G.R. No.
140853, February 27, 2003 Petitioner maneuvered to avoid a collision, but nonetheless the van he was
ARIEL A. TRES REYES, PETITIONER, VS. MAXIMS TEA HOUSE
AND JOCELYN POON, RESPONDENTS.
DECISION
QUISUMBING, J.:
This is a petition for review of the decision[1] of the Court of Appeals, dated
November 22, 1999 in CA-G.R. SP No. 54110, setting aside the decision[2] of
the Third Division, National Labor Relations Commission (NLRC) dated
March 11, 1999, in NLRC CA No. 017339-98. In NLRC NCR Case No. 00-
12-08773-97, the NLRC vacated the Labor Arbiters decision and ordered
herein respondent Maxims Tea House to reinstate petitioner Ariel Tres Reyes
to his former position or, should reinstatement no longer prove feasible, to pay
Tres Reyes his separation pay and backwages.
The facts of this case, as found by the NLRC and affirmed by the Court of
Appeals, are as follows:
Respondent Maxims Tea House (hereinafter Maxims for brevity) had
employed Ariel Tres Reyes as a driver since October 1995. He was assigned to
its M.H. del Pilar Street, Ermita, Manila branch. His working hours were from
5:00 P.M. to 3:00 A.M., and among his duties was to fetch and bring to their
respective homes the employees of Maxims after the restaurant closed for the
day.
In the wee hours of the morning of September 27, 1997, petitioner was driving
a Mitsubishi L300 van and was sent to fetch some employees of Savannah
Moon, a ballroom dancing establishment in Libis, Quezon City. Petitioner
complied and took his usual route along Julia Vargas Street in Pasig City. He
was headed towards Meralco Avenue at a cruising speed of 50 to 60
kilometers per hour, when he noticed a ten-wheeler truck coming his way at
full speed despite the fact that the latters lane had a red signal light on.
driving struck the truck. As a result, petitioner and seven of his passengers
sustained physical injuries and both vehicles were damaged.
On October 15, 1997, the management of Maxims required petitioner to
submit, within forty-eight hours, a written explanation as to what happened
that early morning of September 27, 1997. He complied but his employer
found his explanation unsatisfactory and as a result he was preventively
suspended for thirty (30) days, effective October 20, 1997.
On November 19, 1997, Maxims terminated petitioner for cause.
Feeling that the vehicular accident was neither a just nor a valid cause for the
severance of his employment, petitioner filed a complaint[3] for illegal
dismissal docketed as NLRC NCR Case No. 00-12-08773-97.
On July 20, 1998, the Labor Arbiter decided NLRC NCR Case No. 00-12-
08773-97 as follows:
WHEREFORE, as we sustain the validity of the dismissal of complainant
Ariel A. Tres Reyes, we order respondent Maxim (sic) Tea House to pay him
the following amount(s):
Financial assistance (210 x 26 days) P5,460.00
13th month pay for 1997 (P210 x 28
days)
x 11.6 months over 12) P5,278.00
Service incentive leave pay (P210 x 5
1,050.00
days)
 TOTAL AWARD P11,788.00
SO ORDERED.[4]
In his decision, the Labor Arbiter found that petitioner was grossly negligent
in failing to avoid the collision.
On October 8, 1998, instead of filing the requisite pleading for appeal,
petitioner filed a Motion for Partial Reconsideration with the NLRC. The
NLRC opted to treat petitioners motion as an appeal docketed as NLRC CA
No. 017339-98.
On March 11, 1999, the NLRC reversed the decision of the Labor Arbiter on
the ground that there was no negligence on petitioners part. The decision
concluded, thus:
WHEREFORE, foregoing premises considered, the appeal is hereby
GRANTED. The assailed Decision dated July 20, 1998 is hereby ordered
VACATED and SET ASIDE and new one is hereby entered ordering
respondent MAXIMS TEA HOUSE to reinstate herein complainant Ariel T.
Tres Reyes to his former position without loss of seniority rights plus full
backwages.
In the event that reinstatement is no longer feasible, respondents are hereby
ordered to pay complainant separation pay in the amount of one month for
every year of service computed from October 7, 1995 to the date of this
Decision, in addition to payment of backwages computed from date of
termination on November 19, 1997 up to date of this decision.
All other reliefs herein sought and prayed for are hereby DENIED for lack of
merit.
SO ORDERED.[5]
Respondents moved for reconsideration of the foregoing decision, but said
motion was denied by the Commission in its resolution[6] dated May 12, 1999.
Respondents then filed a special civil action for certiorari with the Court of
Appeals, docketed as CA-G.R. SP No. 54110. It was alleged that the NLRC
committed a grave abuse of discretion amounting to want or excess of
jurisdiction in: (a) giving due course to petitioners Motion for Partial
Reconsideration notwithstanding that it was a prohibited pleading under Sec.
17 (now Sec. 19),[7] Rule V of the NLRC Rules of Procedure and despite want
of showing that it was seasonably filed; and (b) for substituting its own
findings to the factual findings of the Labor Arbiter.
On November 22, 1999, the appellate court decided CA-G.R. SP No. 54110 in
favor of the employer and its manager, thus:
WHEREFORE, premises considered, the petition is given due course and the
assailed decision of public respondent is hereby set aside and the complaint of
private respondent DISMISSED for utter lack of merit.
SO ORDERED.[8]
Hence, the instant case.
Before us, petitioner alleges that the Court of Appeals erred:
I
...IN HOLDING THAT THE NLRC COMMITTED GRAVE ABUSE OF
DISCRETION IN TREATING AS APPEAL THE PARTIAL MOTION FOR
RECONSIDERATION OF MR. TRES REYES, BECAUSE THE COURT
OF APPEALS TURNED A BLIND EYE ON THE FACTS ON RECORD (A)
THAT MR. TRES REYES FILED SAID MOTION ON OCTOBER 8, 1998
(THE 10TH DAY FROM HIS RECEIPT OF A COPY OF ARBITER
DINOPOLS DECISION), (B) THAT HE PROPERLY VERIFIED SAID
MOTION; AND (C) PAID THE APPEAL FEE, BOTH ON THE SAME
DATE.
II
...IN CONCLUDING THAT THE FREAK TRAFFIC ACCIDENT ON
SEPTEMBER 27, 1997 WAS DUE TO NEGLIGENCE OF MR. TRES
REYES AS FOUND BY THE LABOR ARBITER WHO HAD THE
CHANCE TO OBSERVE THE DEMEANOR OF LITIGANTS AND
WITNESSES, DESPITE THE FACT (A) THAT NO TRIAL WAS HAD IN
THE ARBITERS LEVEL TO PROVIDE SUCH A PRETENDED
OPPORTUNITY; (B) THAT THE NLRCS FACTUAL FINDING BEING IN
ACCORD WITH REALITY AND SUPPORTED BY PREPONDERANCE
OF EVIDENCE, IS CONCLUSIVE UPON THE CA, AND (C) THAT THE
COURT OF APPEALS REVERSAL OF THE NLRC RULING IS
SADDLED WITH SURMISES, CONJECTURES, AND SUPPOSITIONS,
WITHOUT CATEGORICAL SUPPORT OF ANY GROSS OR HABITUAL
NEGLECT TO TERMINATE EMPLOYMENT.[9]
Petitioners assigned errors may be reduced to two issues for our resolution,
namely:
(1) Could the Motion for Partial Reconsideration be considered as an appeal
to the NLRC?
(2) Is petitioners dismissal from employment valid and legal?
On the first issue, petitioner argues that the Court of Appeals grievously erred
in holding that the NLRC has gravely abused its discretion in treating his
Motion for Partial Reconsideration as an appeal. Petitioner asserts that when
a motion for reconsideration of a decision of a Labor Arbiter is filed, the
Commission will properly treat it as an appeal. He stresses that under labor
law, rules of procedure should be liberally construed to assist the parties in
obtaining a just, expeditious, and inexpensive settlement of disputes. Hence,
technicalities should not prevail over substantial merits of the labor case.
In the instant case, we note that the Office of the Solicitor General (OSG),
whom we required to comment on the petition, filed instead a Manifestation
and Motion In Lieu of Comment agreeing with petitioner. The OSG submits
that the Motion for Partial Reconsideration was correctly treated by the
NLRC as an appeal, on the principle that technical rules and procedure should
be liberally applied in labor cases.
Respondents counter that granting without admitting, that the NLRC did
indeed correctly treat petitioners Motion for Partial Reconsideration as an
appeal, nonetheless, it still behooves petitioner to comply with the other
requisites for perfection of an appeal. Respondents point out that said motion
contained no statement when petitioner received a copy of the Labor Arbiters
decision to determine the timeliness of the motion cum appeal, as required by
Section 3,[10] Rule VI of the NLRC Rules of Procedure. Respondents also
point to petitioners failure to pay the necessary filing fees. They submit that
the appellate court committed no reversible error when it ruled that
petitioners Motion for Partial Reconsideration failed to comply with the
requisites of a valid appeal, hence fatally defective, e.g. for want of
verification and absence of proof that it was filed within the reglementary
period.
The first issue involves a question of substance versus form. Strictly speaking,
a motion for reconsideration of a decision, order, or award of a Labor Arbiter
is prohibited by Section 19, Rule V of the NLRC Rules of Procedure. But said
rule likewise allows that a motion for reconsideration shall be treated as an
appeal provided it meets all the requisites of an appeal. Petitioner insists that
his pleading was in form a motion for reconsideration, but in substance it was
an appeal which complied with all the technical requirements. Respondents
counter that the formal requisites take precedence.
We have minutely scrutinized the records of this case, particularly the
questioned Motion for Partial Reconsideration, but we find no basis for the
appellate courts finding that said pleading did not contain a statement as to
when petitioner received a copy of the decision in NLRC NCR Case No. 00-
12-08773-97. The lead paragraph of said motion reads:
Complainant ARIEL A. TRES REYES, thru counsel, most respectfully moves
to reconsider the Decision dated July 20, 1998 rendered by the Honorable
Labor Arbiter Ernesto S. Dinopol in the above-captioned case (copy of which
was received by the Complainant on September 28, 1998), and alleges as
follows:[11]
Note that all that Section 3, Rule VI of the NLRC Rules of Procedure requires
with respect to material dates is a statement of the date when the appellant
received the appealed decision. We rule that petitioners declaration in his
motion that he received a copy of the Labor Arbiters decision on September
28, 1998 is more than sufficient compliance with said requirement imposed by
Section 3, Rule VI. We likewise find that the motion in question was filed
with the NLRC on October 8, 1998 or on the tenth (10th) day from the date of
receipt by petitioner of his copy of the Labor Arbiters decision. Otherwise
put, said pleading was filed within the reglementary ten-day period, as
provided for in Section 1,[12] Rule VI of the NLRC Rules of Procedure. The
law[13] on the timeliness of an appeal from the decision, award, or order of the
Labor Arbiters, states clearly that the aggrieved party has ten (10) calendar
days from receipt thereof to appeal to the Commission.[14] Needless to say, an
appeal filed at the last minute of the last day of said period is, for all intents
and purposes, still seasonably filed.
In CA-G.R. SP No. 54110, the Court of Appeals accepted respondents
averment that petitioners Motion for Partial Reconsideration was not
verified. The records, however, contradict their averments. We find that
petitioner verified his motion to reconsider the Labor Arbiters decision on
October 8, 1998, or on the same day that it was filed.[15] We must, perforce,
rule that petitioner has substantially complied with the verification
requirement as provided for in Section 3, Rule VI of the Commissions Rules
of Procedure.
Anent respondents claim that petitioner failed to pay the requisite appeal fee
in NLRC CA No. 0 17339-98, the NLRC stated in its decision that:
A review of the record shows that October 8, 1998, complainant-appellant
paid the amount of P110.00 in cash as appeal fee. For this he was issued, O.R.
#0073761.[16]
This finding refutes respondents claim. The records clearly show the basis for
the finding of the Commission that the appeal fees were paid.[17] Thus, on this
point respondents averment, without any supporting evidence and
contradicted by the records, deserves scant consideration.
How the Court of Appeals could have been misled by respondents allegations
of technical deficiencies with respect to the questioned Motion for Partial
Reconsideration in NLRC CA No. 0 17339-98, is surprising. Had the court a
quo, to use its own words, carefully perused the case records, it would have
readily seen that said pleading had complied with the technical requirements
of an appeal. Hence, we are constrained to conclude that the appellate court
had no basis for concluding that the NLRC had gravely abused its discretion
when the NLRC gave due course to the motion and treated it as an appeal.
In labor cases, rules of procedure should not be applied in a very rigid and
technical sense.[18] They are merely tools designed to facilitate the attainment
of justice, and where their strict application would result in the frustration
rather than promotion of substantial justice, technicalities must be avoided.
Technicalities should not be permitted to stand in the way of equitably and
completely resolving the rights and obligations of the parties.[19] Where the
ends of substantial justice shall be better served, the application of technical
rules of procedure may be relaxed.[20]
On the second issue, petitioner contends that the Court of Appeals erred in
holding that the factual findings made by the Labor Arbiter regarding
negligence should be sustained because at the trial, the Labor Arbiter had the
opportunity to observe the demeanor of the litigants. Petitioner points out that
no such trial or hearing was made. In NLRC NCR Case No. 00-12-08773-97,
the Labor Arbiter decided the case based on the position papers submitted by
the parties. Moreover, says the petitioner, the Court of Appeals ignored
substantial evidence, showing that there was no gross negligence on his part
because the vehicular accident was entirely due to the fault of the truck driver
who was speeding on the wrong lane.
The OSG joins petitioner in his stance, pointing out that the police report
relied upon by the parties before the Labor Arbiter clearly showed that the ten-
wheeler truck lost its brakes, intruded into the lane of the vehicle driven by
petitioner, and collided with petitioners van. These factual findings could not
be rebutted by the Labor Arbiter by observing the demeanor of the parties at
the hearings, more so since the Labor Arbiter did not conduct any trial-type
hearing. Thus, concluded the OSG, the Court of Appeals erred when it relied
upon such ground in sustaining the Labor Arbiters finding that petitioner was
grossly negligent.
Respondents counter that the factual findings of the Labor Arbiter showing
gross negligence on petitioners part were correctly upheld by the Court of
Appeals as these were based on the Labor Arbiters independent evaluation of
the evidence before him. Thus, they add, said findings are final and
conclusive.
The issue of whether a party is negligent is a question of fact.[21] As a rule, the
Supreme Court is not a trier of facts and this applies with greater force in labor
cases.[22] Hence, factual findings of quasi-judicial bodies like the NLRC,
particularly when they coincide with those of the Labor Arbiter and if
supported by substantial evidence, are accorded respect and even finality by
this Court.[23] But where the findings of the NLRC and the Labor Arbiter are
contradictory, as in this case, the reviewing court may delve into the records
and examine for itself the questioned findings.[24]
Our perusal of the records shows that the proceedings before the Labor Arbiter
primarily involved the submission of position papers by the parties.[25] No
trial-type hearing was conducted at all by the Labor Arbiter. Thus, the finding
of the Court of Appeals that the latter was in a better position to evaluate the
evidence as he had the better opportunity to observe the demeanor of the
parties at the hearing has no leg to stand on. Moreover, based on the police
traffic accident investigation report, we are convinced that the accident was
the fault of the ten-wheeler trucks driver. On seeing the signal light change to
red, this driver stepped on his brake, not just once but three times, but his
truck could not stop. Since the truck was on the wrong lane, petitioners van,
which was in its proper lane with the green light, smashed into the out-of-
control truck.[26] This episode led to petitioners dismissal which, in our view,
is unjustified.
Under the Labor Code,[27] gross negligence is a valid ground for an employer
to terminate an employee. Gross negligence is negligence characterized by
want of even slight care, acting or omitting to act in a situation where there is
a duty to act, not inadvertently but willfully and intentionally with a conscious
indifference to consequences insofar as other persons may be affected.[28] In
this case, however, there is no substantial basis to support a finding that
petitioner committed gross negligence.
In sustaining the Labor Arbiters finding that petitioner was grossly negligent,
the appellate court stressed that the cited episode was the second vehicular
accident involving petitioner, and as such it may clearly reflect against [his]
attitudinal character as a driver.[29] We note, however, that the Commission
found that in the first vehicular accident involving petitioner he was the
victim of the reckless and negligent act of a fellow driver.[30] We agree with
the NLRC that an imputation of habitual negligence cannot be drawn against
petitioner, since the earlier accident was not of his own making.
The CA decision further faulted petitioner despite his explanation that he had
the right in traversing the point of collision because the traffic lights along
his right of way was green. According to the CA, a good driver of a motor
vehicle has to know defensive attitude even on a clear way.[31] However, such
observation does not support the conclusion that petitioner was negligent. The
test to determine the existence of negligence is as follows: Did petitioner in
doing the alleged negligent act use that reasonable care and caution which an
ordinarily prudent person would use in the same situation?[32] It is not disputed
that petitioner tried to turn left to avoid a collision. To put it otherwise,
petitioner did not insist on his right of way, notwithstanding the green light in
his lane. Still, the collision took place as the ten-wheeler careened on the
wrong lane. Clearly, petitioner exerted reasonable effort under the
circumstances to avoid injury not only to himself but also to his passengers
and the van he was driving. To hold that petitioner was grossly negligent
under the circumstances goes against the factual circumstances shown. It
appears to us he was more a victim of a vehicular accident rather than its
cause.

There being no clear showing that petitioner was culpable for gross
negligence, petitioners dismissal is illegal. It was error for the Court of
Appeals to reverse and set aside the decision of the Third Division of the
NLRC.

WHEREFORE, the petition is GRANTED. The assailed decision of the

Court of Appeals dated November 22, 1999 in CA-G.R. SP No. 54110 is SET
ASIDE. The decision of the National Labor Relations Commission dated
March 11, 1999 in NLRC CA No. 017339-98 is REINSTATED in full. No
pronouncement as to costs.

SO ORDERED.
G.R. No. 111222, January 18, 1995
CITIBANK, N. A., PETITIONER, VS. DR. JOSE C. GATCHALIAN, IN
HIS CAPACITY AS VOLUNTARY ARBITRATOR, CITIBANK
PHILIPPINES EMPLOYEES UNION (CPEU) AND EMY LLONILLO,
RESPONDENTS.
DECISION
PUNO, J.:
Petitioner Citibank N.A. prays for the reversal of the decision of voluntary
arbitrator Dr. Jose C. Gatchalian reinstating respondent Emerita "Emy"
Llonillo to her former position as clerk-typist/maker without backwages.
Respondent Llonillo, together with Teresita Supnad, her co-employee and
Florence Verendia, an employee of Asian-Pacific Broadcasting Company, Inc.
(APBCI), were implicated in a scheme to defraud petitioner bank in the
amount of P740,000.00. The administrative investigation conducted by
petitioner bank, with the assistance of the PNP Crime Laboratory, revealed the
following:
Petitioner bank received thirty-one (31) applications from alleged APBCI
employees [1] for the issuance of Citibank credit cards, popularly known as
Mastercard.
A Citibank employee verified by phone the data which appeared on the
application forms. It was Florence Verendia, as secretary of the APBCI
General Manager, who answered the check calls. The applications were then
approved and the corresponding new and unsigned credit cards were issued.
Petitioner banks policy is for new and unsigned credit cards to be released
only to the cardholders concerned or their duly authorized representatives.
However, a Citibank employee may himself take delivery of new and unsigned
credit cards after accomplishing a Card Pull-Out Request Form wherein the
employee assumes the responsibility of delivering the same to the cardholder
concerned.
Teresita Supnad, an employee of petitioner bank and Florence Verendia, took
delivery of nineteen (19) credit cards issued in the name of the said alleged
APBCI credit applicants.
On the other hand, on five (5) separate occasions, respondent Llonillo
personally picked up the newly approved and unsigned credit cards issued to
the other seven (7) alleged APBCI employees and delivered them to Verendia.
In July 1992, petitioner bank discovered that the credit card applications of the
alleged APBCI employees were fictitious. Per report of the PNP-Crime
Laboratory, Supnad and Verendia falsified the signatures of the alleged
applicants. [2] After getting the credit cards, the two used them to purchase
goods and avail of services from accredited commercial establishments worth
more than P200,000.00.
Petitioner bank required respondent Llonillo to explain. In her reply, Llonillo
admitted she personally picked up seven (7) credit cards issued to Anjenette
Caballa, Miriam Ramiro, Alen Malic, Caroline Ramiro, Cecilia Ibaez,
Lalaine Perez and Marife Bacuetes. She allegedly wanted to help the bank
deliver "fast, competent and problem-free service to clients." She disclaimed
knowledge that the APBCI applicants were fictitious. She also denied
participation in the fraudulent use of said credit cards.
Petitioner bank then formed a committee to investigate. Respondent Llonillo
and the President of the Citibank Philippines Employees Union (of which
respondent was a member) were invited for a conference. Respondent
revealed that on five (5) occasions, [3] she was asked by Verendia to take
delivery of newly approved and unsigned credit cards issued to some of the
latter's alleged officemates, namely: Anjenette Caballa, Miriam Ramiro, Allen
Malic, Caroline Ramiro, Cecilia Ibaez, Lalaine Perez and Marife Bacuetes. [4]
On said occasions, Verendia informed her by telephone she was on the way to
the bank to pick up some of the newly approved credit cards issued to her
alleged co-employees at APBCI. Each time, she acceded to Verendias request
and delivered the newly approved and unsigned credit cards to the latter
without knowing that the cardholders were fictitious. In every case,
respondent signed the Card Pull-Out Request Form, acknowledging receipt of
the credit cards and taking responsibility for their delivery to the cardholder
concerned. Respondent further disclosed that Verendia was introduced to her
by a mutual friend.
On November 19, 1992, the Committee recommended the termination of
respondents employment with the bank for loss of trust and confidence and
gross negligence. Petitioner bank adopted the Committees recommendation
and notified respondent of her immediate dismissal. [5] The bank also
terminated the services of Supnad. In addition, it filed a case for estafa
through falsification of private/commercial documents against both Supnad
and Verendia.
Pursuant to their existing Collective Bargaining Agreement, petitioner bank
and respondent union referred Llonillos dismissal to the Grievance
Machinery but the latter failed to resolve the controversy. As a next step, the
parties submitted the case for resolution to voluntary arbitrator Dr. Jose C.
Gatchalian.
During the arbitration, a term of reference (stipulation of facts) [6] was agreed
upon by the parties. Petitioner bank then presented its evidence. When it was
the turn of the union to adduce evidence, the union officers and counsel
refused to reveal the purpose of their request to subpoena as a witness one of
petitioner banks officers. The subpoena was not issued [7] and respondent
refused to adduce evidence.
On the basis of the record and the evidence presented by petitioner bank,
voluntary arbitrator Dr. Gatchalian rendered a decision [8] ordering the
reinstatement of respondent Llonillo without payment of backwages.
Hence this petition for certiorari where petitioner contends:
THE DECISION OF THE VOLUNTARY ARBITRATOR IS PATENTLY IN
CONTRAVENTION OF APPLICABLE LAWS AND DECISIONS OF THIS
HONORABLE COURT.
THE DECISION OF THE VOLUNTARY ARBITRATOR IS NOT
SUPPORTED BY, NAY, IGNORED, THE EVIDENCE ON RECORD.
THE DECISION OF THE VOLUNTARY ARBITRATOR CONSTITUTES
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF
JURISDICTION ON HIS PART.
We find for the petitioner.
In ordering the reinstatement of respondent Llonillo, the voluntary arbitrator
ruled that the law [9] requires that an employees negligence, to be a valid
ground for dismissal, must be both gross and habitual. He did not find the
negligence of respondent Llonillo as within this category.
Respondent arbitrators ruling disregards the fact that Llonillo was dismissed
on two (2) grounds, viz: loss of confidence and gross negligence. Petitioners
loss of confidence was anchored on its suspicion that Llonillo conspired with
Supnad and Verendia in the fraud. On the other hand, its finding of gross
negligence was grounded on Llonillos act of carelessly delivering seven (7)
newly approved and unsigned Mastercards to Verendia and the latters
messenger. Thus, petitioner banks Notice of Termination to respondent
Llonillo stated:
"In any event, even assuming that you (respondent Llonillo) were not in
connivance with Florence (Verendia) and Tess (Supnad), the bank finds your
deliberate action of releasing 7 unsigned Mastercards to complete strangers,
without even asking receipt from them, as gross negligence on your part. As
you know by now, because you released said 7 unsigned Mastercards to
Florence and Tess, the two were able to falsify, and did falsify the signatures
of the cardholders therein (on the spaces labeled "Authorized Signature") and
fraudulently used the same to buy goods and services from the banks
accredited establishments, the total value of which is at least P201,795.34. In
this regard, the bank finds the statement you gave by way of explanation, that
you did not notice the provisions of the Card Pull-Out Requests, you ought to
have known/realized that it was totally negligent for anyone to deliver
unsigned Mastercards to total strangers."
We have carefully examined the records and we find no substantial evidence
that would clearly and convincingly prove that respondent Llonillo conspired
with Verendia and Supnad in defrauding petitioner bank of over P200,000.00.
The Report submitted by the PNP Crime Laboratory [10] revealed that it was
Supnad and Verendia who falsified the signatures of the fictitious cardholders
and fraudulently used the same in purchasing goods and services from
accredited commercial establishments. Respondent Llonillos participation
was limited to picking-up seven (7) of the newly-approved and unused credit
cards from the banks releasing officer and turning them over to Verendia. [11]
It was precisely on the basis of the above findings that only Verendia and
Supnad (excluding Llonillo) were charged with estafa through falsification of
private/commercial documents. The alleged close association of respondent
Llonillo to her co-employee Supnad, even if true, does not establish her
complicity in the scheme to defraud the bank. By itself and without more, it is
insufficient to implicate her in the fraud committed by Supnad and Verendia.
Be that as it may, we find that respondent arbitrator gravely abused his
discretion in finding that Llonillo did not commit gross negligence in the
performance of her duty.
Gross negligence implies a want or absence of or failure to exercise slight care
or diligence, or the entire absence of care. It evinces a thoughtless disregard of
consequences without exerting any effort to avoid them. [12]
The evidence on record succinctly established the gross negligence of
respondent Llonillo. She admitted that the first time she was asked by
Verendia to pick up one of the newly approved and unused credit cards, she
immediately acceded. Yet at that time, she had not personally met nor
previously seen Verendia. When asked how she came to know to whom she
would give the card, respondent Llonillo responded that Verendia described
herself over the phone and that was how she was able to identify Verendia
when she first met her. Thus, on the basis of a mere description over the
telephone, respondent Llonillo delivered the credit cards to Verendia.
The succeeding occasions when she delivered the other newly approved and
unused credit cards to Verendia also revealed respondent Llonillos gross lack
of care. Again, she admitted that Verendia would call her up at the office to
say she was enroute to the bank to get some of the newly approved and unused
credit cards. Under the pretext that Verendia had difficulty in finding a parking
space within the banks premises, Verendia would request her to get the credit
cards instead. Respondent Llonillo acceded to the requests. She got the new
and unused credit cards and gave them to Verendia at the mezzanine floor of
the bank. It did not strike respondent Llonillo as strange that while Verendia
allegedly found difficulty in finding a parking space within the bank premises,
yet she was always able to meet her at the mezzanine floor of the bank to get
the credit cards.
Respondent Llonillos gross negligence also showed when she delivered the
credit card issued to Marife Bacuetes, another fictitious APBCI employee. She
admitted that she gave the card to Verendias messenger, a person whom she
had not seen before but who merely represented to her that he was the
messenger sent by Verendia to pick up the card. When queried about the
identity of the said messenger, respondent replied that she did not ask for the
messengers name. Neither did she ask the alleged messenger or Verendia
herself to sign a receipt evidencing their acceptance of the credit cards.
All of the above acts and omissions of respondent Llonillo were in patent
violation of petitioner banks policy that an employee may take delivery of
newly approved and unused credit cards issued in anothers name, but in
doing so, he/she assumes the responsibility of delivering the credit card to the
cardholder concerned or to the latters duly authorized representative.
Respondent Llonillo claims as a defense that even if she did not pick up the
seven (7) newly approved and unused credit cards and deliver the same to
Verendia, still, the latter could have gotten hold of the same by herself.
Respondent stresses that Verendia herself and bank employee Supnad were
able to personally pick up the other credit cards issued to fictitious APBCI
employees. The possibility is beside the point. It cannot obliterate the truth
that she committed gross negligence in the delivery of the seven (7) newly
approved and unused credit cards to Verendia and her messenger.
Finally, respondent Llonillos employment service for twenty-two (22) years
would not, by itself, mitigate her negligence, especially in view of the
substantial loss incurred by petitioner bank. As correctly pointed out by
respondent voluntary arbitrator:
"The Unions claim for compassionate justice on Emys 22 years of service
and as first offender merit scant consideration. The longer an employe(e) stays
in the service of the company, the greater is his responsibility for knowledge
and compliance with the norms of conduct, and the code of discipline of the
company. x x x"
IN VIEW WHEREOF, the appealed decision of voluntary arbitrator Dr. Jose
C. Gatchalian is set aside. Respondent Emerita "Emy" Llonillo is found guilty
of gross negligence and is hereby dismissed from service. Accordingly, the
temporary restraining order issued by this Court in its Resolution, dated
August 18, 1993, is made permanent. No pronouncement as to costs.

Neither are we impressed with respondent Llonillos claim that she was SO ORDERED.
singled out as negligent in her taking delivery of the seven unused credit
cards. The banks releasing officer acted well within the banks rules when it
released the subject credit cards to respondent Llonillo. As previously noted,
the bank allows, as an exception, any of its employees to take delivery of
newly approved and unused credit cards but in doing so, the said employee
undertakes to deliver the same to the cardholder concerned and assumes
responsibility for its fraudulent use. Respondent Llonillo failed in this
undertaking.

