH LAW AND PUT AT NAUGHT ARTICLE 402 OF THE CIVIL CODE. [11]

II

RESPONDENT COURT OF APPEALS VIOLATED SUPREME COURT RULING THAT THE NATIONAL LABOR RELATIONS COMMISSION IS BOUND BY THE FACTUAL FINDINGS OF THE LABOR ARBITER AS THE LATTER WAS IN A BETTER POSITION TO OBSERVE THE DEMEANOR AND DEPORTMENT OF THE WITNESSES IN THE CASE OF ASSOCIATION OF INDEPENDENT UNIONS IN THE PHILIPPINES VERSUS NATIONAL CAPITAL REGION (305 SCRA 233). [12]

III

PRIVATE RESPONDENT WAS NOT DISMISS[ED] BY RESPONDENT SBT TRUCKING CORPORATION. [13]

Three issues are to be resolved: (1) Whether or not an employer-employee relationship existed between petitioners and respondent Sahot; (2) Whether or not there

was valid dismissal; and (3) Whether or not respondent Sahot is entitled to separation pay. Crucial to the resolution of this case is the determination of the first issue. Before a case for illegal dismissal can prosper, an employer-employee relationship must first be established. [14]

Petitioners invoke the decision of the Labor Arbiter Ariel Cadiente Santos which found that respondent Sahot was not an employee but was in fact, petitioners industrial partner. It is contended that it was the Labor Arbiter who heard the case and had the opportunity to observe the demeanor and deportment of the parties. The same conclusion, aver petitioners, is supported by substantial evidence. Moreover, it is argued that the findings of fact of the Labor Arbiter was wrongly overturned by the NLRC when the latter made the following pronouncement: [15]

[16]

We agree with complainant that there was error committed by the Labor Arbiter when he concluded that complainant was an industrial partner prior to 1994. A computation of the age of complainant shows that he was only twenty-three (23) years when he started working with respondent as truck helper. How can we entertain in our mind that a twenty-three (23) year old man, working as a truck helper, be considered an industrial partner. Hence we rule that complainant was only an employee, not a partner of respondents from the time complainant started working for respondent. [17]

Because the Court of Appeals also found that an employer-employee relationship existed, petitioners aver that the appellate courts decision gives an imprimatur to the illegal finding and conclusion of the NLRC. Private respondent, for his part, denies that he was ever an industrial partner of petitioners. There was no written agreement, no proof that he received a share in petitioners profits, nor was there anything to show he had any participation with respect to the running of the business. [18]

The elements to determine the existence of an employment relationship are: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employers power to control the employees conduct. The most important element is the employers control of the employees conduct, not only as to the result of the work to be done, but also as to the means and methods to accomplish it. [19]

As found by the appellate court, petitioners owned and operated a trucking business since the 1950s and by their own allegations, they determined private respondents wages and rest day. Records of the case show that private respondent actually engaged in work as an employee. During the entire course of his employment he did not have the freedom to determine where he would go, what he would do, and how he [20]

would do it. He merely followed instructions of petitioners and was content to do so, as long as he was paid his wages. Indeed, said the CA, private respondent had worked as a truck helper and driver of petitioners not for his own pleasure but under the latters control. Article 1767 of the Civil Code states that in a contract of partnership two or more persons bind themselves to contribute money, property or industry to a common fund, with the intention of dividing the profits among themselves. Not one of these circumstances is present in this case. No written agreement exists to prove the partnership between the parties. Private respondent did not contribute money, property or industry for the purpose of engaging in the supposed business. There is no proof that he was receiving a share in the profits as a matter of course, during the period when the trucking business was under operation. Neither is there any proof that he had actively participated in the management, administration and adoption of policies of the business. Thus, the NLRC and the CA did not err in reversing the finding of the Labor Arbiter that private respondent was an industrial partner from 1958 to 1994. [21]

[22]

On this point, we affirm the findings of the appellate court and the NLRC. Private respondent Jaime Sahot was not an industrial partner but an employee of petitioners from 1958 to 1994. The existence of an employer-employee relationship is ultimately a question of fact and the findings thereon by the NLRC, as affirmed by the Court of Appeals, deserve not only respect but finality when supported by substantial evidence. Substantial evidence is such amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion. [23]

[24]

Time and again this Court has said that if doubt exists between the evidence presented by the employer and the employee, the scales of justice must be tilted in favor of the latter. Here, we entertain no doubt. Private respondent since the beginning was an employee of, not an industrial partner in, the trucking business. [25]

Coming now to the second issue, was private respondent validly dismissed by petitioners? Petitioners contend that it was private respondent who refused to go back to work. The decision of the Labor Arbiter pointed out that during the conciliation proceedings, petitioners requested respondent Sahot to report back for work. However, in the same proceedings, Sahot stated that he was no longer fit to continue working, and instead he demanded separation pay. Petitioners then retorted that if Sahot did not like to work as a driver anymore, then he could be given a job that was less strenuous, such as working as a checker. However, Sahot declined that suggestion. Based on the foregoing recitals, petitioners assert that it is clear that Sahot was not dismissed but it was of his own volition that he did not report for work anymore. In his decision, the Labor Arbiter concluded that:

While it may be true that respondents insisted that complainant continue working with respondents despite his alleged illness, there is no direct evidence that will prove that complainants illness prevents or incapacitates him from performing the function of a driver. The fact remains that complainant suddenly stopped working due to boredom or otherwise when he refused to work as a checker which certainly is a much less strenuous job than a driver. [26]

But dealing the Labor Arbiter a reversal on this score the NLRC, concurred in by the Court of Appeals, held that:

While it was very obvious that complainant did not have any intention to report back to work due to his illness which incapacitated him to perform his job, such intention cannot be construed to be an abandonment. Instead, the same should have been considered as one of those falling under the just causes of terminating an employment. The insistence of respondent in making complainant work did not change the scenario. It is worthy to note that respondent is engaged in the trucking business where physical strength is of utmost requirement (sic). Complainant started working with respondent as truck helper at age twenty-three (23), then as truck driver since 1965. Complainant was already fifty-nine (59) when the complaint was filed and suffering from various illness triggered by his work and age. xxx

[27]

In termination cases, the burden is upon the employer to show by substantial evidence that the termination was for lawful cause and validly made. Article 277(b) of the Labor Code puts the burden of proving that the dismissal of an employee was for a valid or authorized cause on the employer, without distinction whether the employer admits or does not admit the dismissal. For an employees dismissal to be valid, (a) the dismissal must be for a valid cause and (b) the employee must be afforded due process. [28]

[29]

[30]

Article 284 of the Labor Code authorizes an employer to terminate an employee on the ground of disease, viz:

Art. 284. Disease as a ground for termination- An employer may terminate the services of an employee who has been found to be suffering from any disease and whose continued employment is prohibited by law or prejudicial to his health as well as the health of his co-employees: xxx

However, in order to validly terminate employment on this ground, Book VI, Rule I, Section 8 of the Omnibus Implementing Rules of the Labor Code requires:

Sec. 8. Disease as a ground for dismissal- Where the employee suffers from a disease and his continued employment is prohibited by law or prejudicial to his health or to the health of his co-employees, the employer shall not terminate his employment unless there is a certification by competent public health authority that the disease is of such nature or at such a stage that it cannot be cured within a period of six (6) months even with proper medical treatment. If the disease or ailment can be cured within the period, the employer shall not terminate the employee but shall ask the employee to take a leave. The employer shall reinstate such employee to his former position immediately upon the restoration of his normal health. (Italics supplied). As this Court stated in Triple Eight integrated Services, Inc. vs. NLRC, the requirement for a medical certificate under Article 284 of the Labor Code cannot be dispensed with; otherwise, it would sanction the unilateral and arbitrary determination by the employer of the gravity or extent of the employees illness and thus defeat the public policy in the protection of labor. [31]

In the case at bar, the employer clearly did not comply with the medical certificate requirement before Sahots dismissal was effected. In the same case of Sevillana vs. I.T. (International) Corp., we ruled:

Since the burden of proving the validity of the dismissal of the employee rests on the employer, the latter should likewise bear the burden of showing that the requisites for a valid dismissal due to a disease have been complied with. In the absence of the required certification by a competent public health authority, this Court has ruled against the validity of the employees dismissal. It is therefore incumbent upon the private respondents to prove by the quantum of evidence required by law that petitioner was not dismissed, or if dismissed, that the dismissal was not illegal; otherwise, the dismissal would be unjustified. This Court will not sanction a dismissal premised on mere conjectures and suspicions, the evidence must be substantial and not arbitrary and must be founded on clearly established facts sufficient to warrant his separation from work. [32]

In addition, we must likewise determine if the procedural aspect of due process had been complied with by the employer. From the records, it clearly appears that procedural due process was not observed in the separation of private respondent by the management of the trucking company. The employer is required to furnish an employee with two written notices before the

latter is dismissed: (1) the notice to apprise the employee of the particular acts or omissions for which his dismissal is sought, which is the equivalent of a charge; and (2) the notice informing the employee of his dismissal, to be issued after the employee has been given reasonable opportunity to answer and to be heard on his defense. These, the petitioners failed to do, even only for record purposes. What management did was to threaten the employee with dismissal, then actually implement the threat when the occasion presented itself because of private respondents painful left thigh. [33]

All told, both the substantive and procedural aspects of due process were violated. Clearly, therefore, Sahots dismissal is tainted with invalidity. On the last issue, as held by the Court of Appeals, respondent Jaime Sahot is entitled to separation pay. The law is clear on the matter. An employee who is terminated because of disease is entitled to separation pay equivalent to at least one month salary or to one-half month salary for every year of service, whichever is greater xxx. Following the formula set in Art. 284 of the Labor Code, his separation pay was computed by the appellate court at P2,080 times 36 years (1958 to 1994) or P74,880. We agree with the computation, after noting that his last monthly salary was P4,160.00 so that one-half thereof is P2,080.00. Finding no reversible error nor grave abuse of discretion on the part of appellate court, we are constrained to sustain its decision. To avoid further delay in the payment due the separated worker, whose claim was filed way back in 1994, this decision is immediately executory. Otherwise, six percent (6%) interest per annum should be charged thereon, for any delay, pursuant to provisions of the Civil Code. [34]

WHEREFORE, the petition is DENIED and the decision of the Court of Appeals dated February 29, 2000 is AFFIRMED. Petitioners must pay private respondent Jaime Sahot his separation pay for 36 years of service at the rate of one-half monthly pay for every year of service, amounting to P74,880.00, with interest of six per centum (6%) per annum from finality of this decision until fully paid. Costs against petitioners. SO ORDERED. Bellosillo, (Chairman), Mendoza, and Callejo, Sr., JJ., concur. Austria-Martinez, J., no part. SECOND DIVISION [G.R. No. 169191, June 01 : 2011] ROMEO VILLARUEL, PETITIONER, VS. YEO HAN GUAN, DOING BUSINESS UNDER THE NAME AND STYLE YUHANS ENTERPRISES, RESPONDENT.

DECISION PERALTA, J.: Assailed in the present petition are the Decision[1] and Resolution[2] of the Court of Appeals (CA) dated February 16, 2005 and August 2, 2005, respectively, in CA-G.R. SP No. 79105. The CA Decision modified the March 31, 2003 Decision of the National Labor Relations Commission (NLRC) in NLRC NCR CA 028050-01, while the CA Resolution denied petitioner's Motion for Reconsideration. The antecedents of the case are as follows: On February 15, 1999, herein petitioner filed with the NLRC, National Capital Region, Quezon City a Complaint[3] for payment of separation pay against Yuhans Enterprises. Subsequently, in his Amended Complaint and Position Paper [4] dated December 6, 1999, petitioner alleged that in June 1963, he was employed as a machine operator by Ribonette Manufacturing Company, an enterprise engaged in the business of manufacturing and selling PVC pipes and is owned and managed by herein respondent Yeo Han Guan. Over a period of almost twenty (20) years, the company changed its name four times. Starting in 1993 up to the time of the filing of petitioner's complaint in 1999, the company was operating under the name of Yuhans Enterprises. Despite the changes in the company's name, petitioner remained in the employ of respondent. Petitioner further alleged that on October 5, 1998, he got sick and was confined in a hospital; on December 12, 1998, he reported for work but was no longer permitted to go back because of his illness; he asked that respondent allow him to continue working but be assigned a lighter kind of work but his request was denied; instead, he was offered a sum of P15,000.00 as his separation pay; however, the said amount corresponds only to the period between 1993 and 1999; petitioner prayed that he be granted separation pay computed from his first day of employment in June 1963, but respondent refused. Aside from separation pay, petitioner prayed for the payment of service incentive leave for three years as well as attorney's fees. On the other hand, respondent averred in his Position Paper[5] that petitioner was hired as machine operator from March 1, 1993 until he stopped working sometime in February 1999 on the ground that he was suffering from illness; after his recovery, petitioner was directed to report for work, but he never showed up. Respondent was later caught by surprise when petitioner filed the instant case for recovery of separation pay. Respondent claimed that he never terminated the services of petitioner and that during their mandatory conference, he even told the latter that he could go back to work anytime but petitioner clearly manifested that he was no longer interested in returning to work and instead asked for separation pay. On November 27, 2000, the Labor Arbiter handling the case rendered judgment in favor of petitioner. The dispositive portion of the Labor Arbiter's Decision reads, thus: WHEREFORE, premises considered, judgment is hereby rendered in favor of the complainant and against herein respondent, as follows: 1. Ordering the respondents to pay separation benefits equivalent to one-half (½) month salary per year of service, a fraction of six months equivalent to one year to herein complainant based on the complainant's length of service reckoned from June 1963 up to October 1998 as provided under Article 284 of the Labor Code, the same computed by the Computation and Examination Unit which we hereby adopt and approved (sic) as our own in the amount of NINETY-ONE THOUSAND FOUR HUNDRED FORTY-FIVE PESOS (P91,445.00); 2. Ordering the respondents to pay service incentive leave equivalent to fifteen days' salary in the amount of THREE THOUSAND FIFTEEN PESOS (P3,015.00). All other claims are dismissed for lack of merit. SO ORDERED.[6] Aggrieved, respondent filed an appeal with the NLRC. On March 31, 2003, the Third Division of the NLRC rendered its Decision [7] dismissing respondent's appeal

and affirming the Labor Arbiter's Decision. Respondent filed a Motion for Reconsideration,[8] but the same was denied by the NLRC in a Resolution[9] dated May 30, 2003. Respondent then filed with the CA a petition for certiorari under Rule 65 of the Rules of Court. On February 16, 2005, the CA promulgated its presently assailed Decision disposing as follows: WHEREFORE, premises considered, the petition is partially GRANTED. The award of separation pay is hereby DELETED, but the Decision insofar as it awards private respondent [herein petitioner] service incentive leave pay of three thousand and fifteen pesos (P3,015.00) stands. The NLRC is permanently ENJOINED from partially executing its Decision dated November 27, 2000 insofar as the award of separation pay is concerned; or if it has already effected execution, it should order the private respondent to forthwith restitute the same. SO ORDERED.[10] Herein petitioner filed his Motion for Reconsideration [11] of the CA Decision, but it was denied by the CA via a Resolution[12] dated August 2, 2005. Hence, the instant petition based on the following assignment of errors: I THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN ITS FAILURE TO APPRECIATE THE ADMISSION BY [PETITIONER] OF THE FACT AND VALIDITY OF HIS TERMINATION BY THE [RESPONDENT]. II [THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED] IN DENYING [PETITIONER'S] ENTITLEMENT TO SEPARATION PAY UNDER ARTICLE 284 OF THE LABOR CODE AND UNDER THE OMNIBUS RULES IMPLEMENTING THE LABOR CODE. III THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN ITS FINDING THAT THE BURDEN OF PROOF THAT AN EMPLOYEE IS SUFFERING FROM DISEASE THAT HAS TO BE TERMINATED REST[S] UPON THE EMPLOYER IN ORDER FOR THE EMPLOYEE TO BE ENTITLED TO SEPARATION PAY. IV THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN ORDERING THE DELETION OF THE AWARD OF SEPARATION PAY TO THE [PETITIONER].[13] The Court finds the petition without merit. The assigned errors in the instant petition essentially boil down to the question of whether petitioner is entitled to separation pay under the provisions of the Labor Code, particularly Article 284 thereof, which reads as follows: An employer may terminate the services of an employee who has been found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health as well as to the health of his co-employees: Provided, That he is paid separation pay equivalent to at least one (1) month salary or to one-half (½) month salary for every year of service whichever is greater, a fraction of at least six months being considered as one (1) whole year. A plain reading of the abovequoted provision clearly presupposes that it is the employer who terminates the services of the employee found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health as well as to the health of his co-employees. It does not

contemplate a situation where it is the employee who severs his or her employment ties. This is precisely the reason why Section 8,[14] Rule 1, Book VI of the Omnibus Rules Implementing the Labor Code, directs that an employer shall not terminate the services of the employee unless there is a certification by a competent public health authority that the disease is of such nature or at such a stage that it cannot be cured within a period of six (6) months even with proper medical treatment. Hence, the pivotal question that should be settled in the present case is whether respondent, in fact, dismissed petitioner from his employment. A perusal of the Decisions of the Labor Arbiter and the NLRC would show, however, that there was no discussion with respect to the abovementioned issue. Both lower tribunals merely concluded that petitioner is entitled to separation pay under Article 284 of the Labor Code without any explanation. The Court finds no convincing justification, in the Decision of the Labor Arbiter on why petitioner is entitled to such pay. In the same manner, the NLRC Decision did not give any rationalization as the gist thereof simply consisted of a quoted portion of the appealed Decision of the Labor Arbiter. On the other hand, the Court agrees with the CA in its observation of the following circumstances as proof that respondent did not terminate petitioner's employment: first, the only cause of action in petitioner's original complaint is that he was "offered a very low separation pay"; second, there was no allegation of illegal dismissal, both in petitioner's original and amended complaints and position paper; and, third, there was no prayer for reinstatement. In consonance with the above findings, the Court finds that petitioner was the one who initiated the severance of his employment relations with respondent. It is evident from the various pleadings filed by petitioner that he never intended to return to his employment with respondent on the ground that his health is failing. Indeed, petitioner did not ask for reinstatement. In fact, he rejected respondent's offer for him to return to work. This is tantamount to resignation. Resignation is defined as the voluntary act of an employee who finds himself in a situation where he believes that personal reasons cannot be sacrificed in favor of the exigency of the service and he has no other choice but to disassociate himself from his employment.[15] It may not be amiss to point out at this juncture that aside from Article 284 of the Labor Code, the award of separation pay is also authorized in the situations dealt with in Article 283 [16] of the same Code and under Section 4 (b), Rule I, Book VI of the Implementing Rules and Regulations of the said Code [17] where there is illegal dismissal and reinstatement is no longer feasible. By way of exception, this Court has allowed grants of separation pay to stand as "a measure of social justice" where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character.[18] However, there is no provision in the Labor Code which grants separation pay to voluntarily resigning employees. In fact, the rule is that an employee who voluntarily resigns from employment is not entitled to separation pay, except when it is stipulated in the employment contract or CBA, or it is sanctioned by established employer practice or policy.[19] In the present case, neither the abovementioned provisions of the Labor Code and its implementing rules and regulations nor the exceptions apply because petitioner was not dismissed from his employment and there is no evidence to show that payment of separation pay is stipulated in his employment contract or sanctioned by established practice or policy of herein respondent, his employer. Since petitioner was not terminated from his employment and, instead, is deemed to have resigned therefrom, he is not entitled to separation pay under the provisions of the Labor Code. The foregoing notwithstanding, this Court, in a number of cases, has granted financial assistance to separated employees as a measure of social and compassionate justice and as an equitable concession. Taking into consideration the factual circumstances obtaining in the present case, the Court finds that petitioner is entitled to this kind of assistance. Citing Eastern Shipping Lines, Inc. v. Sedan,[20] this Court, in the more recent case of Eastern Shipping Lines v. Antonio,[21] held: But we must stress that this Court did allow, in several instances, the grant of financial assistance. In the words of Justice Sabino de Leon, Jr., now deceased, financial assistance may be allowed as a measure of social justice and exceptional circumstances, and as an equitable concession. The instant case equally calls for balancing the interests of the employer with those of the worker, if only to approximate what Justice Laurel calls justice in its secular sense.

In this instance, our attention has been called to the following circumstances: that private respondent joined the company when he was a young man of 25 years and stayed on until he was 48 years old; that he had given to the company the best years of his youth, working on board ship for almost 24 years; that in those years there was not a single report of him transgressing any of the company rules and regulations; that he applied for optional retirement under the company's non-contributory plan when his daughter died and for his own health reasons; and that it would appear that he had served the company well, since even the company said that the reason it refused his application for optional retirement was that it still needed his services; that he denies receiving the telegram asking him to report back to work; but that considering his age and health, he preferred to stay home rather than risk further working in a ship at sea. In our view, with these special circumstances, we can call upon the same "social and compassionate justice" cited in several cases allowing financial assistance. These circumstances indubitably merit equitable concessions, via the principle of "compassionate justice" for the working class. x x x In the present case, respondent had been employed with the petitioner for almost twelve (12) years. On February 13, 1996, he suffered from a "fractured left transverse process of fourth lumbar vertebra," while their vessel was at the port of Yokohama, Japan. After consulting a doctor, he was required to rest for a month. When he was repatriated to Manila and examined by a company doctor, he was declared fit to continue his work. When he reported for work, petitioner refused to employ him despite the assurance of its personnel manager. Respondent patiently waited for more than one year to embark on the vessel as 2nd Engineer, but the position was not given to him, as it was occupied by another person known to one of the stockholders. Consequently, for having been deprived of continued employment with petitioner's vessel, respondent opted to apply for optional retirement. In addition, records show that respondent's seaman's book, as duly noted and signed by the captain of the vessel was marked "Very Good," and "recommended for hire." Moreover, respondent had no derogatory record on file over his long years of service with the petitioner. Considering all of the foregoing and in line with Eastern, the ends of social and compassionate justice would be served best if respondent will be given some equitable relief. Thus, the award of P100,000.00 to respondent as financial assistance is deemed equitable under the circumstances. [22] While the abovecited cases authorized the grant of financial assistance in lieu of retirement benefits, the Court finds no cogent reason not to employ the same guiding principle of compassionate justice applied by the Court, taking into consideration the factual circumstances obtaining in the present case. In this regard, the Court finds credence in petitioner's contention that he is in the employ of respondent for more than 35 years. In the absence of a substantial refutation on the part of respondent, the Court agrees with the findings of the Labor Arbiter and the NLRC that respondent company is not distinct from its predecessors but, in fact, merely continued the operation of the latter under the same owners and the same business venture. The Court further notes that there is no evidence on record to show that petitioner has any derogatory record during his long years of service with respondent and that his employment was severed not by reason of any infraction on his part but because of his failing physical condition. Add to this the willingness of respondent to give him financial assistance. Hence, based on the foregoing, the Court finds that the award of P50,000.00 to petitioner as financial assistance is deemed equitable under the circumstances. WHEREFORE, the instant petition is DENIED. The assailed Decision and Resolution of the Court of Appeals are AFFIRMED with MODIFICATION by awarding petitioner with financial assistance in the amount of P50,000.00. SO ORDERED. Carpio, (Chairperson), Nachura, Peralta, Abad, and Mendoza, Jj. Endnotes:

Republic of the Philippines

Supreme Court Manila

THIRD DIVISION

WUERTH INC.,

PHILIPPINES,

Petitioner,

G.R. No. 175932 Present: CARPIO,* J.., PERALTA, Acting Chairperson, ABAD,

-

versus

MENDOZA, and PEREZ,** JJ. Promulgated:

RODANTE YNSON,

February 15, 2012

Respondent. x-----------------------------------------------------------------------------------------x

DECISION

PERALTA, J.:

Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, seeking to set aside the Decision [1] dated July 13, 2006 and the Resolution[2] dated December 6, 2006 of the Court of Appeals (CA), in CA-G.R. SP No. 00845, which affirmed with modification the Resolutions of the National Labor Relations Commission (NLRC), Fifth Division, Cagayan de Oro City, in NLRC CA NO. M-008246-2004 (RAB 11-09-00949-03), dated July 29, 2005 and November 24, 2005.

The factual antecedents are as follows:

On August 15, 2001, petitioner Wuerth Philippines, Inc., a subsidiary of Wuerth Germany, hired respondent Rodante Ynson, as its National Sales Manager (NSM) for Automotive. As NSM, respondent was required to travel to different parts of the country so as to supervise the sales activities of the companys sales managers, make a schedule of activities geared towards increasing the sales of petitioner's products, and submit said schedule to Marlon Ricanor, Chief Executive Officer of petitioner company.

In an electronic mail (e-mail)[3] dated January 4, 2003 sent to Ricanor, respondent furnished the former with a copy of his sales targets for the year 2003 and coverage plan for the month of January 2003, and indicated that he intends to be on leave from January 23 to 24, 2003. However, respondent was not able to follow the said coverage plan starting January 26, 2003, as he failed to report to work since then. It turned out that on January 24, 2003, he suffered a stroke, and on the succeeding days, he was confined at the Davao Doctor's Hospital. He immediately informed petitioner about his ailment.

On March 27, 2003, Dr. Daniel de la Paz, a NeurologistElectroencephalographer in Davao City, issued a Certification[4] stating that respondent has been under his care since January 24, 2003 and was confined in the hospital from January 24 to February 3, 2003 due to sudden weakness on the left side of his body. In another Medical Certificate[5]dated June 4, 2003, Dr. De la Paz certified that respondent may return to work, but advised him to continue with his rehabilitation regimen for another month and a half. Dr. Bernard S. Chiew, a specialist on Adult Cardiology, also issued an undated Medical Certificate[6] stating that he examined respondent who was diagnosed with primary hypertension, diabetes mellitus II, S/P stroke on June 4, 2003, and recommended that the latter should continue with his physical rehabilitation until July 2003.

On June 9, 2003, respondent sent an e-mail [7] to Hans Sigrit of Wuerth Germany, informing the latter that he can return to work on June 19, 2003, but in view of the recommendation of doctors that he should continue with his rehabilitation until July, he requested that administrative work be given to him while in Davao City, until completion of his therapy. On June 10, 2003, Alexandra Knapp, Secretary of the Management Board of Wuerth Germany, forwarded the e-mail[8] to Ricanor.

Thereafter, Ricanor sent a letter [9] dated June 12, 2003 to respondent, directing him to appear before the formers office in Manila, on July 1, 2003 at 9:00 a.m., for an investigation, relative to the following violations which carry the penalty of suspension and/or dismissal, based on the following alleged violations: (1) absences without leave since January 24, 2003 to date, and (2) abandonment of work. In a letter[10] dated June 26, 2003, respondent replied that his attending physician advised him to refrain from traveling, in order not to disrupt his daily schedule for therapy and medication.

On June 18, 2003, Knapp sent an e-mail[11] to respondent, informing him that his request for detail in Davao was disapproved, as petitioner did not have any branch in Davao and there was no available administrative work for him. Meanwhile, petitioner company bewailed that its sales suffered, as nobody was performing the duties of the NSM and the office space reserved for respondent remained vacant.

Later, Ricanor sent two letters, [12] dated July 4, 2003 and July 31, 2003, to respondent, resetting the investigation to July 25, 2003, at 9:00 a.m., and August 18, 2003, respectively. Both letters reiterated the contents of his first letter to respondent dated June 12, 2003, but included gross inefficiency as an additional ground for possible suspension or dismissal.

In his letters[13] dated July 21, 2003 and August 12, 2003, respondent reiterated the reasons for his inability to attend the investigation proceedings in Manila and, instead, suggested that Ricanor come to Davao and conduct the investigation there.

Finally, in a letter[14] dated August 27, 2003, Ricanor informed respondent of the decision of petitioner's management to terminate his employment, effective upon date of receipt, on the ground of continued absences without filing a leave of absence.

Respondents salary at the time of the termination of his employment was P175,000.00 per month. On September 5, 2003, respondent filed a Complaint against petitioner and Ricanor, in his capacity as petitioner company's Chief Executive Officer, for illegal dismissal and non-payment of allowances, with claim for moral and exemplary damages and attorneys fees, in the NLRC, Regional Arbitration Branch No. XI in Davao City.

The parties submitted their respective Position Papers. Thereafter, Labor Arbiter Amado M. Solamo rendered a Decision [15] dated July 15, 2004, the dispositive portion thereof reads:

WHEREFORE, judgment is hereby rendered:

1. Finding respondents guilty of illegal dismissal; 2. Ordering respondents to reinstate complainant to his former position without loss of seniority rights and privileges immediately upon receipt hereof. In case of appeal, respondents are hereby ordered to reinstate complainant in the payroll; 3. Ordering respondents to pay complainant, the following: a) Full backwages (Aug. 29, 2003 to July15, 2004) (11 months x P175,000.00) ...... P1,925,000.00 b) Medical benefits.......... 300,000.00 c) 13th month pay Y2003.................. 175,000.00 d) Moral and Exemplary Damages ................. 3,000,000.00 e) 10% of the total award as attorneys fees........ 540,000.00 TOTAL AMOUNT: P5,940,000.00 SO ORDERED.[16]

Petitioner and Ricanor appealed to the NLRC (Cagayan de Oro City), which affirmed with modification the Decision of the Labor Arbiter in a Resolution[17] dated July 29, 2005, reducing the total

awards of moral and exemplary damages from P3,000,000.00 to P600,000.00 and P300,000.00, respectively, and the attorneys fees adjusted in an amount equivalent to ten (10%) percent of the total monetary award.

On August 26, 2005, petitioner and Ricanor filed their Motion for Reconsideration.[18]

In a Resolution[19] dated November 24, 2005, the NLRC modified its Decision, further reducing the awards of moral damages from P600,000.00 to P150,000.00, and exemplary damages from P300,000.00 to P50,000.00, respectively. Aggrieved, petitioner and Ricanor filed before the CA a Petition for Certiorari with Application for the Issuance of a Temporary Restraining Order and Preliminary Injunction.

On July 13, 2006, the CA rendered a Decision, [20] finding the petition partly meritorious. It found that petitioner had the right to terminate the employment of respondent, and that it had observed due process in terminating his employment. While the CA deleted the awards of backwages and moral and exemplary damages, it nonetheless ordered petitioner to pay respondent the following amounts: P1,225,000.00 (representing his salary from February 2003 to August 29, 2003), medical expenses of P94,100.00, temperate damages of P100,000.00, 13th month

pay of P175,000.00, and attorneys fees of 10% of the total monetary award.

Petitioner filed a Motion for Reconsideration, which the CA denied in a Resolution[21] dated December 6, 2006.

Petitioner filed this present Petition for Review on Certiorari, raising the following assignment of errors:

I. THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR WHEN IT AWARDED P1,225,000.00 REPRESENTING THE PRIVATE RESPONDENTS MONTHLY SALARY OFP175,000.00 FROM FEBRUARY 2003 TO AUGUST 29, 2003.

II. THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR WHEN IT AWARDED MEDICAL EXPENSES OF P94,100.00 TO THE PRIVATE RESPONDENT.

III. THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR WHEN IT AWARDED TEMPERATE DAMAGES OF P100,000.00 IN FAVOR OF THE PRIVATE RESPONDENT.

IV. THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR WHEN IT AWARDED 13TH MONTH PAY OF P175,000.00 IN FAVOR OF THE PRIVATE RESPONDENT. V.

THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR WHEN IT AWARDED ATTORNEYS FEES IN FAVOR OF THE PRIVATE RESPONDENT. [22]

Petitioner insists that the ground for the dismissal of the respondent was his gross dereliction of duties as NSM.

The CA ruled that pursuant to Article 284 of the Labor Code, respondents illness is considered an authorized cause to justify his termination from employment. The CA ruled that although petitioner did not comply with the medical certificate requirement before respondents dismissal was effected, this was offset by respondent's absence for more than the six (6)-month period that the law allows an employee to be on leave in order to recover from an ailment. We agree. With regard to disease as a ground for termination, Article 284 of the Labor Code provides that an employer may terminate the services of an employee who has been found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health, as well as to the health of his co-employees.

In order to validly terminate employment on this ground, Section 8, Rule I, Book VI of the Omnibus Rules Implementing the Labor Code requires that: Section 8. Disease as a ground for dismissal. Where the employee suffers from a disease and his continued employment is prohibited by law or prejudicial to his health or to the health of his co-employees, the employer shall not terminate his employment unless there is a certification by a competent public health authority that the disease is of such nature or at such a stage that it cannot be

cured within a period of six (6) months even with proper medical treatment. If the disease or ailment can be cured within the period, the employer shall not terminate the employee but shall ask the employee to take a leave. The employer shall reinstate such employee to his former position immediately upon the restoration of his normal health.

In Triple Eight Integrated Services, Inc. v. NLRC,[23] the Court held that the requirement for a medical certificate under Article 284 of the Labor Code cannot be dispensed with; otherwise, it would sanction the unilateral and arbitrary determination by the employer of the gravity or extent of the employees illness and, thus, defeat the public policy on the protection of labor. In the present case, there was no showing that prior to terminating respondent's employment, petitioner secured the required certification from a competent public health authority that the disease he suffered was of such nature or at such a stage that it cannot be cured within six months despite proper medical treatment, pursuant to Section 8, Rule I, Book VI of the Omnibus Rules Implementing the Labor Code.

The medical certificate, dated June 4, 2003, issued by the attending physician of respondent, shows the following:

DATE HOSPITALIZED and/or TREATED: January 24, 2003 to present. DIAGNOSIS: Hypertension, Diabetes Mellitus onset), Hypercholesterolemia, Status Post Stroke, Ischemic-RMCA

(adult

RECOMMENDATION: Though the patient is allowed to resume work, in view of his recovery with rehabilitation, he has been advised to continue with his present regimen for at least another month and a half. [24]

Thus, as of June 4, 2003, respondent would have been capable of returning to work. However, despite notices sent by the petitioner, i.e., letter[25] dated June 12, 2003, requiring respondent to attend an investigation set on July 14, 2003; letter [26] dated July 4, 2003, requiring respondent to appear on July 25, 2003 for investigation; and letter[27] dated July 31, 2003, requiring respondent to appear for the hearing and investigation on August 18, 2003, respondent refused to report to his office, either to resume work or attend the investigations set by the petitioner. Even considering the directive of respondent's doctor to continue with his present regimen for at least another month and a half, it could be safely deduced that, counted from June 4, 2003, respondent's rehabilitation regimen ended on July 19, 2003. Despite the completion of his treatment, respondent failed to attend the investigations set on July 25, 2003 and August 18, 2003. Thus, his unexplained absence in the proceedings should be construed as waiver of his right to be present therein in order to adduce evidence that would have justified his continued absence from work. In an undated Certification, Dr. Melanie Theresa P. Herrera of the East Asia Orthopaedic and Rehabilitation Institute in Davao City stated that respondent had been undergoing physical rehabilitation, and recommended that he may resume work, but the nature of his work had to be modified so as to give time for his strengthening and maintenance program. Thus,

This is to certify that Mr. Rodante N. Ynson is under my care and is currently undergoing physical rehabilitation.

Diagnosis: S/P CVA, Acute Ischemic Infarction (L) Temporal Lobe (R) Frontal Lobe Reflex Sympathetic Dystrophy Hypertension Stage I LUE.

Recommendation: 1) Continue physical rehabilitation at San Pedro Hospital. 2) He may resume work but has to modify it to give time for strengthening program home program and maintenance program at the center in SPH, Davao City.[28]

Respondent alleged in his letters[29] dated July 21, 2003 and August 12, 2003 that he is not capable of returning to work, because he is still undergoing medications and therapy.However, apart from the clearance of respondent's doctors allowing him to return to work, he has failed to provide competent proof that he was actually undergoing therapy and medications. It is puzzling why despite respondent's submission that he was still undergoing treatment in July and August 2003, he failed to submit official receipts showing the medical expenses incurred and physicians professional fees paid by reason of such treatment. This casts serious doubt on the true condition of the respondent during the prolonged period he was absent from work and investigations, and as to whether he is still suffering from any form of illness from July to August 2003.

Being the NSM, respondent should have reported back to work or attended the investigations conducted by petitioner immediately upon being permitted to work by his doctors, knowing that his position remained vacant for a considerable length of time. During his absence, nobody was performing the duties of NSM, which included, among others, supervising and monitoring of

respondent's sales area which is vital to the companys orderly operation and viability. He did not even show any sincere effort to return to work.

Clearly, since there is no more hindrance for him to return to work and attend the investigations set by petitioner, respondent's failure to do so was without any valid or justifiable reason. Respondent's conduct shows his indifference and utter disregard of his work and his employer's interest, and displays his clear, deliberate, and gross dereliction of duties. It bears stressing that respondent was not an ordinary rank-andfile employee. With the nature of his position, he was reposed with managerial duties to oversee petitioner's business in his assigned area. As a managerial employee, respondent was tasked to perform important and crucial functions and, thus, bound by more exacting work ethic. He should have realized that such sensitive position required the full trust and confidence of his employer in every exercise of managerial discretion insofar as the conduct of the latter's business is concerned. [30] The power to dismiss an employee is a recognized prerogative inherent in the employer's right to freely manage and regulate his business. The law, in protecting the rights of the laborers, authorizes neither oppression nor self-destruction of the employer. The worker's right to security of tenure is not an absolute right, for the law provides that he may be dismissed for cause. [31] As a general rule, employers are allowed wide latitude of discretion in terminating the employment of managerial personnel. The mere existence of a basis for believing that such employee has breached the trust and confidence of his employer would suffice for his dismissal.

Needless to say, an irresponsible employee like respondent does not deserve a place in the workplace, and it is petitioner's management prerogative to terminate his employment. To be sure, an employer cannot be compelled to continue with the employment of workers when continued employment will prove inimical to the employer's interest.[33] [32]

To condone such conduct will certainly erode the discipline that an employer should uniformly apply so that it can expect compliance with the same rules and regulations by its other employees. Otherwise, the rules necessary and proper for the operation of its business would be gradually rendered ineffectual, ignored, and eventually become meaningless.[34] As applied to the present case, it would be the height of unfairness and injustice if the employer would be left hanging in the dark as to when respondent could report to work or be available for the scheduled hearings, which becomes detrimental to the orderly daily operations of petitioner's business.

As regards the monetary awards, the CA ordered the petitioner to pay respondent the amount of P1,225,000.00, representing his salary from February 2003 to August 29, 2003, medical expenses of P94,100.00, temperate damages of P100,000.00, 13th month pay of P175,000.00, and attorneys fees of 10% of the total monetary award, but deleted the award of backwages and moral and exemplary damages.

We modify. In Leonardo v. National Labor Relations Commission, [35] We held that where the employee's failure to work was

occasioned neither by his abandonment nor by a termination, the burden of economic loss is not rightfully shifted to the employer; each party must bear his own loss. [36] In the same manner, respondent's inability to work from January 24 to June 4, 2003, was neither due to petitioners fault nor due to his willful conduct, but because he suffered a stroke on January 24, 2003. Hence, each must bear the loss accordingly.

Beginning June 5, 2003, respondent should have reported back to work, but he failed to do so. Consequently, he can only be entitled to compensation for the actual number of work days. It would be unfair to allow respondent to recover something he has not earned and count not have earned, since he could not discharge his work as NSM. Petitioner should be exempted from the burden of paying backwages. The age-old rule governing the relation between labor and capital, or management and employee, of a fair day's wage for a fair day's labor remains as the basic factor in determining employee's wages. If there is no work performed by the employee, there can be no wage or pay unless, of course, the laborer was able, willing and ready to work but was illegally locked out, suspended or dismissed, or otherwise illegally prevented from working, a situation which is not prevailing in the present case.[37]

Petitioner claims that assuming that respondent may be considered on sick leave for the duration that he did not report to work, the period should cover only up to June 2003.

We agree. Being entitled to sick leave pay during the time that respondent was incapable of working, the Court deems it best that the reckoning date should be from January 24, 2003 [38] to June 4, 2003[39] (not from February 2003 to August 29, 2003 as ruled by the CA), he may be entitled to salary, chargeable against his accrued sick leave benefits and other similar leave benefits, if any, as may be provided by existing company policy of petitioner.

Petitioner next assails the CAs award of medical expenses to respondent in the amount of P94,100.00, merely on the basis of the Certification[40] dated March 27, 2003 of Dr. De la Paz, which states that respondent spent approximately P350.00 daily on medicines and that his continued rehabilitation would cost P250.00 per day. It contends that the bare statements made by Dr. De la Paz, without actual proof of receipts, cannot suffice to warrant the payment of medical expenses.

In order to justify a grant of actual or compensatory damages, it is necessary to prove, with a reasonable degree of certainty, premised upon competent proof and on the best evidence obtainable by the injured party, the actual amount of loss. One is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has adequately proved. Damages, to be recoverable, must not only be capable of proof, but must be actually proved with a reasonable degree of certainty. [41] The Court cannot simply rely on speculation, conjecture or guesswork in determining the amount of damages. [42] Actual proof of expenses incurred for the purchase of medicines and other medical supplies necessary for his treatment and rehabilitation

should have been presented by respondent, in the form of official receipts, to show the exact cost of his medication, and to prove that, indeed, he went through medication and rehabilitation. Aside from the letter of Dr. De la Paz, respondent miserably failed to produce even a single receipt showing his alleged medical and rehabilitation expenses. By reason thereof, petitioner should not be held liable for the P94,000.00 medical expenses of respondent as actual or compensatory damages, for lack of basis. Verily, in the absence of official receipts or other competent evidence to prove the actual expenses incurred, the CA's award of medical expenses in favor of respondent should be negated.

