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

155109 March 14, 2012

C. ALCANTARA & SONS, INC., Petitioner, vs. COURT OF APPEALS, LABOR ARBITER ANTONIO M. VILLANUEVA, LABOR ARBITER ARTURO L. GAMOLO, SHERIFF OF NLRC RAB-XI-DAVAO CITY, NAGKAHIUSANG MAMUMUO SA ALSONS-SPFL (NAMAAL-SPFL), FELIXBERTO IRAG, JOSHUA BARREDO, ERNESTO CUARIO, EDGAR MONDAY, EDILBERTO DEMETRIA, HERMINIO ROBILLO, ROMULO LUNGAY, MATROIL DELOS SANTOS, BONERME MATURAN, RAUL CANTIGA, EDUARDO CAMPUSO, RUDY ANADON, GILBERTO GABRONINO, BONIFACIO SALVADOR, CIRILO MINO, ROBERTO ABONADO, WARLITO MONTE, PEDRO ESQUIERDO, ALFREDO TROPICO, DANILO MEJOS, HECTOR ESTUITA, BARTOLOME CASTILLANES, EDUARDO CAPUYAN, SATURNINO CAGAS, ALEJANDRO HARDER, EDUARDO LARENA, JAIME MONTEDERAMOS, ERMELANDO BASADRE, REYNALDO LIMPAJAN, ELPIDIO LIBRANZA, TEDDY SUELO, JOSE AMOYLIN, TRANQUILINO ORALLO, CARLOS BALDOS, MANOLITO SABELLANO, CARMELITO TOBIAS, PRIMITIVO GARCIA, JUANITO ALDEPOLLA, LUDIVICO ABAD, WENCISLAO INGHUG, RICARDO ALTO, EPIFANIO JARABAY, FELICIANO AMPER, ALEXANDER JUDILLA, ROBERTO ANDRADE, ALFREDO LESULA, JULIO ANINO, BENITO MAGPUSAO, PEDRO AQUINO, EDDIE MANSANADES, ROMEO ARANETA, ARGUILLAO MANTICA, CONSTANCIO ARNAIZ, ERNESTO HOTOY, JUSTINO ASCANO, RICARDO MATURAN, EDILBERTO YAMBAO, ANTONIO MELARGO, JESUS BERITAN, ARSENIO MELICOR, DIOSDADO BONGABONG, LAURO MONTENEGRO, CARLITO BURILLO, LEO MORA, PABLO BUTIL, ARMANDO GUCILA, JEREMIAH CAGARA, MARIO NAMOC, CARLITO CAL, GERWINO NATIVIDAD, ROLANDO CAPUYAN, EDGARDO ORDIZ, LEONARDO CASURRA, PATROCINIO ORTEGA, FILEMON CESAR, MARIO PATAN, ROMEO COMPRADO, JESUS PATOC, RAMON CONSTANTINO, ALBERTO PIELAGO, SAMUEL DELA LLANA, NICASIO PLAZA, ROSALDO DAGONDON, TITO GUADES, BONIFACIO DINAGUDOS, PROCOPIO RAMOS, JOSE EBORAN, ROSENDO SAJOL, FRANCISCO EMPUERTO, PATRICIO SALOMON, NESTOR ENDAYA, MARIO SALVALEON, ERNESTO ESTILO, BONIFACIO SIGUE, VICENTE FABROA, JAIME SUCUAHI, CELSO HUISO, ALEX TAUTO-AN, SATURNINO YAGON, CLAUDIO TIROL, SULPECIO GAGNI, JOSE TOLERO, FERVIE GALVEZ, ALFREDO TORALBA and EDUARDO GENELSA, Respondents. x-----------------------x G.R. No. 155135 NAGKAHIUSANG MAMUMUO SA ALSONS-SPFL (NAMAAL-SPFL), FELIXBERTO IRAG, JOSHUA BARREDO, ERNESTO CUARIO, EDGAR MONDAY, EDILBERTO DEMETRIA, HERMINIO ROBILLO, ROMULO LUNGAY, MATROIL DELOS SANTOS, BONERME MATURAN, RAUL CANTIGA, EDUARDO CAMPUSO, RUDY ANADON, GILBERTO GABRONINO, BONIFACIO SALVADOR, CIRILO MINO, ROBERTO ABONADO, WARLITO MONTE, PEDRO ESQUIERDO,

ALFREDO TROPICO, DANILO MEJOS, HECTOR ESTUITA, BARTOLOME CASTILLANES, EDUARDO CAPUYAN, SATURNINO CAGAS, ALEJANDRO HARDER, EDUARDO LARENA, JAIME MONTEDERAMOS, ERMELANDO BASADRE, REYNALDO LIMPAJAN, ELPIDIO LIBRANZA, TEDDY SUELO, JOSE AMOYLIN, TRANQUILINO ORALLO, CARLOS BALDOS, MANOLITO SABELLANO, CARMELITO TOBIAS, PRIMITIVO GARCIA, JUANITO ALDEPOLLA, LUDIVICO ABAD, WENCISLAO INGHUG, RICARDO ALTO, EPIFANIO JARABAY, FELICIANO AMPER, ALEXANDER JUDILLA, ROBERTO ANDRADE, ALFREDO LESULA, JULIO ANINO, BENITO MAGPUSAO, PEDRO AQUINO, EDDIE MANSANADES, ROMEO ARANETA, ARGUILLAO MANTICA, CONSTANCIO ARNAIZ, ERNESTO HOTOY, JUSTINO ASCANO, RICARDO MATURAN, EDILBERTO YAMBAO, ANTONIO MELARGO, JESUS BERITAN, ARSENIO MELICOR, DIOSDADO BONGABONG, LAURO MONTENEGRO, CARLITO BURILLO, LEO MORA, PABLO BUTIL, ARMANDO GUCILA, JEREMIAH CAGARA, MARIO NAMOC, CARLITO CAL, GERWINO NATIVIDAD, ROLANDO CAPUYAN, JUANITO NISNISAN, AURELIO CARIN, PRIMO OPLIMO, ANGELITO CASTANEDA, EDGARDO ORDIZ, LEONARDO CASURRA, PATROCINIO ORTEGA, FILEMON CESAR, MARIO PATAN, ROMEO COMPRADO, JESUS PATOC, RAMON CONSTANTINO, MANUEL PIAPE, ROY CONSTANTINO, ALBERTO PIELAGO, SAMUEL DELA LLANA, NICASIO PLAZA, ROSALDO DAGONDON, TITO GUADES, BONIFACIO DINAGUDOS, PROCOPIO RAMOS, JOSE EBORAN, ROSENDO SAJOL, FRANCISCO EMPUERTO, PATRICIO SALOMON, NESTOR ENDAYA, MARIO SALVALEON, ERNESTO ESTILO, BONIFACIO SIGUE, VICENTE FABROA, JAIME SUCUAHI, CELSO HUISO, ALEX TAUTO-AN, SATURNINO YAGON, CLAUDIO TIROL, SULPECIO GAGNI, JOSE TOLERO, FERVIE GALVEZ, ALFREDO TORALBA and EDUARDO GENELSA, Petitioners, vs. C. ALCANTARA & SONS, INC., EDITHA I. ALCANTARA, ATTY. NELIA A. CLAUDIO, CORNELIO E. CAGUIAT, JESUS S. DELA CRUZ, ROLANDO Z. ANDRES and JOSE MA. MANUEL YRASUEGUI, Respondents. x-----------------------x G.R. No. 179220 NAGKAHIUSANG MAMUMUO SA ALSONS-SPFL (NAMAAL-SPFL), AND ITS MEMBERS whose names are listed below, Petitioners, vs. C. ALCANTARA & SONS, INC., Respondent. RESOLUTION PERALTA, J.: For resolution are the (1) Motion for Partial Reconsideration filed by C. Alcantara & 2 Sons, Inc. (CASI) and (2) Motion for Reconsideration filed by Nagkahiusang 3 Mamumuo sa Alsons-SPFL (the Union) and the Union officers and their striking 4 5 6 members of the Courts Decision dated September 29, 2010. In a Resolution dated December 13, 2010, the parties were required to submit their respective Comments. After several motions for extension, the parties submitted the required comments. Hence, this resolution. For a proper perspective, we state briefly the facts of the case.
1

The negotiation between CASI and the Union on the economic provisions of the Collective Bargaining Agreement (CBA) ended in a deadlock prompting the Union to 7 stage a strike, but the strike was later declared by the Labor Arbiter (LA) to be illegal 8 having been staged in violation of the CBAs no strike -no lockout provision. Consequently, the Union officers were deemed to have forfeited their employment with the company and made them liable for actual damages plus interest and attorneys fees, while the Union members were ordered to be reinstated without backwages there being no proof that they actually committed illegal acts during the 9 strike. Notwithstanding the provision of the Labor Code mandating that the reinstatement aspect of the decision be immediately executory, the LA refused to reinstate the dismissed Union members. On November 8, 1999, the NLRC affirmed the LA decision insofar as it declared the strike illegal and ordered the Union officers dismissed from employment and liable for damages but modified the same by considering the Union members to have been validly dismissed from employment for 10 committing prohibited and illegal acts. On petition for certiorari, the Court of Appeals (CA) annulled the NLRC decision and reinstated that of the LA. Aggrieved, CASI, the Union and the Union officers and members elevated the matter to this Court. The cases were docketed as G.R. Nos. 11 155109 and 155135. During the pendency of the cases, the affected Union members (who were ordered reinstated) filed with the LA a motion for reinstatement pending appeal and the computation of their backwages. Instead of reinstating the Union members, the LA 12 awarded separation pay and other benefits. On appeal, the NLRC denied the Union 13 members claim for separation pay, accrued wages and other benefits. When elevated to the CA, the appellate court held that reinstatement pending appeal applies only to illegal dismissal cases under Article 223 of the Labor Code and not to 14 cases under Article 263. Hence, the petition by the Union and its officers and members in G.R. No. 179220. G.R. Nos. 155109, 155135, and 179220 were consolidated. On September 29, 2010, the Court rendered a decision the dispositive portion of which reads: WHEREFORE, the Court DENIES the petition of the Nagkahiusang Mamumuo sa Alsons-SPFL and its officers and members in G.R. No. 155135 for lack of merit, and REVERSES and SETS ASIDE the decision of the Court of Appeals in CA-G.R. SP 59604 dated March 20, 2002. The Court, on the other hand, GRANTS the petition of C. Alcantara & Sons, Inc. in G.R. 155109 and REINSTATES the decision of the National Labor Relations Commission in NLRC CA M-004996-99 dated November 8, 1999. Further, the Court PARTIALLY GRANTS the petition of the Nagkahiusang Mamumuo sa Alsons-SPFL and their dismissed members in G.R. No. 179220 and ORDERS C. Alcantara & Sons, Inc. to pay the terminated Union members backwages for four (4) months and nine (9) days and separation pays equivalent to one-half month salary for every year of service to the company up to the date of their termination, with interest of 12% per annum from the time this decision becomes final and executory until such backwages and separation pays are paid. The Court DENIES all other claims. SO ORDERED.
15

