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Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 179001

August 28, 2013

MZR INDUSTRIES, MARILOU R. QUIROZ AND LEA


TIMBAL, PETITIONERS,
vs.
MAJEN COLAMBOT, RESPONDENT.
DECISION
PERALTA, J.:
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court
seeking the reversal of the Decision1 dated May 17, 2007 and
Resolution2 dated July 25, 2007 of the Court of Appeals in CA-G.R. SP No.
98445, reversing the Decision dated October 31, 20063 and
Resolution4 dated December 21, 2006 of the National Labor Relations
Commission (NLRC) which set aside the Decision5 dated April 28, 2006 of the
Labor Arbiter.
The facts are as follows:
On February 8, 2000, petitioner Marilou Quiroz, Owner and Vice-President for
Finance and Marketing of MZR, hired respondent Majen Colambot (Colambot)
as messenger. Colambot's duties and responsibilities included field,
messengerial and other liaison work.
However, beginning 2002, Colambot's work performance started to
deteriorate. Petitioners issued several memoranda to Colambot for habitual
tardiness, negligence, and violations of office policies.6 He was also given
written warnings for insubordination committed on August 27, 2003 and
September 11-12, 2003;7 on September 16, 2003 for negligence caused by
careless handling of confidential office documents;8 on September 22, 2004
for leaving his post without proper turnover;9 and, on October 4, 2004 for
insubordination.10

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Petitioners claimed that despite written warnings for repeated tardiness and
insubordination, Colambot failed to mend his ways. Hence, in a
Memorandum11 dated October 25, 2004 issued by petitioner Lea Timbal
(Timbal), MZR's Administrative Manager, Colambot was given a notice of
suspension for insubordination and negligence.
Again, in a Memorandum12 dated November 25, 2004, Colambot was
suspended from November 26, 2004 until December 6, 2004 for
insubordination. Allegedly, Colambot disobeyed and left the office despite
clear instructions to stay in the office because there was an important
meeting in preparation for a very important activity the following day.
Petitioners claimed they waited for Colambot to report back for work on
December 7, 2004, but they never heard from him anymore. Later,
petitioners were surprised to find out that Colambot had filed a complaint for
illegal suspension, underpayment of salaries, overtime pay, holiday pay, rest
day, service incentive leave and 13th month pay. On December 16, 2004, the
complaint was amended to illegal dismissal, illegal suspension,
underpayment of salaries, holiday pay, service incentive pay, 13th month
pay and separation pay.13
For his part, Colambot narrated that he worked as a messenger for
petitioners since February 2000. That on November 2004, he was directed to
take care of the processing of a document in Roxas Boulevard, Pasay City.
When he arrived at the office around 6 to 7 o'clock in the evening, he looked
for petitioner Quiroz to give the documents. The latter told him to wait for
her for a while. When respondent finally had the chance to talk to Quiroz, she
allegedly told him that she is dissatisfied already with his work performance.
Afterwards, Colambot claimed that he was made to choose between
resigning from the company or the company will be the one to terminate his
services. He said he refused to resign. Colambot alleged that Quiroz made
him sign a memorandum for his suspension, from November 26 to December
6, 2004. After affixing his signature, Quiroz told him that effective December
7, 2004, he is already deemed terminated. Later, on December 2, 2004,
respondent went back to the company to look for Timbal to get his salary. He
claimed that Timbal asked him to turn over his company I.D.14
Petitioners, however, insisted that while Colambot was suspended due to
insubordination and negligence, they maintained that they never terminated
Colambot's employment. They added that Colambot's failure to report for
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work since December 7, 2004 without any approved vacation or sick leave
constituted abandonment of his work, but they never terminated his
employment. Petitioners further emphasized that even with Colambot's filing
of the complaint against them, his employment with MZR has not been
terminated.
Colambot, meanwhile, argued that contrary to petitioners claim that he
abandoned his job, he claimed that he did not report back to work after the
expiration of his suspension on December 6, 2004, because Quiroz told him
that his employment was already terminated effective December 7, 2004.
On April 28, 2006, the Labor Arbiter rendered a Decision,15 the dispositive
portion of which reads:
WHEREFORE, premises considered, respondents are hereby declared guilty
of ILLEGAL DISMISSAL and hereby ORDERED to reinstate complainant to his
former position with full backwages from date of dismissal until actual
reinstatement and moral and exemplary damages in the sum of P100,000.00
and P50,000.00, respectively.
The computation of the judgment award marked as Annex "A" is part and
parcel of this decision.
SO ORDERED.16
The Labor Arbiter held that there was no abandonment as there was no
deliberate intent on the part of Colambot to sever the employer-employee
relationship. The Labor Arbiter likewise noted that Colambot should have
been notified to return back to work, which petitioner failed to do.
Aggrieved, petitioners appealed the decision before the NLRC.
On October 31, 2006, the NLRC rendered a Decision,17 the dispositive portion
of which reads as follows:
WHEREFORE, premises considered, the appeal filed by respondents is
GRANTED. The judgment of the Labor Arbiter dated April 28, 2006 is hereby
SET ASIDE and the Complaint is DISMISSED for lack of merit.
SO ORDERED.18

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The NLRC pointed out that Colambot's complaint was unsupported by any
evidence and was not even made under oath, thus, lacking in credibility and
probative value. The NLRC further believed that Colambot abandoned his
work due to his refusal to report for work after his suspension. The failure of
MZR to notify Colambot to return back to work is not tantamount to actual
dismissal.
Colambot filed a motion for reconsideration, but was denied. Thus, via a
petition for certiorari under Rule 65 of the Rules of Court, raising grave abuse
of discretion as a ground, Colambot appealed before the Court of Appeals
and sought that the Decision dated October 31, 2006 and Resolution dated
December 21, 2006 of the NLRC be reversed and set aside.
In the disputed Decision19 dated May 17, 2007, the Court of Appeals granted
the petition and reversed the assailed Decision dated October 31, 2006 and
Resolution dated December 21, 2006 of the NLRC. The Decision dated April
28, 2006 of the Labor Arbiter was ordered reinstated with modification that
in lieu of reinstatement, petitioners were ordered to pay respondent
separation pay equivalent to one (1) month pay for every year of service in
addition to full backwages.
The appellate court ruled that Colambot was illegally dismissed based on the
grounds that: (1) MZR failed to prove abandonment on the part of Colambot,
and (2) MZR failed to serve Colambot with the required written notices of
dismissal.2007.
Petitioners appealed, but was denied in a Resolution20 dated July 25, 2007.
Thus, via Rule 45 of the Rules of Court, before this Court, petitioners raised
the following issues:
I
THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT COMPLAINANT
WAS ILLEGALLY DISMISSED FROM THE SERVICE.
II
THE HONORABLE COURT SERIOUSLY ERRED IN RULING THAT PETITIONER IS
ENTITLED TO SEPARATION PAY AND BACKWAGES.

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Petitioners argue that they did not terminate the employer-employee


relationship with Colambot. Other than Colambot's self-serving and
unverified narration of facts, he failed to present any document showing that
he was terminated from work. Petitioners assert that Colambot abandoned
his work when he failed to report back to work without an approved vacation
or sick leave, thus, he is not entitled to an award of separation pay and
backwages.
RULING
While we recognize the rule that in illegal dismissal cases, the employer
bears the burden of proving that the termination was for a valid or
authorized cause, in the present case, however, the facts and the evidence
do not establish a prima facie case that the employee was dismissed from
employment. Before the employer must bear the burden of proving that the
dismissal was legal, the employee must first establish by substantial
evidence the fact of his dismissal from service. If there is no dismissal, then
there can be no question as to the legality or illegality thereof.21
In the present case, other than Colambot's unsubstantiated allegation of
having been verbally terminated from his work, there was no evidence
presented to show that he was indeed dismissed from work or was prevented
from returning to his work. In the absence of any showing of an overt or
positive act proving that petitioners had dismissed respondent, the latter's
claim of illegal dismissal cannot be sustained22 as the same would be selfserving, conjectural and of no probative value.
A review of the Notice of Suspension23 dated November 25, 2004 shows that
respondent was merely suspended from work for 6 days, there was,
however, no evidence that Colambot was terminated from work. For
clarification, we quote:
TO : MAJEN COLAMBOT
MZR MESSENGER
FROM : HUMAN RESOURCE DEPT
DATE : NOV. 25, 2004
RE : SUSPENSION DUE TO INSUBORDINATION
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xxxx
Cases of insubordination and violations have been filed against you many
times. We kept on reminding that you should have changed and improved
your working attitudes because it greatly affects not only your working
performance but the company's productivity as well.
Your attitude only shows HARD HEADEDNESS AND LACK OF RESPECT TO
YOUR SUPERIORS which in any company cannot tolerate.
With these, you are suspended for 6 working days effective November 26,
2004, you will only report on December 7, 2004.
THIS IS OUR LAST WARNING FOR YOU TO IMPROVE, FAILURE TO DO SO MAY
MEAN TERMINATION OF YOUR EMPLOYMENT CONTRACT.
xxxx
While the same appeared to contain a warning of termination should
Colambot fail to improve his behavior, it is likewise apparent that there was
also a specific instruction for him to report back to work, on December 7,
2004, upon serving his suspension. The subject of the Letter, i.e.,
"Suspension due to Insubordination," the wordings and content of the letter
is a clear-cut notice of suspension, and not a notice of termination. The
notice of suspension may have contained warnings of termination, but it
must be noted that such was conditioned on the ground that Colambot
would fail to improve his attitude/behavior. There were no wordings
whatsoever implying actual or constructive dismissal. Thus, Colambot's
general allegation of having been orally dismissed from the service as
against the clear wordings and intent of the notice of suspension which he
signed, we are then inclined to believe that there was no dismissal.
In Machica v. Roosevelt Services Center, Inc.,25 this Court sustained the
employer's denial as against the employees' categorical assertion of illegal
dismissal. In so ruling, this Court held that:
The rule is that one who alleges a fact has the burden of proving it; thus,
petitioners were burdened to prove their allegation that respondents
dismissed them from their employment. It must be stressed that the
evidence to prove this fact must be clear, positive and convincing. The rule
that the employer bears the burden of proof in illegal dismissal cases finds
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no application here because the respondents deny having dismissed the


petitioners.26
Hence, as between respondents general allegation of having been orally
dismissed from the service vis-a-vis those of petitioners which were found to
be substantiated by the sworn statement of foreman Wenifredo, we are
persuaded by the latter. Absent any showing of an overt or positive act
proving that petitioners had dismissed respondents, the latters claim of
illegal dismissal cannot be sustained. Indeed, a cursory examination of the
records reveal no illegal dismissal to speak of.27
Moreover, in Abad v. Roselle Cinema,28 we ruled that the substantial evidence
proffered by the employer that it had not terminated the employee should
not be ignored on the pretext that the employee would not have filed the
complaint for illegal dismissal if he had not really been dismissed. We held
that such non sequitur reasoning cannot take the place of the evidence of
both the employer and the employee.
Neither could the petitioners be blamed for failing to order respondent to
return back to work.1wphi1 Records show that Colambot immediately filed
the complaint for illegal dismissal on December 16, 2004, 29 or just a few days
when he was supposed to report back to work on December 7, 2004. For
petitioners to order respondent to report back to work, after the latter had
already filed a case for illegal dismissal, would be unsound.
However, while the Court concurs with the conclusion of the NLRC that there
was no illegal dismissal, no dismissal having actually taken place, the Court
does not agree with its findings that Colambot committed abandonment of
work.
In a number of cases,30 this Court consistently held that to constitute
abandonment of work, two elements must be present: first, the employee
must have failed to report for work or must have been absent without valid
or justifiable reason; and second, there must have been a clear intention on
the part of the employee to sever the employer-employee relationship
manifested by some overt act.
In the instant case, other than Colambot's failure to report back to work after
suspension, petitioners failed to present any evidence which tend to show his
intent to abandon his work. It is a settled rule that mere absence or failure to
report for work is not enough to amount to abandonment of work. There
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must be a concurrence of the intention to abandon and some overt acts from
which an employee may be deduced as having no more intention to
work.31 On this point, the CA was correct when it held that:
Mere absence or failure to report for work, even after notice to return, is not
tantamount to abandonment. The burden of proof to show that there was
unjustified refusal to go back to work rests on the employer. Abandonment is
a matter of intention and cannot lightly be presumed from certain equivocal
acts. To constitute abandonment, there must be clear proof of deliberate and
unjustified intent to sever the employer-employee relationship. Clearly, the
operative act is still the employees ultimate act of putting an end to his
employment. Furthermore, it is a settled doctrine that the filing of a
complaint for illegal dismissal is inconsistent with abandonment of
employment. An employee who takes steps to protest his dismissal cannot
logically be said to have abandoned his work. the filing of such complaint is
proof enough of his desire to return to work, thus negating any suggestion of
abandonment.32
Suffice it to say that, it is the employer who has the burden of proof to show
a deliberate and unjustified refusal of the employee to resume his
employment without any intention of returning. It is therefore incumbent
upon petitioners to ascertain the respondents interest or non-interest in the
continuance of their employment. This, petitioners failed to do so.
These circumstances, taken together, the lack of evidence of dismissal and
the lack of intent on the part of the respondent to abandon his work, the
remedy is reinstatement but without backwages.33 However, considering that
reinstatement is no longer applicable due to the strained relationship
between the parties and that Colambot already found another employment,
each party must bear his or her own loss, thus, placing them on equal
footing.
Verily, in a case where the employee's failure to work was occasioned neither
by his abandonment nor by a termination, the burden of economic loss is not
rightfully shifted to the employer; each party must bear his own loss.34
WHEREFORE, premises considered and subject to the above disquisitions, the
Decision dated May 1 7, 2007 of the Court of Appeals is hereby REVERSED
and SET ASIDE. The Resolution dated October 31, 2006 of the National Labor
Relations Commission in NLRC NCR CASE No. 00-11-12189-04/ CA No.
049533-06 is hereby REINSTATED.
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SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 201701

June 3, 2013

UNILEVER PHILIPPINES, INC., Petitioner,


vs.
MARIA RUBY M. RIVERA, Respondent.
DECISION
MENDOZA, J.:
Subject of this disposition is the petition for review on certiorari1 under Rule
45 of the Rules of Court filed by petitioner Unilever Philippines, Inc. (Unilever)
questioning the June 22, 2011 Decision2 and the April 25, 2012 Resolution3 of
the Court of Appeals (CA)-Cagayan de Oro City, in CA G.R. SP No. 02963-MIN,
an Illegal Dismissal case filed by respondent Maria Ruby M. Rivera (Rivera).
The CA affirmed with modification the March 31, 2009 Resolution of the
National Labor Relations Commission (NLRC) finding Rivera's dismissal from
work to be valid as it was for a just cause and declaring that she was not
entitled to any retirement benefit. The CA, however, awarded separation pay
in her favor as a measure of social justice.
The Facts
Unilever is a company engaged in the production, manufacture, sale, and
distribution of various food, home and personal care products, while Rivera
was employed as its Area Activation Executive for Area 9 South in the cities
of Cotabato and Davao. She was primarily tasked with managing the sales,
distribution and promotional activities in her area and supervising
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Ventureslink International, Inc. (Ventureslink), a third party service provider


for the companys activation projects. Unilever enforces a strict policy that
every trade activity must be accompanied by a Trade Development Program
(TDP) and that the allocated budget for a specific activity must be used for
such activity only.4
Sometime in 2007, Unilevers internal auditor conducted a random audit and
found out that there were fictitious billings and fabricated receipts
supposedly from Ventureslink amounting to P11,200,000.00. It was also
discovered that some funds were diverted from the original intended
projects. Upon further verification, Ventureslink reported that the fund
deviations were upon the instruction of Rivera.
On July 16, 2007, Unilever issued a show-cause notice to Rivera asking her to
explain the following charges, to wit: a) Conversion and Misappropriation of
Resources; b) Breach of Fiduciary Trust; c) Policy Breaches; and d) Integrity
Issues.
Responding through an email, dated July 16, 2007, Rivera admitted the fund
diversions, but explained that such actions were mere resourceful utilization
of budget because of the difficulty of procuring funds from the head
office.5 She insisted that the diverted funds were all utilized in the companys
promotional ventures in her area of coverage.
Through a letter, dated August 23, 2007, Unilever found Rivera guilty of
serious breach of the companys Code of Business Principles compelling it to
sever their professional relations. In a letter, dated September 20, 2007,
Rivera asked for reconsideration and requested Unilever to allow her to
receive retirement benefits having served the company for fourteen (14)
years already. Unilever denied her request, reasoning that the forfeiture of
retirement benefits was a legal consequence of her dismissal from work.
On October 19, 2007, Rivera filed a complaint for Illegal Dismissal and other
monetary claims against Unilever.
On April 28, 2008, the Labor Arbiter (LA) dismissed her complaint for lack of
merit and denied her claim for retirement benefits, but ordered Unilever to
pay a proportionate 13th month pay and the corresponding cash equivalent
of her unused leave credits. The decretal portion of the LA decision reads:

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WHEREFORE, premises considered, judgment is hereby rendered dismissing


for lack of merit the illegal dismissal complaint. However, UNILEVER
PHILIPPINES, INC. is hereby ordered to pay complainant the total amount of
PESOS: FIFTY SEVEN THOUSAND EIGHTY TWO & 90/100 ONLY (P57,082.90)
representing proportionate 13th month pay and unused leave credits.
The complaint against individual respondents Recto Sampang and Alejandro
Concha are likewise dismissed for it was not shown that they acted in bad
faith in the dismissal of complainant. Moreover, their legal personality is
separate and distinct from that of the corporation.
All other money claims are dismissed for lack of basis. 6
On appeal, the NLRC partially granted Riveras prayer. In its Resolution,
dated November 28, 2008, the NLRC held that although she was legally
dismissed from the service for a just cause, Unilever was guilty of violating
the twin notice requirement in labor cases. Thus, Unilever was ordered to pay
her P30,000.00 as nominal damages, retirement benefits and separation pay.
The dispositive portion reads:
WHEREFORE, foregoing premises considered, the appeal is PARTIALLY
GRANTED. The assailed Decision dated 28 April 2008 is hereby MODIFIED in
the sense that respondent UNILEVER PHILIPPINES, INC. is hereby ordered to
pay the following sums:
1. The amount of P30,000.00 representing nominal damages for
violation of complainants right to procedural due process;
2. Retirement benefits under the companys applicable retirement
policy or written agreement, and in the absence of which, to pay
complainant her retirement pay equivalent to at least one-half (1/2)
month salary for every year of service, a fraction of at least six (6)
months being considered as one whole year;
3. Separation pay under the companys applicable policy or written
agreement, and in the absence of which, to pay separation pay
equivalent to at least one-half (1/2) month salary for every year of
service, a fraction of at least six (6) months being considered as one
whole year.
The rest of the Decision is hereby AFFIRMED.
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SO ORDERED.7
Unilever asked for a reconsideration of the NLRC decision. In its Resolution,
dated March 31, 2009, the NLRC modified its earlier ruling by deleting the
award of separation pay and reducing the nominal damages fromP30,000.00
to P20,000.00, but affirmed the award of retirement benefits to Rivera. The
fallo reads:
WHEREFORE, foregoing premises considered, the instant Motion for Partial
Reconsideration is PARTLY GRANTED. The Resolution dated 28 November
2008 of the Commission is hereby
RECONSIDERED as follows:
(1)The award of separation pay is hereby deleted for lack of factual
and legal basis; and
(2)The award of nominal damages is hereby tempered and reduced to
the amount of P20,000.00.
The rest of the award for retirement benefits is affirmed in toto.
SO ORDERED.8
Unsatisfied with the ruling, Unilever elevated the case to CA-Cagayan de Oro
City via a petition for certiorari under Rule 65 of the Rules of Court.
On June 22, 2011, the CA affirmed with modification the NLRC resolution.
Justifying the deletion of the award of retirement benefits, the CA explained
that, indeed, under Unilevers Retirement Plan, a validly dismissed employee
cannot claim any retirement benefit regardless of the length of service. Thus,
Rivera is not entitled to any retirement benefit. It stated, however, that there
was no proof that she personally gained any pecuniary benefit from her
infractions, as her instructions were aimed at increasing the sales efficiency
of the company and competing in the local market. For said reason, the CA
awarded separation pay in her favor as a measure of social justice.9 The
decretal portion of the CA decision reads:
WHEREFORE, the assailed Resolution dated March 31, 2009 of the NLRC
(Branch 5), Cagayan De Oro City is hereby AFFIRMED with MODIFICATION.

