i. Maula vs. Ximex Delivery Express, Inc., G.R. No.

207838, January 25, 2017

This petition for review on certiorari under Rule 45 of the Rules of Civil Procedure seeks to reverse
the November 20, 2012 Decision1 and June 21, 2013 Resolution2 of the Court of Appeals (CA) in CA
G.R. SP No. 121176, which set aside the December 15, 2010 Resolution3 and July 20, 2011
Decision4 of the National Labor Relations Commission (NLRC) that affirmed the February 18, 2010
Decision5 of the Labor Arbiter (LA) finding the illegal dismissal of petitioner.

On May 12, 2009, petitioner Leo T. Maula filed a complaint against respondent Ximex Delivery
Express, Inc. and its officers (Jerome Ibafiez, Lili beth Gorospe, and Amador Cabrera) for illegal
dismissal, underpayment of salary/wages, non-payment/underpayment of overtime pay,
underpayment of holiday premium, underpayment of 13th month pay, non-payment of ECOLA, non-
payment/underpayment of night shift differential, illegal deduction, illegal suspension, regularization,
harassment, underremittance of SSS premiums, deduction of tax without tax identification number,
moral and exemplary damages, and attorney's fees. 6

The factual antecedents, according to petitioner, are as follows:

Petitioner was hired by the respondent as Operation Staff on March 23, 2002. As Operation Steff, he
performed a variety of duties such as but not limited to documentation, checker, dispatcher or
airfreight coordinator. He [was] on call anytime of the day or night. He was rendering night duty
which [started] at 6:00 p.m. More often it went beyond the normal eight-hour schedule such that he
normally rendered duty until 6:00 or 7:00 the following morning. This [was] without payment of the
corresponding night shift differential and overtime pay. His salary from March 2002 to December
2004 was PhP3,600.00 per month; from January 2005 to July 25, 2006 at PhP6,200.00 per month;
from July 26, 2006 to March 15, 2008 at PhP7,500.00 per month; from March 16, 2008 to February
15, 2009 at PhP9,412.00 per month; and, from February 16, 2009 to March 31, 2009 at
PhP9,932.00 per month. x x x.

Petitioner's employment was uneventful until came February 18, 2009 when the [respondent's] HRD
required him and some other employees to sign a form sub-titled "Personal Data for New Hires."
When he inquired about it he was told it was nothing but merely for the twentypeso increase which
the company owner allegedly wanted to see. He could not help but entertain doubts on the scheme
as they were hurriedly made to sign the same. It also [appeared] from the form that the designated

salary/wage [was] daily instead of on a monthly basis. x x x.

On February 21, 2009, a Saturday evening, they were surprised to receive an invitation from the
manager for a dinner and drinking spree in a restaurant-bar. It indeed came as a surprise as he
never had that kind of experience with the manager in his seven (7) years working for the company.

On February 25, 2009, he, together with some other concerned employees[,] requested for a
meeting with their manager together with the manager of the HRD. They questioned the document
and aired their side voicing their apprehensions against the designation "For New Hires" since they
were long time regular employees earning monthly salary/wages and not daily wage earners. The
respondent company's manager[,] Amador Cabrera[,] retorted: "Ay wala yan walang kwenta yan."
When he disclosed that he consulted a lawyer, respondent Cabrera insisted it was nothing and
aceordingly, no lawyer could say that it really matters. Cabrera even dared the petitioner to present
the lawyer. The meeting was concluded. When he was about to exit from the conference room he
was addressed with the parting words: "Baka gusto mo, mag-labor ka!" He did not react. On March
4, 2009, petitioner filed a complaint before the National Conciliation and Mediation Board. During the
hearing held on March 25, 2009, it was stipulated/agreed upon that:

(1) Company's counsel admits that petitioner is a regular employee;

(2) There shall be no retaliatory action between petitioner and the company arising from this
complaint;

(3) Issues anent BIR and SSS shall be brought to the proper forum.

xxx

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Not long thereafter, or on March 25, 2009, in the evening, a supposed problem cropped up. A
misroute of cargo was reported and the company [cast] the whole blame on the petitioner. It was
alleged that he erroneously wrote the label on the box - the name and destination, and allegedly
[was] the one who checked the cargo. The imputation is quite absurd because it was the client who
actually wrote the name and destination, whereas, it was not the petitioner but his co-employee who
checked the cargo. The following day, he received a memorandum charging him with "negligence in
performing duties."

On April 2, 2009 at 4:00 p.m., he received another memorandum of "reassignment" wherein he was
directed to report effective April 2, 2009 to Richard Omalza and Ferdinand Marzan in another
department of the company. But then, at around 4:30 p.m. of the same day, he was instructed by the
HR manager to proceed to his former office for him to train his replacement. He went inside the
warehouse and at around 6:00 p.m. he began teaching his replacement. At 8:00 p.m.[,] his
replacement went outside. He waited for sometime and came to know later when he verified outside
that the person already went straight home. When he went back inside, his supervisor insisted [to]
him to continue with his former work, but due to the "reassignment paper" he had some reservations.
Sensing he might again be framed up and maliciously accused of such as what happened on March
25, 2009, he thus refused. Around 10:30 p.m., he went home. x x x.

The following day, an attempt to serve another memorandum was made on him. This time he was
made to explain by the HR Manager why he did not perform his former work and not report to his
reassignment. It only [validated] his apprehension of a set-up. For how could he be at two places at
[the same] time (his former work is situated in Sucat, Parafiaque, whereas, his new assignment is in
FTI, Taguig City). It bears emphasizing that the directive for him to continue discharging his former
duties was merely verbal. At this point, petitioner lost his composure. Exasperated, he refused to
receive the memorandum and thus retorted "Segura naabnormal na ang utak mo" as it dawned on
him that they were out looking for every means possible to pin him down.

Nonetheless, he reported to his reassignment in FTI Taguig on April 3, 2009. There he was served
with the memorandum suspending him from work for thirty (30) days effective April 4, 2009 for
alleged "Serious misconduct and willful disobedience by the employee of the lawful orders of his
employer or representative in connection with his work." His apprehension was thus confirmed. x x x.

On April 8, 2009, he filed a case anew with the NCMB x x x Hearings were scheduled at the NCMB
on April 20, 27, and May 5, 2009 but the respondents never appeared. On May 4, 2009, he reported
to the office only to be refused entry. Instead, a dismissal letter was handed to him.x x x.

On May 5, 2009, at the NCMB, the mediator decided that the case be brought to the National Labor
Relations Commission for arbitration. Thus, he withdrew his complaint. On May 12, 2009[,] he was
able to refile his complaint with the Arbitration Branch of the NLRC. Efforts were exerted by the
Labor Arbiter to encourage the parties to amicably settle but without success. 7

Respondent countered that: it is a duly registered domestic corporation engaged in the business of
cargo forwarding and truck-hauling; petitioner and several other employees misinterpreted the use of
its old form "For New Hires," that they were relegated to the status of new employees when in fact
they have been employed for quite some time already; after the conciliation conference before the
NCMB, it relied on his promise that he would not disturb the peace in the company premises, which
proved to be wishful thinking; as to the misdelivered cargo of Globe Telecoms, initial investigation
disclosed that he was tasked to check the correct information in the package to ensure prompt
delivery, hence, a Memorandum dated March 27, 2009 was issued to him to explain his side;
thereafter, it was learned from his co-employees that he abandoned his work a few hours after
logging in, which was a serious disobedience to the HR Head's order for him to teach the new
employees assigned to his group; also, he refused to accept a company order with respect to his
transfer of assignment to another client, Fullerlife; for the series of willful disobedience, a
Memorandum dated April 3, 2009 was personally served to him by Gorospe, but he repeatedly
refused to receive the memorandum and howled at her, "Seguro na abnormal ang utak mo!"; his
arrogant actuations, which were directed against a female superior who never made any provocation
and in front of many employees, were contemptuous, gravely improper, and breeds disrespect, even
ignominy, against the company and its officers; on April 3, 2009, another memorandum was issued
to give him the opportunity to explain his side and to inform him of his preventive suspension for
thirty (30) days pending investigation; and the management, after evaluating the gravity of the
charge and the number of infractions, decided to dismiss him from employment through a notice of
dismissal dated April 27, 2009, which was sent via registered mail.

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The LA ruled for petitioner, opining that:

[Petitioner] had cause for alarm and exasperation it appearing that after he joined a complaint in the
NCMB, in a brief period from [March 27, 2009] to [April 3, 2009], [he] was served with a memo on
alleged mishandling which turned out to be baseless, he was reassigned with no clear explanation
and was being charged for disobedience of which was not eventually acted upon. There is no
indication that the altercation between [him] and the HR Manager was of such aggravated character
as to constitute serious misconduct.

This Office finds, on the other hand, that the respondents appeared bent on terminating the services
of complainant following his taking the respondents to task for the new form and in the eventual
dispute before the NCMB.

As to the relief, [petitioner], as an illegally dismissed employee[,] is entitled to the twin relief of
reinstatement with backwages. However, considering the attendant circumstances, it would not be to
the best interest of the [petitioner] to be reinstated as he would be working under an unjustified
suspicion from his employer. Thus, this office finds the award of full backwages from the time of
dismissal on [April 27, 2009] up to [the] date of this decision and separation pay of one month pay
per year of service in order.

Thus, the backwages due to the [petitioner] is computed at P9,932.00 x 10 months x 1.08 or
P107,265.00. His separation pay is also set at ₱9,932.00 x 8 years or P79,456.00. Other claims are
dismissed for lack of factual and legal basis.

Individual respondents Jerome Ibanez, Lilibeth Gorospe and Amador Cabrera are held liable for
being the responsible officers of the respondent company.

WHEREFORE, in view of the foregoing, decision is hereby rendered declaring the dismissal of the
[petitioner] to be illegal and ordering respondents XIMEX DELIVERY EXPRESS, INC., JEROME
IBANEZ, LILIBETH GOROSPE and AMADOR CABRERA to pay [petitioner] the amount of
P186,721.00, as computed above, as backwages and separation pay. All other claims are
dismissed.

SO ORDERED.8

On appeal, the NLRC affirmed in toto the LA's decision. It added:

While We concur that each employee should deal with his coemployees with due respect, the
attending circumstances[,] however[,] should be taken into consideration why said utterance was
made in order to arrive at a fair and equitable decision in this case.

In a span of one week[,] [petitioner] received three (3) [memoranda] requiring him to explain three (3)
different offenses. The utterance was more of an outburst of [his] emotion, having been subjected to
three [memoranda] in successive days, the last of which placed him under suspension for 30 days.
Clearly[,] said utterance [cannot] be considered grave and agravated in character to warrant the
dismissal of herein [petitioner]. x x x.9

Respondent and its accountable officers moved for reconsideration.10 In partially granting the motion,
the NLRC ruled that while the memoranda charging petitioner of negligence, misconduct, and
disobedience were unfounded and that he could not be blamed for his emotional flare-up due to
what he considered as successive retaliatory actions, there was no malice or bad faith on the part of
Ibanez, Gorospe, and Cabrera to justify their solidary liability with respondent.11 Petitioner did not
move to reconsider the modified judgment.

Still aggrieved, respondent elevated the case to the CA, which reversed and set aside the December
15, 2010 Resolution and the July 20, 2011 Decision of the NLRC. The appellate court held:

x x x [A]fter a careful scrutiny of the facts on record, we find that [petitioner's] behavior constitute
serious misconduct which was of grave and aggravated character. When he threw the Memorandum
served on him by HR Supervisor Gorospe in front of her and when he later on shouted at her,
"Siguro na abnormal ang utak mo!", he was not only being disrespectful, he also manifested a willful
defiance of authority and insubordination. Much more, he did it in the presence of his co-employees
which if not corrected would create a precedent to [respondent's] detriment. [Petitioner's] actuations

3
were willfully done as shown by the foul language he used against his superior, with apparent
wrongful intent and not mere error in judgment, making him unfit to continue working for
[respondent]. [Petitioner] attempted to blame [respondent] for his behaviour allegedly because he
was provoked by the successive memoranda it issued to him in a span of two (2) days. This,
however, is a lame excuse and did not in any way justify the inflammatory language he used against
Gorospe and the throwing of the Memorandum at the HR Supervisor, in the presence of his co-
employees at that. Condoning his behaviour is not what the law contemplates when it mandated a
liberal treatment in favor of the working man. An employer cannot be compelled to continue
employing an employee guilty of acts inimical to the employer's interest, justifying loss of confidence
in him. A company has the right to dismiss its erring employees as a measure of self-protection
against acts inimical to its interest. x x x.

xxxx

Further, in a long line of cases, it was ruled that accusatory and inflammatory language used by an
employee to the employer or superior can be a ground for dismissal or termination. Likewise, it did
not escape Our attention that [petitioner] had been intentionally defying the orders of his immediate
superiors when he refused to train his replacement prior to his transfer at Fullerlife in Taguig City
despite being told to do so. This defiance was also manifested when he left his work station without
his superior's permission. Undoubtedly, [petitioner's] behavior makes him unfit to continue his
employment with [respondent] who was rendered helpless by his acts of insubordination.

On the other hand, [respondent] complied with the due process requirements in effecting
[petitioner's] dismissal. It furnished the latter two (2) written notices, first, in Memorandum dated April
3, 2009 apprising him of the charge of serious misconduct for which his dismissal was sought and
second, in Notice of Dismissal dated April 27, 2009 which informed him of [respondent's] decision to
dismiss him. 12

The petition is meritorious.

Standard of Review

In a Rule 45 petition of the CA decision rendered under Rule 65, We are guided by the following
rules:

[I]n a Rule 45 review (of the CA decision rendered under Rule 65), the question of law that confronts
the Court is the legal correctness of the CA decision - i.e., whether the CA correctly determined the
presence or absence of grave abuse of discretion in the NLRC decision before it, and not on the
basis of whether the NLRC decision on the merits of the case was correct. ...

Specifically, in reviewing a CA labor ruling under Rule 45 of the Rules of Court, the Court's review is
limited to:

(1) Ascertaining the correctness of the CA's decision in finding the presence or absence of a grave
abuse of discretion. This is done by examining, on the basis of the parties' presentations, whether
the CA correctly determined that at the NLRC level, all the adduced pieces of evidence were
considered; no evidence which should not have been considered was considered; and the evidence
presented supports the NLRC findings; and

(2) Deciding any other jurisdictional error that attended the CA’s interpretation or application of the
law.13

The general rule is that certiorari does not lie to review errors of judgment of a quasi-judicial tribunal
since the judicial review does not go as far as to examine and assess the evidence of the parties
and to weigh their probative value.14 However, the CA may grant the petition when the factual
findings complained of are not supported by the evidence on record; when it is necessary to prevent
a substantial wrong or to do substantial justice; when the findings of the NLRC contradict those of
the Labor Arbiter; and when necessary to arrive at a just decision of the case.15

As will be shown later, none of the recognized exceptions is present in this case; hence, the CA
.erred when it made its own factual determination of the matters involved and, on that basis,
reversed the NLRC ruling that affirmed the findings of the labor arbiter. While this Court, in a Rule 45
petition, is not a trier of facts and does not analyze and weigh again the evidence presented before

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the tribunals below, the conflicting findings of the administrative bodies exercising quasi-judicial
functions and the CA compels Us to make Our own independent findings of facts. 16

Termination of Employment

While an employer is given a wide latitude of discretion in managing its own affairs, in the
promulgation of policies, rules and regulations on work-related activities of its employees, and in the
imposition of disciplinary measures on them, the exercise of disciplining and imposing appropriate
penalties on erring employees must be practiced in good faith and for the advancement of the
employer's interest and not for the purpose of defeating or circumventing the rights of employees
under special laws or under valid agreements. 17 The reason being that -

Security of tenure of workers is not only statutorily protected, it is also a constitutionally guaranteed
right. Thus, any deprivation of this right must be attended by due process of law. This means that
any disciplinary action which affects employment must pass due process scrutiny in both its
substantive and procedural aspects.