We also rule that respondent Llonillos negligence is both gross and habitual.
It was proved that she picked up the newly approved credit cards on five (5)
separate occasions and delivered the same to Verendia and the latters
messenger. Certainly, these repetitive acts and omissions bespeak of
habituality.
G.R. No. 164181, September 14, 2011
NISSAN MOTORS PHILS., INC., PETITIONER, VS. VICTORINO
ANGELO, RESPONDENT.
DECISION
PERALTA, J.:
This is to resolve the Petition for Review[1] dated July 10, 2004 of petitioner
Nissan Motors Phils., Inc. (Nissan) assailing the Decision[2] dated March 24,
2004 of the Court of Appeals (CA) and the latter's Resolution[3] dated June 9,
2004.
The records contain the following antecedent facts:
Respondent Victorino Angelo was employed by Nissan on March 11, 1989 as
one of its payroll staff. On April 7 to 17, 2000, respondent was on sick leave,
thus, he was not able to prepare the payroll for the said period. Again, on April
27 and 28, 2000, respondent was on an approved vacation leave which again
resulted in the non-preparation of the payroll for that particular period.
On May 8, 2000, respondent received a Memorandum[4] from the petitioner
containing the following:
This is to inform you that the Company is considering your dismissal from
employment on the grounds of serious misconduct, willful disobedience and
gross neglect of duties.
It appears that on April 10, 2000, Monday, which was the supposed cut-off
date for payroll purposes for the April 15 payroll, you went home early
without finishing your work and requested for a referral letter from the
company clinic to E. Delos Santos Hospital claiming that you are not feeling
well.
On April 11, Tuesday, you did not report for work, without any notice to the
company or to any of your immediate superior section head, department head
and division head. A phone call was made to your home, but the company
could not make any contact.
On April 12, Wednesday, you reported for work but went home early claiming
that you were again not feeling well. You were reminded of the coming
payday on Friday, April 14, and you said you will be able to finish it on time
and that you will just continue/finish your work the following day.
On April 13, Thursday, you again did not report for work without any notice to
the company just like what you did last Tuesday. Your immediate superior,
sensing that you did not finish your task, tried to contact you but to no avail,
as you were residing in Novaliches and your home phone was not in order. So
we decided to open your computer thru the help of our IT people to access the
payroll program.
On April 14, Friday (payday), we were still doing the payroll thru IT because
we could not contact you. Later in the day, the Company decided to release
the payroll of employees the following day as we already ran out of time and
the Company just based the net pay of the employees on their March 15
payroll. Naturally, the amount released to the employees were not accurate as
some got more than (sic), while some got less than what they were supposed
to receive.
Consequently, many employees got angry, as the Company paid on a Saturday,
(in practice we do not release salary on a Saturday as it is always done in
advance, i.e., Friday) and majority got lesser amount than what they were
supposed to receive. In addition, the employees were not given their payslip
where they can base the net pay they received.
When you reported for work on Tuesday, April 18, we had a meeting and you
were advised to transfer your payroll task to your immediate superior, which
you agreed. The time table agreement was 2 payroll period, meaning April 30
and May 15 payroll.
Still on April 18, Tuesday, you filed an application for vacation leave due to
your son's graduation on April 27 and 28. Because it is again payroll time, we
advised that your leave will be approved on the condition that you will ensure
that the payroll is finished on time and [you] will make a proper turn over to
your immediate superior before your leave. You agreed and your leave was
approved.
On April 24, Monday, you were reminded you should start on your payroll
task because you will be on leave starting April 27, Thursday, you said yes.
On April 25, Tuesday, you were again reminded on finishing the payroll and
the turn over again and you said yes.
On April 26, Wednesday, you were again reminded on the same matter and, in
fact, Mr. AA del Rosario reminded you also on the matter about 5:30 p.m. And
you promised him that the task will be finished by tomorrow (sic) and will just
leave the diskette in your open drawer. You were left in the office until 6:00
p.m.
On April 27, Thursday, you were already on leave and your superior, Mr. M.
Panela, found out that the diskette only contained the amount and name of
employees, but not the account number. Likewise, the deductions from
salaries was not finished, the salaries of contractuals, apprentices were also
not finished. Since the bank only reads account numbers of employees, we
experienced delay in the payroll processing. You even promised to call the
office i.e., M Panela to give additional instructions not later than 12:00 noon
on the same day, but you did not do so. In fact, the direct phone line of Mr. AA
del Rosario was given to you by your officemate so you can call the office
directly and not thru long distance.
On April 28, Friday, after exhaustive joint efforts done by Welfare
Management Section and IT Division, we were able to finally release the
payroll thru the bank, but many employees got lower amount than what they
have expected, as in fact at least 43 employees out of 360 got salaries below
P1,000.00, among them about 10 people got no salary primarily due to wrong
deduction and computation done by you. Again, many people got angry to the
management's inefficient handling of their payroll.
On May 2, Tuesday, you did not report for work, again you said you are not
feeling well, but the information to us came very late at about noon time.
On May 3, Wednesday, you reported for work, and was instructed to finish the
payslips for the payroll periods April 15 and April 30. You said yes, and you
promised not to go home on that day without finishing the payslips. Later, you
decided on your own to just compute the payslip on a monthly basis instead of
the usual semi-monthly basis as is the customary thing to do. As a result
thereof, an error in the tax withholding happened and again resulted in another
confusion and anger among employees, as in fact for two (2) consecutive
days, May 3 and May 4, the plant workers refused to render overtime.
As a consequence of all these, the manufacturing employees, numbering about
350 people or about 65% of [Nissan's total population], since April 16, have
started to decline rendering overtime work, saying after their 15 days of work
they received only less than P200 while some even received only P80.
The manufacturing operation was hampered completely in the month of April
and the first week of May because of these several incidents. In sum, the
company has suffered massive loss of opportunity to sell because of failure to
produce in the production area due to non-availability of workers rendering
overtime, high absenteeism rate among plant direct workers primarily due to
the payroll problem. It came at a time when NMPI sales [are] just starting to
pick up due to the introduction of the new model Sentra Exalta. The loss is
simply too overwhelming.

Accordingly, you are hereby given a period of three (3) days from receipt
hereof to submit your written answer.
In the meantime, you are hereby placed on preventive suspension effective
immediately.
A hearing will be conducted by Mr. AA del Rosario, on May 13, 2000 at 9:00
a.m. at the Company's conference room (Fairlady).
Respondent filed a Complaint[5] for illegal suspension with the Department of
Labor and Employment (DOLE) on May 12, 2000.
Petitioner conducted an investigation on May 13, 2000, and concluded that
respondent's explanation was untrue and insufficient. Thus, on June 13, 2000,
petitioner issued a Notice of Termination.[6]
Respondent amended his previous complaint against petitioner on June 22,
2000, to include the charge of illegal dismissal.[7] On September 29, 2000, the
Labor Arbiter rendered a Decision[8] dismissing respondent's complaint for
lack of merit. Undaunted, respondent brought the case to the National Labor
Relations Commission (NLRC), which eventually rendered a Resolution[9]
dated February 14, 2002 dismissing the appeal and affirming the Labor
Arbiter's Decision. Respondent's motion for reconsideration of the NLRC
resolution was subsequently denied on May 13, 2002.[10]
Aggrieved, respondent filed a petition for certiorari[11] under Rule 65 of the
Rules of Court with the CA and the latter granted the same petition in its
Decision dated March 24, 2004, the dispositive portion of which reads:
WHEREFORE, the petition is GRANTED. The assailed resolutions dated
February 14, 2002 and May 13, 2002 are REVERSED and SET ASIDE. The
petitioner is hereby reinstated and the private respondents are ordered to pay
him backwages from the time of his illegal dismissal.
SO ORDERED.
Unsatisfied with the decision of the CA, Nissan filed a motion for
reconsideration, which was denied by the same court in a Resolution dated
June 9, 2004.
Thus, the present petition, to which the petitioner cites the following grounds:
A
THE COURT OF APPEALS COMMITTED A SERIOUS ERROR OF LAW
WHEN IT OVERTURNED THE FACTUAL FINDINGS OF BOTH THE
LABOR ARBITER AND THE NLRC WHICH ARE BASED ON
SUBSTANTIAL EVIDENCE.
B
THE COURT OF APPEALS COMMITTED A SERIOUS ERROR OF LAW
WHEN IT DISREGARDED PRIVATE RESPONDENT'S SERIOUS
MISCONDUCT AND INSUBORDINATION, AND DECIDED THE CASE
ONLY ON THE CHARGE OF GROSS AND HABITUAL NEGLIGENCE.
C
THE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW IN
IGNORING PRIVATE RESPONDENT'S MISCONDUCT WHICH, IF EVER
IT DOES NOT JUSTIFY DISMISSAL BECAUSE OF HIS 11-YEAR
SERVICE NONETHELESS LIMITS THE AWARD OF BACKWAGES.[12]
The petition is meritorious.

Petitioner argues that the factual findings of the Labor Arbiter and the NLRC
should have been accorded respect by the CA as they are based on substantial
evidence. However, factual findings of administrative agencies are not
infallible and will be set aside if they fail the test of arbitrariness.[13] In the
present case, the findings of the CA differ from those of the Labor Arbiter and
the NLRC. The Court, in the exercise of its equity jurisdiction, may look into
the records of the case and re-examine the questioned findings.[14]
The Labor Code provides that an employer may terminate the services of an
employee for a just cause.[15] Petitioner, the employer in the present case,
dismissed respondent based on allegations of serious miscounduct, willful
disobedience and gross neglect.
One of the just causes enumerated in the Labor Code is serious misconduct.
Misconduct is improper or wrong conduct.[16] It is the transgression of some
established and definite rule of action, a forbidden act, a dereliction of duty,
willful in character, and implies wrongful intent and not mere error in
judgment.[17] Such misconduct, however serious, must nevertheless be in
connection with the employee's work to constitute just cause for his
separation.[18] Thus, for misconduct or improper behavior to be a just cause for
dismissal, (a) it must be serious; (b) it must relate to the performance of the
employee's duties; and (c) it must show that the employee has become unfit to
continue working for the employer.[19]
Going through the records, this Court found evidence to support the allegation
of serious misconduct or insubordination. Petitioner claims that the language
used by respondent in his Letter-Explanation is akin to a manifest refusal to
cooperate with company officers, and resorted to conduct which smacks of
outright disrespect and willful defiance of authority or insubordination. The
misconduct to be serious within the meaning of the Labor Code must be of
such a grave and aggravated character and not merely trivial or unimportant.
[20]
The Letter-Explanation[21] partly reads:
Again, it's not negligence on my part and I'm not alone to be blamed. It's
negligence on your part [Perla Go] and A.A. Del Rosario kasi, noong pang
April 1999 ay alam ninyo na hindi ako ang dapat may responsibilidad ng
payroll kundi ang Section Head eh bakit hindi ninyo pinahawak sa Section
Head noon pa. Pati kaming dalawa sa payroll, kasama ko si Thelma.
Tinanggal nyo si Thelma. Hindi nyo ba naisip na kailangan dalawa ang tao sa
payroll para pag absent ang isa ay may gagawa. Dapat noon nyo pa naisip
iyan. Ang tagal kong gumawa ng trabahong hindi ko naman dapat ginagawa.
This Court finds the above to be grossly discourteous in content and tenor.
The most appropriate thing he could have done was simply to state his facts
without resorting to such strong language. Past decisions of this Court have
been one in ruling that accusatory and inflammatory language used by an
employee to the employer or superior can be a ground for dismissal or
termination.[22]
Another just cause cited by the petitioner is willful disobedience. One of the
fundamental duties of an employee is to obey all reasonable rules, orders and
instructions of the employer. Disobedience, to be a just cause for termination,
must be willful or intentional, willfulness being characterized by a wrongful
and perverse mental attitude rendering the employee's act inconsistent with
proper subordination. A willful or intentional disobedience of such rule, order
or instruction justifies dismissal only where such rule, order or instruction is
(1) reasonable and lawful, (2) sufficiently known to the employee, and (3)
connected with the duties which the employee has been engaged to discharge.
[23]
This allegation of willful disobedience can still be adduced and proven
from the same Letter-Explanation cited earlier.
Petitioner also dismissed respondent because of gross or habitual negligence.
Neglect of duty, to be a ground for dismissal, must be both gross and habitual.
[24]
In finding that petitioner was able to adduce evidence that would justify its
dismissal of respondent, the NLRC correctly ruled that the latter's failure to
turn over his functions to someone capable of performing the vital tasks which
he could not effectively perform or undertake because of his heart ailment or
condition constitutes gross neglect. It stated that:
x x x Be it mentioned and emphasized that complainant cannot be faulted for
his absences incurred on 10, 11, 13, 14, 17, 27 and 28 of April 2000 as he
went on official leave on said dates. Except for the last two dates mentioned
(27 and 28 April 2000), health problem compelled complainant to be on sick
leave of absence on the foregoing dates. It is not the complainant's liking, in
other words, to be afflicted with any form of heart ailment which actually
caused him to incur such leave of absences. Complainant's pellucid fault,
however, lies on his failure to effect the "much-needed" turn over of functions
to someone capable of performing the vital task(s) which he could not
effectively perform or undertake because of his heart ailment or condition.
Indeed, the trouble(s) "felt" by management and the employees concerned on
the payday of 15 April 2000 may seem justified under the circumstances as
complainant indeed has gotten ill and in fact went on sick leave of absence
prior to said payday. The same, however, certainly does not hold true as to the
trouble(s) and chaos felt and which occurred on the payday of 30 April 2000
as diligence and prudence logically and equitably required complainant to
have effected the necessary turn over of his functions to someone capable of
taking over his assigned task(s) even perhaps on a merely temporary basis.
The preparation of payroll, especially that of a big business entity such as
herein respondent company, certainly involves serious, diligent, and
meticulous attention of the employee tasked of performing such function and a
company definitely could not let either negligence or absence of the employee
concerned get in the way of the performance of the undertaking of such,
otherwise, serious repercussion(s) would be the logical and unavoidable
consequences; such is what befell the respondents. Be it mentioned at this
juncture that under the circumstances herein then prevailing, it would seem
just logical and in keeping with the natural "reflexes," so to speak, of a
business entity, to require an incapable employee tasked to perform a vital
function, to effect the necessary turn over of functions of such employee to
someone capable. Be it further emphasized, however, that even assuming that
no formal directive was given by the company to the employee concerned for
the turn over of the latter's functions, said employee should have taken the
initiative of so doing considering the importance of the task(s) he is
performing. Hence, failure to do so would clearly be tantamount to serious
neglect of duty, a valid ground in terminating employment relations.[25]
Gross negligence connotes want of care in the performance of one's duties.
Habitual neglect implies repeated failure to perform one's duties for a period
of time, depending upon the circumstances. On the other hand, fraud and
willful neglect of duties imply bad faith on the part of the employee in failing
to perform his job to the detriment of the employer and the latter's business.[26]
It must be emphasized at this point that the onus probandi to prove the
lawfulness of the dismissal rests with the employer. In termination cases, the
burden of proof rests upon the employer to show that the dismissal is for just
and valid cause. Failure to do so would necessarily mean that the dismissal
was not justified and, therefore, was illegal.[27] In this case, both the Labor
Arbiter and the NLRC were not amiss in finding that the dismissal of
respondent was legal or for a just cause based on substantial evidence
presented by petitioner. Substantial evidence, which is the quantum of proof
required in labor cases, is that amount of relevant evidence which a reasonable
mind might accept as adequate to justify a conclusion.[28]
However, although the dismissal was legal, respondent is still entitled to a
separation pay as a measure of financial assistance, considering his length of
service and his poor physical condition which was one of the reasons he filed
a leave of absence. As a general rule, an employee who has been dismissed for
any of the just causes enumerated under Article 282[29] of the Labor Code is
not entitled to separation pay.[30] Although by way of exception, the grant of
separation pay or some other financial assistance may be allowed to an
employee dismissed for just causes on the basis of equity.[31] This concept has
been thoroughly discussed in Solidbank Corporation v. NLRC,[32] thus:
The reason that the law does not statutorily grant separation pay or financial Nissan Motors Phils., Inc. is hereby GRANTED. Consequently, the Decision
assistance in instances of termination due to a just cause is precisely because dated March 24, 2004 of the Court of Appeals and the latter's Resolution dated
the cause for termination is due to the acts of the employee. In such instances, June 9, 2004 are hereby REVERSED AND SET ASIDE and the Decision
however, this Court, inspired by compassionate and social justice, has in dated September 29, 2000 of the Labor Arbiter and its Resolution dated
the past awarded financial assistance to dismissed employees when February 14, 2002 are hereby REINSTATED with the MODIFICATION
circumstances warranted such an award. that petitioner shall award respondent his separation pay, the computation of
which shall be based on the prevailing pertinent laws on the matter.
In Central Philippines Bandag Retreaders, Inc. v. Diasnes,[33] this Court
discussed the parameters of awarding separation pay to dismissed employees SO ORDERED.
as a measure of financial assistance, viz:
To reiterate our ruling in Toyota, labor adjudicatory officials and the CA must
demur the award of separation pay based on social justice when an employee's
dismissal is based on serious misconduct or willful disobedience; gross and
habitual neglect of duty; fraud or willful breach of trust; or commission of a
crime against the person of the employer or his immediate family - grounds
under Art. 282 of the Labor Code that sanction dismissals of employees. They
must be most judicious and circumspect in awarding separation pay or
financial assistance as the constitutional policy to provide full protection to
labor is not meant to be an instrument to oppress the employers. The
commitment of the Court to the cause of labor should not embarrass us from
sustaining the employers when they are right, as here. In fine, we should be
more cautious in awarding financial assistance to the undeserving and those
who are unworthy of the liberality of the law.[34]

Thus, in Philippine Commercial International Bank v. Abad,[35] this Court,

having considered the circumstances present therein and as a measure of
social justice, awarded separation pay to a dismissed employee for a just cause
under Article 282. The same concession was given by this Court in Aparente,
Sr. v. National Labor Relations Commission[36] and Tanala v. National Labor
Relations Commission.[37]

WHEREFORE, the Petition for Review dated July 10, 2004 of petitioner
G.R. NO. 146530, January 17, 2005
PEDRO CHAVEZ, PETITIONER, VS. NATIONAL LABOR
RELATIONS COMMISSION, SUPREME PACKAGING, INC. AND
ALVIN LEE, PLANT MANAGER, RESPONDENTS.
DECISION
CALLEJO, SR., J.:
Before the Court is the petition for review on certiorari of the Resolution[1]
dated December 15, 2000 of the Court of Appeals (CA) reversing its Decision
dated April 28, 2000 in CA-G.R. SP No. 52485. The assailed resolution
reinstated the Decision dated July 10, 1998 of the National Labor Relations
Commission (NLRC), dismissing the complaint for illegal dismissal filed by
herein petitioner Pedro Chavez. The said NLRC decision similarly reversed its
earlier Decision dated January 27, 1998 which, affirming that of the Labor
Arbiter, ruled that the petitioner had been illegally dismissed by respondents
Supreme Packaging, Inc. and Mr. Alvin Lee.
The case stemmed from the following facts:
The respondent company, Supreme Packaging, Inc., is in the business of
manufacturing cartons and other packaging materials for export and
distribution. It engaged the services of the petitioner, Pedro Chavez, as truck
driver on October 25, 1984. As such, the petitioner was tasked to deliver the
respondent companys products from its factory in Mariveles, Bataan, to its
various customers, mostly in Metro Manila. The respondent company
furnished the petitioner with a truck. Most of the petitioners delivery trips
were made at nighttime, commencing at 6:00 p.m. from Mariveles, and
returning thereto in the afternoon two or three days after. The deliveries were
made in accordance with the routing slips issued by respondent company
indicating the order, time and urgency of delivery. Initially, the petitioner was
paid the sum of P350.00 per trip. This was later adjusted to P480.00 per trip
and, at the time of his alleged dismissal, the petitioner was receiving P900.00
per trip.
Sometime in 1992, the petitioner expressed to respondent Alvin Lee,
respondent companys plant manager, his (the petitioners) desire to avail
himself of the benefits that the regular employees were receiving such as
overtime pay, nightshift differential pay, and 13th month pay, among others.
Although he promised to extend these benefits to the petitioner, respondent
Lee failed to actually do so.
On February 20, 1995, the petitioner filed a complaint for regularization with
the Regional Arbitration Branch No. III of the NLRC in San Fernando,
Pampanga. Before the case could be heard, respondent company terminated
the services of the petitioner. Consequently, on May 25, 1995, the petitioner
filed an amended complaint against the respondents for illegal dismissal,
unfair labor practice and non-payment of overtime pay, nightshift differential
pay, 13th month pay, among others. The case was docketed as NLRC Case
No. RAB-III-02-6181-95.
The respondents, for their part, denied the existence of an employer-employee
relationship between the respondent company and the petitioner. They averred
that the petitioner was an independent contractor as evidenced by the contract
of service which he and the respondent company entered into. The said
contract provided as follows:
That the Principal [referring to Supreme Packaging, Inc.], by these presents,
agrees to hire and the Contractor [referring to Pedro Chavez], by nature of
their specialized line or service jobs, accepts the services to be rendered to the
Principal, under the following terms and covenants heretofore mentioned:
1. That the inland transport delivery/hauling activities to be performed by
the contractor to the principal, shall only cover travel route from
Mariveles to Metro Manila. Otherwise, any change to this travel route
shall be subject to further agreement by the parties concerned.
2. That the payment to be made by the Principal for any hauling or
delivery transport services fully rendered by the Contractor shall be on
a per trip basis depending on the size or classification of the truck
being used in the transport service, to wit:
a) If the hauling or delivery service shall require a truck of six wheeler,
the payment on a per trip basis from Mariveles to Metro Manila shall
be THREE HUNDRED PESOS (P300.00) and EFFECTIVE
December 15, 1984.
b) If the hauling or delivery service require a truck of ten wheeler, the
payment on a per trip basis, following the same route mentioned, shall
be THREE HUNDRED FIFTY (P350.00) Pesos and Effective
December 15, 1984.
3. That for the amount involved, the Contractor will be to [sic] provide
for [sic] at least two (2) helpers;
4. The Contractor shall exercise direct control and shall be responsible to
the Principal for the cost of any damage to, loss of any goods, cargoes,
finished products or the like, while the same are in transit, or due to
reckless [sic] of its men utilized for the purpose above mentioned;
5. That the Contractor shall have absolute control and disciplinary power
over its men working for him subject to this agreement, and that the
Contractor shall hold the Principal free and harmless from any liability
or claim that may arise by virtue of the Contractors non-compliance to
the existing provisions of the Minimum Wage Law, the Employees
Compensation Act, the Social Security System Act, or any other such
law or decree that may hereafter be enacted, it being clearly
understood that any truck drivers, helpers or men working with and for
the Contractor, are not employees who will be indemnified by the
Principal for any such claim, including damages incurred in
connection therewith;
6. This contract shall take effect immediately upon the signing by the
parties, subject to renewal on a year-to-year basis.[2]
This contract of service was dated December 12, 1984. It was subsequently
renewed twice, on July 10, 1989 and September 28, 1992. Except for the rates
to be paid to the petitioner, the terms of the contracts were substantially the
same. The relationship of the respondent company and the petitioner was
allegedly governed by this contract of service.
The respondents insisted that the petitioner had the sole control over the
means and methods by which his work was accomplished. He paid the wages
of his helpers and exercised control over them. As such, the petitioner was not
entitled to regularization because he was not an employee of the respondent
company. The respondents, likewise, maintained that they did not dismiss the
petitioner. Rather, the severance of his contractual relation with the respondent
company was due to his violation of the terms and conditions of their contract.
The petitioner allegedly failed to observe the minimum degree of diligence in
the proper maintenance of the truck he was using, thereby exposing
respondent company to unnecessary significant expenses of overhauling the
said truck.
After the parties had filed their respective pleadings, the Labor Arbiter
rendered the Decision dated February 3, 1997, finding the respondents guilty
of illegal dismissal. The Labor Arbiter declared that the petitioner was a
regular employee of the respondent company as he was performing a service
that was necessary and desirable to the latters business. Moreover, it was
noted that the petitioner had discharged his duties as truck driver for the
respondent company for a continuous and uninterrupted period of more than
ten years.
The contract of service invoked by the respondents was declared null and void
as it constituted a circumvention of the constitutional provision affording full
protection to labor and security of tenure. The Labor Arbiter found that the
petitioners dismissal was anchored on his insistent demand to be
regularized. Hence, for lack of a valid and just cause therefor and for their
failure to observe the due process requirements, the respondents were found
guilty of illegal dismissal. The dispositive portion of the Labor Arbiters
decision states:
WHEREFORE, in the light of the foregoing, judgment is hereby rendered
declaring respondent SUPREME PACKAGING, INC. and/or MR. ALVIN
LEE, Plant Manager, with business address at BEPZ, Mariveles, Bataan guilty
of illegal dismissal, ordering said respondent to pay complainant his
separation pay equivalent to one (1) month pay per year of service based on
the average monthly pay of P10,800.00 in lieu of reinstatement as his
reinstatement back to work will not do any good between the parties as the
employment relationship has already become strained and full backwages
from the time his compensation was withheld on February 23, 1995 up to
January 31, 1997 (cut-off date) until compliance, otherwise, his backwages
shall continue to run. Also to pay complainant his 13th month pay, night shift
differential pay and service incentive leave pay hereunder computed as
follows:
a) Backwages .. P248,400.00 an employee of the respondent company.
1998, as it affirmed in toto the decision of the Labor Arbiter. In the said
decision, the NLRC characterized the contract of service between the
respondent company and the petitioner as a scheme that was resorted to by
the respondents who, taking advantage of the petitioners unfamiliarity with
the English language and/or legal niceties, wanted to evade the effects and
implications of his becoming a regularized employee.[5]
The respondents sought reconsideration of the January 27, 1998 Decision of
the NLRC. Acting thereon, the NLRC rendered another Decision[6] dated July
10, 1998, reversing its earlier decision and, this time, holding that no
employer-employee relationship existed between the respondent company and
the petitioner. In reconsidering its earlier decision, the NLRC stated that the
respondents did not exercise control over the means and methods by which the
petitioner accomplished his delivery services. It upheld the validity of the
contract of service as it pointed out that said contract was silent as to the time
by which the petitioner was to make the deliveries and that the petitioner
could hire his own helpers whose wages would be paid from his own account.
These factors indicated that the petitioner was an independent contractor, not

b) Separation Pay ....
c) 13th month pay .
d) Service Incentive Leave Pay ..
TOTAL
P140,400.00 The NLRC ruled that the contract of service was not intended to circumvent
P 10,800.00 Article 280 of the Labor Code on the regularization of employees. Said
contract, including the fixed period of employment contained therein, having
2,040.00 been knowingly and voluntarily entered into by the parties thereto was
declared valid citing Brent School, Inc. v. Zamora.[7] The NLRC, thus,
P401,640.00
dismissed the petitioners complaint for illegal dismissal.

Respondent is also ordered to pay ten (10%) of the amount due the
complainant as attorneys fees.
SO ORDERED.[3]
The respondents seasonably interposed an appeal with the NLRC. However,
the appeal was dismissed by the NLRC in its Decision[4] dated January 27,
The petitioner sought reconsideration of the July 10, 1998 Decision but it was
denied by the NLRC in its Resolution dated September 7, 1998. He then filed
with this Court a petition for certiorari, which was referred to the CA
following the ruling in St. Martin Funeral Home v. NLRC.[8]
The appellate court rendered the Decision dated April 28, 2000, reversing the
July 10, 1998 Decision of the NLRC and reinstating the decision of the Labor
Arbiter. In the said decision, the CA ruled that the petitioner was a regular
employee of the respondent company because as its truck driver, he performed
a service that was indispensable to the latters business. Further, he had been
the respondent companys truck driver for ten continuous years. The CA also
reasoned that the petitioner could not be considered an independent contractor
since he had no substantial capital in the form of tools and machinery. In fact,
the truck that he drove belonged to the respondent company. The CA also
observed that the routing slips that the respondent company issued to the
petitioner showed that it exercised control over the latter. The routing slips
indicated the chronological order and priority of delivery, the urgency of
certain deliveries and the time when the goods were to be delivered to the
customers.
The CA, likewise, disbelieved the respondents claim that the petitioner
abandoned his job noting that he just filed a complaint for regularization. This
actuation of the petitioner negated the respondents allegation that he
abandoned his job. The CA held that the respondents failed to discharge their
burden to show that the petitioners dismissal was for a valid and just cause.
Accordingly, the respondents were declared guilty of illegal dismissal and the
decision of the Labor Arbiter was reinstated.
In its April 28, 2000 Decision, the CA denounced the contract of service
between the respondent company and the petitioner in this wise:
In summation, we rule that with the proliferation of contracts seeking to
prevent workers from attaining the status of regular employment, it is but
necessary for the courts to scrutinize with extreme caution their legality and
justness. Where from the circumstances it is apparent that a contract has been
entered into to preclude acquisition of tenurial security by the employee, they
should be struck down and disregarded as contrary to public policy and
morals. In this case, the contract of service is just another attempt to exploit
the unwitting employee and deprive him of the protection of the Labor Code
by making it appear that the stipulations of the parties were governed by the
Civil Code as in ordinary transactions.[9]
However, on motion for reconsideration by the respondents, the CA made a
complete turn around as it rendered the assailed Resolution dated December
15, 2000 upholding the contract of service between the petitioner and the
respondent company. In reconsidering its decision, the CA explained that the
extent of control exercised by the respondents over the petitioner was only
with respect to the result but not to the means and methods used by him. The
CA cited the following circumstances: (1) the respondents had no say on how
the goods were to be delivered to the customers; (2) the petitioner had the
right to employ workers who would be under his direct control; and (3) the
petitioner had no working time.
The fact that the petitioner had been with the respondent company for more
than ten years was, according to the CA, of no moment because his status was
determined not by the length of service but by the contract of service. This
contract, not being contrary to morals, good customs, public order or public
policy, should be given the force and effect of law as between the respondent
company and the petitioner. Consequently, the CA reinstated the July 10, 1998
Decision of the NLRC dismissing the petitioners complaint for illegal
dismissal.
Hence, the recourse to this Court by the petitioner. He assails the December
15, 2000 Resolution of the appellate court alleging that:
(A)
THE COURT OF APPEALS COMMITTED A GRAVE ABUSE OF
DISCRETION AMOUNTING TO EXCESS OF JURISDICTION IN GIVING
MORE CONSIDERATION TO THE CONTRACT OF SERVICE
ENTERED INTO BY PETITIONER AND PRIVATE RESPONDENT THAN
ARTICLE 280 OF THE LABOR CODE OF THE PHILIPPINES WHICH
CATEGORICALLY DEFINES A REGULAR EMPLOYMENT
NOTWITHSTANDING ANY WRITTEN AGREEMENT TO THE
CONTRARY AND REGARDLESS OF THE ORAL AGREEMENT OF THE
PARTIES;
(B)
THE COURT OF APPEALS COMMITTED A GRAVE ABUSE OF
DISCRETION AMOUNTING TO EXCESS OF JURISDICTION IN
REVERSING ITS OWN FINDINGS THAT PETITIONER IS A REGULAR
EMPLOYEE AND IN HOLDING THAT THERE EXISTED NO
EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN PRIVATE
RESPONDENT AND PETITIONER IN AS MUCH AS THE CONTROL
TEST WHICH IS CONSIDERED THE MOST ESSENTIAL CRITERION
IN DETERMINING THE EXISTENCE OF SAID RELATIONSHIP IS NOT
PRESENT.[10]
The threshold issue that needs to be resolved is whether there existed an
employer-employee relationship between the respondent company and the
petitioner. We rule in the affirmative.
The elements to determine the existence of an employment relationship are:
(1) the selection and engagement of the employee; (2) the payment of wages;
(3) the power of dismissal; and (4) the employers power to control the
employees conduct.[11] The most important element is the employers control
of the employees conduct, not only as to the result of the work to be done, but
also as to the means and methods to accomplish it.[12] All the four elements are
present in this case.
First. Undeniably, it was the respondents who engaged the services of the
petitioner without the intervention of a third party.
Second. Wages are defined as remuneration or earnings, however designated,
capable of being expressed in terms of money, whether fixed or ascertained on
a time, task, piece or commission basis, or other method of calculating the
same, which is payable by an employer to an employee under a written or
unwritten contract of employment for work done or to be done, or for service
rendered or to be rendered.[13] That the petitioner was paid on a per trip basis
is not significant. This is merely a method of computing compensation and not
a basis for determining the existence or absence of employer-employee
relationship. One may be paid on the basis of results or time expended on the
work, and may or may not acquire an employment status, depending on
whether the elements of an employer-employee relationship are present or not.
[14]
In this case, it cannot be gainsaid that the petitioner received compensation
from the respondent company for the services that he rendered to the latter.
Moreover, under the Rules Implementing the Labor Code, every employer is
required to pay his employees by means of payroll.[15] The payroll should
show, among other things, the employees rate of pay, deductions made, and
the amount actually paid to the employee. Interestingly, the respondents did
not present the payroll to support their claim that the petitioner was not their
employee, raising speculations whether this omission proves that its
presentation would be adverse to their case.[16]
Third. The respondents power to dismiss the petitioner was inherent in the
fact that they engaged the services of the petitioner as truck driver. They
exercised this power by terminating the petitioners services albeit in the guise
of severance of contractual relation due allegedly to the latters breach of his
contractual obligation.
Fourth. As earlier opined, of the four elements of the employer-employee
relationship, the control test is the most important. Compared to an
employee, an independent contractor is one who carries on a distinct and
independent business and undertakes to perform the job, work, or service on
its own account and under its own responsibility according to its own manner
and method, free from the control and direction of the principal in all matters
connected with the performance of the work except as to the results thereof.[17]
Hence, while an independent contractor enjoys independence and freedom
from the control and supervision of his principal, an employee is subject to the
employers power to control the means and methods by which the employees
work is to be performed and accomplished.[18]
Although the respondents denied that they exercised control over the manner
and methods by which the petitioner accomplished his work, a careful review
of the records shows that the latter performed his work as truck driver under
the respondents supervision and control. Their right of control was
manifested by the following attendant circumstances:
1. The truck driven by the petitioner belonged to respondent company;
2. There was an express instruction from the respondents that the truck shall
be used exclusively to deliver respondent companys goods; [19]
3. Respondents directed the petitioner, after completion of each delivery, to
park the truck in either of two specific places only, to wit: at its office in
Metro Manila at 2320 Osmea Street, Makati City or at BEPZ, Mariveles,
Bataan;[20] and
4. Respondents determined how, where and when the petitioner would
perform his task by issuing to him gate passes and routing slips. [21]
a. The routing slips indicated on the column REMARKS, the chronological
order and priority of delivery such as 1st drop, 2nd drop, 3rd drop, etc. This
meant that the petitioner had to deliver the same according to the order of
priority indicated therein.
b. The routing slips, likewise, showed whether the goods were to be delivered
urgently or not by the word RUSH printed thereon.
c. The routing slips also indicated the exact time as to when the goods were to
be delivered to the customers as, for example, the words tomorrow morning
was written on slip no. 2776.
These circumstances, to the Courts mind, prove that the respondents
exercised control over the means and methods by which the petitioner
accomplished his work as truck driver of the respondent company. On the
other hand, the Court is hard put to believe the respondents allegation that the
petitioner was an independent contractor engaged in providing delivery or
hauling services when he did not even own the truck used for such services.
Evidently, he did not possess substantial capitalization or investment in the
form of tools, machinery and work premises. Moreover, the petitioner
performed the delivery services exclusively for the respondent company for a
continuous and uninterrupted period of ten years.
The contract of service to the contrary notwithstanding, the factual
circumstances earlier discussed indubitably establish the existence of an
employer-employee relationship between the respondent company and the
petitioner. It bears stressing that the existence of an employer-employee
relationship cannot be negated by expressly repudiating it in a contract and
providing therein that the employee is an independent contractor when, as in
this case, the facts clearly show otherwise. Indeed, the employment status of a
person is defined and prescribed by law and not by what the parties say it
should be.[22]
Having established that there existed an employer-employee relationship
between the respondent company and the petitioner, the Court shall now
determine whether the respondents validly dismissed the petitioner.
As a rule, the employer bears the burden to prove that the dismissal was for a
valid and just cause.[23] In this case, the respondents failed to prove any such
cause for the petitioners dismissal. They insinuated that the petitioner
abandoned his job. To constitute abandonment, these two factors must concur:
(1) the failure to report for work or absence without valid or justifiable reason;
and (2) a clear intention to sever employer-employee relationship.[24]
Obviously, the petitioner did not intend to sever his relationship with the
respondent company for at the time that he allegedly abandoned his job, the
petitioner just filed a complaint for regularization, which was forthwith
amended to one for illegal dismissal. A charge of abandonment is totally
inconsistent with the immediate filing of a complaint for illegal dismissal,
more so when it includes a prayer for reinstatement.[25]
Neither can the respondents claim that the petitioner was guilty of gross
negligence in the proper maintenance of the truck constitute a valid and just
cause for his dismissal. Gross negligence implies a want or absence of or
failure to exercise slight care or diligence, or the entire absence of care. It
evinces a thoughtless disregard of consequences without exerting any effort to
avoid them.[26] The negligence, to warrant removal from service, should not
merely be gross but also habitual.[27] The single and isolated act of the
petitioners negligence in the proper maintenance of the truck alleged by the
respondents does not amount to gross and habitual neglect warranting his
dismissal.
backwages, inclusive of allowances, and other benefits or their monetary
equivalent, computed from the time his compensation was withheld from him
up to the time of his actual reinstatement.[29] However, as found by the Labor
Arbiter, the circumstances obtaining in this case do not warrant the
petitioners reinstatement. A more equitable disposition, as held by the Labor
Arbiter, would be an award of separation pay equivalent to one month for
every year of service from the time of his illegal dismissal up to the finality of
this judgment in addition to his full backwages, allowances and other benefits.
WHEREFORE, the instant petition is GRANTED. The Resolution dated
December 15, 2000 of the Court of Appeals reversing its Decision dated April
28, 2000 in CA-G.R. SP No. 52485 is REVERSED and SET ASIDE. The
Decision dated February 3, 1997 of the Labor Arbiter in NLRC Case No.
RAB-III-02-6181-5, finding the respondents guilty of illegally terminating the
employment of petitioner Pedro Chavez, is REINSTATED.