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Consequently, UNILEVER is directed to pay MARIA RUBY M. RIVERA the


following:
a) Separation pay, to be computed based on the companys applicable
policy or written agreement, or in the absence thereof, the equivalent
of at least one-half (1/2) month salary for every year of service, a
fraction of at least six (6) months being considered as one whole year;
b) P20,000.00 as nominal damages; and
c) Proportionate 13th month pay and unused leave credits, to be
computed based on her salary during the period relevant to the case.
The award of retirement benefits is hereby DELETED.
SO ORDERED.10
Unilever filed a motion for partial reconsideration,11 but it was denied in a
Resolution, dated April 25, 2012.
Hence, this petition.12
In support of its position, Unilever submits for consideration the following
GROUNDS
I.
THE COURT OF APPEALS SERIOUSLY ERRED AND GRAVELY ABUSED ITS
DISCRETION IN GRANTING AFFIRMATIVE RELIEFS IN FAVOR OF RIVERA EVEN
IF SHE DID NOT FILE ANY PETITION FOR CERTIORARI TO CHALLENGE THE
NLRC RESOLUTIONS.
II.
THE COURT OF APPEALS SERIOUSLY ERRED AND GRAVELY ABUSED ITS
DISCRETION IN AWARDING SEPARATION PAY IN FAVOR OF RIVERA
CONSIDERING THAT THE LATTER WAS VALIDLY DISMISSED FROM
EMPLOYMENT BASED ON JUST CAUSES UNDER THE LAW.
III.
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THE COURT OF APPEALS SERIOUSLY ERRED AND GRAVELY ABUSED ITS


DISCRETION IN RULING THAT THE COMPANY VIOLATED RIVERAS RIGHT TO
PROCEDURAL DUE PROCESS BEFORE TERMINATING HER EMPLOYMENT, AND
CONSEQUENTLY, IN AWARDING NOMINAL DAMAGES.13
Unilever argues that Rivera did not file any separate petition for certiorari
before the CA. Neither did she file any comment on its petition. Hence, it was
erroneous for the CA to grant an affirmative relief because it was
inconsistent with the doctrine that a party who has not appealed cannot
obtain from the appellate court any affirmative relief other than the ones
granted in the appealed decision. The petitioner stresses that Rivera
misappropriated company funds amounting to millions of pesos and that
granting her separation pay undermines the serious misdeeds she
committed against the company. Moreover, the length of her service with
Unilever does not mitigate her offense, but even aggravates the depravity of
her acts.14
The petition is partly meritorious.
The pivotal issue in the case at bench is whether or not a validly dismissed
employee, like Rivera, is entitled to an award of separation pay.
As a general rule, an employee who has been dismissed for any of the just
causes enumerated under Article 28215of the Labor Code is not entitled to a
separation pay.16 Section 7, Rule I, Book VI of the Omnibus Rules
Implementing the Labor Code provides:
Sec. 7. Termination of employment by employer. The just causes for
terminating the services of an employee shall be those provided in Article
282 of the Code. The separation from work of an employee for a just cause
does not entitle him to the termination pay provided in the Code, without
prejudice, however, to whatever rights, benefits and privileges he may have
under the applicable individual or collective agreement with the employer or
voluntary employer policy or practice.
In exceptional cases, however, the Court has granted separation pay to a
legally dismissed employee as an act of "social justice" or on "equitable
grounds." In both instances, it is required that the dismissal (1) was not for
serious misconduct; and (2) did not reflect on the moral character of the
employee.17 The leading case of Philippine Long Distance Telephone Co. vs.
NLRC18 is instructive on this point:
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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 the separation
pay has nothing to do with the wrong he has committed. Of course it has.
Indeed, if the employee who steals from the company is granted separation
pay even as he is validly dismissed, it is not unlikely that he will commit a
similar offense in his next employment because he thinks he can expect a
like leniency if he is again found out.1wphi1This kind of misplaced
compassion is not going to do labor in general any good as it will encourage
the infiltration of its ranks by those who do not deserve the protection and
concern of the Constitution.
The policy of social justice is not intended to countenance wrongdoing simply
because it is committed by the underprivileged. At best, it may mitigate the
penalty but it certainly will not condone the offense. Compassion for the poor
is an imperative of every humane society but only when the recipient is not a
rascal claiming an undeserved privilege. Social justice cannot be permitted
to be refuge of scoundrels any more than can equity be an impediment to
the punishment of the guilty. Those who invoke social justice may do so only
if their hands are clean and their motives blameless and not simply because
they happen to be poor. This great policy of our Constitution is not meant for
the protection of those who have proved they are not worthy of it, like the
workers who have tainted the cause of labor with the blemishes of their own
character.19
In the subsequent case of Toyota Motor Philippines Corporation Workers
Association (TMPCWA) v. National Labor Relations Commission,20 it was
further elucidated that "in addition to serious misconduct, in dismissals
based on other grounds under Art. 282 like willful disobedience, gross and
habitual neglect of duty, fraud or willful breach of trust, and commission of a
crime against the employer or his family, separation pay should not be
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conceded to the dismissed employee."21 In Reno Foods, Inc, v. Nagkakaisang


Lakas ng Manggagawa (NLM)-Katipunan,22 the Court wrote that "separation
pay is only warranted when the cause for termination is not attributable to
the employees fault, such as those provided in Articles 283 and 284 of the
Labor Code, as well as in cases of illegal dismissal in which reinstatement is
no longer feasible. It is not allowed when an employee is dismissed for just
cause."23
In this case, Rivera was dismissed from work because she intentionally
circumvented a strict company policy, manipulated another entity to carry
out her instructions without the companys knowledge and approval, and
directed the diversion of funds, which she even admitted doing under the
guise of shortening the laborious process of securing funds for promotional
activities from the head office. These transgressions were serious offenses
that warranted her dismissal from employment and proved that her
termination from work was for a just cause. Hence, she is not entitled to a
separation pay.
More importantly, Rivera did not appeal the March 31, 2009 ruling of the
NLRC disallowing the award of separation pay to her. It was Unilever who
elevated the case to the CA. It is axiomatic that a party who does not appeal,
or file a petition for certiorari, is not entitled to any affirmative relief. 24 Due
process prevents the grant of additional awards to parties who did not
appeal.25 An appellee who is not an appellant may assign errors in his brief
where his purpose is to maintain the judgment, but he cannot seek
modification or reversal of the judgment or claim affirmative relief unless he
has also appealed.26 It was, therefore, erroneous for the CA to grant an
affirmative relief to Rivera who did not ask for it.
Lastly, Unilever questions the grant of nominal damages in favor of Rivera
for its alleged non-observance of the requirements of procedural due
process. It insists that she was given ample opportunity "to explain her side,
interpose an intelligent defense and adduce evidence on her behalf." 27
The Court is not persuaded. Section 2, Rule XXIII, Book V of the Rules
Implementing the Labor Code expressly states:
Section 2. Standard of due process: requirements of notice.
In all cases of termination of employment, the following standards of due
process shall be substantially observed.
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I. For termination of employment based on just causes as defined in Article


282 of the Code:
(a) A written notice served on the employee specifying the ground or
grounds for termination, and giving to said employee reasonable
opportunity within which to explain his side;
(b) A hearing or conference during which the employee concerned,
with the assistance of counsel if the employee so desires, is given
opportunity to respond to the charge, present his evidence or rebut the
evidence presented against him; and
(c) A written notice of termination served on the employee indicating
that upon due consideration of all the circumstance, grounds have
been established to justify his termination.
In case of termination, the foregoing notices shall be served on the
employees last known address.
King of Kings Transport, Inc. v. Mamac28 detailed the steps on how procedural
due process can be satisfactorily complied with. Thus:
To clarify, the following should be considered in terminating the services of
employees:
(1) The first written notice to be served on the employees should
contain the specific causes or grounds for termination against them,
and a directive that the employees are given the opportunity to submit
their written explanation within a reasonable period. "Reasonable
opportunity" under the Omnibus Rules means every kind of assistance
that management must accord to the employees to enable them to
prepare adequately for their defense. This should be construed as a
period of at least five (5) calendar days from receipt of the notice to
give the employees an opportunity to study the accusation against
them, consult a union official or lawyer, gather data and evidence, and
decide on the defenses they will raise against the complaint. Moreover,
in order to enable the employees to intelligently prepare their
explanation and defenses, the notice should contain a detailed
narration of the facts and circumstances that will serve as basis for the
charge against the employees. A general description of the charge will
not suffice. Lastly, the notice should specifically mention which
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company rules, if any, are violated and/or which among the grounds
under Art. 282 is being charged against the employees.
(2) After serving the first notice, the employers should schedule and
conduct a hearing or conference wherein the employees will be given
the opportunity to: (1) explain and clarify their defenses to the charge
against them; (2) present evidence in support of their defenses; and
(3) rebut the evidence presented against them by the management.
During the hearing or conference, the employees are given the chance
to defend themselves personally, with the assistance of a
representative or counsel of their choice. Moreover, this conference or
hearing could be used by the parties as an opportunity to come to an
amicable settlement.
(3) After determining that termination of employment is justified, the
employers shall serve the employees a written notice of termination
indicating that: (1) all circumstances involving the charge against the
employees have been considered; and (2) grounds have been
established to justify the severance of their employment.29
In this case, Unilever was not direct and specific in its first notice to Rivera.
The words it used were couched in general terms and were in no way
informative of the charges against her that may result in her dismissal from
employment. Evidently, there was a violation of her right to statutory due
process warranting the payment of indemnity in the form of nominal
damages. Hence, the Court finds no compelling reason to reverse the award
of nominal damages in her favor. The Court, however, deems it proper to
increase the award of nominal damages from P20,000.00 to P30,000.00, as
initially awarded by the NLRC, in accordance with existing jurisprudence. 30
WHEREFORE, the petition is hereby PARTIALLY GRANTED.1wphi1 The June
22, 2011 Decision and the April 25, 2012 Resolution of the Court of Appeals
(CA)-Cagayan de Oro City in CA-G.R. SP No. 02963-MIN are AFFIRMED with
MODIFICATION. The dispositive portion should read as follows:
WHEREFORE, the March 31, 2009 Resolution of the NLRC (Branch 5),
Cagayan de Oro City, is hereby AFFIRMED with MODIFICATION. UNILEVER
PHILIPPINES, INC., is hereby directed to pay MARIA RUBY M. RIVERA the
following:
a) P30,000.00 as nominal damages; and
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b) Proportionate 13th month pay and unused leave credits, to be


computed based on her salary during the period relevant to the case.
The award of retirement benefit is DELETED.
SO ORDERED.

Republic of the Philippines


SUPREME COURT
Baguio City
THIRD DIVISION
G.R. No. 185829

April 25, 2012

ARMANDO ALILING, Petitioner,


vs.
JOSE B. FELICIANO, MANUEL F. SAN MATEO III, JOSEPH R. LARIOSA,
and WIDE WIDE WORLD EXPRESS CORPORATION, Respondents.
DECISION
VELASCO, JR., J.:
The Case
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This Petition for Review on Certiorari under Rule 45 assails and seeks to set
aside the July 3, 2008 Decision1 and December 15, 2008 Resolution2 of the
Court of Appeals (CA), in CA-G.R. SP No. 101309, entitled Armando Aliling v.
National Labor Relations Commission, Wide Wide World Express Corporation,
Jose B. Feliciano, Manuel F. San Mateo III and Joseph R. Lariosa. The assailed
issuances modified the Resolutions dated May 31, 20073 and August 31,
20074 rendered by the National Labor Relations Commission (NLRC) in NLRC
NCR Case No. 00-10-11166-2004, affirming the Decision dated April 25,
20065 of the Labor Arbiter.
The Facts
Via a letter dated June 2, 2004,6 respondent Wide Wide World Express
Corporation (WWWEC) offered to employ petitioner Armando Aliling (Aliling)
as "Account Executive (Seafreight Sales)," with the following compensation
package: a monthly salary of PhP 13,000, transportation allowance of PhP
3,000, clothing allowance of PhP 800, cost of living allowance of PhP 500,
each payable on a per month basis and a 14th month pay depending on the
profitability and availability of financial resources of the company. The offer
came with a six (6)-month probation period condition with this express
caveat: "Performance during [sic] probationary period shall be made as basis
for confirmation to Regular or Permanent Status."
On June 11, 2004, Aliling and WWWEC inked an Employment Contract7 under
the following terms, among others:

Conversion to regular status shall be determined on the basis of work


performance; and

Employment services may, at any time, be terminated for just cause or


in accordance with the standards defined at the time of engagement.8

Training then started. However, instead of a Seafreight Sale assignment,


WWWEC asked Aliling to handle Ground Express (GX), a new company
product launched on June 18, 2004 involving domestic cargo forwarding
service for Luzon. Marketing this product and finding daily contracts for it
formed the core of Alilings new assignment.
Barely a month after, Manuel F. San Mateo III (San Mateo), WWWEC Sales and
Marketing Director, emailed Aliling9 to express dissatisfaction with the latters
performance, thus:
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Armand,
My expectations is [sic] that GX Shuttles should be 80% full by the 3rd week
(August 5) after launch (July 15). Pls. make that happen. It has been more
than a month since you came in. I am expecting sales to be pumping in by
now. Thanks.
Nonong
Thereafter, in a letter of September 25, 2004,10 Joseph R. Lariosa (Lariosa),
Human Resources Manager of WWWEC, asked Aliling to report to the Human
Resources Department to explain his absence taken without leave from
September 20, 2004.
Aliling responded two days later. He denied being absent on the days in
question, attaching to his reply-letter11 a copy of his timesheet12 which
showed that he worked from September 20 to 24, 2004. Alilings explanation
came with a query regarding the withholding of his salary corresponding to
September 11 to 25, 2004.
In a separate letter dated September 27, 2004,13 Aliling wrote San Mateo
stating: "Pursuant to your instruction on September 20, 2004, I hereby
tender my resignation effective October 15, 2004." While WWWEC took no
action on his tender, Aliling nonetheless demanded reinstatement and a
written apology, claiming in a subsequent letter dated October 1, 200414 to
management that San Mateo had forced him to resign.
Lariosas response-letter of October 1, 2004,15 informed Aliling that his case
was still in the process of being evaluated. On October 6, 2004,16 Lariosa
again wrote, this time to advise Aliling of the termination of his services
effective as of that date owing to his "non-satisfactory performance" during
his probationary period. Records show that Aliling, for the period indicated,
was paid his outstanding salary which consisted of:
PhP 4,988.18 (salary for the September 25, 2004 payroll)
1,987.28 (salary for 4 days in October 2004)
-----------------PhP 6,975.46 Total
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Earlier, however, or on October 4, 2004, Aliling filed a Complaint17 for illegal


dismissal due to forced resignation, nonpayment of salaries as well as
damages with the NLRC against WWWEC. Appended to the complaint was
Alilings Affidavit dated November 12, 2004,18 in which he stated: "5. At the
time of my engagement, respondents did not make known to me the
standards under which I will qualify as a regular employee."
Refuting Alilings basic posture, WWWEC stated in its Position Paper dated
November 22, 200419 that, in addition to the letter-offer and employment
contract adverted to, WWWEC and Aliling have signed a letter of
appointment20 on June 11, 2004 containing the following terms of
engagement:
Additionally, upon the effectivity of your probation, you and your immediate
superior are required to jointly define your objectives compared with the job
requirements of the position. Based on the pre-agreed objectives, your
performance shall be reviewed on the 3rd month to assess your competence
and work attitude. The 5th month Performance Appraisal shall be the basis in
elevating or confirming your employment status from Probationary to
Regular.
Failure to meet the job requirements during the probation stage means that
your services may be terminated without prior notice and without recourse
to separation pay.
WWWEC also attached to its Position Paper a memo dated September 20,
200421 in which San Mateo asked Aliling to explain why he should not be
terminated for failure to meet the expected job performance, considering
that the load factor for the GX Shuttles for the period July to September was
only 0.18% as opposed to the allegedly agreed upon load of 80% targeted
for August 5, 2004. According to WWWEC, Aliling, instead of explaining
himself, simply submitted a resignation letter.
In a Reply-Affidavit dated December 13, 2004,22 Aliling denied having
received a copy of San Mateos September 20, 2004 letter.
Issues having been joined, the Labor Arbiter issued on April 25, 200623 a
Decision declaring Alilings termination as unjustified. In its pertinent parts,
the decision reads:

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The grounds upon which complainants dismissal was based did not conform
not only the standard but also the compliance required under Article 281 of
the Labor Code, Necessarily, complainants termination is not justified for
failure to comply with the mandate the law requires. Respondents should be
ordered to pay salaries corresponding to the unexpired portion of the
contract of employment and all other benefits amounting to a total of THIRTY
FIVE THOUSAND EIGHT HUNDRED ELEVEN PESOS (P35,811.00) covering the
period from October 6 to December 7, 2004, computed as follows:
Unexpired Portion of the Contract:
Basic Salary
Transportation

P13,000.00
3,000.00

Clothing Allowance

800.00

ECOLA

500.00
----------------P17,300.00

10/06/04 12/07/04
P17,300.00 x 2.7 mos. = P35,811.00
Complainants 13th month pay proportionately for 2004 was not shown to
have been paid to complainant, respondent be made liable to him therefore
computed at SIX THOUSAND FIVE HUNDRED THIRTY TWO PESOS AND 50/100
(P6,532.50).
For engaging the services of counsel to protect his interest, complainant is
likewise entitled to a 10% attorneys fees of the judgment amount. Such
other claims for lack of basis sufficient to support for their grant are
unwarranted.
WHEREFORE, judgment is hereby rendered ordering respondent company to
pay complainant Armando Aliling the sum of THIRTY FIVE THOUSAND EIGHT
HUNDRED ELEVEN PESOS (P35,811.00) representing his salaries and other
benefits as discussed above.

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Respondent company is likewise ordered to pay said complainant the amount


of TEN THOUSAND SEVEN HUNDRED SIXTY SIX PESOS AND 85/100 ONLY
(10.766.85) representing his proportionate 13th month pay for 2004 plus
10% of the total judgment as and by way of attorneys fees.
Other claims are hereby denied for lack of merit. (Emphasis supplied.)
The labor arbiter gave credence to Alilings allegation about not receiving
and, therefore, not bound by, San Mateos purported September 20, 2004
memo. The memo, to reiterate, supposedly apprised Aliling of the sales
quota he was, but failed, to meet. Pushing the point, the labor arbiter
explained that Aliling cannot be validly terminated for non-compliance with
the quota threshold absent a prior advisory of the reasonable standards upon
which his performance would be evaluated.
Both parties appealed the above decision to the NLRC, which affirmed the
Decision in toto in its Resolution dated May 31, 2007. The separate motions
for reconsideration were also denied by the NLRC in its Resolution dated
August 31, 2007.
Therefrom, Aliling went on certiorari to the CA, which eventually rendered
the assailed Decision, the dispositive portion of which reads:
WHEREFORE, the petition is PARTLY GRANTED. The assailed Resolutions of
respondent (Third Division) National Labor Relations Commission are
AFFIRMED, with the following MODIFICATION/CLARIFICATION: Respondents
Wide Wide World Express Corp. and its officers, Jose B. Feliciano, Manuel F.
San Mateo III and Joseph R. Lariosa, are jointly and severally liable to pay
petitioner Armando Aliling: (A) the sum of Forty Two Thousand Three Hundred
Thirty Three & 50/100 (P42,333.50) as the total money judgment, (B) the
sum of Four Thousand Two Hundred Thirty Three & 35/100 (P4,233.35) as
attorneys fees, and (C) the additional sum equivalent to one-half (1/2)
month of petitioners salary as separation pay.
SO ORDERED.24 (Emphasis supplied.)
The CA anchored its assailed action on the strength of the following
premises: (a) respondents failed to prove that Alilings dismal performance
constituted gross and habitual neglect necessary to justify his dismissal; (b)
not having been informed at the time of his engagement of the reasonable
standards under which he will qualify as a regular employee, Aliling was
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deemed to have been hired from day one as a regular employee; and (c) the
strained relationship existing between the parties argues against the
propriety of reinstatement.
Alilings motion for reconsideration was rejected by the CA through the
assailed Resolution dated December 15, 2008.
Hence, the instant petition.
The Issues
Aliling raises the following issues for consideration:
A. The failure of the Court of Appeals to order reinstatement (despite
its finding that petitioner was illegally dismissed from employment) is
contrary to law and applicable jurisprudence.
B. The failure of the Court of Appeals to award backwages (even if it
did not order reinstatement) is contrary to law and applicable
jurisprudence.
C. The failure of the Court of Appeals to award moral and exemplary
damages (despite its finding that petitioner was dismissed to prevent
the acquisition of his regular status) is contrary to law and applicable
jurisprudence.25
In their Comment,26 respondents reiterated their position that WWWEC hired
petitioner on a probationary basis and fired him before he became a regular
employee.
The Courts Ruling
The petition is partly meritorious.
Petitioner is a regular employee
On a procedural matter, petitioner Aliling argues that WWWEC, not having
appealed from the judgment of CA which declared Aliling as a regular
employee from the time he signed the employment contract, is now
precluded from questioning the appellate courts determination as to the
nature of his employment.
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Petitioner errs. The Court has, when a case is on appeal, the authority to
review matters not specifically raised or assigned as error if their
consideration is necessary in reaching a just conclusion of the case. We said
as much in Sociedad Europea de Financiacion, SA v. Court of Appeals,27 "It is
axiomatic that an appeal, once accepted by this Court, throws the entire
case open to review, and that this Court has the authority to review matters
not specifically raised or assigned as error by the parties, if their
consideration is necessary in arriving at a just resolution of the case."
The issue of whether or not petitioner was, during the period material, a
probationary or regular employee is of pivotal import. Its resolution is
doubtless necessary at arriving at a fair and just disposition of the
controversy.
The Labor Arbiter cryptically held in his decision dated April 25, 2006 that:
Be that as it may, there appears no showing that indeed the said September
20, 2004 Memorandum addressed to complainant was received by him.
Moreover, complainants tasked where he was assigned was a new
developed service. In this regard, it is noted:
"Due process dictates that an employee be apprised beforehand of the
conditions of his employment and of the terms of advancement therein.
Precisely, implicit in Article 281 of the Labor Code is the requirement that
reasonable standards be previously made known by the employer to the
employee at the time of his engagement (Ibid, citing Sameer Overseas
Placement Agency, Inc. vs. NLRC, G.R. No. 132564, October 20, 1999). 28
From our review, it appears that the labor arbiter, and later the NLRC,
considered Aliling a probationary employee despite finding that he was not
informed of the reasonable standards by which his probationary employment
was to be judged.
The CA, on the other hand, citing Cielo v. National Labor Relations
Commission,29 ruled that petitioner was a regular employee from the outset
inasmuch as he was not informed of the standards by which his probationary
employment would be measured. The CA wrote:
Petitioner was regularized from the time of the execution of the employment
contract on June 11, 2004, although respondent company had arbitrarily
shortened his tenure. As pointed out, respondent company did not make
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known the reasonable standards under which he will qualify as a regular


employee at the time of his engagement. Hence, he was deemed to have
been hired from day one as a regular employee.30 (Emphasis supplied.)
WWWEC, however, excepts on the argument that it put Aliling on notice that
he would be evaluated on the 3rd and 5th months of his probationary
employment. To WWWEC, its efforts translate to sufficient compliance with
the requirement that a probationary worker be apprised of the reasonable
standards for his regularization. WWWEC invokes the ensuing holding in
Alcira v. National Labor Relations Commission31 to support its case:
Conversely, an employer is deemed to substantially comply with the rule on
notification of standards if he apprises the employee that he will be
subjected to a performance evaluation on a particular date after his hiring.
We agree with the labor arbiter when he ruled that:
In the instant case, petitioner cannot successfully say that he was never
informed by private respondent of the standards that he must satisfy in order
to be converted into regular status. This rans (sic) counter to the agreement
between the parties that after five months of service the petitioners
performance would be evaluated. It is only but natural that the evaluation
should be made vis--vis the performance standards for the
job.1wphi1 Private respondent Trifona Mamaradlo speaks of such standard
in her affidavit referring to the fact that petitioner did not perform well in his
assigned work and his attitude was below par compared to the companys
standard required of him. (Emphasis supplied.)
WWWECs contention is untenable.
Alcira is cast under a different factual setting. There, the labor arbiter, the
NLRC, the CA, and even finally this Court were one in their findings that the
employee concerned knew, having been duly informed during his
engagement, of the standards for becoming a regular employee. This is in
stark contrast to the instant case where the element of being informed of the
regularizing standards does not obtain. As such, Alcira cannot be made to
apply to the instant case.
To note, the June 2, 2004 letter-offer itself states that the regularization
standards or the performance norms to be used are still to be agreed upon
by Aliling and his supervisor. WWWEC has failed to prove that an agreement
as regards thereto has been reached. Clearly then, there were actually no
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performance standards to speak of. And lest it be overlooked, Aliling was


assigned to GX trucking sales, an activity entirely different to the Seafreight
Sales he was originally hired and trained for. Thus, at the time of his
engagement, the standards relative to his assignment with GX sales could
not have plausibly been communicated to him as he was under Seafreight
Sales. Even for this reason alone, the conclusion reached in Alcira is of little
relevant to the instant case.
Based on the facts established in this case in light of extant jurisprudence,
the CAs holding as to the kind of employment petitioner enjoyed is correct.
So was the NLRC ruling, affirmatory of that of the labor arbiter. In the final
analysis, one common thread runs through the holding of the labor arbiter,
the NLRC and the CA, i.e., petitioner Aliling, albeit hired from managements
standpoint as a probationary employee, was deemed a regular employee by
force of the following self-explanatory provisions:
Article 281 of the Labor Code
ART. 281. Probationary employment. - Probationary employment shall not
exceed six (6) months from the date the employee started working, unless it
is covered by an apprenticeship agreement stipulating a longer period. The
services of an employee who has been engaged on a probationary basis may
be terminated for a just cause or when he fails to qualify as a regular
employee in accordance with reasonable standards made known by the
employer to the employee at the time of his engagement. An employee who
is allowed to work after a probationary period shall be considered a regular
employee. (Emphasis supplied.)
Section 6(d) of the Implementing Rules of Book VI, Rule VIII-A of the Labor
Code
Sec. 6. Probationary employment. There is probationary employment where
the employee, upon his engagement, is made to undergo a trial period where
the employee determines his fitness to qualify for regular employment,
based on reasonable standards made known to him at the time of
engagement.
Probationary employment shall be governed by the following rules:
xxxx