Under Article 2224 of the Civil Code, temperate or moderate damages are more than nominal but less than compensatory, and may be recovered when the court finds that some pecuniary loss has been suffered, but the amount cannot, from the nature of the case, be proved with certainty. The CA found that respondent paid for the doctor's professional fees and incurred other hospital expenses; however, the records failed to show that he presented proof of the actual amount of expenses therein, which served as the basis for the CA to award temperate damages in the amount of P100,000.00.

However, We reduce the amount of temperate damages awarded by the CA, from P100,000.00 to P50,000.00, considering that the stroke suffered by respondent was not debilitating in nature and the records showed that his health condition remained stable. Moreover, there were no instances of subsequent or recurring ailment that necessitates prolonged medical attention.

Anent the CA's ruling that respondent should be entitled to 13th month pay, We clarify that the 13th Month Pay Law, which provides the rules on the entitlement and computation of the 13th month pay, cannot be applied to him because he is a managerial employee, and the law applies only to rank- and-file employees.[43] Be that as it may, although he is not covered by the said law, records showed that he is entitled to this benefit. [44] However, the Court cannot make a proper determination as to the exact amount either full or pro-rated amount of the 13th month pay, if any, that he would be entitled to. Thus, reference should be made in consonance with the existing company policy on the payment of the 13 th month pay vis--vis the number of days that he actually worked. On the matter of attorney's fees, We have ruled that attorney's fees may be awarded only when the employee is illegally dismissed in bad faith, and is compelled to litigate or incur expenses to protect his rights by reason of the unjustified acts of his employer.[45] In view of Our findings that respondent was validly dismissed for unauthorized absences, amounting to gross dereliction of duties under Article 282 (e) of the Labor Code, reckoned from June 5, 2003 (i.e., the day after he was declared fit to return to work, but failed to do so), and lack of evidence that his dismissal was tainted with bad faith, the grant of 10% of the total monetary award as attorney's fees cannot be sustained. WHEREFORE, the petition is PARTLY GRANTED. The dispositions in the Decision dated July 13, 2006 and the Resolution dated December 6, 2006 of the Court of Appeals, in CA-G.R. SP No. 00845, which affirmed with modification the

Resolutions of the National Labor Relations Commission, Fifth Division, Cagayan de Oro City, in NLRC CA NO. M-008246-2004 (RAB 11-09-00949-03), are MODIFIED as follows:

a. The award of salary of respondent Rodante Ynson from February 2003 to August 29, 2003, amounting to P1,225,000.00, is deleted; however, he is entitled to the payment of his salary, chargeable against his accrued sick leave benefits and other similar leave benefits, if any, from January 24 to June 4, 2003, as may be provided by existing company policy of petitioner Wuerth Philippines, Inc.; b. The award of temperate damages, of P100,000.00, is reduced to P50,000.00;

in

the

amount

c. While the award of 13th month pay, in the amount of P175,000.00 is deleted; however, respondent may still be entitled to the 13th month pay, either full or pro-rated amount, in consonance with existing company policy of petitioner; and d. The award of medical expenses amounting to P94,100.00 and attorney's fees of 10% of the total monetary award are deleted.

The case is REMANDED to the National Labor Relations Commission, Fifth Division, Cagayan de Oro City, for proper computation of the awards that respondent may be entitled to, in accordance with this Decision, and shall report compliance thereon within thirty (30) days from notice of this Decision. SO ORDERED.

SECOND DIVISION [G.R. No. 148241. September 27, 2002]

HANTEX TRADING CO., INC., and/or MARIANO CHUA, petitioners, vs. COURT OF APPEALS, Special Former Tenth Division, and BERNARDO SINGSON, respondents. DECISION BELLOSILLO, J.:

This petition seeks to review the Decision of the Court of Appeals affirming in toto the decision of the National Labor Relations Commission (NLRC), which in turn sustained the Labor Arbiter's finding that respondent was illegally dismissed and therefore entitled to reinstatement, backwages and 13th month pay. [1]

Private respondent Bernardo Singson was employed by petitioner Hantex Trading Co., Inc. (HANTEX) on 8 November 1994 as sales representative. HANTEX was engaged in selling laminating machines and ID supplies. He was paid a regular salary of P165.00/day in addition to P500.00 travelling allowance and a 3% - 5% commission from his sales. Sometime in February 1996 the management of HANTEX called the attention of Singson regarding his deteriorating sales performance. Despite thereof, Singson's performance showed no sign of improvement as it remained inadequate and unsatisfactory. Thus, HANTEX, through its president, petitioner Mariano Chua, held a "one-on-one" conference with him on 5 August 1996. The parties presented conflicting versions of what actually transpired during the conference. Singson alleged that petitioner Mariano Chua asked for his resignation from the company, and required him to submit a resignation letter otherwise his separation pay, 13th month pay and other monetary benefits would not be paid. When he refused, petitioner Mariano Chua ejected him from the premises of HANTEX and left instructions to the guards on-duty to refuse him admittance. On the other hand, petitioners denied that they dismissed Singson and maintained that the conference was merely intended to motivate him "to exert more effort in his job and mend his work attitude;" and that Singson apparently resented petitioner Chua for it that he never reported back for work after the conference.

On 8 August 1996 Singson filed a complaint with the Labor Arbiter for illegal dismissal with prayer for reinstatement asserting that he was dismissed from his employment without prior notice and hearing. On the contrary, HANTEX averred that Singson was not dismissed but abandoned his job after he was reprimanded. [2]

On 5 May 1998 the Labor Arbiter rendered a decision finding private respondent Singson to have been illegally dismissed and ordering HANTEX to reinstate him to his former or substantially equivalent position, as well as to pay him P234,848.38 as backwages and P8,992.60 as 13th month pay. [3]

HANTEX appealed to the National Labor Relations Commission (NLRC), which affirmed the Labor Arbiter's finding of illegal dismissal but ordered the reduction of backwages, holding that the computation thereof should start not from the date complainant was hired in 1994 as held by the Labor Arbiter, but from the date he was illegally dismissed in 1996. The NLRC observed -

The respondents would want us to believe that on August 5, 1996, they merely reprimanded complainant for his poor performance (p. 10, Appeal, p. 109, Record). However, they have not submitted any proof thereon, unlike on November 21, 1995 when they sent him a memorandum, which he duly received, calling attention to his work deportment x x x x Just because respondent asked him to assume duties during the hearing before the Labor Arbiter on September 30, 1996 (p. 7, Record) does not necessarily prove that they in fact did not dismiss him in the first place. On the contrary, that offer could be a tacit admission of respondents that they erred in dismissing him verbally and without observance of both substantive and procedural due process x x x x On the matter of complainants alleged abandonment x x x xsuffice it to say that his mere filing of a case for illegal dismissal already negates the theory of abandonment x x x x However, we find merit in respondents argument regarding the award of backwages. Indeed, it was glaring error to base the computation thereof from the date complainant was hired in 1994. Rather, the computation should start from the date he was found to have been illegally dismissed x x x x [4]

On 8 June 2000 HANTEX and/or Mariano Chua, undaunted by reverses, elevated the case to the Court of Appeals on a petition for certiorari arguing that: (a) the complaint for illegal dismissal was a mere ploy of private respondent to get back at them; (b) there was no termination letter which is the best evidence of the alleged illegal dismissal, consequently, the NLRC should have adjudged that private respondent was not dismissed but had voluntarily abandoned his employment; and, (c) private respondent's rejection of petitioners' offer for him to resume his employment during the preliminary conference before the Labor Arbiter was an overt act of abandonment. The appellate court, however, likewise ruled against petitioners [5]

An ordinary member of the working class will not put at stake his primary source of income just to satisfy his egoistic feeling of revenge. The expense of a protracted legal battle against a well-equipped employer coupled with the uncertainty of winning and the prospect of a prolonged unemployment are factors that negate petitioners supposition. Furthermore, a letter of dismissal is not the only material evidence to establish the fact of termination. For in cases of constructive dismissal, as when the employee was compelled to resign because continued employment has become impossible, unreasonable and unlikely, his quitting his job amounts to constructive discharge or illegal dismissal. Likewise, we find petitioners argument in support of their abandonment theory as misplaced x x x that offer could be a tacit admission of petitioners that they erred in dismissing him verbally and without observance of both substantive and procedural due process x x x x Its motion for reconsideration having been denied by the Court of Appeals on 10 May 2001, petitioners now hope to secure relief from this Court. Relying once more on their defense of abandonment, petitioners insist that other than the bare allegations of private respondent that he was illegally dismissed, the records are bereft of any evidence to prove that petitioners indeed terminated his services; that moreover, no notice or letter of dismissal was ever issued by petitioners to private respondent, as there was no intent to dismiss him when he was called to a conference on 5 August 1996; and, that he was not prevented from returning to work as in fact he was asked repeatedly to return to work, but he defiantly refused to do so. To avoid delay in the disposition of the case, it appearing from the records that the parties had already fully ventilated and exhaustively argued their respective positions before the Labor Arbiter, the NLRC and the Court of Appeals, and even before this Court, through their respective petition, comment and reply, we dispensed with the usual practice of requiring the parties to submit their memoranda and would now proceed to decide the case. The pivotal issue in the present recourse is whether private respondent Bernardo Singson deliberately abandoned his employment, or was illegally dismissed by the management of petitioner HANTEX. We deny the petition. Plainly, the petition raises a fundamentally factual issue, which we are not at liberty to review because our jurisdiction is limited to reviewing errors of law that may have been committed by the lower court. The resolution of factual questions is the primary and often the final task of lower courts. This Court is not a trier of facts and it is not our function to examine and evaluate all over again the probative value of all evidence presented to the concerned tribunal which formed the basis of its impugned decision, resolution or order. [6]

We reiterate time and again the much-repeated but not so well-heeded rule that findings of fact of the Court of Appeals, particularly where it is in absolute agreement with that of the NLRC and the Labor Arbiter, as in this case, are accorded not only respect but even finality and are deemed binding upon this Court so long as they are supported by substantial evidence. [7]

In any event, we waded into the records of this case and found no compelling reason to disturb the unanimous findings and conclusions of the Court of Appeals, NLRC and the Labor Arbiter. Indeed, petitioners' persistent refrain, ad nauseam, that private respondent Singson was not dismissed but voluntarily abandoned his employment, fails to persuade. Considering the hard times in which we are in, it is incongruous for respondent to simply give up his work after receiving a mere reprimand from his employer. No employee would recklessly abandon his job knowing fully well the acute unemployment problem and the difficulty of looking for a means of livelihood nowadays. With a family to support, we doubt very much that respondent would so easily sacrifice his only source of income and unduly expose his family to hunger and untold hardships. Certainly, no man in his right mind would do such thing. What is more telling is that on 8 June 1996, or three (3) days after his employment was terminated, respondent immediately instituted the instant case for illegal dismissal with a prayer for reinstatement against his employer. An employee who loses no time in protesting his layoff cannot by any reasoning be said to have abandoned his work, for it is already a well-settled doctrine that the filing by an employee of a complaint for illegal dismissal with a prayer for reinstatement is proof enough of his desire to return to work, thus negating the employer's charge of abandonment. Verily, it would be illogical for respondent Singson to have left his job and thereafter file the complaint against his employer. As we held in Villar v. National Labor Relations Commission [8]

x x x x It is clear from the records that sometime in August 1994, immediately after petitioners supposedly refused to work having lost earlier in the certification election, several complaints for illegal dismissal against HI-TECH were filed by petitioners. These are sufficient proofs that they were never guilty of leaving their jobs. The concept of abandonment of work is inconsistent with the immediate filing of complaints for illegal dismissal. An employee who took steps to protest his layoff could not by any logic be said to have abandoned his work. Abandonment is a matter of intention and cannot lightly be presumed from certain equivocal acts. For abandonment to exist, it is essential (a) that the employee must have failed to report for work or must have been absent without valid or justifiable reason; and, (b) that there must have been a clear intention to sever the employeremployee relationship manifested by some overt acts - the second element is the more

determinative factor. Mere absence of the employee is not sufficient. The burden of proof is on the employer to show a clear and deliberate intent on the part of the employee to discontinue employment without any intention of returning. Petitioners dismally failed to discharge their burden. Their evidence, consisting entirely of cash vouchers of respondent SINGSON and his co-salesman Raul Hista, for the months of May, June and July 1996, is grossly anemic - if not totally irrelevant - to establish that respondent Singson indeed deliberately and unjustifiably abandoned his job. At best, these cash vouchers merely show respondent's lackluster performance during those months, and that he paled in comparison with his co-salesman Raul Hista in terms of sales output. As astutely observed by the Court of Appeals [9]

x x x x Neither can we see any evidentiary relevance of the vouchers of Raul Hista in comparison with that of private respondent. They do not in any way vouch petitioners claim of abandonment nor do they refute the fact that private respondent was illegally dismissed because of petitioners failure to observe the substantive as well as the procedural requirements of the law. If at all, they merely show the unsatisfactory performance of private respondent which does not in any way authorizes the abrupt dismissal of private respondent sans observance of due process. At any rate, petitioners undoubtedly could have presented better evidence to buttress their claim of abandonment. After all, being the employers, they are in possession of documents relevant to this case. For instance, they could have at least presented in evidence copies of respondent's daily time records, which are on-file in its office, to prove the dates respondent was on AWOL (absence without leave); or any letter wherein they required respondent to report for work and explain his unauthorized absences. But, as it is, petitioners' defense of abandonment cannot be given credence for lack of evidentiary support. Petitioners maintain that during the initial hearing before Labor Arbiter Bugarin on 30 September 1996 they made an offer to reinstate private respondent to his former position, but he"defiantly" refused the offer despite the fact that in his complaint he was asking for reinstatement. Again, petitioners extended the offer in their position paper filed with the Labor Arbiter but was likewise rejected by respondent. They assert that these circumstances are clear indications of respondent's lack of further interest to work and effectively negate respondent's claim of illegal dismissal. We hold otherwise. As we see it, respondent's refusal to be reinstated is more of a symptom of strained relations between the parties, rather than an indicium of abandonment of work as obstinately insisted by petitioners. While respondent desires to have his job back, it must have later dawned on him that the filing of the complaint for illegal dismissal and the bitter incidents that followed have sundered the erstwhile harmonious relationship between the parties. Respondent must have surely realized

that even if reinstated, he will find it uncomfortable to continue working under the hostile eyes of the employer who had been forced to reinstate him. He had every reason to fear that if he accepted petitioners' offer, their watchful eyes would thereafter be focused on him, to detect every small shortcoming of his as a ground for vindictive disciplinary action. In such instance, reinstatement would no longer be beneficial to him. [10]

Neither does the fact that petitioners made offers to reinstate respondent legally disproves illegal dismissal. We agree with the observation of the Court of Appeals that the offer may very well be "a tacit admission of petitioners that they erred in dismissing him verbally and without observance of both substantive and procedural due process." Curiously, petitioners' offer of reinstatement was made only after more than one (1) month from the date of the filing of the illegal dismissal case. Their belated gesture of goodwill is highly suspect. If petitioners were indeed sincere in inviting respondent back to work in the company, they could have made the offer much sooner. In any case, their intentions in making the offer are immaterial, for the offer to re-employ respondent could not have the effect of validating an otherwise arbitrary dismissal. In sum, we are convinced that respondent did not quit his job as insisted by petitioners, but was unceremoniously dismissed therefrom without observing the twin requirements of due process, i.e., due notice and hearing. While we recognize the right of the employer to terminate the services of an employee for a just or authorized cause, nevertheless, the dismissal of employees must be made within the parameters of law and pursuant to the tenets of equity and fair play. Truly, the employer's power to discipline its workers may not be exercised in an arbitrary manner as to erode the constitutional guarantee of security of tenure. Whatever doubts, uncertainties or ambiguities remain in this case should ultimately be resolved in favor of the worker in line with the social justice policy of our labor laws and the Constitution. The consistent rule is that the employer must affirmatively show rationally adequate evidence that the dismissal was for a justifiable cause, failing in which makes the termination illegal. Upon the foregoing considerations, the normal consequences of respondent's illegal dismissal are reinstatement without loss of seniority rights, and payment of back wages computed from the time his compensation was withheld from him, that is, 5 August 1996, up to the date of his actual reinstatement. These remedies give life to the workers' constitutional right to security of tenure. However, under the circumstances, reinstatement would be impractical and would hardly promote the best interest of the parties. As heretofore discussed, the resentment and enmity between HANTEX and Singson which culminated in and was compounded by the illegal dismissal suit necessarily strained the relationship between them or even provoked antipathy and antagonism. Where reinstatement is no longer viable as an option, separation pay equivalent to one (1) month salary for every year of service should be awarded as an

alternative. This has been our consistent ruling in the award of separation pay to illegally dismissed employees in lieu of reinstatement. [11]

WHEREFORE, the petition is DENIED and the assailed decision dated 23 October 2000 of the Court of Appeals is AFFIRMED. Petitioners Hantex Trading Co., Inc., and Mariano Chua are directed jointly and severally to pay respondent Bernardo Singson separation pay in lieu of reinstatement in the amount equivalent to one (1) month pay for every year of service, backwages computed from 5 August 2002, the time his compensation was withheld from him, up to the finality of this decision, plus the accrued 13th month pay. SO ORDERED. Quisumbing, Austria-Martinez, and Callejo, Sr., JJ., concur. Mendoza, J., on official leave.

Republic of the Philippines SUPREME COURT Manila

SECOND DIVISION

KING OF KINGS TRANSPORT, G.R. No. 166208 INC., CLAIRE DELA FUENTE, and MELISSA LIM, Present: Petitioners, QUISUMBING, J., Chairperson, CARPIO, CARPIO MORALES, - versus - TINGA, and VELASCO, JR., JJ.

Promulgated: SANTIAGO O. MAMAC, Respondent. June 29, 2007 x-----------------------------------------------------------------------------------------x

DECISION

VELASCO, JR., J.:

Is a verbal appraisal of the charges against the employee a breach of the procedural due process? This is the main issue to be resolved in this plea for review under Rule 45 of the September 16, 2004 Decision[1] of the Court of Appeals (CA) in CA-GR SP No. 81961. Said judgment affirmed the dismissal of bus conductor Santiago O. Mamac from petitioner King of Kings Transport, Inc. (KKTI), but ordered the bus company to pay full backwages for violation of the twin-notice requirement and 13th-month pay. Likewise assailed is the December 2, 2004 CA [2] Resolution rejecting KKTIs Motion for Reconsideration.

The Facts

Petitioner KKTI is a corporation engaged in public transportation and managed by Claire Dela Fuente and Melissa Lim.

Respondent Mamac was hired as bus conductor of Don Mariano Transit Corporation (DMTC) on April 29, 1999. The DMTC employees including respondent formed theDamayan ng mga Manggagawa, Tsuper at Conductor-Transport Workers Union and registered it with the Department of Labor and Employment. Pending the holding of a certification election in DMTC, petitioner KKTI was incorporated with the Securities and Exchange Commission which acquired new buses. Many DMTC employees were subsequently transferred to KKTI and excluded from the election. The KKTI employees later organized the Kaisahan ng mga Kawani sa King of Kings (KKKK) which was registered with DOLE. Respondent was elected KKKK president.

Respondent was required to accomplish a Conductors Trip Report and submit it to the company after each trip. As a background, this report indicates the ticket opening and closing for the particular day of duty. After submission, the company audits the reports. Once an irregularity is discovered, the company issues an Irregularity Report against the employee, indicating the nature and details of the irregularity. Thereafter, the concerned employee is asked to explain the incident by making a written statement or counter-affidavit at the back of the same Irregularity Report. After considering the explanation of the employee, the company then makes a determination of whether to accept the explanation or impose upon the employee a penalty for committing an infraction. That decision shall be stated on said Irregularity Report and will be furnished to the employee.

Upon audit of the October 28, 2001 Conductors Report of respondent, KKTI noted an irregularity. It discovered that respondent declared several sold tickets as returned tickets causing KKTI to lose an income of eight hundred and ninety pesos.

While no irregularity report was prepared on the October 28, 2001 incident, KKTI nevertheless asked respondent to explain the discrepancy. In his letter,[3] respondent said that the erroneous declaration in his October 28, 2001 Trip Report was unintentional. He explained that during that days trip, the windshield of the bus assigned to them was smashed; and they had to cut short the trip in order to immediately report the matter to the police. As a result of the incident, he got confused in making the trip report.

On November 26, 2001, respondent received a [4] letter terminating his employment effective November 29, 2001. The dismissal letter alleged that the October 28, 2001irregularity was an act of fraud against the company. KKTI also cited as basis for respondents dismissal the other offenses he allegedly committed since 1999.

On December 11, 2001, respondent filed a Complaint for illegal dismissal, illegal deductions, nonpayment of 13th-month pay, service incentive leave, and separation pay.He denied committing any infraction and alleged that his dismissal was intended to bust union activities. Moreover, he claimed that his dismissal was effected without due process.

In its April 3, 2002 Position Paper,[5] KKTI contended that respondent was legally dismissed after his commission of a series of misconducts and misdeeds. It claimed that respondent had violated the trust and confidence reposed upon him by KKTI. Also, it averred that it had observed due process in dismissing respondent and maintained that respondent was not entitled to his money claims such as service incentive leave and 13th-month pay because he was paid on commission or percentage basis.

On September 16, 2002, Labor Arbiter Ramon Valentin C. Reyes rendered judgment dismissing respondents Complaint for lack of merit.[6]

Aggrieved, respondent appealed to the National Labor Relations Commission (NLRC). On August 29, 2003, the NLRC rendered a Decision, the dispositive portion of which reads: WHEREFORE, the decision dated 16 September 2002 is MODIFIED in that respondent King of Kings Transport Inc. is hereby ordered to indemnify complainant in the amount of ten thousand pesos (P10,000) for failure to comply with due process prior to termination.

The other findings are AFFIRMED.

SO ORDERED.[7]

Respondent moved for reconsideration but it was denied through the November 14, 2003 Resolution[8] of the NLRC.

Thereafter, respondent filed a Petition for Certiorari before the CA urging the nullification of the NLRC Decision and Resolution.

The Ruling of the Court of Appeals

Affirming the NLRC, the CA held that there was just cause for respondents dismissal. It ruled that respondents act in declaring

sold tickets as returned tickets x x x constituted fraud or acts of dishonesty justifying his dismissal. [9]

Also, the appellate court sustained the finding that petitioners failed to comply with the required procedural due process prior to respondents termination. However, following the doctrine in Serrano v. NLRC,[10] it modified the award of PhP 10,000 as indemnification by awarding full backwages from the time respondents employment was terminated until finality of the decision.

Moreover, the CA held that respondent is entitled to the 13th-month pay benefit.

Hence, we have this petition.

The Issues

Petitioner raises the following assignment of errors for our consideration:

Whether the Honorable Court of Appeals erred in awarding in favor of the complainant/private respondent, full back wages, despite the denial of his petition for certiorari.

Whether the Honorable Court of Appeals erred in ruling that KKTI did not comply with the requirements of

procedural due process before dismissing the services of the complainant/private respondent.

Whether the Honorable Court of Appeals rendered an incorrect decision in that [sic] it awarded in favor of the complaint/private respondent, 13th month pay benefits contrary to PD 851.[11]

The Courts Ruling

The petition is partly meritorious.

The disposition of the first assigned error depends on whether petitioner KKTI complied with the due process requirements in terminating respondents employment; thus, it shall be discussed secondly. Non-compliance with the Due Process Requirements

Due process under the Labor Code involves two aspects: first, substantivethe valid and authorized causes of termination of employment under the Labor Code; andsecond, proceduralthe manner of dismissal. [12] In the present case, the CA affirmed the findings of the labor arbiter and the NLRC that the termination of employment of respondent was based on a just cause. This ruling is not at issue in this case. The question to be determined is whether the procedural requirements were complied with.

Art. 277 of the Labor Code provides the manner of termination of employment, thus: Art. 277. Miscellaneous Provisions.x x x

(b) Subject to the constitutional right of workers to security of tenure and their right to be protected against dismissal except for a just and authorized cause without prejudice to the requirement of notice under Article 283 of this Code, the employer shall furnish the worker whose employment is sought to be terminated a written notice containing a statement of the causes for termination and shall afford the latter ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires in accordance with company rules and regulations promulgated pursuant to guidelines set by the Department of Labor and Employment. Any decision taken by the employer shall be without prejudice to the right of the worker to contest the validity or legality of his dismissal by filing a complaint with the regional branch of the National Labor Relations Commission. The burden of proving that the termination was for a valid or authorized cause shall rest on the employer.

Accordingly, the implementing rule of the aforesaid provision states: SEC. 2. Standards of due process; requirements of notice.In all cases of termination of employment, the following standards of due process shall be substantially observed:

I. For termination of employment based on just causes as defined in Article 282 of the Code:

(a) A written notice served on the employee specifying the ground or grounds for termination, and giving said employee reasonable opportunity within which to explain his side.

(b) A hearing or conference during which the employee concerned, with the assistance of counsel if he so desires is given opportunity to respond to the charge, present his evidence, or rebut the evidence presented against him.

(c) A written notice of termination served on the employee, indicating that upon due consideration of all the circumstances, grounds have been established to justify his termination. [13]

In case of termination, the foregoing notices shall be served on the employees last known address.[14]

To clarify, the following should be considered in terminating the services of employees:

(1) The first written notice to be served on the employees should contain the specific causes or grounds for termination against them, and a directive that the employees are given the opportunity to submit their written explanation within a reasonable period. Reasonable opportunity under the Omnibus

Rules means every kind of assistance that management must accord to the employees to enable them to prepare adequately for their defense.[15] This should be construed as a period of at least five (5) calendar days from receipt of the notice to give the employees an opportunity to study the accusation against them, consult a union official or lawyer, gather data and evidence, and decide on the defenses they will raise against the complaint. Moreover, in order to enable the employees to intelligently prepare their explanation and defenses, the notice should contain a detailed narration of the facts and circumstances that will serve as basis for the charge against the employees. A general description of the charge will not suffice. Lastly, the notice should specifically mention which company rules, if any, are violated and/or which among the grounds under Art. 282 is being charged against the employees.

(2) After serving the first notice, the employers should schedule and conduct a hearing or conference wherein the employees will be given the opportunity to: (1) explain and clarify their defenses to the charge against them; (2) present evidence in support of their defenses; and (3) rebut the evidence presented against them by the management. During the hearing or conference, the employees are given the chance to defend themselves personally, with the assistance of a representative or counsel of their choice. Moreover, this conference or hearing could be used by the parties as an opportunity to come to an amicable settlement.

(3) After determining that termination of employment is justified, the employers shall serve the employees a written notice of termination indicating that: (1) all circumstances involving the charge against the employees have been considered; and (2) grounds have been established to justify the severance of their employment.

In the instant case, KKTI admits that it had failed to provide respondent with a charge sheet. [16] However, it maintains that it had substantially complied with the rules, claiming that respondent would not have issued a written explanation had he not been informed of the charges against him. [17]

We are not convinced.

First, respondent was not issued a written notice charging him of committing an infraction. The law is clear on the matter. A verbal appraisal of the charges against an employee does not comply with the first notice requirement. In Pepsi Cola Bottling Co. v. NLRC,[18] the Court held that consultations or conferences are not a substitute for the actual observance of notice and hearing. Also, in Loadstar Shipping Co., Inc. v. Mesano,[19] the Court, sanctioning the employer for disregarding the due process requirements, held that the employees written explanation did not excuse the fact that there was a complete absence of the first notice.

Second, even assuming that petitioner KKTI was able to furnish respondent an Irregularity Report notifying him of his offense, such would not comply with the requirements of the law. We observe from the irregularity reports against respondent for his other offenses that such contained merely a general description of the charges against him. The reports did not even state a company rule or policy that the employee had allegedly violated. Likewise, there is no mention of any of the grounds for termination of employment under Art. 282 of the Labor Code. Thus, KKTIs standard charge sheet is not sufficient notice to the employee.

Third, no hearing was conducted. Regardless of respondents written explanation, a hearing was still necessary in order for him to clarify and present evidence in support of his defense. Moreover, respondent made the letter merely to explain the circumstances relating to the irregularity in his October 28, 2001 Conductors Trip Report. He was unaware that a dismissal proceeding was already being effected. Thus, he was surprised to receive the November 26, 2001 termination letter indicating as grounds, not only hisOctober 28, 2001 infraction, but also his previous infractions. Sanction for Requirements

Non-compliance with

Due

Process

As stated earlier, after a finding that petitioners failed to comply with the due process requirements, the CA awarded full backwages in favor of respondent in accordance with the doctrine in Serrano v. NLRC.[20] However, the doctrine in Serrano had already been abandoned in Agabon v. NLRC by ruling that if the dismissal is done without due process, the employer should indemnify the employee with nominal damages. [21]

Thus, for non-compliance with the due process requirements in the termination of respondents employment, petitioner KKTI is sanctioned to pay respondent the amount of thirty thousand pesos (PhP 30,000) as damages.

Thirteenth (13th)-Month Pay

Section 3 of the Rules Implementing Presidential Decree No. 851[22] provides the exceptions in the coverage of the payment of the 13th-month benefit. The provision states: SEC. 3. Employers covered.The Decree shall apply to all employers except to:

xxxx

e) Employers of those who are paid on purely commission, boundary, or task basis, and those who are paid a fixed amount for performing a specific work, irrespective of the time consumed in the performance thereof, except where the workers are paid on piece-rate basis in which case the employer shall be covered by this issuance insofar as such workers are concerned.

Petitioner KKTI maintains that respondent was paid on purely commission basis; thus, the latter is not entitled to receive the 13th-month pay benefit. However, applying the ruling in Philippine Agricultural Commercial and Industrial Workers Union v. NLRC,[23] the CA held that respondent is entitled to the said benefit. It was erroneous for the CA to apply the case of Philippine Agricultural Commercial and Industrial Workers Union. Notably in the said case, it was established that the drivers and conductors praying for 13th- month pay were not paid purely on commission. Instead, they were receiving a commission in addition to a fixed or guaranteed wage or salary.Thus, the Court held that bus drivers and conductors who are paid a fixed or guaranteed minimum wage in case their commission be less than the statutory minimum, and commissions only in case where they

are over and above the statutory minimum, are entitled to a 13thmonth pay equivalent to one-twelfth of their total earnings during the calendar year.

On the other hand, in his Complaint, [24] respondent admitted that he was paid on commission only. Moreover, this fact is supported by his pay slips[25] which indicated the varying amount of commissions he was receiving each trip. Thus, he was excluded from receiving the 13th-month pay benefit. WHEREFORE, the petition is PARTLY GRANTED and the September 16, 2004 Decision of the CA is MODIFIED by deleting the award of backwages and 13th-month pay. Instead, petitioner KKTI is ordered to indemnify respondent the amount of thirty thousand pesos (PhP 30,000) as nominal damages for failure to comply with the due process requirements in terminating the employment of respondent.

No costs. SO ORDERED.

FIRST DIVISION G.R. No. 207010, February 18, 2015 MAERSK-FILIPINAS CREWING, INC., A.P. MOLLER SINGAPORE PTE. LIMITED, AND JESUS AGBAYANI, Petitioners, v. TORIBIO C. AVESTRUZ,*Respondent. DECISION PERLAS-BERNABE, J.: Assailed in this petition for review on certiorari1 are the Decision2 dated January 4, 2013 and the Resolution3 dated April 16, 2013 rendered by the Court of Appeals (CA) in CA-G.R. SP No. 125773 which reversed and set aside the Decision4 dated April 26, 2012 and the Resolution5 dated June 18, 2012 of the National Labor Relations Commission (NLRC) in NLRC NCR Case No. (M) 07-10704-11 [NLRC LAC No. (OFW-

M)-01-000123-12] dismissing the illegal dismissal complaint filed by respondent Toribio C. Avestruz (Avestruz) and awarding him nominal damages. chanroblesvirtuallawlibrary

The Facts On April 28, 2011, petitioner Maersk-Filipinas Crewing, Inc. (Maersk), on behalf of its foreign principal, petitioner A.P. Moller Singapore Pte. Ltd. (A.P. Moller), hired Avestruz as Chief Cook on board the vessel M/V Nedlloyd Drake for a period of six (6) months, with a basic monthly salary of US$698.00. 6 Avestruz boarded the vessel on May 4, 2011.7 cralawre d

On June 22, 2011, in the course of the weekly inspection of the vessel’s galley, Captain Charles C. Woodward (Captain Woodward) noticed that the cover of the garbage bin in the kitchen near the washing area was oily. As part of Avestruz’s job was to ensure the cleanliness of the galley, Captain Woodward called Avestruz and asked him to stand near the garbage bin where the former took the latter’s right hand and swiped it on the oily cover of the garbage bin, telling Avestruz to feel it. Shocked, Avestruz remarked, “Sir if you are looking for [dirt], you can find it[;] the ship is big. Tell us if you want to clean and we will clean it.” Captain Woodward replied by shoving Avestruz’s chest, to which the latter complained and said, “Don’t touch me,” causing an argument to ensue between them. 8 cralawred

Later that afternoon, Captain Woodward summoned and required 9 Avestruz to state in writing what transpired in the galley that morning. Avestruz complied and submitted his written statement 10 on that same day. Captain Woodward likewise asked Messman Jomilyn P. Kong (Kong) to submit his own written statement regarding the incident, to which the latter immediately complied. 11 On the very same day, Captain Woodward informed Avestruz that he would be dismissed from service and be disembarked in India. On July 3, 2011, Avestruz was disembarked in Colombo, Sri Lanka and arrived in the Philippines on July 4, 2011. 12 cralawre d

Subsequently, he filed a complaint13 for illegal dismissal, payment for the unexpired portion of his contract, damages, and attorney’s fees against Maersk, A.P. Moller, and Jesus Agbayani (Agbayani), an officer 14 of Maersk.15 He alleged that no investigation or hearing was conducted nor was he given the chance to defend himself before he was dismissed, and that Captain Woodward failed to observe the provisions under Section 17 of the Philippine Overseas Employment Administration (POEA) Standard Employment Contract (POEASEC) on disciplinary procedures. Also, he averred that he was not given any notice stating the ground for his dismissal.16 Additionally, he claimed that the cost of his airfare in the amount of US$606.15 was deducted from his wages.17 Furthermore, Avestruz prayed for the award of the following amounts: (a) US$5,372.00 representing his basic wages, guaranteed overtime, and vacation leave; (b) on board allowance of US$1,936.00; (c) ship maintenance bonus of US$292.00; (d) hardship allowance of US$8,760.00; (e) P300,000.00 as moral damages, (f) P200,000.00 as exemplary damages; and (g) attorney’s fees of ten percent (10%) of the total monetary award.18 cralawre d

In their defense,19 Maersk, A.P. Moller, and Agbayani (petitioners) claimed that during his stint on the vessel, Avestruz failed to attend to his tasks, specifically to maintain the cleanliness of the galley, which prompted Captain Woodward to issue weekly reminders.20 Unfortunately, despite the reminders, Avestruz still failed to perform his duties properly.21 On June 22, 2011, when again asked to comply with the aforesaid duty, Avestruz became angry and snapped, retorting that he did not have time to do all the tasks required of him. As a result, Captain Woodward initiated disciplinary proceedings and informed Avestruz during the hearing of the offenses he committed, i.e., his repeated failure to follow directives pertaining to his duty to maintain the cleanliness of the galley, as well as his act of insulting an officer.22 Thereafter, he was informed of his dismissal from service due to insubordination. 23 Relative thereto, Captain Woodward sent two (2) electronic mail messages24 (e-mails) to Maersk explaining the decision to terminate Avestruz’s employment and requesting for Avestruz’s replacement. Avestruz was discharged from the vessel and arrived in the Philippines on July 4, 2011.25 cralawre d

Petitioners maintained that Avestruz was dismissed for a just and valid cause and is, therefore, not entitled to recover his salary for the unexpired portion of his contract. 26 They likewise claimed that they were justified in deducting his airfare from his salary, and that the latter was not entitled to moral and exemplary damages and attorney’s fees.27 Hence, they prayed that the complaint be dismissed for lack of merit. 28 cralawre d

The LA Ruling In a Decision29 dated November 29, 2011, the Labor Arbiter (LA) dismissed Avestruz’s complaint for lack of merit. The LA found that he failed to perform his duty of maintaining cleanliness in the galley, and that he also repeatedly failed to obey the directives of his superior, which was tantamount to insubordination. 30 In

support of its finding, the LA cited the Collective Bargaining Agreement 31 (CBA) between the parties which considers the act of insulting a superior officer by words or deed as an act of insubordination. 32 cralawred

Aggrieved, Avestruz appealed33 to the NLRC.

chanroblesvirtuallawlibrary

The NLRC Ruling In a Decision34 dated April 26, 2012, the NLRC sustained the validity of Avestruz’s dismissal but found that petitioners failed to observe the procedures laid down in Section 17 of the POEA-SEC, 35 which states: chanRoblesvirtualLa wlibrary

SECTION 17. DISCIPLINARY PROCEDURES. The Master shall comply with the following disciplinary procedures against an erring seafarer: A.

The Master shall furnish the seafarer with a written notice containing the following: 1.

Grounds for the charges as listed in Section 33 of this Contract or analogous act constituting the same.

2.

Date, time and place for a formal investigation of the charges against the seafarer concerned.

B.

The Master or his authorized representative shall conduct the investigation or hearing, giving the seafarer the opportunity to explain or defend himself against the charges. These procedures must be duly documented and entered into the ship’s logbook.

C.

If after the investigation or hearing, the Master is convinced that imposition of a penalty is justified, the Master shall issue a written notice of penalty and the reasons for it to the seafarer, with copies furnished to the Philippine agent.