The Court agrees with the following findings and conclusion of the Labor SO ORDERED.
Arbiter:
As against the gratuitous allegation of the respondent that complainant was
not dismissed from the service but due to complainants breach of their
contractual relation, i.e., his violation of the terms and conditions of the
contract, we are very much inclined to believe complainants story that his
dismissal from the service was anchored on his insistent demand that he be
considered a regular employee. Because complainant in his right senses will
not just abandon for that reason alone his work especially so that it is only his
job where he depends chiefly his existence and support for his family if he
was not aggrieved by the respondent when he was told that his services as
driver will be terminated on February 23, 1995.[28]
Thus, the lack of a valid and just cause in terminating the services of the
petitioner renders his dismissal illegal. Under Article 279 of the Labor Code,
an employee who is unjustly dismissed is entitled to reinstatement, without
loss of seniority rights and other privileges, and to the payment of full G.R. No. 75955, October 28, 1988
MARIA LINDA FUENTES, PETITIONER, VS. NATIONAL LABOR
RELTIONS COMMISSION (NLRC), PHILIPPINE BANKING
CORPORATION AND JOSE LAUREL IV, AS ITS PRESIDENT,
RESPONDENTS.
DECISION
FERNAN, C.J.:
Petitioner Maria Linda Fuentes seeks to set aside the resolution dated
November 28, 1985 of the National Labor Relations Commission (NLRC for
brevity) affirming the Labor Arbiter's dismissal of her complaint for illegal
dismissal against private respondent Philippine Banking Corporation
(Philbanking for brevity).
Petitioner was employed as a teller at the Avenue, Philbanking's office at
Ayala Avenue Makati, Metro Manila. On May 28, 1982, at about 10:30 a.m.,
petitioner, who was acting as an overnight teller, received a cash deposit of
P200,000.00. She counted trio money with the assistance of a co-teller,
finishing the task at 10:40 a.m. or ten (10) minutes after her closing time.
Before she could start balancing her transactions, the Chief Teller handed her
several payroll checks for validation. Finding the checks to be incomplete,
petitioner left her cage to get other checks, without, however, bothering to put
the P200,000.00 cash on her counter inside her drawer. When she returned to
her cubicle after three (3) to five (5) minutes, she found that the checks for
validation were still lacking, so she went out of her cubicle again to get the
rest of the checks. On her way to a co-teller's cubicle, she noticed that the
P200,000.00 pile on her counter had been re-arranged. She thus returned to
her cage, counted the money and discovered that one (1) big bundle worth
P50,000.00 was missing therefrom. She immediately asked her co-teller about
it and getting a negative reply, she reported the matter to the Chief Teller. A
search for the P50,000.00 having proved unavailing, petitioner was asked to
explain why she should not be held liable for the loss. She submitted her
explanation on June 24, 1982.
Subsequently, on June 3, 1983, petitioner was dismissed for gross negligence.
On June 21, 1983, she filed a complaint for illegal dismissal with
reinstatement and backwages.
Private respondent bank seasonably filed an answer with counterclaim that
petitioner be ordered to restitute the amount of P50,000.
On January 31, 1984, Labor Arbiter Bienvenido Hermogenes rendered a
decision dismissing the complaint as the counterclaim but without prejudice as
to the latter.[1] Petitioners appeal to the NLRC was dismissed lack of merit[2]
and her motion for reconsideration was denied.[3] Hence, this petition.
The issue in this case is whether petitioner's dismissal on the ground of dross
negligence was justified under Art. 282 of the Labor Code.
Upon a thorough consideration of the facts of this case, the Court finds no
cogent reason for reversing the conclusion of the Labor Arbiter and the NLRC
that petitioner was grossly negligent in the performance of her duties as a
teller, which negligence resulted in the loss of P50,000.00.
Applying the test of negligence, we ask: did the petitioner in doing the alleged
negligent act use reasonable care and caution which an ordinarily prudent
person would have used in the same situation? If not, she is guilty of
negligence.
The circumstances surrounding the loss in question lend us no sympathy for
the petitioner. It was established that petitioner simply left the pile money
within the easy reach of the crowd milling in front of her cage, instead of
putting it in her drawer as required under the private respondent bank's
General Memorandum No. 211 (Tellers Manual of Operations) which she
was expected to know by heart.[4] Moreover, she left the P200,000.00 two
occasions.[5]

Her irresponsibility is nowhere made apparent than in her response to the
following question:
"Q Noong lumabas ka sa iyong cage para pumunta iyong Chief Teller, hindi
- mo ba ipinagbilin itong pera sa iyong kasamahan?
"A Hindi ko na ho ipinagbilin kasi masyadong maraming tao noon, at iyong
- aking teller's counter ay nilagyan ko ng sign na nakasulat ng 'next teller
please' na ibig sabihin kung meron mang mga cliente doon sa akin ay
doon muna sila maki-pagtransact ng negosyo sa kabilang teller o kung
sino man ang bakante, kasi busy ako."[6]
As a teller, petitioner must realize that the amount of care demanded by
reasonable conduct is that proportionate to the apparent risk. Since it was
payday and depositors were milling around, petitioner should have been extra
cautious. At no time than the occasion under consideration was the need to be
extra careful more obvious. It was certainly not the time to breach the standard
operating procedure of keeping one's cash in the drawer as a precautionary
and security measure.
"A teller's relationship with the bank is necessarily one of trust and
confidence. The teller as a trustee is expected to possess a high degree of
fidelity to trust and must exercise utmost diligence and care in handling cash.
A teller cannot afford to relax vigilance in the performance of his duties."[7]
Petitioner argues that there was contributory negligence on the part of private
respondent bank consisting in its failure to conduct an investigation minutes
after the loss. We do not agree with petitioner. The failure of private
respondent bank to conduct an investigation minutes after the loss was totally
distinct and independent of, as well as remotely related to the fact of loss
itself.
Petitioner Fuentes cannot invoke private respondent's alleged contributory
negligence as there was no direct causal connection between the negligence of
the bank in not conducting the investigation and the loss complained of. In a
legal sense, negligence is contributory only when it contributes proximately to
the injury, and not simply a condition for its occurrence.
In the case at bar, the bank's inaction merely created a condition under which
the loss was sustained. Regardless of whether there was a failure to
investigate, the fact is that the money was lost in the first place due to
petitioners gross negligence. Such gross negligence was the immediate
determining factor in the loss.
Besides, the petitioner's position is anathema to banking operations. By
conducting an instant search on its depositors for every loss that occurs,
management holds suspect each depositor each depositor within its premises.
Considering that currency in the form of money bills bears no distinct
earmarks which would distinguish, it from other similar bills of similar
denominations except as to its serial numbers, any innocent depositor with
P50,000 in his possession would be a likely suspect. Such act would do
violence to the fiduciary relationship between a bank and its depositors.
Ultimately it will result in the loss of valued depositors.
Petitioner argues further that the NLRC failed to consider that petitioner left
her cage at the instance of the Chief Teller. Again we are not persuaded. The
findings of the NLRC are clear. Petitioner left at her own volition to approach
her Chief Teller to ask for the remaining checks to ascertain their authenticity
and completeness. Besides, irrespective of who summoned her, her
responsibility over the cash entrusted to her remained.
Although petitioner's infraction was not habitual, we took into account the
substantial amount lost. Since the deposit slip for P200,000.00 had already
been validated prior to the loss, the act of depositing had already been
complete and from thereon, the bank already assumed the deposit as a liability
to its depositors. Cash deposits are not assets to banks but are recognized as
current liabilities in its balance sheet.

It would be most unfair to compel the bank to continue employing petitioner.

In Galsim v. PNB,[8] we upheld the dismissal of a bank teller who was found to
have given money to a co-employee in violation of bank rules and regulations.
Said act, which caused prejudiced to the bank, was a justifiable basis for the
bank, was a justifiable basis for the bank to lose confidence in the employee.

Similarly, in the case at bar, petitioner, as aforesaid, violated private

respondent bank's General Memorandum, No. 211 (Teller's Manual of
Operations) which strictly says:
"Cash should never be left exposed. The coins and currencies should be kept
in drawers where they are not accessible to someone through the windows
with the aid of a stick or other devices."[9]
An employer cannot legally be compelled to continue with the employment of
a person admittedly guilty of gross negligence in the performance of his duties
and whose continuance in his office is patently inimical to the employer's
interest. "For the law in protecting the rights of the employee/laborer
authorizes neither oppression nor self-destruction of the employer."[10]

WHEREFORE, the instant petition is hereby DISMISSED. The assailed

decision dated November 28, 1985 of the National Labor Relations
Commission is affirmed in toto.

Gutierrez, Jr., Feliciano, Bidin, and Cortes, JJ., concur.

G.R. No. 165565, July 14, 2008

SCHOOL OF THE HOLY SPIRIT OF QUEZON CITY AND/OR SR.
CRIS PINA A. TOLENTINO, S.SP.S., PETITIONERS, VS. CORAZON
P. TAGUIAM, RESPONDENT.
DECISION
QUISUMBING, J.:
This petition assails the Decision[1] dated June 7, 2004 of the Court of Appeals
in CA-G.R. SP No. 81480, which reversed the Resolution[2] dated September
20, 2002 of the National Labor Relations Commission (NLRC) in NLRC
NCR CA No. 031627-02. The NLRC had affirmed the Decision [3] dated
March 26, 2002 of the Labor Arbiter dismissing respondent's complaint for
illegal dismissal. This petition likewise assails the Resolution[4] dated
September 30, 2004 of the Court of Appeals denying petitioners' motion for
reconsideration.
The antecedent facts are as follows:
Respondent Corazon P. Taguiam was the Class Adviser of Grade 5-Esmeralda
of the petitioner, School of the Holy Spirit of Quezon City. On March 10,
2000, the class president, wrote a letter[5] to the grade school principal
requesting permission to hold a year-end celebration at the school grounds.
The principal authorized the activity and allowed the pupils to use the
swimming pool. In this connection, respondent distributed the
parent's/guardian's permit forms to the pupils.
Respondent admitted that Chiara Mae Federico's permit form[6] was unsigned.
Nevertheless, she concluded that Chiara Mae was allowed by her mother to
join the activity since her mother personally brought her to the school with her
packed lunch and swimsuit.
Before the activity started, respondent warned the pupils who did not know
how to swim to avoid the deeper area. However, while the pupils were
swimming, two of them sneaked out. Respondent went after them to verify
where they were going.
Unfortunately, while respondent was away, Chiara Mae drowned. When
respondent returned, the maintenance man was already administering
cardiopulmonary resuscitation on Chiara Mae. She was still alive when
respondent rushed her to the General Malvar Hospital where she was
pronounced dead on arrival.
On May 23, 2000, petitioners issued a Notice of Administrative Charge[7] to
respondent for alleged gross negligence and required her to submit her written
explanation. Thereafter, petitioners conducted a clarificatory hearing which
respondent attended. Respondent also submitted her Affidavit of Explanation.
[8]
On July 31, 2000, petitioners dismissed respondent on the ground of gross
negligence resulting to loss of trust and confidence.[9] Meanwhile, Chiara
Mae's parents filed a P7 Million damage suit against petitioners and
respondent, among others. They also filed against respondent a criminal
complaint for reckless imprudence resulting in homicide.
On July 25, 2001, respondent in turn filed a complaint[10] against the school
and/or Sr. Crispina Tolentino for illegal dismissal, with a prayer for
reinstatement with full backwages and other money claims, damages and
attorney's fees.
In dismissing the complaint, the Labor Arbiter declared that respondent was
validly terminated for gross neglect of duty. He opined that Chiara Mae
drowned because respondent had left the pupils without any adult
supervision. He also noted that the absence of adequate facilities should have
alerted respondent before allowing the pupils to use the swimming pool. The
Labor Arbiter further concluded that although respondent's negligence was not
habitual, the same warranted her dismissal since death resulted therefrom.
Respondent appealed to the NLRC which, however, affirmed the dismissal of
the complaint.
Aggrieved, respondent instituted a petition for certiorari before the Court of
Appeals, which ruled in her favor. The appellate court observed that there was
insufficient proof that respondent's negligence was both gross and habitual.
The Court of Appeals disposed, thus:
WHEREFORE, ... the Court hereby GRANTS the petition. The assailed
September 20, 2002 Resolution of the National Labor Relations Commission
entitled Corazon Taguiam vs. School of the Holy Spirit and/or Sister Crispina
Tolentino[,] NLRC NCR Case No. 00-07-03877-01[,] NLRC NCR CA No.
031627-02 is hereby REVERSED and SET ASIDE, and a new one is hereby
ENTERED directing the private respondent the School of the Holy Spirit to:
(1) Pay the petitioner full backwages, plus all other benefits, bonuses and
general increases to which she would have been normally entitled, had she
not been dismissed and had she not been forced to stop working computed
up to the finality of this decision;
(2) Pay the petitioner separation pay equivalent to one (1) month for every
year of service in addition to full backwages;
(3) Pay the petitioner an amount equivalent to 10% of the judgment award as
attorney's fees;
(4) Pay the cost of this suit.
SO ORDERED.[11]
In this petition, petitioners contend that the Court of Appeals erred in:
... REVERSING AND SETTING ASIDE THE DECISION AND
RESOLUTION OF THE NATIONAL LABOR RELATIONS COMMISSION
AFFIRMING THE DECISION OF THE LABOR ARBITER DISMISSING
THE COMPLAINT FOR LACK OF MERIT.[12]
Simply stated, the sole issue presented for our resolution is whether
respondent's dismissal on the ground of gross negligence resulting to loss of
trust and confidence was valid.
The issue of whether a party is negligent is a question of fact. As a rule, the
Supreme Court is not a trier of facts and this applies with greater force in labor
cases.[13] However, where the issue is shrouded by a conflict of factual
perception, we are constrained to review the factual findings of the Court of
Appeals. In this case, the findings of facts of the appellate court contradict
those of the Labor Arbiter and the NLRC. [14]
Under Article 282[15] of the Labor Code, gross and habitual neglect of duties is
a valid ground for an employer to terminate an employee. Gross negligence
implies a want or absence of or a failure to exercise slight care or diligence, or
the entire absence of care. It evinces a thoughtless disregard of consequences
without exerting any effort to avoid them.[16] Habitual neglect implies repeated
failure to perform one's duties for a period of time, depending upon the
circumstances.[17]
Our perusal of the records leads us to conclude that respondent had been
grossly negligent. First , it is undisputed that Chiara Mae's permit form was
unsigned. Yet, respondent allowed her to join the activity because she
assumed that Chiara Mae's mother has allowed her to join it by personally
bringing her to the school with her packed lunch and swimsuit.

The purpose of a permit form is precisely to ensure that the parents have
allowed their child to join the school activity involved. Respondent cannot
simply ignore this by resorting to assumptions. Respondent admitted that she
was around when Chiara Mae and her mother arrived. She could have
requested the mother to sign the permit form before she left the school or at
least called her up to obtain her conformity.
Second, it was respondent's responsibility as Class Adviser to supervise her
class in all activities sanctioned by the school.[18] Thus, she should have
coordinated with the school to ensure that proper safeguards, such as adequate
first aid and sufficient adult personnel, were present during their activity. She
should have been mindful of the fact that with the number of pupils involved,
it would be impossible for her by herself alone to keep an eye on each one of
them.
As it turned out, since respondent was the only adult present, majority of the
pupils were left unsupervised when she followed the two pupils who sneaked
out. In the light of the odds involved, respondent should have considered that
those who sneaked out could not have left the school premises since there
were guards manning the gates. The guards would not have allowed them to
go out in their swimsuits and without any adult accompanying them. But
those who stayed at the pool were put at greater risk, when she left them
unattended by an adult.
Notably, respondent's negligence, although gross, was not habitual. In view of
the considerable resultant damage, however, we are in agreement that the
cause is sufficient to dismiss respondent. This is not the first time that we have
departed from the requirements laid down by the law that neglect of duties
must be both gross and habitual. In Philippine Airlines, Inc. v. NLRC,[19] we
ruled that Philippine Airlines (PAL) cannot be legally compelled to continue
with the employment of a person admittedly guilty of gross negligence in the
performance of his duties although it was his first offense. In that case, we
noted that a mere delay on PAL's flight schedule due to aircraft damage entails
problems like hotel accommodations for its passengers, re-booking, the
possibility of law suits, and payment of special landing fees not to mention the
soaring costs of replacing aircraft parts.[20] In another case, Fuentes v.
National Labor Relations Commission,[21] we held that it would be unfair to
compel Philippine Banking Corporation to continue employing its bank teller.
In that case, we observed that although the teller's infraction was not habitual,
a substantial amount of money was lost. The deposit slip had already been
validated prior to its loss and the amount reflected thereon is already
considered as current liabilities in the bank's balance sheet.[22] Indeed, the
sufficiency of the evidence as well as the resultant damage to the employer
should be considered in the dismissal of the employee. In this case, the
damage went as far as claiming the life of a child.
As a result of gross negligence in the present case, petitioners lost its trust and
confidence in respondent. Loss of trust and confidence to be a valid ground
for dismissal must be based on a willful breach of trust and founded on clearly
established facts. A breach is willful if it is done intentionally, knowingly and
purposely, without justifiable excuse, as distinguished from an act done
carelessly, thoughtlessly, heedlessly or inadvertently.[23] Otherwise stated, it
must rest on substantial grounds and not on the employer's arbitrariness,
whims, caprices or suspicion; otherwise, the employee would eternally remain
at the mercy of the employer. It should be genuine and not simulated; nor
should it appear as a mere afterthought to justify earlier action taken in bad
faith or a subterfuge for causes which are improper, illegal or unjustified. It
has never been intended to afford an occasion for abuse because of its
subjective nature. There must, therefore, be an actual breach of duty
committed by the employee which must be established by substantial
evidence. [24]
As a teacher who stands in loco parentis to her pupils, respondent should have
made sure that the children were protected from all harm while in her
company.[25] Respondent should have known that leaving the pupils in the
swimming pool area all by themselves may result in an accident. A simple
reminder "not to go to the deepest part of the pool"[26] was insufficient to cast
away all the serious dangers that the situation presented to the children,
especially when respondent knew that Chiara Mae cannot swim.[27] Dismally,
respondent created an unsafe situation which exposed the lives of all the
pupils concerned to real danger. This is a clear violation not only of the trust
and confidence reposed on her by the parents of the pupils but of the school
itself.

Finally, we note that based on the criminal complaint filed by Chiara Mae's
parents, the Assistant City Prosecutor found probable cause to indict
respondent for the crime of reckless imprudence resulting in homicide. The
Assistant City Prosecutor held that respondent "should have foreseen the
danger lurking in the waters." By leaving her pupils in the swimming pool,
respondent displayed an "inexcusable lack of foresight and precaution."[28]
While this finding is not controlling for purposes of the instant case, this only
supports our conclusion that respondent has indeed been grossly negligent.

All told, there being a clear showing that respondent was culpable for gross
negligence resulting to loss of trust and confidence, her dismissal was valid
and legal. It was error for the Court of Appeals to reverse and set aside the
resolution of the NLRC.

WHEREFORE, the petition is GRANTED. The assailed Decision dated

June 7, 2004 of the Court of Appeals in CA-G.R. SP No. 81480 is SET
ASIDE. The Resolution dated September 20, 2002 of the National Labor
Relations Commission in NLRC NCR CA No. 031627-02 is REINSTATED.
No pronouncement as to costs.

SO ORDERED.
G.R. No. 203186, December 04, 2013
XAVIER C. RAMOS, PETITIONER, VS. BPI FAMILY SAVINGS BANK
AND/OR ALFONSO L. SALCEDO, JR., RESPONDENTS.
R ES OLUTIO N
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari[1] are the Decision[2] dated
November 12, 2010 and Resolution[3] dated August 6, 2012 of the Court of
Appeals (CA) in CA-G.R. SP No. 104161 which modified the Decision[4]
dated March 31, 2008 and Resolution[5] dated May 30, 2008 of the National
Labor Relations Commission (NLRC) in NLRC NCR 00-09-07510-06 finding
petitioner Xavier C. Ramos (Ramos) concurrently negligent with respondent
BPI Family Savings Bank, Inc. (BPI Family) and thus ordering the equitable
reduction of his retirement benefits from P546,000.00 to P200,000.00.
The Facts
Ramos was employed by BPI Family in 1995 and eventually became its Vice-
President for Dealer Network Marketing/Auto Loans Division,[6] the duties
and responsibilities of which were to: (a) receive applications for auto loans
from auto dealers and salesmen;[7] (b) analyze market demands[8] and
formulate marketing strategies; and (c) enhance dealer and manufacturer
relations.[9]
During his tenure, a client named Trezita[10] B. Acosta (Acosta) entered into
and obtained several auto and real estate loans from BPI Family which were
duly approved and promptly paid.[11] On December 15, 2004, Acosta
purportedly secured another auto loan from BPI Family in the amount of
P3,097,392.00 for the purchase of a Toyota Prado vehicle (subject loan) which
had remained unpaid. As it turned out, Acosta did not authorize nor personally
apply for the subject loan, rendering the transaction fraudulent.[12]
After investigation, BPI Family discovered that: (a) a person misrepresented
herself as Acosta and succeeded in obtaining the delivery of a Toyota Prado
from the Toyota-Pasong Tamo Branch, pursuant to the Purchase Order (PO)
and Authority to Deliver (ATD) issued by Ramos; (b) Ramos released these
documents without the prior approval of BPI Familys credit committee; and
(c) Ramos was grossly remiss in his duties since his subordinates did not
follow the banks safety protocols, particularly those regarding the
establishment of the loan applicants identity, and that the promissory note
was not even signed by the applicant in the presence of any of the marketing
officers.[13]
As a consequence, BPI Family lost P2,294,080.00, which amount was divided
between Ramos and his three (3) other subordinates, with Ramos shouldering
the proportionate amount of P546,000.00.[14] The foregoing amount was
subsequently deducted from Ramoss benefits which accrued upon his
retirement on May 1, 2006.[15] In relation thereto, he executed a Release,
Waiver and Quitclaim[16] dated June 21, 2006, agreeing to release the bank
from any claim or liability with respect to, inter alia, his separation pay or
retirement benefits.[17]
Claiming that the deductions made by BPI Family were illegal, Ramos filed a
complaint for underpayment of retirement benefits and non-payment of
overtime and holiday pay and premium pay against BPI Family and/or its
President at that time, Alfonso L. Salcedo, Jr., before the Regional Arbitration
Branch of the NLRC,[18] docketed as NLRC NCR 00-09-07510-06.
The LA Ruling
In a Decision[19] dated June 27, 2007, the Labor Arbiter (LA) dismissed
Ramoss complaint, ruling that the deduction made on his retirement benefits
was legal and even reasonable[20] since Ramos was negligent in running his
department. In particular, the LA found that Ramos failed to ensure that his
subordinates complied with the banks Know Your Customer (KYC) safety
protocols, and that he issued the PO and ATD without the prior approval of the
credit committee.[21] The LA further noted that the quitclaim executed by
Ramos must be given the force and effect of law, effectively barring any
future claim by him against BPI Family.[22]
The NLRC Ruling
On appeal, the NLRC reversed the LA in a Decision[23] dated March 31, 2008,
holding that the deduction complained of was illegal and unreasonable[24] in
that: (a) the alleged negligence committed by Ramos was not substantially
proven as he was not expected to personally examine all loan documents that
pass through his hands or to require the client to personally appear before him
because he has subordinates to do those details for him;[25] (b) the issuance of
the PO and ATD prior to the loans approval is not an irregular procedure, but
an ordinary occurrence in BPI Family;[26] and (c) the deduction does not fall
under the exceptions prescribed under Article 113[27] of the Labor Code on
allowable deductions.[28] Further, it found Ramoss consequent signing of the
quitclaim to be without effect.[29]
Accordingly, it ordered BPI Family to return/refund to Ramos the amount of
P546,000.00, with additional payment of 10% thereof as attorneys fees.[30]
BPI Family moved for reconsideration which was, however, denied by the
NLRC on May 30, 2008;[31] hence, it filed a petition for certiorari before the
CA. Pending resolution thereof, Ramos submitted a manifestation that he had
caused the execution of the NLRC decision and the sum amounting to
P600,000.00 was released in satisfaction of his claim.[32]
The CA Ruling
In a Decision[33] dated November 12, 2010, the CA affirmed the finding of
negligence on the part of Ramos, holding that Ramos was remiss in his duty as
head of Dealer Network Marketing/Auto Loans Division in failing to
determine the true identity of the person who availed of the auto loan under
the name Trezita Acosta.[34] It observed that Ramos should have forwarded
the documents for approval to the Loans Review Section and/or the Credit
Evaluation Section of the bank and should not have authorized the release of
the car loan without clearance from the credit committee.[35] However, it also
attributed negligence on the part of BPI Family since it sanctioned the practice
of issuing the PO and ATD prior to the approval of the credit committee.[36]
Such relaxed supervision over its divisions contributed to a large extent to its
defraudation.[37] Thus, finding BPI Familys negligence to be concurrent with
Ramos, the CA found it improper to deduct the entire P546,000.00 from
Ramoss retirement benefits and, instead, equitably reduced the same to the
amount of P200,000.00.[38]
Ramos moved for reconsideration which was, however, denied in a
Resolution[39] dated August 6, 2012. Hence, this petition.
The Issue Before the Court
The essential issue in this case is whether or not the CA erred in attributing
grave abuse of discretion on the part of the NLRC when it found the deduction
made from Ramoss retirement benefits to be illegal and unreasonable.
The Courts Ruling
The petition is meritorious.
To justify the grant of the extraordinary remedy of certiorari, the petitioner
must satisfactorily show that the court or quasi-judicial authority gravely
abused the discretion conferred upon them. Grave abuse of discretion
connotes judgment exercised in a capricious and whimsical manner that is
tantamount to lack of jurisdiction.[40] To be considered grave, the
discretionary authority must be exercised in a despotic manner by reason of
passion or personal hostility, and must be so patent and gross as to amount to
an evasion of positive duty or to a virtual refusal to perform the duty enjoined
by or to act all in contemplation of law.[41]
In labor disputes, the NLRCs findings are said to be tainted with grave abuse
of discretion when its conclusions are not supported by substantial evidence.
As held in the case of Mercado v. AMA Computer College-Paraaque City,
Inc.,[42] citing Protacio v. Laya Mananghaya & Co.:[43]
The CA only examines the factual findings of the NLRC to determine
whether or not the conclusions are supported by substantial evidence
whose absence points to grave abuse of discretion amounting to lack or
excess of jurisdiction. In the recent case of Protacio v. Laya Mananghaya &
Co., we emphasized that:
As a general rule, in certiorari proceedings under Rule 65 of the Rules of
Court, the appellate court does not assess and weigh the sufficiency of
evidence upon which the Labor Arbiter and the NLRC based their conclusion.
The query in this proceeding is limited to the determination of whether or not
the NLRC acted without or in excess of its jurisdiction or with grave abuse of
discretion in rendering its decision. However, as an exception, the appellate
court may examine and measure the factual findings of the NLRC if the
same are not supported by substantial evidence. The Court has not
hesitated to affirm the appellate courts reversals of the decisions of labor
tribunals if they are not supported by substantial evidence.[44] (Emphases
supplied; citations omitted)
The requirement that the NLRCs findings should be supported by substantial
evidence is clearly expressed in Section 5, Rule 133 of the Rules of Court
which provides that [i]n cases filed before administrative or quasi-judicial
bodies, a fact may be deemed established if it is supported by substantial
evidence, or that amount of relevant evidence which a reasonable mind might
accept as adequate to justify a conclusion.
Applying the foregoing considerations, the Court finds the CA to have erred in
attributing grave abuse of discretion on the part of the NLRC in finding that
the deduction made from Ramoss retirement benefits was improper. Two (2)
reasons impel the foregoing conclusion:
First, as correctly observed by the NLRC, BPI Family was not able to
substantially prove its imputation of negligence against Ramos. Well-settled is
the rule that the burden of proof rests upon the party who asserts the
affirmative of an issue.[45] In this case, BPI Family failed to establish that the
duty to confirm and validate information in credit applications and determine
credit worthiness of prospective loan applicants rests with the Dealer Network
Marketing Department, which is the department under the supervision of
Ramos. Quite the contrary, records show that these responsibilities lie with the
banks Credit Services Department, namely its Credit Evaluation Section and
Loans Review and Documentation Section,[46] of which Ramos was not part
of.
Second, as similarly observed by the NLRC, Ramos merely followed standing
company practice when he issued the PO and ATD without prior approval
from the banks Credit Services Department. In fact, as the CA itself notes,
BPI Family adopted the practice of processing loans with extraordinary haste
in order to overcome arduous competition with other banks and lending
institutions, despite compromising procedural safeguards, viz.:[47]
In a separate audit report (herein appended as Annex E), it was noted that
marketing officers regularly issue or release purchase orders and authorities to
deliver to car dealers (in case of dealer generated auto loan wherein a loan
originates from the automobile dealer who submits the financing transactions,
down payment and mortgage fee by the debtor-car purchaser to the bank)
before the approval of the documents. The report further noted that the
practice has been adopted due in part to the stiff competition with other
banks and lending institutions. Resultantly, in 2005 alone, approximately
111 car loan applications were released ahead of the approval of the credit
evaluation section.
Such findings of the auditing division have not been rebutted or countered as
erroneous. In fact, in all 111 instances, the bank did not attempt to rectify
the flaw by calling the respondents attention to the manner by which he SO ORDERED.
disregarded important bank procedure or protocol in accommodating car
loan applications. It would seem unthinkable that respondent bank has had no
knowledge thereof when its credit evaluation committee could have easily
relayed the variations to the management for expedient solution. Any
conscientious, well-meaning banking institution (such as respondent bank, We
imagine) would have raised the red flag the moment the violation is first
discovered. However, in the case before Us, respondent bank did not sound
alarm until the discovery of the first defraudation. Without doubt, its
uncharacteristically relaxed supervision over its divisions contributed to a
large extent to the unfortunate attainment of fraud. x x x (Emphases
supplied)
Based on the foregoing, it is readily apparent that Ramoss action of issuing
the PO and ATD ahead of the approval of the credit committee was actually
conformant to regular company practice which BPI Family itself sanctioned.
As such, Ramos cannot be said to have been negligent in his duties. To this
end, it is well to note that in loan transactions, banks are mandated to ensure
that their clients wholly comply with all the documentary requirements in
relation to the approval and release of loan applications.[48] As BPI Family
uncharacteristically relaxed supervision over its divisions, yielding as it did
to the demands of industry competition, it is but reasonable that it solely bears
the loss of its own shortcomings.