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(d) In all cases of probationary employment, the employer shall make known
to the employee the standards under which he will qualify as a regular
employee at the time of his engagement. Where no standards are made
known to the employee at that time, he shall be deemed a regular employee.
(Emphasis supplied.)
To repeat, the labor arbiter, NLRC and the CA are agreed, on the basis of
documentary evidence adduced, that respondent WWWEC did not inform
petitioner Aliling of the reasonable standards by which his probation would
be measured against at the time of his engagement. The Court is loathed to
interfere with this factual determination. As We have held:
Settled is the rule that the findings of the Labor Arbiter, when affirmed by the
NLRC and the Court of Appeals, are binding on the Supreme Court, unless
patently erroneous. It is not the function of the Supreme Court to analyze or
weigh all over again the evidence already considered in the proceedings
below. The jurisdiction of this Court in a petition for review on certiorari is
limited to reviewing only errors of law, not of fact, unless the factual findings
being assailed are not supported by evidence on record or the impugned
judgment is based on a misapprehension of facts.32
The more recent Peafrancia Tours and Travel Transport, Inc., v.
Sarmiento33 has reaffirmed the above ruling, to wit:
Finally, the CA affirmed the ruling of the NLRC and adopted as its own the
latter's factual findings. Long-established is the doctrine that findings of fact
of quasi-judicial bodies x x x are accorded respect, even finality, if supported
by substantial evidence. When passed upon and upheld by the CA, they are
binding and conclusive upon this Court and will not normally be disturbed.
Though this doctrine is not without exceptions, the Court finds that none are
applicable to the present case.
WWWEC also cannot validly argue that "the factual findings being assailed
are not supported by evidence on record or the impugned judgment is based
on a misapprehension of facts." Its very own letter-offer of employment
argues against its above posture. Excerpts of the letter-offer:
Additionally, upon the effectivity of your probation, you and your immediate
superior are required to jointly define your objectives compared with the job
requirements of the position. Based on the pre-agreed objectives, your
performance shall be reviewed on the 3rd month to assess your competence
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and work attitude. The 5th month Performance Appraisal shall be the basis in
elevating or confirming your employment status from Probationary to
Regular.
Failure to meet the job requirements during the probation stage means that
your services may be terminated without prior notice and without recourse
to separation pay. (Emphasis supplied.)
Respondents further allege that San Mateos email dated July 16, 2004 shows
that the standards for his regularization were made known to petitioner
Aliling at the time of his engagement. To recall, in that email message, San
Mateo reminded Aliling of the sales quota he ought to meet as a condition for
his continued employment, i.e., that the GX trucks should already be 80%
full by August 5, 2004. Contrary to respondents contention, San Mateos
email cannot support their allegation on Aliling being informed of the
standards for his continued employment, such as the sales quota, at the time
of his engagement. As it were, the email message was sent to Aliling more
than a month after he signed his employment contract with WWWEC. The
aforequoted Section 6 of the Implementing Rules of Book VI, Rule VIII-A of the
Code specifically requires the employer to inform the probationary employee
of such reasonable standards at the time of his engagement, not at any time
later; else, the latter shall be considered a regular employee. Thus, pursuant
to the explicit provision of Article 281 of the Labor Code, Section 6(d) of the
Implementing Rules of Book VI, Rule VIII-A of the Labor Code and settled
jurisprudence, petitioner Aliling is deemed a regular employee as of June 11,
2004, the date of his employment contract.
Petitioner was illegally dismissed
To justify fully the dismissal of an employee, the employer must, as a rule,
prove that the dismissal was for a just cause and that the employee was
afforded due process prior to dismissal. As a complementary principle, the
employer has the onus of proving with clear, accurate, consistent, and
convincing evidence the validity of the dismissal.34
WWWEC had failed to discharge its twin burden in the instant case.
First off, the attendant circumstances in the instant case aptly show that the
issue of petitioners alleged failure to achieve his quota, as a ground for
terminating employment, strikes the Court as a mere afterthought on the
part of WWWEC. Consider: Lariosas letter of September 25, 2004 already
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betrayed managements intention to dismiss the petitioner for alleged


unauthorized absences. Aliling was in fact made to explain and he did so
satisfactorily. But, lo and behold, WWWEC nonetheless proceeded with its
plan to dismiss the petitioner for non-satisfactory performance, although the
corresponding termination letter dated October 6, 2004 did not even
specifically state Alilings "non-satisfactory performance," or that Alilings
termination was by reason of his failure to achieve his set quota.
What WWWEC considered as the evidence purportedly showing it gave
Aliling the chance to explain his inability to reach his quota was a purported
September 20, 2004 memo of San Mateo addressed to the latter. However,
Aliling denies having received such letter and WWWEC has failed to refute
his contention of non-receipt. In net effect, WWWEC was at a loss to explain
the exact just reason for dismissing Aliling.
At any event, assuming for argument that the petitioner indeed failed to
achieve his sales quota, his termination from employment on that ground
would still be unjustified.
Article 282 of the Labor Code considers any of the following acts or omission
on the part of the employee as just cause or ground for terminating
employment:
(a) Serious misconduct or willful disobedience by the employee of the
lawful orders of his employer or representative in connection with his
work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him
by his employer or duly authorized representative;
(d) Commission of a crime or offense by the employee against the
person of his employer or any immediate member of his family or his
duly authorized representatives; and
(e) Other causes analogous to the foregoing. (Emphasis supplied)
In Lim v. National Labor Relations Commission,35 the Court considered
inefficiency as an analogous just cause for termination of employment under
Article 282 of the Labor Code:
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We cannot but agree with PEPSI that "gross inefficiency" falls within the
purview of "other causes analogous to the foregoing," this constitutes,
therefore, just cause to terminate an employee under Article 282 of the
Labor Code. One is analogous to another if it is susceptible of comparison
with the latter either in general or in some specific detail; or has a close
relationship with the latter. "Gross inefficiency" is closely related to "gross
neglect," for both involve specific acts of omission on the part of the
employee resulting in damage to the employer or to his business. In Buiser
vs. Leogardo, this Court ruled that failure to observed prescribed standards
to inefficiency may constitute just cause for dismissal. (Emphasis supplied.)
It did so anew in Leonardo v. National Labor Relations Commission36 on the
following rationale:
An employer is entitled to impose productivity standards for its workers, and
in fact, non-compliance may be visited with a penalty even more severe than
demotion. Thus,
[t]he practice of a company in laying off workers because they failed to make
the work quota has been recognized in this jurisdiction. (Philippine American
Embroideries vs. Embroidery and Garment Workers, 26 SCRA 634, 639). In
the case at bar, the petitioners' failure to meet the sales quota assigned to
each of them constitute a just cause of their dismissal, regardless of the
permanent or probationary status of their employment. Failure to observe
prescribed standards of work, or to fulfill reasonable work assignments due
to inefficiency may constitute just cause for dismissal. Such inefficiency is
understood to mean failure to attain work goals or work quotas, either by
failing to complete the same within the allotted reasonable period, or by
producing unsatisfactory results. This management prerogative of requiring
standards may be availed of so long as they are exercised in good faith for
the advancement of the employer's interest. (Emphasis supplied.)
In fine, an employees failure to meet sales or work quotas falls under the
concept of gross inefficiency, which in turn is analogous to gross neglect of
duty that is a just cause for dismissal under Article 282 of the Code.
However, in order for the quota imposed to be considered a valid
productivity standard and thereby validate a dismissal, managements
prerogative of fixing the quota must be exercised in good faith for the
advancement of its interest. The duty to prove good faith, however, rests
with WWWEC as part of its burden to show that the dismissal was for a just
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cause. WWWEC must show that such quota was imposed in good faith. This
WWWEC failed to do, perceptibly because it could not. The fact of the matter
is that the alleged imposition of the quota was a desperate attempt to lend a
semblance of validity to Alilings illegal dismissal. It must be stressed that
even WWWECs sales manager, Eve Amador (Amador), in an internal e-mail
to San Mateo, hedged on whether petitioner performed below or above
expectation:
Could not quantify level of performance as he as was tasked to handle a new
product (GX). Revenue report is not yet administered by IT on a month-tomonth basis. Moreover, this in a way is an experimental activity. Practically
you have a close monitoring with Armand with regards to his performance.
Your assessment of him would be more accurate.
Being an experimental activity and having been launched for the first time,
the sales of GX services could not be reasonably quantified. This would
explain why Amador implied in her email that other bases besides sales
figures will be used to determine Alilings performance. And yet, despite such
a neutral observation, Aliling was still dismissed for his dismal sales of GX
services. In any event, WWWEC failed to demonstrate the reasonableness
and the bona fides on the quota imposition.
Employees must be reminded that while probationary employees do not
enjoy permanent status, they enjoy the constitutional protection of security
of tenure. They can only be terminated for cause or when they otherwise fail
to meet the reasonable standards made known to them by the employer at
the time of their engagement.37Respondent WWWEC miserably failed to
prove the termination of petitioner was for a just cause nor was there
substantial evidence to demonstrate the standards were made known to the
latter at the time of his engagement. Hence, petitioners right to security of
tenure was breached.
Alilings right to procedural due process was violated
As earlier stated, to effect a legal dismissal, the employer must show not
only a valid ground therefor, but also that procedural due process has
properly been observed. When the Labor Code speaks of procedural due
process, the reference is usually to the two (2)-written notice rule envisaged
in Section 2 (III), Rule XXIII, Book V of the Omnibus Rules Implementing the
Labor Code, which provides:
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Section 2. Standard of due process: requirements of notice. In all cases of


termination of employment, the following standards of due process shall be
substantially observed.
I. For termination of employment based on just causes as defined in Article
282 of the Code:
(a) A written notice served on the employee specifying the ground or
grounds for termination, and giving to said employee reasonable
opportunity within which to explain his side;
(b) A hearing or conference during which the employee concerned,
with the assistance of counsel if the employee so desires, is given
opportunity to respond to the charge, present his evidence or rebut the
evidence presented against him; and
(c) A written notice [of] termination served on the employee indicating
that upon due consideration of all the circumstance, grounds have
been established to justify his termination.
In case of termination, the foregoing notices shall be served on the
employees last known address.
MGG Marine Services, Inc. v. NLRC38 tersely described the mechanics of what
may be considered a two-part due process requirement which includes the
two-notice rule, "x x x one, of the intention to dismiss, indicating therein his
acts or omissions complained against, and two, notice of the decision to
dismiss; and an opportunity to answer and rebut the charges against him, in
between such notices."
King of Kings Transport, Inc. v. Mamac39 expounded on this procedural
requirement in this manner:
(1) The first written notice to be served on the employees should
contain the specific causes or grounds for termination against them,
and a directive that the employees are given the opportunity to submit
their written explanation within a reasonable period. "Reasonable
opportunity" under the Omnibus Rules means every kind of assistance
that management must accord to the employees to enable them to
prepare adequately for their defense. This should be construed as a
period of at least five calendar days from receipt of the notice xxxx
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Moreover, in order to enable the employees to intelligently prepare


their explanation and defenses, the notice should contain a detailed
narration of the facts and circumstances that will serve as basis for the
charge against the employees. A general description of the charge will
not suffice. Lastly, the notice should specifically mention which
company rules, if any, are violated and/or which among the grounds
under Art. 288 [of the Labor Code] is being charged against the
employees
(2) After serving the first notice, the employees should schedule and
conduct a hearing or conference wherein the employees will be given
the opportunity to (1) explain and clarify their defenses to the charge
against them; (2) present evidence in support of their defenses; and
(3) rebut the evidence presented against them by the management.
During the hearing or conference, the employees are given the chance
to defend themselves personally, with the assistance of a
representative or counsel of their choice x x x.
(3) After determining that termination is justified, the employer shall
serve the employees a written notice of termination indicating that: (1)
all the circumstances involving the charge against the employees have
been considered; and (2) grounds have been established to justify the
severance of their employment. (Emphasis in the original.)
Here, the first and second notice requirements have not been properly
observed, thus tainting petitioners dismissal with illegality.
The adverted memo dated September 20, 2004 of WWWEC supposedly
informing Aliling of the likelihood of his termination and directing him to
account for his failure to meet the expected job performance would have had
constituted the "charge sheet," sufficient to answer for the first notice
requirement, but for the fact that there is no proof such letter had been sent
to and received by him. In fact, in his December 13, 2004 Complainants
Reply Affidavit, Aliling goes on to tag such letter/memorandum as
fabrication. WWWEC did not adduce proof to show that a copy of the letter
was duly served upon Aliling. Clearly enough, WWWEC did not comply with
the first notice requirement.
Neither was there compliance with the imperatives of a hearing or
conference. The Court need not dwell at length on this particular breach of
the due procedural requirement. Suffice it to point out that the record is
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devoid of any showing of a hearing or conference having been conducted. On


the contrary, in its October 1, 2004 letter to Aliling, or barely five (5) days
after it served the notice of termination, WWWEC acknowledged that it was
still evaluating his case. And the written notice of termination itself did not
indicate all the circumstances involving the charge to justify severance of
employment.
Aliling is entitled to backwages
and separation pay in lieu of reinstatement
As may be noted, the CA found Alilings dismissal as having been illegally
effected, but nonetheless concluded that his employment ceased at the end
of the probationary period. Thus, the appellate court merely affirmed the
monetary award made by the NLRC, which consisted of the payment of that
amount corresponding to the unserved portion of the contract of
employment.
The case disposition on the award is erroneous.
As earlier explained, Aliling cannot be rightfully considered as a mere
probationary employee. Accordingly, the probationary period set in the
contract of employment dated June 11, 2004 was of no moment. In net
effect, as of that date June 11, 2004, Aliling became part of the WWWEC
organization as a regular employee of the company without a fixed term of
employment. Thus, he is entitled to backwages reckoned from the time he
was illegally dismissed on October 6, 2004, with a PhP 17,300.00 monthly
salary, until the finality of this Decision. This disposition hews with the
Courts ensuing holding in Javellana v. Belen:40
Article 279 of the Labor Code, as amended by Section 34 of Republic Act
6715 instructs:
Art. 279. Security of Tenure. - In cases of regular employment, the employer
shall not terminate the services of an employee except for a just cause or
when authorized by this Title. An employee who is unjustly dismissed from
work shall be entitled to reinstatement without loss of seniority rights and
other privileges and to his full backwages, inclusive of allowances, and to his
other benefits or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual
reinstatement. (Emphasis supplied)
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Clearly, the law intends the award of backwages and similar benefits to
accumulate past the date of the Labor Arbiters decision until the dismissed
employee is actually reinstated. But if, as in this case, reinstatement is no
longer possible, this Court has consistently ruled that backwages shall be
computed from the time of illegal dismissal until the date the decision
becomes final. (Emphasis supplied.)
Additionally, Aliling is entitled to separation pay in lieu of reinstatement on
the ground of strained relationship.
In Golden Ace Builders v. Talde,41 the Court ruled:
The basis for the payment of backwages is different from that for the award
of separation pay.1wphi1 Separation pay is granted where reinstatement is
no longer advisable because of strained relations between the employee and
the employer. Backwages represent compensation that should have been
earned but were not collected because of the unjust dismissal. The basis for
computing backwages is usually the length of the employee's service while
that for separation pay is the actual period when the employee was
unlawfully prevented from working.
As to how both awards should be computed, Macasero v. Southern Industrial
Gases Philippines instructs:
[T]he award of separation pay is inconsistent with a finding that there was no
illegal dismissal, for under Article 279 of the Labor Code and as held in a
catena of cases, an employee who is dismissed without just cause and
without due process is entitled to backwages and reinstatement or payment
of separation pay in lieu thereof:
Thus, an illegally dismissed employee is entitled to two reliefs: backwages
and reinstatement. The two reliefs provided are separate and distinct. In
instances where reinstatement is no longer feasible because of strained
relations between the employee and the employer, separation pay is
granted. In effect, an illegally dismissed employee is entitled to either
reinstatement, if viable, or separation pay if reinstatement is no longer
viable, and backwages.
The normal consequences of respondents illegal dismissal, then, are
reinstatement without loss of seniority rights, and payment of backwages
computed from the time compensation was withheld up to the date of actual
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reinstatement. Where reinstatement is no longer viable as an option,


separation pay equivalent to one (1) month salary for every year of service
should be awarded as an alternative. The payment of separation pay is in
addition to payment of backwages. x x x
Velasco v. National Labor Relations Commission emphasizes:
The accepted doctrine is that separation pay may avail in lieu of
reinstatement if reinstatement is no longer practical or in the best interest of
the parties. Separation pay in lieu of reinstatement may likewise be awarded
if the employee decides not to be reinstated. (emphasis in the original; italics
supplied)
Under the doctrine of strained relations, the payment of separation pay is
considered an acceptable alternative to reinstatement when the latter option
is no longer desirable or viable. On one hand, such payment liberates the
employee from what could be a highly oppressive work environment. On the
other hand, it releases the employer from the grossly unpalatable obligation
of maintaining in its employ a worker it could no longer trust.
Strained relations must be demonstrated as a fact, however, to be
adequately supported by evidence substantial evidence to show that the
relationship between the employer and the employee is indeed strained as a
necessary consequence of the judicial controversy.
In the present case, the Labor Arbiter found that actual animosity existed
between petitioner Azul and respondent as a result of the filing of the illegal
dismissal case. Such finding, especially when affirmed by the appellate court
as in the case at bar, is binding upon the Court, consistent with the
prevailing rules that this Court will not try facts anew and that findings of
facts of quasi-judicial bodies are accorded great respect, even finality.
(Emphasis supplied.)
As the CA correctly observed, "To reinstate petitioner [Aliling] would only
create an atmosphere of antagonism and distrust, more so that he had only
a short stint with respondent company."42 The Court need not belabor the
fact that the patent animosity that had developed between employer and
employee generated what may be considered as the arbitrary dismissal of
the petitioner.

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Following the pronouncements of this Court Sagales v. Rustans Commercial


Corporation,43 the computation of separation pay in lieu of reinstatement
includes the period for which backwages were awarded:
Thus, in lieu of reinstatement, it is but proper to award petitioner separation
pay computed at one-month salary for every year of service, a fraction of at
least six (6) months considered as one whole year. In the computation of
separation pay, the period where backwages are awarded must be included.
(Emphasis supplied.)
Thus, Aliling is entitled to both backwages and separation pay (in lieu of
reinstatement) in the amount of one (1) months salary for every year of
service, that is, from June 11, 2004 (date of employment contract) until the
finality of this decision with a fraction of a year of at least six (6) months to
be considered as one (1) whole year. As determined by the labor arbiter, the
basis for the computation of backwages and separation pay will be Alilings
monthly salary at PhP 17,300.
Finally, Aliling is entitled to an award of PhP 30,000 as nominal damages in
consonance with prevailing jurisprudence44 for violation of due process.
Petitioner is not entitled to moral and exemplary damages
In Nazareno v. City of Dumaguete,45 the Court expounded on the requisite
elements for a litigants entitlement to moral damages, thus:
Moral damages are awarded if the following elements exist in the case: (1)
an injury clearly sustained by the claimant; (2) a culpable act or omission
factually established; (3) a wrongful act or omission by the defendant as the
proximate cause of the injury sustained by the claimant; and (4) the award of
damages predicated on any of the cases stated Article 2219 of the Civil
Code. In addition, the person claiming moral damages must prove the
existence of bad faith by clear and convincing evidence for the law always
presumes good faith. It is not enough that one merely suffered sleepless
nights, mental anguish, and serious anxiety as the result of the actuations of
the other party. Invariably such action must be shown to have been willfully
done in bad faith or with ill motive. Bad faith, under the law, does not simply
connote bad judgment or negligence. It imports a dishonest purpose or some
moral obliquity and conscious doing of a wrong, a breach of a known duty
through some motive or interest or ill will that partakes of the nature of
fraud. (Emphasis supplied.)
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In alleging that WWWEC acted in bad faith, Aliling has the burden of proof to
present evidence in support of his claim, as ruled in Culili v. Eastern
Telecommunications Philippines, Inc.:46
According to jurisprudence, "basic is the principle that good faith is
presumed and he who alleges bad faith has the duty to prove the same." By
imputing bad faith to the actuations of ETPI, Culili has the burden of proof to
present substantial evidence to support the allegation of unfair labor
practice. Culili failed to discharge this burden and his bare allegations
deserve no credit.
This was reiterated in United Claimants Association of NEA (UNICAN) v.
National Electrification Administration (NEA),47 in this wise:
It must be noted that the burden of proving bad faith rests on the one
alleging it. As the Court ruled in Culili v. Eastern Telecommunications, Inc.,
"According to jurisprudence, basic is the principle that good faith is
presumed and he who alleges bad faith has the duty to prove the same."
Moreover, in Spouses Palada v. Solidbank Corporation, the Court stated,
"Allegations of bad faith and fraud must be proved by clear and convincing
evidence."
Similarly, Aliling has failed to overcome such burden to prove bad faith on
the part of WWWEC. Aliling has not presented any clear and convincing
evidence to show bad faith. The fact that he was illegally dismissed is
insufficient to prove bad faith. Thus, the CA correctly ruled that "[t]here was
no sufficient showing of bad faith or abuse of management prerogatives in
the personal action taken against petitioner."48 In Lambert Pawnbrokers and
Jewelry Corporation v. Binamira,49 the Court ruled:
A dismissal may be contrary to law but by itself alone, it does not establish
bad faith to entitle the dismissed employee to moral damages. The award of
moral and exemplary damages cannot be justified solely upon the premise
that the employer dismissed his employee without authorized cause and due
process.
The officers of WWWEC cannot be held
jointly and severally liable with the company
The CA held the president of WWWEC, Jose B. Feliciano, San Mateo and
Lariosa jointly and severally liable for the monetary awards of Aliling on the
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ground that the officers are considered "employers" acting in the interest of
the corporation. The CA cited NYK International Knitwear Corporation
Philippines (NYK) v. National Labor Relations Commission50 in support of its
argument. Notably, NYK in turn cited A.C. Ransom Labor Union-CCLU v.
NLRC.51
Such ruling has been reversed by the Court in Alba v. Yupangco,52 where the
Court ruled:
By Order of September 5, 2007, the Labor Arbiter denied respondents
motion to quash the 3rd alias writ. Brushing aside respondents contention
that his liability is merely joint, the Labor Arbiter ruled:
Such issue regarding the personal liability of the officers of a corporation for
the payment of wages and money claims to its employees, as in the instant
case, has long been resolved by the Supreme Court in a long list of cases
[A.C. Ransom Labor Union-CLU vs. NLRC (142 SCRA 269) and reiterated in the
cases of Chua vs. NLRC (182 SCRA 353), Gudez vs. NLRC (183 SCRA 644)]. In
the aforementioned cases, the Supreme Court has expressly held that the
irresponsible officer of the corporation (e.g. President) is liable for the
corporations obligations to its workers. Thus, respondent Yupangco, being
the president of the respondent YL Land and Ultra Motors Corp., is properly
jointly and severally liable with the defendant corporations for the labor
claims of Complainants Alba and De Guzman. x x x
xxxx
As reflected above, the Labor Arbiter held that respondents liability is
solidary.
There is solidary liability when the obligation expressly so states, when the
law so provides, or when the nature of the obligation so requires. MAM Realty
Development Corporation v. NLRC, on solidary liability of corporate officers in
labor disputes, enlightens:
x x x A corporation being a juridical entity, may act only through its directors,
officers and employees. Obligations incurred by them, acting as such
corporate agents are not theirs but the direct accountabilities of the
corporation they represent. True solidary liabilities may at times be incurred
but only when exceptional circumstances warrant such as, generally, in the
following cases:
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1. When directors and trustees or, in appropriate cases, the officers of a


corporation:
(a) vote for or assent to patently unlawful acts of the corporation;
(b) act in bad faith or with gross negligence in directing the corporate
affairs;
xxxx
In labor cases, for instance, the Court has held corporate directors and
officers solidarily liable with the corporation for the termination of
employment of employees done with malice or in bad faith.
A review of the facts of the case does not reveal ample and satisfactory proof
that respondent officers of WWEC acted in bad faith or with malice in
effecting the termination of petitioner Aliling. Even assuming arguendo that
the actions of WWWEC are ill-conceived and erroneous, respondent officers
cannot be held jointly and solidarily with it. Hence, the ruling on the joint and
solidary liability of individual respondents must be recalled.
Aliling is entitled to Attorneys Fees and Legal Interest
Petitioner Aliling is also entitled to attorneys fees in the amount of ten
percent (10%) of his total monetary award, having been forced to litigate in
order to seek redress of his grievances, pursuant to Article 111 of the Labor
Code and following our ruling in Exodus International Construction
Corporation v. Biscocho,53 to wit:
In Rutaquio v. National Labor Relations Commission, this Court held that:
It is settled that in actions for recovery of wages or where an employee was
forced to litigate and, thus, incur expenses to protect his rights and interest,
the award of attorneys fees is legally and morally justifiable.
In Producers Bank of the Philippines v. Court of Appeals this Court ruled that:
Attorneys fees may be awarded when a party is compelled to litigate or to
incur expenses to protect his interest by reason of an unjustified act of the
other party.