The Court agreed with the CA on the illegality of the strike as well as the termination of the Union officers, but disagreed with the CA insofar as it affirmed the reinstatement of the Union members. The Court, instead, sustained the dismissal not only of the Union officers but also the Union members who, during the illegal strike, committed prohibited acts by threatening, coercing, and intimidating non-striking employees, officers, suppliers and customers; obstructing the free ingress to and egress from the company premises; and resisting and defying the implementation of 16 the writ of preliminary injunction issued against the strikers. The Court further held that the terminated Union members, who were ordered reinstated by the LA, should have been immediately reinstated due to the immediate executory nature of the reinstatement aspect of the LA decision. In view, however, of CASIs failure to reinstate the dismissed employees, the Court ordered CASI to pay the terminated Union members their accrued backwages from the date of the LA 17 decision until the eventual reversal by the NLRC of the order of reinstatement. In addition to the accrued backwages, the Court awarded separation pay as a form of financial assistance to the Union members equivalent to one-half month salary for 18 every year of service to the company up to the date of their termination. Not satisfied, CASI filed a Motion for Partial Reconsideration of the above decision based on the following grounds: I. IT IS RESPECTFULLY SUBMITTED THAT A PRECEDENT SETTING RULING OF THIS HONORABLE COURT IN ESCARIO V. NLRC [G.R. No. 160302, 27 SEPTEMBER 2010] PARTICULARLY ON THE PROPER APPLICATION OF ARTICLES 264 AND 279 OF THE LABOR CODE SUPPORTS THE AFFIRMATION AND NOT THE REVERSAL OF THE FINDINGS OF THE COURT OF APPEALS ["CA"], AND NEGATES THE ENTITLEMENT TO ACCRUED WAGES OF THE UNION MEMBERS WHO COMMITTED ILLEGAL ACTS DURING THE ILLEGAL STRIKE, NOTWITHSTANDING THAT THE LABOR ARBITER AWARDED THE SAME. II. IT IS RESPECTFULY SUBMITTED THAT THIS HONORABLE COURT ERRED WHEN IT RESOLVED TO GRANT SEPARATION PAY TO THE UNION MEMBERS WHO COMMITTED ILLEGAL ACTS DURING THE ILLEGAL STRIKE CONSIDERING THAT JURISPRUDENCE CITED TO JUSTIFY THE GRANT OF SEPARATION PAY DO NOT APPLY TO THE PRESENT CASE AS IT APPLIES ONLY TO DISMISSALS FOR A JUST 19 CAUSE. The Union, its officers and members likewise filed their separate motion for reconsideration assailing the Courts conclusions that: (1) the str ike is illegal; (2) that the officers of the Union and its appointed shop stewards automatically forfeited their employment status when they participated in the strike; (3) that the Union members committed illegal acts during the strike and are deemed to have lost their employment 20 status; and (4) that CASI is entitled to actual damages and attorneys fees. They also fault the Court in not finding that: (1) CASI and its officers are guilty of acts of unfair labor practice or violation of Article 248 of the Labor Code; (2) the lockout declared by the company is illegal; (3) CASI and its officers committed acts of discrimination; (4) CASI and its officers violated Article 254 of the Labor Code; and (5)

CASI and its officers are liable for actual, moral, and exemplary damages to the 21 Union, its officers and members. Simply stated, CASI only questions the propriety of the award of backwages and separation pay, while the Union, its officers and members seek the reversal of the Courts conclusions on the illegality of the strike, the validity of the termination of the Union officers and members, and the award of actual damages and attorneys fees as well as the denial of their counterclaims against CASI. After a careful review of the records of the case, we find it necessary to reconsider the Courts September 29, 2010 decision, but only as to the award of separation pay. The LA, the NLRC, the CA and the Court are one in saying that the strike staged by the Union, participated in by the Union officers and members, is illegal being in violation of the no strike-no lockout provision of the CBA which enjoined both the Union and the company from resorting to the use of economic weapons available to them under the law and to instead take recourse to voluntary arbitration in settling 22 their disputes. We, therefore, find no reason to depart from such conclusion. Article 264 (a) of the Labor Code lays down the liabilities of the Union officers and members participating in illegal strikes and/or committing illegal acts, to wit: ART. 264. PROHIBITED ACTIVITIES (a) x x x 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. Thus, the above-quoted provision sanctions the dismissal of a Union officer who knowingly participates in an illegal strike or who knowingly participates in the 23 commission of illegal acts during a lawful strike. In this case, the Union officers were in clear breach of the above provision of law when they knowingly participated in the 24 illegal strike. As to the Union members, the same provision of law provides that a member is liable when he knowingly participates in the commission of illegal acts during a strike. We find no reason to reverse the conclusion of the Court that CASI presented substantial evidence to show that the striking Union members committed the following prohibited acts: a. They threatened, coerced, and intimidated non-striking employees, officers, suppliers and customers; b. They obstructed the free ingress to and egress from the company premises; and c. They resisted and defied the implementation of the writ of preliminary 25 injunction issued against the strikers.

The commission of the above prohibited acts by the striking Union members warrants their dismissal from employment. As clearly narrated earlier, the LA found the strike illegal and sustained the dismissal of the Union officers, but ordered the reinstatement of the striking Union members for lack of evidence showing that they committed illegal acts during the illegal strike. This 26 decision, however, was later reversed by the NLRC. Pursuant to Article 223 of the 27 Labor Code and well-established jurisprudence, the decision of the LA reinstating a dismissed or separated employee, insofar as the reinstatement aspect is concerned, 28 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 employee, merely reinstated in the 29 payroll. 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 30 court. If the employer fails to exercise the option of re-admitting the employee to work or to reinstate him in the payroll, the employer must pay the employees salaries during the period between the LAs order of reinstatement pending appeal and the 31 resolution of the higher court overturning that of the LA. In this case, CASI is liable to pay the striking Union members their accrued wages for four months and nine days, which is the period from the notice of the LAs order of reinstatement until the 32 reversal thereof by the NLRC. Citing Escario v. National Labor Relations Commission (Third Division), CASI claims that the award of the four-month accrued salaries to the Union members is not sanctioned by jurisprudence. In Escario, the Court categorically stated that the strikers were not entitled to their wages during the period of the strike (even if the strike might be legal), because they performed no work during the strike. The Court further held that it was neither fair nor just that the dismissed employees should 34 litigate against their employer on the latters time. In this case, however, the fourmonth accrued salaries awarded to the Union members are not the backwages referred to in Escario. To be sure, the awards were not given as their salaries during the period of the strike. Rather, they constitute the employers liability to the employees for its failure to exercise the option of actual reinstatement or payroll reinstatement following the LAs decision to reinstate the Union members as mandated by Article 223 of the Labor Code adequately discussed earlier. In other words, such monetary award refers to the Union members accrued salaries by reason of the reinstatement order of the LA which is self-executory pursuant to Article 35 223. We, therefore, sustain the award of the four-month accrued salaries.1wphi1 Finally, as regards the separation pay as a form of financial assistance awarded by the Court, we find it necessary to reconsider the same and delete the award pursuant to prevailing jurisprudence. Separation pay may be given as a form of financial assistance when a worker is dismissed in cases such as the installation of labor-saving devices, redundancy, retrenchment to prevent losses, closing or cessation of operation of the establishment, or in case the employee was found to have been suffering from a 36 disease such that his continued employment is prohibited by law. It is a statutory right defined as the amount that an employee receives at the time of his severance from the service and is designed to provide the employee with the wherewithal during 37 the period that he is looking for another employment. It is oriented towards the immediate future, the transitional period the dismissed employee must undergo 38 before locating a replacement job. As a general rule, when just causes for
33

terminating the services of an employee exist, the employee is not entitled to 39 separation pay because lawbreakers should not benefit from their illegal acts. The 40 rule, however, is subject to exceptions. The Court, in Philippine Long Distance 41 Telephone Co. v. NLRC, laid down the guidelines when separation pay in the form of financial assistance may be allowed, to wit: We hold that henceforth separation pay shall be allowed as a measure of social justice only in those instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character. Where the reason for the valid dismissal is, for example, habitual intoxication or an offense involving moral turpitude, like theft or illicit sexual relations with a fellow worker, the employer may not be required to give the dismissed employee separation pay, or financial assistance, or whatever other name it is called, on the ground of social justice. A contrary rule would, as the petitioner correctly argues, have the effect, of rewarding rather than punishing the erring employee for his offense. And we do not agree that the punishment is his dismissal only and that the separation pay has nothing to do 42 with the wrong he has committed x x x. We had the occasion to resolve the same issue in Toyota Motor Phils. Corp. Workers 43 Association (TMPCWA) v. National Labor Relations Commission. Following the declaration that the strike staged by the Union members is illegal, the Union officers and members were considered validly dismissed from employment for committing illegal acts during the illegal strike. The Court affirmed the CAs conclusion that the 44 commission of illegal acts during the illegal strike constituted serious misconduct. Hence, the award of separation pay to the Union officials and members was not 45 sustained. Indeed, we applied social justice and equity considerations in several cases to justify the award of financial assistance. In Piero v. National Labor Relations 46 Commission, the Court declared the strike to be illegal for failure to comply with the procedural requirements. We, likewise, sustained the dismissal of the Union president for participating in said illegal strike. Considering, however, that his infraction is not so reprehensible and unscrupulous as to warrant complete disregard of his long years of service, and considering further that he has no previous derogatory records, we granted financial assistance to support him in the twilight of his life after long years of 47 48 service. The same compassion was also applied in Aparente, Sr. v. NLRC where the employee was declared to have been validly terminated from service after having been found guilty of driving without a valid drivers license, which is a clear violation of 49 the companys rules and regulations. We, likewise, awarded financial assistance in 50 Salavarria v. Letran College to the legally dismissed teacher for violation of school policy because such infraction neither amounted to serious misconduct nor reflected that of a morally depraved person. However, in a number of cases cited in Toyota Motor Phils. Corp. Workers 51 Association (TMPCWA) v. National Labor Relations Commission, we refrained from awarding separation pay or financial assistance to Union officers and members who were separated from service due to their participation in or commission of illegal acts 52 during the strike. In Pilipino Telephone Corporation v. Pilipino Telephone 53 Employees Association (PILTEA), the strike was found to be illegal because of procedural infirmities and for defiance of the Secretary of Labors assumption order. Hence, we upheld the Union officers dismissal without granting financial assistance. 54 In Sukhotai Cuisine and Restaurant v. Court of Appeals, and Manila Diamond Hotel

and Resort, Inc. (Manila Diamond Hotel) v. Manila Diamond Hotel Employees 55 Union, the Union officers and members who participated in and committed illegal acts during the illegal strike were deemed to have lost their employment status and were not awarded financial assistance. In Telefunken Semiconductors Employees Union v. Court of Appeals, the Court held that the strikers open and willful defiance of the assumption order of the Secretary of Labor constitute serious misconduct and reflective of their moral character, hence, granting of financial assistance to them cannot be justified. In Chua v. National Labor 57 Relations Commission, we disallowed the award of financial assistance to the dismissed employees for their participation in the unlawful and violent strike which resulted in multiple deaths and extensive property damage because it constitutes serious misconduct on their part. Here, not only did the Court declare the strike illegal, rather, it also found the Union officers to have knowingly participated in the illegal strike. Worse, the Union members committed prohibited acts during the strike. Thus, as we concluded in Toyota, Telefunken, Chua and the other cases cited above, we delete the award of separation pay as a form of financial assistance. WHEREFORE, premises considered, the motion for reconsideration of the Union, its officers and members are DENIED for lack of merit, while the motion for partial reconsideration filed by C. Alcantara & Sons, Inc. is PARTLY GRANTED. The Decision of the Court dated September 29, 2010 is hereby PARTLY RECONSIDERED by deleting the award of separation pay. SO ORDERED.
56