All told, absent any showing that the NLRCs decision was tainted with
capriciousness or any semblance of whimsicality, the Court is wont to grant
the present petition and accordingly reverse the CA decision.

WHEREFORE, the petition is GRANTED. The Decision dated November

12, 2010 and Resolution dated August 6, 2012 of the Court of Appeals in CA-
G.R. SP No. 104161 are REVERSED and SET ASIDE. The National Labor
Relations Commissions Decision dated March 31, 2008 and Resolution dated
May 30, 2008 in NLRC NCR 00-09-07510-06 are hereby REINSTATED.
G.R. Nos. 180849 and 187143, November 16, 2011
PHILIPPINE NATIONAL BANK, PETITIONER, VS. DAN PADAO,
RESPONDENT.
DECISION
MENDOZA, J.:
These are two consolidated petitions for review on certiorari under Rule 45 of
the Rules of Court.
In G.R. No. 180849, petitioner Philippine National Bank (PNB) seeks the
reversal of the December 14, 2006 Decision[1] and October 2, 2007
Resolution[2] of the Court of Appeals (CA) in CA-G.R. SP No. 76584, which
upheld the ruling of the National Labor Relations Commission, Cagayan de
Oro City (NLRC) in its October 30, 2002 Resolution,[3] reversing the June 21,
2001 Decision[4] of the Executive Labor Arbiter (ELA) which found the
dismissal of respondent Dan Padao (Padao) valid.
In G.R. No. 187143, PNB seeks the reversal of the December 9, 2008
Decision[5] and February 24, 2009 Resolution[6] of the CA in CA-G.R. SP No.
00945, which allowed the execution of the October 30, 2002 NLRC
Resolution.
THE FACTS
A. G.R. No. 180849
On August 21, 1981, Padao was hired by PNB as a clerk at its Dipolog City
Branch. He was later designated as a credit investigator in an acting capacity
on November 9, 1993. On March 23, 1995, he was appointed regular Credit
Investigator III, and was ultimately promoted to the position of Loan and
Credit Officer IV.
Sometime in 1994, PNB became embroiled in a scandal involving behest
loans. A certain Sih Wat Kai complained to the Provincial Office of the
Commission on Audit (COA) of Zamboanga del Norte that anomalous loans
were being granted by its officers: Assistant Vice President (AVP) and Branch
Manager Aurelio De Guzman (AVP de Guzman), Assistant Department
Manager and Cashier Olson Sala (Sala), and Loans and Senior Credit
Investigator Primitivo Virtudazo (Virtudazo).
The questionable loans were reportedly being extended to select bank clients,
among them Joseph Liong, Danilo Dangcalan, Jacinto Salac, Catherine
Opulentisima, and Virgie Pango. The expos triggered the conduct of separate
investigations by the COA and PNBs Internal Audit Department (IAD) from
January to August 1995. Both investigations confirmed that the collateral
provided in numerous loan accommodations were grossly over-appraised. The
credit standing of the loan applicants was also fabricated, allowing them to
obtain larger loan portfolios from PNB. These borrowers eventually defaulted
on the payment of their loans, causing PNB to suffer millions in losses.
In August 1995, Credit Investigators Rolando Palomares (Palomares) and
Cayo Dagpin (Dagpin) were administratively charged with Dishonesty, Grave
Misconduct, Gross Neglect of Duty, Conduct Prejudicial to the Best Interest of
the Service, and violation of Republic Act (R.A.) No. 3019 (Anti-Graft and
Corrupt Practices Act), in connection with an anomalous loan granted to the
spouses, Jaime and Allyn Lim (the Lims). These charges, however, were later
ordered dropped by PNB, citing its findings that Dagpin and Palomares signed
the Inspection and Appraisal Report (IAR) and the Credit Inspection Report
(CIR) in support of the Lims loan application in good faith, and upon the
instruction of their superior officers. PNB also considered using Dagpin and
Palomares as prosecution witnesses against AVP de Guzman, Loan Division
Chief Melindo Bidad (Bidad) and Sala.
The following month, September 1995, administrative charges for Grave
Misconduct, Gross Neglect of Duty and Gross Violations of Bank Rules and
Regulations and criminal cases for violation of R.A. No. 3019 were filed
against AVP de Guzman, Sala, Virtudazo, and Bidad. Consequently, they were
all dismissed from the service by PNB in November 1996. Later, Virtudazo
was ordered reinstated.
On June 14, 1996, Padao and Division Chief Wilma Velasco (Velasco) were
similarly administratively charged with Dishonesty, Grave Misconduct, Gross
Neglect of Duty, Conduct Prejudicial to the Best Interest of the Service, and
violation of R.A. No. 3019.
The case against Padao was grounded on his having allegedly presented a
deceptively positive status of the business, credit standing/rating and financial
capability of loan applicants Reynaldo and Luzvilla Baluma and eleven (11)
others. It was later found that either said borrowers businesses were
inadequate to meet their loan obligations, or that the projects they sought to be
financed did not exist.
Padao was also accused of having over-appraised the collateral of the spouses
Gardito and Alma Ajero, the spouses Ibaba, and Rolly Pango.
On January 10, 1997, after due investigation, PNB found Padao guilty of gross
and habitual neglect of duty and ordered him dismissed from the bank. Padao
appealed to the banks Board of Directors. On January 20, 1997, Velasco was
also held guilty of the offenses charged against her, and was similarly meted
the penalty of dismissal. Her motion for reconsideration, however, was later
granted by the bank, and she was reinstated.
On October 11, 1999, after almost three (3) years of inaction on the part of the
Board, Padao instituted a complaint[7] against PNB and its then AVP, Napoleon
Matienzo (Matienzo), with the Labor Arbitration Branch of the NLRC
Regional Arbitration Branch (RAB) No. IX in Zamboanga City for 1]
Reinstatement; 2] Backwages; 3] Illegal Dismissal; and 4] Treachery/Bad
Faith and Palpable Discrimination in the Treatment of Employees with
administrative cases. The case was docketed as RAB 09-04-00098-01.
In a Decision dated June 21, 2001, the ELA found Padaos dismissal valid.
Despite the finding of legality, the ELA still awarded separation pay of one-
half (1/2) months pay for every year of service, citing PLDT v. NLRC &
Abucay.[8] The ELA held that in view of the peculiar conditions attendant to
Padaos dismissal, there being no clear conclusive showing of moral turpitude,
Padao should not be left without any remedy.
Padao appealed to the NLRC, which, in its Resolution[9] dated October 30,
2002, reversed and set aside the ELA Decision and declared Padaos dismissal
to be illegal. He was thereby ordered reinstated to his previous position
without loss of seniority rights and PNB was ordered to pay him full
backwages and attorneys fees equivalent to ten percent (10%) of the total
monetary award.
PNBs Motion for Reconsideration[10] was denied by the NLRC in its
Resolution[11] dated December 27, 2002.
Aggrieved, PNB filed a petition for certiorari[12] with the CA but it was
dismissed in a Decision[13] dated December 14, 2006. PNB moved for
reconsideration[14] but the motion was denied in the CA Resolution[15] dated
October 2, 2007.
B. G.R. No. 187143
During the pendency of G.R. No. 180849 before the Court, the NLRC issued
an entry of judgment on September 22, 2003, certifying that on February 28,
2003, its October 30, 2002 Resolution had become final and executory.[16]
On December 5, 2003, Padao filed a Motion for Execution of the NLRC
Resolution dated October 30, 2002. This was granted by the ELA on April 22,
2004.

On May 4, 2004, PNB and AVP Matienzo sought reconsideration of the ELAs
Order based on the following grounds: (1) the October 30, 2003 Resolution
was inexistent and, thus, could not become final and executory; and (2)
Padaos motion for execution was granted without hearing.
Acting thereon, the ELA denied PNBs motion for reconsideration on the
ground that motions for reconsideration of an order are prohibited under
Section 19, Rule V of the NLRC Rules of Procedure.
Thus, Padao filed his Motion to Admit Computation[17] dated July 14, 2004. In
its Comment,[18] PNB alleged that the computation was grossly exaggerated
and without basis, and prayed for a period of thirty (30) days within which to
submit its counter-computation since the same would come from its head
office in Pasay City.
On September 22, 2004, the ELA issued the Order[19] granting Padaos Motion
to Admit Computation. The order cited PNBs failure to submit its counter-
computation within the two extended periods (totaling forty days), which the
ELA construed as a waiver to submit the same. Thus, the ELA ordered the
issuance of a writ of execution for the payment of backwages due to Padao in
the amount of ?2,589,236.21.
In a motion[20] dated September 29, 2004, PNB sought reconsideration of the
order with an attached counter-computation. The ELA denied the same in its
Order[21] dated October 20, 2004 on the ground that the motions for
reconsideration of orders and decisions of the Labor Arbiter are prohibited
under Section 19, Rule V of the NLRC Rules of Procedure. The ELA further
stated that PNB had been given more than ample opportunity to submit its
own computation in this case, and the belatedly submitted counter-
computation of claims could not be considered. Thus, a writ of execution[22]
was issued on October 21, 2004.
On November 11, 2004 and January 19, 2005, PNB filed its Motion to Quash
Writ of Execution and its Motion to Dissolve Alias Writ of Execution,
respectively. Both were denied by the ELA in an Order[23] dated February 8,
2005.
On February 18, 2005, PNB filed a Notice of Appeal with Memorandum on
Appeal[24] with the NLRC. On September 20, 2005, however, the NLRC
issued a Resolution[25] dismissing the banks appeal. PNBs Motion for
Reconsideration[26] was also denied in the December 21, 2005 Resolution.[27]
Thus, on March 7, 2006, PNB filed a Petition for Certiorari[28] with the CA,
assailing the findings of ELA Plagata and the NLRC.
In a Decision[29] dated December 9, 2008, the CA dismissed the petition, and
later denied PNBs motion for reconsideration on February 24, 2009.
ISSUES
In G.R. No. 180849, PNB presents the following Assignment of Errors:[30]
A. THE COURT OF APPEALS ERRED IN NOT CONSIDERING THAT
THE POSITION OF A CREDIT INVESTIGATOR IS ONE IMBUED WITH
[THE] TRUST AND CONFIDENCE OF THE EMPLOYER.
B. THE COURT OF APPEALS ERRED IN TREATING THE ACT OF
FALSIFYING THE CREDIT AND APPRAISAL REPORTS AND THAT OF
MERELY AFFIXING ONES SIGNATURE IN A FALSE REPORT
PREPARED BY ANOTHER AS ONE AND THE SAME DEGREE OF
MISCONDUCT WHICH WARRANTS THE SAME PENALTY.
In G.R. No. 187143, PNB presents the following Assignment of Errors:[31]
THE LABOR COURTS AND THE APPELLATE COURT ERRED WHEN
THEY INVARIABLY IGNORED PNBS COUNTER-COMPUTATION AND
MERELY RELIED ON RESPONDENT DAN PADAOS SELF-SERVING
COMPUTATION OF HIS MONEY AWARD.
THE LABOR COURTS AND THE APPELLATE COURT ERRED WHEN
THEY ACCEPTED THE COMPUTATION OF RESPONDENT PADAO
WITHOUT REQUIRING PROOF TO SUPPORT THE SAME.
In G.R. No. 180849, PNB argues that the position of a credit investigator is
one reposed with trust and confidence, such that its holder may be validly
dismissed based on loss of trust and confidence. In disciplining employees, the
employer has the right to exercise discretion in determining the individual
liability of each erring employee and in imposing a penalty commensurate
with the degree of participation of each. PNB further contends that the
findings of the CA are not in accordance with the evidence on record, thus,
necessitating a review of the facts of the present case by this Court.[32]
On the other hand, Padao counters that local bank policies implemented by the
highest-ranking branch officials such as the assistant vice-president/branch
manager, assistant manager/cashier, chief of the loans division and legal
counsel, are presumed to be sanctioned and approved by the bank, and a
subordinate employee should not be faulted for his reliance thereon. He argues
that a person who acts in obedience to an order issued by a superior for some
lawful purpose cannot be held liable. PNB is bound by the acts of its senior
officers and he, like his fellow credit investigators, having acted in good faith
in affixing his signature on the reports based on the instruction, order and
directive of senior local bank officials, should not be held liable.[33]
Padao also claims that PNB cruelly betrayed him by charging and dismissing
him after using him as a prosecution witness to secure the conviction of the
senior bank officials, that he was never part of the conspiracy, and that he did
not derive any benefit from the scheme.[34]
The Courts Ruling
In the 1987 Constitution, provisions on social justice and the protection of
labor underscore the importance and economic significance of labor. Article
II, Section 18 characterizes labor as a primary social economic force, and as
such, the State is bound to protect the rights of workers and promote their
welfare. Moreover, workers are entitled to security of tenure, humane
conditions of work, and a living wage.[35]
The Labor Code declares as policy that the State shall afford protection to
labor, promote full employment, ensure equal work opportunities regardless of
sex, race or creed, and regulate the relations between workers and employers.
The State shall assure the rights of workers to self-organization, collective
bargaining, security of tenure, and just and humane conditions of work.[36]
While it is an employers basic right to freely select or discharge its
employees, if only as a measure of self-protection against acts inimical to its
interest,[37] the law sets the valid grounds for termination as well as the proper
procedure to be followed when terminating the services of an employee.[38]
Thus, in cases of regular employment, the employer is prohibited from
terminating the services of an employee except for a just or authorized cause.
[39]
Such just causes for which an employer may terminate an employee are
enumerated in Article 282 of the Labor Code:
(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 family member of his family or his duly
authorized representative; and
(e) Other causes analogous to the foregoing.
Further, due process requires that employers follow the procedure set by the
Labor Code:
Art. 277. Miscellaneous provisions.
xxx
b. Subject to the constitutional right of workers to security of tenure and their
right to be protected against dismissal except for a just and authorized cause
and without prejudice to the requirement of notice under Article 283 of this
Code, the employer shall furnish the worker whose employment is sought to
be terminated a written notice containing a statement of the causes for
termination and shall afford the latter ample opportunity to be heard and to
defend himself with the assistance of his representative if he so desires in
accordance with company rules and regulations promulgated pursuant to
guidelines set by the Department of Labor and Employment. Any decision
taken by the employer shall be without prejudice to the right of the worker to
contest the validity or legality of his dismissal by filing a complaint with the
regional branch of the National Labor Relations Commission. The burden of
proving that the termination was for a valid or authorized cause shall rest on
the employer. The Secretary of the Department of Labor and Employment
may suspend the effects of the termination pending resolution of the dispute in
the event of a prima facie finding by the appropriate official of the Department
of Labor and Employment before whom such dispute is pending that the
termination may cause a serious labor dispute or is in implementation of a
mass lay-off. (As amended by Section 33, Republic Act No. 6715, March 21,
1989)
xxx
In this case, Padao was dismissed by PNB for gross and habitual neglect of
duties under Article 282 (b) of the Labor Code.
Gross negligence connotes want of care in the performance of ones duties,
while habitual neglect implies repeated failure to perform ones duties for a
period of time, depending on the circumstances.[40] Gross negligence has been
defined as the want or absence of or failure to exercise slight care or diligence,
or the entire absence of care. It evinces a thoughtless disregard of
consequences without exerting any effort to avoid them.[41]
In the case at bench, Padao was accused of having presented a fraudulently
positive evaluation of the business, credit standing/rating and financial
capability of Reynaldo and Luzvilla Baluma and eleven other loan applicants.
[42]
Some businesses were eventually found not to exist at all, while in other
transactions, the financial status of the borrowers simply could not support the
grant of loans in the approved amounts.[43] Moreover, Padao over-appraised
the collateral of spouses Gardito and Alma Ajero, and that of spouses Ihaba
and Rolly Pango.[44]
The role that a credit investigator plays in the conduct of a banks business
cannot be overestimated. The amount of loans to be extended by a bank
depends upon the report of the credit investigator on the collateral being
offered. If a loan is not fairly secured, the bank is at the mercy of the
borrower who may just opt to have the collateral foreclosed. If the scheme is
repeated a hundredfold, it may lead to the collapse of the bank. In the case of
Sawadjaan v. Court of Appeals,[45] the Court stressed the crucial role that a
credit investigator or an appraiser plays. Thus:
Petitioner himself admits that the position of appraiser/inspector is "one of the
most serious [and] sensitive job[s] in the banking operations." He should have
been aware that accepting such a designation, he is obliged to perform the task
at hand by the exercise of more than ordinary prudence. As
appraiser/investigator, the petitioner was expected to conduct an ocular
inspection of the properties offered by CAMEC as collaterals and check the
copies of the certificates of title against those on file with the Registry of
Deeds. Not only did he fail to conduct these routine checks, but he also
deliberately misrepresented in his appraisal report that after reviewing the
documents and conducting a site inspection, he found the CAMEC loan
application to be in order. Despite the number of pleadings he has filed, he
has failed to offer an alternative explanation for his actions. [Emphasis
supplied]
In fact, banks are mandated to exercise more care and prudence in dealing
with registered lands:
[B]anks are cautioned to exercise more care and prudence in dealing even
with registered lands, than private individuals, "for their business is one
affected with public interest, keeping in trust money belonging to their
depositors, which they should guard against loss by not committing any act of
negligence which amounts to lack of good faith by which they would be
denied the protective mantle of the land registration statute Act 496, extended
only to purchasers for value and in good faith, as well as to mortgagees of the
same character and description. It is for this reason that banks before
approving a loan send representatives to the premises of the land offered as
collateral and investigate who are the true owners thereof.[46]
Padaos repeated failure to discharge his duties as a credit investigator of the
bank amounted to gross and habitual neglect of duties under Article 282 (b) of
the Labor Code. He not only failed to perform what he was employed to do,
but also did so repetitively and habitually, causing millions of pesos in damage
to PNB. Thus, PNB acted within the bounds of the law by meting out the
penalty of dismissal, which it deemed appropriate given the circumstances.
The CA was correct in stating that when the violation of company policy or
breach of company rules and regulations is tolerated by management, it cannot
serve as a basis for termination.[47] Such ruling, however, does not apply here.
The principle only applies when the breach or violation is one which neither
amounts to nor involves fraud or illegal activities. In such a case, one cannot
evade liability or culpability based on obedience to the corporate chain of
command.
Padao cited Llosa-Tan v. Silahis International Hotel,[48] where the violation
of corporate policy was held not per se fraudulent or illegal. Moreover, the
said violation was done in compliance with the apparent lawful orders of the
concerned employees superiors. Management-sanctioned deviations in the
said case did not amount to fraud or illegal activities. If anything, it merely
represented flawed policy implementation.
In sharp contrast, Padao, in affixing his signature on the fraudulent reports,
attested to the falsehoods contained therein. Moreover, by doing so, he
repeatedly failed to perform his duties as a credit investigator.
Further, even Article 11(6) of the Revised Penal Code requires that any
person, who acts in obedience to an order issued by a superior does so for
some lawful purpose in order for such person not to incur criminal liability.
The succeeding article exempts from criminal liability any person who acts
under the compulsion of an irresistible force (Article 12, paragraph 6) or under
the impulse of an uncontrollable fear of an equal or greater injury (Article 12,
paragraph 7).
Assuming solely for the sake of argument that these principles apply by
analogy, even an extremely liberal interpretation of these justifying or
exempting circumstances will not allow Padao to escape liability.
Also, had Padao wanted immunity in exchange for his testimony as a
prosecution witness, he should have demanded that there be a written
agreement. Without it, his claim is self-serving and unreliable.
That there is no proof that Padao derived any benefit from the scheme is
immaterial.[49] What is crucial is that his gross and habitual negligence caused
great damage to his employer. Padao was aware that there was something
irregular about the practices being implemented by his superiors, but he went
along with, became part of, and participated in the scheme.
It does not speak well for a person to apparently blindly follow his superiors,
particularly when, with the exercise of ordinary diligence, one would be able
to determine that what he or she was being ordered to do was highly irregular,
if not illegal, and would, and did, work to the great disadvantage of his or her
employer.
PNB, as an employer, has the basic right to freely select and discharge
employees (subject to the Labor Code requirements on substantive and
procedural due process), if only as a measure of self-protection against acts
inimical to its interests.[50] It has the authority to impose what penalty it deems
sufficient or commensurate to an employees offense. Having satisfied the
requirements of procedural and substantive due process, it is thus left to the
discretion of the employer to impose such sanction as it sees befitting based
on the circumstances.
Finally, Padao claims that he should be accorded the same treatment as his co-
employees.[51] As the ELA, however, correctly observed:
[A]s pointed out by the respondents, the case of the complainant was different,
and his culpability, much more than his aforementioned co-employees. In the
case of Palomares and Dagpin, they were involved in only one case of over-
appraisal of collateral in the loan account of the spouses Jaime Lim and Allyn
Tan (Respondents Comments, p. 1), but in the case of complainant, his over-
appraisals involved three (3) loan accounts and amounting to ?9,537,759.00
(Ibid.), not to mention that he also submitted falsified Credit Investigation
Reports for the loan accounts of seven (7) other borrowers of PNB (Ibid., pp.
1-2).
xxx
The number of over-appraisals (3) and falsified credit investigation reports (7)
or countersigned by the complainant indicates habituality, or the propensity to
do the same. The best that can be said of his acts is the lack of moral strength
to resist the repeated commission of illegal or prohibited acts in loan
transactions. He thus cannot interpose undue pressure or coercion exerted
upon [him] by his superiors, to absolve himself of liability for his signing or
countersigning the aforementioned falsified reports. It may have been
allowable or justifiable for him to give in to one anomalous loan transaction
report, but definitely not for ten (10) loan accounts. It is axiomatic that
obedience to ones superiors extends only to lawful orders, not to unlawful
orders calling for unauthorized, prohibited or immoral acts to be done.
In the case of Wilma Velasco, PNB did not pursue legal action and even
discontinued the administrative case filed against her because, according to
PNB, she appeared to have been the victim of the misrepresentations and
falsifications of the credit investigation and appraisal reports of the
complainant upon which she had to reply in acting on loan applications filed
with the PNB and for which such reports were made. She was not obliged to
conduct a separate or personal appraisal of the properties offered as
collaterals, or separate credit investigations of the borrowers of PNB. These
functions pertained to PNB inspectors/credit investigators, like the
complainant. Unfortunately, the latter was derelict in the performance of those
duties, if he did not deliberately misuse or abuse such duties.
As can be seen, therefore, the complainant and Wilma Velasco did not stand
on the same footing relative to their involvement or participation in the
anomalous loan transactions earlier mentioned. Therefore, PNB cannot be
faulted for freeing her from liability and punishment, while dismissing the
complainant from service. [Emphases supplied]
Given the above ruling of the Court in G.R. No. 180849, the ruling of the CA
in CA-G.R. SP No. 00945, an action stemming from the execution of the
decision in said case, must perforce be reversed. assistance.

However, Padao is not entitled to financial assistance. In Toyota Motor Phils. WHEREFORE, the petitions in G.R. No. 180849 and G.R. No. 187143 are
Corp. Workers Association v. NLRC,[52] the Court reaffirmed the general rule GRANTED. In G.R. No. 180849, the December 14, 2006 Decision and the
that separation pay shall be allowed as a measure of social justice only in October 2, 2007 Resolution of the Court of Appeals in CA-G.R. SP No. 76584
those instances where the employee is validly dismissed for causes other than are REVERSED and SET ASIDE.
serious misconduct, willful disobedience, gross and habitual neglect of
duty, fraud or willful breach of trust, commission of a crime against the In G.R. No. 187143, the December 9, 2008 Decision and the February 24,
employer or his family, or those reflecting on his moral character. These 2009 Resolution of the Court of Appeals in CA-G.R. SP No. 00945 are
five grounds are just causes for dismissal as provided in Article 282 of the REVERSED and SET ASIDE.
Labor Code.
The June 21, 2001 Decision of the Executive Labor Arbiter is hereby ordered
[53]
In Central Philippine Bandag Retreaders, Inc. v. Diasnes, cited in REINSTATED, with the MODIFICATION that the award of financial
Quiambao v. Manila Electric Company,[54] we discussed the parameters of assistance is DELETED.
awarding separation pay to dismissed employees as a measure of financial
assistance: SO ORDERED.
To reiterate our ruling in Toyota, labor adjudicatory officials and the CA must
demur the award of separation pay based on social justice when an employees
dismissal is based on serious misconduct or willful disobedience; gross and
habitual neglect of duty; fraud or willfull breach of trust; or commission of a
crime against the person of the employer or his immediate family grounds
under Art. 282 of the Labor Code that sanction dismissal of employees. They
must be judicious and circumspect in awarding separation pay or financial
assistance as the constitutional policy to provide full protection to labor is not
meant to be an instrument to oppress the employers. The commitment of the
Court to the cause of labor should not embarrass us from sustaining the
employers when they are right, as here. In fine, we should be more cautions
in awarding financial assistance to the undeserving and those who are
unworthy of the liberality of the law.[55] [Emphasis original. Underscoring
supplied]

Clearly, given the Courts findings, Padao is not entitled to financial

G.R. No. 170139, August 05, 2014
SAMEER OVERSEAS PLACEMENT AGENCY, INC., PETITIONER,
VS. JOY C. CABILES, RESPONDENT.
DECISION
LEONEN, J.:
This case involves an overseas Filipino worker with shattered dreams. It is our
duty, given the facts and the law, to approximate justice for her.
We are asked to decide a petition for review[1] on certiorari assailing the Court
of Appeals decision[2] dated June 27, 2005. This decision partially affirmed
the National Labor Relations Commissions resolution dated March 31, 2004,
[3]
declaring respondents dismissal illegal, directing petitioner to pay
respondents three-month salary equivalent to New Taiwan Dollar (NT$)
46,080.00, and ordering it to reimburse the NT$3,000.00 withheld from
respondent, and pay her NT$300.00 attorneys fees.[4]
Petitioner, Sameer Overseas Placement Agency, Inc., is a recruitment and
placement agency.[5] Responding to an ad it published, respondent, Joy C.
Cabiles, submitted her application for a quality control job in Taiwan.[6]
Joys application was accepted.[7] Joy was later asked to sign a one-year
employment contract for a monthly salary of NT$15,360.00.[8] She alleged
that Sameer Overseas Agency required her to pay a placement fee of
P70,000.00 when she signed the employment contract.[9]
Joy was deployed to work for Taiwan Wacoal, Co. Ltd. (Wacoal) on June 26,
1997.[10] She alleged that in her employment contract, she agreed to work as
quality control for one year.[11] In Taiwan, she was asked to work as a cutter.[12]
Sameer Overseas Placement Agency claims that on July 14, 1997, a certain
Mr. Huwang from Wacoal informed Joy, without prior notice, that she was
terminated and that she should immediately report to their office to get her
salary and passport.[13] She was asked to prepare for immediate
repatriation.[14]
Joy claims that she was told that from June 26 to July 14, 1997, she only
earned a total of NT$9,000.[15] According to her, Wacoal deducted NT$3,000
to cover her plane ticket to Manila.[16]
On October 15, 1997, Joy filed a complaint[17] with the National Labor
Relations Commission against petitioner and Wacoal. She claimed that she
was illegally dismissed.[18] She asked for the return of her placement fee, the
withheld amount for repatriation costs, payment of her salary for 23 months as
well as moral and exemplary damages.[19] She identified Wacoal as Sameer
Overseas Placement Agencys foreign principal.[20]
Sameer Overseas Placement Agency alleged that respondent's termination was
due to her inefficiency, negligence in her duties, and her failure to comply
with the work requirements [of] her foreign [employer].[21] The agency also
claimed that it did not ask for a placement fee of ?70,000.00.[22] As evidence, it
showed Official Receipt No. 14860 dated June 10, 1997, bearing the amount
of ?20,360.00.[23] Petitioner added that Wacoal's accreditation with petitioner
had already been transferred to the Pacific Manpower & Management
Services, Inc. (Pacific) as of August 6, 1997.[24] Thus, petitioner asserts that it
was already substituted by Pacific Manpower.[25]
Pacific Manpower moved for the dismissal of petitioners claims against it.[26]
It alleged that there was no employer-employee relationship between them.[27]
Therefore, the claims against it were outside the jurisdiction of the Labor
Arbiter.[28] Pacific Manpower argued that the employment contract should first
be presented so that the employers contractual obligations might be
identified.[29] It further denied that it assumed liability for petitioners illegal
acts.[30]
On July 29, 1998, the Labor Arbiter dismissed Joys complaint.[31] Acting
Executive Labor Arbiter Pedro C. Ramos ruled that her complaint was based
on mere allegations.[32] The Labor Arbiter found that there was no excess
payment of placement fees, based on the official receipt presented by
petitioner.[33] The Labor Arbiter found unnecessary a discussion on petitioners
transfer of obligations to Pacific[34] and considered the matter immaterial in
view of the dismissal of respondents complaint.[35]
Joy appealed[36] to the National Labor Relations Commission.
In a resolution[37] dated March 31, 2004, the National Labor Relations
Commission declared that Joy was illegally dismissed.[38] It reiterated the
doctrine that the burden of proof to show that the dismissal was based on a
just or valid cause belongs to the employer.[39] It found that Sameer Overseas
Placement Agency failed to prove that there were just causes for termination.
[40]
There was no sufficient proof to show that respondent was inefficient in her
work and that she failed to comply with company requirements.[41]
Furthermore, procedural due process was not observed in terminating
respondent.[42]
The National Labor Relations Commission did not rule on the issue of
reimbursement of placement fees for lack of jurisdiction.[43] It refused to
entertain the issue of the alleged transfer of obligations to Pacific.[44] It did not
acquire jurisdiction over that issue because Sameer Overseas Placement
Agency failed to appeal the Labor Arbiters decision not to rule on the matter.
[45]
The National Labor Relations Commission awarded respondent only three (3)
months worth of salary in the amount of NT$46,080, the reimbursement of the
NT$3,000 withheld from her, and attorneys fees of NT$300.[46]
The Commission denied the agencys motion for reconsideration[47] dated May
12, 2004 through a resolution[48] dated July 2, 2004.
Aggrieved by the ruling, Sameer Overseas Placement Agency caused the
filing of a petition[49] for certiorari with the Court of Appeals assailing the
National Labor Relations Commissions resolutions dated March 31, 2004 and
July 2, 2004.
The Court of Appeals[50] affirmed the decision of the National Labor Relations
Commission with respect to the finding of illegal dismissal, Joys entitlement
to the equivalent of three months worth of salary, reimbursement of withheld
repatriation expense, and attorneys fees.[51] The Court of Appeals remanded
the case to the National Labor Relations Commission to address the validity of
petitioner's allegations against Pacific.[52] The Court of Appeals held, thus:
Although the public respondent found the dismissal of the complainant-
respondent illegal, we should point out that the NLRC merely awarded her
three (3) months backwages or the amount of NT$46,080.00, which was based
upon its finding that she was dismissed without due process, a finding that we
uphold, given petitioners lack of worthwhile discussion upon the same in the
proceedings below or before us. Likewise we sustain NLRCs finding in
regard to the reimbursement of her fare, which is squarely based on the law; as
well as the award of attorneys fees.
But we do find it necessary to remand the instant case to the public respondent
for further proceedings, for the purpose of addressing the validity or propriety
of petitioners third-party complaint against the transferee agent or the Pacific
Manpower & Management Services, Inc. and Lea G. Manabat. We should
emphasize that as far as the decision of the NLRC on the claims of Joy
Cabiles, is concerned, the same is hereby affirmed with finality, and we hold
petitioner liable thereon, but without prejudice to further hearings on its third
party complaint against Pacific for reimbursement.
WHEREFORE, premises considered, the assailed Resolutions are hereby
partly AFFIRMED in accordance with the foregoing discussion, but subject
to the caveat embodied in the last sentence. No costs.