The constitutional protection for workers elevates their work to the status of a vested right. It is a
vested right protected not only against state action but against the arbitrary acts of the employers as
well. This court in Philippine Movie Pictures Workers' Association v. Premier Productions, Inc.
categorically stated that "[t]he right of a person to his labor is deemed to be property within the
meaning of constitutional guarantees." Moreover, it is of that species of vested constitutional right
that also affects an employee's liberty and quality of life. Work not only contributes to defining the
individual, it also assists in determining one's purpose. Work provides for the material basis of
human dignity. 18

Dismissal from employment have two facets: first, the legality of the act of dismissal, which
constitutes substantive due process; and, second, the legality of the manner of dismissal, which
constitutes procedural due process. 19 The burden of proof rests upon the employer to show that the
disciplinary action was made for lawful cause or that the termination of employment was valid.20 In
administrative and quasi-judicial proceedings, the quantum of evidence required is substantial
evidence or "such relevant evidence as a reasonable mind might accept as adequate to support a
conclusion."21 Thus, unsubstantiated suspicions, accusations, and conclusions of the employer do
not provide legal justification for dismissing the employee. 22 When in doubt, the case should be
resolved in favor of labor pursuant to the social justice policy of our labor laws and the 1987
Constliution.23

Act of Dismissal

Respondent manifestly failed to prove that petitioner's alleged act constitutes serious misconduct.

Misconduct is improper or wrong conduct; it is the transgression of some established and definite
rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent
and not mere error in judgment.24The 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. 25 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. 26

While this Court held in past decisions that accusatory and inflammatory language used by an
employee to the employer or superior can be a ground for dismissal or termination,27 the
circumstances peculiar to this case find the previous rulings inapplicable. The admittedly insulting
and unbecoming language uttered by petitioner to the HR Manager on April 3, 2009 should be
viewed with reasonable leniency in light of the fact that it was committed under an emotionally
charged state. We agree with the labor arbiter and the NLRC that the on-the-spur-of-the-moment
outburst of petitioner, he having reached his breaking point, was due to what he perceived as
successive retaliatory and orchestrated actions of respondent. Indeed, there was only lapse in
judgment rather than a premeditated defiance of authority.

Further, petitioner's purported "thug-like" demeanor is not serious in nature. Despite the "grave
embarassment" supposedly caused on Gorospe, she did not even take any separate action
independent of the company. Likewise, respondent did not elaborate exactly how and to what extent
that its "nature of business" and "industrial peace" were damaged by petitioner's misconduct. It was

5
not shown in detail that he has become unfit to continue working for the company and that the
continuance of his services is patently inimical to respondent's interest.

Even if a just cause exists, the employer still has the discretion whether to dismiss the employee,
impose a lighter penalty, or condone the offense committed.28 In making such decision, the
employee's past offenses may be taken into consideration.29

x x x In Merin v. National Labor Relations Commission, this Court expounded on the principle of
totality of infractions as follows:

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 petitioner should not be taken singly and separately. Fitness for continued
employment cannot be compartmentalized into tight little cubicles of aspects of character, conduct
and ability separate and independent of each other. While it may be true that petitioner was
penalized for his previous infractions, this does not and should not mean that his employment record
would be wiped clean of his infractions. After all, the record of an employee is a relevant
consideration in determining the penalty that should be meted out since an employee's past
misconduct and present behavior must be taken together in determining the proper imposable
penalty[.] Despite the sanctions imposed upon petitioner, he continued to commit misconduct and
exhibit undesirable behavior on board. Indeed, the employer cannot be compelled to retain a
misbehaving employee, or one who is guilty of acts inimical to its interests.30

In this case, respondent contends that aside from petitioner's disrespectful remark against Gorospe,
he also committed several prior intentional misconduct, to wit: erroneous packaging of a cargo of
respondent's client, abandoning work after logging in, failing to teach the rudiments of his job to the
new employees assigned to his group despite orders from his superior, and refusing to accept the
management's order on the transfer of assignment. After evaluating the gravity of the charges and
the number of infractions, respondent decided to dismiss petitioner from his employment.

We do not agree. Respondent cannot invoke the principle of totality of infractions considering that
petitioner's alleged previous acts of misconduct were not established in accordance with the
requirements of procedural due process. In fact, respondent conceded that he "was not even
censured for any infraction in the past." It admitted that "[the] March 25, 2009 incident that
[petitioner] was referring to could not be construed as laying the predicate for his dismissal, because
[he] was not penalized for the misrouting incident when he had adequately and satisfactorily
explained his side. Neither was he penalized for the other [memoranda] previously or subsequently
issued to him."31

This Court finds the penalty of dismissal too harsh. Not every case of insubordination or willful
disobedience by an employee reasonably deserves the penalty of dismissal because the penalty to
be imposed on an erring employee must be commensurate with the gravity of his or her
offense. 32Petitioner's termination from employment is also inappropriate considering that he had
been with respondent company for seven (7) years and he had no previous derogatory record. It is
settled that notwithstanding the existence of a just cause, dismissal should not be imposed, as it is
too severe a penalty, if the employee had been employed for a considerable length of time in the
service of his or her employer, and such employment is untainted by any kind of dishonesty and
irregularity.33

Manner of dismissal

The procedural due process requirement was not complied with. King of Kings Transport, Inc. v.
Mamac, 34 provided for the following rules in terminating the services of employees:

(1) The first written notice to be served on the employees should contain the specific causes or
grounds for termination against them, and a directive that the employees are given the opportunity to
submit their written explanation within a reasonable period. "Reasonable opportunity" under the
Omnibus Rules means every kind of assistance that management must accord to the employees to
enable them to prepare adequately for their defense. This should be construed as a period of at
least five (5) calendar days from receipt of the notice to give the employees an opportunity to study
the accusation against them, consult a union official or lawyer, gather data and evidence, and decide
on the defenses they will raise against the complaint. Moreover, in order to enable the employees to
intelligently prepare their explanation and defenses, the notice should contain a detailed narration of
the facts and circumstances that will serve as basis for the charge against the employees. A general

6
description of the charge will not suffice. Lastly, the notice should specifically mention which
company rules, if any, are violated and/or which among the grounds under Art. 282 is being charged
against the employees.

(2) After serving the first notice, the employers should schedule and conduct a hearing or
conference wherein the employees will be given the opportunity to: (1) explain and clarify their
defenses to the charge against them; (2) present evidence in support of their defenses; and (3) rebut
the evidence presented against them by the management. During the hearing or conference, the
employees are given the chance to defend themselves personally, with the assistance of a
representative or counsel of their choice. Moreover, this conference or hearing could be used by the
parties as an opportunity to come to an amicable settlement.

(3) After determining that termination of employment is justified, the employers shall serve the
employees a written notice of termination indicating that: (1) all circumstances involving the
charge against the employees have been considered; and (2) grounds have been established to
justify the severance of their employment.35

Later, Perez, et al. v. Phil. Telegraph and Telephone Co. et al., 36 clarified that an actual or formal
hearing is not an absolute requirement. The Court en bane held:

>>

Article 277(b) of the Labor Code provides that, in cases of termination for a just cause, an employee
must be given "ample opportunity to be heard and to defend himself." Thus, the opportunity to be
heard afforded by law to the employee is qualified by the word "ample" which ordinarily means
"considerably more than adequate or sufficient." In this regard, the phrase "ample opportunity to be
heard" can be reasonably interpreted as extensive enough to cover actual hearing or conference. To
this extent, Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code is in
conformity with Article 277(b).

Nonetheless, Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code should
not be taken to mean that holding an actual hearing or conference is a condition sine qua non for
compliance with the due process requirement in termination of employment. The test for the fair
procedure guaranteed under Article 277(b) cannot be whether there has been a formal
pretermination confrontation between the employer and the employee. The "ample opportunity to be
heard" standard is neither synonymous nor similar to a formal hearing. To confine the employee's
right to be heard to a solitary form narrows down that right. It deprives him of other equally effective
forms of adducing evidence in his defense. Certainly, such an exclusivist and absolutist
interpretation is overly restrictive. The "very nature of due process negates any concept of inflexible
procedures universally applicable to every imaginable situation."

The standard for the hearing requirement, ample opportunity, is couched in general language
revealing the legislative intent to give some degree of flexibility or adaptability to meet the
peculiarities of a given situation. To confine it to a single rigid proceeding such as a formal hearing
will defeat its spirit.

Significantly, Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code itself
provides that the so-called standards of due process outlined therein shall be observed
"substantially," not strictly. This is a recognition that while a formal hearing or conference is ideal, it is
not an absolute, mandatory or exclusive avenue of due process.

An employee's right to be heard in termination cases under Article 277(b) as implemented by

Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code should be interpreted in
broad strokes. It is satisfied not only by a formal face to face confrontation but by any meaningful
opportunity to controvert the charges against him and to submit evidence in support thereof.

A hearing means that a party should be given a chance to adduce his evidence to support his side of
the case and that the evidence should be taken into account in the adjudication of the
controversy. "To be heard" does not mean verbal argumentation alone inasmuch as one may be
heard just as effectively through written explanations, submissions or pleadings. Therefore, while the
phrase "ample opportunity to be heard" may in fact include an actual hearing, it is not limited to a
formal hearing only. In other words, the existence of an actual, formal "trial-type" hearing, although
preferred, is not absolutely necessary to satisfy the employee's right to be heard.

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 xxxx

[T]he employer may provide an employee with ample opportunity to be heard and defend himself
with the assistance of a representative or counsel in ways other than a formal hearing. The
employee can be fully afforded a chance to respond to the charges against him, adduce his
evidence or rebut the evidence against him through a wide array of methods, verbal or written.

After receiving the first notice apprising him of the charges against him, the employee may submit a
written explanation (which may be in the form of a letter, memorandum, affidavit or position paper)
and offer evidence in support thereof, like relevant company records (such as his 201 file and daily
time records) and the sworn statements of his witnesses. For this purpose, he may prepare his
explanation personally or with the assistance of a representative or counsel. He may also ask the
employer to provide him copy of records material to his defense. His written explanation may also
include a request that a formal hearing or conference be held. In such a case, the conduct of a
formal hearing or conference becomes mandatory, just as it is where there exist substantial
evidentiary disputes or where company rules or practice requires an actual hearing as part of
employment pretermination procedure. To this extent, we refine the decisions we have rendered so
far on this point of law.

This interpretation of Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code
reasonably implements the "ample opportunity to be heard" standard under Article 277(b) of the
Labor Code without unduly restricting the language of the law or excessively burdening the
employer. This not only respects the power vested in the Secretary of Labor and Employment to
promulgate rules and regulations that will lay down the guidelines for the implementation of Article
277(b). More importantly, this is faithful to the mandate of Article 4 of the Labor Code that "[a]ll
doubts in the implementation and interpretation of the provisions of [the Labor Code], including its
implementing rules and regulations shall be resolved in favor of labor."

In sum, the following are the guiding principles in connection with the hearing requirement in
dismissal cases:

(a) "ample opportunity to be heard" means any meaningful opportunity (verbal or written) given to the
employee to answer the charges against him and submit evidence in support of his defense,
whether in a hearing, conference or some other fair, just and reasonable way.

(b) a formal hearing or conference becomes mandatory only when requested by the employee in
writing or substantial evidentiary disputes exist or a company rule or practice requires it, or when
similar

circumstances justify it.

(c) the "ample opportunity to be heard" standard in the Labor Code prevails over the "hearing or
conference" requirement in the implementing rules and regulations.37

In this case, the Memorandum dated April 3, 2009 provided:

Ito ay patungkol sa pangyayari kanina, mga bandang alas kuwatro ng hapon, na kung saan ang mga
ipinakita at ini-asal mo sa akin bilang iyong HR Supervisor na pagbato/paghagis na may kasamang
pagdadabog ang memo na ibinigay para sa iyo na nagsasaad na ikaw ay pinagpapaliwanag lamang
sa mga alegasyon laban sa iyo na dinulog sa aming tanggapan. Ikaw ay binigyan ng pagkakataon
na ibigay ang iyong paliwanag ngunit ang iyong ginawa ay, ikaw ay nagdabog at inihagis ang memo
sa harapan mismo ng iyong HR Supervisor sa kadahilanang hindi mo lamang matanggap ang mga
alegasyong inirereklamo tungkol sayo. Ang paninigaw mo at pagsasabi na "Abnormal pala utak mo
eh" sa HR Supervisor mo na mas nakatataas sa iyo sa harap ng maraming empleyado ay
nagpapakita lang na ikaw ay lumabag sa patakaran ng kumpanya na "Serious Misconduct and
willful disobedience by the employee of the lawful orders of his employer or representative in
connection with his work."

Dahil dito, ang pamunuan ay nagdesisyon na ikaw ay suspendihin ng tatlumpung araw (30) habang
isinasagawa ang imbestigasyon at ito ay magsisimula pagkatanggap mo ng liham na ito.

Para sa iyong kaalaman at pagsunod.38

8
On the other hand, the dismissal letter dated April 27, 2009, which was also signed by Gorospe,
stated:

Ito ay patungkol sa pangyayari na kung saan, ipinakita mo ang hindi kagandahang asal at
kagaspangan ng iyong pag-uugali at hindi pagbibigay ng respeto sa mas nakatataas sa iyo. Na kung
saan ay iyong ibinato/inihagis ang memo para sa iyo na nagsasaad na ikaw ay pinagpapaliwanag at
binibigyan ng pagkakataon na marinig ang iyong panig laban sa mga alegasyon na iyong
kinakaharap. Ang paninigaw mo at pagsasabi na "Abnormal pala utak mo eh" sa akin na HR
Supervisor mo na mas nakatataas sa iyo sa harap ng maraming empleyado ay nagpapakita lamang
na ikaw ay lumabag sa patakaran ng kumpanya, ang "Serious Misconduct by the employee of
the lawful orders of his employer or representative in connection with his work." Nais naming
sabihin na hindi pinahihintulutan ng pamunuan ang ganitong mga pangyayari. Dahil dito, ang
pamunuan ay nagdesisyon na ikaw ay tanggalin sa kumpanyang ito na magsisimula pagkatanggap
mo ng sulat [na] ito. Paki sa ayos ang iyong mga trabahong maiiwan.39

Evidently, Memorandum dated April 3, 2009 does not contain the following: a detailed narration of
facts and circumstances for petitioner to intelligently prepare his explanation and defenses, the
specific company rule violated and the corresponding penalty therefor, and a directive giving him at
least five (5) calendar days to submit a written explanation. No ample opportunity to be heard was
also accorded to petitioner. Instead of devising a just way to get the side of petitioner through
testimonial and/or documentary evidence, respondent took advantage of his "refusal" to file a written
explanation. This should not be so. An employer is duty-bound to exert earnest efforts to arrive at a
settlement of its differences with the employee. While a full adversarial hearing or conference is not
required, there must be a fair and reasonable opportunity for the employee to explain the
controversy at hand.40 Finally, the termination letter issued by respondent miserably failed to satisfy
the requisite contents of a valid notice of termination. Instead of discussing the facts and
circumstances to support the violation of the alleged company rule that imposed a penalty of
dismissal, the letter merely repeats the self-serving accusations stated in Memorandum dated April
3, 2009.