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 187188 June 27, 2012

On 23 January 2008, respondent filed a Motion for Extension to file a Petition for Certiorari before the CA. In a Resolution dated 20 February 2008, the latter granted the Motion for Extension, allowing respondent until 10 February 2008 within which to file its Petition. On 9 February 2008, respondent filed its Petition for Certiorari before the appellate court. On 30 June 2008, the CA issued a Resolution noting that no comment on the Petition had been filed, and stating that the case was now deemed submitted for resolution. On 21 July 2008, the CA rendered its Decision. Finding merit in the Petition, it found the Orders transferring petitioners to Manila to be a valid exercise of management prerogative. The records were bereft of any showing that the subject transfer involved a diminution of rank or salaries. Further, there was no showing of bad faith or ill motive on the part of the employer. Thus, petitioners refusal to comply with the transfer orders constituted willful disobedience of a lawful order of an employer and abandonment, which were just causes for termination under the Labor Code. However, respondent failed to observe the due process requirements in terminating them. The dispositive portion of the CA Decision provides: WHEREFORE, premises considered, the instant petition is GRANTED. The assailed Decision and Resolution of the NLRC dated July 31, 2007 and October 31, 2007[,] respectively, in NLRC NCR CA No. 046036-05 are REVERSED and SET ASIDE. The complaints of private respondents for illegal dismissal are hereby DISMISSED. However, petitioner is ordered to pay private respondents the sum of P 10,000.00 each for having violated the latters right to statutory due process. 7 On 1 August 2008, petitioner Mojar filed a Manifestation8 before the CA, stating that he and the other petitioners had not been served a copy of the CA Petition. He also said that they were not aware whether their counsel before the NLRC, Atty. Jose C. Espinas, was served a copy thereof, since the latter had already been bedridden since December 2007 until his demise on "25 February 2008."9 Neither could their new counsel, Atty. Mario G. Aglipay, enter his appearance before the CA, as petitioners failed to "get [the] folder from the office of Atty. Espinas, as the folder can no longer be found."10 Thereafter, petitioners filed a Motion to Annul Proceedings 11 dated 9 September 2008 before the CA. They moved to annul the proceedings on the ground of lack of jurisdiction. They argued that the NLRC Decision had already attained finality, since the Petition before the CA was belatedly filed, and the signatory to the Certification of non-forum shopping lacked the proper authority. In a Resolution dated 16 March 2009, the CA denied the Motion to Annul Proceedings. Hence, this Petition. The Petition raised the following arguments: (1) There was no proof of service attached to the Motion for Extension to file a Petition for Certiorari before the CA; thus, both the Motion and the Petition were mere scraps of paper. (2) Respondent purposely intended to exclude petitioners from the proceedings before the CA by omitting their actual addresses in the CA Petition, a mandatory requirement under Section 3, Rule 46; in relation to Section 1, Rule 65 of the Rules of Court. Further, respondent failed to prove the valid service of its CA Petition upon petitioners former couns el of record. (3) The CA was grossly ignorant of the law in ignoring jurisprudence, which states that when the floating status of an employee lasts for more than six months, the latter may be considered to have been constructively dismissed. On 3 September 2009, respondent filed its Comment on the Petition, pursuant to this Courts 29 June 2009 Resolution. In its Comment, it argued that the CA Decision had already become final and executory, inasmuch as the Motion to Annul Proceedings, a procedural approach not provided for in the Rules, was filed some 44 days after the

SALVADOR O. MOJAR, EDGAR B. BEGONIA, Heirs of the late JOSE M. CORTEZ, RESTITUTO GADDI, VIRGILIO M. MONANA, FREDDIE RANCES, and EDSON D. TOMAS, Petitioners, vs. AGRO COMMERCIAL SECURITY SERVICE AGENCY, INC., et al.,1 Respondents. DECISION SERENO, J.: This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, seeking to annul the entire proceedings before the Court of Appeals (CA) in CA-G.R. SP No. 102201, in which it issued its Decision dated 21 July 2008 and Resolution dated 16 March 2009. 2 Statement of Facts and of the Case Petitioners were employed as security guards by respondent and assigned to the various branches of the Bank of Commerce in Pangasinan, La Union and Ilocos Sur. In separate Office Orders dated 23 and 24 May 2002, petitioners were relieved from their respective posts and directed to report to their new assignments in Metro Manila effective 3 June 2002. They, however, failed to report for duty in their new assignments, prompting respondent to send them a letter dated 18 June 2002. It required a written explanation why no disciplinary action should be taken against them, but the letter was not heeded. On 15 February 2005, petitioners filed a Complaint for illegal dismissal against respondent and the Bank of Commerce, Dagupan Branch, before the National Labor Relations Commission (NLRC). Petitioners claimed, among others, that their reassignment was a scheme to sever the employer-employee relationship and was done in retaliation for their pressing their claim for salary differential, which they had earlier filed against respondent and the Bank of Commerce before the NLRC. They also contended that the transfer to Manila was inconvenient and prejudicial, since they would incur additional expenses for board and lodging. On 22 May 2006, the Labor Arbiter (LA) rendered a Decision 3 finding that petitioners were illegally dismissed. The dispositive portion reads: WHEREFORE, premises considered, judgment is hereby rendered ordering respondents to reinstate all the complainants to their former assignment in Pangasinan with full backwages and if reinstatement is no longer possible, to pay separation pay of one month for every year of service each of the seven complainant security guards. (A detailed computation of the judgment award is attached as Annex "A.") 4 (Italicized in the original) On appeal, the NLRC affirmed the LAs ruling, with the modification t hat the Complaint against the Bank of Commerce was dismissed.5 The dispositive portion provides: WHEREFORE, premises considered, the appeal of Agro Commercial Security Service Agency, Inc. is hereby DISMISSED for lack of merit. The Appeal of Bank of Commerce is GRANTED for being impressed with merit. Accordingly, judgment is hereby rendered MODIFYING the Decision of the Labor Arbiter dated May 22, 2006 by DISMISSING the complaint against Bank of Commerce-Dagupan. All other dispositions of the Labor Arbiter not so modified, STAYS.6

service of the CA Decision on the counsel for petitioners. Further, Atty. Aglipay had then no legal standing to appear as counsel, considering that there was still no substitution of counsel at the time he filed the Motion to Annul Proceedings. In any case, petitioners are bound by the actions of their counsel, Atty. Espinas. On 1 March 2010, this Court issued a Resolution requiring petitioners to file their reply, which petitioners complied with on 26 April 2010. In their Reply, petitioners state among others that the records of the CA case showed that there was a deliberate violation of their right to due process. The CA Petition did not contain the required affidavit of service, which alone should have caused the motu proprio dismissal thereof. Further, the instant Petition before this Court is an appropriate mode to contest the CA Decision and Resolution, which petitioners contend are void judgments. They also argue that there is no rule on the clients substitution in case of the death of counsel. Instead, the reglementary period to file pleadings in that case must be suspended and made more lenient, considering that the duty of substitution is transferred to a non-lawyer. On 30 March 2011, respondent filed a Motion for Early Resolution of the case. Petitioners likewise filed a Motion for Leave (For the Admission of the Instant Comment on Private Respondents Motion for Early Resolution), stating that they were joining responden t in moving for the early resolution of the case. This Court will resolve the issues raised in seriatim. Actual Addresses of Parties Petitioners contend that the CA should not have taken cognizance of the Petition before it, as their actual addresses were not indicated therein as required under Section 3, Rule 46 12 of the Rules of Court, and pursuant to Cendaa v. Avila. 13 In the 2008 case Cendaa, this Court ruled that the requirement that a petition for certiorari must contain the actual addresses of all the petitioners and the respondents is mandatory. The failure to comply with that requirement is a sufficient ground for the dismissal of a petition. This rule, however, is not absolute. In the 2011 case Santos v. Litton Mills Incorporated, 14 this Court ruled that where the petitioner clearly mentioned that the parties may be served with the courts notices or processes through their respective counsels, whose addresses have been clearly specified as in this case, this act would constitute substantial compliance with the requirements of Section 3, Rule 46. The Court further observed that the notice required by law is notice to counsel if the party has already appeared by counsel, pursuant to Section 2, Rule 13 of the Rules of Court. In its Petition before the CA, respondent clearly indicated the following: THE PARTIES 2.0. The petitioner AGRO COMMERCIAL SECURITY SERVICE AGENCY, INC. (hereafter petitioner AGRO), is a corporation existing under Philippine laws, and may be served with process thru counsel, at his address hereunder indicated; private respondents (1) SALVADOR O. MOJAR; (2) EDGAR B. BEGONIA; (3) JOSE M. CORTEZ; (4) FREDDIE RANCES; (5) VIRGILIO MONANA; (6) RESTITUTU [sic] GADDI; and, (7) EDSON D. TOMAS, are all of age, and during the material period, were in the employ of petitioner AGRO as security guards; said respondents may be served with process thru their common counsel, ATTY. JOSE C. ESPINAS at No. 51 Scout Tuazon, Quezon City; on the other hand, respondent National Labor Relations Commission, 1st Division, Quezon City, is the agency having jurisdiction over labor disputes in the Philippines and may be served with process at offices in Quezon City;15 The foregoing may thus be considered as substantial compliance with Section 3, Rule 46. In any case, and as will be discussed further below, the CA had sufficient reason to take cognizance of the Petition.

Affidavit of Service Section 3, Rule 46 provides that the petition for certiorari should be filed together with the proof of service thereof on the respondent. Under Section 13, Rule 13 of the Rules of Court, if service is made by registered mail, as in this case, proof shall be made by an affidavit of the person mailing and the registry receipt issued by the mailing office. Section 3, Rule 46 further provides that the failure to comply with any of the requirements shall be sufficient ground for the dismissal of the petition. Petitioners allege that no affidavit of service was attached to the CA Petition. Neither is there any in the copy of the CA Petition attached to the instant Petition. In its Comment, respondent claims that petitioners through their counsel, Atty. Aglipay can be charged with knowledge of the pendency of the CA Petition. It says that on April 2008, Atty. Aglipay filed before the NLRC an Entry of Appearance and Motion for Execution Pending Appeal. 16 However, petitioners merely indicated therein that they were "respectfully mov[ing] for the execution pending appeal of the Labor Arbiters decision dated 22 May 2006 affirmed by the NLRC."17 There was no indication that they had been served a copy of the CA Petition. No other proof was presented by respondent to show petitioners actual receipt of the CA Petition. In any case, this knowledge, even if presumed, would not and could not take the place of actual service and proof of service by respondent. In Ferrer v. Villanueva,18 petitioner therein failed to append the proof of service to his Petition for Certiorari. Holding that this failure was a fatal defect, the Court stated: There is no question that petitioner herein was remiss in complying with the foregoing Rule. In Cruz v. Court of Appeals, we ruled that with respect to motions, proof of service is a mandatory requirement. We find no cogent reason why this dictum should not apply and with more reason to a petition for certiorari, in view of Section 3, Rule 46 which requires that the petition shall be filed "together with proof of service thereof." We agree with the Court of Appeals that the lack of proof of service is a fatal defect. The utter disregard of the Rule cannot be justified by harking to substantial justice and the policy of liberal construction of the Rules. Technical rules of procedure are not meant to frustrate the ends of justice. Rather, they serve to effect the proper and orderly disposition of cases and thus effectively prevent the clogging of court dockets. (Emphasis in the original) Indeed, while an affidavit of service is required merely as proof that service has been made on the other party, it is nonetheless essential to due process and the orderly administration of justice.19 Be that as it may, it does not escape the attention of this Court that in the CA Resolution dated 16 March 2009, the appellate court stated that their records revealed that Atty. Espinas, petitioners counsel of record at the time, was duly served a copy of the following: CA Resolution dated 20 February 2008 granting respondents Motion for Extension of Time to file the CA Petition; CA Resolution dated 24 April 2008 requiring petitioners to file their Comment on the CA Petition; and CA Resolution dated 30 June 2008, submitting the case for resolution, as no comment was filed. Such service to Atty. Espinas, as petitioners counsel of record, was valid despite the fact he was already deceased at the time. If a party to a case has appeared by counsel, service of pleadings and judgments shall be made upon his counsel or one of them, unless service upon the party is specifically ordered by the court. It is not the duty of the courts to inquire, during the progress of a case, whether the law firm or partnership representing one of the litigants continues to exist lawfully, whether the partners are still alive, or whether its associates are still connected with the firm.20 It is the duty of party-litigants to be in contact with their counsel from time to time in order to be informed of the progress of their case. It is likewise the duty of parties to inform the court of the fact of their counsels death. 21 Their failure to do so means that they have been