[53]
SO ORDERED.
Dissatisfied, Sameer Overseas Placement Agency filed this petition.[54]
We are asked to determine whether the Court of Appeals erred when it
affirmed the ruling of the National Labor Relations Commission finding
respondent illegally dismissed and awarding her three months worth of salary,
the reimbursement of the cost of her repatriation, and attorneys fees despite
the alleged existence of just causes of termination.
Petitioner reiterates that there was just cause for termination because there was
a finding of Wacoal that respondent was inefficient in her work.[55] Therefore,
it claims that respondents dismissal was valid.[56]
Petitioner also reiterates that since Wacoals accreditation was validly
transferred to Pacific at the time respondent filed her complaint, it should be
Pacific that should now assume responsibility for Wacoals contractual
obligations to the workers originally recruited by petitioner.[57]
Sameer Overseas Placement Agencys petition is without merit. We find for
respondent.
I certification by a competent public health authority in the dismissal of
Sameer Overseas Placement Agency failed to show that there was just cause
for causing Joys dismissal. The employer, Wacoal, also failed to accord her
due process of law.
Indeed, employers have the prerogative to impose productivity and quality
standards at work.[58] They may also impose reasonable rules to ensure that the
employees comply with these standards.[59] Failure to comply may be a just
cause for their dismissal.[60] Certainly, employers cannot be compelled to
retain the services of an employee who is guilty of acts that are inimical to the
interest of the employer.[61] While the law acknowledges the plight and
vulnerability of workers, it does not authorize the oppression or self-
destruction of the employer.[62] Management prerogative is recognized in law
and in our jurisprudence.
This prerogative, however, should not be abused. It is tempered with the
employees right to security of tenure.[63] Workers are entitled to substantive
and procedural due process before termination. They may not be removed
from employment without a valid or just cause as determined by law and
without going through the proper procedure.
Security of tenure for labor is guaranteed by our Constitution.[64]
Employees are not stripped of their security of tenure when they move to work
in a different jurisdiction. With respect to the rights of overseas Filipino
workers, we follow the principle of lex loci contractus.
Thus, in Triple Eight Integrated Services, Inc. v. NLRC,[65] this court noted:
Petitioner likewise attempts to sidestep the medical certificate requirement by
contending that since Osdana was working in Saudi Arabia, her employment
was subject to the laws of the host country. Apparently, petitioner hopes to
make it appear that the labor laws of Saudi Arabia do not require any
employees due to illness.
Again, petitioners argument is without merit.
First, established is the rule that lex loci contractus (the law of the place
where the contract is made) governs in this jurisdiction. There is no
question that the contract of employment in this case was perfected here in
the Philippines. Therefore, the Labor Code, its implementing rules and
regulations, and other laws affecting labor apply in this case. Furthermore,
settled is the rule that the courts of the forum will not enforce any foreign
claim obnoxious to the forums public policy. Here in the Philippines,
employment agreements are more than contractual in nature. The Constitution
itself, in Article XIII, Section 3, guarantees the special protection of workers,
to wit:
The State shall afford full protection to labor, local and overseas, organized
and unorganized, and promote full employment and equality of employment
opportunities for all.
It shall guarantee the rights of all workers to self-organization, collective
bargaining and negotiations, and peaceful concerted activities, including the
right to strike in accordance with law. They shall be entitled to security of
tenure, humane conditions of work, and a living wage. They shall also
participate in policy and decision-making processes affecting their rights and
benefits as may be provided by law.
....
This public policy should be borne in mind in this case because to allow
foreign employers to determine for and by themselves whether an overseas
contract worker may be dismissed on the ground of illness would encourage
illegal or arbitrary pre-termination of employment contracts.[66] (Emphasis
supplied, citation omitted)
Even with respect to fundamental procedural rights, this court emphasized in
PCL Shipping Philippines, Inc. v. NLRC,[67] to wit:
Petitioners admit that they did not inform private respondent in writing of the
charges against him and that they failed to conduct a formal investigation to
give him opportunity to air his side. However, petitioners contend that the
twin requirements of notice and hearing applies strictly only when the
employment is within the Philippines and that these need not be strictly
observed in cases of international maritime or overseas employment.
The Court does not agree. The provisions of the Constitution as well as the
Labor Code which afford protection to labor apply to Filipino employees
whether working within the Philippines or abroad. Moreover, the principle
of lex loci contractus (the law of the place where the contract is made)
governs in this jurisdiction. In the present case, it is not disputed that the
Contract of Employment entered into by and between petitioners and private
respondent was executed here in the Philippines with the approval of the
Philippine Overseas Employment Administration (POEA). Hence, the Labor
Code together with its implementing rules and regulations and other laws
affecting labor apply in this case.[68] (Emphasis supplied, citations omitted)
By our laws, overseas Filipino workers (OFWs) may only be terminated for a
just or authorized cause and after compliance with procedural due process
requirements.
Article 282 of the Labor Code enumerates the just causes of termination by
the employer. Thus:
Art. 282. Termination by employer. An employer may terminate an
employment for any of the following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful
orders of his employer or representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his
employer or duly authorized representative;
(d) Commission of a crime or offense by the employee against the person of
his employer or any immediate member of his family or his duly authorized
representatives; and
(e) Other causes analogous to the foregoing.
Petitioners allegation that respondent was inefficient in her work and
negligent in her duties[69] may, therefore, constitute a just cause for termination
under Article 282(b), but only if petitioner was able to prove it.
The burden of proving that there is just cause for termination is on the
employer. The employer must affirmatively show rationally adequate
evidence that the dismissal was for a justifiable cause.[70] Failure to show that
there was valid or just cause for termination would necessarily mean that the
dismissal was illegal.[71]
To show that dismissal resulting from inefficiency in work is valid, it must be
shown that: 1) the employer has set standards of conduct and workmanship
against which the employee will be judged; 2) the standards of conduct and
workmanship must have been communicated to the employee; and 3) the
communication was made at a reasonable time prior to the employees
performance assessment.
This is similar to the law and jurisprudence on probationary employees, which
allow termination of the employee only when there is just cause or when [the
probationary employee] 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 [or her] engagement.[72]
However, we do not see why the application of that ruling should be limited to
probationary employment. That rule is basic to the idea of security of tenure
and due process, which are guaranteed to all employees, whether their
employment is probationary or regular.
The pre-determined standards that the employer sets are the bases for
determining the probationary employees fitness, propriety, efficiency, and
qualifications as a regular employee. Due process requires that the
probationary employee be informed of such standards at the time of his or her
engagement so he or she can adjust his or her character or workmanship
accordingly. Proper adjustment to fit the standards upon which the employees
qualifications will be evaluated will increase ones chances of being positively
assessed for regularization by his or her employer.
Assessing an employees work performance does not stop after regularization.
The employer, on a regular basis, determines if an employee is still qualified
and efficient, based on work standards. Based on that determination, and after
complying with the due process requirements of notice and hearing, the
employer may exercise its management prerogative of terminating the
employee found unqualified.
The regular employee must constantly attempt to prove to his or her employer
that he or she meets all the standards for employment. This time, however, the
standards to be met are set for the purpose of retaining employment or
promotion. The employee cannot be expected to meet any standard of
character or workmanship if such standards were not communicated to him or
her. Courts should remain vigilant on allegations of the employers failure to
communicate work standards that would govern ones employment if [these
are] to discharge in good faith [their] duty to adjudicate.[73]
In this case, petitioner merely alleged that respondent failed to comply with
her foreign employers work requirements and was inefficient in her work.[74]
No evidence was shown to support such allegations. Petitioner did not even
bother to specify what requirements were not met, what efficiency standards
were violated, or what particular acts of respondent constituted inefficiency.
There was also no showing that respondent was sufficiently informed of the
standards against which her work efficiency and performance were judged.
The parties conflict as to the position held by respondent showed that even
the matter as basic as the job title was not clear.
The bare allegations of petitioner are not sufficient to support a claim that
there is just cause for termination. There is no proof that respondent was
legally terminated.
Petitioner failed to comply with
the due process requirements
Respondents dismissal less than one year from hiring and her repatriation on
the same day show not only failure on the part of petitioner to comply with the
requirement of the existence of just cause for termination. They patently show
that the employers did not comply with the due process requirement.
A valid dismissal requires both a valid cause and adherence to the valid
procedure of dismissal.[75] The employer is required to give the charged
employee at least two written notices before termination.[76] One of the written
notices must inform the employee of the particular acts that may cause his or
her dismissal.[77] The other notice must [inform] the employee of the
employers decision.[78] Aside from the notice requirement, the employee
must also be given an opportunity to be heard.[79]
Petitioner failed to comply with the twin notices and hearing requirements.
Respondent started working on June 26, 1997. She was told that she was
terminated on July 14, 1997 effective on the same day and barely a month
from her first workday. She was also repatriated on the same day that she was
informed of her termination. The abruptness of the termination negated any
finding that she was properly notified and given the opportunity to be heard.
Her constitutional right to due process of law was violated.
II
Respondent Joy Cabiles, having been illegally dismissed, is entitled to her
salary for the unexpired portion of the employment contract that was violated
together with attorneys fees and reimbursement of amounts withheld from her
salary.
Section 10 of Republic Act No. 8042, otherwise known as the Migrant
Workers and Overseas Filipinos Act of 1995, states that overseas workers who
were terminated without just, valid, or authorized cause shall be entitled to
the full reimbursement of his placement fee with interest of twelve (12%) per
annum, plus his salaries for the unexpired portion of his employment contract
or for three (3) months for every year of the unexpired term, whichever is
less.
Sec. 10. MONEY CLAIMS. Notwithstanding any provision of law to the
contrary, the Labor Arbiters of the National Labor Relations Commission
(NLRC) shall have the original and exclusive jurisdiction to hear and decide,
within ninety (90) calendar days after filing of the complaint, the claims
arising out of an employer-employee relationship or by virtue of any law or
contract involving Filipino workers for overseas deployment including claims
for actual, moral, exemplary and other forms of damages.
The liability of the principal/employer and the recruitment/placement agency
for any and all claims under this section shall be joint and several. This
provisions [sic] shall be incorporated in the contract for overseas employment
and shall be a condition precedent for its approval. The performance bond to
be filed by the recruitment/placement agency, as provided by law, shall be
answerable for all money claims or damages that may be awarded to the
workers. If the recruitment/placement agency is a juridical being, the
corporate officers and directors and partners as the case may be, shall
themselves be jointly and solidarily liable with the corporation or partnership
for the aforesaid claims and damages.
Such liabilities shall continue during the entire period or duration of the
employment contract and shall not be affected by any substitution, amendment
or modification made locally or in a foreign country of the said contract.
Any compromise/amicable settlement or voluntary agreement on money
claims inclusive of damages under this section shall be paid within four (4)
months from the approval of the settlement by the appropriate authority.
In case of termination of overseas employment without just, valid or
authorized cause as defined by law or contract, the workers shall be entitled
to the full reimbursement of his placement fee with interest of twelve (12%)
per annum, plus his salaries for the unexpired portion of his employment
contract or for three (3) months for every year of the unexpired term,
whichever is less.
....
(Emphasis supplied)
Section 15 of Republic Act No. 8042 states that repatriation of the worker
and the transport of his [or her] personal belongings shall be the primary
responsibility of the agency which recruited or deployed the worker overseas.
The exception is when termination of employment is due solely to the fault
of the worker,[80] which as we have established, is not the case. It reads:
SEC. 15. REPATRIATION OF WORKERS; EMERGENCY REPATRIATION
FUND. The repatriation of the worker and the transport of his personal
belongings shall be the primary responsibility of the agency which recruited or
deployed the worker overseas. All costs attendant to repatriation shall be
borne by or charged to the agency concerned and/or its principal. Likewise,
the repatriation of remains and transport of the personal belongings of a
deceased worker and all costs attendant thereto shall be borne by the principal
and/or local agency. However, in cases where the termination of employment
is due solely to the fault of the worker, the principal/employer or agency shall
not in any manner be responsible for the repatriation of the former and/or his
belongings.
....
The Labor Code[81] also entitles the employee to 10% of the amount of
withheld wages as attorneys fees when the withholding is unlawful.
The Court of Appeals affirmed the National Labor Relations Commissions
decision to award respondent NT$46,080.00 or the three-month equivalent of
her salary, attorneys fees of NT$300.00, and the reimbursement of the
withheld NT$3,000.00 salary, which answered for her repatriation.
We uphold the finding that respondent is entitled to all of these awards. The
award of the three-month equivalent of respondents salary should,
however, be increased to the amount equivalent to the unexpired term of the
employment contract.
In Serrano v. Gallant Maritime Services, Inc. and Marlow Navigation Co.,
Inc.,[82] this court ruled that the clause or for three (3) months for every year
of the unexpired term, whichever is less[83] is unconstitutional for violating
the equal protection clause and substantive due process.[84]
A statute or provision which was declared unconstitutional is not a law. It
confers no rights; it imposes no duties; it affords no protection; it creates no
office; it is inoperative as if it has not been passed at all.[85]
We are aware that the clause or for three (3) months for every year of the
unexpired term, whichever is less was reinstated in Republic Act No. 8042
upon promulgation of Republic Act No. 10022 in 2010. Section 7 of Republic
Act No. 10022 provides:
Section 7. Section 10 of Republic Act No. 8042, as amended, is hereby
amended to read as follows:
SEC. 10. Money Claims. Notwithstanding any provision of law to the
contrary, the Labor Arbiters of the National Labor Relations Commission
(NLRC) shall have the original and exclusive jurisdiction to hear and decide,
within ninety (90) calendar days after the filing of the complaint, the claims
arising out of an employer-employee relationship or by virtue of any law or
contract involving Filipino workers for overseas deployment including claims
for actual, moral, exemplary and other forms of damage. Consistent with this
mandate, the NLRC shall endeavor to update and keep abreast with the
developments in the global services industry.
The liability of the principal/employer and the recruitment/placement agency
for any and all claims under this section shall be joint and several. This
provision shall be incorporated in the contract for overseas employment and
shall be a condition precedent for its approval. The performance bond to de
[sic] filed by the recruitment/placement agency, as provided by law, shall be
answerable for all money claims or damages that may be awarded to the
workers. If the recruitment/placement agency is a juridical being, the
corporate officers and directors and partners as the case may be, shall
themselves be jointly and solidarily liable with the corporation or partnership
for the aforesaid claims and damages.
Such liabilities shall continue during the entire period or duration of the
employment contract and shall not be affected by any substitution, amendment
or modification made locally or in a foreign country of the said contract.
Any compromise/amicable settlement or voluntary agreement on money
claims inclusive of damages under this section shall be paid within thirty (30)
days from approval of the settlement by the appropriate authority.
In case of termination of overseas employment without just, valid or
authorized cause as defined by law or contract, or any unauthorized
deductions from the migrant workers salary, the worker shall be entitled to
the full reimbursement if [sic] his placement fee and the deductions made with
interest at twelve percent (12%) per annum, plus his salaries for the unexpired
portion of his employment contract or for three (3) months for every year of
the unexpired term, whichever is less.
In case of a final and executory judgement against a foreign
employer/principal, it shall be automatically disqualified, without further
proceedings, from participating in the Philippine Overseas Employment
Program and from recruiting and hiring Filipino workers until and unless it
fully satisfies the judgement award.
Noncompliance with the mandatory periods for resolutions of case provided
under this section shall subject the responsible officials to any or all of the
following penalties:
(a) The salary of any such official who fails to render his decision or
resolution within the prescribed period shall be, or caused to be, withheld until
the said official complies therewith;
(b) Suspension for not more than ninety (90) days; or
(c) Dismissal from the service with disqualification to hold any appointive
public office for five (5) years.
Provided, however, That the penalties herein provided shall be without
prejudice to any liability which any such official may have incured [sic] under
other existing laws or rules and regulations as a consequence of violating the
provisions of this paragraph. (Emphasis supplied)
Republic Act No. 10022 was promulgated on March 8, 2010. This means that
the reinstatement of the clause in Republic Act No. 8042 was not yet in effect
at the time of respondents termination from work in 1997.[86] Republic Act
No. 8042 before it was amended by Republic Act No. 10022 governs this
case.

When a law is passed, this court awaits an actual case that clearly raises
adversarial positions in their proper context before considering a prayer to
declare it as unconstitutional.
However, we are confronted with a unique situation. The law passed
incorporates the exact clause already declared as unconstitutional, without any
perceived substantial change in the circumstances.
This may cause confusion on the part of the National Labor Relations
Commission and the Court of Appeals. At minimum, the existence of Republic
Act No. 10022 may delay the execution of the judgment in this case, further
frustrating remedies to assuage the wrong done to petitioner. Hence, there is a
necessity to decide this constitutional issue.
Moreover, this court is possessed with the constitutional duty to [p]romulgate
rules concerning the protection and enforcement of constitutional rights.[87]
When cases become moot and academic, we do not hesitate to provide for
guidance to bench and bar in situations where the same violations are capable
of repetition but will evade review. This is analogous to cases where there are
millions of Filipinos working abroad who are bound to suffer from the lack of
protection because of the restoration of an identical clause in a provision
previously declared as unconstitutional.
In the hierarchy of laws, the Constitution is supreme. No branch or office of
the government may exercise its powers in any manner inconsistent with the
Constitution, regardless of the existence of any law that supports such
exercise. The Constitution cannot be trumped by any other law. All laws must
be read in light of the Constitution. Any law that is inconsistent with it is a
nullity.
Thus, when a law or a provision of law is null because it is inconsistent with
the Constitution, the nullity cannot be cured by reincorporation or reenactment
of the same or a similar law or provision. A law or provision of law that was
already declared unconstitutional remains as such unless circumstances have
so changed as to warrant a reverse conclusion.
We are not convinced by the pleadings submitted by the parties that the
situation has so changed so as to cause us to reverse binding precedent.
Likewise, there are special reasons of judicial efficiency and economy that
attend to these cases.
The new law puts our overseas workers in the same vulnerable position as
they were prior to Serrano. Failure to reiterate the very ratio decidendi of that
case will result in the same untold economic hardships that our reading of the
Constitution intended to avoid. Obviously, we cannot countenance added
expenses for further litigation that will reduce their hard-earned wages as well
as add to the indignity of having been deprived of the protection of our laws
simply because our precedents have not been followed. There is no
constitutional doctrine that causes injustice in the face of empty procedural
niceties. Constitutional interpretation is complex, but it is never unreasonable.
Thus, in a resolution[88] dated October 22, 2013, we ordered the parties and the
Office of the Solicitor General to comment on the constitutionality of the
reinstated clause in Republic Act No. 10022.
In its comment,[89] petitioner argued that the clause was constitutional.[90] The
legislators intended a balance between the employers and the employees
rights by not unduly burdening the local recruitment agency.[91] Petitioner is
also of the view that the clause was already declared as constitutional in
Serrano.[92]
The Office of the Solicitor General also argued that the clause was valid and
constitutional.[93] However, since the parties never raised the issue of the
constitutionality of the clause as reinstated in Republic Act No. 10022, its
contention is that it is beyond judicial review.[94]
On the other hand, respondent argued that the clause was unconstitutional
because it infringed on workers right to contract.[95]
We observe that the reinstated clause, this time as provided in Republic Act.
No. 10022, violates the constitutional rights to equal protection and due
process.[96] Petitioner as well as the Solicitor General have failed to show any
compelling change in the circumstances that would warrant us to revisit the
precedent.
We reiterate our finding in Serrano v. Gallant Maritime that limiting wages
that should be recovered by an illegally dismissed overseas worker to three
months is both a violation of due process and the equal protection clauses of
the Constitution.
Equal protection of the law is a guarantee that persons under like
circumstances and falling within the same class are treated alike, in terms of
privileges conferred and liabilities enforced.[97] It is a guarantee against
undue favor and individual or class privilege, as well as hostile
discrimination or the oppression of inequality.[98]
In creating laws, the legislature has the power to make distinctions and
classifications.[99] In exercising such power, it has a wide discretion.[100]
The equal protection clause does not infringe on this legislative power.[101] A
law is void on this basis, only if classifications are made arbitrarily.[102] There
is no violation of the equal protection clause if the law applies equally to
persons within the same class and if there are reasonable grounds for
distinguishing between those falling within the class and those who do not fall
within the class.[103] A law that does not violate the equal protection clause
prescribes a reasonable classification.[104]
A reasonable classification (1) must rest on substantial distinctions; (2) must
be germane to the purposes of the law; (3) must not be limited to existing
conditions only; and (4) must apply equally to all members of the same
class.[105]
The reinstated clause does not satisfy the requirement of reasonable
classification.
In Serrano, we identified the classifications made by the reinstated clause. It
distinguished between fixed-period overseas workers and fixed-period local
workers.[106] It also distinguished between overseas workers with employment
contracts of less than one year and overseas workers with employment
contracts of at least one year.[107] Within the class of overseas workers with at
least one-year employment contracts, there was a distinction between those
with at least a year left in their contracts and those with less than a year left in
their contracts when they were illegally dismissed.[108]
The Congress classification may be subjected to judicial review. In Serrano,
there is a legislative classification which impermissibly interferes with the
exercise of a fundamental right or operates to the peculiar disadvantage of a
suspect class.[109]
Under the Constitution, labor is afforded special protection.[110] Thus, this
court in Serrano, [i]mbued with the same sense of obligation to afford
protection to labor, . . . employ[ed] the standard of strict judicial scrutiny, for
it perceive[d] in the subject clause a suspect classification prejudicial to
OFWs.[111]
We also noted in Serrano that before the passage of Republic Act No. 8042,
the money claims of illegally terminated overseas and local workers with
fixed-term employment were computed in the same manner.[112] Their money
claims were computed based on the unexpired portions of their contracts.[113]
The adoption of the reinstated clause in Republic Act No. 8042 subjected the
money claims of illegally dismissed overseas workers with an unexpired term
of at least a year to a cap of three months worth of their salary.[114] There was
no such limitation on the money claims of illegally terminated local workers
with fixed-term employment.[115]
We observed that illegally dismissed overseas workers whose employment
contracts had a term of less than one year were granted the amount equivalent
to the unexpired portion of their employment contracts.[116] Meanwhile,
illegally dismissed overseas workers with employment terms of at least a year
were granted a cap equivalent to three months of their salary for the unexpired
portions of their contracts.[117]
Observing the terminologies used in the clause, we also found that the
subject clause creates a sub-layer of discrimination among OFWs whose
contract periods are for more than one year: those who are illegally dismissed
with less than one year left in their contracts shall be entitled to their salaries
for the entire unexpired portion thereof, while those who are illegally
dismissed with one year or more remaining in their contracts shall be covered
by the reinstated clause, and their monetary benefits limited to their salaries
for three months only.[118]
We do not need strict scrutiny to conclude that these classifications do not rest
on any real or substantial distinctions that would justify different treatments in
terms of the computation of money claims resulting from illegal termination.
Overseas workers regardless of their classifications are entitled to security of
tenure, at least for the period agreed upon in their contracts. This means that
they cannot be dismissed before the end of their contract terms without due
process. If they were illegally dismissed, the workers right to security of
tenure is violated.
The rights violated when, say, a fixed-period local worker is illegally
terminated are neither greater than nor less than the rights violated when a
fixed-period overseas worker is illegally terminated. It is state policy to
protect the rights of workers without qualification as to the place of
employment.[119] In both cases, the workers are deprived of their expected
salary, which they could have earned had they not been illegally dismissed.
For both workers, this deprivation translates to economic insecurity and
disparity.[120] The same is true for the distinctions between overseas workers
with an employment contract of less than one year and overseas workers with
at least one year of employment contract, and between overseas workers with
at least a year left in their contracts and overseas workers with less than a year
left in their contracts when they were illegally dismissed.
For this reason, we cannot subscribe to the argument that [overseas workers]
are contractual employees who can never acquire regular employment status,
unlike local workers[121] because it already justifies differentiated treatment in
terms of the computation of money claims.[122]
Likewise, the jurisdictional and enforcement issues on overseas workers
money claims do not justify a differentiated treatment in the computation of
their money claims.[123] If anything, these issues justify an equal, if not greater
protection and assistance to overseas workers who generally are more prone to
exploitation given their physical distance from our government.
We also find that the classifications are not relevant to the purpose of the law,
which is to establish a higher standard of protection and promotion of the
welfare of migrant workers, their families and overseas Filipinos in distress,
and for other purposes.[124] Further, we find specious the argument that
reducing the liability of placement agencies redounds to the benefit of the
[overseas] workers.[125]
Putting a cap on the money claims of certain overseas workers does not
increase the standard of protection afforded to them. On the other hand,
foreign employers are more incentivized by the reinstated clause to enter into
contracts of at least a year because it gives them more flexibility to violate our
overseas workers rights. Their liability for arbitrarily terminating overseas
workers is decreased at the expense of the workers whose rights they violated.
Meanwhile, these overseas workers who are impressed with an expectation of
a stable job overseas for the longer contract period disregard other
opportunities only to be terminated earlier. They are left with claims that are
less than what others in the same situation would receive. The reinstated
clause, therefore, creates a situation where the law meant to protect them
makes violation of rights easier and simply benign to the violator.
As Justice Brion said in his concurring opinion in Serrano:
Section 10 of R.A. No. 8042 affects these well-laid rules and measures, and in
fact provides a hidden twist affecting the principal/employers liability. While
intended as an incentive accruing to recruitment/manning agencies, the law, as
worded, simply limits the OFWs recovery in wrongful dismissal situations.
Thus, it redounds to the benefit of whoever may be liable, including the
principal/employer the direct employer primarily liable for the wrongful
dismissal. In this sense, Section 10 read as a grant of incentives to
recruitment/manning agencies oversteps what it aims to do by effectively
limiting what is otherwise the full liability of the foreign principals/employers.
Section 10, in short, really operates to benefit the wrong party and allows that
party, without justifiable reason, to mitigate its liability for wrongful
dismissals. Because of this hidden twist, the limitation of liability under
Section 10 cannot be an appropriate incentive, to borrow the term that R.A.
No. 8042 itself uses to describe the incentive it envisions under its purpose
clause.
What worsens the situation is the chosen mode of granting the incentive:
instead of a grant that, to encourage greater efforts at recruitment, is directly
related to extra efforts undertaken, the law simply limits their liability for the
wrongful dismissals of already deployed OFWs. This is effectively a legally-
imposed partial condonation of their liability to OFWs, justified solely by the
laws intent to encourage greater deployment efforts. Thus, the incentive, from
a more practical and realistic view, is really part of a scheme to sell Filipino
overseas labor at a bargain for purposes solely of attracting the market. . . .
The so-called incentive is rendered particularly odious by its effect on the
OFWs the benefits accruing to the recruitment/manning agencies and their
principals are taken from the pockets of the OFWs to whom the full salaries
for the unexpired portion of the contract rightfully belong. Thus, the
principals/employers and the recruitment/manning agencies even profit from
their violation of the security of tenure that an employment contract embodies.
Conversely, lesser protection is afforded the OFW, not only because of the
lessened recovery afforded him or her by operation of law, but also because
this same lessened recovery renders a wrongful dismissal easier and less
onerous to undertake; the lesser cost of dismissing a Filipino will always be a
consideration a foreign employer will take into account in termination of
employment decisions. . . .[126]
Further, [t]here can never be a justification for any form of government
action that alleviates the burden of one sector, but imposes the same burden on
another sector, especially when the favored sector is composed of private
businesses such as placement agencies, while the disadvantaged sector is
composed of OFWs whose protection no less than the Constitution
commands. The idea that private business interest can be elevated to the level
of a compelling state interest is odious.[127]
Along the same line, we held that the reinstated clause violates due process
rights. It is arbitrary as it deprives overseas workers of their monetary claims
without any discernable valid purpose.[128]
Respondent Joy Cabiles is entitled to her salary for the unexpired portion of
her contract, in accordance with Section 10 of Republic Act No. 8042. The
award of the three-month equivalence of respondents salary must be modified
accordingly. Since she started working on June 26, 1997 and was terminated
on July 14, 1997, respondent is entitled to her salary from July 15, 1997 to
June 25, 1998. To rule otherwise would be iniquitous to petitioner and other
OFWs, and would, in effect, send a wrong signal that principals/employers
and recruitment/manning agencies may violate an OFWs security of tenure
which an employment contract embodies and actually profit from such
violation based on an unconstitutional provision of law.[129]
III
On the interest rate, the Bangko Sentral ng Pilipinas Circular No. 799 of June
21, 2013, which revised the interest rate for loan or forbearance from 12% to
6% in the absence of stipulation, applies in this case. The pertinent portions of
Circular No. 799, Series of 2013, read:
The Monetary Board, in its Resolution No. 796 dated 16 May 2013, approved
the following revisions governing the rate of interest in the absence of
stipulation in loan contracts, thereby amending Section 2 of Circular No. 905,
Series of 1982:
Section 1. The rate of interest for the loan or forbearance of any money, goods
or credits and the rate allowed in judgments, in the absence of an express
contract as to such rate of interest, shall be six percent (6%) per annum.
Section 2. In view of the above, Subsection X305.1 of the Manual of
Regulations for Banks and Sections 4305Q.1, 4305S.3 and 4303P.1 of the
Manual of Regulations for Non-Bank Financial Institutions are hereby
amended accordingly.
This Circular shall take effect on 1 July 2013.
Through the able ponencia of Justice Diosdado Peralta, we laid down the
guidelines in computing legal interest in Nacar v. Gallery Frames:[130]
II. With regard particularly to an award of interest in the concept of actual and
compensatory damages, the rate of interest, as well as the accrual thereof, is
imposed, as follows:
1. When the obligation is breached, and it consists in the payment of a
sum of money, i.e., a loan or forbearance of money, the interest due
should be that which may have been stipulated in writing.
Furthermore, the interest due shall itself earn legal interest from the
time it is judicially demanded. In the absence of stipulation, the rate of
interest shall be 6% per annum to be computed from default, i.e., from
judicial or extrajudicial demand under and subject to the provisions of
Article 1169 of the Civil Code.
2. When an obligation, not constituting a loan or forbearance of money, is
breached, an interest on the amount of damages awarded may be
imposed at the discretion of the court at the rate of 6% per annum. No
interest, however, shall be adjudged on unliquidated claims or
damages, except when or until the demand can be established with
reasonable certainty. Accordingly, where the demand is established
with reasonable certainty, the interest shall begin to run from the time
the claim is made judicially or extrajudicially (Art. 1169, Civil Code),
but when such certainty cannot be so reasonably established at the time
the demand is made, the interest shall begin to run only from the date
the judgment of the court is made (at which time the quantification of
damages may be deemed to have been reasonably ascertained). The
actual base for the computation of legal interest shall, in any case, be
on the amount finally adjudged.
3. When the judgment of the court awarding a sum of money becomes
final and executory, the rate of legal interest, whether the case falls
under paragraph 1 or paragraph 2, above, shall be 6% per annum from
such finality until its satisfaction, this interim period being deemed to
be by then an equivalent to a forbearance of credit.
And, in addition to the above, judgments that have become final and
executory prior to July 1, 2013, shall not be disturbed and shall continue to be
implemented applying the rate of interest fixed therein.[131]