Preventive Suspension

Similar to a case,41 no hearing or conference was called with respect to petitioner's alleged
misconduct. Instead, he was immediately placed under preventive suspension for thirty (30) days
and was dismissed while he was still serving his suspension. According to respondent, it is proper to
suspend him pending investigation because his continued employment poses serious and imminent
threat to the life of the company officials and also endanger the operation of the business of
respondent, which is a common carrier dutybound to observe extra ordinary diligence. 42

Preventive suspension may be legally imposed against an employee whose alleged violation is the
subject of an investigation. The purpose of suspension is to prevent-harm or injury to the company
as well as to fellow employees.43 The pertinent rules dealing with preventive suspension are found in
Sections 8 and 9 of Rule XXIII, Book V of the Omnibus Rules Implementing the Labor Code, which
read:

SEC. 8. Preventive suspension. - The employer may place the worker concerned under preventive
suspension if his continued employment poses a serious and imminent threat to the life or property
of the employer or of his co-workers.

SEC. 9. Period of suspension. - No preventive suspension shall last longer than thirty (30) days.
The employer shall thereafter reinstate the worker in his former or in a substantially equivalent
position or the employer may extend the period of suspension provided that during the period of
extension, he pays the wages and other benefits due to the worker. In such case, the worker shall
not be bound to reimburse the amount paid to him during the extension if the employer decides, after
completion of the hearing, to dismiss the worker.

As succinctly stated above, preventive suspension is justified where the employee's continued
employment poses a serious and imminent threat to the life or property of the employer or of the
employee's co-workers. Without this kind of threat, preventive suspension is not proper.44 Here, it
1âwphi1

cannot be said that petitioner posed a danger on the lives of the officers or employees of respondent
or their properties. Being one of the Operation Staff, which was a rank and file position, he could not
and would not be able to sabotage the operations of respondent. The difficulty of finding a logical
and reasonable connection between his assigned tasks and the necessity of his preventive

9
suspension is apparent from the fact that even respondent was not able to present concrete
evidence to support its general allegation.

WHEREFORE, premises considered, the petition is GRANTED. The November 20, 2012 Decision
and June 21, 2013 Resolution of the Court of Appeals in CA G.R. SP No. 121176, which set aside
the December 15, 2010 Resolution and July 20, 2011 Decision of the National Labor Relations
Commission that affirmed the February 18, 2010 Decision of the Labor Arbiter finding the illegal
dismissal of petitioner, are hereby REVERSED AND SET ASIDE. The Labor Arbiter is DIRECTED to
recompute the proper amount of backwages and separation pay due to petitioner in accordance with
this decision.

SO ORDERED.

ii. No serious misconduct but there is loss of trust

1. Bravo vs. Urios College (Now Father Saturnino Urios University), G.R. No. 198066,
June 7, 2017

YOLANDO T. BRAVO, Petitioner

vs.
URIOS COLLEGE (NOW FATHER SATURNINO URI OS UNIVERSITY) and/or FR. JOHN
CHRISTIAN U. YOUNG,, Respondents

DECISION

LEONEN, J.:

The employer must adduce proof of actual involvement in the alleged misconduct for loss of trust
and confidence to warrant the dismissal of fiduciary rank-and-file employees. However, "mere
existence of a basis for believing that [the] employee has breached the trust [and confidence] of [the]
employer" is sufficient for managerial employees.1

Through this Petition for Review,2 Yolando T. Bravo (Bravo) challenges the Decision3 dated January
31, 2011 and Resolution4 dated July 14, 2011 of the Court of Appeals in CA-G.R. SP No. 02407-
MIN. The Court of Appeals reinstated the Executive Labor Arbiter's decision, which upheld
petitioner's dismissal from service. 5

Bravo was employed as a part-time teacher6 in 1988 by Urios College, now called Father Satumino
Urios lJniversity.7 In addition to his duties as a part-time teacher, Bravo was designated as the
school's comptroller from June 1, 2002 to May 31, 2002.8

Urios College organized a committee to formulate a new "ranking system for non-academic
employees for school year 2001-2002." The committee was composed of the Vice-President for
Academic Affairs, Dr. Aldefa Yumo; the Human Resources Department Head, Atty. Josefe C.
Sorrera-Ty; and the Vice-President for Administration, Dr. Wilma Balmocena. "[U]nder [the proposed
ranking] system, the position of Comptroller was classified as an office [h]ead while the position of
VicePresident for Finance was classified as [m]iddle [m]anagement."9

The proposed ranking system for school year 2001-2002 was presented to Bravo for
comments. 10 Bravo recommended that "the position of Comptroller should be classified as a middle
management position [because it was] ... informally merged with . . . the position of [V]ice[ P]resident
for [F]inance." 11 In addition, the Comptroller and the VicePresident for Finance performed similar
functions, which included follow up of payroll preparation, verification of daily cash vouchers, and
certification of checks issued by the school. Moreover, they were responsible for the control of
checkbooks issuance to the Cashier, preparation of departmental budget guidelines, supervision of
reports and payments to various government agencies, and analysis and interpretation of financial
statements. 12Bravo further suggested that since he assumed the duties of Comptroller and Vice-
President for Finance, his salary scale should be upgraded. 13

The committee allegedly agreed with Bravo and accepted his recommendations. 14 Bravo was then
directed to arrange a salary adjustment schedule for the new ranking system. 15

10
Later, Bravo obtained his employee ranking slip which showed his evaluation score and the change
of his rank "from office head to middle manager-level IV."16 The change, however, was merely
superimposed. The employee ranking slip bore the signatures of the Human Resources Department
Head, the Vice-President for Administration, and the President ofUrios College.17

The implementation of the new ranking system for non-academic employees and administrators for
school year 2001-2002 and the corresponding schedule of salary adjustments were reflected on the
October 15, 2001 payroll. This was opposed by several individuals within the school.18

Urios College formed another committee to adopt a new ranking system for school year 2002-2003.
After deliberation, the committee decided to maintain the ranking system used in the previous school
year for school year 2002-2003. In the employee's ranking profile report, the position of Comptroller
was classified as middle management. 19

Meanwhile, Urios College decided to undertake a structural reorganization.20 During this period,
Bravo occupied the Comptroller position in a "hold-over" capacity until May 31, 2003. He was
reappointed to the same position, which expired on May 31, 2004. Bravo was then designated as a
full-time teacher21 in the college department for school year 2004-2005.22

In October 2004, Urios College organized a committee to review the ranking system implemented
during school year 2001-2002.23 In its report, the committee found that the ranking system for school
year 2001-2002 caused salary distortions among several employees. 24 There were also
discrepancies in the salary adjustments of Bravo and of two (2) other employees, namely, Nena A.
Turgo and Cherry I. Tabada.25 The committee discovered that "the Comptroller's Office solely
prepared and implemented the [s]alary [a]djustment [s]chedule" without prior approval from the
Human Resources Department. 26

The committee recommended, among others, that Bravo be administratively charged for serious
misconduct or willful breach of trust under Article 28227 of the Labor Code.28 Bravo allegedly
misclassified several positions and miscomputed his and other employees' salaries.29

On March 16, 2005, Bravo received a show cause memo requiring him to explain in writing why his
services should not be terminated for his alleged acts of serious misconduct:

The committee noted a discrepancy in the Schedule of Salary Adjustments, the implementation of
which was entirely based on the computation that was then the responsibility of your office
(Comptroller). For this reason, you are advised to explain or show cause why your employment with
Urios College will not be terminated for Serious Misconduct due to intentional
misclassification/miscomputation of your salary and some employees named hereunder, thereby
causing prejudice not only to the school but also to said employees as well.

1. As Comptroller then, you belong to Office Heads classification. However, in the Schedule
of Salary Adjustment, you are misclassified as Middle Manager, that resulted to overpayment
in your salary by PhP 3,651.76 per month since June 2001.

Also, having passed the comprehensive exam and oral defense for your master's degree,
your salary adjustment based on your educational qualification ought to be is (sic) PhP
800.00 only. However, what is reflected in the Schedule of Salary Adjustment is PhP
1,000.00, which amount is appropriately given to Master's Degree holders. Considering that
you have not even finished the degree up to the present, such circumstance resulted to
overpayment in your salary by PhP 200.00 per month since June 2001.

This means that you have been receiving a monthly salary more than what is due to you.
The overpayment therefore of PhP 3,851.76 per month (PhP 3,651.76 plus PhP 200.00)
from June 2001 up to February 2005 presently amounts to PhP 185,131.34.

2. As Community Extension Service Officer then, Mrs. Nena A. Turgo belongs to Office
Heads classification. However, in the Schedule of Salary Adjustment, she was misclassified
as Office Staff, which resulted to underpayment by PhP 2,888.99 on her monthly salary.
From June 2001 to February 2005 the underpayment is in the total amount of PhP
140,356.76.

11
 3. Ms. Cherry I. Tabada only passed the comprehensive examination for Master of Arts in
Educational Management in Urios College. This entitled her [to] PhP 500.00 adjustment in
salary due to Educational Qualification (E.Q.). However, what is reflected in the Schedule of
Salary Adjustment is PhP 1,000.00, which resulted to overpayment in salary by PhP 500.00
from June 2001 to March 2003, or in the total amount of PhP 11,000.00.

The foregoing actuations would necessarily affect your character as a teacher in the Commerce
Program, and as an employee of the school, whose honesty and integrity ought to be beyond
reproach to serve as role model for the students in this institution.

We are therefore requesting for your written explanation relative to these matters within three (3)
days from receipt of this memorandum. Documentary evidence, if there be any, [may be] attached to
the written explanation. You may avail the aid of a legal counsel.

Your failure to submit your written explanation as requested will be construed as a waiver on your
part, as a consequence of which the school may take such appropriate action on the bases of the
available records in connection with the matters made subject of this memorandum. For your
compliance.30

A committee was organized to investigate the matter. 31 Hearings were conducted on April 5, 2005,
April 9, 2005, and once in May 2005, after which the parties submitted their respective position
papers.32 In his Position Paper, Bravo alleged that he did not prepare the ranking system for school
year 2001-2002. It was the ranking committee which categorized the position of Comptroller as
middle management. 33

The committee found that Bravo floated the idea of his salary adjustment, which Urios College never
formally approved.34 The committee also discovered an irregularity in the implementation of the
ranking system for school year 2001-2002.35 Flordeliz V. Rosero (Rosero) of the Human Resources
Department attested that Bravo failed to follow the school's protocol in computing employees'
salaries. 36

According to Rosero, the Human Resources Department would prepare a summary table for each
department containing the names of employees, their respective ranks, and the points they earned
from their regular evaluation.37 The accomplished summary tables were forwarded to the
Comptroller's Office, which would then designate each employee's salary based on a salary
scale.38 When the ranking system for school year 2001-2002 was implemented, the Comptroller's
Office prepared its own summary table,39 which did not indicate each employee's rank or bear the
signature of the Human Resources Department Head.40

Bravo was found guilty of serious misconduct for which he was ordered to return the sum of ₱
179,319.16, representing overpayment of his monthly salary.41 He received a copy of the
investigation committee's decision on July 15, 2005.42

On July 25, 2005, Urios College notified Bravo of its decision to terminate his services43 for serious
misconduct and loss of trust and confidence.44 Upon receipt of the termination letter, Bravo
immediately filed before Executive Labor Arbiter Benjamin E. Pelaez (Executive Labor Arbiter
Pelaez) a complaint for illegal dismissal with a prayer for the payment of separation pay, damages,
and attorney's fees. 45

In the Decision46 dated December 27, 2005, Executive Labor Arbiter Pelaez dismissed the complaint
for lack of merit.47 Bravo's act of"assigning to himself an excessive and unauthorized salary rate
while working as a [C]omptroller" constituted serious misconduct and willful breach of trust and
confidence for which he may be dismissed.48

Bravo appealed the Decision of Executive Labor Arbiter Pelaez. 49 In the Resolution50 dated January
31, 2007, the National Labor Relations Commission found that Bravo's dismissal from service was
illegal. There was no clear showing that Bravo violated any school policy.51 Moreover, Bravo received
the increased salary in good faith.52 The National Labor Relations Commission also found that Urios
College "failed to afford [Bravo] the opportunity to be heard and to defend himself with the
assistance of counsel."53 Urios College was ordered to pay Bravo separation pay instead of
reinstating him to his former position due to strained relations. Full backwages and attorney's fees
were likewise awarded.54

12
Urios College assailed National Labor Relations Commission's Resolution dated January 31, 2007
through a petition for certiorari before the Court of Appeals.55

In the Decision dated January 31, 2011, the Court of Appeals reversed the National Labor Relations
Commission's Resolution and reinstated the decision of Executive Labor Arbiter Pelaez.56

The Court of Appeals ruled that Urios College had substantial basis to dismiss Bravo from service on
the ground of serious misconduct and loss of trust and confidence. 57 Bravo occupied a highly
sensitive position as the school's Comptroller. "[I]n the course of his duties, [he] granted himself
additional salaries" without proper authorization.58Rank-and-file employees may only be dismissed
from service for loss of trust and confidence if the employer presents proof that the employee
participated in the alleged misconduct. However, for managerial employees, it is sufficient that the
employer has reasonable ground to believe that the employee is responsible for the alleged
misconduct. 59

Bravo moved for reconsideration but his motion was denied in the Resolution60 dated July 14, 2011.

Bravo filed a Petition for Review61 before this Court on August 31, 2011 to which respondent filed a
Comment on January 6, 2012.62 In the Resolution dated January 30, 2013, this Court gave due
course to the Petition and required the parties to submit their respective memoranda.63

Petitioner asserts that he acted in good faith. He insists that key school officials, including the
Human Resources Department Head,64 classified the position of Comptroller as middle
management.65 Thus, he cannot be held accountable for the change in the rank of Comptroller from
that of office head to middle management. 66

Petitioner argues that suggesting an upgrade in his rank and salary cannot be considered serious
misconduct. 67 He claims that he did not transgress any established rule or policy as "he was duly
authorized ... to receive the benefits of a middle[-]management employee."68 Petitioner further argues
that a dismissal based on loss of trust and confidence must rest on an actual breach of duty.69 It may
not be invoked by an employer without any factual basis. 70

Petitioner adds that he was not given ample opportunity to be heard and defend
himself. 71 Respondent refused to furnish petitioner the minutes of the investigation proceedings and
copies of official documents, all of which respondent had in its custody. 72 Moreover, petitioner was
not given the opportunity to comment on the selection of the members of the investigating
committee. 73

On the other hand, respondent asserts that there was substantial evidence to dismiss petitioner on
the ground of serious misconduct and loss of trust and confidence under the Labor
Code. 74 Petitioner failed to follow regular protocol with respect to the computation of his and other
employees' salaries.75 Respondent emphasizes that petitioner occupies a highly sensitive position.
Hence, his integrity should be beyond reproach. 76 Proof beyond reasonable doubt is not required in
termination cases based on loss of trust and confidence 77 as long as there is reasonable ground to
believe that the employee committed an act of dishonesty.78

Respondent contends that petitioner's right to procedural due process was not violated.79 Petitioner
was present during the hearings and was even given copies of the documents presented against
him. Moreover, respondent required petitioner to submit his position paper after the investigation. 80

The case presents the following issues for this Court's resolution:

First, whether petitioner's employment was terminated for a just cause;81

Second, whether petitioner was deprived of procedural due process;82 and

Finally, whether petitioner is entitled to the payment of separation pay, backwages, and attorney's
fees. 83

Petitioner's dismissal from employment was valid.