negligent in the protection of their cause.22 They cannot pass the blame to the court, which is not tasked to monitor the changes in the circumstances of the parties and their counsel. Substitution of Counsel Petitioners claim that Atty. Espinas passed away on 8 February 2008. They further claim that he was already bedridden as early as December 2007, and thus they "failed to get any information whether [he] was served with a copy of the [CA Petition]." 23 Petitioners were negligent in the conduct of their litigation. Having known that Atty. Espinas was already bedridden as early as December 2007, they should have already obtained new counsel who could adequately represent their interests. The excuse that Atty. Aglipay could not enter his appearance before the CA "because [petitioners] failed to get [their] folder from the office of Atty. Espinas"24 is flimsy at best. The requirements for a valid substitution of counsel have been jurisprudentially settled in this wise: Under Section 26, Rule 138 of the Rules of Court and established jurisprudence, a valid substitution of counsel has the following requirements: (1) the filing of a written application for substitution; (2) the client's written consent; (3) the consent of the substituted lawyer if such consent can be obtained; and, in case such written consent cannot be procured, (4) a proof of service of notice of such motion on the attorney to be substituted in the manner required by the Rules. Where death of the previous attorney is the cause of substitution of the counsel, a verified proof of the death of such attorney (usually a death certificate) must accompany the notice of appearance of the new counsel. 25 The fact that petitioners were unable to obtain their folder from Atty. Espinas is immaterial. Proof of service upon the lawyer to be substituted will suffice where the lawyers consent cannot be obtained. With respect to the records of the case, these may easily be reconstituted by obtaining copies thereof from the various courts involved. Petitioners allegedly went to the CA sometime prior to 31 July 2008, or the date of filing of their Manifestation before the CA, to inquire about the status of their case. Allegedly, they "always visited the Court of Appeals for [the] development of their case." 26 It is doubtful that a person who regularly follows up the status of his case before a court would not be told, first, that a petition has been filed against him; and, second, that the courts resolutions have been sent to his counsel. It is questionable why, knowing these matters, petitioners did not seek the replacement of their counsel, if the latter was unable to pursue their case. Further, despite their manifestation that, sometime prior to 31 July 2008, they were already aware that the case had been submitted for resolution, they still waited until 9 September 2008 or until they allegedly had knowledge of the CA Decision before they filed the Motion to Annul Proceedings. In Ampo v. Court of Appeals,27 this Court explained the vigilance that must be exercised by a party: We are not persuaded by petitioners argument that he was not aware that his counsel had died or that an adverse judgment had already been rendered until he received the notice of promulgation from the RTC of Butuan City on April 20, 2005. Time and again we have stated that equity aids the vigilant, not those who slumber on their rights. Petitioner should have taken it upon himself to periodically keep in touch with his counsel, check with the court, and inquire about the status of the case. Had petitioner been more prudent, he would have found out sooner about the death of his counsel and would have taken the necessary steps to prevent his present predicament. xxx xxx xxx

Litigants who are represented by counsel should not expect that all they need to do is sit back, relax and await the outcome of their cases. Relief will not be granted to a party who seeks avoidance from the effects of the judgment when the loss of the remedy at law was due to his own negligence. The circumstances of this case plainly show that petitioner only has himself to blame. Neither can he invoke due process. The essence of due process is simply an opportunity to be heard. Due process is satisfied when the parties are afforded a fair and reasonable opportunity to explain their respective sides of the controversy. Where a party, such as petitioner, was afforded this opportunity to participate but failed to do so, he cannot complain of deprivation of due process. If said opportunity is not availed of, it is deemed waived or forfeited without violating the constitutional guarantee. In this case, petitioners must bear the fruits of their negligence in the handling of their case. They may not decry the denial of due process, when they were indeed afforded the right to be heard in the first place. Substantive Issue: Illegal Dismissal Petitioners argue that they were illegally dismissed, based on the 1989 case Agro Commercial Security Services Agency, Inc. v. NLRC., 28 which holds that when the floating status of employees lasts for more than six (6) months, they may be considered to have been illegally dismissed from the service. Unfortunately, the above-mentioned case is not applicable here. In Agro, the service contracts of the security agency therein with various corporations and government agencies to which the security guards were previously assigned were terminated, generally due to the sequestration of the said offices. Accordingly, many of the security guards were placed on floating status. "Floating status" means an indefinite period of time when one does not receive any salary or financial benefit provided by law. 29 In this case, petitioners were actually reassigned to new posts, albeit in a different location from where they resided. Thus, there can be no floating status or indefinite period to speak of. Instead, petitioners were the ones who refused to report for work in their new assignment. In cases involving security guards, a relief and transfer order in itself does not sever the employment relationship between the security guards and their agency. Employees have the right to security of tenure, but this does not give them such a vested right to their positions as would deprive the company of its prerogative to change their assignment or transfer them where their services, as security guards, will be most beneficial to the client.30 An employer has the right to transfer or assign its employees from one office or area of operation to another in pursuit of its legitimate business interest, provided there is no demotion in rank or diminution of salary, benefits, and other privileges; and the transfer is not motivated by discrimination or bad faith, or effected as a form of punishment or demotion without sufficient cause.31 While petitioners may claim that their transfer to Manila will cause added expenses and inconvenience, we agree with the CA that, absent any showing of bad faith or ill motive on the part of the employer, the transfer remains valid. WHEREFORE, the Petition is DENIED. The Court of Appeals Decision dated 21 July 2008 and Resolution dated 16 March 2009 in CA-G.R. SP No. 102201 are hereby AFFIRMED. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. 152048 April 7, 2009

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 allegedly tampering with the shipping documents. Respondents emphasized the 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, responde nts 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 o n 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.

FELIX B. PEREZ and AMANTE G. DORIA, Petitioners, vs. PHILIPPINE TELEGRAPH AND TELEPHONE COMPANY and JOSE LUIS SANTIAGO, Respondents. 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, 19932 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.

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 adequate or sufficient."21 In this regard, the phrase "ample opportunity to be heard" can be reasonably interpreted as extensive enough to cover actual hearing or conference. To this extent, Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code is in conformity with Article 277(b). Nonetheless, Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code should not be taken to mean that holding an actual hearing or conference is a condition sine qua non for compliance with the due process requirement in termination of employment. The test for the fair procedure guaranteed under Article 277(b) cannot be whether there has been a formal pretermination confrontation between the employer and the employee. The "ample opportunity to be heard" standard is neither synonymous nor similar to a formal hearing. To confine the 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 Corporation,27 we had the occasion to state: Association v. Solid Development

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 equivalent computed from the time the compensation was not paid up to the time of 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 CA-G.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 NCR CN. 11-06930-93 is hereby AFFIRMED with the MODIFICATION that petitioners should be paid their separation pay in lieu of reinstatement. SO ORDERED.

[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 disputes29 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

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 81262 August 25, 1989 GLOBE MACKAY CABLE AND RADIO CORP., and HERBERT C. HENDRY, petitioners, vs. THE HONORABLE COURT OF APPEALS and RESTITUTO M. TOBIAS, respondents. Atencia & Arias Law Offices for petitioners. Romulo C. Felizmena for private respondent.

the fifth was for of Article 290 of' the Revised Penal Code (Discovering Secrets Through Seizure of Correspondence).lwph1.t Two of these complaints were refiled with the Judge Advocate General's Office, which however, remanded them to the fiscal's office. All of the six criminal complaints were dismissed by the fiscal. Petitioners appealed four of the fiscal's resolutions dismissing the criminal complaints with the Secretary of Justice, who, however, affirmed their dismissal. In the meantime, on January 17, 1973, Tobias received a notice (Exh. "F") from petitioners that his employment has been terminated effective December 13, 1972. Whereupon, Tobias filed a complaint for illegal dismissal. The labor arbiter dismissed the complaint. On appeal, the National Labor Relations Commission (NLRC) reversed the labor arbiter's decision. However, the Secretary of Labor, acting on petitioners' appeal from the NLRC ruling, reinstated the labor arbiter's decision. Tobias appealed the Secretary of Labor's order with the Office of the President. During the pendency of the appeal with said office, petitioners and private respondent Tobias entered into a compromise agreement regarding the latter's complaint for illegal dismissal. Unemployed, Tobias sought employment with the Republic Telephone Company (RETELCO). However, petitioner Hendry, without being asked by RETELCO, wrote a letter to the latter stating that Tobias was dismissed by GLOBE MACKAY due to dishonesty. Private respondent Tobias filed a civil case for damages anchored on alleged unlawful, malicious, oppressive, and abusive acts of petitioners. Petitioner Hendry, claiming illness, did not testify during the hearings. The Regional Trial Court (RTC) of Manila, Branch IX, through Judge Manuel T. Reyes rendered judgment in favor of private respondent by ordering petitioners to pay him eighty thousand pesos (P80,000.00) as actual damages, two hundred thousand pesos (P200,000.00) as moral damages, twenty thousand pesos (P20,000.00) as exemplary damages, thirty thousand pesos (P30,000.00) as attorney's fees, and costs. Petitioners appealed the RTC decision to the Court of Appeals. On the other hand, Tobias appealed as to the amount of damages. However, the Court of Appeals, an a decision dated August 31, 1987 affirmed the RTC decision in toto. Petitioners' motion for reconsideration having been denied, the instant petition for review on certiorari was filed. The main issue in this case is whether or not petitioners are liable for damages to private respondent. Petitioners contend that they could not be made liable for damages in the lawful exercise of their right to dismiss private respondent. On the other hand, private respondent contends that because of petitioners' abusive manner in dismissing him as well as for the inhuman treatment he got from them, the Petitioners must indemnify him for the damage that he had suffered. One of the more notable innovations of the New Civil Code is the codification of "some basic principles that are to be observed for the rightful relationship between human beings and for the stability of the social order." [REPORT ON THE CODE COMMISSION ON THE PROPOSED CIVIL CODE OF THE PHILIPPINES, p. 39]. The framers of the Code, seeking to remedy the defect of the old Code which merely stated the effects of the law, but failed to draw out its spirit, incorporated certain fundamental precepts which were "designed to indicate certain norms that spring from the fountain of good conscience" and which were also meant to serve as "guides for human conduct [that] should run as golden threads through society, to the end that law may approach its supreme ideal, which is the sway and dominance of justice" (Id.) Foremost among these principles is that pronounced in Article 19 which provides: Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith. This article, known to contain what is commonly referred to as the principle of abuse of rights, sets certain standards which must be observed not only in the exercise of one's rights but also in the performance of one's duties. These standards are the following: to act with justice; to give