Circular No. 799 is applicable only in loans and forbearance of money, goods,
or credits, and in judgments when there is no stipulation on the applicable
interest rate. Further, it is only applicable if the judgment did not become final
and executory before July 1, 2013.[132]
We add that Circular No. 799 is not applicable when there is a law that states
otherwise. While the Bangko Sentral ng Pilipinas has the power to set or limit
interest rates,[133] these interest rates do not apply when the law provides that a
different interest rate shall be applied. [A] Central Bank Circular cannot
repeal a law. Only a law can repeal another law.[134]
For example, Section 10 of Republic Act No. 8042 provides that unlawfully
terminated overseas workers are entitled to the reimbursement of his or her
placement fee with an interest of 12% per annum. Since Bangko Sentral ng
Pilipinas circulars cannot repeal Republic Act No. 8042, the issuance of
Circular No. 799 does not have the effect of changing the interest on awards
for reimbursement of placement fees from 12% to 6%. This is despite Section
1 of Circular No. 799, which provides that the 6% interest rate applies even to
judgments.
Moreover, laws are deemed incorporated in contracts. The contracting parties
need not repeat them. They do not even have to be referred to. Every contract,
thus, contains not only what has been explicitly stipulated, but the statutory
provisions that have any bearing on the matter.[135] There is, therefore, an
implied stipulation in contracts between the placement agency and the
overseas worker that in case the overseas worker is adjudged as entitled to
reimbursement of his or her placement fees, the amount shall be subject to a
12% interest per annum. This implied stipulation has the effect of removing
awards for reimbursement of placement fees from Circular No. 799s
coverage.
The same cannot be said for awards of salary for the unexpired portion of the
employment contract under Republic Act No. 8042. These awards are covered
by Circular No. 799 because the law does not provide for a specific interest
rate that should apply.
In sum, if judgment did not become final and executory before July 1, 2013
and there was no stipulation in the contract providing for a different interest
rate, other money claims under Section 10 of Republic Act No. 8042 shall be
subject to the 6% interest per annum in accordance with Circular No. 799.
This means that respondent is also entitled to an interest of 6% per annum on
her money claims from the finality of this judgment.
IV
Finally, we clarify the liabilities of Wacoal as principal and petitioner as the
employment agency that facilitated respondents overseas employment.
Section 10 of the Migrant Workers and Overseas Filipinos Act of 1995
provides that the foreign employer and the local employment agency are
jointly and severally liable for money claims including claims arising out of
an employer-employee relationship and/or damages. This section also
provides that the performance bond filed by the local agency shall be
answerable for such money claims or damages if they were awarded to the
employee.
This provision is in line with the states policy of affording protection to labor
and alleviating workers plight.[136]
In overseas employment, the filing of money claims against the foreign
employer is attended by practical and legal complications. The distance of the
foreign employer alone makes it difficult for an overseas worker to reach it
and make it liable for violations of the Labor Code. There are also possible
conflict of laws, jurisdictional issues, and procedural rules that may be raised
to frustrate an overseas workers attempt to advance his or her claims.
It may be argued, for instance, that the foreign employer must be impleaded in
the complaint as an indispensable party without which no final determination
can be had of an action.[137]
The provision on joint and several liability in the Migrant Workers and
Overseas Filipinos Act of 1995 assures overseas workers that their rights will
not be frustrated with these complications.
The fundamental effect of joint and several liability is that each of the
debtors is liable for the entire obligation.[138] A final determination may,
therefore, be achieved even if only one of the joint and several debtors are
impleaded in an action. Hence, in the case of overseas employment, either the
local agency or the foreign employer may be sued for all claims arising from
the foreign employers labor law violations. This way, the overseas workers
are assured that someone the foreign employers local agent may be
made to answer for violations that the foreign employer may have committed.
The Migrant Workers and Overseas Filipinos Act of 1995 ensures that
overseas workers have recourse in law despite the circumstances of their
employment. By providing that the liability of the foreign employer may be
enforced to the full extent[139] against the local agent, the overseas worker is
assured of immediate and sufficient payment of what is due them.[140]
Corollary to the assurance of immediate recourse in law, the provision on joint
and several liability in the Migrant Workers and Overseas Filipinos Act of
1995 shifts the burden of going after the foreign employer from the overseas
worker to the local employment agency. However, it must be emphasized that
the local agency that is held to answer for the overseas workers money claims
is not left without remedy. The law does not preclude it from going after the
foreign employer for reimbursement of whatever payment it has made to the
employee to answer for the money claims against the foreign employer.
A further implication of making local agencies jointly and severally liable
with the foreign employer is that an additional layer of protection is afforded
to overseas workers. Local agencies, which are businesses by nature, are
inoculated with interest in being always on the lookout against foreign
employers that tend to violate labor law. Lest they risk their reputation or
finances, local agencies must already have mechanisms for guarding against
unscrupulous foreign employers even at the level prior to overseas
employment applications.
With the present state of the pleadings, it is not possible to determine whether
there was indeed a transfer of obligations from petitioner to Pacific. This
should not be an obstacle for the respondent overseas worker to proceed with
the enforcement of this judgment. Petitioner is possessed with the resources to
determine the proper legal remedies to enforce its rights against Pacific, if any.
V
Many times, this court has spoken on what Filipinos may encounter as they
travel into the farthest and most difficult reaches of our planet to provide for
their families. In Prieto v. NLRC:[141]
The Court is not unaware of the many abuses suffered by our overseas
workers in the foreign land where they have ventured, usually with heavy
hearts, in pursuit of a more fulfilling future. Breach of contract, maltreatment,
rape, insufficient nourishment, sub-human lodgings, insults and other forms of
debasement, are only a few of the inhumane acts to which they are subjected
by their foreign employers, who probably feel they can do as they please in
their own country. While these workers may indeed have relatively little
defense against exploitation while they are abroad, that disadvantage must not
continue to burden them when they return to their own territory to voice their
muted complaint. There is no reason why, in their very own land, the
protection of our own laws cannot be extended to them in full measure for the
redress of their grievances.[142]
 interest of 6% per annum from the finality of this judgment.
But it seems that we have not said enough.
The clause, or for three (3) months for every year of the unexpired term,
We face a diaspora of Filipinos. Their travails and their heroism can be told a whichever is less in Section 7 of Republic Act No. 10022 amending Section
million times over; each of their stories as real as any other. Overseas Filipino 10 of Republic Act No. 8042 is declared unconstitutional and, therefore, null
workers brave alien cultures and the heartbreak of families left behind daily. and void.
They would count the minutes, hours, days, months, and years yearning to see
their sons and daughters. We all know of the joy and sadness when they come SO ORDERED.
home to see them all grown up and, being so, they remember what their work
has cost them. Twitter accounts, Facetime, and many other gadgets and online
applications will never substitute for their lost physical presence.

Unknown to them, they keep our economy afloat through the ebb and flow of
political and economic crises. They are our true diplomats, they who show the
world the resilience, patience, and creativity of our people. Indeed, we are a
people who contribute much to the provision of material creations of this
world.

This government loses its soul if we fail to ensure decent treatment for all
Filipinos. We default by limiting the contractual wages that should be paid to
our workers when their contracts are breached by the foreign employers.
While we sit, this court will ensure that our laws will reward our overseas
workers with what they deserve: their dignity.

Inevitably, their dignity is ours as well.

WHEREFORE, the petition is DENIED. The decision of the Court of

Appeals is AFFIRMED with modification. Petitioner Sameer Overseas
Placement Agency is ORDERED to pay respondent Joy C. Cabiles the
amount equivalent to her salary for the unexpired portion of her employment G.R. No. 141717, April 14, 2004
contract at an interest of 6% per annum from the finality of this judgment.
Petitioner is also ORDERED to reimburse respondent the withheld PHILIPS SEMICONDUCTORS (PHILS.), INC., PETITIONER, VS.
NT$3,000.00 salary and pay respondent attorneys fees of NT$300.00 at an ELOISA FADRIQUELA, RESPONDENT.

DECISION
CALLEJO, SR., J.:
Before us is a petition for review of the Decision[1] of the Court of Appeals
(CA) in CA-G.R. SP No. 52149 and its Resolution dated January 26, 2000
denying the motion for reconsideration therefrom.
The Case for the Petitioner
The petitioner Philips Semiconductors (Phils.), Inc. is a domestic corporation
engaged in the production and assembly of semiconductors such as power
devices, RF modules, CATV modules, RF and metal transistors and glass
diods. It caters to domestic and foreign corporations that manufacture
computers, telecommunications equipment and cars.
Aside from contractual employees, the petitioner employed 1,029 regular
workers. The employees were subjected to periodic performance appraisal
based on output, quality, attendance and work attitude.[2] One was required to
obtain a performance rating of at least 3.0 for the period covered by the
performance appraisal to maintain good standing as an employee.
On May 8, 1992, respondent Eloisa Fadriquela executed a Contract of
Employment with the petitioner in which she was hired as a production
operator with a daily salary of P118. Her initial contract was for a period of
three months up to August 8, 1992,[3] but was extended for two months when
she garnered a performance rating of 3.15.[4] Her contract was again renewed
for two months or up to December 16, 1992,[5] when she received a
performance rating of 3.8.[6] After the expiration of her third contract, it was
extended anew, for three months,[7] that is, from January 4, 1993 to April 4,
1993.
After garnering a performance rating of 3.4,[8] the respondents contract was
extended for another three months, that is, from April 5, 1993 to June 4, 1993.
[9]
She, however, incurred five absences in the month of April, three absences
in the month of May and four absences in the month of June.[10] Line
supervisor Shirley F. Velayo asked the respondent why she incurred the said
absences, but the latter failed to explain her side. The respondent was warned
that if she offered no valid justification for her absences, Velayo would have
no other recourse but to recommend the non-renewal of her contract. The
respondent still failed to respond, as a consequence of which her performance
rating declined to 2.8. Velayo recommended to the petitioner that the
respondents employment be terminated due to habitual absenteeism,[11] in
accordance with the Company Rules and Regulations.[12] Thus, the
respondents contract of employment was no longer renewed.
The Complaint of the Respondent
The respondent filed a complaint before the National Capital Region
Arbitration Branch of the National Labor Relations Commission (NLRC) for
illegal dismissal against the petitioner, docketed as NLRC Case No. NCR-07-
04263-93. She alleged, inter alia, that she was illegally dismissed, as there
was no valid cause for the termination of her employment. She was not
notified of any infractions she allegedly committed; neither was she accorded
a chance to be heard. According to the respondent, the petitioner did not
conduct any formal investigation before her employment was terminated.
Furthermore, considering that she had rendered more than six months of
service to the petitioner, she was already a regular employee and could not be
terminated without any justifiable cause. Moreover, her absences were
covered by the proper authorizations.[13]
On the other hand, the petitioner contended that the respondent had not been
dismissed, but that her contract of employment for the period of April 4, 1993
to June 4, 1993 merely expired and was no longer renewed because of her low
performance rating. Hence, there was no need for a notice or investigation.
Furthermore, the respondent had already accumulated five unauthorized
absences which led to the deterioration of her performance, and ultimately
caused the non-renewal of her contract.[14]
The Ruling of the Labor Arbiter and the NLRC
On June 26, 1997, the Labor Arbiter rendered a decision dismissing the
complaint for lack of merit, thus:
IN THE LIGHT OF ALL THE FOREGOING, the complaint is hereby
dismissed for lack of merit. The respondent is, however, ordered to extend to
the complainant a send off award or financial assistance in the amount
equivalent to one-month salary on ground of equity.[15]
The Labor Arbiter declared that the respondent, who had rendered less than
seventeen months of service to the petitioner, cannot be said to have acquired
regular status. The petitioner and the Philips Semiconductor Phils., Inc.,
Workers Union had agreed in their Collective Bargaining Agreement (CBA)
that a contractual employee would acquire a regular employment status only
upon completion of seventeen months of service. This was also reflected in
the minutes of the meeting of April 6, 1993 between the petitioner and the
union. Further, a contractual employee was required to receive a performance
rating of at least 3.0, based on output, quality of work, attendance and work
attitude, to qualify for contract renewal. In the respondents case, she had
worked for the petitioner for only twelve months. In the last extension of her
employment contract, she garnered only 2.8 points, below the 3.0 required
average, which disqualified her for contract renewal, and regularization of
employment. The Labor Arbiter also ruled that the respondent cannot
justifiably complain that she was deprived of her right to notice and hearing
because her line supervisor had asked her to explain her unauthorized
absences. Accordingly, these dialogues between the respondent and her line
supervisor can be deemed as substantial compliance of the required notice and
investigation.
The Labor Arbiter declared, however, that the respondent had rendered
satisfactory service for a period of one year, and since her infraction did not
involve moral turpitude, she was entitled to one months salary.
Aggrieved, the respondent appealed to the NLRC, which, on September 16,
1998, issued a Resolution affirming the decision of the Labor Arbiter and
dismissing the appeal. The NLRC explained that the respondent was a
contractual employee whose period of employment was fixed in the
successive contracts of employment she had executed with the petitioner.
Thus, upon the expiration of her contract, the respondents employment
automatically ceased. The respondents employment was not terminated;
neither was she dismissed.
The NLRC further ruled that as a contractual employee, the respondent was
bound by the stipulations in her contract of employment which, among others,
was to maintain a performance rating of at least 3.0 as a condition for her
continued employment. Since she failed to meet the said requirement, the
petitioner was justified in not renewing her contract.
The respondent filed a motion for reconsideration of the resolution, but on
January 12, 1999, the NLRC resolved to deny the same.
The Case Before the Court of Appeals
Dissatisfied, the respondent filed a petition for certiorari under Rule 65 before
the Court of Appeals, docketed as CA-G.R. SP No. 52149, for the reversal of
the resolutions of the NLRC.
On October 11, 1999, the appellate court rendered a decision reversing the
decisions of the NLRC and the Labor Arbiter and granting the respondents
petition. The CA ratiocinated that the bases upon which the NLRC and the
Labor Arbiter founded their decisions were inappropriate because the CBA
and the Minutes of the Meeting between the union and the management
showed that the CBA did not cover contractual employees like the respondent.
Thus, the seventeenth-month probationary period under the CBA did not apply
to her. The CA ruled that under Article 280 of the Labor Code, regardless of
the written and oral agreements between an employee and her employer, an
employee shall be deemed to have attained regular status when engaged to
perform activities which are necessary and desirable in the usual trade or
business of the employer. Even casual employees shall be deemed regular
employees if they had rendered at least one year of service to the employer,
whether broken or continuous.
The CA noted that the respondent had been performing activities that were
usually necessary and desirable to the petitioners business, and that she had
rendered thirteen months of service. It concluded that the respondent had
attained regular status and cannot, thus, be dismissed except for just cause and
only after due hearing. The appellate court further declared that the task of the
respondent was hardly specific or seasonal. The periods fixed in the contracts
of employment executed by the respondent were designed by the petitioner to
preclude the respondent from acquiring regular employment status. The strict
application of the contract of employment against the respondent placed her at
the mercy of the petitioner, whose employees crafted the said contract.
According to the appellate court, the petitioners contention that the
respondents employment on as the need arises basis was illogical. If such
stance were sustained, the court ruled, then no employee would attain regular
status even if employed by the petitioner for seventeen months or more. The
CA held that the respondents sporadic absences upon which her dismissal was
premised did not constitute valid justifiable grounds for the termination of her
employment. The tribunal also ruled that a less punitive penalty would suffice
for missteps such as absenteeism, especially considering that the respondent
had performed satisfactorily for the past twelve months.
The CA further held that, contrary to the ruling of the Labor Arbiter, the
dialogues between the respondent and the line supervisor cannot be
considered substantial compliance with the requirement of notice and
investigation. Thus, the respondent was not only dismissed without justifiable
cause; she was also deprived of her right to due process.
The petitioner filed a motion for reconsideration of the decision but on
January 26, 2000, the CA issued a resolution denying the same.
The Case Before the Court
The petitioner filed the instant petition and raised the following issues for the
courts resolution: (a) whether or not the respondent was still a contractual
employee of the petitioner as of June 4, 1993; (b) whether or not the petitioner
dismissed the respondent from her employment; (c) if so, whether or not she
was accorded the requisite notice and investigation prior to her dismissal; and,
(d) whether or not the respondent is entitled to reinstatement and full payment
of backwages as well as attorneys fees.
On the first issue, the petitioner contends that the policy of hiring workers for
a specific and limited period on an as needed basis, as adopted by the
petitioner, is not new; neither is it prohibited. In fact, according to the
petitioner, the hiring of workers for a specific and limited period is a valid
exercise of management prerogative. It does not necessarily follow that where
the duties of the employee consist of activities usually necessary or desirable
in the usual course of business of the employer, the parties are forbidden from
agreeing on a period of time for the performance of such activities. Hence,
there is nothing essentially contradictory between a definite period of
employment and the nature of the employees duties.
According to the petitioner, it had to resort to hiring contractual employees for
definite periods because it is a semiconductor company and its business is
cyclical in nature. Its operation, production rate and manpower requirements
are dictated by the volume of business from its clients and the availability of
the basic materials. It produces the products upon order of its clients and does
not allow such products to be stockpiled. Peak loads due to cyclical demands
increase the need for additional manpower for short duration. Thus, the
petitioner often experiences short-term surges in labor requirements. The
hiring of workers for a definite period to supplement the regular work force
during the unpredictable peak loads was the most efficient, just and practical
solution to the petitioners operating needs.
The petitioner contends that the CA misapplied the law when it insisted that
the respondent should be deemed a regular employee for having been
employed for more than one year. The CA ignored the exception to this rule,
that the parties to an employment contract may agree otherwise, particularly
when the same is established by company policy or required by the nature of
work to be performed. The employer has the prerogative to set reasonable
standards to qualify for regular employment, as well as to set a reasonable
period within which to determine such fitness for the job.
According to the petitioner, the conclusion of the CA that the policy adopted
by it was intended to circumvent the respondents security of tenure is without
basis. The petitioner merely exercised a right granted to it by law and, in the
absence of any evidence of a wrongful act or omission, no wrongful intent
may be attributed to it. Neither may the petitioner be penalized for agreeing to
consider workers who have rendered more than seventeen months of service
as regular employees, notwithstanding the fact that by the nature of its
business, the petitioner may enter into specific limited contracts only for the
duration of its clients peak demands. After all, the petitioner asserts, the union
recognized the need to establish such training and probationary period for at
least six months for a worker to qualify as a regular employee. Thus, under
their CBA, the petitioner and the union agreed that contractual workers be
hired as of December 31, 1992.
The petitioner stresses that the operation of its business as a semiconductor
company requires the use of highly technical equipment which, in turn, calls
for certain special skills for their use. Consequently, the petitioner, in the
exercise of its best technical and business judgment, has set a standard of
performance for workers as well as the level of skill, efficiency, competence
and production which the workers must pass to qualify as a regular employee.
In rating the performance of the worker, the following appraisal factors are
considered by the respondent company as essential: (1) output (40%), (2)
quality (30%), (3) attendance (15%), and (4) work attitude (15%). The rate of
3.0 was set as the passing grade. As testified to by the petitioners Head of
Personnel Services, Ms. Cecilia C. Mallari:
A workers efficiency and productivity can be established only after he has
rendered service using Philips equipment over a period of time. A worker has
to undergo training, during which time the worker is taught the manufacturing
process and quality control. After instructions, the worker is subjected to
written and oral examinations to determine his fitness to continue with the
training. The orientation and initial training lasts from three to four weeks
before the worker is assigned to a specific work station. Thereafter, the
workers efficiency and skill are monitored.
Among the factors considered (before a contractual employee becomes a
regular employee) are output, quality, attendance, and work attitude, which
includes cooperation, discipline, housekeeping and inter-office employee
relationship. These factors determine the workers efficiency and productivity.
[16]
The Courts Ruling
In ruling for the respondent, the appellate court applied Article 280 of the
Labor Code of the Philippines, as amended, which reads:
Art. 280. Regular and Casual Employment. The provisions of written
agreement to the contrary notwithstanding and regardless of the oral argument
of the parties, an employment shall be deemed to be regular where the
employee has been engaged to perform activities which are usually necessary
or desirable in the usual business or trade of the employer, except where the
employment has been fixed for a specific project or undertaking the
completion or termination of which has been determined at the time of the
engagement of the employee or where the work or services to be performed is
seasonal in nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the
preceding paragraph; Provided, That, any employee who has rendered at least
one year of service, whether such service is continuous or broken, shall be
considered a regular employee with respect to the activity in which he is
employed and his employment shall continue while such activity exists.
The appellate court held that, in light of the factual milieu, the respondent was
already a regular employee on June 4, 1993. Thus:
It is apparent from the factual circumstances of this case that the period of
employment has been imposed to preclude acquisition of tenurial security by
petitioner. It bears stressing that petitioners original contract of employment,
dated May 8, 1992 to August 8, 1992, had been extended through several
contracts one from October 13, 1992 to December 16, 1992, another from
January 7, 1993 to April 4, 1993, and, lastly, from April 5, 1993 to June 4,
1993.
The fact that the petitioner had rendered more than one year of service at the
time of his (sic) dismissal only shows that she is performing an activity which
is usually necessary and desirable in private respondents business or trade.
The work of petitioner is hardly specific or seasonal. The petitioner is,
therefore, a regular employee of private respondent, the provisions of their
contract of employment notwithstanding. The private respondents prepared
employment contracts placed petitioner at the mercy of those who crafted the
said contract.[17]
We agree with the appellate court.
Article 280 of the Labor Code of the Philippines was emplaced in our statute
books to prevent the circumvention by unscrupulous employers of the
employees right to be secure in his tenure by indiscriminately and completely
ruling out all written and oral agreements inconsistent with the concept of
regular employment defined therein. The language of the law manifests the
intent to protect the tenurial interest of the worker who may be denied the
rights and benefits due a regular employee because of lopsided agreements
with the economically powerful employer who can maneuver to keep an
employee on a casual or temporary status for as long as it is convenient to it.
[18]
In tandem with Article 281 of the Labor Code, Article 280 was designed to
put an end to the pernicious practice of making permanent casuals of our
lowly employees by the simple expedient of extending to them temporary or
probationary appointments, ad infinitum.[19]
The two kinds of regular employees under the law are (1) those engaged to
perform activities which are necessary or desirable in the usual business or
trade of the employer; and (2) those casual employees who have rendered at
least one year of service, whether continuous or broken, with respect to the
activities in which they are employed.[20] The primary standard to determine a
regular employment is the reasonable connection between the particular
activity performed by the employee in relation to the business or trade of the
employer. The test is whether the former is usually necessary or desirable in
the usual business or trade of the employer.[21] 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 of the employer. Hence, the
employment is also considered regular, but only with respect to such activity
and while such activity exists.[22] The law does not provide the qualification
that the employee must first be issued a regular appointment or must be
declared as such before he can acquire a regular employee status.[23]
In this case, the respondent was employed by the petitioner on May 8, 1992 as
production operator. She was assigned to wirebuilding at the transistor
division. There is no dispute that the work of the respondent was necessary or
desirable in the business or trade of the petitioner.[24] She remained under the
employ of the petitioner without any interruption since May 8, 1992 to June 4,
1993 or for one (1) year and twenty-eight (28) days. The original contract of
employment had been extended or renewed for four times, to the same
position, with the same chores. Such a continuing need for the services of the
respondent is sufficient evidence of the necessity and indispensability of her
services to the petitioners business.[25] By operation of law, then, the
respondent had attained the regular status of her employment with the
petitioner, and is thus entitled to security of tenure as provided for in Article
279 of the Labor Code which reads:
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.
The respondents re-employment under contracts ranging from two to three
months over a period of one year and twenty-eight days, with an express
statement that she may be reassigned at the discretion of the petitioner and that
her employment may be terminated at any time upon notice, was but a catch-
all excuse to prevent her regularization. Such statement is contrary to the letter
and spirit of Articles 279 and 280 of the Labor Code. We reiterate our ruling in
Romares v. NLRC:[26]
Succinctly put, in rehiring petitioner, employment contracts ranging from two
(2) to three (3) months with an express statement that his temporary
job/service as mason shall be terminated at the end of the said period or upon
completion of the project was obtrusively a convenient subterfuge utilized to
prevent his regularization. It was a clear circumvention of the employees
right to security of tenure and to other benefits. It, likewise, evidenced bad
faith on the part of PILMICO.
The limited period specified in petitioners employment contract having been
imposed precisely to circumvent the constitutional guarantee on security of
tenure should, therefore, be struck down or disregarded as contrary to public
policy or morals. To uphold the contractual arrangement between PILMICO
and petitioner would, in effect, permit the former to avoid hiring permanent or
regular employees by simply hiring them on a temporary or casual basis,
thereby violating the employees security of tenure in their jobs.[27]
Under Section 3, Article XVI of the Constitution, it is the policy of the State to
assure the workers of security of tenure and free them from the bondage of
uncertainty of tenure woven by some employers into their contracts of
employment. The guarantee is an act of social justice. When a person has no
property, his job may possibly be his only possession or means of livelihood
and those of his dependents. When a person loses his job, his dependents
suffer as well. The worker should therefor be protected and insulated against
any arbitrary deprivation of his job.[28]
We reject the petitioners general and catch-all submission that its policy for a
specific and limited period on an as the need arises basis is not prohibited
by law or abhorred by the Constitution; and that there is nothing essentially
contradictory between a definite period of employment and the nature of the
employees duties.
The petitioners reliance on our ruling in Brent School, Inc. v. Zamora[29] and
reaffirmed in subsequent rulings is misplaced, precisely in light of the factual
milieu of this case. In the Brent School, Inc. case, we ruled that the Labor
Code does not outlaw employment contracts on fixed terms or for specific
period. We also ruled that the decisive determinant in term employment
should not be the activity that the employee is called upon to perform but the
day certain agreed upon by the parties for the commencement and termination
of their employment relationship. However, we also emphasized in the same
case that where from the circumstances it is apparent that the periods have
been imposed to preclude acquisition of tenurial security by the employee,
they should be struck down or disregarded as contrary to public policy and
morals. In the Romares v. NLRC case, we cited the criteria under which term
employment cannot be said to be in circumvention of the law on security of
tenure, namely:
1) The fixed period of employment was knowingly and voluntarily agreed
upon by the parties without any force, duress, or improper pressure being
brought to bear upon the employee and absent any other circumstances
vitiating his consent; or
2) It satisfactorily appears that the employer and the employee dealt with each
other on more or less equal terms with no moral dominance exercised by the
former or the latter.[30]
None of these criteria has been met in this case. Indeed, in Pure Foods
Corporation v. NLRC,[31] we sustained the private respondents averments
therein, thus:
[I]t could not be supposed that private respondents and all other so-called
casual workers of [the petitioner] KNOWINGLY and VOLUNTARILY
agreed to the 5-month employment contract. Cannery workers are never on
equal terms with their employers. Almost always, they agree to any terms of
an employment contract just to get employed considering that it is difficult to
find work given their ordinary qualifications. Their freedom to contract is
empty and hollow because theirs is the freedom to starve if they refuse to
work as casual or contractual workers. Indeed, to the unemployed, security of
tenure has no value. It could not then be said that petitioner and private
respondents dealt with each other on more or less equal terms with no moral
dominance whatever being exercised by the former over the latter.[32]
We reject the petitioners submission that it resorted to hiring employees for
fixed terms to augment or supplement its regular employment for the
duration of peak loads during short-term surges to respond to cyclical
demands; hence, it may hire and retire workers on fixed terms, ad infinitum,
depending upon the needs of its customers, domestic and international. Under
the petitioners submission, any worker hired by it for fixed terms of months
or years can never attain regular employment status. However, the petitioner,
through Ms. Cecilia C. Mallari, the Head of Personnel Services of the
petitioner, deposed that as agreed upon by the Philips Semiconductor (Phils.),
Inc. Workers Union and the petitioner in their CBA, contractual employees
hired before December 12, 1993 shall acquire regular employment status after
seventeen (17) months of satisfactory service, continuous or broken:
5. Q: What was the response of Philips regular employees to your hiring of
contractual workers in the event of peak loads?
A: Philips regular rank-and-file employees, through their exclusive
bargaining agent, the Philips Semiconductors (Phils.), Inc. Workers Union
(Union), duly recognized the right of Philips, in its best business judgment,
to hire contractual workers, and excluded these workers from the bargaining
unit of regular rank-and-file employees.
Thus, it is provided under the Collective Bargaining Agreement, dated May
16, 1993, between Philips and the Union that:
ARTICLE I
UNION RECOGNITION
Section 1. Employees Covered: The Company hereby recognizes the Union
as the exclusive bargaining representative of the following regular employees
in the Factory at Las Pias, Metro Manila: Janitors, Material Handlers, Store
helpers, Packers, Operators, QA Inspectors, Technicians, Storekeepers,
Production Controllers, Inventory Controllers, Draftsmen, Machinists, Sr.
Technician, Sr. QA Inspectors, Controllers, Sr. Draftsmen, and Servicemen,
except probationary and Casual/Contractual Employees, all of whom do not
belong to the bargaining unit.
A copy of the CBA, dated May 16, 1993, was attached as Annex 1 to
Philips Position Paper, dated August 30, 1993.
6. Q: May a contractual employee become a regular employee of the Philips?
A: Yes. Under the agreement, dated April 6, 1993, between the Union and
Philips, contractual workers hired before 12 December 1993, who have
rendered seventeen months of satisfactory service, whether continuous or
broken, shall be given regular status. The service rendered by a contractual
employee may be broken depending on production needs of Philips as
explained earlier.
A copy of the Minutes of the Meeting (Minutes, for brevity), dated April 6,
1993, evidencing the agreement between Philips and the Union has been
submitted as Annex 2 of Philips Position Paper.[33]
In fine, under the CBA, the regularization of a contractual or even a casual
employee is based solely on a satisfactory service of the employee/worker for
seventeen (17) months and not on an as needed basis on the fluctuation of
the customers demands for its products. The illogic of the petitioners
incongruent submissions was exposed by the appellate court in its assailed
decision, thus:
The contention of private respondent that petitioner was employed on as
needed basis because its operations and manpower requirements are dictated
by the volume of business from its client and the availability of the basic
materials, such that when the need ceases, private respondent, at its option,
may terminate the contract, is certainly untenable. If such is the case, then we
see no reason for private respondent to allow the contractual employees to
attain their regular status after they rendered service for seventeen months.
Indubitably, even after the lapse of seventeen months, the operation of private
respondent would still be dependent on the volume of business from its client
and the availability of basic materials. The point is, the operation of every
business establishment naturally depends on the law of supply and demand. It
cannot be invoked as a reason why a person performing an activity, which is
usually desirable and necessary in the usual business, should be placed in a
wobbly status. In reiteration, the relation between capital and labor is not
merely contractual. It is so impressed with public interest that labor contracts
must yield to the common good.
While at the start, petitioner was just a mere contractual employee, she
became a regular employee as soon as she had completed one year of service.
It is not difficult to see that to uphold the contractual arrangement between
private respondent and petitioner would, in effect, be to permit employers to
avoid the necessity of hiring regular or permanent employees. By hiring
employees indefinitely on a temporary or casual status, employers deny their
right to security of tenure. This is not sanctioned by law. [34]
Even then, the petitioners reliance on the CBA is misplaced. For, as
ratiocinated by the appellate court in its assailed decision:
Obviously, it is the express mandate of the CBA not to include contractual
employees within its coverage. Such being the case, we see no reason why an
agreement between the representative union and private respondent, delaying
the regularization of contractual employees, should bind petitioner as well as
other contractual employees. Indeed, nothing could be more unjust than to
exclude contractual employees from the benefits of the CBA on the premise
that the same contains an exclusionary clause while at the same time invoke a
collateral agreement entered into between the parties to the CBA to prevent a
contractual employee from attaining the status of a regular employee.
This cannot be allowed.
The CBA, during its lifetime, constitutes the law between the parties. Such
being the rule, the aforementioned CBA should be binding only upon private
respondent and its regular employees who were duly represented by the
bargaining union. The agreement embodied in the Minutes of Meeting
between the representative union and private respondent, providing that
contractual employees shall become regular employees only after seventeen
months of employment, cannot bind petitioner. Such a provision runs contrary
to law not only because contractual employees do not form part of the
collective bargaining unit which entered into the CBA with private respondent
but also because of the Labor Code provision on regularization. The law
explicitly states that an employee who had rendered at least one year of
service, whether such service is continuous or broken, shall be considered a
regular employee. The period set by law is one year. The seventeen months
provided by the Minutes of Meeting is obviously much longer. The
principle is well settled that the law forms part of and is read into every
contract without the need for the parties expressly making reference to it. [35]
On the second and third issues, we agree with the appellate court that the
respondent was dismissed by the petitioner without the requisite notice and
without any formal investigation. Given the factual milieu in this case, the
respondents dismissal from employment for incurring five (5) absences in
April 1993, three (3) absences in May 1993 and four (4) absences in June
1993, even if true, is too harsh a penalty. We do agree that an employee may
be dismissed for violation of reasonable regulations/rules promulgated by the
employer. However, we emphasized in PLDT v. NLRC[36] that:
Dismissal is the ultimate penalty that can be meted to an employee. Where a
penalty less punitive would suffice, whatever missteps may have been
committed by the worker ought not to be visited with a consequence so severe
such as dismissal from employment. For, the Constitution guarantees the right
of workers to security of tenure. The misery and pain attendant to the loss of
jobs then could be avoided if there be acceptance of the view that under
certain circumstances of the case the workers should not be deprived of their
means of livelihood.[37]
Neither can the conferences purportedly held between the respondent and the
line supervisor be deemed substantial compliance with the requirements of
notice and investigation. We are in full accord with the following
ratiocinations of the appellate court in its assailed decision:
As to the alleged absences, we are convinced that the same do not constitute
sufficient ground for dismissal. Dismissal is just too stern a penalty. No less
than the Supreme Court mandates that where a penalty less punitive would
suffice, whatever missteps may be committed by labor ought not to be visited
with a consequence so severe. (Meracap v. International Ceramics
Manufacturing Co., Inc., 92 SCRA 412 [1979]). Besides, the fact that
petitioner was repeatedly given a contract shows that she was an efficient
worker and, therefore, should be retained despite occasional lapses in
attendance. Perfection cannot, after all, be demanded. (Azucena, The Labor
Code, Vol. II, 1996 ed., [p.] 680)
Finally, we are convinced that it is erroneous for the Commission to uphold
the following findings of the Labor Arbiter, thus:
Those dialogues of the complainant with the Line Supervisor, substantially,
stand for the notice and investigation required to comply with due process.
The complainant did not avail of the opportunity to explain her side to justify
her shortcomings, especially, on absences. She cannot now complain about
deprivation of due process.
Of course, the power to dismiss is a formal prerogative of the employer.
However, this is not without limitations. The employer is bound to exercise
caution in terminating the services of his employees. Dismissals must not be
arbitrary and capricious. Due process must be observed in dismissing an
employee because it affects not only his position but also his means of
livelihood. Employers should respect and protect the rights of their employees
which include the right to labor. (Liberty Cotton Mills Workers Union v.
Liberty Cotton Mills, Inc., 90 SCRA 391 [1979])
To rule that the mere dialogue between private respondent and petitioner
sufficiently complied with the demands of due process is to disregard the strict
mandate of the law. A conference is not a substitute for the actual observance
of notice and hearing. (Pepsi Cola Bottling Co., Inc. v. National Labor
Relations Commission, 210 SCRA 277 [1992]) The failure of private
respondent to give petitioner the benefit of a hearing before she was dismissed
constitutes an infringement on her constitutional right to due process of law
and not to be denied the equal protection of the laws. The right of a person to
his labor is deemed to be his property within the meaning of the constitutional
guarantee. This is his means of livelihood. He cannot be deprived of his labor
or work without due process of law. (Batangas Laguna Tayabas Bus Co. v.
Court of Appeals, 71 SCRA 470 [1976])

All told, the court concludes that petitioners dismissal is illegal because, first,
she was dismissed in the absence of a just cause, and second, she was not
afforded procedural due process. In pursuance of Article 279 of the Labor
Code, we deem it proper to order the reinstatement of petitioner to her former
job and the payment of her full backwages. Also, having been compelled to
come to court to protect her rights, we grant petitioners prayer for attorneys
fees.[38]
IN LIGHT OF ALL THE FOREGOING, the assailed decision of the
appellate court in CA-G.R. SP No. 52149 is AFFIRMED. The petition at bar is
DENIED. Costs against the petitioner.