D. Dismissal for just cause may be effected by the Master without furnishing the seafarer with a notice of dismissal if there is a clear and existing danger to the safety of the crew or the vessel. The Master shall send a complete report to the manning agency substantiated by witnesses, testimonies and any other documents in support thereof. (Emphases supplied) cralawla wlibrary

As the records are bereft of evidence showing compliance with the foregoing rules, the NLRC held petitioners jointly and severally liable to pay Avestruz the amount of P30,000.00 by way of nominal damages. 36 cralawred

Avestruz moved for reconsideration37 of the aforesaid Decision, which was denied in the Resolution 38dated June 18, 2012. Dissatisfied, he elevated the matter to the CA via petition for certiorari.39 cralawred

The CA Ruling In a Decision40 dated January 4, 2013, the CA reversed and set aside the rulings of the NLRC and instead, found Avestruz to have been illegally dismissed. Consequently, it directed petitioners to pay him, jointly and severally, the full amount of his placement fee and deductions made, with interest at twelve percent (12%) per annum, as well as his salaries for the unexpired portion of his contract, and attorney’s fees of ten percent (10%) of the total award. All other money claims were denied for lack of merit. 41 cralawre d

In so ruling, the CA found that the conclusion of the NLRC, which affirmed that of the LA, that Avestruz was lawfully dismissed, was not supported by substantial evidence, there being no factual basis for the charge of insubordination which petitioners claimed was the ground for Avestruz’s dismissal. It found that petitioners, as employers, were unable to discharge the burden of proof required of them to establish that Avestruz was guilty of insubordination, which necessitates the occurrence of two (2) conditions as a just cause for

dismissal: (1) the employee’s assailed conduct must have been willful, that is, characterized by a wrongful and perverse attitude; and (2) the order violated must have been reasonable, lawful, made known to the employee, and must pertain to the duties which he had been engaged to discharge. The CA found that, contrary to the rulings of the labor tribunals, there was no evidence on record to bolster petitioners’ claims that Avestruz willfully failed to comply with his duties as Chief Cook and that he displayed a perverse and wrongful attitude.42 cralawre d

Moreover, it gave more credence to Avestruz’s account of the incident in the galley on June 22, 2011, being supported in part by the statement43 of Kong, who witnessed the incident. On the other hand, the e-mails sent by Captain Woodward to Maersk were uncorroborated. On this score, the CA observed the absence of any logbook entries to support petitioners’ stance.44 cralawred

Similarly, the CA found that petitioners failed to accord procedural due process to Avestruz, there being no compliance with the requirements of Section 17 of the POEA-SEC as above-quoted, or the “two-notice rule.” It held that the statement45 Captain Woodward issued to Avestruz neither contained the grounds for which he was being charged nor the date, time, and place for the conduct of a formal investigation. Likewise, Captain Woodward failed to give Avestruz any notice of penalty and the reasons for its imposition, with copies thereof furnished to the Philippine Agent.46 cralawred

In arriving at the monetary awards given to Avestruz, the CA considered the provisions of Section 7 of Republic Act No. (RA) 10022,47 amending RA 8042,48 which grants upon the illegally dismissed overseas worker “the full reimbursement [of] his placement fee and the deductions made with interest at twelve percent (12%) per annum, plus his salaries for the unexpired portion of his employment contract.” However, with respect to Avestruz’s claims for overtime and leave pay, the same were denied for failure to show entitlement thereto. All other monetary claims were likewise denied in the absence of substantial evidence to prove the same. Finally, the CA awarded attorney’s fees of ten percent (10%) of the total monetary award in accordance with Article 11149 of the Labor Code.50 cralawred

Petitioners moved for reconsideration,51 which the CA denied in its Resolution52 dated April 16, 2013, hence, this petition. The Issue Before the Court The sole issue advanced for the Court’s resolution is whether or not the CA erred when it reversed and set aside the ruling of the NLRC finding that Avestruz was legally dismissed and accordingly, dismissing the complaint, albeit with payment of nominal damages for violation of procedural due process. The Court’s Ruling The petition is devoid of merit. Generally, a re-examination of factual findings cannot be done by the Court acting on a petition for review on certiorari because the Court is not a trier of facts but reviews only questions of law.53Thus, in petitions for review on certiorari, only questions of law may generally be put into issue. This rule, however, admits of certain exceptions.54 In this case, considering that the factual findings of the LA and the NLRC, on the one hand, and the CA, on the other hand, are contradictory, the general rule that only legal issues may be raised in a petition for review on certiorari under Rule 45 of the Rules of Court does not apply,55 and the Court retains the authority to pass upon the evidence presented and draw conclusions therefrom. 56 cralawred

It is well-settled that the burden of proving that the termination of an employee was for a just or authorized cause lies with the employer. If the employer fails to meet this burden, the conclusion would be that the dismissal was unjustified and, therefore, illegal.57 In order to discharge this burden, the employer must present substantial evidence, which is defined as that amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion,58 and not based on mere surmises or conjectures.59 cralawre d

After a punctilious examination of the evidence on record, the Court finds that the CA did not err in reversing and setting aside the factual conclusions of the labor tribunals that Avestruz’s dismissal was lawful. Instead, the Court finds that there was no just or valid cause for his dismissal, hence, he was illegally dismissed. Petitioners maintain that Avestruz was dismissed on the ground of insubordination, consisting of his “repeated failure to obey his superior’s order to maintain cleanliness in the galley of the vessel” as well as

his act of “insulting a superior officer by words or deeds.”60 In support of this contention, petitioners presented as evidence the e-mails sent by Captain Woodward, both dated June 22, 2011, and time-stamped 10:07 a.m. and 11:40 a.m., respectively, which they claim chronicled the relevant circumstances that eventually led to Avestruz’s dismissal. The Court, however, finds these e-mails to be uncorroborated and self-serving, and therefore, do not satisfy the requirement of substantial evidence as would sufficiently discharge the burden of proving that Avestruz was legally dismissed. On the contrary, petitioners failed to prove that he committed acts of insubordination which would warrant his dismissal. Insubordination, as a just cause for the dismissal of an employee, necessitates the concurrence of at least two requisites: (1) the employee’s assailed conduct must have been willful, that is, characterized by a wrongful and perverse attitude; and (2) the order violated must have been reasonable, lawful, made known to the employee, and must pertain to the duties which he had been engaged to discharge. 61 cralawre d

In this case, the contents of Captain Woodward’s e-mails do not establish that Avestruz’s conduct had been willful, or characterized by a wrongful and perverse attitude. The Court concurs with the CA’s observation that Avestruz’s statement62 regarding the incident in the galley deserves more credence, being corroborated63 by Kong, a messman who witnessed the same. Conversely, apart from Captain Woodward’s e-mails, no other evidence was presented by the petitioners to support their claims. While rules of evidence are not strictly observed in proceedings before administrative bodies,64 petitioners should have offered additional proof to corroborate the statements 65 described therein. Thus, in Ranises v. NLRC66 which involved a seafarer who was repatriated to the Philippines for allegedly committing illegal acts amounting to a breach of trust, as based on a telex dispatch by the Master of the vessel, the Court impugned and eventually vetoed the credence given by the NLRC upon the telex, to wit: chanRoble svirtualLawlibrary

Unfortunately, the veracity of the allegations contained in the aforecited telex was never proven by respondent employer. Neither was it shown that respondent employer exerted any effort to even verify the truthfulness of Capt. Sonoda’s report and establish petitioner’s culpability for his alleged illegal acts. Worse, no other evidence was submitted to corroborate the charges against petitioner.67 cralawlawlibrary

Likewise, in Skippers United Pacific, Inc. v. NLRC,68 the Court ruled that the lone evidence offered by the employer to justify the seafarer’s dismissal, i.e., the telexed Chief Engineer’s Report which contained the causes for said dismissal, did not suffice to discharge the onus required of the employer to show that the termination of an employee’s service was valid.69 The same doctrine was enunciated in Pacific Maritime Services, Inc. v. Ranay,70 where the Court held that the telefax transmission purportedly executed and signed by a person on board the vessel is insufficient evidence to prove the commission of the acts constituting the grounds for the dismissal of two seafarers, being uncorroborated evidence. 71 cralawre d

As in this case, it was incumbent upon the petitioners to present other substantial evidence to bolster their claim that Avestruz committed acts that constitute insubordination as would warrant his dismissal. At the least, they could have offered in evidence entries in the ship’s official logbook showing the infractions or acts of insubordination purportedly committed by Avestruz, the ship’s logbook being the official repository of the day-to-day transactions and occurrences on board the vessel.72 Having failed to do so, their position that Avestruz was lawfully dismissed cannot be sustained. Similarly, the Court affirms the finding of the CA that Avestruz was not accorded procedural due process, there being no compliance with the provisions of Section 17 of the POEA-SEC as above-cited, which requires the “two-notice rule.” As explained in Skippers Pacific, Inc. v. Mira:73 cralawre d

An erring seaman is given a written notice of the charge against him and is afforded an opportunity to explain or defend himself. Should sanctions be imposed, then a written notice of penalty and the reasons for it shall be furnished the erring seafarer. It is only in the exceptional case of clear and existing danger to the safety of the crew or vessel that the required notices are dispensed with; but just the same, a complete report should be sent to the manning agency, supported by substantial evidence of the findings. 74 cralawlawlibrary

In this case, there is dearth of evidence to show that Avestruz had been given a written notice of the charge against him, or that he was given the opportunity to explain or defend himself. The statement 75 given by Captain Woodward requiring him to explain in writing the events that transpired at the galley in the morning

of June 22, 2011 hardly qualifies as a written notice of the charge against him, nor was it an opportunity for Avestruz to explain or defend himself. While Captain Woodward claimed in his e-mail 76 that he conducted a “disciplinary hearing” informing Avestruz of his inefficiency, no evidence was presented to support the same. Neither was Avestruz given a written notice of penalty and the reasons for its imposition. Instead, Captain Woodward verbally informed him that he was dismissed from service and would be disembarked from the vessel. It bears stressing that only in the exceptional case of clear andexisting danger to the safety of the crew or vessel that the required notices may be dispensed with, and, once again, records are bereft of evidence showing that such was the situation when Avestruz was dismissed. Finally, with respect to the monetary awards given to Avestruz, the Court finds the same to be in consonance with Section 10 of RA 8042, as amended by RA 10022, which reads: chanRoble svirtualLawlibrary

Section 10. Money claims. – x x x.

chanrobleslaw

xxxx In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, or any unauthorized deductions from the migrant worker’s salary, the worker shall be entitled to the full reimbursement of his placement fee and the deductions made with interest at twelve percent (12%) per annum, plus his salaries for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less.77 cralawre d

xxxx cralawla wlibrary

Similarly, the Court affirms the grant of attorney’s fees of ten percent (10%) of the total award. All other monetary awards are denied for lack of merit. WHEREFORE, the petition is DENIED. The Decision dated January 4, 2013 and the Resolution dated April 16, 2013 rendered by the Court of Appeals in CA-G.R. SP No. 125773 are hereby AFFIRMED. SO ORDERED.

cralawla wlibrary

Sereno, C.J., (Chairperson), Leonardo-De Castro, Bersamin, and Perez, JJ., concur. E

EN BANC

JENNY M. AGABON and G.R. No. 158693 VIRGILIO C. AGABON, Petitioners, Present:

Davide, Jr., C.J.,

Puno, Panganiban, Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, - versus - Carpio, Austria-Martinez, Corona, Carpio-Morales, Callejo, Sr., Azcuna, Tinga, Chico-Nazario, and Garcia, JJ. NATIONAL LABOR RELATIONS COMMISSION (NLRC), RIVIERA HOME IMPROVEMENTS, INC. Promulgated: and VICENTE ANGELES, Respondents. November 17, 2004 x --------------------------------------------------------------------------------------- x

DECISION

YNARES-SANTIAGO, J.: This petition for review seeks to reverse the decision [1] of the Court of Appeals dated January 23, 2003, in CA-G.R. SP No. 63017, modifying the decision of National Labor Relations Commission (NLRC) in NLRC-NCR Case No. 023442-00. Private respondent Riviera Home Improvements, Inc. is engaged in the business of selling and installing ornamental and construction materials. It employed petitioners Virgilio Agabon and Jenny Agabon as gypsum board and cornice installers on January 2, 1992[2] until February 23, 1999 when they were dismissed for abandonment of work. Petitioners then filed a complaint for illegal dismissal and payment of money claims[3] and on December 28, 1999, the Labor Arbiter rendered a decision declaring the dismissals illegal and ordered private respondent to pay the monetary claims. The dispositive portion of the decision states:

WHEREFORE, premises considered, We find the termination of the complainants illegal. Accordingly, respondent is hereby ordered to pay them their backwages up to November 29, 1999 in the sum of:

1. Jenny M. Agabon - P56, 231.93 2. Virgilio C. Agabon - 56, 231.93

and, in lieu of reinstatement to pay them their separation pay of one (1) month for every year of service from date of hiring up to November 29, 1999.

Respondent is further ordered to pay the complainants their holiday pay and service incentive leave pay for the years 1996, 1997 and 1998 as well as their premium pay for holidays and rest days and Virgilio Agabons 13 th month pay differential amounting to TWO THOUSAND ONE HUNDRED FIFTY (P2,150.00) Pesos, or the aggregate amount of ONE HUNDRED TWENTY ONE THOUSAND SIX HUNDRED SEVENTY EIGHT & 93/100 (P121,678.93) Pesos for Jenny Agabon, and ONE HUNDRED TWENTY THREE THOUSAND EIGHT HUNDRED TWENTY EIGHT & 93/100 (P123,828.93) Pesos for Virgilio Agabon, as per attached computation of Julieta C. Nicolas, OIC, Research and Computation Unit, NCR.

SO ORDERED.[4]

On appeal, the NLRC reversed the Labor Arbiter because it found that the petitioners had abandoned their work, and were not entitled to backwages and separation pay. The other money claims awarded by the Labor Arbiter were also denied for lack of evidence.[5]

Upon denial of their motion for reconsideration, petitioners filed a petition for certiorari with the Court of Appeals.

The Court of Appeals in turn ruled that the dismissal of the petitioners was not illegal because they had abandoned their employment but ordered the payment of money claims. The dispositive portion of the decision reads: WHEREFORE, the decision of the National Labor Relations Commission is REVERSED only insofar as it dismissed petitioners money claims. Private respondents are ordered to pay petitioners holiday pay for four (4) regular holidays in 1996, 1997, and 1998, as well as their service incentive leave pay for said years, and to pay the balance of petitioner Virgilio Agabons 13 th month pay for 1998 in the amount of P2,150.00.

SO ORDERED.[6]

Hence, this petition for review on the sole issue of whether petitioners were illegally dismissed.[7]

Petitioners assert that they were dismissed because the private respondent refused to give them assignments unless they agreed to work on a pakyaw basis when they reported for duty on February 23, 1999. They did not agree on this arrangement because it would mean losing benefits as Social Security System (SSS) members. Petitioners also claim that private respondent did not comply with the twin requirements of notice and hearing. [8]

Private respondent, on the other hand, maintained that petitioners were not dismissed but had abandoned their work. [9] In fact, private respondent sent two letters to the last known addresses of the petitioners advising them to report for work. Private respondents manager even talked to petitioner Virgilio Agabon by telephone sometime in June 1999 to tell him about the new assignment at Pacific Plaza Towers involving 40,000 square meters of cornice installation work. However, petitioners did not report for work because they had subcontracted to perform installation work for another company. Petitioners also demanded for an increase in their wage to P280.00 per day. When this was not granted, petitioners stopped reporting for work and filed the illegal dismissal case.[10] It is well-settled that findings of fact of quasi-judicial agencies like the NLRC are accorded not only respect but even finality if the findings are supported by substantial evidence. This is especially so when such findings were affirmed by the Court of Appeals. [11] However, if the factual findings of the NLRC and the Labor Arbiter are conflicting, as in this case, the reviewing court may delve into the records and examine for itself the questioned findings.[12]

Accordingly, the Court of Appeals, after a careful review of the facts, ruled that petitioners dismissal was for a just cause. They had abandoned their employment and were already working for another employer. To dismiss an employee, the law requires not only the existence of a just and valid cause but also enjoins the employer to give the employee the opportunity to be heard and to defend himself. [13] Article 282 of the Labor Code enumerates the just causes for termination by the employer: (a) serious misconduct or willful

disobedience by the employee of the lawful orders of his employer or the latters representative in connection with the employees work; (b) gross and habitual neglect by the employee of his duties; (c) fraud or willful breach by the employee of the trust reposed in him by his employer or his duly authorized representative; (d) commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representative; and (e) other causes analogous to the foregoing. Abandonment is the deliberate and unjustified refusal of an employee to resume his employment. [14] It is a form of neglect of duty, hence, a just cause for termination of employment by the employer.[15] For a valid finding of abandonment, these two factors should be present: (1) the failure to report for work or absence without valid or justifiable reason; and (2) a clear intention to sever employer-employee relationship, with the second as the more determinative factor which is manifested by overt acts from which it may be deduced that the employees has no more intention to work. The intent to discontinue the employment must be shown by clear proof that it was deliberate and unjustified. [16] In February 1999, petitioners were frequently absent having subcontracted for an installation work for another company. Subcontracting for another company clearly showed the intention to sever the employer-employee relationship with private respondent. This was not the first time they did this. In January 1996, they did not report for work because they were working for another company. Private respondent at that time warned petitioners that they would be dismissed if this happened again. Petitioners disregarded the warning and exhibited a clear intention to sever their employer-employee relationship. The record of an employee is a relevant consideration in determining the penalty that should be meted out to him. [17]

In Sandoval Shipyard v. Clave,[18] we held that an employee who deliberately absented from work without leave or permission from his employer, for the purpose of looking for a job elsewhere, is considered to have abandoned his job. We should apply that rule with more reason here where petitioners were absent because they were already working in another company. The law imposes many obligations on the employer such as providing just compensation to workers, observance of the procedural requirements of notice and hearing in the termination of employment. On the other hand, the law also recognizes the right of the employer to expect from its workers not only good performance, adequate work and diligence, but also good conduct[19] and loyalty. The employer may not be compelled to continue to employ such persons whose continuance in the service will patently be inimical to his interests. [20]

After establishing that the terminations were for a just and valid cause, we now determine if the procedures for dismissal were observed.

The procedure for terminating an employee is found in Book VI, Rule I, Section 2(d) of the Omnibus Rules Implementing the Labor Code:

Standards of due process: requirements of notice. In all cases of termination of employment, the following standards of due process shall be substantially observed:

I. For termination of employment based on just causes as defined in Article 282 of the Code:

(a) A written notice served on the employee specifying the ground or grounds for termination, and giving to said employee reasonable opportunity within which to explain his side;

(b) A hearing or conference during which the employee concerned, with the assistance of counsel if the employee so desires, is given opportunity to respond to the charge, present his evidence or rebut the evidence presented against him; and

(c) A written notice of termination served on the employee indicating that upon due consideration of all the circumstances, grounds have been established to justify his termination.

In case of termination, the foregoing notices shall be served on the employees last known address.

Dismissals based on just causes contemplate acts or omissions attributable to the employee while dismissals based on authorized causes involve grounds under the Labor Code which allow the employer to terminate employees. A termination for an authorized cause requires payment of separation pay. When the

termination of employment is declared illegal, reinstatement and full backwages are mandated under Article 279. If reinstatement is no longer possible where the dismissal was unjust, separation pay may be granted.

Procedurally, (1) if the dismissal is based on a just cause under Article 282, the employer must give the employee two written notices and a hearing or opportunity to be heard if requested by the employee before terminating the employment: a notice specifying the grounds for which dismissal is sought a hearing or an opportunity to be heard and after hearing or opportunity to be heard, a notice of the decision to dismiss; and (2) if the dismissal is based on authorized causes under Articles 283 and 284, the employer must give the employee and the Department of Labor and Employment written notices 30 days prior to the effectivity of his separation.

From the foregoing rules four possible situations may be derived: (1) the dismissal is for a just cause under Article 282 of the Labor Code, for an authorized cause under Article 283, or for health reasons under Article 284, and due process was observed; (2) the dismissal is without just or authorized cause but due process was observed; (3) the dismissal is without just or authorized cause and there was no due process; and (4) the dismissal is for just or authorized cause but due process was not observed.

In the first situation, the dismissal is undoubtedly valid and the employer will not suffer any liability.

In the second and third situations where the dismissals are illegal, Article 279 mandates that the employee is entitled to reinstatement without loss of seniority rights and other privileges and full backwages, inclusive of allowances, and other benefits or their monetary equivalent computed from the time the compensation was not paid up to the time of actual reinstatement.

In the fourth situation, the dismissal should be upheld. While the procedural infirmity cannot be cured, it should not invalidate the dismissal. However, the employer should be held liable for noncompliance with the procedural requirements of due process.

The present case squarely falls under the fourth situation. The dismissal should be upheld because it was established that the petitioners abandoned their jobs to work for another company. Private respondent, however, did not follow the notice requirements and instead argued that sending notices to the last known addresses would have been useless because they did not reside there anymore. Unfortunately for the private respondent, this is not a valid excuse because the law mandates the twin notice requirements to the employees last known address. [21] Thus, it should be held liable for non-compliance with the procedural requirements of due process.

A review and re-examination of the relevant legal principles is appropriate and timely to clarify the various rulings on employment termination in the light of Serrano v. National Labor Relations Commission.[22]

Prior to 1989, the rule was that a dismissal or termination is illegal if the employee was not given any notice. In the 1989 case of Wenphil Corp. v. National Labor Relations Commission,[23] we reversed this long-standing rule and held that the dismissed employee, although not given any notice and hearing, was not entitled to reinstatement and backwages because the dismissal was for grave misconduct and insubordination, a just ground for termination under Article 282. The employee had a violent temper and caused trouble during office hours, defying superiors who tried to pacify him. We concluded that reinstating the employee and awarding backwages may encourage him to do even worse and will render a mockery of the rules of discipline that employees are required to observe.[24] We further held that:

Under the circumstances, the dismissal of the private respondent for just cause should be maintained. He has no right to return to his former employment.

However, the petitioner must nevertheless be held to account for failure to extend to private respondent his right to an investigation before causing his dismissal. The rule is explicit as above discussed. The dismissal of an employee must be for just or authorized cause and after due process. Petitioner committed an infraction of the second requirement. Thus, it must be imposed a sanction for its failure to give a formal notice and conduct an investigation as required by law before dismissing petitioner from employment. Considering the circumstances of this case petitioner must indemnify the private respondent the amount of P1,000.00. The measure of this award depends on the facts of each case

and the gravity of the omission committed by the employer.[25]

The rule thus evolved: where the employer had a valid reason to dismiss an employee but did not follow the due process requirement, the dismissal may be upheld but the employer will be penalized to pay an indemnity to the employee. This became known as the Wenphil or Belated Due Process Rule. On January 27, 2000, in Serrano, the rule on the extent of the sanction was changed. We held that the violation by the employer of the notice requirement in termination for just or authorized causes was not a denial of due process that will nullify the termination. However, the dismissal is ineffectual and the employer must pay full backwages from the time of termination until it is judicially declared that the dismissal was for a just or authorized cause. The rationale for the re-examination of the Wenphil doctrine in Serrano was the significant number of cases involving dismissals without requisite notices. We concluded that the imposition of penalty by way of damages for violation of the notice requirement was not serving as a deterrent. Hence, we now required payment of full backwages from the time of dismissal until the time the Court finds the dismissal was for a just or authorized cause. Serrano was confronting the practice of employers to dismiss now and pay later by imposing full backwages. We believe, however, that the ruling in Serrano did not consider the full meaning of Article 279 of the Labor Code which states:

ART. 279. Security of Tenure. In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement.

This means that the termination is illegal only if it is not for any of the justified or authorized causes provided by law. Payment of backwages and other benefits, including reinstatement, is justified only if the employee was unjustly dismissed. The fact that the Serrano ruling can cause unfairness and injustice which elicited strong dissent has prompted us to revisit the doctrine.

To be sure, the Due Process Clause in Article III, Section 1 of the Constitution embodies a system of rights based on moral principles so deeply imbedded in the traditions and feelings of our people as to be deemed fundamental to a civilized society as conceived by our entire history. Due process is that which comports with the deepest notions of what is fair and right and just.[26] It is a constitutional restraint on the legislative as well as

on the executive and judicial powers of the government provided by the Bill of Rights. Due process under the Labor Code, like Constitutional due process, has two aspects: substantive, i.e., the valid and authorized causes of employment termination under the Labor Code; and procedural, i.e., the manner of dismissal. Procedural due process requirements for dismissal are found in the Implementing Rules of P.D. 442, as amended, otherwise known as the Labor Code of the Philippines in Book VI, Rule I, Sec. 2, as amended by Department Order Nos. 9 and 10. [27] Breaches of these due processrequirements violate the Labor Code. Therefore statutory due process should be differentiated from failure to comply with constitutional due process. Constitutional due process protects the individual from the government and assures him of his rights in criminal, civil or administrative proceedings; while statutory due process found in the Labor Code and Implementing Rules protects employees from being unjustly terminated without just cause after notice and hearing. In Sebuguero v. National Labor Relations Commission,[28] the dismissal was for a just and valid cause but the employee was not accorded due process. The dismissal was upheld by the Court but the employer was sanctioned. The sanction should be in the nature of indemnification or penalty, and depends on the facts of each case and the gravity of the omission committed by the employer. In Nath v. National Labor Relations Commission,[29] it was ruled that even if the employee was not given due process, the failure did not operate to eradicate the just causes for dismissal. The dismissal being for just cause, albeit without due process, did

not entitle the employee to reinstatement, backwages, damages and attorneys fees. Mr. Justice Jose C. Vitug, in his separate opinion in MGG Marine Services, Inc. v. National Labor Relations Commission, [30] which opinion he reiterated in Serrano, stated: C. Where there is just cause for dismissal but due process has not been properly observed by an employer, it would not be right to order either the reinstatement of the dismissed employee or the payment of backwages to him. In failing, however, to comply with the procedure prescribed by law in terminating the services of the employee, the employer must be deemed to have opted or, in any case, should be made liable, for the payment of separation pay. It might be pointed out that the notice to be given and the hearing to be conducted generally constitute the two-part due process requirement of law to be accorded to the employee by the employer. Nevertheless, peculiar circumstances might obtain in certain situations where to undertake the above steps would be no more than a useless formality and where, accordingly, it would not be imprudent to apply the res ipsa loquitur rule and award, in lieu of separation pay, nominal damages to the employee. x x x.[31]

After carefully analyzing the consequences of the divergent doctrines in the law on employment termination, we believe that in cases involving dismissals for cause but without observance of the twin requirements of notice and hearing, the better rule is to abandon the Serrano doctrine and to follow Wenphil by holding that the dismissal was for just cause but imposing sanctions on the employer. Such sanctions, however, must be stiffer than that imposed in Wenphil. By doing so, this Court would be able to achieve a fair result by dispensing justice not just to employees, but to employers as well. The unfairness of declaring illegal or ineffectual dismissals for valid or authorized causes but not complying with statutory due process may have far-reaching consequences.

This would encourage frivolous suits, where even the most notorious violators of company policy are rewarded by invoking due process. This also creates absurd situations where there is a just or authorized cause for dismissal but a procedural infirmity invalidates the termination. Let us take for example a case where the employee is caught stealing or threatens the lives of his coemployees or has become a criminal, who has fled and cannot be found, or where serious business losses demand that operations be ceased in less than a month. Invalidating the dismissal would not serve public interest. It could also discourage investments that can generate employment in the local economy.

The constitutional policy to provide full protection to labor is not meant to be a sword to oppress employers. The commitment of this Court to the cause of labor does not prevent us from sustaining the employer when it is in the right, as in this case. [32] Certainly, an employer should not be compelled to pay employees for work not actually performed and in fact abandoned.

The employer should not be compelled to continue employing a person who is admittedly guilty of misfeasance or malfeasance and whose continued employment is patently inimical to the employer. The law protecting the rights of the laborer authorizes neither oppression nor self-destruction of the employer. [33] It must be stressed that in the present case, the petitioners committed a grave offense, i.e., abandonment, which, if the requirements of due process were complied with, would undoubtedly result in a valid dismissal.

An employee who is clearly guilty of conduct violative of Article 282 should not be protected by the Social Justice Clause of the Constitution. Social justice, as the term suggests, should be used only to correct an injustice. As the eminent Justice Jose P. Laurel observed, social justice must be founded on the recognition of the necessity of interdependence among diverse units of a society and of the protection that should be equally and evenly extended to all groups as a combined force in our social and economic life, consistent with the fundamental and paramount objective of the state of promoting the health, comfort, and quiet of all persons, and of bringing about the greatest good to the greatest number.[34]

This is not to say that the Court was wrong when it ruled the way it did in Wenphil, Serrano and related cases. Social justice is not based on rigid formulas set in stone. It has to allow for changing times and circumstances.

Justice Isagani Cruz strongly asserts the need to apply a balanced approach to labor-management relations and dispense justice with an even hand in every case:

We have repeatedly stressed that social justice or any justice for that matter is for the deserving, whether he be a millionaire in his mansion or a pauper in his hovel. It is true that, in case of reasonable doubt, we are to tilt the balance in favor of the poor to whom the Constitution fittingly extends its sympathy and compassion. But never is it justified to give preference to the poor simply because they are poor, or reject the rich simply because they are rich, for justice must always be served for the

poor and the rich alike, according to the mandate of the law.[35]

Justice in every case should only be for the deserving party. It should not be presumed that every case of illegal dismissal would automatically be decided in favor of labor, as management has rights that should be fully respected and enforced by this Court. As interdependent and indispensable partners in nation-building, labor and management need each other to foster productivity and economic growth; hence, the need to weigh and balance the rights and welfare of both the employee and employer.

Where the dismissal is for a just cause, as in the instant case, the lack of statutory due process should not nullify the dismissal, or render it illegal, or ineffectual. However, the employer should indemnify the employee for the violation of his statutory rights, as ruled in Reta v. National Labor Relations Commission.[36] The indemnity to be imposed should be stiffer to discourage the abhorrent practice of dismiss now, pay later, which we sought to deter in the Serrano ruling. The sanction should be in the nature of indemnification or penalty and should depend on the facts of each case, taking into special consideration the gravity of the due process violation of the employer. Under the Civil Code, nominal damages is adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by him. [37]

As enunciated by this Court in Viernes v. National Labor Relations Commissions,[38] an employer is liable to pay indemnity in the form of nominal damages to an employee who has been dismissed if, in effecting such dismissal, the employer fails to comply with the requirements of due process. The Court, after considering the circumstances therein, fixed the indemnity at P2,590.50, which was equivalent to the employees one month salary. This indemnity is intended not to penalize the employer but to vindicate or recognize the employees right to statutory due process which was violated by the employer. [39] The violation of the petitioners right to statutory due process by the private respondent warrants the payment of indemnity in the form of nominal damages. The amount of such damages is addressed to the sound discretion of the court, taking into account the relevant circumstances. [40] Considering the prevailing circumstances in the case at bar, we deem it proper to fix it at P30,000.00. We believe this form of damages would serve to deter employers from future violations of the statutory due process rights of employees. At the very least, it provides a vindication or recognition of this fundamental right granted to the latter under the Labor Code and its Implementing Rules. Private respondent claims that the Court of Appeals erred in holding that it failed to pay petitioners holiday pay, service incentive leave pay and 13th month pay. We are not persuaded. We affirm the ruling of the appellate court on petitioners money claims. Private respondent is liable for petitioners holiday pay, service incentive leave pay and 13 th month pay without deductions.

As a general rule, one who pleads payment has the burden of proving it. Even where the employee must allege non-payment, the general rule is that the burden rests on the employer to prove payment, rather than on the employee to prove non-payment. The reason for the rule is that the pertinent personnel files, payrolls, records, remittances and other similar documents which will show that overtime, differentials, service incentive leave and other claims of workers have been paid are not in the possession of the worker but in the custody and absolute control of the employer.[41] In the case at bar, if private respondent indeed paid petitioners holiday pay and service incentive leave pay, it could have easily presented documentary proofs of such monetary benefits to disprove the claims of the petitioners. But it did not, except with respect to the 13th month pay wherein it presented cash vouchers showing payments of the benefit in the years disputed. [42] Allegations by private respondent that it does not operate during holidays and that it allows its employees 10 days leave with pay, other than being self-serving, do not constitute proof of payment. Consequently, it failed to discharge the onus probandi thereby making it liable for such claims to the petitioners. Anent the deduction of SSS loan and the value of the shoes from petitioner Virgilio Agabons 13th month pay, we find the same to be unauthorized. The evident intention of Presidential Decree No. 851 is to grant an additional income in the form of the 13th month pay to employees not already receiving the same [43] so as to further protect the level of real wages from the ravages of worldwide inflation.[44] Clearly, as additional income, the 13th month pay is included in the definition of wage under Article 97(f) of the Labor Code, to wit: (f) Wage paid to any employee shall mean the remuneration or earnings, however designated, capable of being expressed in terms of money whether fixed or ascertained on a time, task, piece , or commission basis, or other method of calculating the same, which is payable by an employer to an employee under a written or unwritten

contract of employment for work done or to be done, or for services rendered or to be rendered and includes the fair and reasonable value, as determined by the Secretary of Labor, of board, lodging, or other facilities customarily furnished by the employer to the employee

from which an employer is prohibited under Article 113 [45] of the same Code from making any deductions without the employees knowledge and consent. In the instant case, private respondent failed to show that the deduction of the SSS loan and the value of the shoes from petitioner Virgilio Agabons 13 th month pay was authorized by the latter. The lack of authority to deduct is further bolstered by the fact that petitioner Virgilio Agabon included the same as one of his money claims against private respondent. The Court of Appeals properly reinstated the monetary claims awarded by the Labor Arbiter ordering the private respondent to pay each of the petitioners holiday pay for four regular holidays from 1996 to 1998, in the amount of P6,520.00, service incentive leave pay for the same period in the amount of P3,255.00 and the balance of Virgilio Agabons thirteenth month pay for 1998 in the amount of P2,150.00. WHEREFORE, in view of the foregoing, the petition is DENIED. The decision of the Court of Appeals dated January 23, 2003, in CA-G.R. SP No. 63017, finding that petitioners Jenny and Virgilio Agabon abandoned their work, and ordering private respondent to pay each of the petitioners holiday pay for four regular holidays from 1996 to 1998, in the amount of P6,520.00, service incentive leave pay for the same period in the amount of P3,255.00 and the balance of Virgilio Agabons thirteenth month pay for 1998 in the amount of P2,150.00 is AFFIRMED with the MODIFICATION that private respondent Riviera Home Improvements, Inc. is further ORDERED to pay each of the petitioners the amount of P30,000.00 as nominal damages for non-compliance with statutory due process.

No costs. SO ORDERED.

CONSUELO YNARES-SANTIAGO Associate Justice

EN BANC

[G.R. No. 151378. March 28, 2005]

JAKA FOOD PROCESSING CORPORATION, petitioner, vs. DARWIN PACOT, ROBERT PAROHINOG, DAVID BISNAR, MARLON DOMINGO, RHOEL LESCANO and JONATHAN CAGABCAB, respondents. DECISION GARCIA, J.:

Assailed and sought to be set aside in this appeal by way of a petition for review on certiorari under rule 45 of the Rules of Court are the following issuances of the Court of Appeals in CA-G.R. SP. No. 59847, to wit: 1. Decision dated 16 November 2001,[1] reversing and setting aside an earlier decision of the National Labor Relations Commission (NLRC); and 2. Resolution dated 8 January 2002,[2] denying petitioners motion for reconsideration.

The material facts may be briefly stated, as follows: Respondents Darwin Pacot, Robert Parohinog, David Bisnar, Marlon Domingo, Rhoel Lescano and Jonathan Cagabcab were earlier hired by petitioner JAKA Foods Processing Corporation (JAKA, for short) until the latter terminated their employment on August 29, 1997 because the corporation was in dire financial straits. It is not disputed, however, that the termination was effected without JAKA complying with the requirement under Article 283 of the Labor Code regarding the service of a written

notice upon the employees and the Department of Labor and Employment at least one (1) month before the intended date of termination. In time, respondents separately filed with the regional Arbitration Branch of the National Labor Relations Commission (NLRC) complaints for illegal dismissal, underpayment of wages and nonpayment of service incentive leave and 13 th month pay against JAKA and its HRD Manager, Rosana Castelo. After due proceedings, the Labor Arbiter rendered a decision [3] declaring the termination illegal and ordering JAKA and its HRD Manager to reinstate respondents with full backwages, and separation pay if reinstatement is not possible. More specifically the decision dispositively reads:

WHEREFORE, judgment is hereby rendered declaring as illegal the termination of complainants and ordering respondents to reinstate them to their positions with full backwages which as of July 30, 1998 have already amounted to P339,768.00. Respondents are also ordered to pay complainants the amount of P2,775.00 representing the unpaid service incentive leave pay of Parohinog, Lescano and Cagabcab an the amount of P19,239.96 as payment for 1997 13 th month pay as alluded in the above computation. If complainants could not be reinstated, respondents are ordered to pay them separation pay equivalent to one month salary for very (sic) year of service. SO ORDERED. Therefrom, JAKA went on appeal to the NLRC, which, in a decision dated August 30, 1999,[4] affirmed in toto that of the Labor Arbiter. JAKA filed a motion for reconsideration. Acting thereon, the NLRC came out with another decision dated January 28, 2000,[5] this time modifying its earlier decision, thus:

WHEREFORE, premises considered, the instant motion for reconsideration is hereby GRANTED and the challenged decision of this Commission [dated] 30 August 1999 and the decision of the Labor Arbiter xxx are hereby modified by reversing an setting aside the awards of backwages, service incentive leave pay. Each of the complainants-appellees shall be entitled to a separation pay equivalent to one month. In addition, respondents-appellants is (sic) ordered to pay each of the complainantsappellees the sum of P2,000.00 as indemnification for its failure to observe due process in effecting the retrenchment. SO ORDERED.

Their motion for reconsideration having been denied by the NLRC in its resolution of April 28, 2000,[6] respondents went to the Court of Appeals via a petition for certiorari, thereat docketed as CA-G.R. SP No. 59847. As stated at the outset hereof, the Court of Appeals, in a decision dated November 16, 2000, applying the doctrine laid down by this Court in Serrano vs. NLRC,[7] reversed and set aside the NLRCs decision of January 28, 2000, thus:

WHEREFORE, the decision dated January 28, 2000 of the National Labor Relations Commission is REVERSED and SET ASIDE and another one entered ordering respondent JAKA Foods Processing Corporation to pay petitioners separation pay equivalent to one (1) month salary, the proportionate 13 th month pay and, in addition, full backwages from the time their employment was terminated on August 29, 1997 up to the time the Decision herein becomes final. SO ORDERED. This time, JAKA moved for a reconsideration but its motion was denied by the appellate court in its resolution of January 8, 2002. Hence, JAKAs present recourse, submitting, for our consideration, the following issues: I. WHETHER OR NOT THE COURT OF APPEALS CORRECTLY AWARDED FULL BACKWAGES TO RESPONDENTS. II. WHETHER OR NOT THE ASSAILED DECISION CORRECTLY AWARDED SEPARATION PAY TO RESPONDENTS.

As we see it, there is only one question that requires resolution, i.e. what are the legal implications of a situation where an employee is dismissed for cause but such dismissal was effected without the employers compliance with the notice requirement under the Labor Code. This, certainly, is not a case of first impression. In the very recent case of Agabon vs. NLRC,[8] we had the opportunity to resolve a similar question. Therein, we found that the employees committed a grave offense, i.e., abandonment, which is a form of a neglect of duty which, in turn, is one of the just causes enumerated under Article 282 of the Labor Code. In said case, we upheld the validity of the dismissal despite noncompliance with the notice requirement of the Labor Code. However, we required the employer to pay the dismissed employees the amount of P30,000.00, representing nominal damages for non-compliance with statutory due process, thus:

Where the dismissal is for a just cause, as in the instant case, the lack of statutory due process should not nullify the dismissal, or render it illegal, or ineffectual. However, the employer should indemnify the employee for the violation of his statutory rights, as ruled in Reta vs. National Labor Relations Commission. The indemnity to be imposed should be stiffer to discourage the abhorrent practice of dismiss now, pay

later, which we sought to deter in the Serrano ruling. The sanction should be in the nature of indemnification or penalty and should depend on the facts of each case, taking into special consideration the gravity of the due process violation of the employer. xxx xxx xxx The violation of petitioners right to statutory due process by the private respondent warrants the payment of indemnity in the form of nominal damages. The amount of such damages is addressed to the sound discretion of the court, taking into account the relevant circumstances. Considering the prevailing circumstances in the case at bar, we deem it proper to fix it at P30,000.00. We believe this form of damages would serve to deter employers from future violations of the statutory due process rights of employees. At the very least, it provides a vindication or recognition of this fundamental right granted to the latter under the Labor Code and its Implementing Rules, (Emphasis supplied). The difference between Agabon and the instant case is that in the former, the dismissal was based on a just cause under Article 282 of the Labor Code while in the present case, respondents were dismissed due to retrenchment, which is one of the authorized causes under Article 283 of the same Code. At this point, we note that there are divergent implications of a dismissal for just cause under Article 282, on one hand, and a dismissal for authorized cause under Article 283, on the other. A dismissal for just cause under Article 282 implies that the employee concerned has committed, or is guilty of, some violation against the employer, i.e. the employee has committed some serious misconduct, is guilty of some fraud against the employer, or, as in Agabon, he has neglected his duties. Thus, it can be said that the employee himself initiated the dismissal process. On another breath, a dismissal for an authorized cause under Article 283 does not necessarily imply delinquency or culpability on the part of the employee. Instead, the dismissal process is initiated by the employers exercise of his management prerogative, i.e. when the employer opts to install labor saving devices, when he decides to cease business operations or when, as in this case, he undertakes to implement a retrenchment program. The clear-cut distinction between a dismissal for just cause under Article 282 and a dismissal for authorized cause under Article 283 is further reinforced by the fact that in the first, payment of separation pay, as a rule, is not required, while in the second, the law requires payment of separation pay.[9] For these reasons, there ought to be a difference in treatment when the ground for dismissal is one of the just causes under Article 282, and when based on one of the authorized causes under Article 283.

Accordingly, it is wise to hold that: (1) if the dismissal is based on a just cause under Article 282 but the employer failed to comply with the notice requirement, the sanction to be imposed upon him should be tempered because the dismissal process was, in effect, initiated by an act imputable to the employee; and (2) if the dismissal is based on an authorized cause under Article 283 but the employer failed to comply with the notice requirement, the sanction should be stiffer because the dismissal process was initiated by the employers exercise of his management prerogative. The records before us reveal that, indeed, JAKA was suffering from serious business losses at the time it terminated respondents employment. As aptly found by the NLRC:

A careful study of the evidence presented by the respondent-appellant corporation shows that the audited Financial Statement of the corporation for the periods 1996, 1997 and 1998 were submitted by the respondent-appellant corporation, The Statement of Income and Deficit found in the Audited Financial Statement of the respondent-appellant corporation clearly shows the following in 1996, the deficit of the respondent-appellant corporation was P188,218,419.00 or 94.11% of the stockholders [sic] equity which amounts to P200,000,000.00. In 1997 when the retrenchment program of respondent-appellant corporation was undertaken, the deficit ballooned to P247,222,569.00 or 123.61% of the stockholders equity, thus a capital deficiency or impairment of equity ensued. In 1998, the deficit grew to P355,794,897.00 or 177% of the stockholders equity. From 1996 to 1997, the deficit grew by more that (sic) 31% while in 1998 the deficit grew by more than 47%. The Statement of Income and Deficit of the respondent-appellant corporation to prove its alleged losses was prepared by an independent auditor, SGV & Co. It convincingly showed that the respondent-appellant corporation was in dire financial straits, which the complainants-appellees failed to dispute. The losses incurred by the respondentappellant corporation are clearly substantial and sufficiently proven with clear and satisfactory evidence. Losses incurred were adequately shown with respondentappellants audited financial statement. Having established the loss incurred by the respondent-appellant corporation, it necessarily necessarily (sic) follows that the ground in support of retrenchment existed at the time the complainants-appellees were terminated. We cannot therefore sustain the findings of the Labor Arbiter that the alleged losses of the respondent-appellant was [sic] not well substantiated by substantial proofs. It is therefore logical for the corporation to implement a retrenchment program to prevent further losses. [10] Noteworthy it is, moreover, to state that herein respondents did not assail the foregoing finding of the NLRC which, incidentally, was also affirmed by the Court of Appeals.