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While in Lambert Pawnbrokers and Jewelry Corporation,54 the Court


specifically ruled:
However, the award of attorneys fee is warranted pursuant to Article 111 of
the Labor Code. Ten (10%) percent of the total award is usually the
reasonable amount of attorneys fees awarded. It is settled that where an
employee was forced to litigate and, thus, incur expenses to protect his
rights and interest, the award of attorneys fees is legally and morally
justifiable.
Finally, legal interest shall be imposed on the monetary awards herein
granted at the rate of 6% per annum from October 6, 2004 (date of
termination) until fully paid.
WHEREFORE, the petition is PARTIALLY GRANTED. The July 3, 2008 Decision
of the Court of Appeals in CA-G.R. SP No. 101309 is hereby MODIFIED to
read:
WHEREFORE, the petition is PARTIALLY GRANTED. The assailed Resolutions of
respondent (Third Division) National Labor Relations Commission are
AFFIRMED, with the following MODIFICATION/CLARIFICATION: Respondent
Wide Wide World Express Corp. is liable to pay Armando Aliling the following:
(a) backwages reckoned from October 6, 2004 up to the finality of this
Decision based on a salary of PhP 17,300 a month, with interest at 6% per
annum on the principal amount from October 6, 2004 until fully paid; (b) the
additional sum equivalent to one (1) month salary for every year of service,
with a fraction of at least six (6) months considered as one whole year based
on the period from June 11, 2004 (date of employment contract) until the
finality of this Decision, as separation pay; (c) PhP 30,000 as nominal
damages; and (d) Attorneys Fees equivalent to 10% of the total award.
SO ORDERED.

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Republic of the Philippines


SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 144315

July 17, 2006

PHILCOM EMPLOYEES UNION, petitioner,


vs.
PHILIPPINE GLOBAL COMMUNICATIONS and PHILCOM
CORPORATION, respondents.
DECISION
CARPIO, J.:
The Case
This is a petition for review1 to annul the Decision2 dated 31 July 2000 of the
Court of Appeals in CA-G.R. SP No. 53989. The Court of Appeals affirmed the
assailed portions of the 2 October 1998 and 27 November 1998 Orders of the
Secretary of Labor and Employment in OS-AJ-0022-97.
The Facts
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The facts, as summarized by the Court of Appeals, are as follows:


Upon the expiration of the Collective Bargaining Agreement (CBA)
between petitioner Philcom Employees Union (PEU or union, for
brevity) and private respondent Philippine Global Communications, Inc.
(Philcom, Inc.) on June 30, 1997, the parties started negotiations for
the renewal of their CBA in July 1997. While negotiations were ongoing,
PEU filed on October 21, 1997 with the National Conciliation and
Mediation Board (NCMB) National Capital Region, a Notice of Strike,
docketed as NCMB-NCR-NS No. 10-435-97, due to perceived unfair
labor practice committed by the company (Annex "1", Comment, p.
565, ibid.). In view of the filing of the Notice of Strike, the company
suspended negotiations on the CBA which moved the union to file on
November 4, 1997 another Notice of Strike, docketed as NCMB-NCR-NS
No. 11-465-97, on the ground of bargaining deadlock (Annex "2",
Comment, p. 566, ibid.)
On November 11, 1997, at a conciliation conference held at the NCMBNCR office, the parties agreed to consolidate the two (2) Notices of
Strike filed by the union and to maintain the status quo during the
pendency of the proceedings (Annex "3", Comment, p. 567, ibid.).
On November 17, 1997, however, while the union and the company
officers and representatives were meeting, the remaining union officers
and members staged a strike at the company premises, barricading
the entrances and egresses thereof and setting up a stationary picket
at the main entrance of the building. The following day, the company
immediately filed a petition for the Secretary of Labor and Employment
to assume jurisdiction over the labor dispute in accordance with Article
263(g) of the Labor Code.
On November 19, 1997, then Acting Labor Secretary Cresenciano B.
Trajano issued an Order assuming jurisdiction over the dispute,
enjoining any strike or lockout, whether threatened or actual, directing
the parties to cease and desist from committing any act that may
exacerbate the situation, directing the striking workers to return to
work within twenty-four (24) hours from receipt of the Secretary's
Order and for management to resume normal operations, as well as
accept the workers back under the same terms and conditions prior to
the strike. The parties were likewise required to submit their respective
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position papers and evidence within ten (10) days from receipt of said
order (Annex "4", Comment, pp. 610-611, ibid.). On November 28,
1997, a second order was issued reiterating the previous directive to
all striking employees to return to work immediately.
On November 27, 1997, the union filed a Motion for Reconsideration
assailing, among others, the authority of then Acting Secretary Trajano
to assume jurisdiction over the labor dispute. Said motion was denied
in an Order dated January 7, 1998.
As directed, the parties submitted their respective position papers. In
its position paper, the union raised the issue of the alleged unfair labor
practice of the company hereunder enumerated as follows:
"(a) PABX transfer and contractualization of PABX service and
position;
"(b) Massive contractualization;
"(c) Flexible labor and additional work/function;
"(d) Disallowance of union leave intended for union seminar;
"(e) Misimplementation and/or non-implementation of
employees' benefits like shoe allowance, rainboots, raincoats,
OIC shift allowance, P450.00 monthly allowance, driving
allowance, motorcycle award and full-time physician;
"(f) Non-payment, discrimination and/or deprivation of overtime,
restday work, waiting/stand by time and staff meetings;
"(g) Economic inducement by promotion during CBA negotiation;
"(h) Disinformation scheme, surveillance and interference with
union affairs;
"(i) Issuance of memorandum/notice to employees without giving
copy to union, change in work schedule at Traffic Records Section
and ITTO policies; and
"(j) Inadequate transportation allowance, water and facilities."
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(Annex A, Petition; pp. 110-182, ibid.)


The company, on the other hand, raised in its position paper the sole
issue of the illegality of the strike staged by the union (Annex B,
Petition; pp. 302-320, ibid.).
On the premise that public respondent Labor Secretary cannot rule on
the issue of the strike since there was no petition to declare the same
illegal, petitioner union filed on March 4, 1998 a Manifestation/Motion
to Strike Out Portions of & Attachments in Philcom's Position Paper for
being irrelevant, immaterial and impertinent to the issues assumed for
resolution (Annex C, Petition; pp. 330-333, ibid.).
In opposition to PEU's Manifestation/Motion, the company argued that
it was precisely due to the strike suddenly staged by the union on
November 17, 1997 that the dispute was assumed by the Labor
Secretary. Hence, the case would necessarily include the issue of the
legality of the strike (Opposition to PEU'S Motion to Strike Out; Annex F,
Petition; pp. 389-393, ibid.).3
On 2 October 1998, the Secretary of Labor and Employment ("Secretary")
issued the first assailed order. The pertinent parts of the Order read:
Going now to the first issue at hand, a reading of the complaints
charged by the Union as unfair labor practices would reveal that these
are not so within the legal connotation of Article 248 of the Labor Code.
On the contrary, these complaints are actually mere grievances which
should have been processed through the grievance machinery or
voluntary arbitration outlined under the CBA. The issues of flexible
labor and additional functions, misimplementation or nonimplementation of employee benefits, non-payment of overtime and
other monetary claims and inadequate transportation allowance, are
all a matter of implementation or interpretation of the economic
provisions of the CBA subject to the grievance procedure.
Neither do these complaints amount to gross violations which, thus,
may be treated as unfair labor practices outside of the coverage of
Article 261. The Union failed to convincingly show that there is flagrant
and/or malicious refusal by the Company to comply with the economic
provisions stipulated in the CBA.
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With respect to the charges of contractualization and economic


inducement, this Office is convinced that the acts of said company
qualify as a valid exercise of management prerogative. The act of the
Company in contracting out work or certain services being performed
by Union members should not be seen as an unfair labor practice act
per se. First, the charge of massive contractualization has not been
substantiated while the contractualization of the position of PABX
operator is an isolated instance. Secondly, in the latter case, there was
no proof that such contracting out interfered with, restrained or
coerced the employees in the exercise of their right to selforganization. Thus, it is not unfair labor practice to contract out work
for reason of reduction of labor cost through the acquisition of
automatic machines.
Likewise, the promotion of certain employees, who are incidentally
members of the Union, to managerial positions is a prerogative of
management. A promotion which is manifestly beneficial to an
employee should not give rise to a gratuitous speculation that such a
promotion was made simply to deprive the union of the membership of
the promoted employee (Bulletin Publishing Co. v. Sanchez, et. al., G.R.
No. 74425, October 7, 1986).
There remains the issue on bargaining deadlock. The Company has
denied the existence of any impasse in its CBA negotiations with the
Union and instead maintains that it has been negotiating with the
latter in good faith until the strike was initiated. The Union, on the
other hand, contends otherwise and further prays that the remaining
CBA proposals of the Union be declared reasonable and equitable and
thus be ordered incorporated in the new CBA to be executed.
As pointed out by the Union, there are already thirty-seven (37) items
agreed upon by the parties during the CBA negotiations even before
these were suspended. Prior to this Office's assumption over the case,
the Company furnished the Union its improved CBA counter-proposal
on the matter of promotional and wage increases which however was
rejected by the Union as divisive. Even as the Union has submitted its
remaining CBA proposals for resolution, the Company remains silent on
the matter. In the absence of any basis, other than the Union's position
paper, on which this Office may make its determination of the
reasonableness and equitableness of these remaining CBA proposals,
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this Office finds it proper to defer deciding on the matter and first allow
the Company to submit its position thereon.
We now come to the question of whether or not the strike staged by
the Union on November 17, 1997 is illegal. The Company claims it is,
having been held on grounds which are non-strikeable, during the
pendency of preventive mediation proceedings in the NCMB, after this
Office has assumed jurisdiction over the dispute, and with the strikers
committing prohibited and illegal acts. The Company further prays for
the termination of some 20 Union officers who were positively
identified to have initiated the alleged illegal strike. The Union, on the
other hand, refuses to submit this issue for resolution.
Considering the precipitous nature of the sanctions sought by the
Company, i.e., declaration of illegality of the strike and the
corresponding termination of the errant Union officers, this Office
deems it wise to defer the summary resolution of the same until both
parties have been afforded due process. The non-compliance of the
strikers with the return-to-work orders, while it may warrant dismissal,
is not by itself conclusive to hold the strikers liable. Moreover, the
Union's position on the alleged commission of illegal acts by the
strikers during the strike is still to be heard. Only after a full-blown
hearing may the respective liabilities of Union officers and members be
determined. The case of Telefunken Semiconductors Employees UnionFFW v. Secretary of Labor and Employment and Temic Telefunken
Micro-Electronics (Phils.), Inc. (G.R. No. 122743 and 127215, December
12, 1997) is instructive on this point:
It may be true that the workers struck after the Secretary of
Labor and Employment had assumed jurisdiction over the case
and that they may have failed to immediately return to work
even after the issuance of a return-to-work order, making their
continued strike illegal. For, a return-to-work order is
immediately effective and executory notwithstanding the filing of
a motion for reconsideration. But, the liability of each of the
union officers and the workers, if any, has yet to be determined.
xxx xxx xxx.4
The dispositive portion of the Order reads:

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WHEREFORE, in view of all the foregoing, judgment is hereby rendered


as follows:
The Union's Manifestation/Motion to Implead Philcom Corporation is
hereby granted. Let summons be issued to respondent Philcom
Corporation to appear before any hearing that may hereafter be
scheduled and to submit its position paper as may be required.
The Union's Manifestation/Motion to Strike Out Portions of and
Attachments in Philcom's Position Paper is hereby denied for lack of
merit.
The Union's charges of unfair labor practice against the Company are
hereby dismissed.
Pending resolution of the issues of illegal strike and bargaining
deadlock which are yet to be heard, all the striking workers are
directed to return to work within twenty-four (24) hours from receipt of
this Order and Philcom and/or Philcom Corporation are hereby directed
to unconditionally accept back to work all striking Union officers and
members under the same terms and conditions prior to the strike. The
parties are directed to cease and desist from committing any acts that
may aggravate the situation.
Atty. Lita V. Aglibut, Officer-In-Charge of the Legal Service, this
Department is hereby designated as the Hearing Officer to hear and
receive evidence on all matters and issues arising from the present
labor dispute and, thereafter, to submit a report/recommendation
within twenty (20) days from the termination of the proceedings.
The parties are further directed to file their respective position papers
with Atty. Lita V. Aglibut within ten (10) days from receipt of this Order.
SO ORDERED.5
Philcom Corporation ("Philcom") filed a motion for reconsideration. Philcom
prayed for reconsideration of the Order impleading it as party-litigant in the
present case and directing it to accept back to work unconditionally all the
officers and members of the union who participated in the strike. 6 Philcom
also filed a Motion to Certify Labor Dispute to the National Labor Relations
Commission for Compulsory Arbitration.7
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For its part, Philcom Employees Union (PEU) filed a Motion for Partial
Reconsideration. PEU asked the Secretary to "partially reconsider" the 2
October 1998 Order insofar as it dismissed the unfair labor practices charges
against Philcom and included the illegal strike issue in the labor dispute.8
The Secretary denied both motions for reconsideration of Philcom and PEU in
its assailed Order of 27 November 1998. The pertinent parts of the Order
read:
The question of whether or not Philcom Corporation should be
impleaded has been properly disposed of in the assailed Order. We
reiterate that neither the Company herein nor its predecessor was able
to convincingly establish that each is a separate entity in the absence
of any proof that there was indeed an actual closure and cessation of
the operations of the predecessor-company. We would have
accommodated the Company for a hearing on the matter had it been
willing and prepared to submit evidence to controvert the finding that
there was a mere merger. As it now stands, nothing on record would
prove that the two (2) companies are separate and distinct from each
other.
Having established that what took place was a mere merger, we
correspondingly conclude that the employer-employee relations
between the Company and the Union officers and members was never
severed. And in merger, the employees of the merged companies or
entities are deemed absorbed by the new company (Filipinas Port
Services, Inc. v. NLRC, et. al., G.R. No. 97237, August 16, 1991).
Considering that the Company failed miserably to adduce any evidence
to provide a basis for a contrary ruling, allegations to the effect that
employer-employee relations and positions previously occupied by the
workers no longer exist remain just that mere allegations.
Consequently, the Company cannot now exempt itself from compliance
with the Order. Neither can it successfully argue that the employees
were validly dismissed. As held in Telefunken Semiconductor
Employees Union-FFW v. Secretary of Labor and Employment (G.R.
Nos. 122743 and 122715, December 12, 1997), to exclude the workers
without first ascertaining the extent of their individual participation in
the strike or non-compliance with the return-to-work orders will be
tantamount to dismissal without due process of law.

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With respect to the unfair labor practice charges against the Company,
we have carefully reviewed the records and found no reason to depart
from the findings previously rendered. The issues now being raised by
the Union are the same issues discussed and passed upon in our
earlier Order.
Finally, it is our determination that the issue of the legality of the strike
is well within the jurisdiction of this Office. The same has been properly
submitted and assumed jurisdiction by the Office for resolution.9
The dispositive portion of the Order reads:
WHEREFORE, there being no merit in the remaining Motions for
Reconsideration filed by both parties, the same are hereby DENIED.
Our 2 October 1998 Order STANDS. To expedite the resolution of the
Motion to Certify Labor Dispute to the NLRC for Compulsory Arbitration,
Philcom Employees Union is hereby directed to submit its Opposition
thereto within ten (10) days from receipt of the copy of this Order.
SO ORDERED.10
PEU filed with this Court a petition for certiorari and prohibition under Rule 65
of the Rules of Court assailing the Secretary's Orders of 2 October 1998 and
27 November 1998. This Court, in accordance with its Decision of 10 March
1999 in G.R. No. 123426 entitled National Federation of Labor (NFL) vs. Hon.
Bienvenido E. Laguesma, Undersecretary of the Department of Labor and
Employment, and Alliance of Nationalist Genuine Labor Organization,
Kilusang Mayo Uno (ANGLO-KMU),11 referred the case to the Court of
Appeals.12
The Ruling of the Court of Appeals
On 31 July 2000, the Court of Appeals rendered judgment as follows:
WHEREFORE, PREMISES CONSIDERED, this petition is hereby DENIED.
The assailed portions of the Orders of the Secretary of Labor and
Employment dated October 2, 1998 and November 27, 1998 are
AFFIRMED.
SO ORDERED.13

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The Court of Appeals ruled that, contrary to PEU's view, the Secretary could
take cognizance of an issue, even only incidental to the labor dispute,
provided the issue must be involved in the labor dispute itself or otherwise
submitted to him for resolution.
The Court of Appeals pointed out that the Secretary assumed jurisdiction
over the labor dispute upon Philcom's petition as a consequence of the strike
that PEU had declared and not because of the notices of strike that PEU filed
with the National Conciliation and Mediation Board (NCMB).
The Court of Appeals stated that the reason of the Secretary's assumption of
jurisdiction over the labor dispute was the staging of the strike.
Consequently, any issue regarding the strike is not merely incidental to the
labor dispute between PEU and Philcom, but also part of the labor dispute
itself. Thus, the Court of Appeals held that it was proper for the Secretary to
take cognizance of the issue on the legality of the strike.
The Court of Appeals also ruled that for an employee to claim an unfair labor
practice by the employer, the employee must show that the act charged as
unfair labor practice falls under Article 248 of the Labor Code. The Court of
Appeals held that the acts enumerated in Article 248 relate to the workers'
right to self-organization. The Court of Appeals stated that if the act
complained of has nothing to do with the acts enumerated in Article 248,
there is no unfair labor practice.
The Court of Appeals held that Philcom's acts, which PEU complained of as
unfair labor practices, were not in any way related to the workers' right to
self-organization under Article 248 of the Labor Code. The Court of Appeals
held that PEU's complaint constitutes an enumeration of mere grievances
which should have been threshed out through the grievance machinery or
voluntary arbitration outlined in the Collective Bargaining Agreement (CBA).
The Court of Appeals also held that even if by Philcom's acts, Philcom had
violated the provisions of the CBA, still those acts do not constitute unfair
labor practices under Article 248 of the Labor Code. The Court of Appeals
held that PEU failed to show that those violations were gross or that there
was flagrant or malicious refusal on the part of Philcom to comply with the
economic provisions of the CBA.
The Court of Appeals stated that as of 21 March 1989, as held in PAL vs.
NLRC,14 violations of CBAs will no longer be deemed unfair labor practices,
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except those gross in character. Violations of CBAs, except those gross in


character, are mere grievances resolvable through the appropriate grievance
machinery or voluntary arbitration as provided in the CBAs.
Hence, this petition.
The Issues
In assailing the Decision of the Court of Appeals, petitioner contends that:
1. The Honorable Court of Appeals has failed to faithfully adhere with
the decisions of the Supreme Court when it affirmed the
order/resolution of the Secretary of Labor denying the Union's
Manifestation/Motion to Strike Out Portions of & Attachments in
Philcom's Position Paper and including the issue of illegal strike
notwithstanding the absence of any petition to declare the strike
illegal.
2. The Honorable Court of Appeals has decided a question of substance
in a way not in accord with law and jurisprudence when it affirmed the
order/resolution of the Secretary of Labor dismissing the Union's
charges of unfair labor practices.
3. The Honorable Court of Appeals has departed from the edict of
applicable law and jurisprudence when it failed to issue such order
mandating/directing the issuance of a writ of execution directing the
Company to unconditionally accept back to work the Union officers and
members under the same terms and conditions prior to the strike and
as well as to pay their salaries/backwages and the monetary
equivalent of their other benefits from October 6, 1998 to date.15
The Ruling of the Court
The petition must fail.
PEU contends that the Secretary should not have taken cognizance of the
issue on the alleged illegal strike because it was not properly submitted to
the Secretary for resolution. PEU asserts that after Philcom submitted its
position paper where it raised the issue of the legality of the strike, PEU
immediately opposed the same by filing itsManifestation/Motion to Strike Out
Portions of and Attachments in Philcom's Position Paper. PEU asserts that it
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stated in its Manifestation/Motion that certain portions of Philcom's position


paper and some of its attachments were "irrelevant, immaterial and
impertinent to the issues assumed for resolution." Thus, PEU asserts that the
Court of Appeals should not have affirmed the Secretary's order denying
PEU's Manifestation/Motion.
PEU also contends that, contrary to the findings of the Court of Appeals, the
Secretary's assumption of jurisdiction over the labor dispute was based on
the two notices of strike that PEU filed with the NCMB. PEU asserts that only
the issues on unfair labor practice and bargaining deadlock should be
resolved in the present case.
PEU insists that to include the issue on the legality of the strike despite its
opposition would convert the case into a petition to declare the strike illegal.
PEU's contentions are untenable.
The Secretary properly took cognizance of the issue on the legality of the
strike. As the Court of Appeals correctly pointed out, since the very reason of
the Secretary's assumption of jurisdiction was PEU's declaration of the strike,
any issue regarding the strike is not merely incidental to, but is essentially
involved in, the labor dispute itself.
Article 263(g) of the Labor Code provides:
When, in his opinion, there exists a labor dispute causing or likely to
cause a strike or lockout in an industry indispensable to the national
interest, the Secretary of Labor and Employment may assume
jurisdiction over the dispute and decide it or certify the same to the
Commission for compulsory arbitration. Such assumption or
certification shall have the effect of automatically enjoining the
intended or impending strike or lockout as specified in the assumption
or certification order. If one has already taken place at the time of
assumption or certification, all striking or locked out employees shall
immediately return to work and the employer shall immediately
resume operations and readmit all workers under the same terms and
conditions prevailing before the strike or lockout. The Secretary of
Labor and Employment or the Commission may seek the assistance of
law enforcement agencies to ensure the compliance with this provision
as well as with such orders as he may issue to enforce the same.
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x x x x.
The powers granted to the Secretary under Article 263(g) of the Labor Code
have been characterized as an exercise of the police power of the State, with
the aim of promoting public good.16 When the Secretary exercises these
powers, he is granted "great breadth of discretion" in order to find a
solution to a labor dispute. The most obvious of these powers is the
automatic enjoining of an impending strike or lockout or its lifting if one has
already taken place.17
In this case, the Secretary assumed jurisdiction over the dispute because it
falls in an industry indispensable to the national interest. As noted by the
Secretary.
[T]he Company has been a vital part of the telecommunications
industry for 73 years. It is particularly noted for its expertise and
dominance in the area of international telecommunications. Thus, it
performs a vital role in providing critical services indispensable to the
national interest. It is for this very reason that this Office strongly
opines that any concerted action, particularly a prolonged work
stoppage is fraught with dire consequences. Surely, the on-going strike
will adversely affect not only the livelihood of workers and their
dependents, but also the company's suppliers and dealers, both in the
public and private sectors who depend on the company's facilities in
the day-to-day operations of their businesses and commercial
transactions. The operational viability of the company is likewise
adversely affected, especially its expansion program for which it has
incurred debts in the approximate amount of P2 Billion. Any prolonged
work stoppage will also bring about substantial losses in terms of lost
tax revenue for the government and would surely pose a serious set
back in the company's modernization program.
At this critical time when government is working to sustain the
economic gains already achieved, it is the paramount concern of this
Office to avert any unnecessary work stoppage and, if one has already
occurred, to minimize its deleterious effect on the workers, the
company, the industry and national economy as a whole.18
It is of no moment that PEU never acquiesced to the submission for
resolution of the issue on the legality of the strike. PEU cannot prevent
resolution of the legality of the strike by merely refusing to submit the issue
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for resolution. It is also immaterial that this issue, as PEU asserts, was not
properly submitted for resolution of the Secretary.
The authority of the Secretary to assume jurisdiction over a labor dispute
causing or likely to cause a strike or lockout in an industry indispensable to
national interest includes and extends to all questions and
controversies arising from such labor dispute. The power is plenary
and discretionary in nature to enable him to effectively and
efficiently dispose of the dispute.19
Besides, it was upon Philcom's petition that the Secretary immediately
assumed jurisdiction over the labor dispute on 19 November 1997.20 If
petitioner's notices of strike filed on 21 October and 4 November 1997 were
what prompted the assumption of jurisdiction, the Secretary would have
issued the assumption order as early as those dates.
Moreover, after an examination of the position paper21 Philcom submitted to
the Secretary, we see no reason to strike out those portions which PEU seek
to expunge from the records. A careful study of all the facts alleged, issues
raised, and arguments presented in the position paper leads us to hold that
the portions PEU seek to expunge are necessary in the resolution of the
present case.
On the documents attached to Philcom's position paper, except for Annexes
MM-2 to MM-22 inclusive22 which deal with the supposed consolidation of
Philippine Global Communications, Inc. and Philcom Corporation, we find the
other annexes relevant and material in the resolution of the issues that have
emerged in this case.
PEU also claims that Philcom has committed several unfair labor practices.
PEU asserts that there are "factual and evidentiary bases" for the charge of
unfair labor practices against Philcom.
On unfair labor practices of employers, Article 248 of the Labor Code
provides:
Unfair labor practices of employers. - It shall be unlawful for an
employer to commit any of the following unfair labor practice:
(a) To interfere with, restrain or coerce employees in the exercise of
their right to self-organization;
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(b) To require as a condition of employment that a person or an