13
Under Article 297 of the Labor Code, an employer may terminate the services of an employee for the
following just causes:

Article 297. [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.-

To warrant termination of employment under Article 297(a) of the Labor Code, the misconduct must
be serious or "of such grave and aggravated character."84 Trivial and unimportant acts are not
contemplated under Article 297(a) of the Labor Code.85

In addition, the misconduct must "relate to the performance of the employee's duties" that would
render the employee "unfit to continue working for the employer."86 Gambling during office
hours,87 sexual intercourse within company premises, 88 sexual harassment, 89 sleeping while on
duty,90 and contracting work in competition with the business of one's employer91 are among those
considered as serious misconduct for which an employee's services may be terminated.

Recently, this Court has emphasized that the rank-and-file employee's act must have been
"performed with wrongful intent" to warrant dismissal based on serious misconduct. 92 Dismissal is
deemed too harsh a penalty to be imposed on employees who are not induced by any perverse or
wrongful motive despite having committed some form of misconduct.

Hence, in Moreno v. San Sebastian College-Recoletos, 93 this Court deemed the penalty of dismissal
as disproportionate to the committed offense94 because the employee was neither induced by nor
motivated by a perverse or wrongful intent in violating the school's policy on external teaching
engagements.95

The same line of reasoning was applied in Universal Robina Sugar Milling Corp. v. Albay96 wherein
union members assisted the implementation of a writ of execution issued in their favor without
proper authority. This Court found that the union members did not act "with intent to gain or with
wrongful intent." Instead, they were impelled by their desire to collect the balance of their unpaid
benefits, which the Department of Labor and Employment awarded to them. 97

Thus, to warrant the dismissal from service of a rank-and-file employee under Article 297(a) of the
Labor Code, the misconduct (1) must be serious, (2) should "relate to the performance of the
employee's duties," (3) should render the employee "unfit to continue working for the employer," and
(4) should "have been performed with wrongful intent."98

There is no evidence that the position of Comptroller was officially reclassified as middle
management by respondent. Petitioner's employment ranking slip, if at all, only constituted proof of
petitioner's evaluation score. It hardly represented the formal act of respondent in reclassifying the
position of Comptroller. Hence, petitioner could not summarily assign to himself a higher salary rate
without rendering himself unfit to continue working for respondent.

However, it appears that petitioner was neither induced nor motivated by any wrongful intent. He
believed in good faith that respondent had accepted and approved his recommendations on the
proposed ranking scale for school year 2001-2002.

Nevertheless, due to the nature of his occupation, petitioner's employment may be terminated for
willful breach of trust under Article 297(c), not Article 297(a), of the Labor Code.

14
A dismissal based on willful breach of trust or loss of trust and confidence under Article 297 of the
Labor Code entails the concurrence of two (2) conditions.

First, the employee whose services are to be terminated must occupy a position of trust and
confidence.99

There are two (2) types of positions in which trust and confidence are reposed by the employer,
namely, managerial employees and fiduciary rank-and-file employees. 100 Managerial employees are
considered to occupy positions of trust and confidence because they are "entrusted with confidential
and delicate matters." 101 On the other hand, fiduciary rank-and-file employees refer to those
employees, who, "in the normal and routine exercise of their functions, regularly handle significant
amounts of [the employer's] money or property." 102 Examples of fiduciary rank-and-file employees
are "cashiers, auditors, property custodians,"103 selling tellers, 104 and sales managers. 105 It must be
emphasized, however, that the nature and scope of work and not the job title or designation
determine whether an employee holds a position of trust and confidence. 106

The second condition that must be satisfied is the presence of some basis for the loss of trust and
confidence. This means that "the employer must establish the existence of an act justifying the loss
of trust and confidence."107Otherwise, employees will be left at the mercy of their employers.108

Different rules apply in determining whether loss of trust and confidence may validly be used as a
justification in termination cases. Managerial employees are treated differently than fiduciary rank-
1âwphi 1

and-file employees.109 In Caoile v. National Labor Relations Commission: 110

[W]ith respect to rank-and-file personnel, loss of trust and confidence as ground for valid dismissal
requires proof of involvement in the alleged events in question, and that mere uncorroborated
assertions and accusations by the employer will not be sufficient. But, as regards a managerial
employee, mere existence of a basis for believing that such employee has breached the trust of his
employer would suffice for his dismissal. Hence, in the case of managerial employees, proof beyond
reasonable doubt is not required, it being sufficient that there is some basis for such loss of
confidence, such as when the employer has reasonable ground to believe that the employee
concerned is responsible for the purported misconduct, and the nature of his participation therein
renders him unworthy of the trust and confidence demanded by his position. 111 (Citations omitted)

Although a less stringent degree of proof is required in termination cases involving managerial
employees, employers may not invoke the ground of loss of trust and confidence arbitrarily. 112 The
prerogative of employers in dismissing a managerial employee "must be exercised without abuse of
discretion."113

Set against these parameters, this Court holds that petitioner was validly dismissed based on loss of
trust and confidence. Petitioner was not an ordinary rank-and-file employee. His position of
responsibility on delicate financial matters entailed a substantial amount of trust from respondent.
The entire payroll account depended on the accuracy of the classifications made by the Comptroller.
It was reasonable for the employer to trust that he had basis for his computations especially with
respect to his own compensation. The preparation of the payroll is a sensitive matter requiring
attention to detail. Not only does the payroll involve the company's finances, it also affects the
welfare of all other employees who rely on their monthly salaries.

Petitioner's act in assigning to himself a higher salary rate without proper authorization is a clear
breach of the trust and confidence reposed in him. In addition, there was no reason for the
Comptroller's Office to undertake the preparation of its own summary table because this was a
function that exclusively pertained to the Human Resources Department. Petitioner offered no
explanation about the Comptroller's Office's deviation from company procedure and the
discrepancies in the computation of other employees' salaries.114 Petitioner's position made him
accountable in ensuring that the Comptroller's Office observed the company's established
procedures. It was reasonable that he should be held liable by respondent on the basis of command
responsibility. 115

II

In termination based on just causes, the employer must comply with procedural due process by
furnishing the employee a written notice containing the specific grounds or causes for
dismissal.116 The notice must also direct the employee to submit his or her written explanation within
a reasonable period from the receipt of the notice. 117Afterwards, the employer must give the

15
employee ample opportunity to be heard and defend himself or herself. A hearing, however, is not a
condition sine qua non.118

A formal hearing only becomes mandatory in termination cases when so required under company
rules or when the employee requests for it. 119

Previously, a formal hearing was considered as an indispensable component of procedural due

process in dismissal cases. 120 However, in Perez v. Philippine Telegraph and Telephone Co., this
Court clarified: 121

The test for the fair procedure guaranteed under Article 277 (b) [now, Article 292(b)] cannot be
whether there has been a formal pretermination confrontation between the employer and the
employee. The "ample opportunity to be heard" standard is neither synonymous nor similar to a
formal hearing. To confine the employee's right to be heard to a solitary form narrows down that
right. It deprives him of other equally effective forms of adducing evidence in his defense. Certainly,
such an exclusivist and absolutist interpretation is overly restrictive. The "very nature of due process
negates any concept of inflexible procedures universally applicable to every imaginable situation. "

Significantly, Section 2 (d), Rule I of the Implementing Rules of Book VI of the Labor Code itself
provides that the so-called standards of due process outlined therein shall be
observed "substantially", not strictly. This is a recognition that while a formal hearing or conference is
ideal, it is not an absolute, mandatory or exclusive avenue of due process.

An employee's right to be heard in termination cases under Article 277 (b) as implemented by
Section 2 (d), Rule I of the Implementing Rules of Book VI of the Labor Code should be interpreted
in broad strokes. It is satisfied not only by a formal face to face confrontation but by any meaningful
opportunity to controvert the charges against him and to submit evidence in support thereof .

... "To be heard" does not mean verbal argumentation alone inasmuch as one may be heard just as
effectively through written explanations, submissions or pleadings. Therefore, while the phrase
"ample opportunity to be heard" may in fact include an actual hearing, it is not limited to a formal
hearing only. In other words, the existence of an actual, formal "trial-type" hearing, although
preferred, is not absolutely necessary to satisfy the employee's right to be heard. 122 (Emphasis in the
original, citations omitted)

Any meaningful opportunity for the employee to present evidence and address the charges against
him or her satisfies the requirement of ample opportunity to be heard.123

Finally, the employer must serve a notice informing the employee of his or her dismissal from
employment.

In this case, respondent complied with all the requirements of procedural due process in terminating
petitioner's employment. Respondent furnished petitioner a show cause memo stating the specific
grounds for dismissal. The show cause memo also required petitioner to answer the charges by
submitting a written explanation.124Respondent even informed petitioner that he may avail the
services of counsel. Respondent then conducted a thorough investigation. Three (3) hearings were
conducted on separate occasions. 125 The findings of the investigation committee were then sent to
petitioner.126 Lastly, petitioner was given a notice of termination 127containing respondent’s final
decision.

Ordinarily, employees play no part in selecting the members of the investigating committee. That
petitioner was not given the chance to comment on the selection of the members of the investigating
committee does not mean that he was deprived of due process. In addition, there is no evidence
indicating that the investigating committee was biased against petitioner. Hence, there is no merit in
petitioner's claim that he was deprived of due process.

Under Article 294 of the Labor Code, 128 the reliefs of an illegally dismissed employee are
reinstatement and full backwages. "Backwages is a form of relief that restores the income that was
lost by reason of [the employee's] dismissal" from employment.129 It is "computed from the time that
[the employee's] compensation was withheld ... [until] his [or her] actual reinstatement."130 However,
when reinstatement is no longer feasible, separation pay is awarded.131

16
Considering that there was a just cause for terminating petitioner from employment, there is no basis
to award him separation pay and backwages. There are also no factual and legal bases to award
attorney's fees to petitioner.

WHEREFORE, the Petition for Review is DENIED. The Court of Appeals' Decision dated January
31, 2011 in CA-G.R. SP No. 02407-MIN is AFFIRMED.

SO ORDERED.


 iii. No serious misconduct 
 1. BDO Unibank, Inc. vs. Nerbes, G.R. No. 208735, July 19, 2017

July 19, 2017

G.R. No. 208735

BDO UNIBANK, INC. (formerly EQUITABLE PCI BANK), Petitioner

vs.
NESTOR N. NERBES AND ARMENIA F. SURA VILLA, Respondents

DECISION

TIJAM, J.:

Assailed in this Petition for Review1 under Rule 45 are the Decision2 dated May 9, 2012 and Resolution3 dated
August 15, 2013 of the Court of Appeals (CA) in CA-G.R. SP No. 108317 which reversed the decision of the
National Labor Relations Commission (NLRC) and reinstated the Decision4 dated August 26, 2005 of the Labor
Arbiter (LA) in NLRC NCR Case No. 00-11-12543-04, finding respondents Nestor N. Nerbes (Nerbes) and
Armenia F. Suravilla (Suravilla) to have been illegally dismissed and thus ordered their reinstatement and
payment of backwages, or in lieu thereof, payment of separation pay.

The Factual Antecedents

Respondents Nerbes and Suravilla were employees of Equitable PCI Bank (now BDO Unibank, Inc.) (bank)
and members of Equitable PCI Bank Employees Union (EPCIBEU), a legitimate labor union and the sole and
exclusive bargaining representative of the rank and file employees of the bank.5

On February 4, 2004, an election of officers of EPCIBEU was held under the supervision of the Labor Relations
Division of the National Capital Region Regional Office of the Department of Labor and Employment (DOLE-
NCR). Nerbes and Suravilla won as President and Executive Vice President, respectively, and were proclaimed
as winners thru a Resolution issued by the OIC Regional Director of the DOLE-NCR on March 19, 2004. The
protest of the losing candidates was effectively dismissed.6

After taking their oath on March 22, 2004, Nerbes and Suravilla notified the bank of their decision to exercise
their privilege under Section 10[d][3], Article IV of the Collective Bargaining Agreement (CBA) which allows the
President and the Executive Vice President to be on full-time leave for the duration of their term of office in
order to devote their time in maintaining industrial peace. Nerbes and Suravilla anchored their right to
immediately assume their respective positions on Rule XV, Section 5 of Department Order No. 09, Series of
1997 which, in part, provides that "Upon resolution of the protest, the committee shall immediately proclaim the
winners and the latter may assume their positions immediately."7 Thus, Nerbes took his leave beginning March
22, 2004, while Suravilla took hers beginning April 1, 2004.8

On April 1, 2004, the losing candidates appealed to the Bureau of Labor Relations (BLR) the DOLE-NCR's
Resolution dated March 19, 2004.9

Because of the pendency of said appeal, the bank disapproved Nerbes and Suravilla's union leaves and were
directed to refrain from being absent and to report back to work. Nerbes and Suravilla failed to comply.10

Consequently, the bank issued ·show cause Memoranda on May 28, 2004 directing Nerbes and Suravilla to
explain why no disciplinary action should be imposed against them for violation of the bank's Code of Conduct
on attendance and punctuality, and obedience and cooperation.11 It appears that Nerbes himself filed a
complaint12 for unfair labor practice (ULP) against the bank. Thus, Nerbes was additionally asked to explain his
alleged falsification of public document and perjury pertaining to his submission of a position paper in the ULP
case which was purportedly signed by his lawyer but who later on denied having signed the same. 13

Administrative hearings were then conducted and on October 22, 2004, the bank found Nerbes and Suravilla
guilty of serious misconduct and willful disobedience and imposed upon them the penalty of dismissal. 14 Nerbes
and Suravilla then filed before the LA a complaint for ULP, illegal dismissal and money claims.

17
Meantime, in the proceedings before the BLR, the appeal filed by the losing candidates was initially dismissed.
However, on motion for reconsideration, the BLR, in its November 4, 2004 Decision15 reversed itself and
nullified the election held on February 4, 2004. As a result, the BLR ordered a special election of officers. A
special election was then held on April 13, 2005 wherein Nerbes and Suravilla's opponents were proclaimed as
winners.16

On August 26, 2005, the LA rendered a Decision17 in favor of Nerbes and Suravilla's reinstatement, the
dispositive part of which reads:

WHEREFORE, judgment is hereby made finding [Nerbes and Suravilla's] dismissal for insubordination a valid
exercise of management prerogative but considering that [Nerbes and Suravilla's] defiance is anchored on law,
ordering the [bank] to reinstate them to their former or equivalent positions in the [bank], without loss of
seniority rights, with one (1) year backwages or, at the option of [Nerbes and Suravilla], to accept from the
[bank], in lieu of reinstatement and backwages, a separation pay computed at thirty (30) days pay for every
year of service, a fraction of at least six (6) months to be considered a full year or an applicable separation pay
under the subsisting [CBA], whichever is higher.

Subject to any subsequent developments involving the leadership of the [EPCIBEU] or a final decision of an
administrative body and/or superior court, the [bank] are hereby ordered to allow [Nerbes and Suravilla], within
the context of the [CBA], to go on paid union leaves and exercise their other rights as the duly elected
President and Executive Vice President of the union.