It is, therefore, established that there was ground for respondents dismissal, i.e., retrenchment, which is one of the authorized causes enumerated under Article 283 of the Labor Code. Likewise, it is established that JAKA failed to comply with the notice requirement under the same Article. Considering the factual circumstances in the instant case and the above ratiocination, we, therefore, deem it proper to fix the indemnity at P50,000.00. We likewise find the Court of Appeals to have been in error when it ordered JAKA to pay respondents separation pay equivalent to one (1) month salary for every year of service. This is because in Reahs Corporation vs. NLRC,[11] we made the following declaration:

The rule, therefore, is that in all cases of business closure or cessation of operation or undertaking of the employer, the affected employee is entitled to separation pay. This is consistent with the state policy of treating labor as a primary social economic force, affording full protection to its rights as well as its welfare. The exception is when the closure of business or cessation of operations is due to serious business losses or financial reverses; duly proved, in which case, the right of affected employees to separation pay is lost for obvious reasons. xxx. (Emphasis supplied) WHEREFORE, the instant petition is GRANTED. Accordingly, the assailed decision and resolution of the Court of Appeals respectively dated November 16, 2001 and January 8, 2002 are hereby SET ASIDE and a new one entered upholding the legality of the dismissal but ordering petitioner to pay each of the respondents the amount of P50,000.00, representing nominal damages for non-compliance with statutory due process. SO ORDERED. Davide, Jr., C.J., Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, Carpio, Austria-Martinez, Corona, Carpio-Morales, Callejo, Sr., Azcuna, and Chico-Nazario, JJ., concur. Puno, J., reiterate dissent in Agaban & Serrano. Panganiban, J., reiterate dissent in Agaban v. NLRC, GR 158693, Nov. 17, 2004, and Serrano v. NLRC, 380 Phil. 416, Jan. 27, 2000. Tinga, J., only in the result. See separate opinion.

EN BANC FELIX B. PEREZ and G.R. No. 152048 AMANTE G. DORIA, Petitioners, Present:

PUNO, C.J., QUISUMBING, YNARES-SANTIAGO, CARPIO, AUSTRIA-MARTINEZ, - v e r s u s - CORONA, CARPIO MORALES, TINGA, CHICO-NAZARIO, VELASCO, JR., NACHURA, LEONARDO-DE CASTRO, BRION and PERALTA, JJ. PHILIPPINE TELEGRAPH AND TELEPHONE COMPANY and JOSE LUIS SANTIAGO, Respondents. Promulgated:

April 7, 2009 x-------------------------------------------------x

DECISION CORONA, J.:

Petitioners Felix B. Perez and Amante G. Doria were employed by respondent Philippine Telegraph and Telephone Company (PT&T) as shipping clerk and supervisor, respectively, in PT&Ts Shipping Section, Materials Management Group.

Acting on an alleged unsigned letter regarding anomalous transactions at the Shipping Section, respondents formed a special audit team to investigate the matter. It was discovered that the Shipping Section jacked up the value of the freight costs for goods shipped and that the duplicates of the shipping documents allegedly showed traces of tampering, alteration and superimposition.

On

September

3,

1993,

petitioners

were

placed

on

preventive suspension for 30 days for their alleged involvement in the anomaly.[1] Their suspension was extended for 15 days twice: first on October 3, 1993[2] and second on October 18, 1993.[3]

On October 29, 1993, a memorandum with the following tenor was issued by respondents:

In line with the recommendation of the AVP-Audit as presented in his report of October 15, 1993 (copy attached) and the subsequent filing of criminal charges against the parties mentioned therein, [Mr. Felix Perez and Mr. Amante Doria are] hereby dismissed from the service for having falsified company documents. [4] (emphasis supplied)

On November 9, 1993, petitioners filed a complaint for illegal suspension and illegal dismissal. [5] They alleged that they were dismissed on November 8, 1993, the date they received the above-mentioned memorandum.

The labor arbiter found that the 30-day extension of petitioners suspension and their subsequent dismissal were both illegal. He ordered respondents to pay petitioners their salaries during their 30-day illegal suspension, as well as to reinstate them with backwages and 13th month pay.

The National Labor Relations Commission (NLRC) reversed the decision of the labor arbiter. It ruled that petitioners were dismissed for just cause, that they were accorded due process and that they were illegally suspended for only 15 days (without stating the reason for the reduction of the period of petitioners illegal suspension).[6]

Petitioners appealed to the Court of Appeals (CA). In its January 29, 2002 decision,[7] the CA affirmed the NLRC decision insofar as petitioners illegal suspension for 15 days and dismissal for just cause were concerned. However, it found that petitioners were dismissed without due process.

Petitioners now seek a reversal of the CA decision. They contend that there was no just cause for their dismissal, that they were not accorded due process and that they were illegally suspended for 30 days. We rule in favor of petitioners.

RESPONDENTS FAILED TO PROVE JUST CAUSE AND TO OBSERVE DUE PROCESS

The CA, in upholding the NLRCs decision, reasoned that there was sufficient basis for respondents to lose their confidence in

petitioners[8] for

documents.

allegedly

Respondents

tampering

emphasized

with

the

the

shipping

importance

of

a

shipping order or request, as it was the basis of their liability to a cargo forwarder.[9]

We disagree.

Without undermining the importance of a shipping order or request, we find respondents evidence insufficient to clearly and convincingly establish the facts from which the loss of confidence resulted.[10] Other than their bare allegations and the fact that such documents came into petitioners hands at some point, respondents

should

have

provided

evidence

of

petitioners

functions, the extent of their duties, the procedure in the handling and approval of shipping requests and the fact that no personnel other than petitioners were involved. There was, therefore, a patent paucity of proof connecting petitioners to the alleged tampering of shipping documents. The alterations on the shipping documents could not reasonably be attributed to petitioners because it was never proven that petitioners alone had control of or access to these documents. Unless duly proved or sufficiently substantiated otherwise, impartial tribunals should not rely only on the statement of the employer that it has lost confidence in its employee.[11]

Willful breach by the employee of the trust reposed in him by his employer or duly authorized representative is a just cause for termination.[12] However, in General Bank and Trust Co. v. CA, [13]

we said: [L]oss of confidence should not be simulated. It should not be used as a subterfuge for causes which are

improper, illegal or unjustified. Loss of confidence may not be arbitrarily asserted in the face of overwhelming evidence to the contrary. It must be genuine, not a mere afterthought to justify an earlier action taken in bad faith.

The burden of proof rests on the employer to establish that the dismissal is for cause in view of the security of tenure that employees enjoy under the Constitution and the Labor Code. The employers evidence must clearly and convincingly show the facts on which the loss of confidence in the employee may be fairly made to rest.[14] It must be adequately proven by substantial evidence.[15] Respondents failed to discharge this burden.

Respondents

illegal

act

of

dismissing

petitioners

was

aggravated by their failure to observe due process. To meet the requirements of due process in the dismissal of an employee, an employer must furnish the worker with two written notices: (1) a written notice specifying the grounds for termination and giving to said employee a reasonable opportunity to explain his side and (2) another written notice indicating that, upon due consideration of all circumstances, grounds have been established to justify the employer's decision to dismiss the employee. [16]

Petitioners were neither apprised of the charges against them nor given a chance to defend themselves. They were simply and arbitrarily separated from work and served notices of

termination in total disregard of their rights to due process and security of tenure. The labor arbiter and the CA correctly found that respondents failed to comply with the two-notice requirement for terminating employees.

Petitioners likewise contended that due process was not observed in the absence of a hearing in which they could have explained their side and refuted the evidence against them.

There is no need for a hearing or conference. We note a marked difference in the standards of due process to be followed as prescribed in the Labor Code and its implementing rules. The Labor Code, on one hand, provides that an employer must provide the employee ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires: ART. 277. Miscellaneous provisions. x x x (b) Subject to the constitutional right of workers to security of tenure and their right to be protected against dismissal except for a just and authorized cause and without prejudice to the requirement of notice under Article 283 of this Code, the employer shall furnish the worker whose employment is sought to be terminated a written notice containing a statement of the causes for termination and shall afford the latter ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires in accordance with company rules and regulations promulgated pursuant to guidelines set by the

Department of Labor and Employment. Any decision taken by the employer shall be without prejudice to the right of the worker to contest the validity or legality of his dismissal by filing a complaint with the regional branch of the National Labor Relations Commission. The burden of proving that the termination was for a valid or authorized cause shall rest on the employer. (emphasis supplied)

The omnibus rules implementing the Labor Code, on the other hand, require a hearing and conference during which the employee concerned is given the opportunity to respond to the charge, present his evidence or rebut the evidence presented against him:[17] Section 2. Security of Tenure. x x x

(d) In all cases of termination of employment, the following standards of due process shall be substantially observed:

For termination of employment based on just causes as defined in Article 282 of the Labor Code:

(i) A written notice served on the employee specifying the ground or grounds for termination, and giving said employee reasonable opportunity within which to explain his side.

(ii) A hearing or conference during which the employee concerned, with the assistance of

counsel if he so desires, is given opportunity to respond to the charge, present his evidence or rebut the evidence presented against him.

(iii) A written notice of termination served on the employee, indicating that upon due consideration of all the circumstances, grounds have been established to justify his termination. (emphasis supplied)

Which one should be followed? Is a hearing (or conference) mandatory in cases involving the dismissal of an employee? Can the apparent conflict between the law and its IRR be reconciled?

At the outset, we reaffirm the time-honored doctrine that, in case of conflict, the law prevails over the administrative regulations

implementing

it.[18] The

authority

to

promulgate

implementing rules proceeds from the law itself. To be valid, a rule or regulation must conform to and be consistent with the provisions of the enabling statute.[19]As such, it cannot amend the law either by abridging or expanding its scope. [20]

Article 277(b) of the Labor Code provides that, in cases of termination for a just cause, an employee must be given ample opportunity to be heard and to defend himself.Thus, the opportunity to be heard afforded by law to the employee is qualified by the word ample which ordinarily means considerably

more

than

phrase ample

adequate

or

opportunity

sufficient. [21] In to

be

heard

this can

regard,

be

the

reasonably

interpreted as extensive enough to cover actual hearing or conference.

To

this

extent,

Section

2(d),

Rule

I

of

the

Implementing Rules of Book VI of the Labor Code is in conformity with Article 277(b).

Nonetheless, Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code should not be taken to mean that holding an actual hearing or conference is a condition sine qua non for

compliance

with

the

due

process

requirement

in

termination of employment. The test for the fair procedure guaranteed under Article 277(b) cannot be whether there has been a formal pretermination confrontation between the employer and the employee. The ample opportunity to be heard standard is neither synonymous nor similar to a formal hearing. To confine the employees right to be heard to a solitary form narrows down that right. It deprives him of other equally effective forms of adducing evidence in his defense. Certainly, such an exclusivist and absolutist interpretation is overly restrictive. The very nature of due process negates any concept of inflexible procedures universally applicable to every imaginable situation. [22]

The

standard

for

the

hearing

requirement,

ample

opportunity, is couched in general language revealing the legislative intent to give some degree of flexibility or adaptability

to meet the peculiarities of a given situation. To confine it to a single rigid proceeding such as a formal hearing will defeat its spirit. Significantly, Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code itself provides that the so-called standards

of

due

process

outlined

therein

shall

be

observed substantially, not strictly. This is a recognition that while a formal hearing or conference is ideal, it is not an absolute, mandatory or exclusive avenue of due process.

An employees right to be heard in termination cases under Article 277(b) as implemented by Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code should be interpreted in broad strokes. It is satisfied not only by a formal face to face confrontation but by any meaningful opportunity to controvert the charges against him and to submit evidence in support thereof.

A hearing means that a party should be given a chance to adduce his evidence to support his side of the case and that the evidence should be taken into account in the adjudication of the controversy.[23] To be heard does not mean verbal argumentation alone inasmuch as one may be heard just as effectively through written

explanations,

submissions

or

pleadings. [24] Therefore,

while the phrase ample opportunity to be heard may in fact

include an actual hearing, it is not limited to a formal hearing only. In other words, the existence of an actual, formal trial-type hearing, although preferred, is not absolutely necessary to satisfy the employees right to be heard.

This Court has consistently ruled that the due process requirement in cases of termination of employment does not require an actual or formal hearing. Thus, we categorically declared in Skippers United Pacific, Inc. v. Maguad:[25] The Labor Code does not, of course, require a formal or trial type proceeding before an erring employee may be dismissed. (emphasis supplied)

In Autobus Workers Union v. NLRC,[26] we ruled: The twin requirements of notice and hearing constitute the essential elements of due process. Due process of law simply means giving opportunity to be heard before judgment is rendered. In fact, there is no violation of due process even if no hearing was conducted, where the party was given a chance to explain his side of the controversy. What is frowned upon is the denial of the opportunity to be heard.

xxxxxxxxx A formal trial-type hearing is not even essential to due process. It is enough that the parties are given a fair and reasonable opportunity

to explain their respective sides of the controversy and to present supporting evidence on which a fair decision can be based. This type of hearing is not even mandatory in cases of complaints lodged before the Labor Arbiter. (emphasis supplied)

In Solid Development Corporation Workers Association v. Solid Development Corporation,[27] we had the occasion to state: [W]ell-settled is the dictum that the twin requirements of notice and hearing constitute the essential elements of due process in the dismissal of employees. It is a cardinal rule in our jurisdiction that the employer must furnish the employee with two written notices before the termination of employment can be effected: (1) the first apprises the employee of the particular acts or omissions for which his dismissal is sought; and (2) the second informs the employee of the employers decision to dismiss him. The requirement of a hearing, on the other hand, is complied with as long as there was an opportunity to be heard, and not necessarily that an actual hearing was conducted.

In separate infraction reports, petitioners were both apprised of the particular acts or omissions constituting the charges against them. They were also required to submit their written explanation within 12 hours from receipt of the reports. Yet, neither of them complied. Had they found the 12-hour period too short, they should have requested for an extension of time. Further, notices of termination were also sent to them informing them of the basis of their dismissal. In fine, petitioners were given due process before they were dismissed. Even if no hearing

was conducted, the requirement of due process had been met since they were accorded a chance to explain their side of the controversy. (emphasis supplied)

Our holding in National Semiconductor HK Distribution, Ltd. v. NLRC[28] is of similar import: That the investigations conducted by petitioner may not be considered formal or recorded hearings or investigations is immaterial. A formal or trial type hearing is not at all times and in all instances essential to due process, the requirements of which are satisfied where the parties are afforded fair and reasonable opportunity to explain their side of the controversy. It is deemed sufficient for the employer to follow the natural sequence of notice, hearing and judgment.

The above rulings are a clear recognition that the employer may provide an employee with ample opportunity to be heard and defend himself with the assistance of a representative or counsel in ways other than a formal hearing. The employee can be fully afforded a chance to respond to the charges against him, adduce his evidence or rebut the evidence against him through a wide array of methods, verbal or written.

After receiving the first notice apprising him of the charges against him, the employee may submit a written explanation

(which may be in the form of a letter, memorandum, affidavit or position paper) and offer evidence in support thereof, like relevant company records (such as his 201 file and daily time records) and the sworn statements of his witnesses. For this purpose, he may prepare his explanation personally or with the assistance of a representative or counsel. He may also ask the employer to provide him copy of records material to his defense. His written explanation may also include a request that a formal hearing or conference be held. In such a case, the conduct of a formal hearing or conference becomes mandatory, just as it is where there exist substantial evidentiary disputes [29] or where company rules or practice requires an actual hearing as part of employment pretermination procedure. To this extent, we refine the decisions we have rendered so far on this point of law.

This

interpretation

of

Section

2(d),

Rule

I

of

the

Implementing Rules of Book VI of the Labor Code reasonably implements the ample opportunity to be heard standard under Article 277(b) of the Labor Code without unduly restricting the language of the law or excessively burdening the employer. This not only respects the power vested in the Secretary of Labor and Employment to promulgate rules and regulations that will lay down the guidelines for the implementation of Article 277(b). More importantly, this is faithful to the mandate of Article 4 of the Labor

Code

that

[a]ll

doubts

in

the

implementation

and

interpretation of the provisions of [the Labor Code], including its

implementing rules and regulations shall be resolved in favor of labor.

In sum, the following are the guiding principles in connection with the hearing requirement in dismissal cases: (a) ample opportunity to be heard means any meaningful opportunity (verbal or written) given to the employee to answer the charges against him and submit evidence in support

of

his

defense,

whether

in

a

hearing,

conference or some other fair, just and reasonable way. (b) a formal hearing or conference becomes mandatory only when

requested

by

the

employee

in

writing

or

substantial evidentiary disputes exist or a company rule or practice requires it, or when similar circumstances justify it. (c) the ample opportunity to be heard standard in the Labor Code

prevails

over

the

hearing

or

conference

requirement in the implementing rules and regulations. PETITIONERS WERE ILLEGALLY SUSPENDED FOR 30 DAYS

An employee may be validly suspended by the employer for just cause provided by law. Such suspension shall only be for a period of 30 days, after which the employee shall either be reinstated or paid his wages during the extended period. [30]

In this case, petitioners contended that they were not paid during the two 15-day extensions, or a total of 30 days, of their preventive suspension. Respondents failed to adduce evidence to the contrary. Thus, we uphold the ruling of the labor arbiter on this point. Where the dismissal was without just or authorized cause and there was no due process, Article 279 of the Labor Code, as amended,

mandates

that

the

employee

is

entitled

to

reinstatement without loss of seniority rights and other privileges and full backwages, inclusive of allowances, and other benefits or their

monetary

compensation

equivalent

was

not

computed

paid

up

to

from the

the time

time of

the

actual

reinstatement.[31] In this case, however, reinstatement is no longer possible because of the length of time that has passed from the date of the incident to final resolution. [32] Fourteen years have transpired from the time petitioners were wrongfully dismissed. To order reinstatement at this juncture will no longer serve any prudent or practical purpose.[33]

WHEREFORE,

the

petition

is

hereby GRANTED.

The

decision of the Court of Appeals dated January 29, 2002 in CAG.R. SP No. 50536 finding that petitioners Felix B. Perez and Amante G. Doria were not illegally dismissed but were not accorded due process and were illegally suspended for 15 days, is SET ASIDE. The decision of the labor arbiter dated December

27,

1995

in

NLRC

hereby AFFIRMED with

NCR

CN.

11-06930-93

the MODIFICATION that

is

petitioners

should be paid their separation pay in lieu of reinstatement.

SO ORDERED. SECOND DIVISION

[G.R. No. 130772. November 19, 1999]

WALLEM MARITIME SERVICES, INC., MANAGEMENT, LTD., petitioners, vs. RELATIONS COMMISSION INDUCTIVO, respondents.

and WALLEM SHIP NATIONAL LABOR and ELIZABETH

DECISION BELLOSILLO, J.:

WALLEM MARITIME SERVICES, INC. and WALLEM SHIP MANAGEMENT LTD. in this petition for certiorari assail for having been rendered with grave abuse of discretion the 30 June 1997 Resolution of the National Labor Relations Commission dismissing their appeal for lack of merit, as well as its 29 August 1997 Resolution denying reconsideration thereof.[1] Sometime in May 1993, Pan-Fil Co. Inc., as manning and crewing agent in the Philippines of Wallem Ship Management Ltd. (WALLEM MANAGEMENT), hired Faustino Inductivo as utilityman for "MT Rowan," a vessel owned and operated by WALLEM MANAGEMENT, a Hongkong based shipping company. The employment contract of Faustino Inductivo was good for ten (10) months with a compensation of US$360.00 monthly basic salary, US$201.00 fixed monthly overtime pay, and a monthly vacation leave with pay for six (6) days. As was the standard procedure, Faustino Inductivo underwent pre-employment medical examination and was found by his employer's doctors to be physically fit for work. So, on 13 May 1993, he was told to board as he did the "MT Rowan."

In November 1993 Wallem Maritime Services, Inc. (WALLEM SERVICES) took over as WALLEM MANAGEMENT's manning and crewing agent in the Philippines. Faustino Inductivo, who was advised of the takeover, opted to remain on the vessel and to continue his employment under the manning agency of WALLEM SERVICES. Barely two (2) months before the expiration of his employment contract, or on 17 January 1994, he was discharged from the vessel. His Seaman's Book[2] and Wages Account[3]indicated that the cause of the discharge was "mutual consent, on completion of 8 months and 5 days." Accordingly, he disembarked in Hong Kong, travelled to Manila alone and then returned to his hometown in Nueva Ecija. On 19 January 1994, two (2) days after his arrival in the Philippines, he was hospitalized at the Yamsuan Medical Clinic in Gapan, Nueva Ecija, after complaining of occasional coughing and chest pains.The clinical diagnosis was pneumonities, bilateral. As his condition worsened, Faustino Inductivo was rushed to the Lung Center of the Philippines where a mass was found on his right lung and another on his right neck. His doctor advised him to undergo biopsy treatment, but since he was scared he requested to go on medication at home instead. Two (2) days thereafter, Faustino Inductivo returned to the hospital, this time at the De Ocampo Memorial Medical Center. Dr. Alfredo Sales, his attending physician, found on examination the presence of water in his lungs causing shortness of breath. For insufficiency of medical facilities, however, he was transferred to the Makati Medical Center where his doctor finally abandoned all hopes for his recovery as his disease was already in its advanced stage. He succumbed to his illness on 23 April 1994 and the autopsy report showed as cause of death disseminated intravascular coagulations, septecalmia, pulmonary congestion and multiple intestinal obstruction secondary to multiple adhesions.[4] Before Faustino Inductivo's death, or sometime in February 1994, herein private respondent Elizabeth Inductivo went to petitioners to claim the balance of her husbands leave wages. She also inquired about his sickness benefits as he was then very sick. Petitioners however informed her that her husband was not entitled to sickness benefits because he was not sick at the time he was "offsigned" from the vessel; he was "offsigned" from the vessel on "mutual consent" and not on medical grounds; and since he failed to advise or notify petitioners in writing within seventytwo (72) hours of his alleged sickness, his right to claim sickness benefits was deemed forfeited. Consequently, at the instance of Faustino Inductivo, private respondent filed an affidavit-complaint against petitioners for the payment of sickness and insurance benefits. After Faustino Inductivo died his complaint was amended by private respondent to include death benefits. On 24 September 1996 the Labor Arbiter [5] rendered a decision in favor of private respondent ordering petitioners to pay complainant, for herself and in her capacity as

guardian of her two (2) minor children, as follows: US$50,000.00 as death benefits; US$14,000.00 as childrens allowances; and US$1,000.00 as burial expenses. On appeal the NLRC sustained the Labor Arbiter. In its Resolution of 30 June 1997 the NLRC held in part It may be true that the deceased failed to report to respondent Wallem Maritime within seventy two hours after arrival in the Philippines but it could not be denied also that the deceased was sick when he arrived. Human mind dictates that a medical consultation at the nearest clinic is necessary before anything else. The wife could not immediately advise the respondent due to the situation of her deceased husband x x x x The allegation of the complainant that her husband was repatriated upon petition of the crew due to the deteriorating physical condition of Faustino Inductivo, was not denied by respondent.The defense of the latter that the repatriation of the deceased was by mutual consent and not discharged medically deserves scant consideration. It is to be emphasized that the illness was contracted during the deceased's employment on board "MT Rowan." Suffice it to say that the death of Faustino Inductivo is compensable under the circumstances. Their motion for reconsideration having been denied by the NLRC in its Resolution of 29 August 1997, petitioners are now before us imputing grave abuse of discretion on the part of the NLRC in: (a) totally disregarding the evidence on record; (b) ignoring and disregarding the existing law and jurisprudence on the matter; and, (c) affirming in toto the Labor Arbiters award of death compensation in favor of private respondent. The pivotal issue to be resolved is whether the death of Faustino Inductivo is compensable as to entitle his wife and children to claim death benefits. Petitioners insist that it is not compensable for two (2) principal reasons: first, Faustino Inductivo was offsigned from the vessel "MT Rowan" based on "mutual consent" and not on medical grounds, and the cancer which caused his death was not contracted during his employment but was a pre-existing condition; and second, Faustino Inductivo failed to comply with the mandatory seventy-two (72)-hour reporting requirement prescribed by the POEA standard employment contract, and therefore his right to claim benefits was deemed forfeited. Petitioners would want to impress upon this Court that Faustino Inductivo was still in good health when he disembarked from "MT Rowan," as shown in his Seaman's Book indicating that the cause of his discharge was "mutual consent in writing" and not on medical grounds. We disagree. From all indications, Faustino Inductivo was already in a deteriorating physical condition when he left the vessel. This is the only plausible reason why with barely two (2) months away from the expiration of his employment

contract he was all of a sudden and with no rational explanation discharged from the vessel. This conclusion is buttressed by the events that transpired immediately upon his arrival in the Philippines, i.e., he was hospitalized two (2) days later and died three (3) months after. Thus, as succinctly observed by the Labor Arbiter While it's true that the seaman was offsigned from the vessel by mutual consent, what could have been the compelling reason why only less than two (2) months away before the expiration of his employment contract, he decided to disembark. Then there is the question about the true state of his health at the time he disembarked. The puzzle of course is why two (2) days upon his disembarkation complainants husband lapsed into his ordeal immediately serious at the onset without any sign of relief until his last breath barely three months thereafter. It is indeed unthinkable that the deceased seaman at the homestretch of his voyage would suddenly seek the end of his employment for no reason at all. There is only one logical explanation for this given the circumstances that took place immediately after disembarkation. Complainants husband was already seriously ill when he (was) discharged from the vessel. This conclusion is supported by the fact that barely two (2) days upon his arrival in the Philippines, he was rushed to a local medical clinic for some serious symptoms. There being no relief after six (6) days of medical attendance, the late seaman was transferred to the Lung Center of the Philippines. Again, as there was likewise no relief obtained the family was constrained to seek further work-outs in two (2) other hospitals, the last of which was at the Makati Medical Center where all clinical procedures and work-outs were ruled out as of no consequence since the deceaseds condition at the time was already irreversible. There is likewise no merit in petitioners theory that Faustino Inductivo died of cancer which was pre-existing and could not have been contracted during the eight (8)-month period of his employment at the vessel. Primarily, both the Death Certificate[6] and Autopsy Report of Faustino Inductivo never mentioned that the cause of death was cancer. What was mentioned was "septicemia," if we go by the Death Certificate, and "disseminated intravascular coagulations, septecalmia, pulmonary congestion, multiple intestinal obstruction secondary to multiple adhesions," if we refer to the autopsy report. Ostensibly, cancer was not in the list.

Indeed, there was never any categorical or conclusive finding that Faustino Inductivo was afflicted with cancer. Petitioners extensive discussion in support of their "cancer theory" is nothing more than mere speculations cloaked in medical gibberish. Moreover, we agree with private respondent that opinions of petitioners doctors to this effect should not be given evidentiary weight as they are palpably self-serving and

biased in favor of petitioners, and certainly could not be considered independent. These medical opinions cannot prevail over the entries in the Death Certificate and Autopsy Report. Furthermore, before Faustino Inductivo was made to sign the employment contract with petitioners he was required to undergo, as a matter of procedure, medical examinations and was declared fit to work by no less than petitioners' doctors. Petitioners cannot now be heard to claim that at the time Faustino Inductivo was employed by them he was afflicted with a serious disease, and that the medical examination conducted on the deceased seaman was not exploratory in nature such that his disease was not detected in the first instance. Being the employer, petitioners had all the opportunity to pre-qualify, screen and choose their applicants and determine whether they were medically, psychologically and mentally fit for the job upon employment. The moment they have chosen an applicant they are deemed to have subjected him to the required pre-qualification standards. But even assuming that the ailment of Faustino Inductivo was contracted prior to his employment on board "MT Rowan," this is not a drawback to the compensability of the disease. It is not required that the employment be the sole factor in the growth, development or acceleration of the illness to entitle the claimant to the benefits provided therefor. It is enough that the employment had contributed, even in a small degree, to the development of the disease and in bringing about his death. It is indeed safe to presume that, at the very least, the nature of Faustino Inductivos employment had contributed to the aggravation of his illness - if indeed it was pre-existing at the time of his employment - and therefore it is but just that he be duly compensated for it. It cannot be denied that there was at least a reasonable connection between his job and his lung infection, which eventually developed into septicemia and ultimately caused his death. As a utilityman on board the vessel, he was exposed to harsh sea weather, chemical irritants, dusts, etc., all of which invariably contributed to his illness. Neither is it necessary, in order to recover compensation, that the employee must have been in perfect condition or health at the time he contracted the disease. Every workingman brings with him to his employment certain infirmities, and while the employer is not the insurer of the health of the employees, he takes them as he finds them and assumes the risk of liability. If the disease is the proximate cause of the employees death for which compensation is sought, the previous physical condition of the employee is unimportant and recovery may be had therefor independent of any pre-existing disease.[7] On the alleged failure of private respondent to comply with the seventy-two (72)hour reporting requirement, the POEA Standard Employment Contract Governing the Employment of All Filipino Seamen on Board Ocean Going Vessel,[8] provides in part -

x x x x the seaman shall submit himself to a post-employment medical examination by the company-designated physician within three working days upon his return, except when he is physically incapacitatedto do so, in which case a written notice to the agency within the same period is deemed as compliance. Failure of the seaman to comply with the mandatory requirement shall result in his forfeiture of the right to claim the above benefits (underscoring supplied). Admittedly, Faustino Inductivo did not subject himself to post-employment medical examination within three (3) days from his return to the Philippines, as required by the above provision of the POEA standard employment contract. But such requirement is not absolute and admits of an exception, i.e., when the seaman is physically incapacitated from complying with the requirement. Indeed, for a man who was terminally ill and in need of urgent medical attention one could not reasonably expect that he would immediately resort to and avail of the required medical examination, assuming that he was still capable of submitting himself to such examination at that time. It is quite understandable that his immediate desire was to be with his family in Nueva Ecija whom he knew would take care of him. Surely, under the circumstances, we cannot deny him, or his surviving heirs after his death, the right to claim benefits under the law. Similarly, neither could private respondent Elizabeth Inductivo be expected to have thought of, much less had the leisure of time to travel all the way to Manila, to notify petitioners of her husbands condition. Her primary concern then was to take care of her husband who was at the brink of death. At any rate, it appears that in early February 1994 private respondent went to petitioners to claim the balance of her husbands leave wages. She then informed petitioners of the condition of her husband as well as his confinement in a hospital, and inquired about the sickness benefits she intended to claim. This was more than sufficient actual notice to petitioners. It is relevant to state that the POEA standard employment contract is designed primarily for the protection and benefit of Filipino seamen in the pursuit of their employment on board ocean-going vessels.Its provisions must, therefore, be construed and applied fairly, reasonably and liberally in favor or for the benefit of the seamen and their dependents. Only then can its beneficent provisions be fully carried into effect. Finally, petitioner WALLEM SERVICES as manning agent is jointly and severally liable with its principal, WALLEM MANAGEMENT, for the claims of the heirs of Faustino Inductivo in accordance with Sec. 1, Rule II of the POEA Rules and Regulations.[9]

WHEREFORE, the petition is DISMISSED. The assailed Resolutions of public respondent National Labor Relations Commission dated 30 June 1997 and 29 August 1997, respectively dismissing petitioners appeal for lack of merit and denying reconsideration thereof, are AFFIRMED. Petitioners are ordered to pay, jointly and severally, the following amounts to private respondent for herself and in her capacity as guardian of her two (2) minor children: US$50,000.00 as death benefits; US$14,000.00 as children's allowances; and US$1,000.00 as burial expenses. Costs against petitioners. SO ORDERED. Mendoza, Quisumbing, Buena, and De Leon, Jr., JJ., concur.

Republic of the Philippines

Supreme Court Baguio City

THIRD DIVISION

QUIRICO LOPEZ,

G.R. No. 191008 Present:

Petitioner,

CARPIO MORALES, Chairperson, J., BRION,

- versus

BERSAMIN, VILLARAMA, JR., and SERENO, JJ. ALTURAS

GROUP

OF

COMPANIES MARLITO UY,

and/or Promulgated:

Respondents.

April 11, 2011 x------------------------------------------------ - -x

DECISION

CARPIO MORALES, J.:

Quirico Lopez (petitioner) was hired by respondent Alturas Group of Companies in 1997 as truck driver. Ten years later or sometime in November 2007, he was dismissed after he was allegedly caught by respondents security guard in the act of attempting to smuggle out of the company premises 60 kilos of scrap iron worth P840 aboard respondents Isuzu Cargo Aluminum Van with Plate Number PHP 271 that was then assigned to him. When questioned, petitioner allegedly admitted to the security guard that he was taking out the scrap iron consisting of lift springs out of which he would make axes.

Petitioner, in compliance with the Show Cause Notice [1] dated December 5, 2007 issued by respondent companys Human Resource Department Manager, denied the allegations by a handwritten explanation written in the Visayan dialect.

Finding petitioners explanation unsatisfactory, respondent company terminated his employment by Notice of [2] Termination effective December 14, 2007 on the grounds of loss of trust and confidence, and of violation of company rules and regulations. In issuing the Notice, respondent company also took into account the result of an investigation showing that petitioner had been smuggling out its cartons which he had sold, in conspiracy with one Maritess Alaba, for his own benefit to thus prompt it to file a criminal case for Qualified Theft [3] against him before the Regional Trial Court (RTC) of Bohol. It had in fact earlier filed another criminal case for Qualified Theft [4] against petitioner arising from the theft of the scrap iron.

Petitioner thereupon filed a complaint against respondent company for illegal dismissal and underpayment of wages. He claimed that the smuggling charge against him was fabricated to justify his illegal dismissal; that the filing of the charge came about after he reported the loss of the original copy of his pay slip, which report, he went on to claim, respondent company took to mean that he could use the pay slip as evidence for filing a complaint for violation of labor laws; and that on account of the immediately stated concern of respondent, it forced him into executing an affidavit that if the pay slip is eventually found, it could not be used in any proceedings between them.

By Decision[5] of June 30, 2008, the Labor Arbiter, holding that the pendency of the criminal case involving the scrap iron did not warrant the suspension of the proceedings before him, held that petitioners dismissal was justified, for he, a truck driver, held a position of trust and confidence, and his act of stealing company property was a violation of the trust reposed upon him.

Respecting the charge of underpayment of wages, the Labor Arbiter noted that on the basis of the records, petitioner had been paid the correct wages and benefits mandated by law.

The Labor complaint.

Arbiter

accordingly

dismissed

petitioners

On appeal, the National Labor Relations Commissions (NLRC) Fourth Division (Cebu City) set aside the Labor Arbiters Decision by Decision[6] dated December 22, 2008, finding that respondents evidence did not suffice to warrant the termination of petitioners services; and that petitioners alleged admission of taking the scrap iron was belied by his vehement denial, as even the security guard, one Gerardo Luega, who allegedly witnessed the asportation and before whom the alleged admission was made, did not even execute an affidavit in support thereof.

Citing Salaw v. NLRC,[7] the NLRC went on to hold that petitioner should have been afforded, or at least advised of the right to counsel. It thus held that any evaluation which was based only on the explanation to the show-cause letter and any socalled investigation but without confrontation of the vital witnesses, do[es] not suffice.

Respondent companys motion for reconsideration was denied by Resolution[8] of April 30, 2009, hence, it appealed to the Court of Appeals.

By Report[9] of December 18, 2009, the appellate court reversed the NLRC ruling. It held that respondent company was justified in terminating petitioners employment on the ground

of loss of trust and confidence, his alleged act of smuggling out the scrap iron having been sufficiently established through the affidavits of Patrocinio Borja and Zalde Tare, supervisor and junior supervisor, respectively, of its Supermarket Motorpool.

The appellate court further held that the evidence supporting the criminal charge, found after preliminary investigation are [sic] sufficient to show prima facie guilt, which constitutes just cause for [petitioners dismissal] based on loss of trust and confidence; and that petitioners subsequent acquittal in the criminal case did not automatically preclude a determination that he is guilty of acts inimical to the employers interest resulting in loss of trust and confidence.

Albeit the appellate court found that petitioners dismissal was for a just cause, it held that due process was not observed when respondent company failed to give him a chance to defend his side in a proper hearing. Following Agabon v. NLRC,[10] the appellate court thus ordered respondent to pay nominal damages of P30,000.

Thus the appellate court disposed: WHEREFORE, in view of the foregoing, the Decision of the NLRC dated December 22, 2008 is hereby MODIFIED. Private respondents dismissal from employment is upheld on the ground of loss of trust and confidence, a just cause for termination. However, for failure to comply fully with the procedural due process, petitioner is ORDERED to pay private respondent the amount of P30,000.00 as nominal damages.[11] (underscoring supplied)

Hence, the present petition for review on certiorari.

Dismissals have two facets: the legality of the act of dismissal, which constitutes substantive due process, and the legality of the manner of dismissal which constitutes procedural due process.[12]

As to substantive due process, the Court finds that respondent companys loss of trust and confidence arising from petitioners smuggling out of the scrap iron, conpounded by his past acts of unauthorized selling cartons belonging to respondent company, constituted just cause for terminating his services.

Loss of trust and confidence as a ground for dismissal of employees covers employees occupying a position of trust who are proven to have breached the trust and confidence reposed on them. Apropos is Cruz v. Court of Appeals[13] which explains the basis and quantum of evidence of loss of trust and confidence, viz: In addition, the language of Article 282(c) of the Labor Code states that the loss of trust and confidence must be based on willful breach of the trust reposed in the employee by his employer. Such breach is willful if it is done intentionally, knowingly, and purposely, without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. Moreover, it must be based on substantial evidence and not on the employers whims or caprices or suspicions otherwise, the employee would eternally remain at the mercy of the

employer. Loss of confidence must not be indiscriminately used as a shield by the employer against a claim that the dismissal of an employee was arbitrary. And, in order to constitute a just cause for dismissal, the act complained of must be work-related and shows that the employee concerned is unfit to continue working for the employer. In addition, loss of confidence as a just cause for termination of employment is premised on the fact that the employee concerned holds a position of responsibility, trust and confidence or that the employee concerned is entrusted with confidence with respect to delicate matters, such as the handling or care and protection of the property and assets of the employer. The betrayal of this trust is the essence of the offense for which an employee is penalized. (emphasis and underscoring supplied)

Petitioner, a driver assigned with a specific vehicle, was entrusted with the transportation of respondent companys goods and property, and consequently with its handling and protection, hence, even if he did not occupy a managerial position, he can be said to be holding a position of responsibility. As to his actprincipal ground for his dismissal his attempt to smuggle out the scrap iron belonging to respondent company, the same is undoubtedly workrelated.

Respondent companys charge against petitioner was amply proven by substantial evidence consisting of the affidavits of various employees of respondent. Contrary to the NLRCs observation, the security guard who apprehended petitioner, Gerardo Luega, actually executed a statement [14] relative to the smuggling out of scrap iron, which was attached to, and served as

basis for the filing of, the corresponding complaint for Qualified Theft. Petitioners claim that he was framed up after he allegedly lost his pay slip to draw respondent company to suspect that he might file a labor complaint for underpayment does not inspire credence.

It is, however, with respect to the appellate courts finding that petitioner was not afforded procedural due process that the Court deviates from. Procedural due process has been defined as giving an opportunity to be heard before judgment is rendered. [15] In termination cases, Perez v. Philippine Telegraph and Telephone Company,[16] illuminates on the correct proceedings to be followed therein in order to comply with the due process requirement: The above rulings are a clear recognition that the employer may provide an employee with ample opportunity to be heard and defend himself with the assistance of a representative or counsel in ways other than a formal hearing. The employee can be fully afforded a chance to respond to the charges against him, adduce his evidence or rebut the evidence against him through a wide array of methods, verbal or written.

After receiving the first notice apprising him of the charges against him, the employee may submit a written explanation (which may be in the form of a letter, memorandum, affidavit or position paper) and offer evidence in support thereof, like relevant company records (such as his 201 file and daily time records) and the sworn statements of his witnesses. For this purpose, he may prepare his explanation personally or with the assistance of a representative or counsel. He may also ask the

employer to provide him copy of records material to his defense. His written explanation may also include a request that a formal hearing or conference be held. In such a case, the conduct of a formal hearing or conference becomes mandatory, just as it is where there exist substantial evidentiary disputes or where company rules or practice requires an actual hearing as part of employment pretermination procedure. (emphasis and underscoring supplied)

Petitioner was given the opportunity to explain his side when he was informed of the charge against him and required to submit his written explanation with which he complied. That there might have been no hearing is of no moment, for as Autobus Workers Union v. NLRC[17] holds: This Court has held that there is no violation of due process even if no hearing was conducted, where the party was given a chance to explain his side of the controversy. What is frowned upon is the denial of the opportunity to be heard. (emphasis supplied)

Parenthetically, the Court finds that it was error for the NLRC to opine that petitioner should have been afforded counsel or advised of the right to counsel. The right to counsel and the assistance of one in investigations involving termination cases is neither indispensable nor mandatory, except when the employee himself requests for one or that he manifests that he wants a formal hearing on the charges against him. In petitioners case, there is no showing that he requested for a formal hearing to be

conducted or that he be assisted by counsel. Verily, since he was furnished a second notice informing him of his dismissal and the grounds therefor, the twin-notice requirement had been complied with to call for a deletion of the appellate courts award of nominal damages to petitioner.