CORTES, J.: Private respondent Restituto M. Tobias was employed by petitioner Globe Mackay Cable and Radio Corporation (GLOBE MACKAY) in a dual capacity as a purchasing agent and administrative assistant to the engineering operations manager. In 1972, GLOBE MACKAY discovered fictitious purchases and other fraudulent transactions for which it lost several thousands of pesos. According to private respondent it was he who actually discovered the anomalies and reported them on November 10, 1972 to his immediate superior Eduardo T. Ferraren and to petitioner Herbert C. Hendry who was then the Executive Vice-President and General Manager of GLOBE MACKAY. On November 11, 1972, one day after private respondent Tobias made the report, petitioner Hendry confronted him by stating that he was the number one suspect, and ordered him to take a one week forced leave, not to communicate with the office, to leave his table drawers open, and to leave the office keys. On November 20, 1972, when private respondent Tobias returned to work after the forced leave, petitioner Hendry went up to him and called him a "crook" and a "swindler." Tobias was then ordered to take a lie detector test. He was also instructed to submit specimen of his handwriting, signature, and initials for examination by the police investigators to determine his complicity in the anomalies. On December 6,1972, the Manila police investigators submitted a laboratory crime report (Exh. "A") clearing private respondent of participation in the anomalies. Not satisfied with the police report, petitioners hired a private investigator, retired Col. Jose G. Fernandez, who on December 10, 1972, submitted a report (Exh. "2") finding Tobias guilty. This report however expressly stated that further investigation was still to be conducted. Nevertheless, on December 12, 1972, petitioner Hendry issued a memorandum suspending Tobias from work preparatory to the filing of criminal charges against him. On December 19,1972, Lt. Dioscoro V. Tagle, Metro Manila Police Chief Document Examiner, after investigating other documents pertaining to the alleged anomalous transactions, submitted a second laboratory crime report (Exh. "B") reiterating his previous finding that the handwritings, signatures, and initials appearing in the checks and other documents involved in the fraudulent transactions were not those of Tobias. The lie detector tests conducted on Tobias also yielded negative results. Notwithstanding the two police reports exculpating Tobias from the anomalies and the fact that the report of the private investigator, was, by its own terms, not yet complete, petitioners filed with the City Fiscal of Manila a complaint for estafa through falsification of commercial documents, later amended to just estafa. Subsequently five other criminal complaints were filed against Tobias, four of which were for estafa through Falsification of commercial document while

everyone his due; and to observe honesty and good faith. The law, therefore, recognizes a primordial limitation on all rights; that in their exercise, the norms of human conduct set forth in Article 19 must be observed. A right, though by itself legal because recognized or granted by law as such, may nevertheless become the source of some illegality. When a right is exercised in a manner which does not conform with the norms enshrined in Article 19 and results in damage to another, a legal wrong is thereby committed for which the wrongdoer must be held responsible. But while Article 19 lays down a rule of conduct for the government of human relations and for the maintenance of social order, it does not provide a remedy for its violation. Generally, an action for damages under either Article 20 or Article 21 would be proper. Article 20, which pertains to damage arising from a violation of law, provides that: Art. 20. Every person who contrary to law, wilfully or negligently causes damage to another, shall indemnify the latter for the same. However, in the case at bar, petitioners claim that they did not violate any provision of law since they were merely exercising their legal right to dismiss private respondent. This does not, however, leave private respondent with no relief because Article 21 of the Civil Code provides that: Art. 21. Any person who wilfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage. This article, adopted to remedy the "countless gaps in the statutes, which leave so many victims of moral wrongs helpless, even though they have actually suffered material and moral injury" [Id.] should "vouchsafe adequate legal remedy for that untold number of moral wrongs which it is impossible for human foresight to provide for specifically in the statutes" [Id. it p. 40; See also PNB v. CA, G.R. No. L-27155, May 18,1978, 83 SCRA 237, 247]. In determining whether or not the principle of abuse of rights may be invoked, there is no rigid test which can be applied. While the Court has not hesitated to apply Article 19 whether the legal and factual circumstances called for its application [ See for e.g., Velayo v. Shell Co. of the Phil., Ltd., 100 Phil. 186 (1956); PNB v. CA, supra; Grand Union Supermarket, Inc. v. Espino, Jr., G.R. No. L-48250, December 28, 1979, 94 SCRA 953; PAL v. CA, G.R. No. L-46558, July 31,1981,106 SCRA 391; United General Industries, Inc, v. Paler G.R. No. L-30205, March 15,1982,112 SCRA 404; Rubio v. CA, G.R. No. 50911, August 21, 1987, 153 SCRA 183] the question of whether or not the principle of abuse of rights has been violated resulting in damages under Article 20 or Article 21 or other applicable provision of law, depends on the circumstances of each case. And in the instant case, the Court, after examining the record and considering certain significant circumstances, finds that all petitioners have indeed abused the right that they invoke, causing damage to private respondent and for which the latter must now be indemnified. The trial court made a finding that notwithstanding the fact that it was private respondent Tobias who reported the possible existence of anomalous transactions, petitioner Hendry "showed belligerence and told plaintiff (private respondent herein) that he was the number one suspect and to take a one week vacation leave, not to communicate with the office, to leave his table drawers open, and to leave his keys to said defendant (petitioner Hendry)" [RTC Decision, p. 2; Rollo, p. 232]. This, petitioners do not dispute. But regardless of whether or not it was private respondent Tobias who reported the anomalies to petitioners, the latter's reaction towards the former upon uncovering the anomalies was less than civil. An employer who harbors suspicions that an employee has committed dishonesty might be justified in taking the appropriate action such as ordering an investigation and directing the employee to go on a leave. Firmness and the resolve to uncover the truth would also be expected from such employer. But the high-handed treatment accorded Tobias by petitioners was certainly uncalled for. And this reprehensible attitude of petitioners was to continue when private respondent returned to work on November 20, 1972 after his one week forced leave. Upon reporting for work, Tobias was confronted by Hendry who said. "Tobby, you are the crook and swindler in this company." Considering that the first report made by the police investigators was submitted only on December 10, 1972 [See Exh. A] the statement made by petitioner Hendry was baseless. The imputation of guilt without

basis and the pattern of harassment during the investigations of Tobias transgress the standards of human conduct set forth in Article 19 of the Civil Code. The Court has already ruled that the right of the employer to dismiss an employee should not be confused with the manner in which the right is exercised and the effects flowing therefrom. If the dismissal is done abusively, then the employer is liable for damages to the employee [Quisaba v. Sta. Ines-Melale Veneer and Plywood Inc., G.R. No. L-38088, August 30, 1974, 58 SCRA 771; See also Philippine Refining Co., Inc. v. Garcia, G.R. No. L-21871, September 27,1966, 18 SCRA 107] Under the circumstances of the instant case, the petitioners clearly failed to exercise in a legitimate manner their right to dismiss Tobias, giving the latter the right to recover damages under Article 19 in relation to Article 21 of the Civil Code. But petitioners were not content with just dismissing Tobias. Several other tortious acts were committed by petitioners against Tobias after the latter's termination from work. Towards the latter part of January, 1973, after the filing of the first of six criminal complaints against Tobias, the latter talked to Hendry to protest the actions taken against him. In response, Hendry cut short Tobias' protestations by telling him to just confess or else the company would file a hundred more cases against him until he landed in jail. Hendry added that, "You Filipinos cannot be trusted." The threat unmasked petitioner's bad faith in the various actions taken against Tobias. On the other hand, the scornful remark about Filipinos as well as Hendry's earlier statements about Tobias being a "crook" and "swindler" are clear violations of 'Tobias' personal dignity [See Article 26, Civil Code]. The next tortious act committed by petitioners was the writing of a letter to RETELCO sometime in October 1974, stating that Tobias had been dismissed by GLOBE MACKAY due to dishonesty. Because of the letter, Tobias failed to gain employment with RETELCO and as a result of which, Tobias remained unemployed for a longer period of time. For this further damage suffered by Tobias, petitioners must likewise be held liable for damages consistent with Article 2176 of the Civil Code. Petitioners, however, contend that they have a "moral, if not legal, duty to forewarn other employers of the kind of employee the plaintiff (private respondent herein) was." [Petition, p. 14; Rollo, p. 15]. Petitioners further claim that "it is the accepted moral and societal obligation of every man to advise or warn his fellowmen of any threat or danger to the latter's life, honor or property. And this includes warning one's brethren of the possible dangers involved in dealing with, or accepting into confidence, a man whose honesty and integrity is suspect" [Id.]. These arguments, rather than justify petitioners' act, reveal a seeming obsession to prevent Tobias from getting a job, even after almost two years from the time Tobias was dismissed. Finally, there is the matter of the filing by petitioners of six criminal complaints against Tobias. Petitioners contend that there is no case against them for malicious prosecution and that they cannot be "penalized for exercising their right and prerogative of seeking justice by filing criminal complaints against an employee who was their principal suspect in the commission of forgeries and in the perpetration of anomalous transactions which defrauded them of substantial sums of money" [Petition, p. 10, Rollo, p. 11]. While sound principles of justice and public policy dictate that persons shall have free resort to the courts for redress of wrongs and vindication of their rights [Buenaventura v. Sto. Domingo, 103 Phil. 239 (1958)], the right to institute criminal prosecutions can not be exercised maliciously and in bad faith [Ventura v. Bernabe, G.R. No. L-26760, April 30, 1971, 38 SCRA 5871.] Hence, in Yutuk V. Manila Electric Co., G.R. No. L-13016, May 31, 1961, 2 SCRA 337, the Court held that the right to file criminal complaints should not be used as a weapon to force an alleged debtor to pay an indebtedness. To do so would be a clear perversion of the function of the criminal processes and of the courts of justice. And in Hawpia CA, G.R. No. L-20047, June 30, 1967. 20 SCRA 536 the Court upheld the judgment against the petitioner for actual and moral damages and attorney's fees after making a finding that petitioner, with persistence, filed at least six criminal complaints against respondent, all of which were dismissed. To constitute malicious prosecution, there must be proof that the prosecution was prompted by a design to vex and humiliate a person and that it was initiated deliberately by the defendant knowing that the charges were false and groundless [Manila Gas Corporation v. CA, G.R. No. L44190, October 30,1980, 100 SCRA 602]. Concededly, the filing of a suit by itself, does not

render a person liable for malicious prosecution [Inhelder Corporation v. CA, G.R. No. 52358, May 301983122 SCRA 576]. The mere dismissal by the fiscal of the criminal complaint is not a ground for an award of damages for malicious prosecution if there is no competent evidence to show that the complainant had acted in bad faith [Sison v. David, G.R. No. L-11268, January 28,1961, 1 SCRA 60]. In the instant case, however, the trial court made a finding that petitioners acted in bad faith in filing the criminal complaints against Tobias, observing that: xxx Defendants (petitioners herein) filed with the Fiscal's Office of Manila a total of six (6) criminal cases, five (5) of which were for estafa thru falsification of commercial document and one for violation of Art. 290 of the Revised Penal Code "discovering secrets thru seizure of correspondence," and all were dismissed for insufficiency or lack of evidence." The dismissal of four (4) of the cases was appealed to the Ministry of Justice, but said Ministry invariably sustained the dismissal of the cases. As above adverted to, two of these cases were refiled with the Judge Advocate General's Office of the Armed Forces of the Philippines to railroad plaintiffs arrest and detention in the military stockade, but this was frustrated by a presidential decree transferring criminal cases involving civilians to the civil courts. xxx To be sure, when despite the two (2) police reports embodying the findings of Lt. Dioscoro Tagle, Chief Document Examiner of the Manila Police Department, clearing plaintiff of participation or involvement in the fraudulent transactions complained of, despite the negative results of the lie detector tests which defendants compelled plaintiff to undergo, and although the police investigation was "still under follow-up and a supplementary report will be submitted after all the evidence has been gathered," defendants hastily filed six (6) criminal cases with the city Fiscal's Office of Manila, five (5) for estafa thru falsification of commercial document and one (1) for violation of Art. 290 of the Revised Penal Code, so much so that as was to be expected, all six (6) cases were dismissed, with one of the investigating fiscals, Asst. Fiscal de Guia, commenting in one case that, "Indeed, the haphazard way this case was investigated is evident. Evident likewise is the flurry and haste in the filing of this case against respondent Tobias," there can be no mistaking that defendants would not but be motivated by malicious and unlawful intent to harass, oppress, and cause damage to plaintiff. xxx [RTC Decision, pp. 5-6; Rollo, pp. 235-236]. In addition to the observations made by the trial court, the Court finds it significant that the criminal complaints were filed during the pendency of the illegal dismissal case filed by Tobias against petitioners. This explains the haste in which the complaints were filed, which the trial court earlier noted. But petitioners, to prove their good faith, point to the fact that only six complaints were filed against Tobias when they could have allegedly filed one hundred cases, considering the number of anomalous transactions committed against GLOBE MACKAY. However, petitioners' good faith is belied by the threat made by Hendry after the filing of the first complaint that one hundred more cases would be filed against Tobias. In effect, the possible filing of one hundred more cases was made to hang like the sword of Damocles over the head of Tobias. In fine, considering the haste in which the criminal complaints were filed, the fact that they were filed during the pendency of the illegal dismissal case against petitioners, the threat made by Hendry, the fact that the cases were filed notwithstanding the two police reports exculpating Tobias from involvement in the anomalies committed against GLOBE MACKAY, coupled by the eventual dismissal of all the cases, the Court is led into no other conclusion than