The charge of unfair labor practice and other claims are dismissed for lack of merit.

SO ORDERED.18

The bank appealed to the NLRC. In its Decision19 dated November 11, 2008, the NLRC reversed the ruling of
the LA and dismissed Nerbes and Suravilla's complaint. The NLRC disposed as follows:

WHEREFORE, premises considered, the Decision dated August 26, 2005 of [LA] Amansec is VACA TED and
SET ASIDE, and a NEW ONE rendered dismissing the case for lack of merit.

SO ORDERED.20

Their Motion for Reconsideration21 likewise having been denied in the NLRC Resolution22 dated January 30,
2009, Nerbes and Suravilla filed a certiorari petition23 before the CA.

The Ruling of the CA

The CA framed the issue to be resolved as to whether Nerbes and Suravilla were illegally dismissed from
employment, the resolution of which is, in turn, anchored on whether their refusal to return to work amounts to
willful disobedience.

The CA held that while Nerbes and Suravilla disobeyed the bank's order to return to work, such disobedience
was not characterized by a wrongful or perverse attitude. The CA noted that their refusal to return to work was
brought by their honest belief that as elected officers, they were entitled to be on full-time leave. As such, the
CA reasoned, their offense was disproportionate to the ultimate penalty of dismissal.

Anent the charge of falsification of public document and perjury

against Nerbes, the CA noted that this was a mere retaliatory move on the part of the bank which had nothing
to do with the latter's work. In any case, the CA observed that Nerbes' counsel already acknowledged having
notarized the questioned document.

In disposal, the CA pronounced:

WHEREFORE, in view of the foregoing considerations, the Petition for Certiorari is GRANTED. The Decision of
the [NLRC] in NLRC NCR CA No. 047601-06 dated November 11, 2008 and its subsequent Resolution dated
January 30, 2009 are ANNULLED AND SET ASIDE. The Decision of the [LA] dated August 26, 2005
is REINSTATED insofar as it ordered private respondent Equitable PCI Bank (Now Banco De Oro) to reinstate
[Nerbes and S uravilla] to their former or equivalent positions in the bank, without loss of seniority rights, with
one (1) year backwages or, at the option of [Nerbes and Suravilla], to accept from [the bank], in lieu of
reinstatement and backwages, a separation pay computed at thirty (30) days pay for every year of service, a
fraction of at least six (6) months to be considered a full year or an applicable separation pay under the
subsisting [CBA], whichever is higher.

SO ORDERED.24

18
The bank's Motion for Reconsideration25 was similarly rebuked by the CA, in its Resolution26 dated August 15,
2013. Undaunted, the bank filed the instant petition.

Pending Incidents

Pending resolution of the instant petition, the bank moved for the withdrawal of its petition as regards Suravilla
in view of the parties' Compromise Agreement.27 Part of said Compromise Agreement is Suravilla's undertaking
to release the bank from any and all claims arising from or related to the instant petition. The pertinent
provisions of the Compromise Agreement state:

xxxx

2. Within five working days from the signing of this agreement, BDO, shall release to Ms. Suravilla the amount
of PESOS: THREE MILLION FOUR HUNDRED EIGHTY SEVEN THOUSAND FIVE HUNDRED TWELVE
AND 77/100 (Php3,487,512.77) and Statement of Account, representing her separation pay net of her
accountabilities on loans, insurance, and credit cards if any. The Bank shall likewise release to Ms. Suravilla,
her BIR Form 2316.

3. Upon receipt of the check with the foregoing amount, Ms. Suravilla will acknowledge the same as the full
satisfaction of the separation benefits due her in connection with her employment with the BDO, as well as any
and all claims or court case she may have against the Bank.

4. Furthermore, Ms. Armenia F. Suravilla, her heirs, successors and assigns, hereby unconditionally release,
remiss, waive and forever discharge BDO Unibank, Inc., its affiliates, subsidiaries and successors-in-interest,
stockholders, officers, directors, agents, employees, associates, contractors, and consultants from any and all
actions, whether civil, criminal, administrative or otherwise, or from any claim of any kind or character arising
directly from, incidental to, or in any manner related to her employment with the Bank, as well as the release of
her separation benefits and retirement claims in the amount quoted above.

5. More particularly, Ms. Armenia F. Suravilla, her heirs, successors and assigns, likewise unconditionally
release, remiss, waive and forever discharge BDO Unibank, Inc., its affiliates, subsidiaries, and successors-in-
interest, stockholders, officers, directors, agents, employees, associates, contractors, and consultants from ALL
claims of any kind or character arising directly from, incidental to,or in any manner related with the case entitled
"BDO Unibank, Inc. vs. Nestor Nerbes and Armenia Suravilla", pending with the Supreme Court of the
Philippines, and docketed as SC GR NO. 208735.

6. By virtue of the release of the said amount under this Compromise Agreement, Ms. Armenia F. Suravilla
hereby affirms that she has no further cause of action, demand, complaint, case or grievance whatsoever
against BDO, its affiliates, subsidiaries and succesors-in-interest stockholders, officers, directors, agents,
employees, associates, contractors, and consultants in respect of any matter arising out of the said separation
benefits and retirement claims; and further affirms that this present agreement serves as the FULL
SATISFACTION of the judgment in any and all claims she has against the Bank, specifically in the case "BDO
Unibank, Inc. vs. Nestor Nerbes and Armenia Suravilla", pending with the Supreme Court of the Philippines,
and docketed as SC GR No. 208735.

x x x x28 (Emphasis omitted)

Attached to said motion are plain copies of the Compromise Agreement with Undertaking 29 executed by and
between the bank and Suravilla; and Release Waiver and Quitclaim30 executed by Suravilla.

Consequently, Atty. Emmanuel R. Jabla (Atty. Jabla) of Jabla Brigola Bagas & Sampior Law Offices, counsel
for Nerbes and Suravilla, moved to intervene.31 Atty. Jabla alleged that said Compromise Agreement was wrung
from Suravilla without his knowledge and consent, as a result of which, he was deprived of his professional fee
supposed to be payable upon full recovery of her monetary claims. He alleged that there was a verbal
agreement between him and Suravilla for the latter to pay a contingent fee of 10% of all money recovered. He
prayed that the bank and Suravilla be held solidarily liable as joint tortfeasors to pay his professional fee
equivalent to 10% of the amount received by Suravilla, or PhP348,751.27 and that a lien upon all judgments for
the payment of money and executions issued in pursuance of such judgments be granted in his favor. 32

The Issues

We divide the issues raised in this petition into two: one, concerning the validity of Nerbes and Suravilla's
dismissal which is the main issue raised in the petition; and the other, the bank's motion to withdraw the petition
with respect to Suravilla and Atty. Jabla's motion to intervene.

Otherwise stated, the issues for our consideration and determination are: (a) whether Nerbes and Suravilla's
refusal to report to work despite the bank's order for them to do so constitutes disobedience of such a willful
character as to justify their dismissal from service; (b) whether there is merit in the bank's motion to withdraw its

19
petition with respect to Suravilla; and (c) whether the motion for intervention to protect attorney's rights can
prosper and, if so, how much is counsel entitled to recover.

The Ruling of this Court

We deny the petition.

We begin by first emphasizing the following rules that guide the Court in disposing of petitions filed under Rule
45 which seek a review of a CA decision rendered under Rule 65, thus:

[I]n a Rule 45 review (of the CA decision rendered under Rule 65), the question of law that confronts the Court
is the legal correctness of the CA decision - i.e., whether the CA correctly determined the presence or absence
of grave abuse of discretion in the NLRC decision before it, and not on the basis of whether the NLRC decision
on the merits of the case was correct.

Specifically, in reviewing a CA labor ruling under Rule 45 of the Rules of Court, the Court's review is limited to:

(1) Ascertaining the correctness of the CA's decision in finding the presence or absence of a grave abuse of
discretion. This is done by examining, on the basis of the parties' presentations, whether the CA correctly
determined that at the NLRC level, all the adduced pieces of evidence were considered; no evidence which
should not have been considered was considered; and the evidence presented supports the NLRC findings;
and

(2) Deciding any other jurisdictional error that attended the CA's interpretation or application of the law. 33

Given this narrow scope of review, the ultimate question to be addressed by the Court is whether or not the CA
erred in finding that the NLRC gravely abused its discretion in holding that Nerbes and Suravilla were
dismissed for cause.

Further, We stress that the Court in a Rule 45 petition, as a rule, does not try facts and does not analyze and
again weigh the evidence presented before the lower tribunals.34 However, the conflicting findings of the
administrative bodies exercising quasi-judicial functions and the CA in this case warrants an independent
finding of facts from this Court.35

The present case likewise brings to fore the perennial task of balancing of interests between labor on one
hand, and management, on the other. The law and jurisprudence consistently echo the commitment to protect
the working class in keeping with the principle of social justice. In not a few instances, the Court struck down
employer acts, even at the guise of exercise of management prerogative, which undermine the worker's right to
security of tenure. Nevertheless, the law, in aiming to protect the rights of workers, does not thereby authorize
the oppression or self-destruction of the employer.36

With these basic postulates in mind, the Court thus proceeds to resolve the issues raised in the instant petition.

Refusal to return to work was not

characterized by a wrongful and
perverse attitude to warrant
dismissal

Petitioner bank essentially argues that it validly dismissed Nerbes and Suravilla from employment because they
committed serious misconduct and willful disobedience when they failed to return to work despite orders for
them to do so. Nerbes and Suravilla counter that as duly-elected officers of the union they are entitled to be on
full-time leave. According to Nerbes and Suravilla, Department Order No. 09 allows them to immediately
assume their respective positions upon resolution of the election protests of the losing candidates and that the
appeal to the BLR filed by their opponents could not have stayed the execution of their proclamation as such
appeal is not the appeal contemplated under Department Order No. 09.

In siding with Nerbes and Suravilla, the LA held that their refusal to return to work, being anchored on the text
of Department Order No. 09, does not constitute serious misconduct or willful disobedience. The CA, while
finding that the bank's order for Nerbes and Suravilla to return to work was lawful and reasonable and that they
refused to comply with said order, nevertheless found that their refusal to do so was not characterized by a
wrongful and perverse attitude to warrant the supreme penalty of dismissal.

We agree.

Article 282,37 now Article 296, of the Labor Code enumerates the just causes for the termination of the
employment of an employee. Under Article 282(a), serious misconduct or willful disobedience by the employee
of the lawful orders of his employer or representative in connection with his work is a just cause for dismissal.

20
Misconduct is defined as an improper or wrong conduct. It is a transgression of some established and definite
n1le of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not
mere error in judgment.38 To be a valid cause for dismissal, such misconduct must be of grave and aggravated
character and not merely trivial or unimportant.39 The misconduct must also be related to the performance of the
employee's duties showing him to be unfit to continue working for the employer 40 and that the employee's act or
conduct was performed with wrongful intent.41

On the other hand, valid dismissal on the ground of willful disobedience requires the concurrence of twin
requisites: (1) the employee's assailed conduct must have been willful or intentional, the willfulness being
characterized by a wrongful and perverse attitude; and (2) the order violated must have been reasonable,
lawful, made known to the employee and must pertain to the duties which he had been engaged to discharge. 42

As correctly held by the CA, the return to work order made by the bank is reasonable and lawful, and the act
required for Nerbes and Suravilla relates to the performance of their duties. The point of contention is whether
their refusal to return to work was willful or intentional and, if so, whether such willful or intentional conduct is
attended by a wrongful and perverse attitude.

In this case, Nerbes and Suravilla's failure to report for work despite the disapproval of their application for
leave was clearly intentional. However, though their refusal to do so may have been intentional, such was not
characterized by a wrongful and perverse attitude or with deliberate disregard of their duties as such. At the
time Nerbes and Suravilla notified the bank of their intent to avail of their union leaves, they were already
proclaimed as winners and in fact took their respective oaths of office. Following the terms of the parties' CBA,
which has the strength of law as between them, Nerbes and Suravilla, as duly-elected union officers, were
entitled to take their union leaves. That Nerbes and Suravilla were indeed entitled to such privilege is tacitly
recognized by the bank itself when it continued to pay them their full salaries, despite not reporting for work,
from March 22, 2004 until June 15, 2004.43

Nerbes and Suravilla's belief that they are entitled to immediately assume their positions as union officers and
thereby entitled to union leaves is not completely bereft of basis. For one, they based the exercise of such
privilege on the existing CBA, the terms of which the bank has not demonstrated to be inapplicable. For
another, it was only upon being proclaimed as winners did they assume their respective positions which, under
Department Order No. 09, take place immediately.

On the other hand, the bank's disapproval of union leaves and return to work order were essentially based on
the pendency of the appeal filed by Nerbes and Suravilla's opponents before the BLR. To the bank, the appeal
before the BLR defeated the immediately executory nature of Nerbes and Suravilla's proclamation. Even then,
their failure to report for work can hardly be equated as a perverse defiance of the bank's orders as they
believed that such appeal could not have stayed their immediate proclamation and assumption to office for,
after all, a doubtful or difficult question of law may be the basis of good faith. As to which interpretation is
correct is beside the point and, hence, should be addressed at a more appropriate forum at a proper time.

So too, the Court finds that the penalty of dismissal in this case is harsh and severe. Not every case of
insubordination or willful disobedience by an employee reasonably deserves the penalty of dismissal because
the penalty to be imposed on an erring employee must be commensurate with the gravity of his or her
offense.44 It is settled that notwithstanding the existence of a just cause, dismissal should not be imposed, as it
is too severe a penalty, if the employee had been employed for a considerable length of time in the service of
his or her employer, and such employment is untainted by any kind of dishonesty and irregularity.45 We note
that aside from the subject incident, Nerbes and Suravilla were not previously charged with any other offense
or irregularity. Considering the surrounding facts, termination of Nerbes and Suravilla's services was a
disproportionately heavy penalty.

Compromise Agreement between

petitioner bank and respondent
Soravilla is approved; counsel's
right to compensation is protected

It is settled that a client may enter into a compromise agreement with the adverse party to terminate the
litigation before a judgment is rendered therein,46 and if the compromise agreement is found to be in order and
not contrary to law, morals, good customs and public policy, its judicial approval is in order. 47 There being no
impediment to the court's approval of the Compromise Agreement between the bank and Suravilla, the court
accordingly approves the same and grants the bank's motion to withdraw its petition with respect to Suravilla.

Be that as it may, the grant of the bank's motion to withdraw the petition as regards Suravilla and the approval
of their Compromise Agreement does not affect counsel's right to compensation. On this score, the Court's
disquisition in Malvar v. Kraft Foods Philippines, Inc., et al.,48 resonates with relevance and is thus quoted
extensively:

On considerations of equity and fairness, the Court disapproves of the tendencies of clients compromising their
cases behind the backs of their attorneys for the purpose of unreasonably reducing or completely setting to

21
naught the stipulated contingent fees. Thus, the Court grants the Intervenor's Motion for Intervention to Protect
Attorney's Rights as a measure of protecting the Intervenor's right to its stipulated professional fees that would
be denied under the compromise agreement. The Court does so in the interest of protecting the rights of the
practicing Bar rendering professional services on contingent fee basis.