As for the subsequent dismissal of the criminal cases [18] filed against petitioner, criminal and labor proceedings are distinct and separate from each other. Each requires a different quantum of proof, arising though they are from the same set of facts or circumstances. As Vergara v. NLRC[19] holds: An employees acquittal in a criminal case does not automatically preclude a determination that he has been guilty of acts inimical to the employers interest resulting in loss of trust and confidence. Corollarily, the ground for the dismissal of an employee does not require proof beyond reasonable doubt; as noted earlier, the quantum of proof required is merely substantial evidence. More importantly, the trial court acquitted petitioner not because he did not commit the offense, but merely because of the failure of the prosecution to prove his guilt beyond reasonable doubt.. In other words, while the evidence presented against petitioner did not satisfy the quantum of proof required for conviction in a criminal case, it substantially proved his culpability which warranted his dismissal from employment. (emphasis supplied)

WHEREFORE, the petition is DENIED. The Report dated December 18, 2009 of the Court of Appeals dismissing petitioners complaint is AFFIRMED withMODIFICATION

in that the award of nominal damages in the amount of P30,000 is DELETED.

Costs against petitioner.

SO ORDERED. CONCHITA CARPIO MORALES Associate Justice PHILIPPINE DAILY INQUIRER, INC., Petitioner,

- versus -

G.R. No. 164532 Present: PUNO, C.J., Chairperson, SANDOVAL-GUTIERREZ, CORONA, AZCUNA, and GARCIA, JJ. Promulgated:

LEON M. MAGTIBAY, JR. July 24, 2007 and PHILIPPINE DAILY INQUIRER EMPLOYEES UNION (PDIE U), Respondents. x---------------------------------------------------x

DECISION

GARCIA, J.:

By this petition for review on certiorari under Rule 45 of the Rules of Court, petitioner Philippine Daily Inquirer, Inc. (PDI) seeks the reversal and setting aside of the decision [1] dated May 25, 2004 of the Court of Appeals (CA) in CA G.R. SP No. 78963, affirming the resolution dated September 23, 2002 of the National Labor Relations Commission (NLRC) in NLRC Case No. 00-0301945-96. The affirmed NLRC resolution reversed an earlier decision dated July 29, 1996 of the Labor Arbiter in NLRC Case No. 011800-96, which dismissed the complaint for illegal dismissal filed by the herein respondent Leon Magtibay, Jr. against the petitioner.

The factual antecedents are undisputed:

On February 7, 1995, PDI hired Magtibay, on contractual basis, to assist, for a period of five months from February 17, 1995, the regular phone operator. Before the expiration of Magtibays contractual employment, he and PDI agreed to a fifteen-day contract extension, or from July 17, 1995 up to July 31, 1995, under the same conditions as the existing contract.

After the expiration of Magtibays contractual employment, as extended, PDI announced the creation and availability of a new position for a second telephone operator who would undergo probationary employment. Apparently, it was PDIs policy to accord regular employees preference for new vacancies in the company. Thus, Ms. Regina M. Layague, a PDI employee and member of respondent PDI Employees Union (PDIEU), filed her application for the new position. However, she later withdrew her

application, paving the way for outsiders or non-PDI employees, like Magtibay in this case, to apply.

After the usual interview for the second telephone operator slot, PDI chose to hire Magtibay on a probationary basis for a period of six (6) months. The signing of a written contract of employment followed.

On March 13, 1996, or a week before the end the agreed 6-month probationary period, PDI officer Benita del Rosario handed Magtibay his termination paper, grounded on his alleged failure to meet company standards. Aggrieved, Magtibay immediately filed a complaint for illegal dismissal and damages before the Labor Arbiter. PDIEU later joined the fray by filing a supplemental complaint for unfair labor practice. Magtibay anchored his case principally on the postulate that he had become a regular employee by operation of law, considering that he had been employed by and had worked for PDI for a total period of ten months, i.e., four months more than the maximum six-month period provided for by law on probationary employment. He also claimed that he was not apprised at the beginning of his employment of the performance standards of the company, hence, there was no basis for his dismissal. Finally, he described his dismissal as tainted with bad faith and effected without due process.

PDI, for its part, denied all the factual allegations of Magtibay, adding that his previous contractual employment was validly terminated upon the expiration of the period stated therein. Pressing the point, PDI alleged that the period covered by the contractual employment cannot be counted with or tacked to the period for probation, inasmuch as there is no basis to consider

Magtibay a regular employee. PDI additionally claimed that Magtibay was dismissed for violation of company rules and policies, such as allowing his lover to enter and linger inside the telephone operators booth and for failure to meet prescribed company standards which were allegedly made known to him at the start through an orientation seminar conducted by the company.

After due proceedings, the Labor Arbiter found for PDI and accordingly dismissed Magtibays complaint for illegal dismissal. The Labor Arbiter premised his holding on the validity of the previous contractual employment of Magtibay as an independent contract. He also declared as binding the stipulation in the contract specifying a fixed period of employment. According to the Labor Arbiter, upon termination of the period stated therein, the contractual employment was also effectively terminated, implying that Magtibay was merely on a probationary status when his services were terminated inasmuch as the reckoning period for probation should be from September 21, 1995 up to March 31, 1996as expressly provided in their probationary employment contract. In fine, it was the Labor Arbiters position that Magtibays previous contractual employment, as later extended by 15 days, cannot be considered as part of his subsequent probationary employment.

Apart from the foregoing consideration, the Labor Arbiter further ruled that Magtibays dismissal from his probationary employment was for a valid reason. Albeit the basis for termination was couched in the abstract, i.e., you did not meet the standards of the company, there were three specific reasons for Magtibays termination, to wit: (1) he repeatedly violated the company rule prohibiting unauthorized persons from entering the telephone operators room; (2) he intentionally omitted to indicate in his application form his having a dependent child; and (3) he

exhibited lack of sense of responsibility by locking the door of the telephone operators room on March 10, 1996 without switching the proper lines to the company guards so that incoming calls may be answered by them.

The Labor Arbiter likewise dismissed allegations of denial of due process and the commission by PDI of unfair labor practice. PDIEU and Magtibay appealed the decision of the Labor Arbiter to the NLRC. As stated earlier, the NLRC reversed and set aside said decision, effectively ruling that Magtibay was illegally dismissed. According to the NLRC, Magtibays probationary employment had ripened into a regular one.

With the NLRCs denial of its motion for reconsideration, PDI went to the CA on a petition for certiorari. Eventually, the CA denied due course to PDIs petition on the strength of the following observations: We agree with the findings of respondent NLRC.

Petitioner PDI failed to prove that such rules and regulations were included in or form part of the standards that were supposed to be made known to respondent Magtibay at the time of his engagement as telephone operator. Particularly, as regards the first stated infraction xxx petitioner PDI, contrary to its assertion, stated in its position paper, motion for reconsideration and in this petition that respondent Magtibay failed to abide by the rules and regulations of the company issued by Ms. Benita del Rosario regarding the entry of persons in the operators booth when respondent was already working for petitioner PDI. Further, nowhere can it be found in the list of Basic Responsibility and Specific Duties and

Responsibilities (Annex D of the petition) of respondent Magtibay that he has to abide by the duties, rules and regulations that he has allegedly violated. The infractions considered by petitioner PDI as grounds for the dismissal of respondent Magtibay may at most be classified as just causes for the termination of the latters employment. x x x.

xxxxxxxxx

Finally, the three questionable grounds also relied upon by petitioner PDI in dismissing respondent Magtibay may be considered as just causes. However, petitioner PDI did not raise the same as an issue in the present petition because the procedure it adopted in dismissing respondent Magtibay fell short of the minimum requirements provided by law.

PDI filed a motion for reconsideration but to no avail.

Hence, this recourse by PDI on the following submissions: I.

THE COURT OF APPEALS COMMITTED GRAVE ERROR IN FINDING THAT A PROBATIONARY EMPLOYEES FAILURE TO FOLLOW AN EMPLOYERS RULES AND REGULATIONS CANNOT BE DEEMED FAILURE BY SAID EMPLOYEE TO MEET THE STANDARDS OF HIS EMPLOYER THUS EMASCULATING PETITIONERS RIGHT TO CHOOSE ITS EMPLOYEES.

II.

THE COURT OF APPEALS COMMITTED A GRAVE ERROR IN REFUSING TO FIND THAT PROCEDURAL DUE PROCESS AS LAID DOWN IN SECTION 2, RULE XXIII OF THE IMPLEMENTING RULES OF THE LABOR CODE HAD BEEN OBSERVED BY THE PETITIONER.

We GRANT the petition.

This Court, to be sure, has for a reason, consistently tended to be partial in favor of workers or employees in labor cases whenever social legislations are involved. However, in its quest to strike a balance between the employers prerogative to choose his employees and the employees right to security of tenure, the Court remains guided by the gem of a holding in an old but still applicable case of Pampanga Bus, Co. v. Pambusco Employees Union, Inc.[2] In it, the Court said:

The right of a laborer to sell his labor to such persons as he may choose is, in its essence, the same as the right of an employer to purchase labor from any person whom it chooses. The employer and the employee have thus an equality of right guaranteed by the Constitution. If the employer can compel the employee to work against the latters will, this is servitude. If the employee can compel the employer to give him work against the employers will, this is oppression.

Management and labor, or the employer and the employee are more often not situated on the same level playing field, so to

speak. Recognizing this reality, the State has seen fit to adopt measures envisaged to give those who have less in life more in law. Article 279 of the Labor Code which gives employees the security of tenure is one playing field leveling measure:

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. x x x.

But hand in hand with the restraining effect of Section 279, the same Labor Code also gives the employer a period within which to determine whether a particular employee is fit to work for him or not. This employers prerogative is spelled out in the following provision:

Art. 281. Probationary employment. ̶ Probationary employment shall not exceed six (6) months from the date the employee started working, unless it is covered by an apprenticeship agreement stipulating a longer period. The services of an employee who has been engaged on a probationary basis may be terminated for a just cause or when he fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the time of his engagement. An employee who is allowed to work after a probationary period shall be considered a regular employee.

In International Catholic Migration Commission v. NLRC, [3] we have elucidated what probationary employment entails:

x x x. A probationary employee, as understood under Article 282 (now Article 281) of the Labor Code, is one who is on trial by an employer during which the employer determines whether or not he is qualified for permanent employment. A probationary appointment is made to afford the employer an opportunity to observe the fitness of a probationer while at work, and to ascertain whether he will become a proper and efficient employee. The word probationary, as used to describe the period of employment, implies the purpose of the term or period but not its length.

Being in the nature of a trial period the essence of a probationary period of employment fundamentally lies in the purpose or objective sought to be attained by both the employer and the employee during said period. The length of time is immaterial in determining the correlative rights of both in dealing with each other during said period. While the employer, as stated earlier, observes the fitness, propriety and efficiency of a probationer to ascertain whether he is qualified for permanent employment, the probationer, on the other, seeks to prove to the employer, that he has the qualifications to meet the reasonable standards for permanent employment.

It is well settled that the employer has the right or is at liberty to choose who will be hired and who will be denied employment. In that sense, it is within the exercise of the right to select his employees that the employer may set or fix a probationary period within

which the latter may test and observe the conduct of the former before hiring him permanently. x x x.

Within the limited legal six-month probationary period, probationary employees are still entitled to security of tenure. It is expressly provided in the afore-quoted Article 281 that a probationary employee may be terminated only on two grounds: (a) for just cause, or (b) when he fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the time of his engagement. [4]

PDI invokes the second ground under the premises. In claiming that it had adequately apprised Magtibay of the reasonable standards against which his performance will be gauged for purposes of permanent employment, PDI cited the one-on-one seminar between Magtibay and its Personnel Assistant, Ms. Rachel Isip-Cuzio. PDI also pointed to Magtibays direct superior, Benita del Rosario, who diligently briefed him about his responsibilities in PDI. These factual assertions were never denied nor controverted by Magtibay. Neither did he belie the existence of a specific rule prohibiting unauthorized persons from entering the telephone operators booth and that he violated that prohibition. This notwithstanding, the NLRC and the CA proceeded nonetheless to rule that the records of the case are bereft of any evidence showing that these rules and regulations form part of the so-called company standards.

We do not agree with the appellate court when it cleared the NLRC of commission of grave abuse of discretion despite the latters disregard of clear and convincing evidence that there were reasonable standards made known by PDI to Magtibay during his

probationary employment. It is on record that Magtibay committed obstinate infractions of company rules and regulations, which in turn constitute sufficient manifestations of his inadequacy to meet reasonable employment norms. The suggestion that Magtibay ought to have been made to understand during his briefing and orientation that he is expected to obey and comply with company rules and regulations strains credulity for acceptance. The CAs observation that nowhere can it be found in the list of Basic Responsibility and Specific Duties and Responsibilities of respondent Magtibay that he has to abide by the duties, rules and regulations that he has allegedly violated is a strained rationalization of an unacceptable conduct of an employee. Common industry practice and ordinary human experience do not support the CAs posture. All employees, be they regular or probationary, are expected to comply with company-imposed rules and regulations, else why establish them in the first place. Probationary employees unwilling to abide by such rules have no right to expect, much less demand, permanent employment. We, therefore find sufficient factual and legal basis, duly established by substantial evidence, for PDI to legally terminate Magtibays probationary employment effective upon the end of the 6-month probationary period.

It is undisputed that PDI apprised Magtibay of the ground of his termination, i.e., he failed to qualify as a regular employee in accordance with reasonable standards made known to him at the time of engagement, only a week before the expiration of the sixmonth probationary period. Given this perspective, does this make his termination unlawful for being violative of his right to due process of law?

It does not.

Unlike under the first ground for the valid termination of probationary employment which is for just cause, the second ground does not require notice and hearing. Due process of law for this second ground consists of making the reasonable standards expected of the employee during his probationary period known to him at the time of his probationary employment. By the very nature of a probationary employment, the employee knows from the very start that he will be under close observation and his performance of his assigned duties and functions would be under continuous scrutiny by his superiors. It is in apprising him of the standards against which his performance shall be continuously assessed where due process regarding the second ground lies, and not in notice and hearing as in the case of the first ground.

Even if perhaps he wanted to, Magtibay cannot deny as he has not denied PDIs assertion that he was duly apprised of the employment standards expected of him at the time of his probationary employment when he underwent a one-on-one orientation with PDIs personnel assistant, Ms. Rachel Isip-Cuzio. Neither has he denied nor rebutted PDIsfurther claim that his direct superior, Benita del Rosario, briefed him regarding his responsibilities in PDI.

Lest it be overlooked, Magtibay had previously worked for PDI as telephone operator from February 7, 1995 to July 31, 1995 as a contractual employee. Thus, the Court entertains no doubt that when PDI took him in on September 21, 1995, Magtibay was already very much aware of the level of competency and professionalism PDI wanted out of him for the entire duration of his probationary employment.

PDI was only exercising its statutory hiring prerogative when it refused to hire Magtibay on a permanent basis upon the expiration of the six-month probationary period. This was established during the proceedings before the labor arbiter and borne out by the records and the pleadings before the Court. When the NLRC disregarded the substantial evidence establishing the legal termination of Magtibays probationary employment and rendered judgment grossly and directly contradicting such clear evidence, the NLRCcommits grave abuse of discretion amounting to lack or excess of jurisdiction. It was, therefore, reversible error on the part of the appellate court not to annul and set aside such void judgment of the NLRC.

WHEREFORE, the assailed decision dated May 25, 2004 of the CA in CA G.R. SP No. 78963 is hereby REVERSED and SET ASIDE, and the earlier resolution dated September 23, 2002 of the NLRC in NLRC Case No. 00-0301945-96 is declared NULL and VOID. The earlier decision dated July 29, 1996 of the Labor Arbiter in NLRC Case No. 01180096, dismissing respondent Leon Magtibay, Jr.s complaint for alleged illegal dismissal, is REINSTATED. No pronouncement as to costs.

SO ORDERED.

Republic of the Philippines SUPREME COURT Baguio City EN BANC G.R. No. 192571

April 22, 2014

ABBOTT LABORATORIES, PHILIPPINES, CECILLE A. TERRIBLE, EDWIN D. FEIST, MARIA OLIVIA T. YABUT-MISA, TERESITA C. BERNARDO, AND ALLAN G. ALMAZAR, Petitioners, vs. PEARLIE ANN F. ALCARAZ, Respondent. RESOLUTION PERLAS-BERNABE, J.: For resolution is respondent Pearlie Ann Alcaraz's (Alcaraz) Motion for Reconsideration dated August 23, 2013 of the Court's Decision dated July 23, 2013 (Decision). 1

At the outset, there appears to be no substantial argument in the said motion sufficient for the Court to depart from the pronouncements made in the initial ruling. But if only to address Akaraz's novel assertions, and to so placate any doubt or misconception in the resolution of this case, the Court proceeds to shed light on the matters indicated below. A. Manner of review. Alcaraz contends that the Court should not have conducted a re-weighing of evidence since a petition for review on certiorari under Rule 45 of the Rules of Court (Rules) is limited to the review of questions of law. She submits that since what was under review was a ruling of the Court of Appeals (CA) rendered via a petition for certiorari under Rule 65 of the Rules, the Court should only determine whether or not the CA properly determined that the National Labor Relations Commission (NLRC) committed a grave abuse of discretion. The assertion does not justify the reconsideration of the assailed Decision. A careful perusal of the questioned Decision will reveal that the Court actually resolved the controversy under the above-stated framework of analysis. Essentially, the Court found the CA to have committed an error in holding that no grave abuse of discretion can be ascribed to the NLRC since the latter arbitrarily disregarded the legal implication of the attendant circumstances in this case which should have simply resulted in the finding that Alcaraz was apprised of the performance standards for her regularization and hence, was properly a probationary employee. As the Court observed, an employee’s failure to perform the duties and responsibilities which have been clearly made known to him constitutes a justifiable basis for a probationary employee’s non-regularization. As detailed in the Decision, Alcaraz was well-apprised of her duties and responsibilities as well as the probationary status of her employment: (a) On June 27, 2004, [Abbott Laboratories, Philippines (Abbott)] caused the publication in a major broadsheet newspaper of its need for a Regulatory Affairs Manager, indicating therein the job description for as well as the duties and responsibilities attendant to the aforesaid position; this prompted Alcaraz to submit her application to Abbott on October 4, 2004; (b) In Abbott’s December 7, 2004 offer sheet, it was stated that Alcaraz was to be employed on a probationary status; (c) On February 12, 2005, Alcaraz signed an employment contract which specifically stated, inter alia, that she was to be placed on probation for a period of six (6) months beginning February 15, 2005 to August 14, 2005;

(d) On the day Alcaraz accepted Abbott’s employment offer, Bernardo sent her copies of Abbott’s organizational structure and her job description through e-mail; (e) Alcaraz was made to undergo a pre-employment orientation where [Allan G. Almazar] informed her that she had to implement Abbott’s Code of Conduct and office policies on human resources and finance and that she would be reporting directly to [Kelly Walsh]; (f) Alcaraz was also required to undergo a training program as part of her orientation; (g) Alcaraz received copies of Abbott’s Code of Conduct and Performance Modules from [Maria Olivia T. Yabut-Misa] who explained to her the procedure for evaluating the performance of probationary employees; she was further notified that Abbott had only one evaluation system for all of its employees; and (h) Moreover, Alcaraz had previously worked for another pharmaceutical company and had admitted to have an "extensive training and background" to acquire the necessary skills for her job. 2

Considering the foregoing incidents which were readily observable from the records, the Court reached the conclusion that the NLRC committed grave abuse of discretion, viz.: [I]n holding that Alcaraz was illegally dismissed due to her status as a regular and not a probationary employee, the Court finds that the NLRC committed a grave abuse of discretion. To elucidate, records show that the NLRC based its decision on the premise that Alcaraz’s receipt of her job description and Abbott’s Code of Conduct and Performance Modules was not equivalent to being actually informed of the performance standards upon which she should have been evaluated on. It, however, overlooked the legal implication of the other attendant circumstances as detailed herein which should have warranted a contrary finding that Alcaraz was indeed a probationary and not a regular employee – more particularly the fact that she was well-aware of her duties and responsibilities and that her failure to adequately perform the same would lead to her nonregularization and eventually, her termination. 3

Consequently, since the CA found that the NLRC did not commit grave abuse of discretion and denied the certiorari petition before it, the reversal of its ruling was thus in order. At this juncture, it bears exposition that while NLRC decisions are, by their nature, final and executory and, hence, not subject to appellate review, the Court is not precluded from considering other questions of law aside from the CA’s finding on the NLRC’s grave abuse of discretion. While the focal point of analysis revolves on this issue, the Court may deal with ancillary issues – such as, in this case, the question of how a probationary employee is deemed to have been informed of the standards of his regularization – if only to determine if the concepts and principles of labor law were correctly applied or misapplied by the NLRC in its decision. In other words, the Court’s analysis of the NLRC’s interpretation of the environmental principles and concepts of labor law is not completely prohibited in – as it is complementary to – a Rule 45 review of labor cases. 4

5

Finally, if only to put to rest Alcaraz’s misgivings on the manner in which this case was reviewed, it bears pointing out that no "factual appellate review" was conducted by the Court in the Decision. Rather, the Court proceeded to interpret the relevant rules on probationary employment as applied to settled factual findings. Besides, even on the assumption that a scrutiny of facts was undertaken, the

Court is not altogether barred from conducting the same. This was explained in the case of Career Philippines Shipmanagement, Inc. v. Serna wherein the Court held as follows: 6

Accordingly, we do not re-examine conflicting evidence, re-evaluate the credibility of witnesses, or substitute the findings of fact of the NLRC, an administrative body that has expertise in its specialized field. Nor do we substitute our "own judgment for that of the tribunal in determining where the weight of evidence lies or what evidence is credible." The factual findings of the NLRC, when affirmed by the CA, are generally conclusive on this Court. Nevertheless, there are exceptional cases where we, in the exercise of our discretionary appellate jurisdiction may be urged to look into factual issues raised in a Rule 45 petition. For instance, when the petitioner persuasively alleges that there is insufficient or insubstantial evidence on record to support the factual findings of the tribunal or court a quo, as Section 5, Rule 133 of the Rules of Court states in express terms that in cases filed before administrative or quasi-judicial bodies, a fact may be deemed established only if supported by substantial evidence. (Emphasis supplied) 7

B. Standards for regularization; conceptual underpinnings. Alcaraz posits that, contrary to the Court’s Decision, one’s job description cannot by and of itself be treated as a standard for regularization as a standard denotes a measure of quantity or quality. By way of example, Alcaraz cites the case of a probationary salesperson and asks how does such employee achieve regular status if he does not know how much he needs to sell to reach the same. The argument is untenable. First off, the Court must correct Alcaraz’s mistaken notion: it is not the probationary employee’s job description but the adequate performance of his duties and responsibilities which constitutes the inherent and implied standard for regularization. To echo the fundamental point of the Decision, if the probationary employee had been fully apprised by his employer of these duties and responsibilities, then basic knowledge and common sense dictate that he must adequately perform the same, else he fails to pass the probationary trial and may therefore be subject to termination. 8

The determination of "adequate performance" is not, in all cases, measurable by quantitative specification, such as that of a sales quota in Alcaraz’s example. It is also hinged on the qualitative assessment of the employee’s work; by its nature, this largely rests on the reasonable exercise of the employer’s management prerogative. While in some instances the standards used in measuring the quality of work may be conveyed – such as workers who construct tangible products which follow particular metrics, not all standards of quality measurement may be reducible to hard figures or are readily articulable in specific pre-engagement descriptions. A good example would be the case of probationary employees whose tasks involve the application of discretion and intellect, such as – to name a few – lawyers, artists, and journalists. In these kinds of occupation, the best that the employer can do at the time of engagement is to inform the probationary employee of his duties and responsibilities and to orient him on how to properly proceed with the same. The employer cannot bear out in exacting detail at the beginning of the engagement what he deems as "quality work" especially since the probationary employee has yet to submit the required output. In the ultimate analysis, the communication of performance standards should be perceived within the context of the nature of the probationary employee’s duties and responsibilities. The same logic applies to a probationary managerial employee who is tasked to supervise a particular department, as Alcaraz in this case. It is hardly possible for the employer, at the time of the employee’s engagement, to map into technical indicators, or convey in precise detail the quality 1âwphi1

standards by which the latter should effectively manage the department. Factors which gauge the ability of the managerial employee to either deal with his subordinates (e.g., how to spur their performance, or command respect and obedience from them), or to organize office policies, are hardly conveyable at the outset of the engagement since the employee has yet to be immersed into the work itself. Given that a managerial role essentially connotes an exercise of discretion, the quality of effective management can only be determined through subsequent assessment. While at the time of engagement, reason dictates that the employer can only inform the probationary managerial employee of his duties and responsibilities as such and provide the allowable parameters for the same. Verily, as stated in the Decision, the adequate performance of such duties and responsibilities is, by and of itself, an implied standard of regularization. In this relation, it bears mentioning that the performance standard contemplated by law should not, in all cases, be contained in a specialized system of feedbacks or evaluation. The Court takes judicial notice of the fact that not all employers, such as simple businesses or small-scale enterprises, have a sophisticated form of human resource management, so much so that the adoption of technical indicators as utilized through "comment cards" or "appraisal" tools should not be treated as a prerequisite for every case of probationary engagement. In fact, even if a system of such kind is employed and the procedures for its implementation are not followed, once an employer determines that the probationary employee fails to meet the standards required for his regularization, the former is not precluded from dismissing the latter. The rule is that when a valid cause for termination exists, the procedural infirmity attending the termination only warrants the payment of nominal damages. This was the principle laid down in the landmark cases of Agabon v. NLRC (Agabon) and Jaka Food Processing Corporation v. Pacot (Jaka). In the assailed Decision, the Court actually extended the application of the Agabon and Jaka rulings to breaches of company procedure, notwithstanding the employer’s compliance with the statutory requirements under the Labor Code. Hence, although Abbott did not comply with its own termination procedure, its non-compliance thereof would not detract from the finding that there subsists a valid cause to terminate Alcaraz’s employment. Abbott, however, was penalized for its contractual breach and thereby ordered to pay nominal damages. 9

10

11

As a final point, Alcaraz cannot take refuge in Aliling v. Feliciano (Aliling) since the same is not squarely applicable to the case at bar. The employee in Aliling, a sales executive, was belatedly informed of his quota requirement. Thus, considering the nature of his position, the fact that he was not informed of his sales quota at the time of his engagement changed the complexion of his employment. Contrarily, the nature of Alcaraz's duties and responsibilities as Regulatory Affairs Manager negates the application of the foregoing. Records show that Alcaraz was terminated because she (a) did not manage her time effectively; (b) failed to gain the trust of her staff and to build an effective rapport with them; (c) failed to train her staff effectively; and (d) was not able to obtain the knowledge and ability to make sound judgments on case processing and article review which were necessary for the proper performance of her duties. Due to the nature and variety of these managerial functions, the best that Abbott could have done, at the time of Alcaraz's engagement, was to inform her of her duties and responsibilities, the adequate performance of which, to repeat, is an inherent and implied standard for regularization; this is unlike the circumstance in Aliling where a quantitative regularization standard, in the term of a sales quota, was readily articulable to the employee at the outset. Hence, since the reasonableness of Alcaraz's assessment clearly appears from the records, her termination was justified. Bear in mind that the quantum of proof which the employer must discharge is only substantial evidence which, as defined in case law, means 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. To the Court's mind, this threshold of evidence Abbott amply overcame in this case. 12

13

14

All told, the Court hereby denies the instant motion for reconsideration and thereby upholds the Decision in the main case.

WHEREFORE, the motion for reconsideration dated August 23, 2013 of the Court's Decision dated July 23, 2013 in this case is hereby DENIED. SO ORDERED. ESTELA M. PERLAS-BERNABE Associate Justice THIRD DIVISION G.R. No. 192924, November 26, 2014 PHILIPPINE AIRLINES, INC., Petitioner, v. REYNALDO V. PAZ, Respondent. DECISION REYES, J.: Before this Court is a petition for review on certiorari 1 filed under Rule 45 of the Rules of Court by Philippine Airlines, Inc. (PAL), seeking to annul and set aside the Amended Decision 2 dated June 29, 2010 of the Court of Appeals (CA) in CA-G.R. SP No. 75618. Reynaldo V. Paz (respondent) was a former commercial pilot of PAL and a member of the Airlines Pilots Association of the Philippines (ALPAP), the sole and exclusive bargaining representative of all the pilots in PAL. On December 9, 1997, ALPAP filed a notice of strike with the National Conciliation and Mediation Board of the Department of Labor and Employment (DOLE). Pursuant to Article 263(g) of the Labor Code, the DOLE Secretary assumed jurisdiction over the labor dispute and enjoined the parties from committing acts which will further exacerbate the situation.3 On June 5, 1998, notwithstanding the directive of the DOLE Secretary, the ALPAP officers and members staged a strike and picketed at the PAL’s premises. To control the situation, the DOLE Secretary issued a return-to-work order on June 7, 1998, directing all the striking officers and members of ALPAP to return to work within 24 hours from notice of the order. The said order was served upon the officers of ALPAP on June 8, 1998 by the DOLE Secretary himself. Even then, the striking members of ALPAP did not report for work. 4 On June 25, 1998, Atty. Joji Antonio, the counsel for ALPAP, informed the members of the union that she has just received a copy of the return-to-work order and that they have until the following day within which to comply. When the striking members of the ALPAP reported for work on the following day, the security guards of PAL denied them entry.5 On June 13, 1998, the DOLE Secretary issued a resolution on the case from which both parties filed a motion for reconsideration. Pending the resolution of the motions, PAL filed a petition for approval of rehabilitation plan and for appointment of a rehabilitation receiver with the Securities and Exchange Commission (SEC), claiming serious financial distress brought about by the strike. Subsequently, on June 23, 1998, the SEC appointed a rehabilitation receiver for PAL and declared the suspension of all claims against it.6 On June 1, 1999, the DOLE Secretary resolved the motions for reconsideration filed by both parties and declared the strike staged by ALPAP illegal and that the participants thereof are deemed to have lost their employment.7 On June 25, 1999, the respondent filed a complaint for illegal dismissal against PAL for not accepting him back to work, claiming non-participation in the illegal strike. In his position paper, he alleged that on the day the ALPAP staged a strike on June 5, 1998, he was off-duty from work and was in Iligan City. However, when he reported back to work on June 12, 1998, after a week-long break, he was no longer allowed to enter PAL’s premises in Nichols, Pasay City.8

The respondent further alleged that on June 25, 1998, he learned that the DOLE Secretary issued a returnto-work order, requiring all the striking pilots to return to work within 24 hours from notice. Notwithstanding his non-participation in the strike, he signed the logbook at the entrance of PAL’s office on the following day. When he tried to report for work, however, he was denied entry by the PAL’s security guards. 9 For its part, PAL claimed that the respondent was among the participants of the strike staged by ALPAP on June 5, 1998 who did not heed to the return-to-work order issued on June 7, 1998 by the DOLE Secretary. The said order directed all the participants of the strike to return to work within 24 hours from notice thereof. However, ALPAP and its counsel unjustifiably refused to receive the copy of the order and was therefore deemed served. The 24-hour deadline for the pilots to return to work expired on June 9, 1998, without the respondent reporting back to work. Subsequently, the DOLE Secretary issued the Resolution dated June 1, 1999, declaring that the striking pilots have lost their employment for defying the return-towork order. Thus, PAL argued that the respondent’s charge of illegal dismissal is utterly without merit. 10 On March 5, 2001, the Labor Arbiter (LA) rendered a Decision, 11 holding that the respondent was illegally dismissed and ordered that he be reinstated to his former position without loss of seniority rights and other privileges and paid his full backwages inclusive of allowances and other benefits computed from June 12, 1998 up to his actual reinstatement. The dispositive portion of the decision reads, as follows: WHEREFORE, judgment is hereby rendered: chanroble svirtuallawlibrary

1. Declaring that this Arbitration Branch has jurisdiction over the causes of action raised by the [respondent] in this case; 2. Declaring that the causes of action raised in the complaint in this case have not been barred by prior judgment of the Secretary of Labor and Employment in his Resolution of June 1, 1999; 3. Declaring that the termination of the services of the [respondent] was not for any just or authorized cause and also without due process and therefore illegal; 4. Ordering Philippine Airlines, Inc. to reinstate immediately upon receipt of this decision [respondent] Reynaldo V. Paz to his former position as commercial pilot without loss of seniority rights and other privileges and to pay him his full backwages inclusive of allowances and other benefits or their monetary equivalent computed from June 12, 1998 up to his actual reinstatement even pending appeal but the respondent has the option to actually reinstate [the respondent] to his former position or to reinstate him merely in payroll. As of September 5, 2000, the full backwages due to the [respondent] total P2,629,420.00; 5. Ordering Philippine Airlines, Inc. to pay the [respondent] the following:

Productivity Pay (P22,383.62 x 27 P604,357.74 months…… Retirement Fund Contribution (P9,800.00 x 27 264,600.00 months)……………….. PODF (P4,663.25 x 27 125,907.75 months)………………..... Sick Leave (P3,000.62 126,026.04 x 42 days)……………….. Vacation Leave (P3,000.62 x 42 days) 125,026.04 ………….. Rice Subsidy (P600.00 16,200.00 x 27 months)…………….

chanroblesvirtuallawlibrary

13th Month Pay (P93,265.00 x 2 years)………….. Longevity Pay (P500.00 x 2 years) ………………

188,030.00 1,000.00

6. Ordering Philippine Airlines, Inc. to pay [the respondent] attorney’s fees equivalent to 10% of the whole monetary award (Art. III, Labor Code); 7. Ordering Philippine Airlines, Inc. to pay [the respondent] moral damages equivalent to Five Hundred Thousand Pesos (P500,00[0].00) and exemplary damages of Five Hundred Thousand Pesos (P500,000.00) SO ORDERED.12 Unyielding, PAL appealed the foregoing decision to the National Labor Relations Commission (NLRC). Pending appeal, the respondent filed a motion for partial execution of the reinstatement aspect of the decision. The LA granted the said motion and issued a partial writ of execution on May 25, 2001. Subsequently, on June 27, 2001, the NLRC rendered a Resolution, 13 reversing the LA decision. The NLRC ruled that the pieces of evidence presented by PAL proved that the respondent participated in the strike and defied the return-to-work order of the DOLE Secretary; hence, he is deemed to have lost his employment. The pertinent portions of the decision read: Indeed, other than [the respondent’s] self-serving assertions, he has failed to substantiate his claim that he was in Iligan City and that he reported for work a week after June 5, 1998. [PAL], on the other hand, has presented photographs of the complainant picketing [at the PAL’s] premises on June 15 & 26, 1998. x x x chanroble svirtuallawlibrary

xxxx In sum, [PAL’s] concrete evidence submitted in the proceedings below should prevail over the self-serving assertions of [the respondent]. Consequently, we are of the view that [PAL] acted within its rights when it refused to accept [the respondent] when he reported for work on June 26, 1998. This is consistent with the finding[s] of the DOLE Secretary when he declared the strikers to have lost their employment status. x x x. xxxx WHEREFORE, premises considered, the appeal is hereby GRANTED, and the decision dated March 5, 2001, is REVERSED and SET ASIDE for utter lack of merit. SO ORDERED.14 Notwithstanding the reversal of the LA decision, the respondent pursued his move for the issuance of a writ of execution, claiming that he was entitled to reinstatement salaries which he supposedly earned during the pendency of the appeal to the NLRC. On August 28, 2001, the LA granted the motion and issued the corresponding writ of execution.15 On September 17, 2001, the LA issued an Order,16 clarifying the respondent’s entitlement to reinstatement salaries. He ratiocinated that the order of reinstatement is immediately executory even pending appeal and that under Article 223 of the Labor Code, the employer has the option to admit the employee back to work or merely reinstate him in the payroll. Considering, however, that there was no physical reinstatement, the respondent, as a matter of right, must be reinstated in the payroll. The accrued salaries may now be the subject of execution despite the NLRC’s reversal of the decision. PAL appealed the LA Order dated September 17, 2001 to the NLRC, arguing that the writ of execution lacked factual and legal basis considering that the NLRC reversed and set aside the LA decision and categorically declared the order of reinstatement as totally devoid of merit. It contended that entitlement to salaries pending appeal presupposes a finding that the employee is entitled to reinstatement. Absent such finding, the employee is not entitled to reinstatement salaries and the writ of execution issued pursuant thereto is a complete nullity.17 On June 28, 2002, the NLRC rendered a Resolution,18 sustaining the award of reinstatement salaries to the respondent albeit suspending its execution in view of the fact that PAL was under rehabilitation receivership.