SO ORDERED.

G.R. No. 146621, July 30, 2004

RENE P. VALIAO, PETITIONER, VS. HON. COURT OF APPEALS,
NATIONAL LABOR RELATIONS COMMISSION-FOURTH
DIVISION (CEBU CITY), WEST NEGROS COLLEGE,
RESPONDENTS.

DECISION
QUISUMBING, J.:
For review on certiorari is the Decision[1] dated August 22, 2000 of the Court
of Appeals in CA-G.R. SP No. 55133, and its Resolution[2] dated November
22, 2000 denying the motion for reconsideration. The Court of Appeals
dismissed the petition for certiorari filed by petitioner and affirmed the
Resolution dated July 7, 1999 of the National Labor Relations Commission
(NLRC)-Fourth Division in NLRC Case No. V-000134-98 (RAB Case No.
06-01-10026-95), which sustained the Decision of Labor Arbiter Benjamin E.
Pelaez, directing private respondent West Negros College (WNC) to pay
petitioner Rene P. Valiaos salary during the period of his preventive
suspension and attorneys fees, while dismissing all other claims.
The facts, as culled from records, are as follows:
On February 5, 1990, petitioner Rene Valiao was appointed by private
respondent West Negros College (WNC) as Student Affairs Office (SAO)
Director, with a starting salary of P2,800 per month. On May 14, 1990, he
was assigned as Acting Director, Alumni Affairs Office.
On July 29, 1990, petitioner was transferred to a staff position and designated
as Records Chief at the Registrars Office but was again re-assigned as a typist
on June 24, 1991.
The latest re-assignment was due to his tardiness and absences, as reflected in
the summary of tardiness and absences report, which showed him to have
been absent or late for work from a minimum of seven (7) to a maximum of
seventy-five (75) minutes for the period March to October 31, 1991, and to
have reported late almost every day for the period November to December
1991.
Copies of his tardiness/absences reports were furnished petitioner, along with
memoranda requiring him to explain but his explanations were either
unacceptable or unsatisfactory. Subsequent reports also showed that he did
not change his habits resulting in tardiness and absences. He was even caught
one time manipulating the bundy clock, thus necessitating another
memorandum to him asking him to explain his dishonest actuations in
accomplishing the daily attendance logbook and in using the bundy clock.
On December 10, 1991, petitioner received a suspension order without pay for
fifteen (15) days effective January 1, 1992, because of dishonesty in reporting
his actual attendance. After serving the suspension, the petitioner reported
back to office on January 16, 1992.
On June 15, 1992, another adverse report on tardiness and absences from the
Registrar was made against the petitioner prompting WNC to send him
another memorandum with an attached tardiness and absences report, calling
his attention on his tardiness and absences for the period February to April
1992.
On June 20, 1992, petitioner sent a letter of appeal and explained his side to
the new college president, Suzette Arbolario-Agustin, who gave petitioner
another chance. The petitioner was then appointed as Information Assistant
effective immediately. However, the petitioner did not immediately assume
the post of Information Assistant prompting the President of private
respondent WNC to call his attention. When the petitioner finally assumed
his post, he was allowed a part-time teaching job in the same school to
augment his income.
Sometime in December 1992, WNC won a case against the officials of the
union before the NLRC. Petitioner was ordered to prepare a media blitz of
this victory but the petitioner did not comply with the order on the ground
that such a press release would only worsen the already aggravated situation
and strained relations between WNC management and the union officials.

When petitioner reported for work on the first day of January 1993, he was
relieved from his post and transferred to the College of Liberal Arts as
Records Evaluator. Not for long, the Dean of the Liberal Arts sent a letter to
the Human Resources Manager complaining about the petitioners poor
performance and habitual absenteeism, as shown in the daily absence reports.
On January 18, 1993, petitioner was again absent from work without
permission or notice to his immediate superior. It turned out that he went to
Bacolod City and on January 28, 1993, the petitioner was one of those arrested
during a raid in the house of one Toto Ruiz, a suspected drug pusher and
was brought to the Bacolod Police Station along with four (4) other suspects.
Upon further search and investigation by the Narcotics Control Division, the
petitioner was found possessing two (2) suspected marijuana roaches (butts)
which were placed inside his left shoe. The event was widely publicized,
focusing on petitioners position as an Economics teacher of WNC, and
considering further that one of his fellow suspects was a member of the
Philippine Army, who was caught with an unlicensed firearm, a tooter and
other shabu paraphernalia. The petitioner and other suspects were then
charged with violation of the Dangerous Drugs Act of 1972 (Republic Act No.
6425, as amended).
Petitioner was asked to explain within 24 hours why he should not be
terminated as a result of the raid and the charges against him for violation of
Rep. Act No. 6425 as amended. Petitioner allegedly was not able to answer
immediately since he was in jail and received said memorandum only on
January 30, 1993, although his wife had earlier received the memorandum on
January 28, 1993.
On January 29, 1993, the petitioner was dismissed for failure to answer said
memorandum.
On February 1, 1993, the petitioner wrote to the President of WNC explaining
his side and asking for due process. WNC cancelled its Notice of Termination
dated January 29, 1993, and granted the petitioners request. The petitioner
was notified through a memorandum about the grant of his request and that a
hearing would be conducted. He was then placed under preventive suspension
and an investigation committee was organized to conduct the probe. On
March 6, 1993, a notice of hearing/investigation was sent to the petitioner.
After the investigation attended by the petitioner and his counsel, with
proceedings duly recorded, the investigation committee recommended the
dismissal of petitioner. A notice of termination was then sent to petitioner
informing him of his termination from the service for serious misconduct and
gross and habitual neglect of duty. The petitioner received the notice on
March 25, 1993, but did not file a grievance concerning the notice of
termination.
On January 19, 1995, petitioner filed a Complaint against WNC for illegal
suspension, illegal dismissal, backwages, salary differential for salary
increases and other benefits granted after his dismissal as well as for moral
and exemplary damages and attorneys fees.
In its Answer, WNC alleged that petitioner was dismissed on charges of
serious misconduct, and gross and willful neglect of duty. WNC said his
dismissal was effected after due notice and prior hearing. It claimed also that
since petitioner was terminated for a valid cause after a due hearing, the
latters claim for moral and exemplary damages, and attorneys fees had no
basis in fact and in law.
After due proceedings, the Labor Arbiter rendered a decision, the decretal
portion of which reads as follows:
WHEREFORE, premises considered, judgment is hereby rendered
DIRECTING respondent West Negros College to pay complainant Rene P.
Valiao (a) P3,300.00 as salary for the period of his preventive suspension,
and (b) P330.00 as attorneys fees, or the total amount of THREE
THOUSAND SIX HUNDRED THIRTY PESOS (P3,630.00).
Further, all other claims are DISMISSED for lack of merit.
SO ORDERED.[3]
The Labor Arbiter found no justifiable reason to place the petitioner under
preventive suspension as there was no serious or imminent threat to the life or
property of his employer or co-workers.
However, the Labor Arbiter found the dismissal of the petitioner from WNC to
be valid due to absenteeism and tardiness and after he was accorded the
procedural due process aspect of the law as reflected in the records showing
that the petitioner was formally investigated and given the opportunity to
refute the alleged findings by the management of WNC. The Labor Arbiter
held that frequent absenteeism and tardiness of the petitioner constituted not
only willful disobedience but also gross and habitual neglect of duties, which
are valid grounds for termination of employment. He stressed that the
petitioners frequent absences without proper leave of absence was not only
unfair to WNC and the petitioners co-employees but also set an undesirable
example to the employees under his supervision, considering that the
petitioner was not a mere rank-and-file employee but one who owed more
than the usual fealty to the organization.
On appeal to the NLRC, the latter affirmed the decision of the Labor Arbiter,
sustained the latters findings of facts, and made its own findings on the
apprehension of the petitioner for possession of prohibited drugs. The
decretal portion of the decision reads as follows:
WHEREFORE, premises considered, the appeal is DISMISSED and the
decision of the Executive Labor Arbiter is AFFIRMED in its entirety.
SO ORDERED.[4]
Petitioner then filed a Petition for Certiorari under Rule 65 before the Court
of Appeals but this was dismissed for lack of merit. The decretal portion of
the decision reads as follows:
WHEREFORE, the questioned Decision and Resolution dated December 11,
1998 and July 7, 1999, respectively, of public respondent National Labor
Relations Commission are hereby AFFIRMED.
SO ORDERED.[5]
The Court of Appeals held that the petitioner was validly dismissed for serious
misconduct and gross habitual neglect of duties, which was aggravated by his
arrest for violation of Rep. Act No. 6425, as amended [the January 28, 1993
incident] and that he was afforded the twin requirements of notice and hearing
and the opportunity to defend himself by the investigating committee. The
appellate court noted that WNC had presented sufficient evidence to support
petitioners termination from employment after taking into consideration the
totality of the infractions or the number of violations committed by petitioner
during the period of employment and stressed that it properly exercised its
management prerogative by observing due process. Finally, the Court of
Appeals ruled that the NLRC correctly denied the claim for damages and
attorneys fees for lack of evidentiary support.
Petitioner duly filed a Motion of Reconsideration, which was denied by the
Court of Appeals.
Hence, this petition alleging that:
A. THE HONORABLE PUBLIC RESPONDENT COURT OF APPEALS
ERRED IN HOLDING THAT THE DISMISSAL OF PETITIONER
WAS VALID, DESPITE THE FACT THAT THERE IS CLEAR AND
BLATANT VIOLATION OF THE BASIC CONSTITUTIONAL
RIGHTS OF THE HEREIN PETITIONER BOTH SUBSTANTIVE
AND PROCEDURAL DUE PROCESS.

B. THE HONORABLE PUBLIC RESPONDENT COURT OF APPEALS
IN (SIC) DISMISSING THE RELIEFS FOR MORAL AND
EXEMPLARY DAMAGES AND ATTORNEYS FEES.[6]
In our view, the only relevant issue for our resolution is whether or not the
petitioner was validly dismissed from employment on the ground of serious
misconduct and gross habitual neglect of duties, including habitual tardiness
and absenteeism.
Petitioner claims that his outright dismissal from employment was not valid
and too harsh and that he was not dismissed from employment because of
tardiness or absences but because he was among those apprehended in a raid.
Also, he was not accorded due process because although his wife received the
show cause notice, he did not have the proper mind to reply as he was in jail
and was psychologically disturbed.
Considering the submissions of the parties as well as the records before us, we
find the petition without merit. Petitioners dismissal from employment is
valid and justified.
For an employees dismissal to be valid, (a) the dismissal must be for a valid
cause and (b) the employee must be afforded due process.[7]
Serious misconduct and habitual neglect of duties are among the just causes
for terminating an employee under the Labor Code of the Philippines. Gross
negligence connotes want of care in the performance of ones duties. Habitual
neglect implies repeated failure to perform ones duties for a period of time,
depending upon the circumstances.[8] The Labor Arbiters findings that
petitioners habitual absenteeism and tardiness constitute gross and habitual
neglect of duties that justified his termination of employment are sufficiently
supported by evidence on record. Petitioners repeated acts of absences
without leave and his frequent tardiness reflect his indifferent attitude to and
lack of motivation in his work. More importantly, his repeated and habitual
infractions, committed despite several warnings, constitute gross misconduct
unexpected from an employee of petitioners stature. This Court has held that
habitual absenteeism without leave constitute gross negligence and is
sufficient to justify termination of an employee.[9]
However, petitioner claims that he was dismissed not for his tardiness or
absences but for his arrest as a suspected drug user. His claim, however, is
merely speculative. We find such contention devoid of basis. First, the
decisions of the Labor Arbiter, the NLRC, and the Court of Appeals are
indubitable. They show that indeed petitioner had incurred numerous and
repeated absences without any leave. Moreover, he was not punctual in
reporting for work. These unexplained absences and tardiness were reflected
on the summary reports submitted by WNC before the labor arbiter, but
petitioner failed to controvert said reports. Second, contrary to petitioners
assertion, the NLRC did not base its conclusions on the fact of the arrest of
petitioner for violation of Rep. Act No. 6425 but on the totality of the number
of infractions incurred by the petitioner during the period of his employment
in different positions he occupied at WNC. Thus:
In the case of petitioner Valiao, his services were terminated by private
respondent after having been found guilty of serious misconduct and gross
habitual neglect of duty which was aggravated by the January 28, 1993
incident. In exercising such management prerogative, due process was
properly observed. Private respondent presented sufficient evidence to
support its act in terminating the services of petitioner. Private respondent
took into consideration the totality of the infractions or the number of
violations committed by petitioner during the period of employment.
Furthermore, it hardly needs reminding that, in view of petitioners position
and responsibilities, he must demonstrate a scrupulous regard for rules and
policies befitting those who would be role models for their young charges.[10]
(Emphasis and italics supplied)
Indeed, even without the arrest incident, WNC had more than enough basis for
terminating petitioner from employment. It bears stressing that petitioners
absences and tardiness were not isolated incidents but manifested a pattern of
habituality. In one case, we held that where the records clearly show that the
employee has not only been charged with the offense of highgrading but also
has been warned 21 times for absences without official leave, these repeated
acts of misconduct and willful breach of trust by an employee justify his
dismissal and forfeiture of his right to security of tenure.[11] The totality of
infractions or the number of violations committed during the period of
employment shall be considered in determining the penalty to be imposed
upon an erring employee. The offenses committed by him should not be taken
singly and separately but in their totality. Fitness for continued employment
cannot be compartmentalized into tight little cubicles of aspects of character,
conduct, and ability separate and independent of each other.[12]
Needless to say, so irresponsible an employee like petitioner does not deserve
a place in the workplace, and it is within the managements prerogative of
WNC to terminate his employment. Even as the law is solicitous of the
welfare of employees, it must also protect the rights of an employer to
exercise what are clearly management prerogatives. As long as the companys
exercise of those rights and prerogative is in good faith to advance its interest
and not for the purpose of defeating or circumventing the rights of employees
under the laws or valid agreements, such exercise will be upheld.[13]
Still, petitioner claims that he was not afforded due process so that his
dismissal from employment should be declared invalid. This contention
deserves scant consideration. The Court of Appeals held that the records
reveal that petitioner was afforded the twin requirements of notice and hearing
and was likewise given the opportunity to defend himself before the
investigating committee. We find no reason to set aside these factual
findings of the Court of Appeals as they are supported by evidence on record.
Besides, we may not review the appellate courts findings of fact in an appeal
via certiorari,[14] since as a rule, the Supreme Courts review is limited to
errors of law allegedly committed by the appellate court.[15] Judicial review of
labor cases does not go as far as to evaluate the sufficiency of evidence upon
which the Labor Arbiter and National Labor Relations Commission based
their determinations.[16]
In this case, petitioner was asked to explain his several absences and tardiness
on many occasions. A notice to explain was sent to him regarding the arrest
incident wherein he was able to reply. An investigation committee was
formed by WNC to investigate the arrest incident and the absences and
tardiness of petitioner. It must be emphasized that proceedings of the
committee were duly recorded, and petitioner actively participated therein by
answering the various questions interposed by the panel members. Finally, a
notice of his termination was sent to petitioner, although he claims to have
received it late as he was in jail. It is an undeniable fact, however, that his
wife had actually received the notice in his house earlier, even before
petitioners termination and this matter was later communicated to him.
At any rate, petitioner was given enough opportunity to be heard, and his
dismissal was based on valid grounds. The essence of due process is simply an
opportunity to be heard, or as applied to administrative proceedings, an
opportunity to explain ones side or an opportunity to seek a reconsideration
of the action or ruling complained of. A formal or trial-type hearing is not at
all times and in all instances essential, as the due process requirements are
satisfied where the parties are afforded fair and reasonable opportunity to
explain their side of the controversy at hand. What is frowned upon is the
absolute lack of notice and hearing.[17]
Finally, the Labor Arbiter found that petitioner is entitled to salary differentials
for the period of his preventive suspension, as there is no sufficient basis
shown to justify his preventive suspension. During the pendency of the
investigation, the employer may place the worker concerned under preventive
suspension if his continued employment poses a serious and imminent threat
to life or property of the employer or of his co-workers.[18] But in this case,
there is no indication that petitioner posed a serious threat to the life and
property of the employer or his co-employees. Neither was it shown that he
was in such a position to unduly influence the outcome of the investigation.
Hence, his preventive suspension could not be justified, and the payment of
his salary differentials is in order.

However, the award of attorneys fees to him cannot be sustained, in view of

our findings that petitioner was validly dismissed from employment. Said
award lacks legal basis and could not be granted properly in this case.

WHEREFORE, the assailed Decision dated August 22, 2000 and Resolution
dated November 22, 2000 of the Court of Appeals in CA-G.R. SP No. 55133
are AFFIRMED with MODIFICATION in that the award of attorneys fees is
deleted. No pronouncement as to costs.

SO ORDERED.

G.R. No. 168120, January 25, 2012

MANSION PRINTING CENTER AND CLEMENT CHENG,
PETITIONERS, VS. DIOSDADO BITARA, JR. RESPONDENT.

DECISION
PEREZ, J.:
Before us is a petition for review on certiorari seeking to reverse and set aside
the issuances of the Court of Appeals in CA-GR. SP No. 70965, to wit: (a) the
Decision[1] dated 18 March 2004 granting the petition for certiorari under
Rule 65 of herein respondent Diosdado Bitara, Jr.; and (b) the Resolution[2]
dated 10 May 2005 denying the petitioners Motion for Reconsideration of the
Decision. The assailed decision of the Court of Appeals reversed the findings
of the National Labor Relations Commission[3] and the Labor Arbiter[4] that
respondent was validly dismissed from the service.
The Antecedents
Petitioner Mansion Printing Center is a single proprietorship registered under
the name of its president and co-petitioner Clement Cheng. It is engaged in the
printing of quality self-adhesive labels, brochures, posters, stickers, packaging
and the like.[5]
Sometime in August 1998, petitioners engaged the services of respondent as a
helper (kargador). Respondent was later promoted as the companys sole
driver tasked to pick-up raw materials for the printing business, collect
account receivables and deliver the products to the clients within the delivery
schedules.[6]
Petitioners aver that the timely delivery of the products to the clients is one of
the foremost considerations material to the operation of the business.[7] It
being so, they closely monitored the attendance of respondent. They noted his
habitual tardiness and absenteeism.
Thus, as early as 23 June 1999, petitioners issued a Memorandum[8] requiring
respondent to submit a written explanation why no administrative sanction
should be imposed on him for his habitual tardiness.
Several months after, respondents attention on the matter was again called to
which he replied:
29 NOV. 1999
MR. CLEMENT CHENG
SIR:
I UNDERSTAND MY TARDINESS WHATEVER REASON I HAVE
AFFECTS SOMEHOW THE DELIVERY SCHEDULE OF THE COMPANY,
THUS DISCIPLINARY ACTION WERE IMPOSED TO ME BY THE
MANAGEMENT. AND ON THIS END, ACCEPT MY APOLOGIES AND
REST ASSURED THAT I WILL COME ON TIME (ON OR BEFORE 8:30
AM) AND WILLINGNESS TO EXTEND MY SERVICE AS A COMPANY
DRIVER. WHATEVER HELP NEEDED. (sic)
RESPECTFULLY YOURS,
(SGD.) DIOSDADO BITARA, JR.[9]
Despite respondents undertaking to report on time, however, he continued to
disregard attendance policies. His weekly time record for the first quarter of
the year 2000[10] revealed that he came late nineteen (19) times out of the
forty-seven (47) times he reported for work. He also incurred nineteen (19)
absences out of the sixty-six (66) working days during the quarter. His
absences without prior notice and approval from March 11-16, 2000 were
considered to be the most serious infraction of all[11] because of its adverse
effect on business operations.
Consequently, Davis Cheng, General Manager of the company and son of
petitioner Cheng, issued on 17 March 2000 another Memorandum[12] (Notice
to Explain) requiring respondent to explain why his services should not be
terminated. He personally handed the Notice to Explain to respondent but the
latter, after reading the directive, refused to acknowledge receipt thereof.[13] He
did not submit any explanation and, thereafter, never reported for work.
On 21 March 2000, Davis Cheng personally served another Memorandum[14]
(Notice of Termination) upon him informing him that the company found him
grossly negligent of his duties, for which reason, his services were terminated
effective 1 April 2000.
On even date, respondent met with the management requesting for
reconsideration of his termination from the service. However, after hearing his
position, the management decided to implement the 21 March 2000
Memorandum. Nevertheless, the management, out of generosity, offered
respondent financial assistance in the amount of P6,110.00 equivalent to his
one month salary. Respondent demanded that he be given the amount
equivalent to two (2) months salary but the management declined as it
believed it would, in effect, reward respondent for being negligent of his
duties.[15]
On 27 April 2000, respondent filed a complaint[16] for illegal dismissal against
the petitioners before the Labor Arbiter. He prayed for his reinstatement and
for the payment of full backwages, legal holiday pay, service incentive leave
pay, damages and attorneys fees.[17]
In his Position Paper[18] filed with the Labor Arbiter, respondent claimed that
he took a leave of absence from March 17-23, 2000[19] due to an urgent family
problem. He returned to work on 24 March 2000[20] but Davis Cheng allegedly
refused him admission because of his unauthorized absences.[21] On 1 April
2000, respondent was summoned by Davis Cheng who introduced him to a
lawyer, who, in turn, informed him that he will no longer be admitted to work
because of his 5-day unauthorized absences. Respondent explained that he
was compelled to immediately leave for the province on 17 March 200022
due to the urgency of the matter and his wife informed the office that he will
be absent for a week. The management found his explanation unacceptable
and offered him an amount equivalent to his one (1) month salary as
separation pay but respondent refused the offer because he wanted to keep the
job.[23] In his Reply to Respondents Position Paper,[24] however, respondent
averred that he rejected the offer because he wanted an amount equivalent to
one and a half months pay.
On 21 December 2000, the Labor Arbiter dismissed the complaint for lack of
merit.[25]
On appeal to the National Labor Relations Commission (hereinafter referred
to as the Commission), the findings of the Labor Arbiter was AFFIRMED en
toto. Thus, in its Resolution of 29 June 2001 in NLRC NCR CA No. 027871-
01, the Commission declared:
Upon Our review of the record of the case, We perceive no abuse of discretion
as to compel a reversal. Appellant failed to adduce convincing evidence to
show that the Labor Arbiter in rendering the assailed decision has acted in a
manner inconsistent with the criteria set forth in the foregoing pronouncement.
Neither are we persuaded to disturb the factual findings of the Labor Arbiter a
quo. The material facts as found are all in accordance with the evidence
presented during the hearing as shown by the record.
WHEREFORE, finding no cogent reason to modify, alter, much less reverse
the decision appealed from, the same is AFFIRMED en toto and the instant
appeal DISMISSED for lack of merit.[26]
It likewise denied respondents Motion for Reconsideration of the Resolution
on 21 February 2002.[27]
Before the Court of Appeals, respondent sought the annulment of the
Commissions Resolution dated 29 June 2001 and Order dated 21 February
2002 on the ground that they were rendered with grave abuse of discretion
and/or without or in excess of jurisdiction.[28]
The Court of Appeals found for the respondent and reversed the findings of
the Commission. The dispositive portion of its Decision dated 18 March 2004
reads:
WHEREFORE, the petition is GRANTED. In lieu of the assailed Resolution
and Order of the respondent NLRC, a NEW DECISION is hereby rendered
declaring petitioner Diosdado Bitara, Jr. to have been Illegally Dismissed and,
thus, entitled to the following:
1. Reinstatement or if no longer feasible, Separation Pay to be computed
from the commencement of his employment in August 1988 up to the
time of his termination on April 1, 2000, including his imputed service
from April 1, 2000 until the finality of this decision, based on the
salary rate prevailing at the said finality;
2. Backwages, inclusive of allowances and other benefits, computed from
April 1, 2000 up to the finality of this decision, without qualification
or deduction; and
3. 5-day Service Incentive Leave Pay for every year of service from the
commencement of his employment in August 1988 up to its
termination on April 1, 2000.[29]
On 10 May 2005, the Court of Appeals denied respondents Motion for
Reconsideration of the decision for lack of merit. [30]
Hence, the instant petition.[31]
Issue
The core issue in this case is whether or not the Court of Appeals correctly
found that the Commission acted without and/or in excess of jurisdiction and
with grave abuse of discretion amounting to lack or excess of jurisdiction (a)
in upholding the termination of respondents employment and (b) in affirming
the denial of his claim for non-payment of holiday pay, service incentive leave
pay, moral and exemplary damages.
Our Ruling
The petition is meritorious.
The special civil action for certiorari seeks to correct errors of jurisdiction and
not errors of judgment.[32]
xxx The raison detre for the rule is when a court exercises its jurisdiction,
an error committed while so engaged does not deprive it of the
jurisdiction being exercised when the error is committed. If it did, every
error committed by a court would deprive it of its jurisdiction and every
erroneous judgment would be a void judgment. xxx Hence, where the issue
or question involved affects the wisdom or legal soundness of the decision
not the jurisdiction of the court to render said decision the same is
beyond the province of a special civil action for certiorari. xxx[33]
xxx [J]udicial review does not go as far as to evaluate the sufficiency of
evidence upon which the Labor Arbiter and NLRC based their determinations,
the inquiry being limited essentially to whether or not said public respondents
had acted without or in excess of its jurisdiction or with grave abuse of
discretion.[34] The said rule directs us to merely determine whether there is
basis established on record to support the findings of a tribunal and such
findings meet the required quantum of proof, which in this case, is substantial
evidence. Our deference to the expertise acquired by quasi-judicial agencies
and the limited scope granted to us in the exercise of certiorari jurisdiction
restrain us from going so far as to probe into the correctness of a tribunals
evaluation of evidence, unless there is palpable mistake and complete
disregard thereof in which case certiorari would be proper.[35]
It is on the alleged lack of substantial evidence that the Court of Appeals
found for the respondents, thereby reversing the decision of the Commission.
We hold otherwise.
Upon examination of the documents presented by the parties, we are
convinced that the finding of facts on which the conclusions of the
Commission and the Labor Arbiter were based was actually supported by
substantial evidence that amount of relevant evidence as a reasonable
mind might accept as adequate to support a conclusion, even if other minds,
equally reasonable, might conceivably opine otherwise.[36] (Emphasis
supplied.)
I previous infractions capped by his recent unauthorized absences from March
In order to validly dismiss an employee, the employer is required to observe
both substantive and procedural aspects the termination of employment must
be based on a just or authorized cause of dismissal and the dismissal must be
effected after due notice and hearing.[37]
Substantive Due Process
We cannot agree with the Court of Appeals that the sole basis of the
termination of respondents employment was his absences from March 11-16,
2000.
Indeed, the Notice to Explain38 clearly stated:
We are seriously considering your termination from service, and for this
reason you are directed to submit a written explanation, within seventy-
two hours from your receipt of this notice, why you should not be
terminated from service for failure to report for work without verbal or
written notice or permission on March 11, 13, 14, 15 and 16, 2000. xxx
(Emphasis supplied.)
To give full meaning and substance to the Notice to Explain, however, the
paragraph should be read together with its preceding paragraph, to wit:
We have time and again, verbally and formally, called your attention to
your negligence from your tardiness and your frequent absences without
any notice but still, you remain to ignore our reminder. As you know, we
are in need of a regular driver and your action greatly affected the operation of
our company. (Emphasis supplied.)
Necessarily, he was considered for termination of employment because of his
11-16, 2000.
That the recent absences were unauthorized were satisfactorily established by
petitioners. Two (2) employees of the company belied the claim of
respondents wife Mary Ann Bitara that she called the office on 11 March
2000, and, through a certain Delia, as allegedly later identified by respondent,
informed petitioners that her husband would take a leave of absence for a
week because he went to the province.[39]
Delia Abalos, a binder/finisher of the company, stated in her Affidavit that
she never received a call from respondent nor his wife regarding his absences
from March 11-16 and 17-23 during the month of March 2000.[40] On the other
hand, Ritchie Distor, a messenger of the company, narrated in his Affidavit
that, upon instruction of the Management, he went to respondents house on
13 March 2000 to require him to report for work. Instead of relaying the
message to him, as respondent would have it, the wife informed him that
respondent had already left the house but that she did not know where he was
going.[41]
The Court of Appeals relied heavily on our ruling in Stellar Industrial
Services, Inc. vs. NLRC,[42] which is not on all fours with the present case. In
that case, the employer dismissed respondent for non-observance of company
rules and regulations. On the basis of the facts presented, this Court honored
the questioned medical certificate justifying the absences he incurred. It
further ratiocinated:
xxx [P]rivate respondents absences, as already discussed, were incurred with
due notice and compliance with company rules and he had not thereby
committed a similar offense as those he had committed in the past [to wit:
gambling, for which he was preventively suspended; habitual tardiness for
which he received several warnings; and violation of company rules for
carrying three sacks of rice, for which he was required to explain.] xxx To
refer to those earlier violations as added grounds for dismissing him is doubly
unfair to private respondent.[43] (Emphasis supplied.)
In the present case, however, petitioners have repeatedly called the attention
of respondent concerning his habitual tardiness. The Memorandum dated 23
June 1999 of petitioner Cheng required him to explain his tardiness. Also in
connection with a similar infraction, respondent even wrote petitioner Cheng a
letter dated 29 November 1999 where he admitted that his tardiness has
affected the delivery schedules of the company, offered an apology, and
undertook to henceforth report for duty on time. Despite this undertaking, he
continued to either absent himself from work or report late during the first
quarter of 2000.
We, therefore, agree with the Labor Arbiters findings, to wit:
The imputed absence and tardiness of the complainant are documented. He
faltered on his attendance 38 times of the 66 working days. His last absences
on 11, 13, 14, 15 and 16 March 2000 were undertaken without even
notice/permission from management. These attendance delinquencies may be
characterized as habitual and are sufficient justifications to terminate the
complainants employment.[44]
On this score, Valiao v. Court of Appeals[45] is instructive:
xxx It bears stressing that petitioners absences and tardiness were not isolated
incidents but manifested a pattern of habituality. xxx The totality of infractions
or the number of violations committed during the period of employment shall
be considered in determining the penalty to be imposed upon an erring
employee. The offenses committed by him should not be taken singly and
separately but in their totality. Fitness for continued employment cannot be
compartmentalized into tight little cubicles of aspects of character, conduct,
and ability separate and independent of each other.[46]
There is likewise no merit in the observation of the Court of Appeals that the
petitioners themselves are not certain of the official time of their employees
after pointing out the seeming inconsistencies between the statement of the
petitioners that there is no need for written rules since even the [respondent]
is aware that his job starts from 8 am to 5 pm[47] and its Memorandum of 23
June 1999, where it was mentioned that respondents official time was from
8:30 a.m. to 5:30 p.m. On the contrary, it was clearly stated in the
Memorandum that the Management adjusted his official time from 8:00 a.m.
to 5:00 p.m. to 8:30 a.m. to 5:30 p.m. to hopefully solve the problem on his
tardiness.48
Neither is there basis to hold that the company tolerates the offsetting of
undertime with overtime services. The Weekly Time Record relied upon by
respondent does not conclusively confirm the alleged practice.
In Valiao,[49] we defined gross negligence as want of care in the performance
of ones duties[50] and habitual neglect as repeated failure to perform ones
duties for a period of time, depending upon the circumstances.51 These are
not overly technical terms, which, in the first place, are expressly sanctioned
by the Labor Code of the Philippines, to wit:
ART. 282. Termination by employer. - An employer may terminate an
employment for any of the following causes:
(a) xxx
(b) Gross and habitual neglect by the employee of his duties;
xxx
Clearly, even in the absence of a written company rule defining gross and
habitual neglect of duties, respondents omissions qualify as such warranting
his dismissal from the service.
We cannot simply tolerate injustice to employers if only to protect the welfare
of undeserving employees. As aptly put by then Associate Justice Leonardo A.
Quisumbing:
Needless to say, so irresponsible an employee like petitioner does not deserve
a place in the workplace, and it is within the managements prerogative xxx to
terminate his employment. Even as the law is solicitous of the welfare of
employees, it must also protect the rights of an employer to exercise what are
clearly management prerogatives. As long as the companys exercise of those
rights and prerogative is in good faith to advance its interest and not for the
purpose of defeating or circumventing the rights of employees under the laws
or valid agreements, such exercise will be upheld.[52]
And, in the words of then Associate Justice Ma. Alicia Austria-Martinez in
Philippine Long Distance and Telephone Company, Inc. v. Balbastro:[53]
While it is true that compassion and human consideration should guide the
disposition of cases involving termination of employment since it affects one's
source or means of livelihood, it should not be overlooked that the benefits
accorded to labor do not include compelling an employer to retain the services
of an employee who has been shown to be a gross liability to the employer.
The law in protecting the rights of the employees authorizes neither
oppression nor self-destruction of the employer.[54] It should be made clear that
when the law tilts the scale of justice in favor of labor, it is but a recognition
of the inherent economic inequality between labor and management. The
intent is to balance the scale of justice; to put the two parties on relatively
equal positions. There may be cases where the circumstances warrant favoring
labor over the interests of management but never should the scale be so tilted
if the result is an injustice to the employer. Justitia nemini neganda est
(Justice is to be denied to none).[55]
Procedural Due Process
Procedural due process entails compliance with the two-notice rule in
dismissing an employee, to wit: (1) the employer must inform the employee of
the specific acts or omissions for which his dismissal is sought; and (2) after
the employee has been given the opportunity to be heard, the employer must
inform him of the decision to terminate his employment.[56]
Respondent claimed that he was denied due process because the company did
not observe the two-notice rule. He maintained that the Notice of Explanation
and the Notice of Termination, both of which he allegedly refused to sign,
were never served upon him.[57]
The Court of Appeals favored respondent and ruled in this wise:
Furthermore, We believe that private respondents failed to afford petitioner
due process. The allegation of private respondents that petitioner refused to
sign the memoranda dated March 17 and 21, 2000 despite receipt thereof is
not only lame but also implausible. First, the said allegation is self-serving and
unsubstantiated. Second, a prudent employer would simply not accept such
mere refusal, but would exert effort to observe the mandatory requirement of
due process. We cannot accept the self-serving claim of respondents that
petitioner refused to sign both memoranda. Otherwise, We would be allowing
employers to do away with the mandatory twin-notice rule in the termination
of employees. We find more credible the claim of petitioner that he was
illegally dismissed on April 1, 2000 when the lawyer of the company
informed him, without prior notice and in derogation of his right to due
process, of his termination by offering him a 1-month salary as separation pay.
The petitioners immediate filing of a complaint for illegal dismissal on April
27, 2000 reinforced Our belief that petitioner was illegally dismissed and was
denied due process.[58] (Emphasis in the original.)
We rule otherwise.
In Bughaw v. Treasure Island Industrial Corporation,[59] this Court, in
verifying the veracity of the allegation that respondent refused to receive the
Notice of Termination, essentially looked for the following: (1) affidavit of
service stating the reason for failure to serve the notice upon the recipient; and
(2) a notation to that effect, which shall be written on the notice itself.[60] Thus:
xxx Bare and vague allegations as to the manner of service and the
circumstances surrounding the same would not suffice. A mere copy of the
notice of termination allegedly sent by respondent to petitioner, without proof
of receipt, or in the very least, actual service thereof upon petitioner, does not
constitute substantial evidence. It was unilaterally prepared by the petitioner
and, thus, evidently self-serving and insufficient to convince even an
unreasonable mind.[61]
Davis Cheng, on the other hand, did both. First, he indicated in the notices the
notation that respondent refused to sign together with the corresponding
dates of service. Second, he executed an Affidavit dated 29 July 2000 stating
that: (1) he is the General Manager of the company; (2) he personally served
each notice upon respondent, when respondent went to the office/factory on
17 March 2000 and 21 March 2000, respectively; and (3) on both occasions,
after reading the contents of the memoranda, respondent refused to
acknowledge receipt thereof. We are, thus, convinced that the notices have
been validly served.
Premises considered, we find that respondent was accorded both substantive
and procedural due process.
II
As to respondents monetary claims, petitioners did not deny respondents
entitlement to service incentive leave pay as, indeed, it is indisputable that he
is entitled thereto. In Fernandez v. NLRC,[62] this Court elucidated:
The clear policy of the Labor Code is to grant service incentive leave pay to
workers in all establishments, subject to a few exceptions. Section 2, Rule V,
Book III of the Implementing Rules and Regulations[63] provides that [e]very
employee who has rendered at least one year of service shall be entitled to a
yearly service incentive leave of five days with pay. Service incentive leave
is a right which accrues to every employee who has served within 12 months,
whether continuous or broken reckoned from the date the employee started
working, including authorized absences and paid regular holidays unless the
working days in the establishment as a matter of practice or policy, or that
provided in the employment contracts, is less than 12 months, in which case
said period shall be considered as one year.[64] It is also commutable to its
money equivalent if not used or exhausted at the end of the year.[65] In other
words, an employee who has served for one year is entitled to it. He may use
it as leave days or he may collect its monetary value. xxx[66] (Emphasis
supplied.)
Be that as it may, petitioners failed to establish by evidence that respondent
had already used the service incentive leave when he incurred numerous
absences notwithstanding that employers have complete control over the
records of the company so much so that they could easily show payment of
monetary claims against them by merely presenting vouchers or payrolls,67 or
any document showing the off-setting of the payment of service incentive
leave with the absences, as acknowledged by the absentee, if such is the
company policy. Petitioners presented none.
employment period from August 1988 to 1 April 2000. This case is hereby
REMANDED to the Labor Arbiter for the computation of respondents service
incentive leave pay.
SO ORDERED.