Nonetheless, the claim for attorney's fees does not void or nullify the compromise agreement between Malvar
and the respondents. There being no obstacles to its approval, the Court approves the compromise agreement.
The Court adds, however, that the Intervenor is not left without a remedy, for the payment of its adequate and
reasonable compensation could not be annulled by the settlement of the litigation without its participation and
conformity. It remains entitled to the compensation, and its right is safeguarded by the Court because its
members are officers of the Court who are as entitled to judicial protection against injustice or imposition of
fraud committed by the client as much as the client is against their abuses as her counsel. In other words, the
duty of the Court is not only to ensure that the attorney acts in a proper and lawful manner, but also to see to it
that the attorney is paid his just fees. Even if the compensation of the attorney is dependent only on winning the
litigation, the subsequent withdrawal of the case upon the client's initiative would not deprive the attorney of the
legitimate compensation for professional services rendered.49 (Citations omitted)

In this case, We find that Atty. Jabla adequately and sufficiently represented Suravilla and prepared all the
required pleadings50 on her behalf before the LA, the NLRC, the CA and this Court. Despite the absence of a
written agreement as to the payment of fees, his entitlement to reasonable compensation may still be fairly
ascertained. In this regard, Section 24 of Rule 138 of the Rules of Court should be observed in determining
Atty. Jabla's compensation which provides:

SEC. 24. Compensation of attorney's; agreement as to fees. - An attorney shall be entitled to have and recover
from his client no more than a reasonable compensation for his services, with a view to the importance of the
subject matter of the controversy, the extent of the services rendered, and the professional standing of the
attorney. No court shall be bound by the opinion of attorneys as expert witnesses as to the proper
compensation, but may disregard such testimony and base its conclusion on its own professional knowledge. A
written contract for services shall control the amount to be paid therefor unless found by the court to be
unconscionable or unreasonable.

As well, the criteria found in the Code of Professional Responsibility are considered in assessing the proper
amount of compensation that a lawyer should receive. Canon 20, Rule 20.01 provides:

CANON 20 - A LA WYER SHALL CHARGE ONLY FAIR AND REASONABLE FEES.

Rule 20.01. A lawyer shall be guided by the following factors in determining his fees:

(a) The time spent and the extent of the services rendered or required;

(b) The novelty and difficulty of the question involved;

(c) The importance of the subject matter;

(d) The skill demanded;

(e) The probability of losing other employment as a result of acceptance of the proffered case;

(f) The customary charges for similar services and the schedule of fees of the IBP Chapter to which he
belongs;

(g) The amount involved in the controversy and the benefits resulting to the client from the service;

(h) The contingency or certainty of compensation;

(i) The character of the employment, whether occasional or established; and

(j) The professional standing of the lawyer.

Taking into account the foregoing, the Court finds that the amount equivalent to 10% of the settlement amount
received by Suravilla, or PhP 348,751.27 is reasonable compensation for the skill and services rendered by
Atty. Jabla.

However, the Court cannot easily hold the bank solidarily liable with Suravilla for the payment of said attorney's
fees in the absence of proof that the bank acted in connivance with Suravilla to deprive Atty. Jab la of the fees
reasonably due him. As held in Malvar,51 the opposing party would be liable if they were shown to have
connived with the client in the execution of the compromise agreement, with the intention of depriving the

22
intervenor of its attorney's fees. In such case, the opposing party would be solidarily liable with the client for the
attorney's fees under the theory that they unfairly and unjustly interfered with the counsel's professional
relationship with his client. Such was not shown to be the case here.

An illegally dismissed employee is

entitled to reinstatement and
backwages; in lieu of reinstatement,
separation pay is awarded

Having found that Nerbes was illegally dismissed, he is necessarily entitled to reinstatement to his former
position without loss of seniority and the payment of backwages pursuant to Section 279 of the Labor Code
which reads:

Article 279. Security of Tenure. - In cases of regular employment, the employer shall not terminate the services
of an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed
from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full
backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the
time his compensation was withheld from him up to the time of his actual reinstatement.

Interpreting this provision, the Court held in Bustamante, et al. v. NLRC, et al.,52 that illegally dismissed
employees are entitled to full backwages without conditions or limitations. The CA's award of backwages that is
limited to only one (1) year is thus without basis.

Moreover, the CA's award of separation pay in lieu of both reinstatement and backwages is
incorrect. Reinstatement and backwages are two separate reliefs available to an illegally dismissed employee.
1âw phi 1

Payment of backwages is a form of relief that restores the income that was lost by reason of unlawful dismissal.
Separation pay, on the other hand, is oriented towards the immediate future, the transitional period the
dismissed employee must undergo before locating a replacement job. 53

Hence, instead of limiting the payment of backwages to just one year and awarding separation pay in lieu of
both the reinstatement aspect and the payment of backwages, the correct award, as is consistent with
prevailing jurisprudence, is reinstatement and the payment of full backwages from the time of dismissal until
finality of the decision. It is however understood that if Nerbes had, in the meantime, been reinstated on payroll
and paid his corresponding salaries, such amounts should be deducted from the award of backwages
consistent with the rule against double recovery.

However, since 13 years had passed since Nerbes was dismissed, it is no longer reasonable for the Court to
direct him to return to work and for the bank to accept him.54 It is therefore just and equitable to award
separation pay, in lieu of reinstatement, in an amount equivalent to one month salary for every year of service,
computed up to the time of Nerbes' dismissal on October 22, 2004.

WHEREFORE, the petition is DENIED. The Decision dated May 9, 2012 and Resolution dated August 15, 2013
of the Court of Appeals in CA-G.R. SP No. 108317 are AFFIRMED insofar as it declared respondents Nestor
N. Nerbes and Armenia F. Suravilla to have been illegally dismissed.

The Compromise Agreement between petitioner BDO Unibank, Inc. (formerly Equitable PCI Bank) and
respondent Suravilla is APPROVED and the motion to withdraw petition with respect to respondent Suravilla is
accordingly GRANTED.

Respondent Suravilla is ORDERED to pay to movant-intervenor Jabla Brigola Bagas & Sampior Law Offices,
as represented by Atty. Emmanuel R. Jabla, the attorney's fees equivalent to 10% of the amount received by
respondent Suravilla, or PhP 348,751.27.

The Labor Arbiter is DIRECTED to recompute the proper amount of backwages and separation pay due to
respondent Nerbes in accordance with this decision.

SO ORDERED.


 iv. Disrespect towards superior 
 1. Sterling Paper Products Enterprises, Inc. vs. KMM-Katipunan,
G.R. No. 221493, August 2, 2017



August 2, 2017

G.R. No. 221493

23
STERLING PAPER PRODUCTS ENTERPRISES, INC., Petitioner,
vs.
KMM-KATIPUNAN and RAYMOND Z. ESPONGA, Respondents,

DECISION

MENDOZA, J.:

This is a petition for review on certiorari seeking to reverse and set aside the December 22, 2014 Decision1 and
October 27, 2015 Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 124596, which nullified the
November 15, 2011 Decision3 and March 2, 2012 Resolution4 of the National Labor Relations
Commission (NLRC)in NLRC CN. RAB-III-11- 17024-10/ NLRC LAC No. 09-002429-11. The NLRC reversed
and set aside the May 5, 2011 Decision5 of the Labor Arbiter (LA).

The Antecedents

On July 29, 1998,6 petitioner Sterling Paper Products Enterprises, Inc. (Sterling) hired respondent Raymond Z.
Esponga (Esponga), as machine operator.

In June 2006, Sterling imposed a 20-day suspension on several employees including Esponga, for allegedly
participating in a wildcat strike. The Notice of Disciplinary Action contained a warning that a repetition of a
similar offense would compel the management to impose the maximum penalty of termination of services. 7

Sterling averred that on June 26, 2010, their supervisor Mercy Vinoya (Vinoya), found Esponga and his co-
employees about to take a nap on the sheeter machine. She called their attention and prohibited them from
taking a nap thereon for safety reasons.8

Esponga and his co-employees then transferred to the mango tree near the staff house. When Vinoya passed
by the staff house, she heard Esponga utter, "Huwag maingay, puro bawal. " She then confronted Esponga,
who responded in a loud and disrespectful tone, "Pura kayo bawal, bakit bawal ba magpahinga.? ,9

When Vinoya turned away, Esponga gave her the "dirty finger" sign in front of his co-employees and said "Wala
ka pala eh, puro ka dakdak. Baka pag ako nagsalita hindi mo kayanin. " The incident was witnessed by Mylene
Pesimo (Pesimo), who executed a handwritten account thereon.10 Later that day, Esponga was found to have
been not working as the machine assigned to him was not running from 2:20 to 4:30 in the afternoon.

Instead, he was seen to be having a conversation with his co-employees, Bobby Dolor and Ruel Bertulfo.
Additionally, he failed to submit his daily report from June 21 to June 29, 2010.11

Hence, a Notice to Explain, dated July 26, 2010, was served on Esponga on July 30, 2010, requiring him to
submit his written explanation and to attend the administrative hearing scheduled on August 9, 2010.

On August 9, 2010, Esponga submitted his written explanation denying the charges against him. He claimed
that he did not argue with Vinoya as he was not in the area where the incident reportedly took place. Esponga
further reasoned that during the time when he was not seen operating the machine assigned to him, he was at
the Engineering Department and then he proceeded to the comfort room.

The July 26, 2010 Notice to Explain, however, indicated a wrong date when the incident allegedly happened.
Thus, an amended Notice to Explain, dated August 16, 2010, was issued to Esponga requiring him to submit
his written explanation and to attend the administrative hearing scheduled on August 23, 2010. Esponga,
however, failed to submit his written explanation and he did not attend the hearing.

In view of Esponga's absence, the administrative hearing was rescheduled. The hearing was reset several
more times because of his failure to appear. The hearing was finally set on October 4, 2010. Esponga and his
counsel, however, still failed to attend.

Having found Esponga guilty of gross and serious misconduct, gross disrespect to superior and habitual
negligence, Sterling sent a termination notice, dated November 15, 2010. This prompted Esponga and
KMMKatipunan (respondents) to file a complaint for illegal dismissal, unfair labor practice, damages, and
attorney's fees against Sterling.

The LA Ruling

In its May 5, 2011 Decision, the LA ruled that Esponga was illegally dismissed. It held that Sterling failed to
discharge the burden of proof for failure to submit in evidence the company's code of conduct, which was used
as basis to dismiss Esponga. The fallo reads:

24
WHEREFORE, premises considered, respondents are found to have failed to discharge their burden of proof,
therefore, there is illegal dismissal.

Consequently, respondent corporation is hereby ordered to reinstate complainant to his former position without
loss of seniority rights and other privileges, with full backwages initially computed at this time at ₱51,148.36.

The reinstatement aspect of this decision is immediately executory even as respondents are hereby enjoined to
submit a report of compliance therewith within ten (10) days from receipt hereof.

Respondent corporation is likewise assessed 10% attorney's fee in favor of the complaint in the sum of
₱5,114,84.

All other claims are hereby dismissed for lack of merit.

SO ORDERED.12

Not in conformity, Sterling elevated an appeal before the NLRC.

The NLRC Ruling

In its November 15, 2011 Decision, the NLRC reversed and set aside the LA ruling. It declared that Esponga's
dismissal was valid. The NLRC observed that as a result of the June 26, 2010 incident, Esponga no longer
performed his duties and simply spent the remaining working hours talking with his co-workers. >>

It opined that Esponga intentionally did all these infractions on the same day to show his defiance and
displeasure with Vinoya, who prohibited him from sleeping on the sheeter machine. It concluded that these
were all violations of the Company Code of Conduct and Discipline, and constituted a valid cause for
termination of employment under the Labor Code. The NLRC disposed the case in this wise:

WHEREFORE, premises considered, the appeal is GRANTED. The Decision appealed from is REVERSED
and SET ASIDE, and a new one issued DISMISSING the complaint.

SO ORDERED.13

Undeterred, respondents filed a motion for reconsideration. In its March 2, 2012 Resolution, the NLRC denied
the same.

Aggrieved, the respondents filed a petition for certiorari with the CA.

The CA Ruling

its assailed December 22, 2014 Decision, the CA reinstated the LA ruling. It held that the utterances and
gesture did not constitute serious misconduct. The CA stated that Esponga may have committed an error of
judgment in uttering disrespectful and provocative words against his superior and in making a lewd gesture, but
it could not be said that his actuations were motivated by a wrongful intent. It adjudged that Esponga's
utterances and gesture sprung from the earlier incident which he perceived as unfairly preventing him from
taking a rest from work. As such, the CA ruled that Esponga's actuations could only be regarded as simple
misconduct. The dispositive portion reads:

WHEREFORE, the Petition is GRANTED. The Decision dated November 15, 2011 and Resolution dated March
2, 2012 of the National Labor Relations Commission are SET ASIDE. The Decision dated May 5, 2011 of Labor
Arbiter Leandro Jose is REINSTATED in full.

SO ORDERED.14

Sterling moved for reconsideration, but the CA denied its motion in its assailed October 27, 2015 Resolution.

Hence, this petition for review.

ISSUE

WHETHER THE CAUSE OF ESPONGA'S DISMISSAL AMOUNTS TO SERIOUS MISCONDUCT

Sterling argues that Esponga's utterance of foul and abusive language against his supervisor, demonstrating a
dirty finger, and defiance to perform his duties undeniably constitute serious misconduct. It added that

25
Esponga's acts were not only serious, but they also related to the performance of his duties. Further, Sterling
asserts that he was motivated by wrongful intent.

In his Comment,15 dated September 30, 2016, Esponga replied that Sterling failed to establish the validity of his
dismissal by clear and convincing evidence. He insisted that if doubts exist between the evidence presented by
the employer and the employee, the scales of justice must be tilted in favor of the latter because the employer
must affirmatively show rationally adequate evidence that the dismissal was for a justifiable cause.

In its Reply,16 dated January 30, 2017, Sterling contended that Esponga's failure to participate in the
administrative investigation conducted on his infraction was a clear manifestation of his lack of discipline. It
asserted that the existence of just and valid cause for Esponga's dismissal and its compliance with the due
process requirements had been proven by clear, convincing and substantial evidence on record. Sterling
reasoned that an employer has free rein and enjoys wide latitude of discretion to regulate all aspects of
employment, including the prerogative to instil discipline in its employees and to impose penalties, including
dismissal, upon erring employees.

The Court's Ruling

The petition is meritorious.

Pesimo's retraction has no

probative value

In cases of illegal dismissal, the employer bears the burden of proof to prove that the termination was for a
valid or authorized cause.17 In support of its allegation, Sterling submitted the handwritten statement of Pesimo
who witnessed the incident between Esponga and Vinoya on June 26, 2010. Pesimo, however, recanted her
statement.

A recantation does not necessarily cancel an earlier declaration.18 The rule is settled that in cases where the
previous testimony is retracted and a subsequent different, if not contrary, testimony is made by the same
witness, the test to decide which testimony to believe is one of comparison coupled with the application of the
general rules of evidence. A testimony solemnly given in court should not be set aside and disregarded lightly,
and before this can be done, both the previous testimony and the subsequent one should be carefully
compared and juxtaposed, the circumstances under which each was made, carefully and keenly scrutinized,
and the reasons and motives for the change discriminately analysed.19

In this case, Pesimo's earlier statement was more credible as there was no proof, much less an allegation, that
the same was made under force or intimidation. It must be noted that Pesimo's recantation was made only
1âw phi 1

after Esponga came to see her.20 Nevertheless, in a text message she sent to Vinoya on January 24, 2011,
Pesimo did not deny the contents of her earlier statement. She merely expressed concern over Esponga's
discovery that she had executed a sworn statement corroborating Vinoya's narration of the incident. 21 Thus, her
earlier statement prevails over her subsequent recantation.