PAL filed a motion for reconsideration but the NLRC denied the same in its Resolution 19dated November 22, 2002. Unperturbed, PAL filed a petition for certiorari with the CA, questioning the NLRC Resolution dated June 28, 2002. Subsequently, in a Decision20 dated January 31, 2005, the CA affirmed with modification the NLRC Resolution dated June 28, 2002, the dispositive portion of which reads, as follows: WHEREFORE, the NLRC Resolution dated June 28, 2002 is AFFIRMED with the MODIFICATION that, in lieu of reinstatement salaries, petitioner Philippine Airlines, Inc. is ordered to pay respondent Paz separation pay equivalent to one month salary for every year of service, to be computed from the time respondent commenced employment with petitioner PAL until the time the Labor Arbiter issued the writ ordering respondent’s reinstatement, i.e., on May 25, 2001 . chanroble svirtuallawlibrary

SO ORDERED.21 The CA ruled that while the respondent is entitled to reinstatement, the prevailing circumstances rendered the same difficult if not impossible to execute. It noted that at the time the reinstatement was ordered, there was no vacant B747-400 pilot position available for the respondent. Further complicating the situation is the fact that PAL has been under receivership since July 1998. Thus, in lieu of reinstatement salaries, the CA ordered PAL to pay the respondent separation pay equivalent to one (1) month salary for every year of service.22 PAL filed a motion for reconsideration of the CA decision. Subsequently, the CA rendered the assailed Amended Decision23 dated June 29, 2010, holding thus: Accordingly, compliance with the reinstatement order is not affected by the fact that private respondent’s previous position had been filled-up. In reinstatement pending appeal, payroll reinstatement is an alternative to actual reinstatement. Hence, public respondent did not err when it upheld the Labor Arbiter that private respondent is entitled to reinstatement salaries during the period of appeal. chanroble svirtuallawlibrary

WHEREFORE, premises considered, the modification contained in Our January 31, 2005 Decision is DELETED and SET ASIDE. The June 28, 2002 Resolution of the National Labor Relations Commission is hereby REINSTATED in toto. SO ORDERED.24 On August 3, 2010, PAL filed the instant petition with the Court, contending that the CA acted in a manner contrary to law and jurisprudence when it upheld the award of reinstatement salaries to the respondent. 25 The petition is meritorious. The same issue had been raised and addressed by the Court in the case of Garcia v. Philippine Airlines, Inc.26 In the said case, the Court deliberated on the application of Paragraph 3, Article 223 of the Labor Code in light of the apparent divergence in its interpretation, specifically on the contemplation of the reinstatement aspect of the LA decision. The pertinent portion of the provision reads, thus: In any event, the decision of the Labor Arbiter reinstating a dismissed or separated employee, insofar as the reinstatement aspect is concerned, shall immediately be executory, pending appeal . The employee shall either be admitted back to work under the same terms and conditions prevailing prior to his dismissal or separation or,at the option of the employer, merely reinstated in the payroll. The posting of a bond by the employer shall not stay the execution for reinstatement provided herein. 27(Emphasis and underscoring in the original) chanroble svirtuallawlibrary

Briefly, in Garcia, the petitioners were dismissed by their employer, respondent PAL, after they were allegedly caught in the act of sniffing shabu when a team of company security personnel and law enforcers raided the PAL Technical Center’s Toolroom Section. After they filed a complaint for illegal dismissal, respondent PAL was placed under rehabilitation receivership due to serious financial losses. Eventually, the LA resolved the case in favor of the petitioners and ordered their immediate reinstatement. Upon appeal, however, the NLRC reversed the LA decision and dismissed the complaint. Even then, the LA issued a writ of execution, with respect to the reinstatement aspect of the decision, and issued a notice of garnishment. Respondent PAL filed an urgent petition for injunction with the NLRC but the latter, by way of Resolutions dated November 26, 2001 and January 28, 2002, affirmed the validity of the writ and the notice issued by the LA but suspended and referred the action to the rehabilitation receiver. On appeal, the CA ruled in favor of respondent PAL and nullified the NLRC resolutions, holding that (1) a subsequent finding of a valid dismissal removes the basis for the reinstatement aspect of a LA decision, and (2) the impossibility to comply with the reinstatement order due to corporate rehabilitation justifies respondent PAL’s failure to exercise the options under Article 223 of the Labor Code. When the case was further elevated to this Court,

the petition was partially granted and reinstated the NLRC resolutions insofar as it suspended the proceedings. Subsequently, respondent PAL notified the Court that it has exited from the rehabilitation proceedings. The Court then proceeded to determine the main issue of whether the petitioners therein are entitled to collect salaries pertaining to the period when the LA’s order of reinstatement is pending appeal to the NLRC until it was reversed. The factual milieu of the instant case resembles that of Garcia. The respondent herein obtained a favorable ruling from the LA in the complaint for illegal dismissal case he filed against PAL but the same was reversed on appeal by the NLRC. Also, PAL was under rehabilitation receivership during the entire period that the illegal dismissal case was being heard. A similar question is now being raised, i.e., whether the respondent may collect reinstatement salaries which he is supposed to have received from the time PAL received the LA decision, ordering his reinstatement, until the same was overturned by the NLRC. The rule is that the employee is entitled to reinstatement salaries notwithstanding the reversal of the LA decision granting him said relief. In Roquero v. Philippine Airlines,28 the Court underscored that it is obligatory on the part of the employer to reinstate and pay the wages of the dismissed employee during the period of appeal until reversal by the higher court. This is so because the order of reinstatement is immediately executory. Unless there is a restraining order issued, it is ministerial upon the LA to implement the order of reinstatement. The unjustified refusal of the employer to reinstate a dismissed employee entitles him to payment of his salaries effective from the time the employer failed to reinstate him. 29 In Garcia, however, the Court somehow relaxed the rule by taking into consideration the cause of delay in executing the order of reinstatement of the LA. It was declared, thus: After the labor arbiter’s decision is reversed by a higher tribunal, the employee may be barred from collecting the accrued wages, if it is shown that the delay in enforcing the reinstatement pending appeal was without fault on the part of the employer. chanroble svirtuallawlibrary

The test is two-fold: (1) there must be actual delay or the fact that the order of reinstatement pending appeal was not executed prior to its reversal; and (2) the delay must not be due to the employer’s unjustified act or omission. If the delay is due to the employer’s unjustified refusal, the employer may still be required to pay the salaries notwithstanding the reversal of the Labor Arbiter’s decision. 30 (Italics ours and emphasis and underscoring deleted) It is clear from the records that PAL failed to reinstate the respondent pending appeal of the LA decision to the NLRC. It can be recalled that the LA rendered the decision ordering the reinstatement of the respondent on March 5, 2001. And, despite the self-executory nature of the order of reinstatement, the respondent nonetheless secured a partial writ of execution on May 25, 2001. Even then, the respondent was not reinstated to his former position or even through payroll. A scrutiny of the circumstances, however, will show that the delay in reinstating the respondent was not due to the unjustified refusal of PAL to abide by the order but because of the constraints of corporate rehabilitation. It bears noting that a year before the respondent filed his complaint for illegal dismissal on June 25, 1999, PAL filed a petition for approval of rehabilitation plan and for appointment of a rehabilitation receiver with the SEC. On June 23, 1998, the SEC appointed an Interim Rehabilitation Receiver. Thereafter, the SEC issued an Order31 dated July 1, 1998, suspending all claims for payment against PAL. The inopportune event of PAL’s entering rehabilitation receivership justifies the delay or failure to comply with the reinstatement order of the LA. Thus, in Garcia, the Court held: It is settled that upon appointment by the SEC of a rehabilitation receiver, all actions for claims before any court, tribunal or board against the corporation shall ipso jure be suspended. As stated early on, during the pendency of petitioners’ complaint before the Labor Arbiter, the SEC placed respondent under an Interim Rehabilitation Receiver. After the Labor Arbiter rendered his decision, the SEC replaced the Interim Rehabilitation Receiver with a Permanent Rehabilitation Receiver. chanroblesvirtuallawlibrary

Case law recognizes that unless there is a restraining order, the implementation of the order of reinstatement is ministerial and mandatory. This injunction or suspension of claims by legislative fiat partakes of the nature of a restraining order that constitutes a legal justification for respondent’s noncompliance with the reinstatement order. Respondent’s failure to exercise the alternative options of actual reinstatement and payroll reinstatement was thus justified. Such being the case, respondent’s obligation to pay the salaries pending appeal, as the normal effect of the non-exercise of the options, did not attach.32 (Citations omitted)

In light of the fact that PAL’s failure to comply with the reinstatement order was justified by the exigencies of corporation rehabilitation, the respondent may no longer claim salaries which he should have received during the period that the LA decision ordering his reinstatement is still pending appeal until it was overturned by the NLRC. Thus, the CA committed a reversible error in recognizing the respondent’s right to collect reinstatement salaries albeit suspending its execution while PAL is still under corporate rehabilitation. WHEREFORE, the petition is GRANTED. The Amended Decision dated June 29, 2010 of the Court of Appeals in CA-G.R. SP No. 75618 is hereby REVERSED and SET ASIDE. Respondent Reynaldo V. Paz is not entitled to the payment of reinstatement salaries. SO ORDERED. Leonardo-De Castro,* Peralta, (Acting Chairperson), Villarama, Jr., and Jardeleza, JJ., concur. Endnotes:

EN BANC JUANITO A. GARCIA and ALBERTO J. DUMAGO, Petitioners,

G.R. No. 164856 Present: PUNO, C.J., QUISUMBING, YNARES-SANTIAGO, CARPIO, AUSTRIA-MARTINEZ, CORONA,

- versus -

CARPIO MORALES, AZCUNA, TINGA, CHICO-NAZARIO, VELASCO, JR.,

PHILIPPINE AIRLINES, INC.,

NACHURA, LEONARDO-DE

Respondent.

CASTRO, and BRION, JJ. Promulgated: January 20, 2009

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

DECISION CARPIO MORALES, J.:

Petitioners Juanito A. Garcia and Alberto J. Dumago assail the December 5, 2003 Decision and April 16, 2004 Resolution of the Court of Appeals[1] in CA-G.R. SP No. 69540 which granted the petition for certiorari of respondent, Philippine Airlines, Inc. (PAL), and denied petitioners Motion for Reconsideration, respectively. The dispositive portion of the assailed Decision reads: WHEREFORE, premises considered and in view of the foregoing, the instant petition is hereby GIVEN DUE COURSE. The assailed November 26, 2001 Resolution as well as the January 28, 2002 Resolution of public respondent National Labor Relations Commission [NLRC] is hereby ANNULLED and SET ASIDE for having been issued with grave abuse of discretion amounting to lack or excess of jurisdiction. Consequently, the Writ of Execution and the Notice of Garnishment issued by the Labor Arbiter are hereby likewise ANNULLED and SET ASIDE.

SO ORDERED.[2]

The case stemmed from the administrative charge filed by PAL against its employees-herein petitioners[3] after they were allegedly caught in the act of sniffing shabu when a team of company security personnel and law enforcers raided the PAL Technical Centers Toolroom Section on July 24, 1995.

After due notice, PAL dismissed petitioners on October 9, 1995 for transgressing the PAL Code of Discipline, [4] prompting them to file a complaint for illegal dismissal and damages which was, by Decision of January 11, 1999,[5] resolved by the Labor Arbiter in their favor, thus ordering PAL to, inter alia, immediately comply with the reinstatement aspect of the decision. Prior to the promulgation of the Labor Arbiters decision, the Securities and Exchange Commission (SEC) placed PAL (hereafter referred to as respondent), which was suffering from severe financial losses, under an Interim Rehabilitation Receiver, who was subsequently replaced by a Permanent Rehabilitation Receiver on June 7, 1999.

From the Labor Arbiters decision, respondent appealed to the NLRC which, by Resolution of January 31, 2000, reversed said decision and dismissed petitioners complaint for lack of merit.[6]

Petitioners Motion for Reconsideration was denied by Resolution of April 28, 2000 and Entry of Judgment was issued on July 13, 2000.[7]

Subsequently or on October 5, 2000, the Labor Arbiter issued a Writ of Execution (Writ) respecting the reinstatement aspect of his January 11, 1999 Decision, and on October 25, 2000, he issued a Notice of Garnishment (Notice). Respondent thereupon moved to quash the Writ and to lift the Notice while petitioners moved to release the garnished amount.

In a related move, respondent filed an Urgent Petition for Injunction with the NLRC which, by Resolutions of November 26, 2001 and January 28, 2002, affirmed the validity of the Writ and the Notice issued by the Labor Arbiter but suspended and referred the action to the Rehabilitation Receiver for appropriate action.

Respondent elevated the matter to the appellate court which issued the herein challenged Decision and Resolution nullifying the NLRC Resolutions on two grounds, essentially espousing that: (1) a subsequent finding of a valid dismissal removes the basis for implementing the reinstatement aspect of a labor arbiters decision (the first ground), and (2) the impossibility to comply with the reinstatement order due to corporate rehabilitation provides a reasonable justification for the failure to exercise the options under Article 223 of the Labor Code (the second ground).

By Decision of August 29, 2007, this Court PARTIALLY GRANTED the present petition and effectively reinstated the NLRC Resolutions insofar as it suspended the proceedings, viz: Since petitioners claim against PAL is a money claim for their wages during the pendency of PALs appeal to the NLRC, the same should have been suspended pending the

rehabilitation proceedings. The Labor Arbiter, the NLRC, as well as the Court of Appeals should have abstained from resolving petitioners case for illegal dismissal and should instead have directed them to lodge their claim before PALs receiver. However, to still require petitioners at this time to re-file their labor claim against PAL under peculiar circumstances of the case that their dismissal was eventually held valid with only the matter of reinstatement pending appeal being the issue this Court deems it legally expedient to suspend the proceedings in this case.

WHEREFORE, the instant petition is PARTIALLY GRANTED in that the instant proceedings herein are SUSPENDED until further notice from this Court. Accordingly, respondent Philippine Airlines, Inc. is hereby DIRECTED to quarterly update the Court as to the status of its ongoing rehabilitation. No costs.

SO ORDERED.[8] (Italics in the original; underscoring supplied)

By Manifestation and Compliance of October 30, 2007, respondent informed the Court that the SEC, by Order of September 28, 2007, granted its request to exit from rehabilitation proceedings.[9] In view of the termination of the rehabilitation proceedings, the Court now proceeds to resolve the remaining issue for consideration, which is whether petitioners may collect their wages during the period between the Labor Arbiters order of reinstatement pending appeal and the NLRC decision overturning that of the Labor Arbiter, now that respondent has exited from rehabilitation proceedings.

Amplification of the First Ground The appellate court counted on as its first ground the view that a subsequent finding of a valid dismissal removes the basis for implementing the reinstatement aspect of a labor arbiters decision.

On this score, the Courts attention is drawn to seemingly divergent decisions concerning reinstatement pending appeal or, particularly, the option of payroll reinstatement. On the one hand is the jurisprudential trend as expounded in a line of cases including Air Philippines Corp. v. Zamora,[10] while on the other is the recent case of Genuino v. National Labor Relations Commission.[11] At the core of the seeming divergence is the application of paragraph 3 of Article 223 of the Labor Code which reads: In any event, the decision of the Labor Arbiter reinstating a dismissed or separated employee, insofar as the reinstatement aspect is concerned, shall immediately be executory, pending appeal. The employee shall either be admitted back to work under the same terms and conditions prevailing prior to his dismissal or separation or, at the option of the employer, merely reinstated in the payroll. The posting of a bond by the employer shall not stay the execution for reinstatement provided herein. (Emphasis and underscoring supplied)

The view as maintained in a number of cases is that: x x x [E]ven if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the part of the employer to reinstate and pay the wages of the dismissed employee during the

period of appeal until reversal by the higher court. On the other hand, if the employee has been reinstated during the appeal period and such reinstatement order is reversed with finality, the employee is not required to reimburse whatever salary he received for he is entitled to such, more so if he actually rendered services during the period. [12] (Emphasis in the original; italics and underscoring supplied)

In other words, a dismissed employee whose case was favorably decided by the Labor Arbiter is entitled to receive wages pending appeal upon reinstatement, which is immediately executory. Unless there is a restraining order, it is ministerial upon the Labor Arbiter to implement the order of reinstatement and it is mandatory on the employer to comply therewith.[13]

The opposite view is articulated in Genuino which states: If the decision of the labor arbiter is later reversed on appeal upon the finding that the ground for dismissal is valid, then the employer has the right to require the dismissed employee on payroll reinstatement to refund the salaries s/he received while the case was pending appeal, or it can be deducted from the accrued benefits that the dismissed employee was entitled to receive from his/her employer under existing laws, collective bargaining agreement provisions, and company practices. However, if the employee was reinstated to work during the pendency of the appeal, then the employee is entitled to the compensation received for actual services rendered without need of refund. Considering that Genuino was not reinstated to work or placed on payroll reinstatement, and her dismissal is based on a just cause, then she is not entitled to be paid the salaries stated in item no. 3 of the fallo of the September 3, 1994 NLRC Decision.[14] (Emphasis, italics and underscoring supplied)

It has thus been advanced that there is no point in releasing the wages to petitioners since their dismissal was found to be valid, and to do so would constitute unjust enrichment.

Prior to Genuino, there had been no known similar case containing a dispositive portion where the employee was required to refund the salaries received on payroll reinstatement.In fact, in a catena of cases,[15] the Court did not order the refund of salaries garnished or received by payroll-reinstated employees despite a subsequent reversal of the reinstatement order.

The dearth of authority supporting Genuino is not difficult to fathom for it would otherwise render inutile the rationale of reinstatement pending appeal.

x x x [T]he law itself has laid down a compassionate policy which, once more, vivifies and enhances the provisions of the 1987 Constitution on labor and the working man.

xxxx

These duties and responsibilities of the State are imposed not so much to express sympathy for the workingman as to forcefully and meaningfully underscore labor as a primary social and economic force, which the Constitution also expressly affirms with equal intensity. Labor is an indispensable partner for the nation's progress and stability.

xxxx

x x x In short, with respect to decisions reinstating employees, the law itself has determined a sufficiently overwhelming reason for its execution pending appeal.

xxxx x x x Then, by and pursuant to the same power (police power), the State may authorize an immediate implementation, pending appeal, of a decision reinstating a dismissed or separated employee since that saving act is designed to stop, although temporarily since the appeal may be decided in favor of the appellant, a continuing threat or danger to the survival or even the life of the dismissed or separated employee and his family.[16]

The social justice principles of labor law outweigh or render inapplicable the civil law doctrine of unjust enrichment espoused by Justice Presbitero Velasco, Jr. in his Separate Opinion. The constitutional and statutory precepts portray the otherwise unjust situation as a condition affording full protection to labor.

Even outside the theoretical trappings of the discussion and into the mundane realities of human experience, the refund doctrine easily demonstrates how a favorable decision by the Labor Arbiter could harm, more than help, a dismissed employee. The employee, to make both ends meet, would necessarily have to use up the salaries received during the pendency of the appeal, only to end up having to refund the sum in case of a final unfavorable decision. It is mirage of a stop-gap leading the employee to a risky cliff of insolvency.

Advisably, the sum is better left unspent. It becomes more logical and practical for the employee to refuse payroll reinstatement and simply find work elsewhere in the interim, if any is available. Notably, the option of payroll reinstatement belongs to the employer, even if the employee is able and raring to return to work. Prior to Genuino, it is unthinkable for one to refuse payroll reinstatement. In the face of the grim possibilities, the rise of concerned employees declining payroll reinstatement is on the horizon.

Further, the Genuino ruling not only disregards the social justice principles behind the rule, but also institutes a scheme unduly favorable to management. Under such scheme, the salaries dispensed pendente lite merely serve as a bond posted in installment by the employer. For in the event of a reversal of the Labor Arbiters decision ordering reinstatement, the employer gets back the same amount without having to spend ordinarily for bond premiums. This circumvents, if not directly contradicts, the proscription that the posting of a bond [even a cash bond] by the employer shall not stay the execution for reinstatement.[17]

In playing down the stray posture in Genuino requiring the dismissed employee on payroll reinstatement to refund the salaries in case a final decision upholds the validity of the dismissal, the Court realigns the proper course of the prevailing doctrine on reinstatement pending appeal vis--vis the effect of a reversal on appeal.

Respondent insists that with the reversal of the Labor Arbiters Decision, there is no more basis to enforce the reinstatement aspect of the said decision. In his Separate Opinion, Justice Presbitero Velasco, Jr. supports this argument and finds the prevailing doctrine in Air Philippines and allied cases inapplicable because, unlike the present case, the writ of execution therein was secured prior to the reversal of the Labor Arbiters decision.

The proposition is tenuous. First, the matter is treated as a mere race against time. The discussion stopped there without considering the cause of the delay. Second, it requires the issuance of a writ of execution despite the immediately executory nature of the reinstatement aspect of the decision. In Pioneer Texturing Corp. v. NLRC,[18] which was cited inPanuncillo v. CAP Philippines, Inc.,[19] the Court observed:

x x x The provision of Article 223 is clear that an award [by the Labor Arbiter] for reinstatement shall be immediately executory even pending appeal and the posting of a bond by the employer shall not stay the execution for reinstatement. The legislative intent is quite obvious, i.e., to make an award of reinstatement immediately enforceable, even pending appeal. To require the application for and issuance of a writ of execution as prerequisites for the execution of a reinstatement award would certainly betray and run counter to the very object and intent of Article 223, i.e., the immediate execution of a reinstatement order. The reason is simple. An application for a writ of execution and its issuance could be delayed for numerous reasons. A mere continuance or postponement of a scheduled hearing, for instance, or an inaction on the part of the Labor Arbiter or the NLRC could easily delay the issuance of the writ thereby setting at naught the strict mandate and noble purpose envisioned by Article 223. In other words, if the requirements of Article 224 [including the issuance of a writ of execution] were to govern, as we so declared in Maranaw, then the executory nature of a reinstatement order or award contemplated by Article 223 will be unduly circumscribed and rendered ineffectual. In enacting the law, the legislature is presumed to have ordained a valid and sensible law, one which operates no further than may be necessary to achieve its specific purpose. Statutes, as a rule, are to be construed in the light of the purpose to be achieved and the evil sought to be remedied. x x x In introducing a new rule on the reinstatement aspect of a labor decision under Republic Act No. 6715, Congress should not be considered to be indulging in mere semantic exercise. x x x[20] (Italics in the original; emphasis and underscoring supplied)

The Court reaffirms the prevailing principle that even if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the part of the employer to reinstate and pay the wages of the dismissed employee during the period of appeal until reversal by the higher court. [21] It settles the view that the Labor Arbiter's order of reinstatement is immediately executory and the employer has to either re-admit them to work under the same terms and conditions prevailing prior to their dismissal, or to reinstate them in the payroll, and that failing to exercise the options in the alternative, employer must pay the employees salaries.[22]

Amplification of the Second Ground

The remaining issue, nonetheless, is resolved in the negative on the strength of the second ground relied upon by the appellate court in the assailed issuances. The Court sustains the appellate courts finding that the peculiar predicament of a corporate rehabilitation rendered it impossible for respondent to exercise its option under the circumstances.

The spirit of the rule on reinstatement pending appeal animates the proceedings once the Labor Arbiter issues the decision containing an order of reinstatement. The immediacy of its execution needs no further elaboration. Reinstatement pending appeal necessitates its immediate execution during the pendency of the appeal, if the law is to serve its noble purpose. At the same time, any attempt on the part of the employer to evade or delay its execution, as observed in Panuncillo and as what actually transpired in Kimberly, [23] Composite,[24] Air Philippines,[25] and Roquero,[26] should not be countenanced.

After the labor arbiters decision is reversed by a higher tribunal, the employee may be barred from collecting the accrued wages, if it is shown that the delay in enforcing the reinstatement pending appeal was without fault on the part of the employer.

The test is two-fold: (1) there must be actual delay or the fact that the order of reinstatement pending appeal was not executed prior to its reversal; and (2) the delay must not be due to the employers unjustified act or omission. If the delay is due to the employers unjustified refusal, the employer may still be required to pay the salaries notwithstanding the reversal of the Labor Arbiters decision.

In Genuino, there was no showing that the employer refused to reinstate the employee, who was the Treasury Sales Division Head, during the short span of four months or from the promulgation on May 2, 1994 of the Labor Arbiters Decision up to the promulgation on September 3, 1994 of the NLRC Decision. Notably, the former NLRC Rules of Procedure did not lay down a mechanism to promptly effectuate the self-executory order of reinstatement, making it difficult to establish that the employer actually refused to comply.

In a situation like that in International Container Terminal Services, Inc. v. NLRC[27] where it was alleged that the employer was willing to comply with the order and that the employee opted not to pursue the execution of the order, the Court upheld the self-executory nature of the reinstatement order and ruled that the salary automatically accrued from notice of the Labor Arbiter's order of reinstatement until its ultimate reversal by the NLRC. It was later discovered that the employee indeed moved for the issuance of a writ but was not acted upon by the Labor Arbiter. In that scenario where the delay was caused by the Labor Arbiter, it was ruled that the inaction of the Labor Arbiter who failed to act upon the employees motion for the issuance of a writ of execution may no longer adversely affect the cause of the dismissed employee in view of the self-executory nature of the order of reinstatement.[28]

The new NLRC Rules of Procedure, which took effect on January 7, 2006, now require the employer to submit a report of compliance within 10 calendar days from receipt of the Labor Arbiters decision,[29] disobedience to which clearly denotes a refusal to reinstate. The employee need not file a motion for the issuance of the writ of execution since the Labor Arbiter shall thereafter motu proprio issue the writ. With the new rules in place, there is hardly any difficulty in determining the employers intransigence in immediately complying with the order. In the case at bar, petitioners exerted efforts[30] to execute the Labor Arbiters order of reinstatement until they were able to secure a writ of execution, albeit issued on October 5, 2000 after the reversal by the NLRC of the Labor Arbiters decision. Technically, there was still actual delay which brings to the question of whether the delay was due to respondents unjustified act or omission.

It is apparent that there was inaction on the part of respondent to reinstate them, but whether such omission was justified depends on the onset of the exigency of corporate rehabilitation.

It is settled that upon appointment by the SEC of a rehabilitation receiver, all actions for claims before any court, tribunal or board against the corporation shall ipso jure be suspended.[31] As stated early on, during the pendency of petitioners complaint before the Labor Arbiter, the SEC placed respondent under an Interim Rehabilitation Receiver.After the Labor Arbiter rendered his decision, the SEC replaced the Interim Rehabilitation Receiver with a Permanent Rehabilitation Receiver.

Case law recognizes that unless there is a restraining order, the implementation of the order of reinstatement is ministerial and mandatory.[32] This injunction or

suspension of claims by legislative fiat[33] partakes of the nature of a restraining order that constitutes a legal justification for respondents non-compliance with the reinstatement order.Respondents failure to exercise the alternative options of actual reinstatement and payroll reinstatement was thus justified. Such being the case, respondents obligation to pay the salaries pending appeal, as the normal effect of the non-exercise of the options, did not attach.

While reinstatement pending appeal aims to avert the continuing threat or danger to the survival or even the life of the dismissed employee and his family, it does not contemplate the period when the employer-corporation itself is similarly in a judicially monitored state of being resuscitated in order to survive.

The parallelism between a judicial order of corporation rehabilitation as a justification for the non-exercise of its options, on the one hand, and a claim of actual and imminent substantial losses as ground for retrenchment, on the other hand, stops at the red line on the financial statements. Beyond the analogous condition of financial gloom, as discussed by Justice Leonardo Quisumbing in his Separate Opinion, are more salient distinctions. Unlike the ground of substantial losses contemplated in a retrenchment case, the state of corporate rehabilitation was judicially pre-determined by a competent court and not formulated for the first time in this case by respondent.

More importantly, there are legal effects arising from a judicial order placing a corporation under rehabilitation. Respondent was, during the period material to the case, effectively deprived of the alternative choices under Article 223 of the Labor Code, not only by virtue of the statutory injunction but also in view of the interim relinquishment of management control to give way to the full exercise of the powers of the rehabilitation receiver. Had there

been no need to rehabilitate, respondent may have opted for actual physical reinstatement pending appeal to optimize the utilization of resources. Then again, though the management may think this wise, the rehabilitation receiver may decide otherwise, not to mention the subsistence of the injunction on claims.

In sum, the obligation to pay the employees salaries upon the employers failure to exercise the alternative options under Article 223 of the Labor Code is not a hard and fast rule, considering the inherent constraints of corporate rehabilitation.

WHEREFORE, the petition is PARTIALLY DENIED. Insofar as the Court of Appeals Decision of December 5, 2003 and Resolution of April 16, 2004 annulling the NLRC Resolutions affirming the validity of the Writ of Execution and the Notice of Garnishment are concerned, the Court finds no reversible error.

SO ORDERED.

CONCHITA CARPIO MORALES Associate Justice Republic of the Philippines SUPREME COURT Manila THIRD DIVISION

G.R. No. 99034. April 12, 1993.

JEAN C. AURELIO, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, NORTHWESTERN COLLEGE, BEN A. NICOLAS, ERNESTO B. ASUNCION, JOFFREY AURELIO, JOSE G. CASTRO, FRANCISCO SANTELLA, ALBA B. CADAY, LILIA PAZ, WILFRED A. NICOLAS, GLENN AQUINO, LUCIDIA RUIZ-FLOREZ, respondents. Pedro Q. Qadra for petitioner. Ponce, Enrile, Cayetano, & Reyes & Manalastas for private respondents. SYLLABUS 1. LABOR AND SOCIAL LEGISLATION; LABOR CODE; EMPLOYMENT; RULES OF EMPLOYMENT REGARDING MANAGERIAL EMPLOYEES; EMPLOYERS ALLOWED A GREATER LATITUDE. — The rules on termination of employment, penalties for infractions, and resort to concerted actions, insofar as managerial employees are concerned, are not necessarily the same as those applicable to termination of employment of ordinary employees. Employers, generally, are allowed a wider latitude of discretion in terminating the employment of managerial personnel or those of similar rank performing functions which by their nature require the employer's trust and confidence, than in the case of ordinary rank-and-file employees (Cruz vs. Medina, 177 SCRA 565 [1989]). 2. ID.; ID.; ID.; LOSS OF TRUST AND CONFIDENCE, VALID GROUND FOR DISMISSING MANAGERIAL EMPLOYEE. — Under Article 282(c) of the Labor Code, loss of trust and confidence is a valid ground for dismissing an employee. Termination of employment on this ground does not require proof beyond reasonable doubt. All that is needed is for the employer to establish sufficient basis for the dismissal of the employee (Cruz vs. Medina, supra). 3. ID.; ID.; ID.; TERMINATION; REQUIREMENTS FOR VALIDITY THEREOF. — Under Section 1, Rule XIV of the Implementing Rules and Regulations of the Labor Code, the dismissal of an employee must be for a just or authorized cause and after due process. The two requirements of this legal provision are: 1. The legality of the act of dismissal, that is, dismissal under the ground provided under Article 283 of the New Labor Code; and 2. The legality in the manner of dismissal, that is, with due observance of the procedural requirements of Sections 2, 5, and 6 of Batas Pambansa Blg. 130 (Shoemart vs. NLRC, 176 SCRA 385 [1989]). 4. ID.; ID.; ID.; ID.; ID.; NON-OBSERVANCE OF DUE PROCESS ENTITLES EMPLOYEE TO AWARD OF P1,000.00; CASE AT BAR. — In cases where there was a valid ground to dismiss an employee but there was non-observance of due process, this Court held that only a sanction must be imposed upon the employer for failure to give formal notice and to conduct an investigation required by law before dismissing the employee in consonance with the ruling in Wenphil v. NLRC, 170 SCRA 69 [1989]; Shoemart, Inc. vs. NLRC, supra; and in Pacific Mills, Inc. vs. Zenaida Alonzo, 199 SCRA 617 [1991]). Public respondent's finding that petitioner was not afforded due process is correct but the Commission erred when it awarded separation pay in the amount of P32,750.00. In the Pacific Mills, Inc. and Wenphil cases, this Court merely awarded P1,000.00 as penalty for nonobservance of due process. The decision under review is hereby AFFIRMED with the MODIFICATION that the award of separation pay is DELETED and that private respondents are ORDERED to pay petitioner the amount of One Thousand Pesos (P1,000.00) as indemnity for nonobservance of due process.

5. ID.; ID.; ID.; MANAGEMENT, AT LIBERTY TO ABOLISH POSITIONS NO LONGER NECESSARY. — The prerogative of management to conduct its own business affairs to achieve its purposes cannot be denied (San Miguel Brewery Sales Force Union [PTGHWO] vs. Ople, 110 SCRA 25 [1981]; Abbot Laboratories vs. NLRC, 154 SCRA 713 [1987]). Management is at liberty, absent any malice on its part, to abolish positions which it deems no longer necessary (Great Pacific Life Assurance Corp. vs. NLRC, 188 SCRA 139 [1990]). When petitioner was stripped by the Board of her positions as Executive Vice President and Vice President for Administration, with a corresponding reduction in salary, the Board did not act in a capricious, whimsical, and arbitrary manner, thus negating malice and bad faith. DECISION MELO, J p: The appeal before us has reference to the decision of the National Labor Relations Commission (NLRC) dated March 27, 1991 which modified the decision of the Labor Arbiter involving petitioner's charge of illegal dismissal. The reviewing authority merely awarded separation pay equivalent to one-half month pay for every year of service and denied petitioner's prayer for reinstatement, backwages, moral and exemplary damages, including attorney's fees (p. 89, Rollo). Petitioner started as clinical instructor of the College of Nursing of Northwestern College (NWC) in June 1917 with a basic salary of P600.00 a month. In October 1979, petitioner was appointed Dean of the College of Nursing with a starting salary of P3,000.00 a month. In September 1981, petitioner was promoted to College Administrator or Vice-President for Administration, retaining concurrently her position of Dean of the College of Nursing, with an increased salary of P3,500.00 per month. She was later promoted to Executive Vice-President with the corresponding salary of P7,500.00. On April 10, 1988, petitioner's husband, Oscar Aurelio, a stockholder of respondent NWC, was elected Auditor. On May 1, 1988, the individual respondents, as Board of Directors, took over the management of respondent NWC. This new management unleashed a series of reorganization affecting the petitioner and her husband, Oscar Aurelio, to wit: (a) On May 30, 1988, petitioner's husband, then in the United States, was removed as Auditor of the college; (b) Without prior notice, petitioner's office was stripped of its facilities. First, the airconditioner, then the refrigerator; (c) Respondents asked petitioner, "to justify," the continued use of the conference room which was used for team teaching; the librarian of the College of Nursing was removed and assigned as secretary of the Chairman of Academic Matters and all the facilities of the College of Nursing were taken over by the individual respondents; (d) Petitioner's salary was reduced from P7,500.00 to P5,000.00 then to P2,500.00 a month; (e) While petitioner was absent because of influenza, respondents assigned her office room to the Chairman on Management and Planning; the Nursing conference room was assigned as the lounge room of the members of the Board of Directors;

Because of the indignities and humiliation suffered by the petitioner, she wrote a letter on September 20, 1988 informing the President of Northwestern College that she was going on an indefinite leave, thus: Dear Sir: This is to inform your office that I am taking an indefinite leave of absence effective immediately due to the following reasons: 1. My having been demoted in rank from Executive Vice-President to Vice-President for Administration to Dean of the College of Nursing without prior notice and without any dialogue whatsoever with management. This mote(s) of the administration was coupled with innuendos perpetuated by some people close to management giving rise to speculations that besmirched my reputation and character. 2. Since the new management took over on May 1, 1988, my office has been stripped of its facilities one after the other, again without prior notice. First, the air-conditioner was removed, then the refrigerator. 3. My efforts and that of my staff to complete and improve our physical plant and facilities such as the conference room, library, team teaching requirements and nutrition laboratory did not get any support from management. In fact, our efforts were even seen as mere exercises to satisfy our personal whims. Imagine being asked to "justify" the continued use of our conference room which is a basic requirement for team teaching? To make matters worse, our librarian was assigned as secretary to the Chairman of Academic Matters and our facilities were taken over by same officers of the college. 4. My salary was reduced from P7,500.00 per month to P5,000.00, and then finally to P2,500.00 per month since May 1, 1980. This defies logic because in 1979, I had the starting salary of P3,000.00. Nine years later, I am to be paid P2,500.00 per month. 5. To cap all these, while I was absent because of influenza, management decided to assign my office to the Chairman on Management Planning, and the Nursing conference room to the members of the board to be used as their lounging room. This singular act has caused me extreme anguish and embarrassment which I feel I don't deserve and it has caused much damage to my integrity. Because of the above-cited development, I feel that I have been inflicted with an injustice that has caused irreparable damage to my reputation, and has rendered me ineffective in discharging my duties as member of administration and as Dean of the College of Nursing. Yours truly, (SGD) Jean C. Aurelio (pp. 6-7, Rollo.) On September 21, 1988, petitioner sent a copy of the above letter to the Secretary of Education, Culture and Sports praying for assistance. On October 26, 1988, the Secretary of Education, Culture and Sports-referred the letter to the DECS Director of Region I. On October 28, 1988, the Director of the Bureau of Higher Education ordered the DECS Regional Director of Region I through telegram "to investigate NWC College of Nursing, Laoag City immediately PRC recommends suspension of

the operation of College of Nursing due to lack of Dean and faculty to supervise students." On November 3, 1988, the Regional Director informed respondent Northwestern College of the order of investigation and that pursuant thereto, the Director was sending her representatives "to look into the problem stated thereon which is apparently facing the College of Nursing." On November 7, 1988, the representatives of the Regional Director submitted their official findings and recommendations confirming the truth of the allegations of petitioner in her September 20, 1988 letter. The DECS also confirmed the willingness of petitioner to withdraw her indefinite leave of absence. The matter of petitioner's resumption of her position as Dean of the College of Nursing was addressed by the DECS to the attention of respondents who were given up to November 13, 1988 to make their decision. On November 7, 1988, the Regional Director sent a telegram stating: "Please submit written decision status position dean college of nursing not later than November 14, 1988 pd." Private respondents did not answer. They refused to accept petitioner. On November 16, 1988, petitioner filed her complaint for illegal dismissal against private respondents and prayed for reinstatement plus backwages, moral and exemplary damages, and attorney's fees. At the arbitration level, petitioner and private respondents submitted their respective position papers. On December 29, 1989, the labor arbiter issued a decision dismissing the complaint. It appears that private respondent Northwestern College is managed by its Board of Directors elected annually by the stockholders and who serve as such for the ensuing year until their successors shall have been duly elected and qualified. The individual respondents Ben Nicolas, Ernesto Asuncion, Joffrey Aurelio, Alva B. Caday, Lilia Paz, Wilfredo Santillan, and Glen Aquino, are members of the Board of Directors of Northwestern College of which Jean C. Aurelio is a stockholder. On April 30, 1988, the annual regular meeting of stockholders was held at the principal office of the corporation in Laoag City. Elected Directors were the following: Alva Caday, Lucidia Flores, Nicolas Nicolas, Oscar Aurelio, Cherry Caday, Lilia Paz, Ben Nicolas, Joffrey Aurelio, Francisco Santella, Glenn Aquino, and Wilfredo Nicolas. The following members were elected as officers of the Northwestern College: Alva Caday, Chairman of the Board; Ben Nicolas, Vice-Chairman and President; Joffrey Aurelio, Treasurer; Oscar Aurelio, Corporate Auditor and Lucidia Flores, Corporate Secretary. Nicolas Nicolas, Oscar Aurelio, and Cherry Caday later resigned and in their stead, Atty. Ernesto Asuncion, Atty. Jose Castro, and Dr. Juanito Chan were elected by the stockholders. Since their election into office, the Board members have taken effective control of the management of the college and have regularly exercised their corporate powers. The new Board conducted a preliminary audit which revealed that the college was financially distressed, unable to meet its maturing obligations with its creditor bank. The new management headed by its President, Ben Nicolas, embarked on a realignment of positions and functions of the different department in order to minimize expenditures. As a result of the audit, NWC was compelled to abolish the administrative positions held by petitioner, which she did not contest, because of the following reasons: a) In 1988, NWC realized that it was violating the Administrative Manual for Private Schools. Thus, the position of Administrator/Vice President had to be eliminated; b) At that time, NWC was reeling from the effects of ,j its failure to meet its obligations with its creditors and all efforts to minimize expenditures were being undertaken;

c) NWC realized after a study of the realignment of the positions that the functions and duties of Administrator/Vice President for Administration were being performed by the President. Consequently, the former positions had become redundant. During the first semester of the school year 1988-1989, Northwestern College uncovered irregularities allegedly committed by the petitioner, to wit: a) She personally exacted without receipt P25.00 from every student in the College of Nursing for the maintenance of the College Library. b) She did not remit nor liquidate the sum of P600.00 out of the P1,295.91 Related Learning Experience (RLE) fee paid by all students in the College of Nursing. The total sum thereof in the amount of P114,280.00 suspiciously remained unremitted and unliquidated for an unreasonable length of time. c) She drew salaries for teaching in the College of Nursing although she did not have a teaching load. Before the investigation could be concluded, petitioner sent a letter to the President of the college on September 20, 1988 manifesting that she is on an indefinite leave of absence. On December 29, 1989, the labor arbiter dismissed the complaint on the basis of these findings which were adopted by the NLRC: . . . Undoubtedly, complainant had occupied managerial positions, thus the rule of loss of trust and confidence applies. This office is however aware that allegations of loss of trust and confidence must have some basis and such is not lacking on record. Respondent had alleged and submitted evidence of irregularities of complainant during her tenure at the college. The complainant instead of refuting the charges cited alleged irregularities committed by the respondents in their respective offices. Needless to state, the allegation does not detract anything from the charges of irregularities against her by the respondent school. As the records of this case stand, our complainant has not sufficiently explained the substantiated charges of Northwestern College anent exaction of P25.00 from every student of the College of nursing, receipt of salaries for alleged teaching services for which she did not have any teaching load and failure to remit nor liquidate a total amount of P120,000.00. (p. 29 and 94, Rollo.) It must be emphasized that the rules of dismissal for managerial employees are different from those governing ordinary employees for it would be unjust and inequitable to compel an employer to continue with the employment of a person who occupies a managerial and sensitive position despite loss of trust and confidence. At the very least, the relationship must be considered seriously strained, foreclosing the remedy of reinstatement. We find that the allegations of irregularities were sufficiently substantiated thus justifying petitioner's separation. Moreover, and still on the issue of dismissal, the records disclose that in holding on to the two positions, petitioner violated the Administrative Manual for Private Schools. Thus, the respondent had no other recourse but to take away one of the positions from her or abolish the same. Undoubtedly, the College Board of Directors has the authority to reorganize and streamline the operations of the college with the end in view of minimizing expenditures. We believe that the instant case was an offshoot of a corporate reorganization, a prerogative reposed on the Board of Directors of the College.