that petitioners were motivated by malicious intent in filing the six criminal complaints against Tobias. Petitioners next contend that the award of damages was excessive. In the complaint filed against petitioners, Tobias prayed for the following: one hundred thousand pesos (P100,000.00) as actual damages; fifty thousand pesos (P50,000.00) as exemplary damages; eight hundred thousand pesos (P800,000.00) as moral damages; fifty thousand pesos (P50,000.00) as attorney's fees; and costs. The trial court, after making a computation of the damages incurred by Tobias [See RTC Decision, pp. 7-8; Rollo, pp. 154-1551, awarded him the following: eighty thousand pesos (P80,000.00) as actual damages; two hundred thousand pesos (P200,000.00) as moral damages; twenty thousand pesos (P20,000.00) as exemplary damages; thirty thousand pesos (P30,000.00) as attorney's fees; and, costs. It must be underscored that petitioners have been guilty of committing several actionable tortious acts, i.e., the abusive manner in which they dismissed Tobias from work including the baseless imputation of guilt and the harassment during the investigations; the defamatory language heaped on Tobias as well as the scornful remark on Filipinos; the poison letter sent to RETELCO which resulted in Tobias' loss of possible employment; and, the malicious filing of the criminal complaints. Considering the extent of the damage wrought on Tobias, the Court finds that, contrary to petitioners' contention, the amount of damages awarded to Tobias was reasonable under the circumstances. Yet, petitioners still insist that the award of damages was improper, invoking the principle of damnum absque injuria. It is argued that "[t]he only probable actual damage that plaintiff (private respondent herein) could have suffered was a direct result of his having been dismissed from his employment, which was a valid and legal act of the defendants-appellants (petitioners herein).lwph1.t " [Petition, p. 17; Rollo, p. 18]. According to the principle of damnum absque injuria, damage or loss which does not constitute a violation of a legal right or amount to a legal wrong is not actionable [Escano v. CA, G.R. No. L47207, September 25, 1980, 100 SCRA 197; See also Gilchrist v. Cuddy 29 Phil, 542 (1915); The Board of Liquidators v. Kalaw, G.R. No. L-18805, August 14, 1967, 20 SCRA 987]. This principle finds no application in this case. It bears repeating that even granting that petitioners might have had the right to dismiss Tobias from work, the abusive manner in which that right was exercised amounted to a legal wrong for which petitioners must now be held liable. Moreover, the damage incurred by Tobias was not only in connection with the abusive manner in which he was dismissed but was also the result of several other quasi-delictual acts committed by petitioners. Petitioners next question the award of moral damages. However, the Court has already ruled in Wassmer v. Velez, G.R. No. L-20089, December 26, 1964, 12 SCRA 648, 653, that [p]er express provision of Article 2219 (10) of the New Civil Code, moral damages are recoverable in the cases mentioned in Article 21 of said Code." Hence, the Court of Appeals committed no error in awarding moral damages to Tobias. Lastly, the award of exemplary damages is impugned by petitioners. Although Article 2231 of the Civil Code provides that "[i]n quasi-delicts, exemplary damages may be granted if the defendant acted with gross negligence," the Court, in Zulueta v. Pan American World Airways, Inc ., G.R. No. L- 28589, January 8, 1973, 49 SCRA 1, ruled that if gross negligence warrants the award of exemplary damages, with more reason is its imposition justified when the act performed is deliberate, malicious and tainted with bad faith. As in the Zulueta case, the nature of the wrongful acts shown to have been committed by petitioners against Tobias is sufficient basis for the award of exemplary damages to the latter. WHEREFORE, the petition is hereby DENIED and the decision of the Court of Appeals in CAG.R. CV No. 09055 is AFFIRMED. SO ORDERED.

Republic of the Philippines SUPREME COURT EN BANC G.R. No. 151378. March 28, 2005 JAKA FOOD PROCESSING CORPORATION, Petitioners, 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 13th 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 13th 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, respondentsappellants is (sic) ordered to pay each of the complainants-appellees 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 13th 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 un der 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 non-compliance 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 noncompliance 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 respondentappellant 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 respondent-appellant corporation are clearly substantial and sufficiently proven with clear and satisfactory evidence. Losses incurred were adequately shown with respondent-appellants 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.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 72207 August 6, 1986 DIVINE WORD HIGH SCHOOL AND REV. VIC TIAM, SVD. DIRECTOR, petitioners, vs. THE NATIONAL LABOR RELATIONS COMMISSION AND LUZ MALLBO CATENZA, respondents. Pedro R. Perez, Jr. for petitioners. Gregorio Mallabo for respondent.

The instant proceeding stemmed from a complaint filed by herein private respondent Luz Catenza, a high school teacher of petitioner Divine Word College, for illegal dismissal. She alleged in her complaint that she went on a vacation leave but that when she tried to report back to work she was informed that she is not anymore allowed to teach because of the "misdeeds" and "immoral acts" of her husband Pablo Catenza, then the principal of petitioner school. Answering the complaint, petitioners, then respondents, alleged that it was not the "misdeeds" and "immoral acts" committed by her husband, which was the reason or cause of her dismissal but her contemporaneous and subsequent conduct of covering up and concealing the immoral acts of her husband coupled with threats to kill made by said respondent on the person of student Remie Ignacio, the victim of her husband's immoral acts. After trial, the Labor Arbiter rendered his Decision, the dispositive portion reading: WHEREFORE, in view of the foregoing, a Decision should be as it is hereby entered, in the above-entitled case, ORDERING respondents Divine Word High School and Rev. Father Vic Tiam, SVD. Director, within ten (10) days from receipt hereof, to REINSTATE complainant to her former position without loss of seniority rights and to pay her backwages for a period of (10) months. Thus, with a monthly salary of P700.00 respondents should pay her within the ten-day period Seven Thousand Pesos. (P7,000.00) as backwages and to pay her lawyer, Atty. Gregorio Mallabo, the amount of P700.00 as attorney's fee, the amount being ten percent of the total monetary award. It is SO ORDERED. The said decision was modified on appeal by respondent NLRC, hence, this petition for review after petitioner's motion for reconsideration had been denied. After a review of the records of the case, We agree with the following finding of the Labor Arbiter (which finding has also been affirmed by the NLRC); A careful review and evaluation of the entire records of the case show clearly that complainant was dismissed without a valid cause. ALL throughout the records of the case it is very apparent that the main reason she was dismissed was because of the alleged immoral conduct of her husband. Granting that allegation is true, there being no clear showing that complainant's husband was ever investigated or convicted of the serious act alluded to him, why should his wife be made to suffer for her husband's indiscretion and infidelity. Likewise devoid of merit is petitioners' contention that they were denied due process of law when the Labor Arbiter considered the case submitted for decision notwithstanding the fact that petitioners had not yet rested their case. Scrutiny of the records shows that petitioners were afforded every opportunity to present their evidence but they repeatedly failed to appear at the four (4) consecutive hearings scheduled for the purpose. It is settled that there is no denial of due process where petitioner was afforded an opportunity to present his case. (Municipality of Daet v. Hidalgo Enterprises, Inc., 138 SCRA 265). Nonetheless We hesitate ordering the reinstatement of private respondent Luz Ballano Catenza as a high school teacher in the petitioner high school, which is a Catholic institution, serving the educational and moral needs of its Catholic studentry. While herself innocent, the continued presense of Mrs. Catenza as a teacher in the school may well be met with antipathy and antagonism by some sectors in the school community. WHEREFORE, the petitioners are hereby ORDERED to pay complainant-appellee separation pay equivalent to one month pay for every year of service, plus her backwages (not to exceed three years) from the time of the dismissal up to the time of actual payment. SO ORDERED.

PARAS, J.: Petition filed by Divine Word High School and its Director Rev. Vic Tiam to review and set aside the decision of public respondent National Labor Relations Commission (NLRC) dated August 5, 1985, which modified the decision of the Labor Arbiter. The pertinent portion of the assailed decision of the NLRC reads: Respondent-appellants stress that their main reason in terminating complainant-appellee, was not because of the immoral conduct of her husband, but because of her act of covering-up the alleged immoral conduct, by advising and/or persuading Miss Remie Ignacio not to report the supposed immoral conduct of complainant-appellee's husband. Even assuming the act complained of by respondents-appellants to be true, WE hold that in the eyes of the law, complaint- appellee committed no crime and has not committed any act that would justify her outright dismissal from the service. xxx xxx xxx However, considering the moral repercussions of complainant-appellee's act which it may have towards the mind of the entire studentry of respondents-appellants' institution and considering further that respondentappellant Divine Word High School is a catholic institution set to inculcate into the minds of its students moral values as well as spiritual teachings and virtues of Christianity not only by word of mouth but also by example or deed, the act of complainant-appellee therefore, may not be held totally irreprehensible.Thus we deemed it wise to modify the challenged decision and therefore give complainant-appellee a choice of whether or not she be reinstated with full backwages and benefits from the time of her dismissal up to the time of her actual reinstatement, or she be separated from the service with termination pay equivalent of one month pay for every year of service plus backwages from the time of her dismissal up to the time of the finality of this Decision. WHEREFORE, premises considered the Decision appealed from is hereby modified and respondents-appellants therefore are hereby ordered either to reinstate complainant-appellee to her former position without loss of seniority rights with full backwages and benefits from the time of her dismissal up to the time of her actual reinstatement and/or to pay complainant-appellee separation pay equivalent to one month pay for every year of service, plus her backwages from the time of the dismissal up to the time of the finality of this Decision, at the option of complainant-appellee. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 143204 June 26, 2001

On August 24, 1995 about 25 union members requested the chairman of the Board of the Association to suspend the complainant and Saturnino for engaging in a fist fight (sic) since both are officers of the union which should be models of discipline for the rank and file (Annex "A" of Respondent Association's position paper) employees.1wphi1.nt On August 25, Jaime Dublin, Chairman of the Board of the Association, acting on the letter of some members of the association, issued a memorandum (Annex "E" complainant position paper) to the Operation Manager of the Respondent company, Mr. H. Caraig (sic) stating the following: 'This is in connection with the fist fighting (sic) incident between Mr. Tomas Saturnino and Mr. Rustom Catinoy, President and Secretary respectively, Hyatt Taxi Driver's Association. As per initial investigation conducted by the committee itself, both officer (sic) have violated the Company's Rules and Regulations and likewise, the Union Policy constitution and By-Laws, Article 15 Section 1, e.i., Impeachment. The committee further decided the indefinite suspension of the two officers pending completion of the Committee's investigation. The decision was approved by the Executive Board. So, therefore, the committee is requesting your office to implement our recommendation/decision at the soonest possible time.' On August 26, 1995, the Asst. Vice-President of the Respondent company (sic) Melchor Acosta, Jr. (sic) issued a memorandum preventively suspending for 30 days the services of the complainant and Saturnino pending investigation in response to the recommendation of the Chairman of the Board of the Association. xxxxxx Complainant aggrieved by the preventive suspension since he was not the aggressor, filed a complaint for illegal suspension, unpaid wages, and damages against both the association-union and management on August 28, 1995 before the National Labor Relations Commission. After the lapse of his 30 days preventive suspension, complainant reported for work but he was not allowed to resume his duties as a taxi driver allegedly, since he is pursuing the criminal complainant for physical injuries against Saturnino, the associations' President and the complaint for the illegal suspension with the National Labor Relations Commission. On October 12, 1995, since there was no response from Respondent company, complainant decided to amend his complaint to include constructive dismissal as an additional cause of action since he was not allowed to resume his employment after the lapse of his preventive suspension."2 On September 19, 1997, the Labor Arbiter rendered a Decision finding petitioner guilty of illegal preventive suspension, requiring it to pay the wage equivalent of the suspension, and further finding petitioner guilty of illegal constructive dismissal, ordering petitioner to reinstate respondent and to pay him backwages and attorney's fees. Petitioner and the Union Association then filed a Joint Memorandum of Appeal before the National Labor Relations Commission (NLRC). On June 26, 1998, the NLRC issued a Decision affirming the decision of the Arbitration Branch. The dispositive portion of the Decision reads: "WHEREFORE, premises considered judgment is hereby rendered:

HYATT TAXI SERVICES INC., petitioner, vs. RUSTOM M. CATINOY, respondent. GONZAGA-REYES, J.: Before us is a petition for review under Rule 45 of the Rules of Court of the Decision 1 of the Court of Appeals dated December 27, 1999 in the case entitled "RUSTOM M. CATINOY VS. HYATT TAXI SERVICES INC., HYATT TAXI EMPLOYEE ASSOCIATION AND/OR MR. JAIME DUBLIN" that ruled against herein petitioner Hyatt Taxi Services, Inc. (hereafter petitioner) and of the Resolution dated May 11, 2000 denying the Motion for Reconsideration of petitioner. The assailed Decision held that the preventive suspension of respondent Rustom M. Catinoy (hereafter respondent) by petitioner was without cause and without due process of law, and that petitioner constructively dismissed respondent. The facts/antecedents of this case as found by the Labor Arbiter, NLRC and Court of Appeals are as follows: "Complainant was hired on October 10, 1992 as a taxi driver by the Respondent Hyatt Taxi Services, Inc. Complainant is also a member and officer (Secretary) of Respondent, Hyatt Taxi Employees Association, a legitimate labor organization registered with the Department of Labor and Employment and is the exclusive bargaining representative of all taxi drivers of Respondent Hyatt Taxi Service, Inc. Respondent Jaime Dublin is the President and Chairman of the Board of the Respondent association. As a taxi driver, complainant works every other day for 15 days in a month earning P800.00 more or less a day after remitting to the respondent company his boundary (P650.00/day) during carbarn time 1:00 a.m. Being the Secretary of the Union/association, complainant keeps all the records and documents of the association in the drawer of his desk at the Union Office which is located inside the premises of Respondent company. On August 21, 1995 at about past 10:00 a.m., complainant went inside the union office and to his surprise found his drawer to have been forcibly opened. Since he saw the acting President of the Union, Mr. Tomas Saturnino inside the office together with two rice suppliers namely Melencio Reyes and Ms. Rosalinda Balahan, complainant asked Saturnino who opened his drawer. Saturnino replied that he was the one who forcibly opened the drawer to retrieve some documents particularly the list of union members. An argument ensued and complainant even reminded Saturnino that he should respect the rights and functions of other officers of the association. Saturnino then approached the complainant and shoved him. Complainant retaliated with fist blow but it failed to hit Saturnino and the latter hit him twice in (sic) the face causing one of his tooth (sic) to fall. The aggression of Saturnino was only interrupted when the Operations Manager of the respondent company (sic) Mr. Caraig (sic) intervened and told him (Saturnino) to stop. Complainant was brought to the hospital by Ms. Balahan and Mr. Reyes due to the bleeding that occurred due to the loss of his tooth. After securing medical treatment, complainant on the same day filed a criminal complaint for physical injuries with the fiscal's Office and Saturnino was arrested by the police for investigation (Annex "A" of complainant's position paper).

1. Finding Respondent Hyatt Taxi Services, Inc., guilty of illegal constructive dismissal; 2. Finding Respondents Hyatt Taxi Services, Inc., and Hyatt Taxi Employees Association and/or Jaime Dublin jointly and severally liable for illegal preventive suspension; 2. Ordering Respondents Hyatt Taxi Services, Inc., and Hyatt Taxi Employees Association and/or Jaime Dublin jointly and severally liable to pay a month's wage due to complainants illegal preventive suspension in the amount of P12,000.00; 3. Ordering Respondents Hyatt Taxi Services, Inc., to pay complainant's full backwages from the time of his dismissal till actual reinstatement in the amount of P276,000.00 (computed till promulgation only); 4. Ordering Respondents Hyatt Taxi Services, Inc. to reinstate complainant to his former position as taxi driver without loss of seniority rights and privileges immediately upon acknowledgment of this resolution; 5. Ordering Respondent Hyatt Taxi Services, Inc. to pay 10% attorney's fees based on the total judgment award on the illegal dismissal aspect; 6. Ordering the Dismissal of the complaint for damages for lack of merit. SO ORDERED."3 Aggrieved, petitioner filed a Motion for Reconsideration urging the NLRC to review the finding of facts of the Arbitration Branch. On October 30, 1998, the NLRC acting on said Motion for Reconsideration, issued a Decision granting in part the motion. The Decision of the NLRC modified its earlier decision when it deleted the award of backwages on the ground that there was "no concrete showing that complainant was constructively dismissed". The dispositive portion of said Decision reads: "WHEREFORE, the Decision rendered on June 26, 1998 is hereby affirmed with modifications by deleting the award of backwages. Accordingly, respondent is ordered to reinstate complainant without loss of seniority rights. All other aspects are hereby AFFIRMED. SO ORDERED."4 Respondent filed a Partial Motion for Reconsideration of said Decision. On January 14, 1999, the NLRC issued a Resolution denying respondent's Partial Motion for Reconsideration. On March 30, 1999, respondent filed a Petition for Certiorari with the Court of Appeals that sought the annulment of the NLRC Decision, alleging grave abuse of discretion in the deletion of the award of backwages. On December 27, 1999, the Court of Appeals issued the now assailed Decision that set aside and annulled the October 30, 1998 Decision of the NLRC and reinstated the earlier decision of the NLRC dated June 25, 1998. The dispositive portion of the Decision reads: "WHEREFORE, judgment is hereby rendered SETTING ASIDE and ANNULLING the Decision of the respondent National Labor Relations Commission dated October 30, 1998 and REINSTATING its Decision dated June 25, 1998."5 On January 25, 2000, petitioner filed a Motion for Reconsideration of the Decision of the Court of Appeals. On May 11, 2000, the Court of Appeals issued the Resolution denying petitioner's motion.

Hence, this petition for review that raises these issues: "I THE COURT OF APPEALS ERRED GREVIOUSLY (sic) WHEN IT ANNULED (sic) AND SET ASIDE THE DECISION OF THE NLRC DISREGARDING THE WELLENTRENCHED MAXIM THAT THE FINDINGS OF FACTS OF THE NLRC ARE ACCORDED NOT ONLY WITH RESPECT BUT WITH FINALITY. II THE COURT OF APPEALS GREVIOUSLY (sic) ERRED IN NOT CONSIDERING THAT THERE WAS NO ILLEGAL DISMISSAL DISREGARDING THE JURISPRUDENCE APPLICABLE ON SUCH ISSUE. III THE COURT OF APPEALS GREVIOUSLY (sic) ERRED WHEN IT INSISTED THAT CATINOY WAS CONSTRUCTIVELY DISMISSED WHEN THE NLRC HAD ALREADY RULED THAT THERE WAS NO CONCRETE SHOWING OF ILLEGAL DISMISSAL."6 The main contention of petitioner is that the Court of Appeals should not have disregarded the factual findings of the NLRC to the effect that there was no concrete showing that petitioner had constructively dismissed respondent. Petitioner maintains that while the second decision of the NLRC modified its first decision, it cannot be considered that the NLRC had contradicted itself because a second review is the essence of a motion for reconsideration. A court or quasi-judicial agency like the NLRC, according to petitioner, should be given leeway to correct its findings or decisions via motions for reconsideration. Petitioner then argues that since a second review is the final interoperation of the issues in the case, such decision should be respected and given finality. Petitioner also insists that there was no constructive dismissal in this case because as employer, it did not render impossible, unreasonable or unlikely the continuation of respondent's employment. Petitioner points out that even respondent had not alleged any overt act or conduct on the part of petitioner manifesting refusal to admit him back to its employ. The petition is without merit. We uphold the ruling of the Court of Appeals that there is no justification for the NLRC's modification of its earlier decision when it deleted the award of backwages that it had previously awarded to respondent. In abandoning its original stance that there was constructive dismissal that would entitle respondent to backwages, the NLRC reasoned that: "Upon second review of the case records and after due consideration of the instant motion, we still maintain the ruling rendered in the case but we are inclined to make certain modifications relative to the issue of constructive dismissal. We have to make clarifications on this aspect by following the jurisprudence on constructive dismissal whereby the Supreme Court held that constructive dismissal consists in the act of quitting because continued employment is rendered impossible, unreasonable or unlikely as in the case of an offer involving demotion in rank and a diminution in pay. Applying the same in the case at bar, complainant did not resign or quit. On the contrary, he pursued his employment when he returned to the respondent's officer after his 30 days suspension. Hence, we cannot sustain the respondent's claim that complainant abandoned his job. To constitute abandonment of work, it must be accompanied by overt acts unerringly pointing to the fact that the employee does not want to work anymore. We note that respondent expressed willingness to take back complainant manifesting that the latter was one of those desirable drivers and it has no reason to terminate him. Seemingly there was no meeting of the minds between management and complainant due to the conflict that arose regarding the latter's suspension. In view thereof, reinstatement is proper taking into consideration the positions of the management and complainant but we are deleting the award for payment of

backwages as there was no concrete showing that complainant was constructively dismissed."7 The foregoing rationale of the NLRC is without basis. First, the evidence on record runs counter to the ruling of the NLRC that there was no concrete showing that respondent was constructively dismissed. The factual findings of the Labor Arbiter, which the NLRC initially adopted, show that respondent was not taken back by petitioner after the 30-day suspension period that petitioner imposed on respondent had lapsed. The Labor Arbiter appreciated the following events as badges of constructive dismissal: "Records show that complainant reported for work on September 25, 1995, after the lapse of his suspension but was not able to talk with the operation manager and this was confirmed by the Respondents in their position paper (sic)) On the following day complainant reported again for work but was allegedly told by Mr. Caraig (Operation Manager) that if he will not drop the criminal complainant for physical injuries he filed against Tomas Saturnino and his complaint for illegal suspension with the National Labor Relations Commission he will not be able to resume his employment. In fact, complainant on September 28, 1995 wrote a letter addressed to Respondent's VicePresident, pleading that he be allowed to resume his work (see Annex "G" Complainant's position paper). There being no response or reaction complainant amended his complaint to include constructive dismissal."8 Clearly, constructive dismissal had already set in when the suspension went beyond the maximum period allowed by law. Section 4, Rule XIV, Book V of the Omnibus Rules provides that preventive suspension cannot be more than the maximum period of 30 days. Hence, we have ruled that after the 30-day period of suspension, the employee must be reinstated to his former position because suspension beyond this maximum period amounts to constructive dismissal.9 Petitioner denies that it constructively dismissed respondent and alleges that it was respondent who went AWOL and who refused to resume his work because he could not account for union funds. Both the Labor Arbiter and the NLRC rejected petitioner's claims. We affirm the rejection. It bears stressing that in illegal dismissal cases, it is the employer who has the burden of proof. 10 Since petitioner claims that respondent abandoned his work, petitioner has to establish the concurrence of the following: (1) the employee's intention to abandon employment and (2) overt acts from which such intention may be inferredas when the employee shows no desire to resume work.11 Petitioner failed to make out its case of abandonment. Even the NLRC in its modified decision confirmed that there were no overt acts unerringly pointing to the fact that respondent had no intention of returning to work anymore. Also, the fact that respondent filed a complaint against his employer within a reasonable period of time belies abandonment.12 Petitioner implores this Court to respect the modified decision of the NLRC. While it is true that the essence of a motion for reconsideration is a second review of the facts, this theory does not apply in the case at bar. As correctly pointed out by the Court of Appeals, the motion for reconsideration of petitioner before the NLRC contained no factual basis that could support the NLRC's change of heart. The evidence as it stands shows that after the lapse of the 30-day suspension period, respondent reported for work but he was not allowed to resume his duties as a taxi driver. To reiterate, from the time that the 30-day suspension period had expired, respondent can be already deemed as constructively dismissed. Second, the strict adherence by the NLRC to the definition of constructive dismissal is erroneous. Apparently, the NLRC ruled out constructive dismissal in this case mainly because according to it "constructive dismissal consists in the act of quitting because continued employment is rendered impossible, unreasonable or unlikely as in the case of an offer involving demotion in rank and a diminution in pay".13 Based on this definition, the NLRC concluded that since respondent neither resigned nor abandoned his job and the fact that respondent pursued his reinstatement negate constructive dismissal. What makes this conclusion tenuous is the fact that constructive dismissal does not always involve forthright dismissal or diminution in rank, compensation, benefit and privileges.14 There may be constructive dismissal if an act of clear