Dismissal from employment on

the ground of serious misconduct

Under Article 282 (a) of the Labor Code, serious misconduct by the employee justifies the employer in
terminating his or her employment.

Misconduct is defined as an improper or wrong conduct. It is a 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. To constitute a valid cause for the dismissal within the text and meaning of Article 282 of the
Labor Code, the employee's misconduct must be serious, i.e., of such grave and aggravated character and not
merely trivial or unimportant.22

Additionally, the misconduct must be related to the performance of the employee's duties showing him to be
unfit to continue working for the employer.23 Further, and equally important and required, the act or conduct
must have been performed with wrongful intent.24

To summarize, for misconduct or improper behavior to be a just cause for dismissal, the following elements
must concur: (a) the misconduct must be serious; (b) it must relate to the performance of the employee's duties
showing that the employee has become unfit to continue working for the employer; and (c) it must have been
performed with wrongful intent.25

In the case at bench, the charge of serious misconduct is duly substantiated by the evidence on record.

26
Primarily, in a number of cases, the Court has consistently ruled that the utterance of obscene, insulting or
offensive words against a superior is not only destructive of the morale of his co-employees and a violation of
the company rules and regulations, but also constitutes gross misconduct. 26

In de La Cruz v. National Labor Relations Commission,27 the dismissed employee shouted, "Sayang ang pagka-
professional mo!" and "Putang ina mo" at the company physician when the latter refused to give him a referral
slip.

Likewise, inAutobus Workers' Union (AWU) v. National Labor Relations Commission,28 the dismissed employee
told his supervisor "Gago ka" and taunted the latter by saying, "Bakit anong gusto mo, tang ina mo."

Moreover, in Asian Design and Manufacturing Corporation v. Deputy Minister of Labor,29 the dismissed
employee made false and malicious statements against the foreman (his superior) by telling his co-employees:
"If you don't give a goat to the foreman, you will be terminated. If you want to remain in this company, you have
to give a goat." The dismissed employee therein likewise posted a notice in the comfort room of the company
premises, which read: "Notice to all Sander -Those who want to remain in this company, you must give
anything to your foreman."

In Reynolds Philippines Corporation v. Eslava,30 the dismissed employee circulated several letters to the
members of the company's board of directors calling the executive vice-president and general manager a "big
fool," "anti-Filipino" and accusing him of "mismanagement, inefficiency, lack of planning and foresight, petty
favoritism, dictatorial policies, one-man rule, contemptuous attitude to labor, anti-Filipino utterances and
activities."

Hence, it is well-settled that accusatory and inflammatory language used by an employee towards his employer
or superior can be a ground for dismissal or termination.31

Further, Esponga's assailed conduct was related to his work. Vinoya did not prohibit him from taking a
nap. She merely reminded him that he could not do so on the sheeter machine for safety reasons. Esponga's
1âw phi1

acts reflect an unwillingness to comply with reasonable management directives.32

Finally, contrary to the CA' s pronouncement, the Court finds that Esponga was motivated by wrongful intent.
To reiterate, Vinoya prohibited Esponga from sleeping on the sheeter machine. Later on, when Vinoya was
passing by, Esponga uttered "Huwag main gay, puro bawal. " When she confronted him, he retorted "Pura
kayo bawal, bakit bawal ba magpahinga?" Not contented, Esponga gave her supervisor the "dirty finger" sign
and said "Wala ka pala eh, puro ka dakdak. Baka pag ako nagsalita hindi mo kayanin. " It must be noted that
he committed all these acts in front of his co-employees, which evidently showed that he intended to disrespect
and humiliate his supervisor.

"An aggrieved employee who wants to unburden himself of his disappointments and frustrations in his job or
relations with his immediate superior would normally approach said superior directly or otherwise ask some
other officer possibly to mediate and discuss the problem with the end in view of settling their differences
without causing ferocious conflicts. No matter how the employee dislikes his employer professionally, and even
if he is in a confrontational disposition, he cannot afford to be disrespectful and dare to talk with an unguarded
tongue and/or with a baleful pen."33

Time and again, the Court has put emphasis on the right of an employer to exercise its management
prerogative in dealing with its affairs including the right to dismiss its erring employees. It is a general principle
of labor law to discourage interference with an employer's judgment in the conduct of his business. As already
noted, even as the law is solicitous of the welfare of the employees, it also recognizes the employer's exercise
of management prerogatives. As long as the company's exercise of judgment is in good faith to advance its
interest and not for the purpose of defeating or circumventing the rights of employees under the laws or valid
agreements, such exercise will be upheld.34

WHEREFORE, the petition is GRANTED. The December 22, 2014 Decision and the October 27, 2015
Resolution of the Court of Appeals in CA-G.R. SP No. 124596 are hereby REVERSED and SET ASIDE. The
November 15, 2011 Decision and the March 2, 2012 Resolution of the National Labor Relations Commission
is REINSTATED.

SO ORDERED.

e. Willful disobedience 
 i. Disobedience is not willful 
 1. BDO Unibank, Inc. vs. Nerbes, G.R. No.
208735, July 19, 2017 


July 19, 2017

27
G.R. No. 208735

BDO UNIBANK, INC. (formerly EQUITABLE PCI BANK), Petitioner

vs.
NESTOR N. NERBES AND ARMENIA F. SURA VILLA, Respondents

DECISION

TIJAM, J.:

Assailed in this Petition for Review1 under Rule 45 are the Decision2 dated May 9, 2012 and Resolution3 dated
August 15, 2013 of the Court of Appeals (CA) in CA-G.R. SP No. 108317 which reversed the decision of the
National Labor Relations Commission (NLRC) and reinstated the Decision4 dated August 26, 2005 of the Labor
Arbiter (LA) in NLRC NCR Case No. 00-11-12543-04, finding respondents Nestor N. Nerbes (Nerbes) and
Armenia F. Suravilla (Suravilla) to have been illegally dismissed and thus ordered their reinstatement and
payment of backwages, or in lieu thereof, payment of separation pay.

The Factual Antecedents

Respondents Nerbes and Suravilla were employees of Equitable PCI Bank (now BDO Unibank, Inc.) (bank)
and members of Equitable PCI Bank Employees Union (EPCIBEU), a legitimate labor union and the sole and
exclusive bargaining representative of the rank and file employees of the bank.5

On February 4, 2004, an election of officers of EPCIBEU was held under the supervision of the Labor Relations
Division of the National Capital Region Regional Office of the Department of Labor and Employment (DOLE-
NCR). Nerbes and Suravilla won as President and Executive Vice President, respectively, and were proclaimed
as winners thru a Resolution issued by the OIC Regional Director of the DOLE-NCR on March 19, 2004. The
protest of the losing candidates was effectively dismissed.6

After taking their oath on March 22, 2004, Nerbes and Suravilla notified the bank of their decision to exercise
their privilege under Section 10[d][3], Article IV of the Collective Bargaining Agreement (CBA) which allows the
President and the Executive Vice President to be on full-time leave for the duration of their term of office in
order to devote their time in maintaining industrial peace. Nerbes and Suravilla anchored their right to
immediately assume their respective positions on Rule XV, Section 5 of Department Order No. 09, Series of
1997 which, in part, provides that "Upon resolution of the protest, the committee shall immediately proclaim the
winners and the latter may assume their positions immediately."7 Thus, Nerbes took his leave beginning March
22, 2004, while Suravilla took hers beginning April 1, 2004.8

On April 1, 2004, the losing candidates appealed to the Bureau of Labor Relations (BLR) the DOLE-NCR's
Resolution dated March 19, 2004.9

Because of the pendency of said appeal, the bank disapproved Nerbes and Suravilla's union leaves and were
directed to refrain from being absent and to report back to work. Nerbes and Suravilla failed to comply.10

Consequently, the bank issued ·show cause Memoranda on May 28, 2004 directing Nerbes and Suravilla to
explain why no disciplinary action should be imposed against them for violation of the bank's Code of Conduct
on attendance and punctuality, and obedience and cooperation.11 It appears that Nerbes himself filed a
complaint12 for unfair labor practice (ULP) against the bank. Thus, Nerbes was additionally asked to explain his
alleged falsification of public document and perjury pertaining to his submission of a position paper in the ULP
case which was purportedly signed by his lawyer but who later on denied having signed the same. 13

Administrative hearings were then conducted and on October 22, 2004, the bank found Nerbes and Suravilla
guilty of serious misconduct and willful disobedience and imposed upon them the penalty of dismissal.14 Nerbes
and Suravilla then filed before the LA a complaint for ULP, illegal dismissal and money claims.

Meantime, in the proceedings before the BLR, the appeal filed by the losing candidates was initially dismissed.
However, on motion for reconsideration, the BLR, in its November 4, 2004 Decision15 reversed itself and
nullified the election held on February 4, 2004. As a result, the BLR ordered a special election of officers. A
special election was then held on April 13, 2005 wherein Nerbes and Suravilla's opponents were proclaimed as
winners.16

On August 26, 2005, the LA rendered a Decision17 in favor of Nerbes and Suravilla's reinstatement, the
dispositive part of which reads:

WHEREFORE, judgment is hereby made finding [Nerbes and Suravilla's] dismissal for insubordination a valid
exercise of management prerogative but considering that [Nerbes and Suravilla's] defiance is anchored on law,
ordering the [bank] to reinstate them to their former or equivalent positions in the [bank], without loss of
seniority rights, with one (1) year backwages or, at the option of [Nerbes and Suravilla], to accept from the

28
[bank], in lieu of reinstatement and backwages, a separation pay computed at thirty (30) days pay for every
year of service, a fraction of at least six (6) months to be considered a full year or an applicable separation pay
under the subsisting [CBA], whichever is higher.

Subject to any subsequent developments involving the leadership of the [EPCIBEU] or a final decision of an
administrative body and/or superior court, the [bank] are hereby ordered to allow [Nerbes and Suravilla], within
the context of the [CBA], to go on paid union leaves and exercise their other rights as the duly elected
President and Executive Vice President of the union.

The charge of unfair labor practice and other claims are dismissed for lack of merit.

SO ORDERED.18

The bank appealed to the NLRC. In its Decision19 dated November 11, 2008, the NLRC reversed the ruling of
the LA and dismissed Nerbes and Suravilla's complaint. The NLRC disposed as follows:

WHEREFORE, premises considered, the Decision dated August 26, 2005 of [LA] Amansec is VACA TED and
SET ASIDE, and a NEW ONE rendered dismissing the case for lack of merit.

SO ORDERED.20

Their Motion for Reconsideration21 likewise having been denied in the NLRC Resolution22 dated January 30,
2009, Nerbes and Suravilla filed a certiorari petition23 before the CA.

The Ruling of the CA

The CA framed the issue to be resolved as to whether Nerbes and Suravilla were illegally dismissed from
employment, the resolution of which is, in turn, anchored on whether their refusal to return to work amounts to
willful disobedience.

The CA held that while Nerbes and Suravilla disobeyed the bank's order to return to work, such disobedience
was not characterized by a wrongful or perverse attitude. The CA noted that their refusal to return to work was
brought by their honest belief that as elected officers, they were entitled to be on full-time leave. As such, the
CA reasoned, their offense was disproportionate to the ultimate penalty of dismissal.

Anent the charge of falsification of public document and perjury

against Nerbes, the CA noted that this was a mere retaliatory move on the part of the bank which had nothing
to do with the latter's work. In any case, the CA observed that Nerbes' counsel already acknowledged having
notarized the questioned document.

In disposal, the CA pronounced:

WHEREFORE, in view of the foregoing considerations, the Petition for Certiorari is GRANTED. The Decision of
the [NLRC] in NLRC NCR CA No. 047601-06 dated November 11, 2008 and its subsequent Resolution dated
January 30, 2009 are ANNULLED AND SET ASIDE. The Decision of the [LA] dated August 26, 2005
is REINSTATED insofar as it ordered private respondent Equitable PCI Bank (Now Banco De Oro) to reinstate
[Nerbes and S uravilla] to their former or equivalent positions in the bank, without loss of seniority rights, with
one (1) year backwages or, at the option of [Nerbes and Suravilla], to accept from [the bank], in lieu of
reinstatement and backwages, a separation pay computed at thirty (30) days pay for every year of service, a
fraction of at least six (6) months to be considered a full year or an applicable separation pay under the
subsisting [CBA], whichever is higher.

SO ORDERED.24

The bank's Motion for Reconsideration25 was similarly rebuked by the CA, in its Resolution26 dated August 15,
2013. Undaunted, the bank filed the instant petition.

Pending Incidents

Pending resolution of the instant petition, the bank moved for the withdrawal of its petition as regards Suravilla
in view of the parties' Compromise Agreement.27 Part of said Compromise Agreement is Suravilla's undertaking
to release the bank from any and all claims arising from or related to the instant petition. The pertinent
provisions of the Compromise Agreement state:

xxxx

29
2. Within five working days from the signing of this agreement, BDO, shall release to Ms. Suravilla the amount
of PESOS: THREE MILLION FOUR HUNDRED EIGHTY SEVEN THOUSAND FIVE HUNDRED TWELVE
AND 77/100 (Php3,487,512.77) and Statement of Account, representing her separation pay net of her
accountabilities on loans, insurance, and credit cards if any. The Bank shall likewise release to Ms. Suravilla,
her BIR Form 2316.

3. Upon receipt of the check with the foregoing amount, Ms. Suravilla will acknowledge the same as the full
satisfaction of the separation benefits due her in connection with her employment with the BDO, as well as any
and all claims or court case she may have against the Bank.

4. Furthermore, Ms. Armenia F. Suravilla, her heirs, successors and assigns, hereby unconditionally release,
remiss, waive and forever discharge BDO Unibank, Inc., its affiliates, subsidiaries and successors-in-interest,
stockholders, officers, directors, agents, employees, associates, contractors, and consultants from any and all
actions, whether civil, criminal, administrative or otherwise, or from any claim of any kind or character arising
directly from, incidental to, or in any manner related to her employment with the Bank, as well as the release of
her separation benefits and retirement claims in the amount quoted above.

5. More particularly, Ms. Armenia F. Suravilla, her heirs, successors and assigns, likewise unconditionally
release, remiss, waive and forever discharge BDO Unibank, Inc., its affiliates, subsidiaries, and successors-in-
interest, stockholders, officers, directors, agents, employees, associates, contractors, and consultants from ALL
claims of any kind or character arising directly from, incidental to,or in any manner related with the case entitled
"BDO Unibank, Inc. vs. Nestor Nerbes and Armenia Suravilla", pending with the Supreme Court of the
Philippines, and docketed as SC GR NO. 208735.

6. By virtue of the release of the said amount under this Compromise Agreement, Ms. Armenia F. Suravilla
hereby affirms that she has no further cause of action, demand, complaint, case or grievance whatsoever
against BDO, its affiliates, subsidiaries and succesors-in-interest stockholders, officers, directors, agents,
employees, associates, contractors, and consultants in respect of any matter arising out of the said separation
benefits and retirement claims; and further affirms that this present agreement serves as the FULL
SATISFACTION of the judgment in any and all claims she has against the Bank, specifically in the case "BDO
Unibank, Inc. vs. Nestor Nerbes and Armenia Suravilla", pending with the Supreme Court of the Philippines,
and docketed as SC GR No. 208735.

x x x x28 (Emphasis omitted)

Attached to said motion are plain copies of the Compromise Agreement with Undertaking29 executed by and
between the bank and Suravilla; and Release Waiver and Quitclaim30 executed by Suravilla.