The NLRC found that: Admittedly, complainant was a managerial employee who has to have the complete trust and confidence of respondents. While it may be true that complainant was not strictly an accountable employee primarily responsible for disbursement of whatever funds, respondents had some basis in losing its trust and confidence in complainant. Respondents' evidence showed that under the principle of command responsibility, complainant was in a sense responsible in the monitoring of monetary transactions involving funds from library collections and from Related Learning Science collection (pp. 29-32, 136). For it has been held that in case of termination due to loss of trust and confidence proof beyond reasonable doubt of misconduct is not necessary but some basis being sufficient (Villadolid vs. Inciong, 121 SCRA 205). However, we find that complainant was not accorded notice and investigation prior to termination. Indeed, circumstances herein resulted in constructive dismissal. We lend credence to complainant's allegation that investigation was conducted after she tendered her indefinite leave. Law and jurisprudence mandate due process prior to termination (Century Textile vs. NLRC, 161 SCRA 528). Considering the circumstances obtaining and in the spirit of compassionate justice, we find complainant entitled to separation pay, equivalent to one-half month per year of service based on her salary of P7,500.00 or the total amount of P32,750.00. Except for the allegation on constructive dismissal, this petition is a repetition of what petitioner had already alleged below and which the labor arbiter and the NLRC dismissed for lack of merit. Petitioner's claim of constructive dismissal stems from her alleged removal from the positions of Administrator, Vice President for Administration and Executive Vice President. From the time petitioner assumed the position of Executive Vice President, she did not possess any legal right to claim security of tenure concerning this position because she assumed the same without authority from the Board of Directors. Petitioner cannot claim that she was dismissed from the position of Administrator and Vice-President for Administration because her continuous occupation of the positions is at the discretion or pleasure of the Board of Directors. In La Sallete of Santiago, Inc. vs. NLRC (195 SCRA 80 [1991]), this Court explained: The acquisition of security of tenure by the teacher in the manner indicated signifies that he shall thenceforth have the right to remain in employment as such teacher until he reaches the compulsory retirement age in accordance with the rules of the school or the law. That tenure, once acquired, cannot be adversely affected or defeated by requiring the teacher to execute contracts stipulating the termination of his employment upon the expiration of a fixed period or term. Contracts of that sort are anathema and will be struck down as null and void. Now, a teacher may also be appointed as a department head or administrative officer of the school, e.g., as member of the school's governing council, as college dean or assistant dean, as high school principal, as college secretary. Except in the case of a clear and explicit agreement to the contrary, the acceptance by a teacher of an administrative position offered to him or to which he might have aspired, does not operate as a relinquishment or loss by him of his security of tenure as a faculty member; he retains his tenure as a teacher during all the time that he occupies the additional position of department head or administrative officer of the school. Indeed, the agreement between him and the school may very well include a provision for him to continue teaching even on a parttime basis. The teacher designated as administrative officer ordinarily serves for a definite term or at the pleasure of the school head or board of trustees or regents depending on the rules of the school and

the agreement he may enter into with the institution. This appears to the Court to be the invariable practice in most private schools, the purpose being, as the Court en banc has also had occasion to point out, to afford to as many of the teaching staff as possible the opportunity to serve as dean or principal or as administrative officer of one type or another. There is, to be sure, nothing whatever amiss in said practice of having teachers serve as administrative officials for a fixed term or in a nonpermanent capacity. xxx xxx xxx A distinction should thus be drawn between the teaching staff of private educational institutions, on one hand — teachers, assistant instructors, assistant professors, associate professors, full professors — and department or administrative heads or officials on the other — college or department secretaries, principals, directors," assistant, deans, deans. The teaching staff, the faculty members, may and should acquire tenure in accordance with the rules and regulations of the Department of Education and Culture and the school's own rules and standards. On the other hand, teachers appointed to serve as administrative officials do not normally and should not expect to, acquire a second or additional tenure. The acquisition of such an additional tenure is not normal, is the exception rather than the rule, and should therefore be clearly and specifically provided by law or contract. (at pp. 82-83, and 85.) The management of NWC rests on its Board of Directors including the selection of members of the faculty who may be allowed to assume other positions in the college aside from that of teacher or instructor. In 1988, when the then new Board of Directors abolished the additional positions held by the petitioner, it was merely exercising its right. The Board abolished the positions not because the petitioner was the occupant thereof but because the positions had become redundant with functions overlapping those of the President of the college. The Board realized that the college was violating the Administrative Manual for Private School which requires that all collegiate departments should have a full-time head. In Philippine School of Business Administration, et al. vs. Labor Arbiter Lacandola S. Leano and Rufino R. Tan (127 SCRA 778 [1984]), this Court held: This is not a case of dismissal. The situation is that of a corporate office having been declared vacant, and of TAN's not having been elected thereafter, The matter of whom to elect is a prerogative that belongs to the Board, and involves the exercise of deliberate choice and the faculty of discriminative selection. Generally speaking, the relationship of a person to a corporation, whether as officer or agent or employee, is not determined by the nature of the services performed, but by the incidents of the relationship as they actually exist. (At p. 783.). The Board of Directors of NWC merely exercised rights vested in it by the Articles of Incorporation. Petitioner failed to refute the evidence proffered by NWC before the labor arbiter. In her appeal to the NLRC, petitioner also failed to rebut the findings of the labor arbiter. In the instant petition, she has again failed to overturn private respondents' evidence as well as the findings of the labor arbiter which were affirmed by the NLRC. Petitioner's application for an indefinite leave of absence was not approved by the college authorities, but this notwithstanding, she failed to follow-up her application and did not report for work. Believing she was dismissed, petitioner filed the complaint for illegal dismissal, illegal deductions, underpayment, unpaid wages or commissions and for moral damages and attorney's fees on November 16, 1988.

As pointed out earlier, the rules on termination of employment, penalties for infractions, and resort to concerted actions, insofar as managerial employees are concerned, are not necessarily the same as those applicable to termination of employment of ordinary employees. Employers, generally, are allowed a wider latitude of discretion in terminating the employment of managerial personnel or those of similar rank performing functions which by their nature require the employer's trust and confidence, than in the case of ordinary rank-and-file employees (Cruz vs. Medina, 177 SCRA S65 [1989]). Article 282(c) of the Labor Code provides that an employer may terminate an employment for "fraud or willful breach by the employee of the trust reposed in him by his employer or his duly authorized representative." Under this provision, loss of trust and confidence is a valid ground for dismissing an employee. Termination of employment on this ground does not require proof beyond reasonable doubt. All that is needed is for the employer to establish sufficient basis for the dismissal of the employee (Cruz vs. Medina, supra) Both the labor arbiter and the public respondent NLRC found that there is some basis for respondent NWC's loss of trust and confidence on petitioner. The dismissal of the petitioner was for a just and valid cause. However, public respondent gave credence to petitioner's allegation that she was not accorded notice and hearing prior to termination. It appears on record that the investigation of petitioner's alleged irregularities was conducted after the filing of the complaint for illegal dismissal. Under Section 1, Rule XIV of the Implementing Rules and Regulations of the Labor Code, the dismissal of an employee must be for a just or authorized cause and after due process. The two requirements of this legal provision are: 1. The legality of the act of dismissal, that is, dismissal under the ground provided under Article 283 of the New Labor Code; and 2. The legality in the manner of dismissal, that is, with due observance of the procedural requirements of Sections 2, 5, and 6 of Batas Pambansa Blg. 130 (Shoemart vs. NLRC, 176 SCRA 385 [1989]). While the Labor Code treats of the nature and the remedies available with regard to the first, such as: (a) reinstatement to his former position without loss of seniority rights, and (b) payment of backwages corresponding to the period from his illegal dismissal up to actual reinstatement, said Code does not deal at all with the second, that is, the manner of dismissal, which is therefore, governed exclusively by the Civil Code (Primero vs. IAC, 156 SCRA 436 [1987]; Shoemart vs. NLRC, supra). In cases where there was a valid ground to dismiss an employee but there was non-observance of due process, this Court held that only a sanction must be imposed upon the employer for failure to give formal notice and to conduct an investigation required by law before dismissing the employee in consonance with the ruling in Wenphil v. NLRC, 170 SCRA 69 (1989); Shoemart, Inc. vs. NLRC, supra; and in Pacific Mills, Inc. vs. Zenaida Alonzo, 199 SCRA 617 (1991). In Wenphil, we held:

However, the petitioner must nevertheless be held to account for failure to extend to private respondent his right to an investigation before causing his dismissal. The rule is explicit as discussed above. The dismissal of an employee must be for just or authorized cause and after due process (Emphasis in the original). Petitioner committed an infraction of the second requirement. Thus, it must be imposed a sanction for its failure to give a formal notice and conduct an investigation as required by law before dismissing petitioner from employment. Considering the circumstance of this case petitioner must indemnify the private respondent the amount of P1,000.00. The measure of this award depends on the facts of each case and the gravity of the omission committed by the employer. (at p. 76, reiterated in Pacific Mills, supra, at p. 261.) Public respondent's finding that petitioner was not afforded due process is correct but the Commission erred when it awarded separation pay in the amount of P32,750.00. In the Pacific Mills, Inc. and Wenphil cases, this Court merely awarded P1,000.00 as penalty for non-observance of due process. The Board of Directors, composed of the individual private respondents herein, has the power granted by the Corporation Code to implement a reorganization of respondent college's offices, including the abolition of various positions, since it is implied or incidental to its power to conduct the regular business affairs of the corporation. The prerogative of management to conduct its own business affairs to achieve its purposes cannot be denied (San Miguel Brewery Sales Force Union [FTGHWO] vs. Ople, 110 SCRA 25 [1981]; Abbot Laboratories vs. NLRC, 154 SCRA 713 [1987]). Management is at liberty, absent any malice on its part, to abolish positions which it deems no longer necessary (Great Pacific Life Assurance Corp. vs. NLRC, 188 SCRA 139 [1990]). When petitioner was stripped by the Board of her positions as Executive Vice President and Vice President for Administration, with a corresponding reduction in salary, the Board did not act in a capricious, whimsical, and arbitrary manner, thus negating malice and bad faith. WHEREFORE, the decision under review is hereby AFFIRMED with the MODIFICATION that the award of separation pay is DELETED and that private respondents are ORDERED to pay petitioner the amount of One Thousand Pesos (P1,000.00) as indemnity for non-observance of due process. SO ORDERED. Feliciano, Bidin, Davide, Jr. and Romero, JJ ., concur.

Republic of the Philippines Supreme Court Manila

THIRD DIVISION

REYNALDO G. CABIGTING, Petitioner,

G.R. No. 167706 Present:

QUISUMBING,* J., - versus -

CARPIO, J., Chairperson, CHICO-NAZARIO, PERALTA, and ABAD,** JJ.

SAN MIGUEL FOODS, INC., Respondent.

Promulgated: November 5, 2009

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

DECISION

PERALTA, J.:

Before this Court is a Petition for Review [1] on certiorari under Rule 45 of the Rules of Court assailing the August 31, 2004 Decision[2] and April 5, [3] 2005 Resolution of the Court of Appeals (CA) in CA-G.R. SP No. 82810. The CA declared the dismissal of petitioner as illegal and ordered the payment of his full backwages, but did not decree his reinstatement. The facts of the case: Petitioner Reynaldo G. Cabigting was hired as a receiver/ issuer at the San Miguel Corporation, Feeds and Livestock Division (B-Meg) on February 16, 1984 and after years of service, he was promoted as inventory controller.[4]

On June 26, 2000, respondent San Miguel Foods, Inc., through its President, Mr. Arnaldo Africa, sent petitioner a letter informing him that his position as sales office coordinator under its logistic department has been declared redundant. Simultaneously, respondent terminated the services of petitioner effective July 31, 2000, and offered him an early retirement package. Thereafter, petitioner was included in the list of retrenched employees (for reason of redundancy) submitted by respondent to the Department of Labor and Employment.[5]

Petitioner was surprised upon receipt of the letter because he was not a sales office coordinator, and yet he was being terminated as such. Accordingly, petitioner refused to avail of the early retirement package.[6]

Prior to petitioners termination on July 31, 2000, he was an inventory controller, performing at the same time the function of a warehouseman. Furthermore, petitioner was an active union

officer of respondents union but upon his termination, was only a member thereof.[7]

With the support of his union,[8] petitioner filed a Complaint questioning his termination primarily because he was not a sales office coordinator, but an inventory controller, performing the functions of both an inventory controller and a warehouseman. [9]

In reply, respondent reiterated its declaration that petitioners position as sales office coordinator was redundant as a result of respondents effort to streamline its operations. [10]

According to respondent, petitioner was supposed to be separated from employment (effective July 1, 1997) due to the cessation of business of the B-Meg Plant. However, upon petitioners request for redeployment to another position, he was accommodated and was designated as sales coordinator from December 1997 to November 1998, even without rendering actual work as sales coordinator. Respondent claimed that the same was done on the assumption that petitioner would replace Mr. Luis del Rosario, Sales Coordinator of respondents Luzon Operations Center, upon the latters impending retirement and for the sole purpose of justifying his inclusion in the payroll. Respondent averred, however, that the position of Mr. Luis del Rosario as sales coordinator was abolished due to redundancy as a result of its streamlining efforts.[11]

On October 14, 2002, the Labor Arbiter (LA) rendered a Decision, [12] where it ruled that petitioner was illegally dismissed. Accordingly, the LA ordered respondent to pay petitioner backwages, separation pay in lieu of reinstatement and attorneys fees. The dispositive portion of said Decision reads:

WHEREFORE, premises considered, judgment is hereby rendered ordering the respondent SAN MIGUEL FOODS, INC. to pay complainant REYNALDO CABIGTING the amount ofP1,521,588.99, representing his separation pay under the CBA, backwages and attorneys fees. All other claims are dismissed for lack of merit.

SO ORDERED.[13]

Respondent appealed the LAs Decision to the National Labor Relations Commission (NLRC). Likewise, petitioner partly appealed the LAs Decision as to his non-reinstatement to his previous post and for not awarding him moral and exemplary damages. [14]

On June 30, 2003, the NLRC rendered a Decision [15] affirming the LAs finding that petitioner was illegally dismissed by respondent. More importantly, the NLRC modified the LAs Decision by ordering the reinstatement of petitioner to his previous post, without loss of seniority rights. The dispositive portion of said Decision reads: WHEREFORE, premises considered, the decision under review is hereby MODIFIED by decreeing the REINSTATEMENT of the complainant to his former position without loss of seniority rights, in lieu of an earlier award of separation pay.

Accordingly, backwages shall be computed from the time of the dismissal up to actual reinstatement.

All other claims are dismissed for lack of merit.

SO ORDERED.[16]

Respondent appealed the NLRC Decision to the CA via a Petition for Certiorari[17] under Rule 65 of the Rules of Court.

On August 31, 2004, the CA rendered a Decision partially granting respondents petition. In said Decision, the CA affirmed the judgment of the LA and the NLRC finding that petitioner was illegally dismissed by respondent. However, the CA, on the ground that there were strained relations between employee and employer, reversed the portion of the NLRC Decision which decreed petitioners reinstatement. The dispositive portion of the CA Decision reads: WHEREFORE, premises considered, the judgment of public respondent NLRC, affirming the judgment of the Labor Arbiter that private respondent Cabigting was illegally dismissed by petitioner, is hereby AFFIRMED. However, public respondent NLRCs judgment ordering the reinstatement of private respondent Cabigting is hereby REVERSED and SET ASIDE.

The awards of backwages, separation pay and attorneys fees by the Labor Arbiter in his Decision dated October 14, 2002 REMAIN.

SO ORDERED.[18]

Respondent filed a Motion for Reconsideration [19] of the said Decision. Likewise, petitioner filed a Partial Motion for Reconsideration[20] assailing the CA Decision insofar as it ruled against his reinstatement.

On April 5, 2005, the CA issued a Resolution [21] denying both motions.

Hence, herein petition, with petitioner raising the lone assignment of error, to wit: THE HONORABLE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR IN MODIFYING THE DECISION OF THE NATIONAL LABOR RELATIONS COMMISSION, SECOND DIVISION.[22]

The petition is meritorious.

The crux of the controversy is whether or not strained relations bar petitioners reinstatement. At the outset, this Court shall address respondents plea to re-open the issue of illegal dismissal. Respondent argues that it is axiomatic that an appeal, once accepted by the Supreme Court, throws the entire case open to review. [23] Accordingly, respondent posits that petitioner was not illegally dismissed, but was separated due to a valid redundancy/retrenchment program. [24]

The well-entrenched rule in our jurisdiction is that only questions of law may be entertained by this Court in a petition for review

on certiorari. This rule, however, is not ironclad and admits certain exceptions, such as when (1) the conclusion is grounded on speculations, surmises or conjectures; (2) the inference is manifestly mistaken, absurd or impossible; (3) there is grave abuse of discretion; (4) the judgment is based on a misapprehension of facts; (5) the findings of fact are conflicting; (6) there is no citation of specific evidence on which the factual findings are based; (7) the findings of absence of facts are contradicted by the presence of evidence on record; (8) the findings of the Court of Appeals are contrary to those of the trial court; (9) the Court of Appeals manifestly overlooked certain relevant and undisputed facts that, if properly considered, would justify a different conclusion; (10) the findings of the Court of Appeals are beyond the issues of the case; and (11) such findings are contrary to the admissions of both parties. [25]

After a painstaking review of the records, this Court finds no justification to warrant the application of any exception to the general rule.

It bears to stress that the LA, the NLRC and the CA all ruled that petitioner was illegally dismissed. Such being the case, factual findings of quasi-judicial bodies like the NLRC, particularly when they coincide with those of the Labor Arbiter and, if supported by substantial evidence, are accorded respect and even finality by this Court.[26] Moreover, it is not the function of this Court to assess and evaluate the evidence all over again, particularly where the findings of the LA, the NLRC and the CA coincide. Thus, absent a showing of an error of law committed by the court below, or of whimsical or capricious exercise of judgment, or a demonstrable lack of basis for its conclusions, this Court may not disturb its factual findings.[27]

Having settled the foregoing, this Court shall now address the lone issue of strained relations.

Article 279 of the Labor Code of the Philippines provides the law on reinstatement, viz.:

Article 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.[28]

Corollarily, Sections 2 and 3, Rule 1, Book VI of the Omnibus Rules Implementing the Labor Code state, viz.:

Sec. 2. Security of Tenure. - In cases of regular employment, the employer shall not terminate the services of an employee, except for a just cause as provided in the Labor Code or when authorized by existing laws. Sec. 3. Reinstatement. - An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and to backwages.[29]

Under the law and prevailing jurisprudence, an illegally dismissed employee is entitled to reinstatement as a matter of right. However, if reinstatement would only exacerbate the tension and strained relations between the parties, or where the relationship between the employer and the employee has been unduly strained by reason of their irreconcilable differences, particularly

where the illegally dismissed employee held a managerial or key position in the company, it would be more prudent to order payment of separation pay instead of reinstatement. [30]

In Globe-Mackay Cable and Radio Corporation v. National Labor Relations Commission, [31] this Court discussed the limitations and qualifications for the application of the strained relations principle, in this wise: x x x If, in the wisdom of the Court, there may be a ground or grounds for non-application of the above-cited provision, this should be by way of exception, such as when the reinstatement may be inadmissible due to ensuing strained relations between the employer and the employee. In such cases, it should be proved that the employee concerned occupies a position where he enjoys the trust and confidence of his employer; and that it is likely that if reinstated, an atmosphere of antipathy and antagonism may be generated as to adversely affect the efficiency and productivity of the employee concerned. A few examples will suffice to illustrate the Court's application of the above principle: where the employee is a Vice-President for Marketing and, as such, enjoys the full trust and confidence of top management; or is the Officer-In-Charge of the extension office of the bank where he works; or is an organizer of a union who was in a position to sabotage the union's efforts to organize the workers in commercial and industrial establishments; or is a warehouseman of a non-profit organization whose primary purpose is to facilitate and maximize voluntary gifts by foreign individuals and organizations to the Philippines; or is a manager of its Energy Equipment Sales. Obviously, the principle of "strained relations" cannot be applied indiscriminately. Otherwise, reinstatement can never be possible simply because some hostility is invariably engendered between the parties as a result of litigation. That is human nature.

Besides, no strained relations should arise from a valid and legal act of asserting one's right; otherwise, an employee who shall assert his right could be easily separated from the service, by merely paying his separation pay on the pretext that his relationship with his employer had already become strained.[32]

Moreover, Chief Justice Reynato S. Puno, in his dissenting opinion in MGG Marine Services, Inc. v. National Labor Relations Commission,[33] gives the following suggestion in the application of the doctrine of strained relations: x x x At the very least, I suggest that, henceforth, we should require that the alleged strained relationship must be pleaded and proved if either the employer or the employee does not want the employment tie to remain. By making strained relationship a triable issue of fact before the Arbiter or the NLRC we will eliminate rulings on strained relationship based on mere impression alone.[34]

Based on the foregoing, in order for the doctrine of strained relations to apply, it should be proved that the employee concerned occupies a position where he enjoys the trust and confidence of his employer and that it is likely that if reinstated, an atmosphere of antipathy and antagonism may be generated as to adversely affect the efficiency and productivity of the employee concerned.

Although the determination of the applicability of the doctrine of strained relations is essentially a question of fact, which should not be the proper subject of herein petition, this

Court shall address said issue in light of the conflicting findings of the LA and the NLRC. The LA ruled that strained relations barred petitioners reinstatement, to wit: Anent the aspect of reinstatement, this Office opines that to reinstate complainant to his former position at this point in time, is no longer practical and would not promote peace considering the animosity and strained relations that exist between the parties. x x x[35]

After a perusal of the LA Decision, this Court finds that the LA had no hard facts upon which to base the application of the doctrine of strained relations, as the same was not squarely discussed nor elaborated on. Also, it is of notice that said issue was addressed by the LA in just one sentence without indicating factual circumstances why strained relations exist.

The same is also true for the CA Decision which disposed of the issue in just one sentence without any elaboration, to wit: On the matter of reinstatement, We believe that under the circumstances in this case, there has been, and there will be, animosity and strained relationships between the parties, hence, private respondent Cabigting shall be entitled to separation pay.[36]

Accordingly, this Court is of the opinion that both the LA and the CA based their conclusions on impression alone. It bears to stress that reinstatement is the rule and, for the exception of strained relations to apply, it should be proved that it is likely that if reinstated, an atmosphere of antipathy and antagonism would be generated as to adversely affect the efficiency and productivity of the employee concerned. However, both the LA and the CA failed to state the basis for their finding that a strained relationship exists. Based on the foregoing, this Court upholds the ruling of the NLRC finding the doctrine of strained relations inapplicable to the factual circumstances of the case at bar, to wit: Finally, it is noted that the position of warehouseman and inventory controller is still existing up to date. The nature of the controversy where the parties to this case were engaged is not of such nature that would spawn a situation where the relations are severely strained between them as would bar the complainant to his continued employment. Neither may it be said that his position entails a constant communion with the respondent such that hostilities may bar smooth interactions between them. Accordingly, We find no basis for an award of separation pay in lieu of reinstatement. [37]

In its pleadings, however, respondent repeatedly argued against the reinstatement of petitioner, in the wise: 5.5 Strained relations may result, among others, from the imputations made by the employer and the employee as against each other or, by the filing of a complaint by the employee against the employer.

5.6 As will be discussed below, the strained relationship between the petitioner and the respondent, aside from the fact that the former was not illegally dismissed,

further militates petitioner.

against

the

reinstatement

of

the

5.7 The petitioner, in his pleadings submitted before the Honorable Labor Arbiter below, resorted to imputations and accusations which are totally uncalled for, hitting the respondent below the belt, so to speak.

5.8 For instance, in his reply position paper, petitioner declared as a blatant display of arrogance the alleged refusal of respondent to observe certain provisions of the collective bargaining agreement; that it was highly ridiculous on the part of the respondent to assert that his continued employment was due merely to an act of accommodation on the part of the respondent.

5.9 In fact, in his comment with the Court of Appeals, petitioner intimated that respondent fabricated evidence when it presented a document which showed that petitioner was a Sales Office Coordinator, claiming that he was assigned by the respondent to a new and unknown position and thereafter declared [the position] redundant. Throughout his allegations, petitioner imputes malice and bad faith on the part of respondent.

5.10 These imputations effectively placed a strain on the relationship between the respondent and the petitioner, notwithstanding the fact that the former did everything within its resources to accommodate the petitioner so as to provide him employment even when there was no more work for him to do.

xxxx

5.18 The antagonism and antipathy shown by petitioner towards the respondent is more real than imaginary. It bears to note that after the respondent extended him accommodation by instituting him in the payroll, the petitioner turned the tables on the respondent by declaring that his continued employment was not due to an accommodation, even alleging that it was highly ridiculous for the respondent to consider him as an accommodated employee.[38]

The claim of respondent is not meritorious. This Court shares petitioners view that the words allegedly imputing malice and bad faith towards the respondent cannot be made a basis for denying his reinstatement. Respondents perceived antipathy and antagonism is not of such degree as would preclude reinstatement of petitioner to his former position. [39] In addition, by themselves alone, the words used by petitioner in his pleadings are insufficient to prove the presence of strained relations. Thus, this Court finds that one should not fault petitioner for his choice of words, especially in light of overwhelming evidence showing he was illegally dismissed.

Moreover, the filing of the complaint by petitioner cannot be used as a basis for strained relations. As a rule, no strained relations should arise from a valid and legal act asserting ones right.[40] Likewise, respondents claim that it was betrayed by petitioner, after several accommodations it had extended to him, [41] deserves scant consideration. On this note, the NLRC was categorical that no such accommodation existed, to wit:

On the argument that Cabigting was merely accommodated by the respondent after the closure of the Tacoma Warehouse, it, however, appears that no such accommodation existed. x x x[42]

The doctrine of strained relations has been made applicable to cases[43] where the employee decides not to be reinstated and demands for separation pay. The same, however, does not apply to herein petition, as petitioner is asking for his reinstatement despite his illegal dismissal. Lastly, this Court takes note of the findings of fact of the NLRC that the position of inventory controller and warehouseman is still existing up to date.[44] Petitioner has been an inventory controller for so many years, and there should be no problem in ordering the reinstatement with facility of a laborer, clerk, or other rankand-file employee.[45]

In conclusion, it bears to stress that it is human nature that some hostility will inevitably arise between parties as a result of litigation, but the same does not always constitute strained relations in the absence of proof or explanation that such indeed exists.

WHEREFORE, premises considered, the petition is GRANTED. The August 31, 2004 Decision and April 5, 2005 Resolution of the Court of Appeals in CA-G.R. SP No. 82810 are hereby AFFIRMED with the MODIFICATION that petitioner Reynaldo G. Cabigting is entitled to REINSTATEMENT. Respondent is ORDERED toIMMEDIATELY REINSTATE petitioner to his previous position without loss of seniority rights. In case the former position of petitioner is no longer available, respondent is directed to create an equivalent position and immediately reinstate petitioner without loss of seniority rights. Accordingly,

backwages shall be computed from the time of dismissal up to the time of actual reinstatement. SO ORDERED.

DIOSDADO M. PERALTA Associate Justice

Republic of the Philippines Supreme Court Manila

SECOND DIVISION BANK OF LUBAO, INC.,

G.R. No. 188722

Petitioner, Present: CARPIO, J.,

- versus -

Chairperson, BRION, PEREZ,

ROMMEL J. MANABAT and the

SERENO, and

NATIONAL LABOR RELATIONS

REYES, JJ.

COMMISSION, Respondents.

Promulgated: February 1, 2012

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

DECISION

REYES, J.:

Nature of the Petition

This is a petition for review on certiorari under Rule 45 of the Rules of Court filed by the Bank of Lubao, Inc. (petitioner) assailing the Decision[1] dated April 24, 2009 and Resolution[2] dated July 7, 2009 issued by the Court of Appeals (CA) in CA-G.R. SP No. 106419.

The Antecedent Facts

Sometime in 2001, Rommel J. Manabat (respondent) was hired by petitioner Bank of Lubao, a rural bank, as a Market Collector. Subsequently, the respondent was assigned as an encoder at the Bank of Lubaos Sta. Cruz Extension Office, which he manned together with two other employees, teller Susan P. Lingad (Lingad) and May O. Manasan. As an encoder, the respondents primary duty is to encode the clients deposits on the banks computer after the same are received by Lingad.

In November 2004, an initial audit on the Bank of Lubaos Sta. Cruz Extension Office conducted by the petitioner revealed that there was a misappropriation of funds in the amount of P3,000,000.00, more or less. Apparently, there were transactions entered and posted in the passbooks of the clients but were not entered in the banks book of accounts. Further audit showed that there were various deposits which were entered in the banks computer but were subsequently reversed and marked as error in posting.

On November 17, 2004, the respondent, through a memorandum sent by the petitioner, was asked to explain in writing the discrepancies that were discovered during the audit. On November 19, 2004, the respondent submitted to the petitioner his letter-explanation which, in essence, asserted that there were times when Lingad used the banks computer while he was out on errands.

On December 11, 2004, an administrative hearing was conducted by the banks investigating committee where the respondent was further made to explain his side. Subsequently, the investigating committee concluded that the respondent conspired with Lingad in making fraudulent entries disguised as error corrections in the banks computer.

On August 9, 2005, the petitioner filed several criminal complaints for qualified theft against Lingad and the respondent with the Municipal Trial Court (MTC) of Lubao, Pampanga. Thereafter, citing serious misconduct tantamount to willful breach of trust as ground, it terminated the respondents employment effective September 1, 2005.

On September 26, 2005, the respondent filed a Complaint [3] for illegal dismissal with the Regional Arbitration Branch of the National Labor Relations Commission (NLRC) in San Fernando City, Pampanga. In the said complaint, the respondent, to bolster his claim that there was no valid ground for his dismissal, averred that the charge against him for qualified theft was dismissed for lack of sufficient basis to conclude that he conspired with Lingad. The respondent sought an award for separation pay, full backwages, 13th month pay for 2004 and moral and exemplary damages.

For its part, the petitioner insists that the dismissal of the respondent is justified, asserting the February 14, 2006 Audit Report which confirmed the participation of the respondent in the alleged misappropriations. Likewise, the petitioner asserted that the dismissal of the qualified theft charge against the respondent is immaterial to the validity of the ground for the latters dismissal.

The Labor Arbiters Decision

On February 28, 2007, the Labor Arbiter (LA) rendered a decision[4] sustaining the respondents claim of illegal dismissal thus ordering the petitioner to reinstate the respondent to his former position and awarding the latter backwages in the amount of P111,960.00 and 13th month pay in the amount of P6,220.00. The LA opined that the petitioner failed to adduce substantial evidence that there was a valid ground for the respondents dismissal. Further, the

February 14, 2006 Audit Report that was adduced by the petitioner in evidence was disregarded by the LA since it was unsigned.

The petitioner appealed the foregoing disposition to the NLRC, submitting a new audit report dated April 30, 2007. Pending appeal, the petitioner sent the respondent a letter[5] dated April 30, 2007 requiring him to report for work on May 4, 2007 pursuant to the reinstatement order of the LA. The said letter was served to the respondent on May 3, 2007 but he refused to receive the same.

The NLRCs Decision

On July 21, 2008, the NLRC rendered a Decision [6] affirming the February 28, 2007 Decision of the LA. The NLRC held that it was sufficiently established that only Lingad was the one responsible for the said misappropriations. Further, the NLRC asserted that the February 14, 2006 and April 30, 2007 audit reports presented by the petitioner could not be given evidentiary weight as the same were executed after the respondent had already been dismissed. The petitioner sought reconsideration of the said July 21, 2008 Decision but it was denied by the NLRC in its Resolution[7] dated September 22, 2009.

Subsequently, the petitioner filed a Petition for Certiorari[8] with the CA alleging that the NLRC and the LA gravely abused their discretion in ruling that the respondent had been illegally dismissed.

The CA Decision

On April 24, 2009, the CA rendered the herein assailed decision [9] denying the petition for certiorari filed by the petitioner. However, the CA held that the respondent is entitled to separation pay equivalent to one-month salary for every year of service in lieu of reinstatement and backwages to be computed from the time of his illegal dismissal until the finality of the said decision.

The CA agreed with the LA and the NLRC that the petitioner failed to establish by substantial evidence that there was indeed a valid ground for the respondents dismissal. Nevertheless, the CA held that the petitioner should pay the respondent separation pay since the latter did not pray for reinstatement before the LA and that the same would be in the best interest of the parties considering the animosity and antagonism that exist between them. The CA stated the following:

With respect to monetary awards, a finding that an employee has been illegally dismissed ordinarily entitles him to reinstatement to his former position without loss of seniority rights and to the payment of backwages. In this case, however, private respondent did not pray for reinstatement before the Labor Arbiter. This being the case, the employer should pay him separation pay in lieu [of] reinstatement. This is only just and practical because reinstatement of private respondent will no longer be in the best interest of both parties considering the animosity and antagonism that exist between them brought about by the filing of charges in the criminal as well as in the labor proceedings. Consequently, private respondent is entitled to separation pay equivalent to one month pay for every year of service up to the finality of this judgment, as an alternative to reinstatement. With respect to his backwages, where

reinstatement is no longer possible, it shall be computed from the time of the employees illegal termination up to the finality of this decision, without qualification or deduction.[10] (citations omitted)

Hence, the fallo of the CA Decision reads:

WHEREFORE, the petition is DENIED. The assailed Decision and Resolution of the NLRC are AFFIRMED with the MODIFICATION that private respondent is entitled to separation pay equivalent to one month salary for every year of service in lieu of reinstatement and backwages to be computed from the time of his illegal dismissal until the finality of this Decision.

SO ORDERED.[11]

The petitioners Motion for Reconsideration[12] was denied by the CA in its Resolution[13] dated July 7, 2009.

Undaunted, the petitioner instituted the instant petition for review on certiorari before this Court asserting the following arguments: (1) the CA erred in awarding separation pay in favor of the respondent in lieu of reinstatement considering that the appeal before it only involved the issue of the legality or illegality of the respondents dismissal; (2) an award of separation pay to the respondent is not proper in this case considering that, in his complaint, he merely prayed for reinstatement and not payment of separation pay; and (3) the CA erred

in awarding backwages in favor of the respondent since it acted in good faith when it terminated the respondents employment.

In his Comment,[14] the respondent asserted that the CA did not err in ordering the payment of separation pay in his favor in lieu of reinstatement since there is already a strained relationship between him and the petitioner. He intimated that the petitioner had previously filed various criminal charges against him for qualified theft thus effectively rendering his reinstatement to his former position in the Bank of Lubao impracticable.

Issues

In sum, the issues to be resolved by this Court in the instant case are the following: (1) whether the CA erred in ordering the petitioner to pay the respondent separation pay in lieu of reinstatement; and (2) whether the respondent is entitled to payment of backwages.

The Courts Ruling

This Court notes that the LA, the NLRC and the CA unanimously ruled that the respondent was illegally dismissed. Factual findings of quasi-judicial bodies like the NLRC, if supported by substantial evidence, are accorded respect and even finality by this Court, more so when they coincide with those of the LA. Such factual findings are given more weight when the same are affirmed by the CA. We find no reason to depart from the foregoing rule.

First Issue: Separation Pay in Lieu of Reinstatement

At the outset, it should be stressed that a determination of the applicability of the doctrine of strained relations is essentially a factual question and, thus, not a proper subject in the instant petition.[15]

The well-entrenched rule in our jurisdiction is that only questions of law may be entertained by this Court in a petition for review on certiorari. This rule, however, is not ironclad and admits certain exceptions, such as when, inter alia, the findings of fact are conflicting.[16]

Here, in view of the conflicting findings of the NLRC and the CA, this Court is constrained to pass upon the propriety of the application of the doctrine of strained relations to justify the award of separation pay to the respondent in lieu of reinstatement.

The law on reinstatement is provided for under Article 279 of the Labor Code of the Philippines: Article 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 reinstatement. (emphasis supplied)

of

his

actual

Under the law and prevailing jurisprudence, an illegally dismissed employee is entitled to reinstatement as a matter of right. However, if reinstatement would only exacerbate the tension and strained relations between the parties, or where the relationship between the employer and the employee has been unduly strained by reason of their irreconcilable differences, particularly where the illegally dismissed employee held a managerial or key position in the company, it would be more prudent to order payment of separation pay instead of reinstatement.[17]

Under the doctrine of strained relations, the payment of separation pay is considered an acceptable alternative to reinstatement when the latter option is no longer desirable or viable. On one hand, such payment liberates the employee from what could be a highly oppressive work environment. On the other hand, it releases the employer from the grossly unpalatable obligation of maintaining in its employ a worker it could no longer trust.[18]

In such cases, it should be proved that the employee concerned occupies a position where he enjoys the trust and confidence of his employer; and that it is likely that if reinstated, an atmosphere of antipathy and antagonism may be generated as to adversely affect the efficiency and productivity of the employee concerned.[19]

Here, we agree with the CA that the relations between the parties had been already strained thereby justifying the grant of separation pay in lieu of reinstatement in favor of the respondent.

First, it cannot be gainsaid that the petitioners reinstatement to his former position would only serve to intensify the atmosphere of antipathy and antagonism between the parties. Undoubtedly, the petitioners filing of various criminal complaints against the respondent for qualified theft and the subsequent filing by the latter of the complaint for illegal dismissal against the latter, taken together with the pendency of the instant case for more than six years, had caused strained relations between the parties.

Second, considering that the respondents former position as bank encoder involves the handling of accounts of the depositors of the Bank of Lubao, it would not be equitable on the part of the petitioner to be ordered to maintain the former in its employ since it may only inspire vindictiveness on the part of the respondent.

Third, the refusal of the respondent to be re-admitted to work is in itself indicative of the existence of strained relations between him and the petitioner. In the case ofLagniton, Sr. v. National Labor Relations Commission,[20] the Court held that the refusal of the dismissed employee to be re-admitted is constitutive of strained relations:

It appears that relations between the petitioner and the complainants have been so strained that the complainants are no longer willing to be reinstated. As such reinstatement would only exacerbate the animosities that have developed between the parties, the public respondents were correct in ordering instead the grant of separation pay to the dismissed employees in the interest of industrial peace. [21]

Time and again, this Court has recognized that strained relations between the employer and employee is an exception to the rule requiring actual reinstatement

for illegally dismissed employees for the practical reason that the already existing antagonism will only fester and deteriorate, and will only worsen with possible adverse effects on the parties, if we shall compel reinstatement; thus, the use of a viable substitute that protects the interests of both parties while ensuring that the law is respected.[22]

Second Issue: Backwages

Anent the second issue, the petitioner claimed that the respondent is not entitled to the payment of backwages considering that there was no bad faith on its part when it terminated the latters employment. The petitioner insists that it is within its prerogative to dismiss the respondent on the basis of loss of trust and confidence.

We do not agree.

The arguments raised by the petitioner with regard to the issue of backwages, essentially, attacks the factual findings of the CA, the NLRC and the LA. As stated earlier, subject to well-defined exceptions, factual questions may not be raised in a petition for review on certiorari under Rule 45 as this Court is not a trier of facts. The petitioner failed to assert any circumstance which would impel this Court to disregard the findings of fact of the lower tribunals on the propriety of the award of backwages in favor of the respondent.

However, the backwages that should be awarded to the respondent should be modified. Employees who are illegally dismissed are entitled to full backwages, inclusive of allowances and other benefits or their monetary equivalent, computed from the time their actual compensation was withheld from them up to the time of

their actual reinstatement. But if reinstatement is no longer possible, the backwages shall be computed from the time of their illegal termination up to the finality of the decision.[23]

Thus, when there is an order of reinstatement, the computation of backwages shall be reckoned from the time of illegal dismissal up to the time that the employee is actually reinstated to his former position.

Pursuant to the order of reinstatement rendered by the LA, the petitioner sent the respondent a letter requiring him to report back to work on May 4, 2007. Notwithstanding the said letter, the respondent opted not to report for work. Thus, it is but fair that the backwages that should be awarded to the respondent be computed from the time that the respondent was illegally dismissed until the time when he was required to report for work, i.e. from September 1, 2005 until May 4, 2007. It is only during the said period that the respondent is deemed to be entitled to the payment of backwages.

The fact that the CA, in its April 4, 2009 decision, ordered the payment of separation pay in lieu of the respondents reinstatement would not entitle the latter to backwages. It bears stressing that decisions of the CA, unlike that of the LA, are not immediately executory. Accordingly, the petitioner should only pay the respondent backwages from September 1, 2005, the date when the respondent was illegally dismissed, until May 4, 2007, the date when the petitioner required the former to report to work.

WHEREFORE, in consideration of the foregoing disquisitions, the instant petition is PARTIALLY GRANTED. The Decision dated April 24, 2009 and Resolution dated July 7, 2009 of the Court of Appeals in CA-G.R. SP No. 106419 are

hereby AFFIRMED with MODIFICATION. The petitioner ordered to pay the respondent backwages from September 2005 until May 4, 2007. For this purpose, the case hereby REMANDED to the Labor Arbiter for the computation the amounts due the respondent.

is 1, is of

SO ORDERED.

BIENVENIDO L. REYES Associate Justice EN BANC

[G.R. No. 111651. November 28, 1996]

OSMALIK S. BUSTAMANTE, PAULINO A. BANTAYAN, FERNANDO L. BUSTAMANTE, MARIO D. SUMONOD, and SABU J. LAMARAN, petitioners, vs.NATIONAL LABOR RELATIONS COMMISSION, FIFTH DIVISION and EVERGREEN FARMS, INC., respondents. RESOLUTION PADILLA, J.:

On 15 March 1996, the Court (First Division) promulgated a decision in this case, the dispositive part of which states: "WHEREFORE, the resolution of the National Labor Relations Commission dated 3 May 1993 is modified in that its deletion of the award for backwages in favor of petitioners, is SET ASIDE. The decision of the Labor Arbiter dated 26 April 1991 is AFFIRMED with the modification that backwages shall be paid to petitioners from the time of their illegal dismissal on 25 June 1990 up to the date of their reinstatement. If reinstatement s no longer feasible, a one-month salary shall be paid the petitioners as ordered in the labor arbiter's decision, in addition to the adjudged backwages. Private respondent now moves to reconsider the decision on grounds that (a) petitioners are not entitled to recover backwages because they were not actually dismissed but their probationary employment was not converted to permanent employment; and (b) assuming that petitioners are entitled to backwages, computation thereof should not start from cessation of work up to actual reinstatement, and that salary earned elsewhere (during the period of illegal dismissal) should be deducted from the award of such backwages. There is no compelling reason to reconsider the decision of the Court (First Division) dated 15 March 1996. However, we here clarify the computation of backwages due an employee on account of his illegal dismissal from employment. This court has, over the years, applied different methods in the computation of backwages. The first labor relations law governing the award of backwages was Republic Act No. 875, the Industrial Peace Act, approved on 17 June 1953. Sections 5 and 15 thereof provided thus: "Sec. 5. Unfair Labor Practice Cases.(c) x x x. If, after investigation, the Court shall be of the opinion that any person named in the complaint has engaged in or is engaging in any unfair labor practice, then the Court shall state its findings of fact and shall issue and cause to be served on such person an order requiring such person to cease and desist from such unfair labor practice and take such affirmative action as will effectuate the policies of this Act, including (but not limited to) reinstatement of employees with or without back-pay and including rights of the employees prior to dismissal including seniority. x x x (underscoring supplied) Sec. 15. Violation of Duty to Bargain Collectively. - x x x. Any employee whose work has stopped as a consequence of such lockout shall be entitled to back-pay. (underscoring supplied)"

In accordance with these provisions, backpay (the same as backwages) could be awarded where, in the opinion of the Court of Industrial Relations (CIR) such was necessary to effectuate the policies of the Industrial Peace Act. Only in one case was backpay a matter of right, and that was, when an employer had declared a lockout without having first bargained collectively with his employees in accordance with the provisions of the Act. [1]

As the CIR was given wide discretion to grant or disallow payment of backpay (backwages) to an employee, it also had the implied power of mitigating (reducing) the backpay where backpay was allowed. Thus, in the exercise of its jurisdiction, the CIR increased or diminished the award of backpay, depending on several circumstances, among them, the good faith of the employer, the employee's employment in other establishments during the period of illegal dismissal, or the probability that the employee could have realized net earnings from outside employment if he had exercised due diligence to search for outside employment. In labor cases decided during the effectivity of R.A. No. 875, this Court acknowledged and upheld the CIR's authority to deduct any amount from the employee's backwages, including the discretion to reduce such award of backwages by whatever earnings were obtained by the employee elsewhere during the period of his illegal dismissal. In the case of Itogon-Suyoc Mines, Inc. v. Sagilo-Itogon Workers' Union, this Court restated the guidelines for deternination of total backwages, thus: [2]

[3]

[4]

[5]

[6] [7]

"First. To be deducted from the backwages accruing to each of the laborers to be reinstated is the total amount of earnings obtained by him from other employment(s) from the date of dismissal to the date of reinstatement. Should the laborer decide that it is preferable not to return to work, the deduction should be made up to the time judgment becomes final. And these, for the reason that employees should not be permitted to enrich themselves at the expense of their employer. Besides, there is the 'law's abhorrence for the double competition'. Second. Likewise, in mitigation of the damages that the dismissed respondents are entitled to, account should be taken of whether in the exercise of due diligence respondents might have obtained income from suitable remunerative employment. We are prompted to give out this last reminder because it is really unjust that a discharged employee should, with folded arms, remain inactive in the expectation that a windfall would come to him. A countrary view would breed idleness; it is conductive to lack of initiative on the part of a laborer. Both bear the stamp of underdesirability."