employee shall not join a labor organization or shall withdraw from one
to which he belongs;
(c) To contract out services or functions being performed by union
members when such will interfere with, restrain or coerce employees in
the exercise of their rights to self-organization;
(d) To initiate, dominate, assist or otherwise interfere with the
formation or administration of any labor organization, including the
giving of financial or other support to it or its organizers or supporters;
(e) To discriminate in regard to wages, hours of work, and other terms
and conditions of employment in order to encourage or discourage
membership in any labor organization. x x x
(f) To dismiss, discharge, or otherwise prejudice or discriminate against
an employee for having given or being about to give testimony under
this Code;
(g) To violate the duty to bargain collectively as prescribed by this
Code;
(h) To pay negotiation or attorney's fees to the union or its officers or
agents as part of the settlement of any issue in collective bargaining or
any other dispute; or
(i) To violate a collective bargaining agreement.
Unfair labor practice refers to acts that violate the workers' right to organize.
The prohibited acts are related to the workers' right to self-organization and
to the observance of a CBA. Without that element, the acts, no matter how
unfair, are not unfair labor practices.23 The only exception is Article 248(f),
which in any case is not one of the acts specified in PEU's charge of unfair
labor practice.
A review of the acts complained of as unfair labor practices of Philcom
convinces us that they do not fall under any of the prohibited acts defined
and enumerated in Article 248 of the Labor Code. The issues of
misimplementation or non-implementation of employee benefits, nonpayment of overtime and other monetary claims, inadequate transportation
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allowance, water, and other facilities, are all a matter of implementation or


interpretation of the economic provisions of the CBA between Philcom and
PEU subject to the grievance procedure.
We find it pertinent to quote certain portions of the assailed Decision, thus
A reading of private respondent's justification for the acts complained
of would reveal that they were actually legitimate reasons and not in
anyway related to union busting. Hence, as to compelling employees to
render flexible labor and additional work without additional
compensation, it is the company's explanation that the employees
themselves voluntarily took on work pertaining to other assignments
but closely related to their job description when there was slack in the
business which caused them to be idle. This was the case of the
International Telephone Operators who tried telemarketing when they
found themselves with so much free time due to the slowdown in the
demand for international line services. With respect to the Senior
Combination Technician at the Cebu branch who was allegedly made to
do all around work, the same happened only once when the lineman
was absent and the lineman's duty was his ultimate concern.
Moreover, the new assignment of the technicians at CTSS who were
promoted to QCE were based on the job description of QCE, while
those of the other technicians were merely temporary due to the
promotion of several technicians to QCE (pars. 9-12, Philcom's Reply to
PEU's Position Paper; Annex "E", Petition; pp. 350-351, ibid.).
On the alleged misimplementation and/or non-implementation of
employees' benefits, such as shoe allowance, rainboots, raincoats, OIC
shift allowance, P450.00 monthly allowance, driving allowance,
motorcycle award and full-time physician, the company gave the
following explanation which this Court finds plausible, to wit:
16. The employees at CTSS were given One Thousand Pesos
(P1,000.00) cash or its equivalent in purchase orders because it
was their own demand that they be given the option to buy the
pair of leather boots they want. For the Cebu branch, the
employees themselves failed to include these benefits in the list
of their demands during the preparation of the budget for the
year 1997 despite the instruction given to them by the branch
manager. According to the employees, they were not aware that
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they were entitled to these benefits. They thought that because


they have been provided with two vans to get to their respective
assignments, these benefits are available only to collectors,
messengers and technicians in motorcycles.
17. The P450.00 monthly allowance was provided by the CBA to
be given to counter clerks. However, the position of counter
clerks had been abolished in accordance with the reorganization
plan undertaken by the company in April 1995, with the full
knowledge of the Union membership. As a result of the abolition
of the position of counter clerks, there was no more reason for
granting the subject allowance.
18. The company more than satisfied the provision in the CBA to
engage the services of a physician and provided adequate
medical services. Aside from a part time physician who reports
for duty everyday, the company has secured the services of
Prolab Diagnostics, which has complete medical facilities and
personnel, to serve the medical needs of the employees. x x x
19. The Union demands that a full-time physician to be assigned
at the Head Office. This practice, is not provided in the CBA and,
moreover is too costly to maintain. The medical services offered
by Prolab [D]iagnostics are even better and more comprehensive
than any full time physician can give. It places at the employees'
disposal numerous specialists in various fields of medicine. It is
beyond understanding why the Union would insist on having a
full-time physician when they could avail of better services from
Prolab Diagnostics.
(Philcom's Reply to PEU's Position Paper, pp.352, 354, ibid.)
On the issue of non-payment, discrimination and/or deprivation of
overtime, restday work, waiting/stand by time and staff meeting
allowance, suffice it to state that there is nothing on record to prove
the same. Petitioner did not present evidence substantial enough to
support its claim.
As to the alleged inadequate transportation allowance and facilities,
the company posits that:
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30. The transportation allowances given to the Dasmarinas and


Pinugay employees are more than adequate to defray their daily
transportation cost. Hence, there is absolutely no justification for
an increase in the said allowance. In fact, said employees at
Dasmarinas and Pinugay, who are only residing in areas near
their place of work, are more privileged as they receive
transportation expenses while the rest of the company workers
do not.
31. As to the demand for clean drinking water, the company has
installed sufficient and potable water inside the Head Office even
before the strike was staged by the Union. Any person who visits
the Makati Head Office can attest to this fact.
(Philcom's Reply to PEU's Position Paper, p. 357, ibid.)
Anent the allegation of PABX transfer and contractualization of PABX
service and position, these were done in anticipation of the company to
switch to an automatic PABX machine which requires no operator. This
cannot be treated as ULP since management is at liberty, absent any
malice on its part, to abolish positions which it deems no longer
necessary (Arrieta vs. National Labor Relations Commission, 279 SCRA
326, 332). Besides, at the time the company hired a temporary
employee to man the machine during daytime, the subject position
was vacant while the assumption of the function by the company guard
during nighttime was only for a brief period.
With respect to the perceived massive contractualization of the
company, said charge cannot be considered as ULP since the hiring of
contractual workers did not threaten the security of tenure of regular
employees or union members. That only 160 employees out of 400
employees in the company's payroll were considered rank and file does
not of itself indicate unfair labor practice since this is but a company
prerogative in connection with its business concerns.
Likewise, the offer or promotions to a few union members is neither
unlawful nor an economic inducement. These offers were made in
accordance with the legitimate need of the company for the services of
these employees to fill positions left vacant by either retirement or
resignation of other employees. Besides, a promotion is part of the
career growth of employees found competent in their work. Thus,
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in Bulletin Publishing Corporation vs. Sanchez (144 SCRA 628, 641),


the Supreme Court held that "(T)he promotion of employees to
managerial or executive positions rests upon the discretion of
management. Managerial positions are offices which can only be held
by persons who have the trust of the corporation and its officers. It is
the prerogative of management to promote any individual working
within the company to a higher position. It should not be inhibited or
prevented from doing so. A promotion which is manifestly beneficial to
an employee should not give rise to a gratuitous speculation that such
a promotion was made simply to deprive the union of the membership
of the promoted employee, who after all appears to have accepted his
promotion."
That the promotions were made near or around the time when CBA
negotiations were about to be held does not make the company's
action an unfair labor practice. As explained by the company, these
promotions were based on the availability of the position and the
qualification of the employees promoted (p. 6, Annex "4", Philcom's
Reply to PEU's Position Paper; p. 380, ibid.)
On the union's charge that management disallowed leave of union
officers and members to attend union seminar, this is belied by the
evidence submitted by the union itself. In a letter to PEU's President,
the company granted the leave of several union officers and members
to attend a seminar notwithstanding that its request to be given more
details about the affair was left unheeded by the union (Annex "Y",
PEU's Position Paper; p. 222, ibid.). Those who were denied leave were
urgently needed for the operation of the company.
On the ULP issue of disinformation scheme, surveillance and
interference with union affairs, these are mere allegations unsupported
by facts. The charge of "black propaganda" allegedly committed by the
company when it supposedly posted two (2) letters addressed to the
Union President is totally baseless. Petitioner presents no proof that it
was the company which was behind the incident. On the purported
disallowance of union members to observe the July 27, 1997 CBA
meeting, the company explained that it only allowed one (1) employee
from ITTO, instead of two (2), as it would adversely affect the operation
of the group. It also took into consideration the fact that ITTO members
represent only 20% of the union. Other union members from other
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departments of the company should have equal representation (Annex


"L", Position Paper for the Union; pp. 205-206, ibid.). As to the alleged
surveillance of the company guards during a union seminar, We find
the idea of sending guards to spy on a mere union seminar quite
preposterous. It is thus not likely for the company which can gain
nothing from it to waste its resources in such a scheme.
On the issuance of memorandum/notice to employees without giving
copy to union, change in work schedule at Traffic Records Section and
ITTO policies, the company has sufficiently rebutted the same, thus:
27. The Union also whines about the failure of the company to
furnish copies of memoranda or notices sent to employees and
change of work schedules at the Traffic Records Section and ITTO
policies. The CBA, however, does not obligate the Company to
give the Union a copy of each and every memorandum or notice
sent to employees. This would be unreasonable and impractical.
Neither did the Union demand that they be furnished copies of
the same. This is clearly a non-issue as copies of all memoranda
or notices issued by management are readily available upon
request by any employee or the Union.
28. Contrary to the allegations of the Union, the rationale and
mechanics for the abolishment of the midnight schedule at the
Traffic Record Services had been thoroughly and adequately
discussed with the Union's President, Robert Benosa, and the
staff of Traffic Record Services in the meeting held on May 9,
1997. The midnight services were abolished for purely economic
reasons. The company realized that the midnight work can be
handled in the morning without hampering normal operations. At
the same time, the company will be able to save on cost. For this
objective, the employees concerned agreed to create a manning
and shifting schedule starting at 6:00 a.m. up to 10:00 p.m., with
each employee rendering only eight hours of work every day
without violating any provision of the labor laws or the CBA.24
The Court has always respected a company's exercise of its prerogative to
devise means to improve its operations. Thus, we have held that
management is free to regulate, according to its own discretion and
judgment, all aspects of employment, including hiring, work assignments,
Elsa M. Caete|63 | P a g e
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supervision and transfer of employees, working methods, time, place and


manner of work.25
This is so because the law on unfair labor practices is not intended to deprive
employers of their fundamental right to prescribe and enforce such rules as
they honestly believe to be necessary to the proper, productive and
profitable operation of their business.26
Even assuming arguendo that Philcom had violated some provisions in the
CBA, there was no showing that the same was a flagrant or malicious refusal
to comply with its economic provisions. The law mandates that such
violations should not be treated as unfair labor practices.27
PEU also asserts that the Court of Appeals should have issued an order
directing the issuance of a writ of execution ordering Philcom to accept back
to work unconditionally the striking union officers and members under the
same terms and conditions prevailing before the strike. PEU asserts that the
union officers and members should be paid their salaries or backwages and
monetary equivalent of other benefits beginning 6 October 1998 when PEU
received a copy of the Secretary's 2 October 1998 return-to-work order.
PEU claims that even if the "issue of illegal strike can be included in the
assailed orders and that the union officers and members have been
terminated as a result of the alleged illegal strike, still, the Secretary has to
rule on the illegality of the strike and the liability of each striker." PEU asserts
that the union officers and members should first be accepted back to work
because a return-to-work order is immediately executory.28
We rule on the legality of the strike if only to put an end to this protracted
labor dispute. The facts necessary to resolve the legality of the strike are not
in dispute.
The strike and the strike activities that PEU had undertaken were patently
illegal for the following reasons:
1. Philcom is engaged in a vital industry protected by Presidential Decree No.
823 (PD 823), as amended by Presidential Decree No. 849, from strikes and
lockouts. PD 823, as amended, provides:
Sec. 1. It is the policy of the State to encourage free trade unionism
and free collective bargaining within the framework of compulsory and
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voluntary arbitration. Therefore, all forms of strikes, picketings and


lockouts are hereby strictly prohibited in vital industries, such as in
public utilities, including transportation andcommunications, x x x.
(Emphasis supplied)
Enumerating the industries considered as vital, Letter of Instruction No. 368
provides:
For the guidance of workers and employers, some of whom have been
led into filing notices of strikes and lockouts even in vital industries,
you are hereby instructed to consider the following as vital industries
and companies or firms under PD 823 as amended:
1. Public Utilities:
xxxx
B. Communications:
1) Wire or wireless telecommunications such as
telephone, telegraph, telex, and cable companies or
firms; (Emphasis supplied)
xxxx
It is therefore clear that the striking employees violated the no-strike policy
of the State in regard to vital industries.
2. The Secretary had already assumed jurisdiction over the dispute. Despite
the issuance of the return-to-work orders dated 19 November and
28 November 1997, the striking employees failed to return to work
and continued with their strike.
Regardless of their motives, or the validity of their claims, the striking
employees should have ceased or desisted from all acts that would
undermine the authority given the Secretary under Article 263(g) of the
Labor Code. They could not defy the return-to-work orders by citing Philcom's
alleged unfair labor practices to justify such defiance.29
PEU could not have validly anchored its defiance to the return-to-work orders
on the motion for reconsideration that it had filed on the assumption of
Elsa M. Caete|65 | P a g e
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jurisdiction order. A return-to-work order is immediately effective and


executory despite the filing of a motion for reconsideration. It must
be strictly complied with even during the pendency of any petition
questioning its validity.30
The records show that on 22 November 1997, Philcom published in
the Philippine Daily Inquirer a notice to striking employees to return to
work.31 These employees did not report back to work but continued their
mass action. In fact, they lifted their picket lines only on 22 December
1997.32 Philcom formally notified twice these employees to explain in writing
why they should not be dismissed for defying the return-to-work
order.33 Philcom held administrative hearings on these disciplinary
cases.34 Thereafter, Philcom dismissed these employees for abandonment of
work in defiance of the return-to-work order.35
A return-to-work order imposes a duty that must be discharged more than it
confers a right that may be waived. While the workers may choose not to
obey, they do so at the risk of severing their relationship with their
employer.36
The following provision of the Labor Code governs the effects of defying a
return-to-work order:
ART. 264. Prohibited activities. (a) x x x x
No strike or lockout shall be declared after assumption of
jurisdiction by the President or the Minister or after certification
or submission of the dispute to compulsory or voluntary arbitration or
during the pendency of cases involving the same grounds for the strike
or lockout x x x x
Any union officer who knowingly participates in illegal strike and any
worker or union officer who knowingly participates in the
commission of illegal acts during a strike may be declared to
have lost his employment status: 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. (Emphasis supplied)
A strike undertaken despite the Secretary's issuance of an assumption or
certification order becomes aprohibited activity, and thus, illegal, under
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Article 264(a) of the Labor Code. The union officers who knowingly
participate in the illegal strike are deemed to have lost their employment
status. The union members, including union officers, who commit specific
illegal acts or who knowingly defy a return-to-work order are also deemed to
have lost their employment status.37 Otherwise, the workers will simply
refuse to return to their work and cause a standstill in the company
operations while retaining the positions they refuse to discharge and
preventing management to fill up their positions.38
Hence, the failure of PEU's officers and members to comply immediately with
the return-to-work orders dated 19 November and 28 November 1997 cannot
be condoned. Defiance of the return-to-work orders of the Secretary
constitutes a valid ground for dismissal.39
3. PEU staged the strike using unlawful means and methods.
Even if the strike in the present case was not illegal per se, the strike
activities that PEU had undertaken, especially the establishment of human
barricades at all entrances to and egresses from the company premises and
the use of coercive methods to prevent company officials and other
personnel from leaving the company premises, were definitely illegal.40 PEU
is deemed to have admitted that its officers and members had committed
these illegal acts, as it never disputed Philcom's assertions of PEU's unlawful
strike activities in all the pleadings that PEU submitted to the Secretary and
to this Court.
PEU's picketing officers and members prohibited other tenants at the Philcom
building from entering and leaving the premises. Leonida S. Rabe, Country
Manager of Societe Internationale De Telecommunications
Aeronautiques (SITA), a tenant at the Philcom building, wrote two letters
addressed to PEU President Roberto B. Benosa. She told Benosa that PEU's
act of obstructing the free ingress to and egress from the company premises
"has badly disrupted normal operations of their organization."41
The right to strike, while constitutionally recognized, is not without legal
constrictions. Article 264(e) of the Labor Code, on prohibited activities,
provides:
No person engaged in picketing shall commit any act of violence,
coercion or intimidation or obstruct the free ingress to or egress from
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the employer's premises for lawful purposes, or obstruct public


thoroughfares.
The Labor Code is emphatic against the use of violence, coercion, and
intimidation during a strike and to this end prohibits the obstruction of free
passage to and from the employer's premises for lawful purposes. A
picketing labor union has no right to prevent employees of another company
from getting in and out of its rented premises, otherwise, it will be held liable
for damages for its acts against an innocent by-stander.42
The sanction provided in Article 264(a) is so severe that 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.43
By insisting on staging the prohibited strike and defiantly picketing Philcom's
premises to prevent the resumption of company operations, the striking
employees have forfeited their right to be readmitted.44
4. PEU declared the strike during the pendency of preventive mediation
proceedings at the NCMB.
On 17 November 1997, while a conciliation meeting was being held at the
NCMB in NCMB-NCR-NS 10-435-97, PEU went on strike. It should be noted
that in their meeting on 11 November 1997, both Philcom and PEU were
even "advised to maintain the status quo."45 Such disregard of the mediation
proceedings was a blatant violation of Section 6, Book V, Rule XXII of the
Omnibus Rules Implementing the Labor Code, which explicitly obliges the
parties to bargain collectively in good faith and prohibits them from impeding
or disrupting the proceedings.46 The relevant provision of the Implementing
Rules provides:
Section 6. Conciliation. x x x x
During the proceedings, the parties shall not do any act which may
disrupt or impede the early settlement of dispute. They are obliged, as
part of their duty, to bargain collectively in good faith, to participate
fully and promptly in the conciliation meetings called by the regional
branch of the Board. x x x x

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Article 264(a) of the Labor Code also considers it a prohibited activity to


declare a strike "during the pendency of cases involving the same grounds
for the same strike."
Lamentably, PEU defiantly proceeded with their strike during the pendency
of the conciliation proceedings.
5. PEU staged the strike in utter disregard of the grievance procedure
established in the CBA.
By PEU's own admission, "the Union's complaints to the management began
in June 1997 even before the start of the 1997 CBA renegotiations."47 Their
CBA expired on 30 June 1997.48 PEU could have just taken up their
grievances in their negotiations for the new CBA. This is what a Philcom
officer had suggested to the Dasmarias staff when the latter requested on
16 June 1997 for an increase in transportation allowance.49 In fact, when PEU
declared the strike, Philcom and PEU had already agreed on 37 items in their
negotiations for the new CBA.50
The bottom line is that PEU should have immediately resorted to the
grievance machinery provided for in the CBA.51 In disregarding this
procedure, the union leaders who knowingly participated in the strike have
acted unreasonably. The law cannot interpose its hand to protect them from
the consequences of their illegal acts.52
A strike declared on the basis of grievances which have not been submitted
to the grievance committee as stipulated in the CBA of the parties is
premature and illegal.53
Having held the strike illegal and having found that PEU's officers and
members have committed illegal acts during the strike, we hold that no writ
of execution should issue for the return to work of PEU officers who
participated in the illegal strike, and PEU members who committed illegal
acts or who defied the return-to-work orders that the Secretary issued on 19
November 1997 and 28 November 1997. The issue of who participated in the
illegal strike, committed illegal acts, or defied the return-to-work orders is a
question of fact that must be resolved in the appropriate proceedings before
the Secretary of Labor.
WHEREFORE, we DISMISS the petition and AFFIRM the Decision of the
Court of Appeals in CA-G.R. SP No. 53989, with the MODIFICATION that the
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Secretary of Labor is directed to determine who among the Philcom


Employees Union officers participated in the illegal strike, and who among
the union members committed illegal acts or defied the return-to-work
orders of 19 November 1997 and 28 November 1997. No pronouncement as
to costs.
SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila
EN BANC
G.R. No. L-25999

February 9, 1967

ASSOCIATED LABOR UNION, petitioner,


vs.
JUDGE AMADOR E. GOMEZ, JUDGE JOSE C. BORROMEO and SUPERIOR
GAS AND EQUIPMENT CO., OF CEBU, INC., respondents.
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Sino, Mendoza, Ruiz & Associates for petitioner.