discrimination, insensibility, or disdain by an employer becomes so unbearable on the part of the employee that it could foreclose any choice by him except to forego his continued employment. 15 Here, what made it impossible or unacceptable for respondent to resume work was petitioner's insistence that respondent first desist from filing his criminal complaint against the acting president of the union and to withdraw his complaint for illegal suspension against petitioner before he could be allowed to return to work. Respondent refused and amended his complaint to include constructive dismissal. Respondent's refusal to yield to petitioner's conditioned offer to take him back is understandable for respondent has every right not to bargain away his right to prosecute his complaints in exchange for the employment to which he was in the first place rightfully entitled. In acting on the motion for reconsideration of petitioner, the NLRC gave credence to petitioner's contention that petitioner's failure to reinstate respondent to his job was merely a result of a miscommunication between the two parties since petitioner was willing to take back respondent as its employee. We disagree. Instead, we are in full accord with the Court of Appeals that the predicament respondent faced was not just a product of miscommunication, an argument that the NLRC had in fact branded in its earlier decision as a mere afterthought. Respondent had written the assistant vice president of petitioner to complain about his non-reinstatement after the lapse of his preventive suspension. Petitioner failed to reply, and it is actually from petitioner's inaction where the supposed miscommunication sprung. Moreover, from the time that petitioner failed to recall respondent to work after the expiration of the suspension period, taken together with petitioner's precondition that respondent withdraw the complaints against the acting president of the union and against petitioner itself, respondent's security of tenure was already undermined by petitioner. Petitioner's actions undoubtedly constitute constructive dismissal.1wphi1.nt WHEREFORE, the Decision of the Court of Appeals dated December 27, 1999 is hereby AFFIRMED. SO ODERED.

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. 164856 January 20, 2009

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 th e 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

JUANITO A. GARCIA and ALBERTO J. DUMAGO, Petitioners, vs. PHILIPPINE AIRLINES, INC., Respondent. 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 petitioners3 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

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 payrollreinstated 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 in Panuncillo 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 x20 (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 r ehabilitation 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. NLRC27 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 efforts30 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 fiat33 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 nonexercise 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.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION

the ship forced him to step out in Egypt despite his protestations to the contrary, there being no more reason to request for relief, an illegal dismissal occurred and he had 7 no other recourse but to return to the Philippines at his own expense. In its Answer to the complaint, petitioners denied the allegations of the complainant and averred that the contract was cut short because of private respondent's own request for relief so that it was only proper that he should pay for his repatriation 8 expenses in accordance with the provisions of their employment contract. The sole issue to be resolved in this case is whether or not complainant's termination is illegal. POEA rendered a decision dismissing the complaint for lack of merit. the NLRC, the decision was reversed. The dispositive portion of the NLRC decision reads: WHEREFORE, the appealed decision is hereby SET ASIDE and another one entered, directing respondents-appellees to: (1) pay complainant-appellant the amount of US$780.00 representing his plane fare from Egypt to Manila; and (2) pay complainant-appellant the amount of US$6,300.00 representing his unearned salary for nine (9) months, the unexpired portion of the contract. Foreign exchange conversions shall be paid in Philippine currency at the rate of exchange at the actual payment thereof. SO ORDERED. Hence, this petition. Article 21(c) of the Labor Code requires that the Philippine Overseas Employment Administration (formerly NSB) should approve and verify a contract for overseas 11 Employment. A contract, which is approved by the National Seamen Board, such as the one in this case, is the law between the contracting parties; and where there is nothing in it which is contrary to law, morals, good customs, public policy or public 12 order, the validity of said contract must be sustained. In its resolution, the NLRC held that the immediate approval of private respondent's request for relief should have resulted in his disembarkation in Port Pylos, Greece; that failure of the Master to allow disembarkation in Greece nullified the request for relief and its approval, such that private respondent's subsequent disembarkation in 13 Egypt is no longer his doing but rather an illegal dismissal on the part of the Master. We cannot support such a ruling for it fails to consider the clear import of the provisions of the employment contract between petitioners and private respondent. Paragraph 5 of the Employment Contract between petitioners and private respondent Ernesto de la Cruz provides as follows: 5. That, if the seaman decide to terminate his contract prior to the expiration of the service period as stated and defined in paragraph 4 of this Employment Contract, without due cause, he will give the Master thirty (30) days notice and agree to allow his repatriation 14 expenses to be deducted from wages due him. Clearly, therefore, private respondent Ernesto de la Cruz was required by the employment contract not only to pay his own repatriation expenses but also to give
10 9

G.R. No. 81087 June 19, 1991 INTERTROD MARITIME, INC. and TROODOS SHIPPING CO., petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION and ERNESTO DE LA CRUZ, respondents. Del Rosario & Del Rosario for petitioners.

On appeal to

PADILLA, J.:p This petition seeks the annulment and/or modification of the resolution * of the First Division of the National Labor Relations Commission promulgated on 11 December 1987 in NSB Case No. 3997-82 entitled "Ernesto de la Cruz vs. Intertrod Maritime, Inc. and Troodos Shipping Company," which reversed the decision of then POEA Administrator Patricia Sto. Tomas dated 20 December 1983. On 10 May 1982, private respondent Ernesto de la Cruz signed a shipboard employment contract with petitioner Troodos Shipping Company as principal and petitioner Intertrod Maritime, Inc., as agent to serve as Third Engineer on board the M/T "BREEDEN" for a period of twelve (12) months with a basic monthly salary of 1 US$950.00. Private respondent eventually boarded a sister vessel, M/T "AFAMIS" and proceeded to work as the vessel's Third Engineer under the same terms and conditions of his 2 employment contract previously referred to. On 26 August 1982, while the ship (M/T "Afamis") was at Port Pylos, Greece, private 3 respondent requested for relief, due to "personal reason." The Master of the ship approved his request but informed private respondent that repatriation expenses were for his account and that he had to give thirty (30) days notice in view of the Clause 5 of the employment contract so that a replacement for him (private respondent) could 4 be arranged. On 30 August 1982, while the vessel was at Port Said in Egypt and despite the fact that it was only four (4) days after private respondent's request for relief, the Master "signed him off" and paid him in cash all amounts due him less the amount of US$780.00 for his repatriation expenses, as evidenced by the wages account signed 5 by the private respondent. On his return to the Philippines, private respondent filed a complaint with the National Seamen Board (NSB)(now POEA) charging petitioners for breach of employment 6 contract and violation of NSB rules and regulations. Private respondent alleged that his request for relief was made in order to take care of a Filipino member of the crew of M/T "AFAMIS" who was hospitalized on 25 August 1982 in Athens, Greece. However, the Master of the ship refused to let him immediately disembark in Greece so that the reason for his request for relief ceased to exist. Hence, when the Master of

thirty (30) days notice should he decide to terminate his employment prior to the expiration of the period provided in the contract. When the Master approved his request for relief, the Master emphasized that private respondent was required to give thirty (30) days notice and to shoulder his own repatriation expenses. Approval of his request for relief, therefore, did not constitute a waiver by petitioners of the provisions of the contract, as private respondent would have us believe, for it was made clear to him that the provisions of the contract, insofar as the thirty (30) days notice and repatriation expenses were concerned, were to be enforced. Private respondent claims that his request for relief was only for the reason of taking care of a fellow member of the crew so much so that when he was not allowed to disembark in Port Pylos, Greece, the reason no longer existed and, therefore, when he was forced to "sign off" at Port Said, Egypt even when he signified intentions of 15 continuing his work, he was illegally dismissed. We sympathize with the private respondent; however, we cannot sustain such contention. Resignation is 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, then he 16 has no other choice but to disassociate himself from his employment." The employer has no control over resignations and so, the notification requirement was devised in order to ensure that no disruption of work would be involved by reason of the resignation. This practice has been recognized because "every business enterprise endeavors to increase its profits by adopting a device or means designed 17 towards that goal." Resignations, once accepted and being the sole act of the employee, may not be withdrawn without the consent of the employer. In the instant case, the Master had already accepted the resignation and, although the private respondent was being required to serve the thirty (30) days notice provided in the contract, his resignation was already approved. Private respondent cannot claim that his resignation ceased to be effective because he was not immediately discharged in Port Pylos, Greece, for he could no longer unilaterally withdraw such resignation. When he later signified his intention of continuing his work, it was already up to the petitioners to accept his withdrawal of his resignation. The mere fact that they did not accept such withdrawal did not constitute illegal dismissal for acceptance of the withdrawal of the resignation was their (petitioners') sole prerogative. Once an employee resigns and his resignation is accepted, he no longer has any right to the job. If the employee later changes his mind, he must ask for approval of the withdrawal of his resignation from his employer, as if he were re-applying for the job. It will then be up to the employer to determine whether or not his service would be continued. If the employer accepts said withdrawal, the employee retains his job. If the employer does not, as in this case, the employee cannot claim illegal dismissal for the employer has the right to determine who his employees will be. To say that an employee who has resigned is illegally dismissed, is to encroach upon the right of employers to hire persons who will be of service to them. Furthermore, the employment contract also provides as follows: 4. That all terms and conditions agreed herein are for a service period of twelve (12) months provided the vessel is in a convenient port for his repatriation, otherwise at Master's discretion, on vessel's arrival at the first port where repatriation is practicable provided that such continued service shall not exceed three 18 months.

Under the terms of the employment contract, it is the ship's Master who determines where a seaman requesting relief may be "signed off." It is, therefore, erroneous for private respondent to claim that his resignation was effective only in Greece and that because he was not immediately allowed to disembark in Greece (as the employer wanted compliance with the contractual conditions for termination on the part of the employee), the resignation was to be deemed automatically withdrawn. The decision of the NLRC is therefore set aside. To sustain it would be to authorize undue oppression of the employer. After all, "the law, in protecting the rights of the 19 laborer, authorizes neither oppression nor self-destruction of the employer." WHEREFORE, the petition is GRANTED. The questioned resolution of the National Labor Relations Commission dated 11 December 1987 is hereby REVERSED and SET ASIDE and the decision of then POEA Administrator Patricia Sto. Tomas dated 20 December 1983 is REVIVED. No pronouncement as to costs. SO ORDERED.