From this ruling came the burden of disposing of an illegal dismissal case on its merits of determining whether or not the computation of the award of backwages is correct. In order not to unduly delay the disposition of illegal dismissal cases, this Court found occasion in the case of Mercury Drug Co., Inc., et al. v. CIR, et al. to rule that a fixed amount of backwages without further qualifications should be awarded to an illegally dismissed employee (hereinafter the Mercury Drug rule). This ruling was grounded upon considerations of expediency in the execution of the decision. Former Justice Claudio Teehankee approved of this formula expressing that such method of computation is a "realistic, reasonable and mutually beneficial solution" and "thus obviates the twin evils of idleness on the part of the employees and attrition and undue delay in satisfying the award on the part of the employer". However, Justice Teehankee dissented from the majority view that the employee in said case should be awarded backwages only for a period of 1 year, 11 months and 15 days which represented the remainder of the prescriptive period after deducting the period corresponding to the delay incurred by the employee in filing the complaint for unfair labor practice and reinstatement. Justice Teehankee opined that: [8]

[9]

" an award of back wages equivalent to three years (where the case is not terminated sooner) should serve as the base figure for such awards without deduction, subject to deduction where there are mitigating circumstances in favor of the employer but subject to increase by way of exemplary damages where there are aggravating circumstances (e.g. oppression or dilatory appeals) on the employer's part." [10]

The proposal on the three-year backwages was subsequently adopted in later cases, among them, Feati University Club (PAFLU) v. Feati University (No. L-31503, 15 August 1974, 58 SCRA 395), Luzon Stevedoring Corporation v. CIR (No. L-34300, 22 November 1974, 61 SCRA 154), Danao Development Corporation v. NLRC (Nos. L-40706 and L-40707, 16 February 1978, 81 SCRA 487), Associated Anglo-American Tobacco Corporation v. Lazaro (No. 63779, 27 October 1983, 125 SCRA (463), Philippine National Oil Company - Energy Development Corporation v. Leogardo (G.R. No. 58494, 5 July 1989, 175 SCRA 26). Then came Presidential Decree No. 442 (the Labor Code of the Philippines) which was signed into law on 1 May 1974 and which took effect on 1 November 1974. Its posture on the award of backwages, as amended, was expressed as follows: "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 to his back wages computed from the time his compensation was was withheld from him up to the time of his reinstatement. (underscoring supplied)." Under the abovequoted provision, it became mandatory to award backwages to illegally dismissed regular employees. The law specifically declared that the award of backwages was to be computed from the time compensation was withheld from the employee up to the time of his reinstatement. This nothwithstanding, the rule generally applied by the Court after the promulgation of the Mercury Drug case, and during the effectivity of P.D. No. 442 was still the Mercury Drug rule. A survey of cases from 1974 until 1989, when the amendatory law to P.D. No. 442, namely, R.A. No. 6715 took effect, supports this conclusion. [11]

In the case of New Manila Candy Workers Union (Naconwa-Paflu) v. CIR (1978), or after the Labor Code (P.D. No. 442) had taken effect, the Court still followed the Mercury Drug rule to avoid the necessity of a hearing on earnings obtained elsewhere by the employee during the period of illegal dismissal. In an even later case (1987) the Court declared that the general principle is that an employee is entitled to receive as backwages all the amounts he may have received from the date of his dismissal up to the time of his reinstatement. However, in compliance with the jurisprudential policy of fixing the amount of backwages to a just and reasonable level, the award of backwages equivalent to three (3) years, without qualification or deduction, was nonetheless followed in said case. [12]

[13]

In a more direct approach to the rule on the award of backwages, this Court declared in the 1990 case of Medado v. Court of Appeals that "any decision or order granting backwages in excess of three (3) years is null and void as to the excess". [14]

In sum, during the effectivity of P.D. 442, the Court enforced the Mercury Drug rule and, in effect, qualified the provision under P.D. No. 442 by limiting the award of backwages to three (3) years. On 21 march 1989, Republic Act No. 6715 took effect, amending the Labor Code. Article 279 thereof states in part: "ART. 279. Security of Tenure.- . . . An employee who 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." (underscoring supplied)

In accordance with the above provision, an illegally dismissed employee is entitled to his full backwages from the time his compensation was withheld from him (which , as a rule, is from the time of his illegal dismissal) up to the time of his actual reinstatement. It is true that this Court had ruled in the case of Pines City Educational Center vs. NLRC (G.R. No. 96779, 10 November 1993, 227 SCRA 655) that "in ascertaining the total amount of backwages payable to them (employees), we go back to the rule prior to the Mercury Drug rule that the total amount derived from employment elsewhere by the employee from the date of dismissal up to the date of reinstatement, if any, should be deducted therefrom." The rationale for such ruling was that, the eraning derived elsewhere by the dismissed employee while litigating the legality of his dismissal, should be deducted from the full amount of backwages which the law grants him upon reinstatement, so as not to unduly or unjustly enrich the employee at the expense of the employer. [15]

The Court deems it appropriate, however, to reconsider such earlier ruling on the computation of backwages as enunciated in said Pines City Educational Center case, by now holding that conformably with the evident legislative intent as expressed in Rep. Act No. 6715, above-quoted, backwages to be awarded to an illegally dismissed employee, should not, as a general rule, be diminished or reduced by the earnings derived by him elsewhere during the period of his illegal dismissal. The underlying reason for this ruling is that the employee, while litigating the legality (illegality) of his dismissal, must still earn a living to support himself and family, while full backwages have to be paid by the employer as part of the price or penalty he has to pay for illegally dismissing his employee. The clear legislative intent of the amendment in Rep. Act No. 6715 is to give more benefits to workers than was previously given them under theMercury Drug rule or the "deduction of earnings elsewhere" rule. Thus, a closer adherence to the legislative policy behind Rep. Act No. 6715 points to "full backwages" as meaning exactly that, i.e., without deducting from backwages the earnings derived elsewhere by the concerned employee during the period of his illegal dismissal. In other words, the provision calling for "full backwages" to illegally dismissed employees is clear, plain and free from ambiguity and, therefore, must be applied without attempted or strained interpretation. Index animi sermo est. [16]

[17]

Therefore, in accordance with R.A No. 6715, petitioners are entitled to their full backwages, inclusive of allowances and other benefits or their monetary equivalent, from the time their actual compensation was with held from them up to the time of their actual reinstatement.

As to reinstatement of petitioners, this Court has already ruled that since reinstatement is no longer feasible, because the company would be unjustly prejudiced by the continued employment of petitioners who at present are overage, a separation pay equal to one-month salary granted to them in the Labor Arbiter's decision was in order and, therefore, affirmed in the Court's decision of 15 March 1996. Furthermore, since reinstatement in this case is no longer feasible, the amount of backwages shall be computed from the time of their illegal termination on 25 June 1990 up to the time of finality of this decision. [18]

ACCORDINGLY, private respondent's Motion for Reconsideration, dated 10 April 1996, is DENIED. SO ORDERED. Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 201483

August 4, 2014

CONRADO A. LIM, Petitioner, vs. HMR PHILIPPINES, INC., TERESA SANTOS-CASTRO, HENRY BUNAG and NELSON CAMILLER,Respondents. DECISION MENDOZA, J.: Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the March 30, 2012 Decision of the Court of Appeals (CA) in CA G.R. SP No. 112708, a case involving the computation of the back wages of an illegally dismissed employee. The Facts 1

On February 8, 200 I, petitioner Conrado A. Lim (Lim) filed a case for illegal dismissal and money claims against respondents, HMR Philippines, Inc. (HMR)and its officers, Teresa G. Santos-Castro, Henry G. Bunag and Nelson S. Camiller. The Labor Arbiter (LA) dismissedthe complaint for lack of merit. On April 11, 2003, the National Labor Relations Commission (NLRC)in NLRC NCR No. 0200926-01, reversedthe LA and declared Lim to have been illegally dismissed. The dispositive portion of the NLRC decision reads: WHEREFORE, premises considered, judgment is hereby rendered declaring the appealed Decision REVERSED and SET ASIDE; that the dismissal of herein complainant-appellant was illegal and the respondent-appellee Company is hereby ordered to reinstate immediately the said employee to his former position without loss of seniority rights and other privileges. Furthermore, the respondentappellee Company is hereby ordered to pay the complainant-appellant his full backwages, reckoned from his dismissal on February 3, 2001 up to the promulgation of this Decision.

All other claims are hereby DISMISSED for lack of merit. The Computation and Research Unit (CRU) of this Commission is hereby directed to compute the backwages and the 10% annual increase from 1998 to 2000. SO ORDERED.

2

[Emphases supplied] Both Lim and HMR filed their respective petitions for certiorari before the CA, docketed as CA-G.R. SP No. 80379 and CA-G.R. SP No. 80630, respectively, which were consolidated. Pending resolution of the petitions, the CA issued the Temporary Restraining Order (TRO)enjoining the execution of the NLRC decision. On November 15, 2005, the CA affirmed the NLRC decision with modification as follows: WHEREFORE, the Decision of the National Labor Relations Commission is AFFIRMED, with MODIFICATION by awarding moral damages and exemplary damages to Conrado A. Lim in the amount of P50,000.00 and P20,000.00, respectively, as well as attorney’s fees equivalent to 10% of the total amount due him. SO ORDERED.

3

On February 7, 2007, this Court, in G.R. No. 175950-51, dismissed the petition for certiorari filed by HMR assailing the November 15, 2005 CA decision. Entry of judgment was ordered on July 27, 2007. 4

5

On September 24, 2007, Lim moved for execution. On November 28, 2007, the Computation and Research Unit (CRU) of the NLRC computed the total award to amount to P2,020,053.46, which computed the backwages from February 3, 2001, the date of the illegal dismissal, up to October 31, 2007, the date ofactual reinstatement. 6

7

HMR opposed the computation arguing that the backwages should be computed until April 11, 2003 only, the date of promulgation of the NLRC decision, as stated in the dispositive portion of the NLRC decision, which provided that backwages shall be "reckoned from his dismissal on February 3, 2001 up to the promulgation of this Decision." It also noted that the 10% annual increase was computed from 1998 to 2007, instead of only from 1998 to 2000 as decreed. 8

In his Comment, Lim argued that the body of the NLRC decision explictly stated that he was entitled tofull backwages from the time he was illegally dismissed until his actual reinstatement, which was also in accord with Article 279 of the Labor Codeand all prevailing jurisprudence. Ruling of the LA 9

On April 21, 2009, the LA issued the order granting the motion for execution filed by Lim. Holding thatthe backwages should be reckoned until April 11, 2003 only in accordance with the NLRC decision, the LA disposed: 10

Accordingly, in computing complainant’s backwages, the following conditions must apply: 1) that the backwages cover the period February 3, 2001 up to April 11, 2003; 2) that the base rate applicable is his salary as of February 3, 2001 inclusive of the ten percent adjustment due at the time, or P12,500.00 plus ten percent (10%) orP13,750.00; 3) that the computation should include his 13th month pay; and 4) 15 days vacation pay in accordance with the personnel policy handbook, in lieu of 5 days service incentive leave pay.

While complainant claims that he is entitled to 15 days sick leave pay, a perusal of the personnel policy handbook on the grant of said benefit shows that sick leave pay is availed of only upon notification of illness and conversion thereof to cash is subject to the discretion of management. Accordingly, complainant’s monetary award, which is the proper subject of enforcement through a writ of execution, in accordance with the Decision of the Commission as modified by the Court of Appeals, is computed as follows: A.

Backwages: 2/3/01 to 4/11/03 = 26.26 P13,750.00 x 26.26

=

P361,075.00

13th month pay (P366,575.00/12)

=

30,089.58

Vacation Leave (P687.50 x 15 x 26.26/12)

=

B.

Moral Damages

=

50,000.00

C.

Exemplary Damages

=

20,000.00

22,859.37

P414,023.95

P484,023.95 D.

Attorney’s Fees

=

48,402.39 P532,426.34

WHEREFORE, complainant’s Motion for Issuance of Writ of Execution is GRANTED. A Writ of Execution is hereby issued for the satisfaction of the judgment award rendered in this case. SO ORDERED.

11

Ruling of the NLRC Lim filed his "Motion Ad Cautelamfor Reconsideration or Recomputation and Partial Execution of Monetary Award," insisting that his backwages should be computed up to his actual reinstatement. On August 28, 2009, the NLRC treated the motion as an appeal and sustained the computation of the LA, explaining that the dispositive portion was clear, and that it could not alter or amend the amount based on the final decision of the NLRC which was affirmed by both the CA and this Court. Aggrieved, petitioner filed a petition for certioraribefore the CA. 12

13

Ruling of the CA In its assailed March 30, 2012 Decision, the CA dismissed the petition. It emphasized that the April 11, 2003 NLRC decision had long become final and executory after it was affirmed by the Court and, as such, it may no longer be amended or corrected. While noting that the body of the NLRC decision stated that petitioner was entitled to backwages until his actual reinstatement, the CA ruled that when there was a conflict between the dispositive portion and the body of the decision, the former must prevail as the dispositive portion was the final order, and that it was the dispositive portion which was the subject of execution. It wrote that the fallowas clear and unequivocal and could, therefore, be given effect without going to the body of the decision or further interpretation or construction. 14

The CA found that although the NLRC had recognized that petitioner was entitled to backwages until actual reinstatement, nonetheless, it expressly limited the computation of backwages to the promulgation date of its decision. It wrote that the issue ofwhether such limitation was lawful or improper could no longer be ventilated due to the finality of the judgment. Hence, the present petition. ISSUES AND ARGUMENTS I Whether or not the Court of Appeals erred in peremptorily applying the doctrine laid down in PH Credit Corporation v. Court of Appealsand contrary to law as well as the established jurisprudence mandating the payment of backwages until the illegally dismissed employee is actually reinstated. II Whether or not the Court of Appeals erred in not affirming the applicability of Eastern Shipping Lines v. Court of Appealsin the computation of interest since the Decision on the illegal termination case had become final and executory on June 6, 2007 inconsistent with existing jurisprudence by its failure to include interest payments. 15

Petitioner Lim argues that Article279 of the Labor Code and the prevailing jurisprudence provide that illegally dismissed workers are entitled to an award of backwages from the timeof the illegal dismissal until they are actually reinstated. He states that the body of the NLRC decision was explicit in its intent to award backwages until actual reinstatement, especially when read with its fallo,which ordered his immediate reinstatement. He further avers that it has been held that the dispositive part of a decision must find support from the decision’s ratio decidendi, because, while the opinion of the court is not partof the judgment, it may, in case of uncertainty or ambiguity, be referred tofor the purpose of construing the judgment, where the court may clarify by amendment even after judgment has become final. Lim also points out that the LA completely failed to include in the computation the unpaid 10% annual increase in his salary from 1998 to 2000, as awarded in the falloof the NLRC decision. He posits that the LA also failed to include the payment of other benefits, such as a 10% increase in salary per annum, 15 days vacation leave and 15 days sick leave per annum, all as part of employee benefitsfound in HMR’s Personnel Policy. Petitioner Lim also argues that in accordance with the rules laid down in Eastern Shipping Lines v. Court of Appeals, the monetary awards should be subject to interest. He prays that the respondents be made to pay, jointly and severally, additional moral and exemplary damages on account of their bad faith in delaying the payment and reinstatement of the petitioner, which prompted him to file the present petition. 16

Respondents’ Comment In their Comment, the respondents argue that the August 28, 2009 NLRC Resolution had already becomefinal and executory and could no longer be modified as the petitioner belatedly filed his motion for reconsideration. In the same vein, they argue that the April 21, 2009 LA Order had also 17

become final and executory considering that the petitioner’s motion ad cautelam/appeal was not seasonably filed. The respondents insist that the "decretal portion of the NLRC decision, dated April 11, 2003 limited the amount of petitioner’s backwages from February 3, 2001 and up to promulgation of such Decision on April 11, 2003 only. Granting that the body of such decision controls, they aver that the recoverable backwages cannot go beyond December 26, 2007, the date HMR offered to reinstate Lim, who refused to be reinstated and abandoned his job. They add that it was also clearfrom the dispositive portion that the 10% annual salary increase awarded was only for the years 1998 to 2000. 18

They also point out that the P12,500.00 base pay of Lim was already inclusive of holiday pay, and that the conversion of sick leave to cash was subject to management discretion in accordance with company policy. They further argue that the claimsfor legal interest and additional moral and exemplary damages are without merit because these were not awarded in the decision and they simply acted in good faith in pursuing the legal remedies available to them. Petitioner’s Reply In his Reply, Lim counters that his pleadings before the NLRC and the LA were timely filed as the notices of their respective orders had not been received by an authorized representative. As to HMR’s offer of reinstatement, the petitioner explainsthat the respondent company never responded to his reply-letter asking for a meeting to discuss the matter of his compensation upon reinstatement. Lim also argued that holiday pay was not shown by HMR to be included in his salary, and that it is unjust to leave the sick leave conversion to management discretion. Specifically, the Court has to address the following 19

ISSUES: 1. Whether the petitioner’s motion for reconsideration and motion ad cautelam/appeal were belatedly filed? 2. Whether the computation of backwages should be reckoned until the promulgation of the NLRC Decision on April 11, 2003 or until actual reinstatement? 3. Whether the petitioner is entitled to the unpaid 10% annual salary increase from 19982000? 4. Whether the petitioner is entitled to the 10% annual salary increase after the year 2000? 5. Whether the petitioner is entitled to holiday pay? 6. Whether the petitioner is entitled to sick leave pay? 7. Whether the respondents should beheld jointly and severally liable for additional moral and exemplary damages? 8. Whether the interest in accordance with Eastern Shipping should be awarded?

Ruling of The Court The petition is partly meritorious. Preliminarily, the Court shall first dispose of the lone procedural issue. The respondents argue thatthe August 28, 2009 NLRC Resolution was already final and executory and could no longer be modified as the petitioner belatedly filed his motion for reconsideration thereto. In the same vein, they aver that the April 21,2009 LA Order was also final and executory considering that petitioner’s motion ad cautelam/appeal was not seasonably filed. The petitioner counters that his pleadings were timely filed because the aforementioned NLRC Resolution and LA Order were not duly received by an authorized representative. It appears that the respondents raised this issue before the NLRC and the CA. The lower courts, nonetheless, ruled on the merits of the assailed pleadings of the petitioner. The lower courts, thus, gave credence to the petitioner’s argument that the notices were not received by an authorized representative. The Court sees no reason to deviate from their findings. In any case, this issue is a question of fact which is beyond the Court’s ambit of review under Rule 45 of the Rules of Court, considering that a resolution of the issue would require a review of the evidence presented in connection therewith. The Court now moves on to the substantive issues. Backwages It is beyond question that Lim was illegally dismissed by HMR. All that remains to be settled is the exact amount owing to petitioner as an illegally dismissed employee. Article 279 of the Labor Code is clear in providing that an illegally dismissed employee is entitled to his full backwages computed from the time his compensation was withheld up to the time of his actual reinstatement, to wit: 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. [Emphases and underscoring supplied] In accordance with this provision, the body of the April 11, 2003 NLRC decision expressly recognizes that Lim is entitled to his full backwages until his actual reinstatement, as follows: In fine, the act of complainant-appellant herein, do not constitute a serious misconduct as tojustify his dismissal. As such, he is, thus, entitled to reinstatement to his former position as Assistant Technical Manager, unless such position no longer exists, in which case, he shall be given a substantially equivalent position without loss of seniority rights. He is, likewise, entitled to his full backwages from the time he was illegally dismissed until his actual reinstatement. [Emphasis and underscoring supplied] 20

Nowhere in the body of the NLRC decision was there a discussion restricting the award of backwages. Nonetheless, the falloof the said decision limited the computation of the backwages up to its promulgation on April 11, 2003, in this wise:

WHEREFORE, premises considered, judgment is hereby rendered declaring the appealed Decision REVERSED and SET ASIDE; that the dismissal of herein complainant-appellant was illegal and the respondent-appellee Company is hereby ordered to reinstate immediately the said employee to his former position without loss of seniority rights and other privileges. Furthermore, the respondentappellee Company is hereby ordered to pay the complainant-appellant his full backwages, reckoned from his dismissal on February 3, 2001 up to the promulgation of this Decision. All other claims are hereby DISMISSED for lack of merit. The Computation and Research Unit (CRU) of this Commission is hereby directed tocompute the backwages and the 10% annual increase from 1998 to 2000. SO ORDERED.

21

[Emphasis and underscoring supplied] Considering that the judgmentdecreeing the computation of backwages up to the promulgation of the NLRC decision has long become final and executory, the key question is whether a recomputation of backwages up to the date of the actual reinstatement of Lim would violate the principle of immutability of judgments. The rule is that it is the dispositive portion that categorically states the rights and obligations of the parties tothe dispute as against each other. Thus, it is the dispositive portion that must be enforced to ensure the validity of the execution. That a judgment should be implemented according to the terms of its dispositive portion is a long and well-established rule. A companion to this rule is the principle of immutability of final judgments. Save for recognized exceptions, a final judgment may no longer be altered, amended or modified, even if the alteration, amendment or modification is meant to correct what is perceived to be an erroneous conclusion of fact or law and regardless of what court renders it. Any attempt to insert, change or add matters not clearly contemplated inthe dispositive portion violates the rule on immutability of judgments. 22

The cases of Session Delights Ice Cream and Fast Foods v. Court of Appeals (Session Delights) and Nacar v. Gallery Frames (Nacar) shed much light on the apparent discrepancy inthe case at hand. As in the present case, both involve labor cases findingthat the employees therein were illegally dismissed. At the LA level,in awarding backwages, a precise computation was provided from the time of illegal dismissal up to the promulgation of the LA decision. Additionally, the dispositive portion of the LA decision in Nacaralso made a declaration that separation pay in lieu of reinstatement be "computed only up to promulgation of this decision." The LA decisions in these cases were affirmed by the NLRC and the CA and subsequently became final and executory. At the execution stage, the computation of backwages came into issue. 23

24

25

26

Session Delights made clear that a case for illegal dismissal is one that relates to status, where the decision or ruling is essentially declaratory of the status and of the rights, obligations and monetary consequences that flow from the declared status, such as, the payment of separation pay and backwages. In execution, what is primarily implemented is the declaratory finding on the status and the rights and obligations of the parties therein; the arising monetary consequences from the declaration only follow as component of the parties’ rights and obligations. The precise amount of backwages should ideally be stated in the final decision; otherwise, the matter is for handling and computation by the LA of origin as the labor official charged with the implementation of decisions before the NLRC. 27

28

The Court’s disquisition in Session Delights, also referenced with approval in Nacar, is enlightening:

A source of misunderstanding in implementing the final decision in this case proceeds from the way the original labor arbiter framed his decision. The decision consists essentially of two parts. The first is that part of the decision that cannot now be disputed because it has been confirmed with finality. This is the finding of the illegality of the dismissal and the awards of separation pay in lieu of reinstatement, backwages, attorney’s fees, and legal interests. The secondpart is the computation of the awards made. On its face, the computation the labor arbiter made shows that it was time-bound as can be seen from the figures used in the computation. This part, being merely a computation of what the first part of the decision established and declared, can, by its nature, be recomputed. This is the part, too, that the petitioner now posits should no longer be re-computed because the computation is already in the labor arbiter’s decision that the CA had affirmed. The public and private respondents, onthe other hand, posit that a recomputation is necessary because the relief in an illegal dismissal decision goes all the way up to reinstatement if reinstatement is to be made, or up to the finality of the decision, if separation pay is to be given in lieu of reinstatement. xxx Clearly implied from this original computation is its currency up to the finality of the labor arbiter’s decision. As we noted above, this implication is apparent from the terms of the computation itself, and no question would have arisen had the parties terminated the case and implemented the decision at that point. However, the petitioner disagreed with the labor arbiter’s findings on all counts – i.e., on the finding of illegality as well as on all the consequent awards made. Hence, the petitioner appealed the case to the NLRC which, in turn, affirmed the labor arbiter’s decision. By law, the NLRC decision is final, reviewable only by the CA on jurisdictional grounds. The petitioner appropriately sought to nullify the NLRC decision on jurisdictional grounds through a timely filed Rule 65 petition for certiorari. The CA decision, finding that NLRC exceeded its authority in affirming the payment of 13th month pay and indemnity, lapsed to finalityand was subsequently returned to the labor arbiter of origin for execution. It was at this point that the present case arose. Focusing on the core illegal dismissal portion of the original labor arbiter’s decision, the implementing labor arbiter ordered the award recomputed; he apparently read the figures originally ordered to be paid to be the computation due had the case been terminated and implemented at the labor arbiter’s level. Thus, the labor arbiter recomputed the award to include the separation pay and the backwages due up to the finality of the CA decision that fully terminated the case on the merits. Unfortunately, the labor arbiter’s approved computation went beyond the finality of the CA decision (July 29, 2003) and included as well the payment for awards the final CA decision had deleted – specifically, the proportionate 13th month pay and the indemnity awards. Hence, the CA issued the decision now questioned in the present petition. We see no error in the CA decision confirming that a recomputation is necessary as it essentially considered the labor arbiter’s original decision in accordance with its basic component parts as we discussed above. To reiterate, the first part contains the finding of illegality and its monetary consequences; the second part is the computation of the awards or monetary consequences of the illegal dismissal, computed as of the time of the labor arbiter’s original decision. To illustrate these points, had the case involved a pure money claim for a specific sum (e.g. salary for a specific period) or a specific benefit (e.g. 13th month pay for a specific year) made by a former employee, the labor arbiter’s computation would admittedly have continuing currency because the

sum is specific and any variation may only be on the interests that may run from the finality of the decision ordering the payment of the specific sum. In contrast with a ruling on a specific pure money claim, is a claim that relates to status (as in this case, where the claim is the legality of the termination of the employment relationship). In this type of cases, the decision or ruling is essentially declaratory of the status and of the rights, obligations and monetary consequences that flow from the declared status (in this case, the payment of separation pay and backwages and attorney’s fees when illegal dismissal is found). When this type of decision is executed, what is primarily implemented is the declaratory finding on the status and the rights and obligations of the parties therein; the arising monetary consequences from the declaration only follow as component of the parties’ rights and obligations. In the present case, the CA confirmed that indeed an illegal dismissal had taken place, so that separation pay in lieu of reinstatement and backwages should be paid. How much that separation pay would be, would ideally be stated in the final CA decision; if not, the matter is for handling and computation by the labor arbiter of origin as the labor official charged with the implementation of decisions before the NLRC. xxx Consistent with what we discussed above, we hold that under the terms of the decision under execution, no essential change is made by a re-computation as this step is a necessary consequence that flows from the nature of the illegality of dismissal declared in that decision. A recomputation (or an original computation, if no previous computation has been made) is a partof the law – specifically, Article 279 of the Labor Code and the established jurisprudence on this provision – that is read into the decision. By the nature of an illegal dismissal case, the reliefs continue toadd on until full satisfaction, as expressed under Article 279 of the Labor Code. The re-computation of the consequences of illegal dismissal upon execution of the decision does not constitute an alteration or amendment of the final decision being implemented. The illegal dismissal ruling stands; only the computation of monetary consequences of this dismissal is affected and this is not a violation of the principle of immutability of final judgments. xxx That the amount the petitioner shall now pay has greatly increased is a consequence that it cannot avoid as itis the risk that it ran when it continued to seek recourses against the labor arbiter’s decision.Article 279 provides for the consequences of illegal dismissal in no uncertain terms, qualified only by jurisprudence in its interpretation of when separationpay in lieu of reinstatement is allowed. When that happens, the finality of the illegal dismissal decision becomes the reckoning point instead of the reinstatement that the law decrees. In allowing separation pay, the final decision effectively declares that the employment relationship ended so that separation pay and backwages are to be computed up to that point. x x x 29

[Emphases and underscoring supplied] Although the NLRC decision in the present case did not provide a precise computation, the principles enunciated in Session Delightsstill equally apply. In Session Delights, the computation of the LA was found to be time-bound, which implied the currency of the computation up to the finality of the LA decision. In the present case, the NLRC declared backwages to be reckoned "up to the promulgation" of its decision, which was an express declaration of the currency of the computation up to the finality of the NLRC decision, especially considering that HMR was "ordered to reinstate immediately" petitioner Lim. The decisions in both cases are premised on their immediate execution,

in that no question would have arisen had the parties terminated the case and the decision implemented at that point. 30

As discussed above, no essential change is being made by a recomputation because such is a necessary consequence which flows from the nature of the illegality of the dismissal. To reiterate, a recomputation, or an original computation, if no previous computation was made, as in the present case, is a part of the law that is read into the decision, namely, Article 279 of the Labor Code and established jurisprudence. Article 279 provides for the consequences of illegal dismissal, one of which is the payment of full backwages until actual reinstatement, qualified only by jurisprudence whenseparation pay in lieu of reinstatement is allowed, where the finality of the illegal dismissal decision instead becomes the reckoning point. 31

32

The nature of an illegal dismissal case requires that backwages continue to add on until full satisfaction.The computation required to reflect full satisfaction does not constitute an alteration or amendment of the final decision being implemented as the illegal dismissal ruling stands. Thus, in the present case, a computation of backwages until actual reinstatement is not a violation of the principle of immutability of final judgments. 33

The respondents aver that the recoverable backwages cannot go beyond December 26, 2007, the date HMR offered to reinstate Lim, who allegedly refused to be reinstated and abandoned his job. HMR sent the petitioner a letter, dated December 22, 2007, directing him to report for work on December 26,2007, with an offer of separation pay in the amount of P150,000.00 in lieu of reinstatement which he could avail of not later than December26, 2007. Lim replied in a letter, dated December 24, 2007, requesting for a meeting in January 2008, considering that his counsel was out of the country; that the NLRC was still in the process of computing the amount of the award which was necessary to consider the offer of separation pay; and that a writ of execution had not yet been issued. HMR never responded to the petitioner’s request, and up to the present, the latter has yet to be reinstated. 34

35

From the above, it is apparent that the petitioner cannot be deemed to have refused reinstatement or to have abandoned his job. HMR’s offer of reinstatement appeared superficial and insincere considering that it never replied to the petitioner’s letter. It did not make any further attempt to reinstate the petitioner either. The recoverable backwages, thus, continue to run, and must be reckoned up until the petitioner’s actual reinstatement. 10% annual salary increase Petitioner Lim argues that the LA completely failed to include in its computation the unpaid 10% annual increase in his salary from 1998 to 2000, as stated in the falloof the NLRC decision, and the 10% salary increase per annumin backwages until actual reinstatement. The pertinent portion of the falloof the NLRC decision reads: The Computation and Research Unit (CRU) of this Commission is hereby directed tocompute the backwages and the 10% annual increase from 1998 to 2000. 36

In awarding the 10% annual salary increase from 1998 to 2000, the body of the NLRC decision explained:

We see no reason, therefore, why complainant-appellant herein, being a regular employee, should be deprived of what he is entitled to under Company policy. As such, he should be paid his unpaid 10% annual increase for the years 1998, 1999 and 2000. 37

[Emphasis and underscoring supplied] Lim is, thus, entitled to be paid his unpaid 10% annual salary increase for the years 1998-2000. A reading of the assailed order of the LA would reveal that it made the following adjustment in connection to the 10% annual salary increase: 2) that the base rate applicable is his salary as of February 3, 2003 inclusive of the ten percent adjustment due at the time, or P12,500.00 plus ten percent (10%) or P13,750.00; 38

This is incorrect on two counts. First, the LA failed to include the actual unpaid 10% annual increase from 1998-2000. The first computation of the LA, as well as the suggested computation of respondent HMR itself, gave the correct computation ofthe unpaid salary increase from 1998-2000, as follows: 39

40

Year

Rate (P)

Increase

Monthly Increase (P)

Annual Increase (P)

1998

12,500.00

10%

1,250.00

15,000.00

1999

13,750.00

10%

1,375.00

16,500.00

2000

15,125.00

10%

1,512.50

18,150.00

Total

49,650.00

Second, based on the above, the applicable base rate for the computation of the petitioner’s backwages from the time he was illegally dismissed on February 3, 2001 should be P15,125.00. Lim cannot, however, insist that the 10% annual salary increase be applied to his backwages past the year 2000 up to his actual reinstatement. In Equitable Banking Corporation v. Sadac, the Court held that although Article 279 of the Labor Code mandates that an employee’s full backwages be inclusive of allowances and other benefits, salary increases cannot be interpreted as either an allowance or a benefit, as allowances and benefits are separate from salary, while a salary increase is added to salary as an increment thereto. It was further held therein that the base figure to be used in the computation of backwages was pegged at the wage rate at the time of the employee’s dismissal, inclusive of regular allowances that the employee had been receiving such as the emergency living allowances and the 13th month pay mandated by law. The award of salary differentials was not allowed, the rule being that upon reinstatement, illegally dismissed employees were to be paid their backwages without deduction and qualification as to any wage increases orother benefits that might have been received by their co-workerswho were not dismissed. 41

42

43

It must be noted that the NLRC did not err in awarding the unpaid salary increase for the years 1998-2000 as such did not constitute backwages as a consequence of the petitioner’s illegal dismissal, but was earned and owing to the petitioner before he was illegally terminated. Holiday pay

The respondents insist that the base pay of Lim is already inclusive of holiday pay. The records, however, are insufficient to determine whether holiday pay is indeed included in the petitioner’s base pay. Under Article 94 of the Labor Code, every worker shall be paid his regular daily wage during regular holidays. Thus, anemployee must receive his daily wage even if he does not work on a regular holiday. The purpose of holiday pay is to prevent diminution ofthe monthly income of workers on account of work interruptions declared by the State. 44

Whether or not holiday pay is included in the monthly salary of an employee, may be gleaned from the divisors used by the company in the computation of overtime pay and employees’ absences. To illustrate, if all nonworking days are paid, the divisor ofthe monthly salary to obtain daily rate should be 365. If nonworking days are not paid, the divisor is 251, which is a result of subtracting all Saturdays, Sundays, and the ten legal holidays. Hence, if the petitioner’s base pay does not yet include holiday pay, it must be added tohis monetary award. 45

This matter is clearly for the LA to determine being the labor official charged with the implementation of decision and concomitant computations. 46

Sick leave pay The LA found that that the petitioner was not entitled to have his sick leaves converted to cash because such was subject to the discretion of management in accordance with company policy. The pertinent provision on sick leave conversion in the Personnel Policy handbook of HMR reads: d) Accumulated days of unused sick leave may be converted into cash, time-off or vacation allowance at the end of the calendar year, any of these upon the discretion of the General Manager.

47

It is clear from the above that the provision does not give HMR the absolute discretion to decide whether ornot to grant sick leave conversion. The discretion of the general manager only pertains to what form the sick leave conversion may take, and not to whether or not sick leave conversion will be granted at all. An HMR employee is, therefore, entitled to conversion of unused sick leave, subject only to the general manager’sdiscretion as to the form it will take, namely – cash,time-off, or vacation allowance. Considering that the conversion optionsof time-off and vacation allowance are no longer feasible because the petitioner was illegally dismissed, he is now entitled to have his unused sick leaves converted to cash. Additional moral and exemplary damages Petitioner Lim prays that the respondents be made to pay, jointly and severally, additional moral and exemplary damages on account of their bad faith in delaying the payment and his reinstatement. There appears, however, no basis to award additional damages considering that the respondents simply availed of the remedies available to them under the law in good faith. Legal interest The petitioner argues that legal interest in accordance with the case of Eastern Shippingmust also be awarded, as follows:

1. the unpaid 10% annual increasefrom 1998 to 2000 shall earn a 6% interest annually starting 1998 until October 23, 2003 (Entry of Judgment of the April 11, 2003 NLRC decision); and 12% legal interest per annumthereafter until the same is fully paid; and 2. the backwages, 13th month pay as well asunpaid vacation and sick leaves shall earn a 6% per annuminterest starting at the time of petitioner’s illegal dismissal on February 3, 2001 until October 23, 2003; and 12% legal interest per annumthereafter until the same is fully paid. 48

The respondents counter that interest may no longer be added considering that such was not included in the any of the courts’ decisions before the judgment became final and executory. In both Session Delightsand Nacar, no interest was expressly awarded before the judgments became final and executory, yet in both cases, the Court, nonetheless, awarded legal interest. Session Delightsexplained that the decision had become a judgment for money from which another consequence flowed, namely, the payment of interest in case of delay in accordance with Eastern Shipping Lines v. Court of Appeals. It was held therein that when the judgment of the court awarding a sum of money became final and executory, the rateof legal interest, should be 12% per annumfrom finality until satisfaction. 49

The rules on legal interest in Eastern Shippinghave, however, been recently modified by Nacar in accordance with Bangko Sentral ng Pilipinas Monetary Board (BSP-MB) Circular No. 799, which became effective on July 1, 2013. Pertinently, it amended the rate of legal interest in judgments from 12% to 6% per annum, with the qualification that the new rate be applied prospectively. Thus, the 12% per annumlegal interest in judgments under Eastern Shippingshall apply only until June 30, 2013, and the new rate of 6% per annumshall be applied from July 1, 2013 onwards. 50

Petitioner also prays that he be awarded interest at a rate of 6% per annumon the amounts awarded from the time they became legally due him until entry of judgment, presumably under the second paragraph in Eastern Shipping (which was not modified by Nacar), which states: 2. When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages awarded may be imposed at the discretion of the courtat the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated claims or damages except when or until the demand can be established with reasonable certainty. Accordingly, where the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code) but when such certainty cannot be so reasonably established at the time the demand is made, the interest shall begin to run only from the date the judgment of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained). The actual base for the computation of legal interest shall, in any case, be on the amount finally adjudged. 51

[Emphasis supplied] It is plain from the above that the interest of 6% per annumfor obligations not constituting a loan or forbearance of money is one that may be imposed at the discretion of the court. This form of interest is not mandatory but discretionary in nature and therefore, not necessarily owing to the petitioner in the present case. WHEREFORE, the petition is PARTLY GRANTED, the March 30, 2012 Decision of the Court of Appeals, in CA-G.R. SP No. 112708 is REVERSED and SET ASIDE. Respondent HMR Philippines, Inc. is ORDERED to PAY petitioner Conrado A. Lim: 1awp++i1

(1) back wages computed from the time the petitioner was illegally dismissed on February 3, 2001 up to his actual reinstatement, with a monthly base pay in the amount of P15,125.00; (2) the unpaid 10% annual salary increase from 1998-2000 in the amount of P49,650.00; (3) 13th monthpay; (4) vacation pay in accordance with the personnel policy handbook; (5) the cash value of his unused sick leaves; (6) holiday pay, provided that the Labor Arbiter finds that such is not yet included in the base pay; (7) moral damages in the amount of P50,000.00; (8) exemplary damages in the amount of P20,000.00; (9) attorney's fees equivalent to 10% of the total amount due to the petitioner; and (10) legal interest of 12% per annum of the total monetary awards computed from July 27, 2007 to June 30, 2013, and 6% per annum from July 1, 2013 until their full satisfaction. The Labor Arbiter is ORDERED to compute the total monetary benefits awarded and due the petitioner in accordance with this decision. 1âwphi1

SO ORDERED. JOSE CATRAL MENDOZA Associate Justice