Parades, Poblador, Cruz & Nazareno for respondents.
SANCHEZ, J.:
Following are the facts that spawned the present proceedings:
On January 1, 1965, Associated Labor Union1 and Superior Gas and
Equipment Co. of Cebu, Inc.,2 entered into a collective bargaining contract. It
was to expire on January 1, 1966. Prior to the contract's expiry, Union and
employer started negotiations for its renewal. Late in February, 1966, while
bargaining was in progress, 12 of Sugeco's employees resigned from the
Union. Negotiations were broken. On March 1, 1966, the Union wrote Sugeco.
There, request was made that unless the 12 resigned employees3 could
produce a clearance from the Union, they be not allowed in the meantime to
report for work. On the same day, Sugeco's attorney rejected the request.
The reasons given are that irreparable injury would ensue, that the
bargaining contract had lapsed, and that the Company could no longer
demand from its employees the requested clearance. Sugeco made it
understood that after the 12 men would have returned into the Union fold,
said company would then be "in a position to negotiate again for the renewal
of the collective bargaining contract." Also on the same day, March 1, the
Union wrote Sugeco, charged the latter with bargaining in bad faith, and its
supervisors with "campaigning for the resignation of members of this Union".
The Union there served notice "that unless the aforementioned unfair labor
practice acts will immediately be stopped and a collective bargaining
agreement be signed between your company and this union immediately
after receipt of this letter, this union will declare a strike against your
management and correspondingly establish picket lines in any place where
your business may be found". On March 3, 1966, counsel for Sugeco wrote
the Union stating that with the resignation of Union members aforesaid, the
Union was no longer the representative of the majority of the employees "for
purposes of negotiation and recognition".
On March 4, the Union struck, picketed the Basak (Mandawe) plant of
Sugeco.
The next day, March 5, 1966, Sugeco went to the Court of First Instance of
Cebu (Case No. R-9221, entitled "Superior Gas and Equipment Co. of Cebu,
Inc., petitioner, vs. Associated Labor Union, respondent"), praying that the
Union be restrained from alleged illegal picketing activities at its Basak plant,
and also from, picketing Sugeco's offices at Juan Luna street, Cebu City, and
its other offices located elsewhere in the Philippines.
On the same date, March 5, 1966, upon a bond of P5,000.00, respondent
Judge Amador E. Gomez, purportedly upon the authority of the Rules of
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Court,4 issued ex parte the writ of preliminary injunction prayed for. The
Union moved to reconsider. Ground, inter alia, is that the court of first
instance had no jurisdiction over the subject-matter unfair labor practice.
It was the turn of the other respondent, Judge Jose C. Borromeo, to refuse
reconsideration.
Meanwhile, on March 5, 1966 on the same day the Court of First Instance
complaint was filed by Sugeco against the Union the latter lodged with the
Court of Industrial Relations (CIR, for short) a charge for unfair labor practice
against Sugeco, its general manager, Concepelon Y. Lua, and its two
supervisors, Nestor Yu and Mariano Nulla. The Union there averred that said
respondents coerced and exerted pressure upon the union members to
resign, as they did resign, from the Union; and that such resignations were
seized upon by Sugeco to refuse further negotiations with the Union.
Offshoot is the complaint for unfair labor practice registered in the CIR on
April 29, 1966 by its Acting Prosecutor.5
On May 9, 1966, the Union came to this Court on certiorari and prohibition.
The Union here prays that respondent judges of the Court of First Instance of
Cebu be declared without jurisdiction over the subject matter of the petition
in Civil Case No. R-9221 aforesaid; that the writ of preliminary injunction
therein issued be annulled; and that said judges be directed to dismiss said
case. The Union also asks that pendente lite the respondent judges be
stopped from further proceeding with the case just adverted to.
This Court on May 16, 1966, issued the solicited cease-and-desist
order.1wph1.t
The quintessence of this case is jurisdiction.
First, we go to the background facts. We take stock of Sugeco's petition
against the Union in the Court of First Instance of Cebu (Case No. R-9221).
Read as it should be, Sugeco in paragraph 10 thereof charges the Union with
"coercing the resigned employees to rejoin" the same. And this, obviously to
neutralize the Union claim that Sugeco was coercing and cajoling its
members to separate therefrom.6
This charge and countercharge require us to focus attention on the Industrial
Peace Act.7 Section 4(a) and (b) thereof recite, as follows:
(a) It shall be unfair labor practice for an employer:
(1) To interfere with, restrain or coerce employees in the exercise of
their rights guaranteed in section three;
xxx

xxx

xxx
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(b) It shall be unfair labor practice for a labor organization or its


agents:
(1) To restrain or coerce employees in the exercise of their rights under
section three ....
And Section 3 referred to in Section 4(a) and (b) provides:
... Employees shall have the right to self-organization and to form, join
or assist labor organizations of their own choosing for the purpose of
collective bargaining through representatives of their own choosing
and to engage in concerted activities for the purpose of collective
bargaining and other mutual aid or protection. ....
The broad sweep of the law suggests that the coercion or cajolery of
employees heretofore described, by management or union, is unfair labor
practice.8 Therefore, the alleged act of coercing or instigating union
members to resign therefrom is clearly within the coverage of the
prescription. It is aimed at crippling the Union, throwing it off balance,
destroying its bargaining authority. It is an attack against the Magna Carta of
Labor. By the same token, the charge levelled by Sugeco against the Union
that the latter "is coercing the resigned employees to rejoin the Union" is no
less an unfair labor practice.
Jurisdiction then is exclusively vested in the Court of Industrial Relations. For,
explicit in Section 5(a) of the Industrial Peace Act is the precept that
The Court shall have jurisdiction over the prevention of unfair labor
practices and is empowered to prevent any person from engaging in
any unfair labor practice. This power shall be exclusive and shall not be
affected by any other means of adjustment or prevention that has
been or may be established by an agreement, code, law or otherwise.
[Emphasis supplied]
Nor will Sugeco's averment below that it suffers damages, by reason of the
strike, work to defeat the CIR's jurisdiction to hear the unfair labor practice
charge. Reason for this is that the right to damages "would still have to
depend on the evidence in the unfair labor practice case" in the CIR.9 To
hold otherwise is to sanction split jurisdiction which is obnoxious to the
orderly administration of justice.10
The stance that the ULP case initiated by the Union in the CIR was an
afterthought, will not carry the day for Sugeco. That case was filed on the
very same day Sugeco went to the Court of First Instance which, anyway,
is without jurisdiction over the subject-matter. The Union struck precisely
because of the unfair labor practice allegedly indulged in by Sugeco. So that,
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the ULP case was not calculated merely to divest the Cebu court of first
instance of jurisdiction which it did not possess.11
A rule buttressed upon statute and reason that frequently reiterated in
jurisprudence is that labor cases involving unfair labor practice are within
the exclusive jurisdiction of the ClR. By now, this rule has ripened into
dogma. It thus commands adherence not breach.12 This Court once pointedly
remarked that "[t]he policy of social justice guaranteed by the Constitution
demands that when cases appear to involve labor disputes courts should
take care in the exercise of their prerogatives and discretion".13
The Court of First Instance of Cebu, we rule, is without jurisdiction over the
subject-matter of Case No. R-9221. Its judges, therefore, did not have the
authority to provide for an ancillary remedy in that case. Hence, the
injunction below complained of was issued coram non judice. It is void.
For the reasons given:
(1) the petition herein for a writ of certiorari and prohibition is hereby
granted, and the writ of preliminary injunction we issued on May 13, 1966 is
declared permanent;
(2) the writ of preliminary injunction issued by the Court of First Instance of
Cebu in Case No. L-9221, entitled "Superior Gas and Equipment Co. of Cebu,
Inc., petitioner, vs. Associated Labor Union, respondent" is hereby declared
null and void; and
(3) the respondent judges, or whoever shall take their place, are hereby
directed to dismiss the said Case No. L-9221.
Costs against respondent Superior Gas and Equipment Co. of Cebu, Inc. So
ordered.

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FIRST DIVISION

MA. SOCORRO MANDAPAT,

G.R. No. 180285

Petitioner,

Present:

- versus -

CORONA, C.J.,
Chairperson,
VELASCO, JR.,
LEONARDO-DE CASTRO,
DEL CASTILLO, and
PEREZ, JJ.

ADD
FORCE
PERSONNEL
SERVICES,
INC. and COURT
OF APPEALS,

Promulgated:

Respondents.

July 6, 2010

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

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DECISION

PEREZ, J.:

Before us is a Petition for Review on Certiorari under Rule 45 of the


Rules of Court, seeking to reverse and set aside the 27 July 2007
Decision[1] and the 17 October 2007 Resolution of the Court of Appeals in CAG.R. SP No. 98868.

The factual premise of the case follows

On 15 September 2003, petitioner Ma. Socorro Mandapat was hired as


Sales and Marketing Manager for respondent Add Force Personnel Services,
Inc. As detailed in her appointment letter, her duties include negotiation and
consummation of contracts with clients who wanted to avail of respondents
services. She reported directly to the Chief Executive Officer (CEO), Colwyn
Ron C. Longstaff (Longstaff).[2]

Respondent claims that during her five-month stint as sales manager,


petitioner failed to close a single deal or contract with any client. In addition,
petitioner issued several proposals to clients which were either grossly
disadvantageous to respondent or disregarded the clients budget
ceiling. Petitioner also sent out several communications to clients containing
erroneous data and computations; submitted fictitious daily activity reports
and reimbursement slips; and consistently failed to submit her reports, such
as the daily activity report, expense report, weekly sales call plan and
internet-based calendar system on time.[3]

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These infractions were contained in a show-cause notice sent to


petitioner on 23 February 2004, directing her to explain why she should not
be disciplined for gross and habitual neglect of duties and willful breach of
trust. Petitioner was also preventively suspended and was asked to turn over
pending tasks and to leave the office premises. We quote the pertinent
portion of the memorandum:

xxxx

Please remember that as Sales Manager and head of the Sales


Department, the company demands from you a disciplined
approach on the implementation of the sales plans of the
company as well as ability to lead your people by
example. However, from Managements evaluation of your
performance these last five (5) months, you have not only failed
to set a good example to your subordinates but you have, in fact,
been the first one to violate company rules and procedures.

On account of the sensitivity of the position you currently hold,


please be informed that Management has decided to put you on
PREVENTIVE SUSPENSION during the course of the investigation
of this matter.Accordingly, you are requested to immediately
turnover to Ms. Abigail E. Villavert all of your pending tasks and,
thereafter, leave the office premises.

For your information and appropriate action.

From:

MARIA CRISTINA S. SAMSON


Corporate Counsel
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Approved by:

JACQUES A. DUPASQUIER
Chairman

Accompanied by her letter in response to the show-cause


memorandum, petitioner tendered her resignation dated 25 February 2004
supposedly in protest of the preventive suspensionmeted on her. [4]

On 15 March 2004, petitioner filed a complaint for constructive dismissal with


the labor arbiter.

In her position paper, petitioner alleged that she was constructively


dismissed, as indicated by the following actions of respondent first, she was
illegally placed on preventive suspension; second, her access to the internet
was cut off; and third, she was pressured by respondent into resigning in
exchange for payment of separation pay.[5]

Petitioner also questioned as illegal her preventive suspension because she


did not pose any danger to the lives of respondents officers, as well as its
properties.[6]

Petitioner denied that she was negligent and proffered that she faithfully and
painstakingly performed her duties as sales manager. She faulted Longstaff
for his indecisiveness and the lack of support personnel and staff for the
sales department.[7]
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Respondent insisted that petitioner was not dismissed, that instead,


she tendered her resignation. Hence, the claim for reinstatement had no
basis. Respondent countered that petitioner was properly placed on
preventive suspension because of the risk she posed on the property and
business of respondent.[8]

On 30 September 2005, the labor arbiter rendered judgment [9] finding


petitioner to have been illegally and constructively dismissed, thus:

WHEREFORE, premises considered, judgment is hereby


entered finding that complainant was illegally and constructively
dismissed on 2/23/04 thus, ORDERING:

1)
Respondent company ADD Force Personnel
Services, Inc. to pay her full backwages from date illegally
dismissed on 6/23/04 until actual payment and/or finality of this
decision, which as of date amounts to basic P1,311,360.00
(P68,300.00 x 19.2 months), 13 th month pay of P109,280.00, and
the combined amounts of her leaves (VL & SL) of P107,913.68
(30 days/year x P2,276.66/day x 1.58 years);

2)
Respondent company ADD Force Personnel
Services, Inc., in lieu of complainants reinstatement, to pay her
separation pay of one (1) month per year of service/putative
service reckoned from 09/15/03 until finality of this decision or
actual payment which as of date, amounts to P136,600.00
(P68,300.00 x 2 years);

3)
Respondents ADD Force Personnel Services, Inc.,
JACQUES A. DUPASQUIER (Chairman), COLWYN RON C.
LONGSTAFF (CEO), ATTY. CRISTINA SAMSON (Corporate Counsel),
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to pay her in solidomoral damages


exemplary damages of P100,000.00;

of

P200,000.00

and

4)
Respondent ADD Force Personnel Services, Inc. to
pay her proportionate 13th month pay (Jan. to 02/23/04), last
months salary (February, 01-23, 2003) and reimbursements
P2,000.00;

5)
Respondent ADD Force Personnel Services, Inc. to
pay her 10% of the total award as attorneys fees.[10]

The labor arbiter found that petitioner was illegally suspended without
basis. The charges of gross and habitual neglect of duties, as well as the loss
of trust and confidence were not substantiated.Thus, the labor arbiter
concluded that petitioner was constructively dismissed by respondent.[11]

The National Labor Relations Commission (NLRC) [12] affirmed with


modification the findings of the labor arbiter. The NLRC deleted the award of
moral and exemplary damages for lack of sufficient basis. A motion for
reconsideration was filed by respondent but it was denied for lack of merit.

On 21 June 2007, respondent filed a manifestation and motion stating that


the NLRC had issued a writ of execution for the amount of money
claims. Unable to satisfy these claims, the sheriff garnished the bank
accounts of respondent.

On 27 July 2007, the Court of Appeals, to which the case was elevated,
enjoined the execution of the NLRC decision and subsequently reversed its
decision, as well as that of the labor arbiters.
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The dispositive portion provides:

WHEREFORE, the petition for certiorari is GRANTED. The Decision


of the National Labor Relations Commission dated 27 November
2006 affirming the Labor Arbiters decision; its Resolution, dated
28
February
2007,
denying
petitioners
motion
for
reconsideration; and the Decision of the Labor Arbiter, dated 30
September 2005, are SET ASIDE. Ma. Socorro Mandapats
Complaint for illegal dismissal is DISMISSED.[13]

The Court of Appeals ruled that petitioner was not constructively dismissed
but that the latter chose to resign from her job. Petitioners bare allegation
that she was coerced into resigning was not given credence by the appellate
court. With respect to the allegation of illegal suspension, the Court of
Appeals upheld the exercise by respondent of its management prerogative in
suspending petitioner pending investigation for a perceived violation of
company rules.

Furthermore, the appellate court declared that the issue of preventive


suspension had been rendered moot by petitioners resignation.[14]

Petitioner moved for reconsideration but it was denied in a Resolution issued


on 17 October 2007.[15]

The principal issue to be resolved in the instant petition is whether petitioner


was constructively dismissed.

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Constructive dismissal exists when an act of clear discrimination, insensibility


or disdain by an employer has become so unbearable to the employee
leaving him with no option but to forego with his continued employment.[16]

Upon perusal of the records of this case, we find no evidence to


support discrimination which led to constructive dismissal.

Petitioner reiterates that she was constructively dismissed. She harps


on the alleged pattern of harassment committed by respondent as
tantamount to constructive dismissal, such as, illegally placing her under
preventive suspension, the disconnection of her internet account, and the
pressure exerted by respondent to force her to resign.[17]

Petitioner claims that the preventive suspension meted upon her is


illegal for being indefinite, as the duration of her suspension was not stated
in the companys memorandum.

On the other hand, respondent employer argues that petitioners


preventive suspension for one day can hardly be considered indefinite, given
the fact that petitioner immediately resigned one day after the suspension.

We find that there was no act of discrimination committed against


petitioner that would render her employment unbearable.

Preventive suspension may be legally imposed against an employee


whose alleged violation is the subject of an investigation. The purpose of his
suspension is to prevent him from causing harm or injury to the company as
well as to his fellow employees.

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The pertinent rules dealing with preventive suspension are found in


Section 8 and Section 9 of Rule XXIII, Book V of the Omnibus Rules
Implementing the Labor Code, as amended by Department Order No. 9,
Series of 1997, which read as follows:

Section 8. Preventive suspension. The employer may place


the worker concerned under preventive suspension only if his
continued employment poses a serious and imminent threat to
the life or property of the employer or of his co-workers.

Section 9. Period of suspension. No preventive suspension


shall last longer than thirty (30) days. The employer shall
thereafter reinstate the worker in his former or in a substantially
equivalent position or the employer may extend the period of
suspension provided that during the period of extension, he pays
the wages and other benefits due to the worker. In such case, the
worker shall not be bound to reimburse the amount paid to him
during the extension if the employer decides, after completion of
the hearing, to dismiss the worker.

When preventive suspension exceeds the maximum period allowed


without reinstating the employee either by actual or payroll
reinstatement[18] or when preventive suspension is for indefinite period,
[19]
only then will constructive dismissal set in.

While no period was mentioned in the show-cause memorandum, it


was wrong for petitioner to infer that her suspension was for an indefinite
period. It must be pointed out that the inclusion of the phrase during the
course of investigation would lead to a reasonable and logical presumption
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that said suspension in fact has a duration which could very well be not more
than 30 days as mandated by law. And, as the Court of Appeals correctly
observed, the suspension has been rendered moot by petitioners resignation
tendered a day after the suspension was made effective.

Petitioner contests the grounds for her suspension as she denies


posing a danger on the lives of the officers or employees of respondent or of
their properties. Petitioner adds that she was not in a position to bind
respondent to any contract, therefore, she could not and would not be able
to sabotage the operations of respondent.[20] Upon the other hand,
respondent asserts that preventive suspension was necessary in order to
protect the assets and operations of the company pending investigation of
the alleged infractions committed by the employee concerned.[21]

Respondent is correct. Indeed, as sales manager, petitioner had the power


and authority to enter into contracts that would bind respondent, regardless
of whether these contracts would prove to be beneficial or prejudicial to the
interest of respondent. Respondent has every right to protect its assets and
operations pending investigation of petitioner.

Neither could we consider the acts of disconnection of computer and


internet access privileges as harassment. Respondent clearly explained that
the cessation of her internet and network privileges were but a consequence
of the investigation against her and not for the purpose of harassment.
[22]
The Court of Appeals gave merit to respondents explanation and held,
thus:

x x x while her suspension, cessation of internet privileges, and


exclusion from local network access were but a consequence of
the investigation against her, and were intended to prevent her
from having further access to the companys network-based
documents and forms.[23]
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The acts respondent complains about are just measures enforced by


respondent to protect itself while the investigation was ongoing.

Petitioner claims that Longstaff forced her to resign by baiting her with
the promise of separation pay;[24] but respondent maintains that there was
nothing illegal in giving petitioner the option to either resign or be separated
for a just cause.[25]

We agree with the Court of Appeals that there was no coercion


employed on petitioner. The appellate court made the following observation:

Unfortunately, however, before the investigation could


proceed to the second step of the termination process into a
hearing or conference, Mandapat chose to resign from her
job. Mandapats bare allegation that she was coerced into
resigning can hardly be given credence in the absence of clear
evidence proving the same. No doubt, Mandapat read the writing
on the wall, knew that she would be fired for her transgressions,
and beat the company to it by resigning. Indeed, by the
disrespectful tenor of her memorandum, Mandapat practically
indicated that she was no longer interested in continuing cordial
relations, much less gainful employment with Add Force.[26]

Mere allegations of threat or force do not constitute evidence to


support a finding of forced resignation. In order for intimidation to vitiate
consent, the following requisites must concur: (1) that the intimidation
caused the consent to be given; (2) that the threatened act be unjust or
unlawful; (3) that the threat be real or serious, there being evident
disproportion between the evil and the resistance which all men can offer,
leading to the choice of doing the act which is forced on the person to do as
the lesser evil; and (4) that it produces a well-grounded fear from the fact

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that the person from whom it comes has the necessary means or ability to
inflict the threatened injury to his person or property.[27]

None of these requisites was proven by petitioner. No demand was


made on petitioner to resign. At most, she was merely given the option to
either resign or face disciplinary investigation, which respondent had every
right to conduct in light of the numerous infractions committed by
petitioner. There is nothing irregular in providing an option to
petitioner. Ultimately, the final decision on whether to resign or face
disciplinary action rests on petitioner alone.

All told, the instances of harassment alleged by petitioner appear to be


more apparent than real. We find no reason to disturb the conclusion of the
Court of Appeals that petitioner resigned and was not constructively
dismissed.

WHEREFORE, the petition is DENIED. The 27 July 2007 Decision of


the Court of Appeals in CA-G.R. SP No. 98868 is AFFIRMED.

SO ORDERED.

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Republic of the Philippines


SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 175369

February 27, 2013

TEGIMENTA CHEMICAL PHILS. and VIVIAN ROSE D.


GARCIA, Petitioners,
vs.
MARY ANNE OCO, Respondent.
DECISION
SERENO, J.:
Before this Court is a Rule 45 Petition, seeking a review of the 24 April 2006
Court of Appeals (CA) Resolution in CA-G.R. SP No. 87706.1 The CA reversed
its 3 January 2006 Decision and, in effect, affirmed the 30 July2 and 24
September 20043 Resolutions of the National Labor Relations Commission
(NLRC) in NLRC CA No. 036684-03 and the 30 May 2003 Decision4 in NLRC
NCR -Case No. 06-03760-2002 of the labor arbiter (LA). The courts a
quo similarly found that petitioner had illegally dismissed respondent Mary
Anne Oco (Oco ).
The antecedent facts are as follows:5
Starting 5 September 2001, respondent worked as a clerk, and later on as a
material controller, for petitioner Tegimenta Chemical Philippines,
Incorporated (Tegimenta), a company owned by petitioner Vivian Rose D.
Garcia (Garcia).
By reason of her pregnancy, Oco incurred numerous instances of absence
and tardiness from March to April 2002. Garcia subsequently advised her to
take a vacation, which the latter did from 1 to 15 May 2002.
On her return, Oco immediately worked for the next four working days of
May. However, on 21 May 2002, Garcia allegedly told her to no longer report
to the office effective that day. Hence, respondent no longer went to work.
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She nevertheless called petitioner at the end of the month, but was informed
that she had no more job to do.
Immediately thereafter, on 3 June 2002, respondent filed a Complaint for
illegal dismissal and prayed for reinstatement and back wages before the LA.
Later on, she amended her Complaint by asking for separation pay instead of
reinstatement.
In her Position Paper,6 Oco maintained that petitioner verbally dismissed her
without any valid cause and without due process. To bolster her story,
respondent adduced that Tegimenta hired new employees to replace her. In
their defense, petitioners countered that she had abandoned her job by
being continuously absent without official leave (AWOL). They further
narrated that they could not possibly terminate her services, because she
still had to settle her accountabilities.7
The LA disbelieved the narration of petitioners and thus ruled in favor of
respondent. The arbiter deduced that the employer only wanted to "make it
appear that the complainant was not dismissed from employment, as she
could not prove it with any Memorandum issued to that effect and yet, they
also maintain that complainant was AWOL."8The LA further observed that
petitioners did not deny the main claim of respondent that she had simply
been told not to report for work anymore.
Aggrieved, petitioners appealed to the NLRC. They assailed the ruling of the
LA for having been issued based not on solid proof, but on mere allegations
of the employee.9 They advanced further that Oco had abandoned her
employment, given that she claimed separation pay instead of
reinstatement.
The NLRC reviewed the records of the case and found that the documentary
evidence coincided with the allegations of Oco.10
Consequently, it affirmed her claim that Garcia, without advancing any
reason and without giving any written notice, had categorically told her not
to work for Tegimenta anymore. Accordingly, the NLRC sustained the
illegality of respondents dismissal.11
On Motion for Reconsideration, the NLRC still affirmed the LAs Decision in
toto.12 Thus, petitioners pursued their action before the CA via a Rule 65
Petition.
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Alleging grave abuse of discretion amounting to lack or excess of jurisdiction,