We thus quote with approval the findings of the Court of Appeals on the
following:
[P]rivate respondents bear the burden to prove that employees have received
these benefits in accordance with law. It is incumbent upon the employer to
present the necessary documents to prove such claim. Although private
respondents labored to show that they paid petitioner his holiday pay, no
similar effort was shown with regard to his service incentive leave pay. We do
not agree with the Labor Arbiters conclusion that petitioners service
incentive leave pay has been used up by his numerous absences, there being
no proof to that effect.[68]

As to the payment of holiday pay, we are convinced that respondent had

already received the same based on the cash vouchers on record.

Accordingly, we affirm the ruling of the National Labor Relations

Commission that the dismissal was valid. However, respondent shall be
entitled to the money equivalent of the five-day service incentive leave pay for
every year of service from the commencement of his employment in August
1988 up to its termination on 1 April 2000. The Labor Arbiter shall compute
the corresponding amount.

WHEREFORE, the Resolution dated 29 June 2001 and the Order dated 21
February 2002 of the National Labor Relations Commission in NLRC NCR
CASE No. 027871-01 are hereby REINSTATED with the MODIFICATION
that petitioners are ORDERED to pay respondent the money equivalent of the
five-day service incentive leave for every year of service covering his
A.M. No. 2007-15-SC, January 19, 2009
RE: EMPLOYEES INCURRING HABITUAL TARDINESS IN THE 1ST
SEMESTER OF 2007: MS. MARIVIC C. AZURIN, ATTY. WINSTON R.
BANIEL, MS. MARIA VICTORIA S. BUZON, MR. CRISANTO C.
CARILLO, JR., MR. ALLAN MICHAEL L. CHUA, MR. MANOLITO
V. DE GUZMAN, MR. RODERICK I. DUERO, MR. RODEL A.
GOMBIO, MR. EDUARDO M. IGLESIAS, ATTY. TERESITA
ASUNCION M. LACANDULA-RODRIGUEZ, MR. RONALD C.
NAPOLITANO, MS. MARIA TERESA P. OLIPAS, MS. DIGNA C.
PALAFOX, MS. SANDRA O. PENDON, MR. JOVITO V. SANCHEZ
AND MR. ROLANDO N. YACAT.
DECISION
CHICO-NAZARIO, J.:
Pending our action is the Memorandum[1] dated 16 November 2007 of Atty.
Eden T. Candelaria (Atty. Candelaria), Deputy Clerk of Court and Chief
Administrative Officer of this Court, recommending the imposition of
administrative penalties on 16 employees who committed habitual tardiness
during the first semester of 2007, in accordance with Civil Service
Commission (CSC) Memorandum Circular No. 4, Series of 1991 (Policy on
Absenteeism and Tardiness) and Memorandum Circular No. 19, Series of
1999 (Revised Uniform Rules on Administrative Cases in Civil Service).
The present administrative matter stemmed from the referral by the Leave
Division to the Complaints and Investigation Division of the Office of
Administrative Services (OAS) of the list of employees who incurred
tardiness 10 times or more in a month for the first semester (January to June)
of 2007, for appropriate action. Atty. Candelaria then required the employees
in said list to explain within five days from notice why no disciplinary action
should be taken against them. The names of the concerned employees and
their respective explanations are reproduced below:
A. Employees with previous penalties of habitual tardiness:
1. Ms. Maria Teresa P. Olipas (Ms. Olipas), Court Stenographer III, Court
Management Office.
In the First Semester of 2007, Ms. Olipas incurred habitual tardiness, to wit:
MONTH TIMES TARDY
January 10
April 11
In her Comment[2] dated 29 August 2007, Ms. Olipas explained that she is a
single parent with no one to assist her in taking care of her two daughters'
needs. There are times when she suffers a severe pain on her left foot which
gives her a hard time in getting up from bed. She admitted, however, she
incurred tardiness but without any intention to violate the said CSC
Memorandum Circular. She now begs for the kind indulgence and compassion
of the Court for her predicament.
The Court En Banc in a Resolution dated 4 May 2001 in Re: Habitual
Tardiness for the Year 1999 suspended Ms. Olipas for one month. She was
again suspended for five days pursuant to the Court En Banc Resolution dated
16 March 2004 Re: Habitual Tardiness for the 1st and 2nd Semesters of 2003
for her second incursion of the same offense.
2. Ms. Marivic C. Azurin (Ms. Azurin), Clerk IV, Leave Division-OCA.
In the first semester of 2007, Ms. Azurin incurred habitual tardiness, to wit:
MONTH TIMES TARDY
January 13
February 10
March 10
Ms. Azurin did not submit her explanation despite receipt of the Memorandum
of OCA on 24 August 2007 and First Tracer on 26 September 2007 by the
Leave Section of OCA, requiring her to explain in writing why no disciplinary
action should be taken against her for her habitual tardiness. Thus, she is
deemed to have waived her right to comment.
As to the tardiness he incurred in the 1st semester of 2007 he explained that it
was a balance of priorities between domestic troubles and family problems as
against the rules being required of civil servants. He admitted that to decide
between priorities, the latter should prevail. He now asks for temperance and
promises to persevere and sacrifice more as he approaches his eighteenth year
of service to the Court.
In a Resolution dated 13 September 2006, the Court En Banc in Re: Habitual
Tardiness for the 2nd Semester 2005, sternly warned Atty. Baniel.

In a Resolution dated 23 October 2001, the Court En Banc in Re: Habitual 4. Mr. Allan Michael L. Chua (Mr. Chua), Clerk IV, Office of the Court
Tardiness for the First Semester of 2001, Ms. Azurin was sternly warned. Administrator.

3. Atty. Wilson Baniel (Atty. Baniel), Court Attorney VI, Office of the Clerk In the first semester of 2007, Mr. Chua incurred tardiness, to wit:
of Court-En Banc.
MONTH TIMES TARDY
Atty. Baniel incurred habitual tardiness in the first semester of 2007, to wit:

MONTH TIMES TARDY

January 13

February 11
January 14

May 13 In his Comment[4] dated 14 September, Mr. Chua admitted his infraction. He
said that such incursion was neither intentional nor ingrained with bad faith.
June 12 Having been employed only in July 2006 as co-terminus, he is still at a loss on
the procedure on attendance in the government. That due to some domestic
problems that he dealt with during said period, his performance at work was
In his Comment[3] dated 1 October 2007, Atty. Baniel apologized for the late somehow affected. Mr. Chua now begs for the kind consideration on his case
compliance with the OCA's directive to explain. He stated that through so as not to prejudice his chance of being employed elsewhere in the future
oversight, he was not able to comply in due time because all the while he when his appointment expires.
thought that he had already complied but as he checked his files none has been
filed. In a Resolution dated 5 June 2007, the Court En Banc in Re: Employees
Incurring Habitual Tardiness in the Second Semester of 2006, Mr. Chua was
sternly warned.
5. Jovito V. Sanchez (Mr. Sanchez), Information System Analyst III,
Management Information Systems Office.
Mr. Sanchez incurred habitual tardiness in the First Semester of 2007, to wit:
MONTH TIMES TARDY
January 10
March 11
In his Comment[5] dated 5 September 2007, he explained that it has been a
year now since he was separated with his wife. On 10 December 2006, his
estranged wife left for Singapore to work. Their three children, two of whom
are already attending school, are now living with him since she left and they
are all being taken care of by himself alone. He is considering the idea of
getting a household help but finds it difficult to get one. He now begs that any
disciplinary action that may be imposed on him as a result of his being
habitually tardy be accorded with utmost compassion for humanitarian
reasons.
Mr. Sanchez was sternly warned pursuant to the Court En Banc Resolution
dated 17 April 2001, Re: Habitual Tardiness for the 1st Semester of 2000.
B. Employees incurring habitual tardiness for the first time:
1. Ms. Maria Victoria S. Buzon (Ms. Buzon), Management & Audit Analyst
II, Court Management Office-OCA.
Ms. Buzon has been reported to be habitually tardy in the first semester of
2007, to wit:
MONTH TIMES TARDY
February 10
April 10
In her Comment[6] dated 27 August 2007, Ms. Buzon explained that for having
served the Judiciary for the past thirty (30) years as a public servant, she is
well aware of the Civil Service Rules and Regulations regarding tardiness,
absenteeism and the like. Having acquired hypertension last year, she finds it
difficult to adjust and still is unable to handle the situations up to the earlier
part of this year. She added that she is not used to uncomfortable feelings
brought about by attacks of hypertension which caused her to slow down
especially in the morning. This predicament, she said, was compounded by the
unprecedented street diggings that caused so much traffic along the different
routes used by public utility vehicles which she takes to reach the office.
Nonetheless, she admitted that she failed to monitor the number of times she
came late. She promised, however, that this would not happen again especially
now that she has been able to cope with her present health condition and the
routes she takes daily to reach the office.
2. Mr. Crisanto C. Carrillo, Jr. (Mr. Carrillo), Judicial Officer III, MCLEO.
Mr. Carrillo, Jr. has incurred habitual tardiness in the first semester of 2007, to
wit:
MONTH TIMES TARDY
 4. Mr. Roderick I. Duero (Mr. Duero), Utility Worker II, Office of the Chief
January 12 Attorney.

May 10 Mr. Roderick I. Duero incurred habitual tardiness in the first semester of 2007,
to wit:
In his Comment[7] dated 4 September 2007, he admitted the report for MONTH TIMES TARDY
incurring tardiness qualified as habitual on the above-mentioned months.
Nonetheless, he seeks favorable consideration due to the personal and health
problems he was dealing with at that time compounded by the demand in
January 11
school where he enrolled for his post graduate studies. He promised to be
more circumspect in his actions despite this predicament. February 10
3. Mr. Manolito V. De Guzman (Mr. De Guzman), Data Entry Machine May 10
Operator IV, Office of ACA Antonio Dujua, OCA.
June 11
Mr. De Guzman has been reported to be habitually tardy during the first
semester of 2007, to wit:
In his explanation[9] dated 29 August 2007, Mr. Duero did not dispute the
MONTH TIMES TARDY record of his tardiness. As a family man who is desolated by his better-half, he
said that he has to attend to all the needs of his four kids, three of whom are
attending schools. Nonetheless, he pleads that any disciplinary action that may
January 11 be imposed on him for the said infraction be accorded with leniency for
humanitarian reasons.
May 10
5. Mr. Rodel A. Gombio (Mr. Gombio), Human Resource Management
Officer II, Office of Administrative Services.
He explained in his Comment[8] dated 29 August 2007 that during the months
he was habitually tardy, his wife was sick and would not be able to take of Mr. Gombio incurred habitual tardiness in the first semester of 2007, to wit:
their seven children, six of whom are attending their classes. That during those
times, he was the one who took care of all the children's needs as he could not MONTH TIMES TARDY
afford to get a household help. He is hoping for the kind consideration on his
predicament.
May 10
June 10
In his Comment[10] dated 28 August 2007, Mr. Gombio, at the outset,
expressed his apologies for being tardy during the said months. He explained
that his tardiness was incurred due to some circumstances attendant in his
family life. That during those times, his wife was set to travel to Australia for
one year and had a short period to prepare for her trip. Most of the time, he
had to do the errands as his wife could not afford to be absent nor late for
work.
He added further that two days before his wife left for Australia, his brother
came home from Dubai and stayed there for his month-long vacation. With his
wife away, he had to run the household by himself and attend to the needs of
their children. Despite all of these, he said that he tried his best to wake up
early and catch the Court of Appeals shuttle bus at 6:00 a.m. At times that he
missed the shuttle service, he is sure that on his way to the office he will be
caught in terrible traffic that hindered him from coming to work on time.
6. Mr. Eduardo M. Iglesias (Mr. Iglesias), SC Chief Judicial Staff Officer,
Personnel Division-OCA
Mr. Iglesias has been reported to be habitually tardy in the first semester of
2007, to wit:
MONTH TIMES TARDY
April 11
May 10
Mr. Iglesias submitted his Comment[11] dated 5 September 2007. In his
comment, he admitted his tardiness pursuant to CSC Memorandum Circular
No. 4, s. 1991. He said, however, that he was not fully aware of his being
tardy ten times or more for two consecutive months. He humbly expresses his
apology and assured not to commit the same infraction in the future.
7. Atty. Teresita Asuncion M. Lacandula-Rodriguez (Atty. Lacandula-
Rodriguez), Court Attorney VI, Office of Justice Renato C. Corona.
Atty. Lacandula-Rodriguez has been reported to be habitually tardy in the first
semester of 2007, to wit:
MONTH TIMES TARDY
January 10
February 16
In her Comment[12] dated 28 August 2007, Atty. Rodriguez explained that she
lives in Quezon City and during the period she was tardy, repairs to the Ayala
Bridge (where she passes) were made which made her travel time longer than
usual. In addition, she cites the circumstances in her family as her reason for
her coming to the office late. She nonetheless resolves to rearrange her
schedule so she can henceforth arrive on time. She asks the kind consideration
on this matter and offers her sincere apology to the Court for the
inconvenience she may have caused it.
8. Mr. Ronald C. Napolitano (Mr. Napolitano), Information Officer IV, Public
Information Office.
Mr. Ronald C. Napolitano incurred habitual tardiness in the first semester of
2007, to wit: In her letter[14] dated 31 August 2007, she admitted having incurred her
tardiness for a considerable number of days but without deliberate disregard of
MONTH TIMES TARDY the Civil Service Rules. She explained that her tardiness for the above-
mentioned months were caused by her severe symptoms of menopause which
frequently wake her all night long. Being forty-nine (49) years of age, she
January 11 finds difficulty to get up in the morning after a very troublesome sleep.
Despite this predicament, she has been trying her best to adjust her schedule
February 13 and has been successful in not incurring tardiness ten (10) times a month prior
to April and May 2007, and the months thereafter.
March 16
10. Ms. Sandra O. Pendon (Ms. Pendon), Clerk IV, Office of Court
June 12 Administrator Jose P. Perez.

In his letter[13] dated 28 September 2007, Mr. Napolitano explained that being Ms. Pendon was reported to be habitually tardy in the first semester of 2007,
the Public Information Office's Primary Artist and Layout Editor, he rendered to wit:
overtime, on a regular basis, just to complete his tasks within the deadlines. MONTH TIMES TARDY
Because of this, he has difficulty waking up early in the morning. He said that
he already requested for a change in his official time. He begs for kind
consideration and pledges to endeavor not to repeat the same infraction in the
future. January 10

9. Ms. Digna C. Palafox (Ms. Palafox), Clerk IV, Court Management Office. March 10

Ms. Palafox incurred habitual tardiness in the first semester of 2007, to wit: In her Comment[15] dated 28 August 2007, Ms. Pendon explained that during
MONTH TIMES TARDY the months she was habitually tardy, she has no household help to take care of
all the needs of her two nieces who were left by their mother to her charge.
She prays for kind consideration on the matter.

April 10 11. Mr. Rolando N. Yacat (Mr. Yacat), Clerk III, Office of Administrative
Services-OCA.
May 10
Mr. Yacat incurred habitual tardiness in the first semester of 2007, to wit:
MONTH TIMES TARDY
c. The following employees be STERNLY WARNED for their first
offense of habitual tardiness with the same warning that a repetition of
February 11 the same infraction in the future shall be dealt with more severely:

June 10 1. MS. MARIA VICTORIA S. BUZON

2. MR. CRISANTO C. CARILLO, JR.
[16]
Mr. Yacat explained in his letter dated 28 August 2007 that he and his 3. MR. MANOLITO V. DE GUZMAN
family are living in Kawit, Cavite; that during the month of February, part of
the road along Island Cove, where they usually take as their route, is 4. MR. RODERICK L. DUERO
undergoing renovation and because of the volume of the vehicles going to 5. MR. RODEL GOMBIO
Manila, heavy traffic builds up during the morning. This causes him to arrive
late in the office. He added that he already remedied his predicament by 6. MR. EDUARDO IGLESIAS
changing his work schedule from 8:00 a.m. to 8:30 a.m. He prays for
7. ATTY. TERESITA ASUNCION M. LACANDULA-
consideration and understanding on the matter.
RODRIGUEZ
In her Memorandum, Atty. Candelaria recommended that:
8. MR. RONALD C. NAPOLITANO
a. Ms. MARIA TERESA P. OLIPAS, for having been habitually tardy for
9. MS. DIGNA C. PALFOX
the third time, be SUSPENDED for fifteen (15) days, for humanitarian
consideration, with a final warning that a repetition of the same shall 10. MS. SANDRA O. PENDON
be dealt with more severely;
11. MR. ROLANDO N. YACAT
b. The following employees for having been found guilty of habitual
tardiness for the second time, be SEVERELY REPRIMANDED for On 27 November 2007, we required[17] the parties to manifest within 10 days
humanitarian reason, with a FINAL WARNING that a repetition of the from notice if they were willing to submit the matter for resolution based on
same shall be dealt with more severely: the pleadings filed. Only Ms. Olipas,[18] Mr. De Guzman,[19] Ms. Pendon,[20]
Atty. Lacandula-Rodriguez,[21] and Mr. Sanchez[22] submitted their
1. Ms. MARIVIC C. AZURIN manifestations. As for the others who failed to file their manifestations within
the given period, despite due notice, we deemed as waived[23] their submission
2. ATTY. WINSTON R. BANIEL
of supplemental comment/pleadings. Resultantly, the administrative matter
3. MR. ALLAN MICHAEL L. CHUA was deemed submitted for decision based on the pleadings filed.
4. MR. JOVITO V. SANCHEZ We agree in the findings of Atty. Candelaria in her Memorandum. We,
however, make some modifications on the penalties.
Under CSC Memorandum Circular No. 4, Series of 1991, a public employee
shall be considered habitually tardy if he incurs tardiness, regardless of the
number of minutes, ten (10) times a month for at least two (2) months in a
semester or at least two (2) consecutive months during the year.
There is no question that the employees herein were habitually tardy, as
defined in CSC Memorandum Circular No. 4, Series of 1991, for which they
must be penalized for such administrative offense which seriously
compromises efficiency and hampers public service.
By being habitually tardy, these employees have fallen short of the stringent
standard of conduct demanded from everyone connected with the
administration of justice. By reason of the nature and functions of their office,
officials and employees of the Judiciary must be role models in the faithful
observance of the constitutional canon that public office is a public trust.[24]
Public officers and employees must at all times be accountable to the people,
serve them with utmost responsibility, integrity, loyalty, and efficiency, act
with patriotism and justice, and lead modest lives.[25] Inherent in this mandate
is the observance of prescribed office hours and the efficient use of every
moment thereof for public service, if only to recompense the Government, and
ultimately, the people who shoulder the cost of maintaining the Judiciary.[26]
Thus, to inspire public respect for the justice system, court officials and
employees are at all times behooved to strictly observe official time. As
punctuality is a virtue, absenteeism and tardiness are impermissible.[27]
Likewise, in Basco v. Gregorio5 this Court held:
The exacting standards of ethics and morality imposed upon court employees
and judges are reflective of the premium placed on the image of the court of
justice, and that image is necessarily mirrored in the conduct, official or
otherwise, of the men and women who work thereat. It thus becomes the
imperative and sacred duty of everyone charged with the dispensation of
justice, from the judge to the lowliest clerk, to maintain the court's good name
and standing as true temples of justice. Circumscribed with the heavy burden
of responsibility, their conduct at all times must not only be characterized with
propriety and decorum, but above all else, must be above suspicion. Indeed,
every employee of the Judiciary should be an example of integrity, probity,
uprightness, honesty and diligence. x x x.[28]
The employees involved in the administrative matter before us, however, beg
our indulgence and consideration, giving various explanations for their
habitual tardiness, i.e., domestic problems and responsibilities, health reasons,
traffic and road repairs, overtime work, and unfamiliarity with the rules on
attendance in government. As correctly found by Atty. Candelaria, none of the
justifications provided by the employees for their habitual tardiness merit our
consideration. We have ruled that moral obligations, performance of
household chores, traffic problems, health conditions, and domestic and
financial concerns are not sufficient reasons to excuse habitual tardiness[29] or
to exempt the guilty employee from the imposition of the penalty, although
these may be considered to mitigate their liability.
Under Section 52(C)(4), Rule VI of CSC Memorandum Circular No. 19,
Series of 1999,[30]habitual tardiness shall be penalized as follows:
First Offense - Reprimand
Second Offense - Suspension for 1-30 days
Third Offense - Dismissal from the service
Thus, we modify the penalties recommended by Atty. Candelaria to be
imposed against the erring employees.
In the case of Ms. Olipas, while she should already be dismissed from the
service, as this is the third time she is found guilty of habitual tardiness, we
believe, for humanitarian considerations,[31] as well as taking into account her
(30) long years of service[32] in this Court, that a suspension of only fifteen
(15) days is in order. Ms. Olipas, however, is finally warned that this Court
will not hesitate to impose the extreme penalty of dismissal in case of a
repetition of the same or similar act in the future.
Ms. Azurin, Atty. Baniel, Mr. Chua, and Mr. Sanchez are suspended from the
service for five (5) days without pay since they have committed the offense of
habitual tardiness for the second time.
As for Ms. Buzon, Mr. Carillo, Mr. De Guzman, Mr. Duero. Mr. Gombio, Mr.
Iglesias, Atty. Lacandula-Rodriguez, Mr. Napolitano, Ms. Palafox, Ms.
Pendon, and Mr. Yacat, found guilty of habitual tardiness for the first time, we
cannot approve Atty. Candelaria's recommendation that they should only be
warned. According to the Civil Service rules earlier cited, the proper penalty
for the first offense of habitual tardiness is reprimand.
WHEREFORE, as recommended by Atty. Candelaria, we find the concerned
Supreme Court employees administratively liable for habitual tardiness and
are penalized as follows:
1. Ms. Maria Teresa P. Olipas is SUSPENDED for fifteen (15) days
without pay, for being habitually tardy for the third time, with a
FINAL WARNING that a repetition of the same shall be dealt with
more severely;
2. Ms. Marivic C. Azurin, Atty. Winston R. Baniel, and Mr. Jovito V.
Sanchez are SUSPENDED FOR 5 DAYS, for being habitually tardy
for the second time, with a FINAL WARNING that a repetition of the
same shall be dealt with more severely;
3. Mr. Allan Michael L. Chua is SUSPENDED for 5 days for being
habitually tardy for the second time. However, as such administrative
sanction can no longer be imposed since his appointment expired on
30 November 2007, let a copy of this Decision be entered into his
personal file for record purposes; and
4. The following employees: (a) Ms. Maria Victoria S. Buzon, (b) Mr.
Crisanto C. Carrillo, Jr., (c) Mr. Manolito V. de Guzman, (d) Mr.
Roderick L. Duero, (e) Mr. Rodel A. Gombio, (f) Mr. Eduardo M.
Iglesias, (g) Atty. Teresita Asuncion M. Lacandula-Rodriguez, (h) Mr.
Ronald Napolitano, (i) Mr. Digna C. Palafox, (j) Ms. Sandra O.
Pendon, and (k) Mr. Rolando N. Yacat are REPRIMANDED with a
WARNING that a repetition of the same act shall be dealt with more
severely.
SO ORDERED.