petitioners again assailed the factual determinations of the LA and the NLRC.
In doing so, they attacked Ocos allegations for being inconsistent with the
evidence on record.
Petitioners reiterated the following before the CA: (1) the payroll sheets from
May to August 2002 belied the claim of Oco that Tegimenta had hired new
employees to replace her; (2) the time cards showing respondents
attendance in the office on 21 May 2002 negated the story that Garcia had
verbally instructed her not to report for work starting from the said date; and
(3) the Complaint that Oco filed before the LA, stating that she was fired on 3
June 2002, contradicted her allegation in her Position Paper that she was
ultimately terminated on 30 May 2002 a discrepancy of three days.13 The
employer also highlighted the marginal notation on the 16 to 30 June 2002
payroll sheet, which indicated that the company considered respondent "on
leave."
Appreciating these inconsistencies, together with the marginal notes in the
payroll sheet, the CA overturned the courts a quo and pronounced that no
actual dismissal transpired; rather, Oco was merely on AWOL.
Subsequently, respondent sought reconsideration. She insisted that
petitioners actually terminated her services, and that they failed to discharge
their burden to prove that it was she who had abandoned work by being on
AWOL.
This time around, the CA reversed its earlier ruling.14 Albeit belatedly, the CA
realized that (1) the alleged hiring of new employees, (2) the presence of
Oco in the office on the day of her termination, and (3) the three-day
discrepancy between the date of her dismissal, stated in her Complaint
before the LA and that in her Position Paper were all immaterial to the
threshold question of whether she abandoned her work or was illegally
dismissed.
Proceeding therefore with the main issue, the CA debunked petitioners
insistence that Oco abandoned her employment by being on AWOL. Firstly, it
noted that she reported for work right after her vacation, an act that
indicated her intention to resume her employment. In this light, petitioners
failed to prove that she had intended to abandon her work. The appellate
court held:15
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A deeper study of the records show that Tegimenta failed to adduce proof of
any overt act of Oco that clearly and unequivocably showed her
intention to abandoned her work when she allegedly absented herself
without leave. The absences incurred by Oco do not indicate that she already
abandoned her work, especially considering that Oco reported for
work after the agreed dates of her vacation leave, and she
subsequently filed an illegal dismissal case against Tegimenta. (Emphasis
supplied).
Secondly, the CA rejected the payroll sheets as proof that Oco was on AWOL.
It held that the companys marginal notes reflecting that she was "on leave"
had no supporting attachments. It even construed the notations as
incompetent evidence because, despite her absence, the payroll sheets for
July 2002 onwards had no notations at all that she was "on leave."16
Thirdly, the CA dismissed petitioners argument that Oco had effectively
abandoned her work and waived her claim for back wages when she
changed her prayer from reinstatement to separation pay. The appellate
court simply explained that opting for separation pay, in lieu of
reinstatement, could not support the allegation that Oco abandoned her
work; and that the relief for separation pay did not preclude the grant of
back ages, as these two awards were twin remedies available to an illegally
dismissed employee.
Completely dissatisfied with the reversal of their fortune, petitioners implore
this Court (1) to discredit the allegation of Oco that she had in fact been
dismissed by them and (2) to make a finding that she abandoned her work
by being on AWOL.
RULING OF THE COURT
The Factual Determination of the Employees Dismissal
Prefatorily, the inquiry into whether Garcia verbally fired Oco and whether
the employee abandoned her job are factual determinations generally
beyond the jurisdiction of this Court;17 and in addition to the weakness of
petitioners case, all the courts below consistently affirmed the certainty of
the employees dismissal by the employer.18
An established doctrine in labor cases is that factual questions are for labor
tribunals to resolve. Their consistent findings are binding and conclusive and
Elsa M. Caete|90 | P a g e
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will normally not be disturbed, since this Court is not a trier of


facts.19Therefore, on the basis of these circumstances alone, the appeal
before us already deserves scant consideration.
Nevertheless, petitioners adamantly try to persuade this Court to believe
their narration that they did not dismiss Oco. To prove their version of the
story, they poke holes in her narration by harping on her allegedly false
claim that Tegimenta hired replacements and by faulting her for rendering
work on the very day that her services were supposedly terminated.
Unfortunately, these purported defects in her narration cannot carry the day
for petitioners.
According to the CA, the hiring of new employees and the presence of Oco
on the day of her termination were all immaterial to resolving the issue of
whether she was on AWOL or was illegally dismissed. We find this
appreciation to be correct. Courts consider the evidence as material if it
refers to the be-all and end-all of a petitioners cause.20 Here, none of the
loopholes can resolve the case, since it is expected that dismissals may
occur even if no prior replacements were hired, and an employer can indeed
attempt to terminate employees on any day that they come in for work.
Petitioners also make a big fuss about the differing termination dates that
Oco stated in her Complaint (3 June 2002) and her Position Paper (30 May
2002). But in Prieto v. NLRC,21 we held that employees who are not assisted
by lawyers when they file a complaint with the LA may commit a slight error
that is forgivable if rectified later on.
Here, Oco only had one inadvertence when she filled out the Complaint in
template form. She also stated in all her subsequent pleadings before the LA,
the NLRC, the CA and this Court that she was dismissed on 30 May 2002. On
this point, we similarly rule by regarding the inaccuracy as an error that is
insufficient to destroy her case.
Most notably, the LA observed that the employers "did not deny the claims
of complainant [Oco] that she was simply told not to work."22 As in Solas v.
Power & Telephone Supply Phils. Inc.,23 this silence constitutes an admission
that fortifies the truth of the employees narration. Section 32, Rule 130 of
the Rules Court, provides:
An act or declaration made in the presence and within the hearing or
observation of a party who does or says nothing when the act or declaration
Elsa M. Caete|91 | P a g e
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is such as naturally to call for action or comment if not true, and when proper
and possible for him to do so, may be given in evidence against him.
Considering this rule of evidence, together with the immaterial
discrepancies, this Court thus rules against wholly invalidating the findings of
the courts a quo.
The Employers Defense of Absence without Official Leave
After unsuccessfully assailing the narration of the employee, petitioners
argue that Oco abandoned her job by being on AWOL. As bases for this
affirmative defense, they highlight her previous instances of absence and
tardiness. Then, they emphasize the marginal notes in the 16 to 30 Jun 2002
payroll, which showed that she was on leave. Finally, they equate the
employees act of asking for separation pay instead of reinstatement as an
act of abandonment.
The bases cited by petitioners are bereft of merit.
First, the nonappearance of Oco at work was already accepted by the
company as having resulted from complications in her pregnancy. In fact,
Garcia herself offered respondent a vacation leave. Therefore, given that the
absences of the latter were grounded on justifiable reasons, these absences
cannot serve as the antecedent to the conclusion that she had already
abandoned her job. 24
For abandonment to exist, two factors must be present: (1) the failure to
report for work or absence without a valid or justifiable reason; and (2) a
clear intention to sever the employer-employee relationship, with the second
element as the more determinative factor being manifested by some overt
acts.25
The mere absence of an employee is not sufficient to constitute
abandonment.26 As an employer, Tegimenta has the burden of proof to show
the deliberate and unjustified refusal of the employee to resume the latters
employment without any intention of returning.27
Here, Tegimenta failed to discharge its burden of proving that Oco desired to
leave her job. The courts a quouniformly found that she had continuously
reported for work right after her vacation, and that her office attendance was
simply cut off when she was categorically told not to report anymore. These
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courts even noted that she had also called up the office to follow up her
status; and when informed of her definite termination, she lost no time in
filing a case for illegal dismissal. Evidently, her actions did not constitute
abandonment and instead implied her continued interest to stay employed.
Second, the marginal notes in the 16 to 30 June 2002 payroll showing that
she was on leave are dubious. For one, the CA dutifully detected that none of
the succeeding payroll sheets indicated that Oco was considered by the
company as merely AWOL. Hence, it becomes questionable whether there is
regularity in making simple notations as Tegimentas reference in considering
the status of an employee. Therefore, we hold that the marginal notations in
a single payroll sheet are not competent proofs to back up petitioners main
defense.
This Court also rejects the invocation by petitioners of the bestevidence
rule.1wphi1 According to them, the payroll sheet, and not the mere
allegation of Oco, is the best evidence that they did not terminate her.
However, petitioners seem to miss the whole import of the bestevidence
rule. This rule is used to compel the production of the original document, if
the subject of the inquiry is the content of the document itself.28 The rule
provides that the court shall not receive any evidence that is merely
substitutionary in nature, such as a photocopy, as long as the original
evidence of that document can be had.29
Based on the explanation above, the best-evidence rule has no application to
this case. The subject of the inquiry is not the payroll sheet of Tegimenta
rather, the thrust of this case is the abundance of evidence present to prove
the allegation that Oco abandoned her job by being on AWOL. Consequently,
the employer cannot be logically stumped by a payroll sheet, but must be
able to submit testimonial and other pieces of documentary evidence like
leave forms, office memos, warning letters and notices to be able to prove
that the employee abandoned her work.
Finally, petitioners posit that Ocos act of replacing the prayer for
reinstatement with that for separation pay implied that respondent
abandoned her employment.
Abandonment is a matter of intention and cannot lightly be inferred or legally
presumed from certain equivocal acts.30 For abandonment to be appreciated,
there must be a "clear, willful, deliberate, and unjustified refusal of the
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employee to resume employment."31 Here, the mere fact that Oco asked for
separation pay, after she was told to no longer report for work, does not
reflect her intention to leave her job. She is merely exercising her option
under Article 279 of the Labor Code, which entitles her to either
reinstatement and back wages or payment of separation pay.
As an end note, petitioners advance a procedural lapse on the part of the CA.
They argue that since no new facts, evidence or circumstances were
introduced by respondent to the appellate court, it cannot issue a Resolution
that reverses its earlier Decision.
In Astraquillo v. Javier,32 we have similarly dealt with this contention and
considered it as flawed. Our procedural laws allow motions for
reconsideration and their concomitant resolutions, which give the same court
an opportunity to reconsider and review its own ruling.
As stated in Section 5(g) of Rule 135, every court shall have the inherent
power to amend and control its processes and orders, so as to make them
conformable to law and justice. "This power includes the right to reverse
itself, especially when in its honest opinion it has committed an error or
mistake in judgment, and that to adhere to its decision will cause injustice to
a party-litigant."33 Thus, upon finding that petitioners had indeed illegally
dismissed respondent, the CA merely exercised its prerogative to reverse an
incorrect judgment.
IN VIEW THEREOF, the 24 April 2006 Resolution of the Court of Appeals in
CA-G.R. CV No. 87706 is AFFIRMED. The 12 May 2006 Petition for Review on
Certiorari filed by Tegimenta Chemical Philippines, Incorporated and Vivian
Rose D. Garcia is hereby DENIED for lack of merit.
SO ORDERED.

Elsa M. Caete|94 | P a g e
LABOR CASES

Republic of the Philippines


SUPREME COURT
Manila
SECOND DIVISION
G.R. No.170904

November 13, 2013

BANI RURAL BANK INC. ENOC THEATER I AND II and/or RAFAEL DE


GUZMAN, Petitioners,
vs.
TERESA DE GUZMAN, EDGAR C. TAN and TERESA G. TAN, Respondents.
DECISION
BRION, J.:
We pass upon the petition for review on certiorari1 under Rule 45 of the Rules
of Court filed by petitioners Bani Rural Bank, Inc., ENOC Theater I and II, and
Rafael de Guzman. They assail the decision2 dated September 1, 2005 and
the resolution3 dated December 14, 2005 of the Court of Appeals CA) in CAElsa M. Caete|95 | P a g e
LABOR CASES

G.R. SP No. 70085. The assailed CA rulings, in turn, affirmed the computation
of the backwages due respondents Teresa de Guzman and Edgar C.
Tan4 made by the National Labor Relations Commission (NLRC).
The Facts
The respondents were employees of Bani Rural Bank, Inc. and ENOC Theatre
I and II who filed a complaint for illegal dismissal against the petitioners. The
complaint was initially dismissed by Labor Arbiter Roque B. de Guzman on
March 15, 1994. On appeal, the National Labor Relations Commission (NLRC)
reversed Labor Arbiter De Guzman's findings, and ruled that the respondents
had been illegally dismissed. In a resolution5 dated March 17, 1995 the NLRC
ordered the petitioners to:
... [R]einstate the two complainants to their former positions, without loss o
seniority rights and other benefits and privileges, with backwages from the
time o their dismissal (constructive) until their actual reinstatement, less
earnings elsewhere.6
The parties did not file any motion for reconsideration or appeal. The March
17, 1995 resolution of the NLRC became final and executory and the
computation of the awards was remanded to the labor arbiter for execution
purposes.
The first computation of he monetary award under the March ,17 1995
resolution of the NLRC
The computation of the respondents' backwages, under the terms of the
March 17 1995 NLRC resolution was remanded to Labor Arbiter Rolando D.
Gambito. First, Labor Arbiter Gambito deducted the earnings derived by the
respondents either from Bani Rural Bank, Inc. or ENOC Theatre I and II.
Second, Labor Arbiter Gambito fixed the period of backwages from the
respondents' illegal dismissal until August 25 1995 or the date when the
respondents allegedly manifested that they no longer wanted to be
reinstated.7
The respondents appealed Labor Arbiter Gambito's computation with the
NLRC. In a
Decision8 dated July 31, 1998, the NLRC modified the terms of the March 17,
1995 resolution insofar as it clarified the phrase less earnings elsewhere. The
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NLRC additionally awarded the payment of separation pay, in lieu of


reinstatement, under the following terms:
The decision of this Commission is hereby MODIFIED to the extent that: (1)
the phrase earnings elsewhere in its dispositive portion shall exclude the
complainants' salaries from the Rural Bank of Mangantarem; and (2) in lieu of
reinstatement, the respondents are hereby ordered to pay the complainants
separation pay equivalent to one month salary for every year of service
computed from the start of their employment up to the date of the finality of
the decision.9
The NLRC justified the award of separation pay on account of the strained
relations between the parties. In doing so, the NLRC ruled:
Insofar as the second issue is concerned, it should be noted: (1) that in his
report dated November 8, 1995, the NLRC Sheriff stated that on October 5,
1995, he went to the Sub-Arbitration Branch to serve the writ of execution
upon the complainants; that they did not appear, but instead, sent a
representative named Samuel de la Cruz who informed him that they were
interested, not on being reinstated, but only in the monetary award; (2) that
in a letter dated October 9, 1995, the complainants authorized one Samuel
de la Cruz to get a copy of the writ of execution; and (3) that during the preexecution conference, the respondents' counsel manifested that the
respondents were requiring the complainants to report for work on Monday
and, in turn, the complainants' counsel manifested that the complainants
were asking to be reinstated. The proceedings already protracted as it iswould be delayed further if this case were to be remanded to the Labor
Arbiter for a hearing to ascertain the correctness of the above-mentioned
sheriff's report. Besides, if both parties were really interested in the
complainants being reinstated, as their counsels stated during the preexecution conference, the said reinstatement should already have been
effected. Since neither party has actually done anything to implement the
complainants' reinstatement, it would appear that the relations between
them have been strained to such an extent as to make the resumption of the
employer-employee relationship unpalatable to both of them. Under the
circumstances, separation pay may be awarded in lieu of reinstatement.10
The respondents filed a motion for reconsideration on whether the award of
backwages was still included in the judgment. The NLRC dismissed the
motion for having been filed out of time.
Elsa M. Caete|97 | P a g e
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On January 29, 1999, the July 31, 1998 decision of the NLRC lapsed to finality
and became executory.
The second computation of the monetary awards under the July 31, 998
decision of the NLRC
The recomputation of the monetary awards of the respondents' backwages
and separation pay, according to the decision dated July 31, 1998 and the
modified terms of the March 17, 1995 resolution of the NLRC, was referred to
Labor Arbiter Gambito. In the course of the recomputation, the petitioners
filed before Labor Arbiter Gambito a Motion to Quash Writ of
Execution and Suspend Further Execution they reiterated their position that
the respondents backwages should be computed only up to August 25, 1995,
citing the alleged manifestation made by the respondents, through Samuel
de la Cruz, as their basis.
In an order11 dated July 12, 2000, Labor Arbiter Gambito computed the
respondents backwages only up to August 25, 1995.
The NLRCs Ruling
The respondents appealed the July 12, 2000 order of Labor Arbiter Gambito
to the NLRC, which reversed Labor Arbiter Gambito s order. In its
decision12 dated September 28, 2001, the NLRC ruled that the computation
of the respondents backwages should be until January 29 1999 which was
the date when the July 31, 1998 decision attained finality:
WHEREFORE, the Order of Labor Arbiter Rolando D. Gambito dated July 12,
2000 is SET ASIDE. In lieu thereof, judgment is hereby rendered by ordering
respondents to p y complainants backwages up to January 29, 1999 as above
discussed.13
The NLRC emphasized that the issue relating to the computation of the
respondents backwages had been settled in its July 31, 1998 decision. In a
resolution dated January 23, 2002, the NLRC denied the motion for
reconsideration filed by the petitioners.
The petitioners disagreed with the NLRC s ruling and filed a petition for
certiorari with the CA, raising the following issues:

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(A) THE COMMISSION ACTED WITHOUT JURISDICTION AND WITH GRAVE


. ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION WHEN
IT REVERSED AND SET ASIDE THE ORDER OF LABOR ARBITER
ROLANDO D. GAMBITO DATED JULY 12, 2000 AND ORDERED THE
COMPUTATION OF PRIVATE RESPONDENTS BACKWAGES TO COVER THE
PERIOD AFTER AUGUST 25, 1995, OR UNTIL JANUARY 29, 1999, THE
DATE OF FINALITY OF THE SECOND RESOLUTION OF THE COMMISSION.
(B) THE COMMISSION ACTED WITH GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OF JURISDICTION FOR DENYING PETITIONERS
MOTION FOR RECONSIDERA TION.14
The CA Rulings
The CA found the petition to be without merit. It held that certiorari was not
the proper remedy since no error of jurisdiction was raised or no grave abuse
of discretion was committed by the NLRC. The CA stated that:
The extraordinary remedy of certiorari is proper if the tribunal, board or
officer exercising judicial or quasi-judicial functions acted without or in grave
abuse of discretion amounting to lack or excess of jurisdiction and there is no
appeal or any plain, speedy, and adequate remedy in law. When a court,
tribunal or officer has jurisdiction over the person and the subject matter of
dispute, the decision on all other questions arising in the case is an exercise
of that jurisdiction. Consequently, all errors committed in the exercise of said
jurisdiction are merely errors of judgment. Under prevailing procedural rules
and jurisprudence, errors of judgment are not proper subjects of a special
civil action for certiorari.15
Thus, the CA echoed the NLRCs conclusions:
As explained in the assailed Decision, what is controlling for purposes of the
backwages is the NLRC s Resolution dated 17 March 1995 which decreed that
private respondents are entitled to backwages from the time of their
dismissal (constructive) until their actual reinstatement; and considering that
the award of reinstatement was set aside by the NLRC in its final and
executory Decision dated 3 July 1998 which ordered the payment of
separation pay in lieu of reinstatement to be computed up to the finality on
29 January 1999 of said Decision dated 3 July 1998, then the computation of
the backwages should also end on said date, which is 29 January 1999.16
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Citing the case of Chronicle Securities Corp. v. NLRC,17 the CA held that
backwages are granted to an employee or worker who had been illegally
dismissed from employment. If reinstatement is no longer possible, the
backwages shall be computed from the time of the illegal termination up to
the finality of the decision.
The Present Petition
The petitioners argue that the following reversible errors were committed by
the CA, namely:
(1) In ruling that no grave abuse of discretion was committed by the
NLRC when it issued the September 28, 2001 decision, the January 23,
2002 resolution and the July 31, 1998 decision, which modified the final
and executory resolution dated March 17, 1995 of the NLRC computing
the backwages only until the reinstatement of the respondents;
(2) When it manifestly overlooked or misappreciated relevant facts, i.e.
Labor Arbiter Gambito s computation did conform to the NLRC s March
17, 1995 resolution considering the manifestation of Samuel that the
respondents no longer wanted to be reinstated, in response to the
order of execution dated August 25, 1995; and
(3) When it declared that only errors o judgment, and not jurisdiction,
were committed by the NLRC.
In their Comment,18 the respondents contend that the computation of the
backwages until January 29, 1999 was consistent with the tenor of the
decision dated July 31, 1998 and the modified March 17, 1995 resolution of
the NLRC.
After the petitioners filed their Reply,19 the Court resolved to give due course
to the petition; in compliance with our directive, the parties submitted their
respective memoranda repeating the arguments in the pleadings earlier
filed.20
The Issue
As presented, the issue boils down to whether the respondents backwages
had been correctly computed under the decision dated September 28, 2001

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of the NLRC, as confirmed by the CA, in light of the circumstance that there
were two final NLRC decisions affecting the computation of the backwages.
The Court s Ruling
We find the petition unmeritorious.
Preliminary considerations
In Session Delights Ice Cream and Fast Foods v. Court of Appeals (Sixth
Division),21 we held that a decision in an illegal dismissal case consists
essentially of two components:
The first is that part of the decision that cannot now be disputed because it
has been confirmed with finality. This is the finding of the illegality of the
dismissal and the awards of separation pay in lieu of reinstatement,
backwages.
The second part is the computation of the awards made.22
The first part of the decision stems from the March 17, 1995 NLRC resolution
finding an illegal dismissal and defining the legal consequences of this
dismissal. The second part involves the computation of the monetary award
of backwages and the respondents' reinstatement. Under the terms of the
March 17, 1995 resolution, the respondents' backwages were to be
computed from the time of the illegal dismissal up to their reinstatement.
In the first computation of the backwages, Labor Arbiter Gambito confronted
the following circumstances and the Sheriffs Report dated November 8,
1995:23 first, how to interpret the phrase less earnings elsewhere as stated in
the dispositive portion of the March 17, 1995 resolution of the NLRC; second,
the effect of the alleged manifestation (dated October 9, 1995) of Samuel
that the respondents were only interested in the monetary award, not in their
reinstatement; and third, the effect of the respondents' counsel's statement
during the pre-execution proceedings that the respondents simply wanted to
be reinstated.
The records indicate that the respondents denied Samuel's statement and
asked for reinstatement through their counsel. Nevertheless, Labor Arbiter
Gambito relied on Samuel's statement and fixed the computation date of the
respondents' backwages to be up to and until August 25, 1995 or the date
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the order of execution was issued for the NLRC's March 17, 1995 decision. As
stated in his July 12, 2000 order,24 Labor Arbiter Gambito found it fair and
just that in the execution of the NLRC's decision, the computation of the
respondents' backwages should "stop at that time when it was put on record
by them [respondents] that they had no desire to return to work."25
The NLRC disregarded Labor Arbiter Gambito's first computation. In the
dispositive portion of its July 31, 1998 decision, the NLRC modified the final
March 17, 1995 resolution. The first part of this decision -the original ruling of
illegal dismissal -was left untouched while the second part of the decision
-the monetary award and its computation -was altered to conform with the
strained relations between the parties that became manifest during the
execution phase of the March 17, 1995 resolution.
The effect of the modification of the March 17, 1995 resolution of the NLRC
was two-fold: , the reinstatement aspect of the March 1 7, 1995 resolution
was expressly substituted by an order of payment of separation pay; and two
the July 31, 1998 decision of the NLRC now provided for two monetary
awards (backwages and separation pay). The July 31, 1998 decision of the
NLRC became final since neither parties appealed.
Immutability of Judgment
That there is already a final and executory March 17, 1995 resolution finding
that respondents have been illegally dismissed, and awarding backwages
and reinstatement, is not disputed. That there, too, is the existence of
another final and executory July 31, 1998 decision modifying the
reinstatement aspect of the March 17, 1995 resolution, by awarding
separation pay, is likewise beyond dispute.
As a rule, "a final judgment may no longer be altered, amended or modified,
even if the alteration, amendment or modification is meant to correct what is
perceived to be an erroneous conclusion of fact or law and regardless of
what court, be it the highest Court of the land, rendered it. Any attempt on
the part of the x x x entities charged with the execution of a final judgment
to insert, change or add matters not clearly contemplated in the dispositive
portion violates the rule on immutability of judgments."26 An exception to this
rule is the existence of supervening events27 which refer to facts transpiring
after judgment has become final and executory or to new circumstances that
developed after the judgment acquired finality, including matters that the
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parties were not aware of prior to or during the trial as they were not yet in
existence at that time.28
Under the circumstances of this case, the existence of the strained relations
between the petitioners and the respondents was a supervening event that
justified the NLRC s modification of its final March 17, 1995 resolution. The
NLRC, in its July 31, 1998 decision, based its conclusion that strained
relations existed on the conduct of the parties during the first execution
proceedings before Labor Arbiter Gambito. The NLRC considered the delay in
the respondents reinstatement and the parties conflicting claims on whether
the respondents wanted to be reinstated.29 The NLRC also observed that
during the intervening period from the first computation (which was done in
1995) to the appeal and resolution of the correctness of the first computation
(subject of the NLRC s July 31, 1998 decision), neither party actually did
anything to implement the respondents reinstatement. The NLRC considered
these, actions as indicative of the strained relations between the parties so
that neither of them actually wanted to implement the reinstatement decree
in the March 17, 1995 resolution. The NLRC concluded that the award of
reinstatement was no longer possible; thus, it awarded separation pay, in
lieu of reinstatement. Unless exceptional reasons are presented, these above
findings and conclusion can no longer be disturbed after they lapsed to
finality.
Appeal of labor case under Rule 45
A review of the CA s decision in a labor case, brought to the Court via Rule 45
of the Rules of Court, is limited to a review of errors of law imputed to the CA.
In Montoya v. Transmed Manila Corporation,30 we laid down the basic
approach in reviews of Rule 45 decisions of the CA in labor cases, as follows:
In a Rule 45 review, we consider the correctness of the assailed CA decision,
in contrast with the review for jurisdictional error that we undertake under
Rule 65. Furthermore, Rule 45 limits us to the review of questions of law
raised against the assailed CA decision. In ruling for legal correctness, we
have to view the CA decision in the same context that the petition for
certiorari it ruled upon was presented to it; we have to examine the CA
decision from the prism of whether it correctly determined the presence or
absence of grave abuse of discretion in the NLRC decision before it, not on
the basis of whether the NLRC decision on the merits of the case was correct.
In other words, we have to be keenly aware that the CA undertook a Rule 65
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review, not a review on appeal, of the NLRC decision challenged before it.
This is the approach that should be basic in a Rule 45 review of a CA ruling in
a labor case. In question form, the question to ask is: Did the C correctly
determine whether the NLRC committed grave abuse of discretion in ruling
on the case?
This manner of review was reiterated in Holy Child Catholic School v Hon.
Patricia Sta. Tomas, etc., et al.,31 where the Court limited its review under
Rule 45 of the CA s decision in a labor case to the determination of whether
the CA correctly resolved the presence or absence of grave abuse of
discretion in the decision of the Secretary of Labor, and not on the basis of
whether the latter's decision on the merits of the case was strictly correct.
Grave abuse of discretion, amounting to lack or excess of jurisdiction, has
been defined as the capricious and whimsical exercise of judgment
amounting to or equivalent to lack of jurisdiction.32 There is grave abuse of
discretion when the power is exercised in an arbitrary or despotic manner by
reason of passion or personal hostility, and must be so patent and so gross
as to amount to an evasion of a positive duty or to a virtual refusal to
perform the duty enjoined or to act at all in contemplation of law."33
With this standard in mind, we find no reversible error committed by the CA
when it found no grave abuse of discretion in the NLRC's ruling. We find the
computation of backwages and separation pay in the September 28, 2001
decision of the NLRC consistent with the provisions of law and jurisprudence.
The computation conforms to the terms of the March 17, 1995 resolution (on
illegal dismissal and payment of backwages) and the July 31, 1998 decision
(on the computation of the backwages and the payment of separation pay).
Article 279 of the Labor Code, as amended,34 provides backwages and
reinstatement as basic awards and consequences of illegal dismissal:
Article 279. Security of Tenure. -x x x An employee who is unjustly dismissed
from work shall be entitled to reinstatement without loss of seniority rights
and other privileges and to his full backwages, inclusive of allowances, and
to his other benefits or their monetary equivalent computed from the time
his compensation was withheld from him up to the time of his actual
reinstatement.
"By jurisprudence derived from this provision, separation pay may [also] be
awarded to an illegally dismissed employee in lieu of
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reinstatement."35 Section 4(b), Rule I of the Rules Implementing Book VI of


the Labor Code provides the following instances when the award of
separation pay, in lieu of reinstatement to an illegally dismissed employee, is
proper: (a) when reinstatement is no longer possible, in cases where the
dismissed employee s position is no longer available; (b) the continued
relationship between the employer and the employee is no longer viable due
to the strained relations between them; and (c) when the dismissed
employee opted not to be reinstated, or the payment of se aration benefits
would be for the best interest of the parties involved.36 In these instances,
separation pay is the alternative remedy to reinstatement in addition to the
award of backwages.37 The payment of separation pay and reinstatement are
exclusive remedies. The payment of separation pay replaces the legal
consequences of reinstatement to an employee who was illegally
dismissed.38
For clarity, the bases for computing separation pay and backwages are
different. Our ruling in Macasero v. Southern Industrial Gases
Philippines39 provides us with the manner these awards should be computed:
[U]nder Article 279 of the Labor Code and as held in a catena of cases, an
employee who is dismissed without just cause and without due process is
entitled to backwages and reinstatement or payment of separation pay in
lieu thereof:
Thus, an illegally dismissed employee is entitled to two reliefs: backwages
and reinstatement. The two reliefs provided are separate and distinct. In
instances where reinstatement is no longer feasible because of strained
relations between the employee and the employer, separation pay is
granted. In effect, an illegally dismissed employee is entitled to either
reinstatement, if viable, or separation pay if reinstatement is no longer
viable, and backwages.
The normal consequences of respondents illegal dismissal, then, are
reinstatement without loss of seniority rights, and payment of backwages
computed from the time compensation was withheld up to the date of actual
reinstatement. Where reinstatement is no longer viable as an option,
separation pay equivalent to one (1) month salary for every year of service
should be awarded as an alternative. The payment of separation pay is in
addition to payment of backwages.40

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The computation of separation pay is based on the length of the employee s


service; and the computation of backwages is based on the actual period
when the employee was unlawfully prevented from working.41
The basis of computation of backwages
The computation of backwages depends on the final awards adjudged as a
consequence of illegal dismissal, in that:
First, when reinstatement is ordered, the general concept under Article 279
of the Labor Code, as amended, computes the backwages from the time of
dismissal until the employees reinstatement. The computation of backwages
(and similar benefits considered part of the backwages) can even continue
beyond the decision of the labor arbiter or NLRC and ends only when the
employee is actually reinstated.42
Second, when separation pay is ordered in lieu of reinstatement (in the event
that this aspect of the case is disputed) or reinstatement is waived by the
employee (in the event that the payment of separation pay, in lieu, is not
disputed), backwages is computed from the time of dismissal until the
finality of the decision ordering separation pay.
Third, when separation pay is ordered after the finality of the decision
ordering the reinstatement by reason of a supervening event that makes the
award of reinstatement no longer possible (as in the case), backwages is
computed from the time of dismissal until the finality of the decision ordering
separation pay.
The above computation of backwages, when separation pay is ordered, has
been the Court s consistent ruling. In Session Delights Ice Cream and Fast
Foods v. Court Appeals Sixth Division, we explained that the finality of the
decision becomes the reckoning point because in allowing separation pay,
the final decision effectively declares that the employment relationship
ended so that separation pay and backwages are to be computed up to that
point.43
We may also view the proper computation of backwages (whether based on
reinstatement or an order of separation pay) in terms of the life of the
employment relationship itself.1wphi1

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When reinstatement is ordered, the employment relationship continues.


Once the illegally dismissed employee is reinstated, any compensation and
benefits thereafter received stem from the employee s continued
employment. In this instance, backwages are computed only up until the
reinstatement of the employee since after the reinstatement, the employee
begins to receive compensation from his resumed employment.
When there is an order of separation pay (in lieu of reinstatement or when
the reinstatement aspect is waived or subsequently ordered in light of a
supervening event making the award of reinstatement no longer possible),
the employment relationship is terminated only upon the finality of the
decision ordering the separation pay. The finality of the decision cuts-off the
employment relationship and represents the final settlement of the rights
and obligations of the parties against each other. Hence, backwages no
longer accumulate upon the finality of the decision ordering the payment of
separation pay since the employee is no longer entitled to any compensation
from the employer by reason of the severance of his employment.
The computation of the respondents backwages
As the records show, the contending parties did not dispute the NLRC s order
of separation pay that replaced the award of reinstatement on the ground of
the supervening event arising from the newly-discovered strained relations
between the parties. The parties allowed the NLRC s July 31, 1998 decision to
lapse into finality and recognized, by their active participation in the second
computation of the awards, the validity and binding effect on them of the
terms of the July 31, 1998 decision.
Under these circumstances, while there was no express modification on the
period for computing backwages stated in the dispositive portion of the July
31, 1998 decision of the NLRC, it is nevertheless clear that the award of
reinstatement under the March 17, 1995 resolution (to which the
respondents backwages was initially supposed to have been computed) was
substituted by an award of separation pay. As earlier stated, the awards of
reinstatement and separation pay are exclusive remedies; the change of
awards (from reinstatement to separation pay) under the NLRC s July 31,
1998 not only modified the awards granted, but also changed the manner
the respondents backwages is to be computed. The respondents backwages
can no longer be computed up to the point of reinstatement as there is no
longer any award of reinstatement to speak of.
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We also emphasize that the payment of backwages and separation pay


cannot be computed from the time the respondents allegedly expressed their
wish to be paid separation pay. In the first place, the records show that the
alleged manifestation by the respondents, through Samuel, was actually a
mere expression of interest.44 More importantly, the alleged manifestation
was disregarded in the NLRC's July 31, 1998 decision where the NLRC
declared that the award of separation pay was due to the supervening event
arising from the strained relations (not a waiver of reinstatement) that
justified the modification of the NLRC's final March 17, 1995 resolution on the
award of reinstatement. Simply put, insofar as the computation of the
respondents' backwages, we are guided by the award, modified to separation
pay, under the NLRC's July 31, 1998 decision.
Thus, the computation of the respondents' backwages must be from the time
of the illegal dismissal from employment until the finality of the decision
ordering the payment of separation pay. It is only when the NLRC rendered
its July 31, 1998 decision ordering the payment of separation pay (which
both parties no longer questioned and which thereafter became final) that
the issue of the respondents' employment with the petitioners was decided
with finality, effectively terminating it. The respondents' backwages,
therefore, must be computed from the time of their illegal dismissal until
January 29, 1999, the date of finality of the NLRC's July 31, 1998 Decision. As
a final point, the CA s ruling must be modified to include legal interest
commencing from the finality of the NLRC's July 31, 1998 decision. The CA
failed to consider that the NLRC's July 31, 1998 decision, once final, becomes
a judgment for money from which another consequence flows -the payment
of interest in case of delay.45Under the circumstances, the payment of legal
interest of six percent (6) upon the finality of the judgment is proper. It is not
barred by the principle of immutability of judgment as it is compensatory
interest arising from the final judgment.46
WHEREFORE, premises considered, we DENY the petition and thus effectively
AFFIRM with MODIFICATION the decision dated September 1 2005 and the
resolution dated December 14, 2005 of the Court of Appeals in CA-G.R. SP
No. 70085. The petitioners Bani Rural Bank, Inc., Enoc Theatre I and II and/or
Rafael de Guzman, are ORDERED to PAY respondents Teresa de Guzman,
Edgar C. Tan and Teresa G. Tan the following:
(a) Backwages computed from the date the petitioners illegally
dismissed the respondents up to January 29, 1999, the date of the
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finality of the decision dated July 31, 1998 of the National Labor
Relations Commission in NLRC CN. SUB-RAB-01-07- 7-0136-93 CA No.
L-001403 and NLRC CN. SUB-RAB-01-07-7-0137-93 CA No. L-001405;
(b) Separation pay computed from respondents' first day of
employment up to January 29, 1999 at the rate of one (1) month pay
per year of service; and
(c) Legal interest of six percent (6) per annum of the total monetary
awards computed from January 29, 1999 until their full satisfaction.
The labor arbiter is hereby ORDERED to make another recomputation
according to the above directives.
SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 204406

February 26, 2014

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MACARTHUR MALICDEM and HERMENIGILDO FLORES, Petitioners,


vs.
MARULAS INDUSTRIAL CORPORATION and MIKE
MANCILLA, Respondents.
DECISION
MENDOZA, J.:
This petition for review on certiorari1 under Rule 45 of the Rules of Court filed
by Macarthur Malicdem (Malicdem) and Hermenigildo Flores (Flores) assails
the July 18, 2012 Decision2 and the November 12, 2012 Resolution3 of the
Court of Appeals (CA) in CA-G.R. SP No. 1244 70, dismissing their petition for
certiorari under Rule 65 in an action for illegal dismissal.
The Facts:
A complaint4 for illegal dismissal, separation pay, money claims, moral and
exemplary damages, and attorney's fees was filed by petitioners Malicdem
and Flores against respondents Marulas Industrial Corporation (Marulas) and
Mike Mancilla (Mancilla), who were engaged in the business of manufacturing
sacks intended for local and export markets.
Malicdem and Flores were first hired by Marulas as extruder operators in
2006, as shown by their employment contracts. They were responsible for
the bagging of filament yarn, the quality of pp yarn package and the
cleanliness of the work place area. Their employment contracts were for a
period of one (1) year. Every year thereafter, they would sign a
Resignation/Quitclaim in favor of Marulas a day after their contracts ended,
and then sign another contract for one (1) year. Until one day, on December
16, 2010, Flores was told not to report for work anymore after being asked to
sign a paper by Marulas' HR Head to the effect that he acknowledged the
completion of his contractual status. On February 1, 2011, Malicdem was also
terminated after signing a similar document. Thus, both claimed to have
been illegally dismissed.
Marulas countered that their contracts showed that they were fixed-term
employees for a specific undertaking which was to work on a particular order
of a customer for a specific period. Their severance from employment was
due to the expiration of their contracts.

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On February 7, 2011, Malicdem and Flores lodged a complaint against


Marulas and Mancilla for illegal dismissal.
On July 13, 2011, the Labor Arbiter (LA) rendered a decision5 in favor of the
respondents, finding no illegal dismissal. He ruled that Malicdem and Flores
were not terminated and that their employment naturally ceased when their
contracts expired. The LA, however, ordered Marulas to pay Malicdem and
Flores their respective wage differentials, to wit:
WHEREFORE, the complaints for illegal dismissal are dismissed for lack of
merit. Respondent Marulas Industrial Corporation is, however, ordered to pay
complainants wage differential in the following amounts:
1.

Macarthur Malicdem

P20,111.26

2/2/07 6/13/08 = None


6/14/08 8/27/08 = 2.47 mos.
P377 362 = P15
x 26 days x 2.47 mos. =

963.30

8/28/08 6/30/10 = 22.06 mos.


P382 P362 = P20
x 26 days x 22.06 mos. =

11,471.20

7/1/10 2/2/11 = 7.03 mos.


P404 P362 = P42
x 26 days x 7.03 mos. =

7,676.76

20,111.26
; and

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2.

Herminigildo Flores

P18,440.50

2/2/08 6/13/08 = 4.36 mos. None


6/14/08 8/27/08 =

963.30

8/28/08 6/30/10 =

11,471.20

7/1/10 12/16/10 = 5.50 mos.


P404 x P362 = P42
x 26 days x 5.50 mos. =

6,006.00

18,440.50
All other claims are dismissed for lack of merit.
SO ORDERED.6
Malicdem and Flores appealed to the NLRC which partially granted their
appeal with the award of payment of 13th month pay, service incentive
leave and holiday pay for three (3) years. The dispositive portion of its
December 19, 2011 Decision7 reads:
WHEREFORE, the appeal is GRANTED IN PART. The Decision of Labor Arbiter
Raymund M. Celino, dated July 13, 2011, is MODIFIED. In addition to the
award of salary differentials, complainants should also be awarded 13th
month pay, service incentive leave and holiday pay for three years.
SO ORDERED.8
Still, petitioners filed a motion for reconsideration, but it was denied by the
NLRC on February 29, 2011.
Aggrieved, Malicdem and Flores filed a petition for certiorari under Rule 65
with the CA.
On July 18, 2012, the CA denied the petition,9 finding no grave abuse of
discretion amounting to lack or excess of jurisdiction on the part of the NLRC.
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It ruled that the issue of whether or not the petitioners were project
employees or regular employees was factual in nature and, thus, not within
the ambit of a petition for certiorari. Moreover, it accorded respect and due
consideration to the factual findings of the NLRC, affirming those of the LA,
as they were supported by substantial evidence.
On the substantive issue, the CA explained that "the repeated and
successive rehiring of project employees do not qualify them as regular
employees, as length of service is not the controlling determinant of the
employment tenure of a project employee, but whether the employment has
been fixed for a specific project or undertaking, its completion has been
determined at the time of the engagement of the employee."10
Corollarily, considering that there was no illegal dismissal, the CA ruled that
payment of backwages, separation pay, damages, and attorney's fees had
no factual and legal bases. Hence, they could not be awarded to the
petitioners.
Aggrieved, Malicdem and Flores filed a motion for reconsideration, but their
pleas were denied in the CA Resolution, dated November 12, 2012.
The Petition
Malicdem and Flores now come before this Court by way of a petition for
review on certiorari under Rule 45 of the Rules of Court praying for the
reversal of the CA decision anchored on the principal argument that the
appellate court erred in affirming the NLRC decision that there was no illegal
dismissal because the petitioners contracts of employment with the
respondents simply expired. They claim that their continuous rehiring paved
the way for their regularization and, for said reason, they could not be
terminated from their jobs without just cause.
In their Comment,11 the respondents averred that the petitioners failed to
show that the CA erred in affirming the NLRC decision. They posit that the
petitioners were contractual employees and their rehiring did not amount to
regularization. The CA cited William Uy Construction Corp. v.
Trinidad,12 where it was held that the repeated and successive rehiring of
project employees did not qualify them as regular employees, as length of
service was not the controlling determinant of the employment tenure of a
project employee, but whether the employment had been fixed for a specific
project or undertaking, its completion had been determined at the time of
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the engagement of the employee. The respondents add that for said reason,
the petitioners were not entitled to full backwages, separation pay, moral
and exemplary damages, and attorneys fees.
Now, the question is whether or not the CA erred in not finding any grave
abuse of discretion amounting to lack or excess of jurisdiction on the part of
the NLRC.
The Courts Ruling:
The Court grants the petition.
The petitioners have convincingly shown that they should be considered
regular employees and, as such, entitled to full backwages and other
entitlements.
A reading of the 2008 employment contracts,13 denominated as "Project
Employment Agreement," reveals that there was a stipulated probationary
period of six (6) months from its commencement. It was provided therein
that in the event that they would be able to comply with the companys
standards and criteria within such period, they shall be reclassified as project
employees with respect to the remaining period of the effectivity of the
contract. Specifically, paragraph 3(b) of the agreement reads:
The SECOND PARTY hereby acknowledges, agrees and understands that the
nature of his/her employment is probationary and on a project-basis. The
SECOND PARTY further acknowledges, agrees and understands that within
the effectivity of this Contract, his/her job performance will be evaluated in
accordance with the standards and criteria explained and disclosed to
him/her prior to signing of this Contract. In the event that the SECOND PARTY
is able to comply with the said standards and criteria within the probationary
period of six month/s from commencement of this Contract, he/she shall be
reclassified as a project employee of (o)f the FIRST PARTY with respect to the
remaining period of the effectivity of this Contract.
Under Article 281 of the Labor Code, however, "an employee who is allowed
to work after a probationary period shall be considered a regular employee."
When an employer renews a contract of employment after the lapse of the
six-month probationary period, the employee thereby becomes a regular
employee. No employer is allowed to determine indefinitely the fitness of its
employees.14 While length of time is not the controlling test for project
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employment, it is vital in determining if the employee was hired for a specific


undertaking or tasked to perform functions vital, necessary and
indispensable to the usual business of trade of the employer.15 Thus, in the
earlier case of Maraguinot, Jr. v. NLRC,16 it was ruled that a project or work
pool employee, who has been: (1) continuously, as opposed to intermittently,
rehired by the same employer for the same tasks or nature of tasks; and (2)
those tasks are vital, necessary and indispensable to the usual business or
trade of the employer, must be deemed a regular employee. Thus:
x x x. Lest it be misunderstood, this ruling does not mean that simply
because an employee is a project or work pool employee even outside the
construction industry, he is deemed, ipso jure, a regular employee. All that
we hold today is that once a project or work pool employee has been: (1)
continuously, as opposed to intermittently, re-hired by the same employer
for the same tasks or nature of tasks; and (2) these tasks are vital, necessary
and indispensable to the usual business or trade of the employer, then the
employee must be deemed a regular employee, pursuant to Article 280 of
the Labor Code and jurisprudence. To rule otherwise would allow
circumvention of labor laws in industries not falling within the ambit of Policy
Instruction No. 20/Department Order No. 19, hence allowing the prevention
of acquisition of tenurial security by project or work pool employees who
have already gained the status of regular employees by the employer's
conduct.1wphi1
The test to determine whether employment is regular or not is the
reasonable connection between the particular activity performed by the
employee in relation to the usual business or trade of the employer. If the
employee has been performing the job for at least one year, even if the
performance is not continuous or merely intermittent, the law deems the
repeated and continuing need for its performance as sufficient evidence of
the necessity, if not indispensability of that activity to the business.17
Guided by the foregoing, the Court is of the considered view that there was
clearly a deliberate intent to prevent the regularization of the petitioners.
To begin with, there is no actual project. The only stipulations in the contracts
were the dates of their effectivity, the duties and responsibilities of the
petitioners as extruder operators, the rights and obligations of the parties,
and the petitioners compensation and allowances. As there was no specific
project or undertaking to speak of, the respondents cannot invoke the
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exception in Article 280 of the Labor Code.18 This is a clear attempt to


frustrate the regularization of the petitioners and to circumvent the law.
Next, granting that they were project employees, the petitioners could only
be considered as regular employees as the two factors enumerated in
Maraguinot, Jr., are present in this case. It is undisputed that the petitioners
were continuously rehired by the same employer for the same position as
extruder operators. As such, they were responsible for the operation of
machines that produced the sacks. Hence, their work was vital, necessary
and indispensable to the usual business or trade of the employer.
In D.M. Consunji, Inc. v. Estelito Jamin19 and Liganza v. RBL Shipyard
Corporation,20 the Court reiterated the ruling that an employment ceases to
be coterminous with specific projects when the employee is continuously
rehired due to the demands of the employers business and re-engaged for
many more projects without interruption.
The respondents cannot use the alleged expiration of the employment
contracts of the petitioners as a shield of their illegal acts. The project
employment contracts that the petitioners were made to sign every year
since the start of their employment were only a stratagem to violate their
security of tenure in the company. As restated in Poseidon Fishing v.
NLRC,21 "if from the circumstances it is apparent that periods have been
imposed to preclude acquisition of tenurial security by the employee, they
should be disregarded for being contrary to public policy."
The respondents invocation of William Uy Construction Corp. v. Trinidad22 is
misplaced because it is applicable only in cases involving the tenure of
project employees in the construction industry. It is widely known that in the
construction industry, a project employee's work depends on the availability
of projects, necessarily the duration of his employment.23 It is not permanent
but coterminous with the work to which he is assigned.24 It would be
extremely burdensome for the employer, who depends on the availability of
projects, to carry him as a permanent employee and pay him wages even if
there are no projects for him to work on.25 The rationale behind this is that
once the project is completed it would be unjust to require the employer to
maintain these employees in their payroll. To do so would make the
employee a privileged retainer who collects payment from his employer for
work not done. This is extremely unfair to the employers and amounts to
labor coddling at the expense of management.26"
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Now that it has been clearly established that the petitioners were regular
employees, their termination is considered illegal for lack of just or
authorized causes. Under Article 279 of the Labor Code, an employee who is
unjustly dismissed from work shall be entitled to reinstatement without loss
of seniority rights and other privileges and to his full backwages, inclusive of
allowances, and to his other benefits or their monetary equivalent computed
from the time his compensation was withheld from him up to the time of his
actual reinstatement. The law intends the award of backwages and similar
benefits to accumulate past the date of the LA decision until the dismissed
employee is actually reinstated.
WHEREFORE, the petition is GRANTED. The assailed July 18, 2012 decision of
the Court of Appeals and its November 12, 2012 Resolution in CA-G.R. SP No.
1244 70, are hereby ANNULLED and SET ASIDE.
Accordingly, respondent Marulas Industrial Corporation is hereby ordered to
reinstate petitioners Macarthur Malicdem and Hermenigildo Flores to their
former positions without loss of seniority rights and other privileges and to
pay their full backwages, inclusive of allowances and their other benefits or
their monetary equivalent computed from the time their compensations were
withheld from them up to the time of their actual reinstatement plus the
wage differentials stated in the July 13, 2011 decision of the Labor Arbiter, as
modified by the December 19, 2011 NLRC decision.
SO ORDERED.

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