Consequently, Atty. Emmanuel R. Jabla (Atty. Jabla) of Jabla Brigola Bagas & Sampior Law Offices, counsel
for Nerbes and Suravilla, moved to intervene.31 Atty. Jabla alleged that said Compromise Agreement was wrung
from Suravilla without his knowledge and consent, as a result of which, he was deprived of his professional fee
supposed to be payable upon full recovery of her monetary claims. He alleged that there was a verbal
agreement between him and Suravilla for the latter to pay a contingent fee of 10% of all money recovered. He
prayed that the bank and Suravilla be held solidarily liable as joint tortfeasors to pay his professional fee
equivalent to 10% of the amount received by Suravilla, or PhP348,751.27 and that a lien upon all judgments for
the payment of money and executions issued in pursuance of such judgments be granted in his favor.32

The Issues

We divide the issues raised in this petition into two: one, concerning the validity of Nerbes and Suravilla's
dismissal which is the main issue raised in the petition; and the other, the bank's motion to withdraw the petition
with respect to Suravilla and Atty. Jabla's motion to intervene.

Otherwise stated, the issues for our consideration and determination are: (a) whether Nerbes and Suravilla's
refusal to report to work despite the bank's order for them to do so constitutes disobedience of such a willful
character as to justify their dismissal from service; (b) whether there is merit in the bank's motion to withdraw its
petition with respect to Suravilla; and (c) whether the motion for intervention to protect attorney's rights can
prosper and, if so, how much is counsel entitled to recover.

The Ruling of this Court

We deny the petition.

We begin by first emphasizing the following rules that guide the Court in disposing of petitions filed under Rule
45 which seek a review of a CA decision rendered under Rule 65, thus:

[I]n a Rule 45 review (of the CA decision rendered under Rule 65), the question of law that confronts the Court
is the legal correctness of the CA decision - i.e., whether the CA correctly determined the presence or absence

30
of grave abuse of discretion in the NLRC decision before it, and not on the basis of whether the NLRC decision
on the merits of the case was correct.

Specifically, in reviewing a CA labor ruling under Rule 45 of the Rules of Court, the Court's review is limited to:

(1) Ascertaining the correctness of the CA's decision in finding the presence or absence of a grave abuse of
discretion. This is done by examining, on the basis of the parties' presentations, whether the CA correctly
determined that at the NLRC level, all the adduced pieces of evidence were considered; no evidence which
should not have been considered was considered; and the evidence presented supports the NLRC findings;
and

(2) Deciding any other jurisdictional error that attended the CA's interpretation or application of the law. 33

Given this narrow scope of review, the ultimate question to be addressed by the Court is whether or not the CA
erred in finding that the NLRC gravely abused its discretion in holding that Nerbes and Suravilla were
dismissed for cause.

Further, We stress that the Court in a Rule 45 petition, as a rule, does not try facts and does not analyze and
again weigh the evidence presented before the lower tribunals.34 However, the conflicting findings of the
administrative bodies exercising quasi-judicial functions and the CA in this case warrants an independent
finding of facts from this Court.35

The present case likewise brings to fore the perennial task of balancing of interests between labor on one
hand, and management, on the other. The law and jurisprudence consistently echo the commitment to protect
the working class in keeping with the principle of social justice. In not a few instances, the Court struck down
employer acts, even at the guise of exercise of management prerogative, which undermine the worker's right to
security of tenure. Nevertheless, the law, in aiming to protect the rights of workers, does not thereby authorize
the oppression or self-destruction of the employer.36

With these basic postulates in mind, the Court thus proceeds to resolve the issues raised in the instant petition.

Refusal to return to work was not

characterized by a wrongful and
perverse attitude to warrant
dismissal

Petitioner bank essentially argues that it validly dismissed Nerbes and Suravilla from employment because they
committed serious misconduct and willful disobedience when they failed to return to work despite orders for
them to do so. Nerbes and Suravilla counter that as duly-elected officers of the union they are entitled to be on
full-time leave. According to Nerbes and Suravilla, Department Order No. 09 allows them to immediately
assume their respective positions upon resolution of the election protests of the losing candidates and that the
appeal to the BLR filed by their opponents could not have stayed the execution of their proclamation as such
appeal is not the appeal contemplated under Department Order No. 09.

In siding with Nerbes and Suravilla, the LA held that their refusal to return to work, being anchored on the text
of Department Order No. 09, does not constitute serious misconduct or willful disobedience. The CA, while
finding that the bank's order for Nerbes and Suravilla to return to work was lawful and reasonable and that they
refused to comply with said order, nevertheless found that their refusal to do so was not characterized by a
wrongful and perverse attitude to warrant the supreme penalty of dismissal.

We agree.

Article 282,37 now Article 296, of the Labor Code enumerates the just causes for the termination of the
employment of an employee. Under Article 282(a), serious misconduct or willful disobedience by the employee
of the lawful orders of his employer or representative in connection with his work is a just cause for dismissal.

Misconduct is defined as an improper or wrong conduct. It is a transgression of some established and definite
n1le of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not
mere error in judgment.38 To be a valid cause for dismissal, such misconduct must be of grave and aggravated
character and not merely trivial or unimportant.39 The misconduct must also be related to the performance of the
employee's duties showing him to be unfit to continue working for the employer 40 and that the employee's act or
conduct was performed with wrongful intent.41

On the other hand, valid dismissal on the ground of willful disobedience requires the concurrence of twin
requisites: (1) the employee's assailed conduct must have been willful or intentional, the willfulness being
characterized by a wrongful and perverse attitude; and (2) the order violated must have been reasonable,
lawful, made known to the employee and must pertain to the duties which he had been engaged to discharge. 42

31
As correctly held by the CA, the return to work order made by the bank is reasonable and lawful, and the act
required for Nerbes and Suravilla relates to the performance of their duties. The point of contention is whether
their refusal to return to work was willful or intentional and, if so, whether such willful or intentional conduct is
attended by a wrongful and perverse attitude.

In this case, Nerbes and Suravilla's failure to report for work despite the disapproval of their application for
leave was clearly intentional. However, though their refusal to do so may have been intentional, such was not
characterized by a wrongful and perverse attitude or with deliberate disregard of their duties as such. At the
time Nerbes and Suravilla notified the bank of their intent to avail of their union leaves, they were already
proclaimed as winners and in fact took their respective oaths of office. Following the terms of the parties' CBA,
which has the strength of law as between them, Nerbes and Suravilla, as duly-elected union officers, were
entitled to take their union leaves. That Nerbes and Suravilla were indeed entitled to such privilege is tacitly
recognized by the bank itself when it continued to pay them their full salaries, despite not reporting for work,
from March 22, 2004 until June 15, 2004.43

Nerbes and Suravilla's belief that they are entitled to immediately assume their positions as union officers and
thereby entitled to union leaves is not completely bereft of basis. For one, they based the exercise of such
privilege on the existing CBA, the terms of which the bank has not demonstrated to be inapplicable. For
another, it was only upon being proclaimed as winners did they assume their respective positions which, under
Department Order No. 09, take place immediately.

On the other hand, the bank's disapproval of union leaves and return to work order were essentially based on
the pendency of the appeal filed by Nerbes and Suravilla's opponents before the BLR. To the bank, the appeal
before the BLR defeated the immediately executory nature of Nerbes and Suravilla's proclamation. Even then,
their failure to report for work can hardly be equated as a perverse defiance of the bank's orders as they
believed that such appeal could not have stayed their immediate proclamation and assumption to office for,
after all, a doubtful or difficult question of law may be the basis of good faith. As to which interpretation is
correct is beside the point and, hence, should be addressed at a more appropriate forum at a proper time.

So too, the Court finds that the penalty of dismissal in this case is harsh and severe. Not every case of
insubordination or willful disobedience by an employee reasonably deserves the penalty of dismissal because
the penalty to be imposed on an erring employee must be commensurate with the gravity of his or her
offense.44 It is settled that notwithstanding the existence of a just cause, dismissal should not be imposed, as it
is too severe a penalty, if the employee had been employed for a considerable length of time in the service of
his or her employer, and such employment is untainted by any kind of dishonesty and irregularity. 45 We note
that aside from the subject incident, Nerbes and Suravilla were not previously charged with any other offense
or irregularity. Considering the surrounding facts, termination of Nerbes and Suravilla's services was a
disproportionately heavy penalty.

Compromise Agreement between

petitioner bank and respondent
Soravilla is approved; counsel's
right to compensation is protected

It is settled that a client may enter into a compromise agreement with the adverse party to terminate the
litigation before a judgment is rendered therein,46 and if the compromise agreement is found to be in order and
not contrary to law, morals, good customs and public policy, its judicial approval is in order. 47 There being no
impediment to the court's approval of the Compromise Agreement between the bank and Suravilla, the court
accordingly approves the same and grants the bank's motion to withdraw its petition with respect to Suravilla.

Be that as it may, the grant of the bank's motion to withdraw the petition as regards Suravilla and the approval
of their Compromise Agreement does not affect counsel's right to compensation. On this score, the Court's
disquisition in Malvar v. Kraft Foods Philippines, Inc., et al.,48 resonates with relevance and is thus quoted
extensively:

On considerations of equity and fairness, the Court disapproves of the tendencies of clients compromising their
cases behind the backs of their attorneys for the purpose of unreasonably reducing or completely setting to
naught the stipulated contingent fees. Thus, the Court grants the Intervenor's Motion for Intervention to Protect
Attorney's Rights as a measure of protecting the Intervenor's right to its stipulated professional fees that would
be denied under the compromise agreement. The Court does so in the interest of protecting the rights of the
practicing Bar rendering professional services on contingent fee basis.

Nonetheless, the claim for attorney's fees does not void or nullify the compromise agreement between Malvar
and the respondents. There being no obstacles to its approval, the Court approves the compromise agreement.
The Court adds, however, that the Intervenor is not left without a remedy, for the payment of its adequate and
reasonable compensation could not be annulled by the settlement of the litigation without its participation and
conformity. It remains entitled to the compensation, and its right is safeguarded by the Court because its
members are officers of the Court who are as entitled to judicial protection against injustice or imposition of
fraud committed by the client as much as the client is against their abuses as her counsel. In other words, the

32
duty of the Court is not only to ensure that the attorney acts in a proper and lawful manner, but also to see to it
that the attorney is paid his just fees. Even if the compensation of the attorney is dependent only on winning the
litigation, the subsequent withdrawal of the case upon the client's initiative would not deprive the attorney of the
legitimate compensation for professional services rendered.49 (Citations omitted)

In this case, We find that Atty. Jabla adequately and sufficiently represented Suravilla and prepared all the
required pleadings50 on her behalf before the LA, the NLRC, the CA and this Court. Despite the absence of a
written agreement as to the payment of fees, his entitlement to reasonable compensation may still be fairly
ascertained. In this regard, Section 24 of Rule 138 of the Rules of Court should be observed in determining
Atty. Jabla's compensation which provides:

SEC. 24. Compensation of attorney's; agreement as to fees. - An attorney shall be entitled to have and recover
from his client no more than a reasonable compensation for his services, with a view to the importance of the
subject matter of the controversy, the extent of the services rendered, and the professional standing of the
attorney. No court shall be bound by the opinion of attorneys as expert witnesses as to the proper
compensation, but may disregard such testimony and base its conclusion on its own professional knowledge. A
written contract for services shall control the amount to be paid therefor unless found by the court to be
unconscionable or unreasonable.

As well, the criteria found in the Code of Professional Responsibility are considered in assessing the proper
amount of compensation that a lawyer should receive. Canon 20, Rule 20.01 provides:

CANON 20 - A LA WYER SHALL CHARGE ONLY FAIR AND REASONABLE FEES.

Rule 20.01. A lawyer shall be guided by the following factors in determining his fees:

(a) The time spent and the extent of the services rendered or required;

(b) The novelty and difficulty of the question involved;

(c) The importance of the subject matter;

(d) The skill demanded;

(e) The probability of losing other employment as a result of acceptance of the proffered case;

(f) The customary charges for similar services and the schedule of fees of the IBP Chapter to which he
belongs;

(g) The amount involved in the controversy and the benefits resulting to the client from the service;

(h) The contingency or certainty of compensation;

(i) The character of the employment, whether occasional or established; and

(j) The professional standing of the lawyer.

Taking into account the foregoing, the Court finds that the amount equivalent to 10% of the settlement amount
received by Suravilla, or PhP 348,751.27 is reasonable compensation for the skill and services rendered by
Atty. Jabla.

However, the Court cannot easily hold the bank solidarily liable with Suravilla for the payment of said attorney's
fees in the absence of proof that the bank acted in connivance with Suravilla to deprive Atty. Jab la of the fees
reasonably due him. As held in Malvar,51 the opposing party would be liable if they were shown to have
connived with the client in the execution of the compromise agreement, with the intention of depriving the
intervenor of its attorney's fees. In such case, the opposing party would be solidarily liable with the client for the
attorney's fees under the theory that they unfairly and unjustly interfered with the counsel's professional
relationship with his client. Such was not shown to be the case here.

An illegally dismissed employee is

entitled to reinstatement and
backwages; in lieu of reinstatement,
separation pay is awarded

Having found that Nerbes was illegally dismissed, he is necessarily entitled to reinstatement to his former
position without loss of seniority and the payment of backwages pursuant to Section 279 of the Labor Code
which reads:

33
Article 279. Security of Tenure. - In cases of regular employment, the employer shall not terminate the services
of an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed
from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full
backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the
time his compensation was withheld from him up to the time of his actual reinstatement.

Interpreting this provision, the Court held in Bustamante, et al. v. NLRC, et al.,52 that illegally dismissed
employees are entitled to full backwages without conditions or limitations. The CA's award of backwages that is
limited to only one (1) year is thus without basis.

Moreover, the CA's award of separation pay in lieu of both reinstatement and backwages is
incorrect. Reinstatement and backwages are two separate reliefs available to an illegally dismissed employee.
1âw phi 1

Payment of backwages is a form of relief that restores the income that was lost by reason of unlawful dismissal.
Separation pay, on the other hand, is oriented towards the immediate future, the transitional period the
dismissed employee must undergo before locating a replacement job. 53

Hence, instead of limiting the payment of backwages to just one year and awarding separation pay in lieu of
both the reinstatement aspect and the payment of backwages, the correct award, as is consistent with
prevailing jurisprudence, is reinstatement and the payment of full backwages from the time of dismissal until
finality of the decision. It is however understood that if Nerbes had, in the meantime, been reinstated on payroll
and paid his corresponding salaries, such amounts should be deducted from the award of backwages
consistent with the rule against double recovery.

However, since 13 years had passed since Nerbes was dismissed, it is no longer reasonable for the Court to
direct him to return to work and for the bank to accept him.54 It is therefore just and equitable to award
separation pay, in lieu of reinstatement, in an amount equivalent to one month salary for every year of service,
computed up to the time of Nerbes' dismissal on October 22, 2004.

WHEREFORE, the petition is DENIED. The Decision dated May 9, 2012 and Resolution dated August 15, 2013
of the Court of Appeals in CA-G.R. SP No. 108317 are AFFIRMED insofar as it declared respondents Nestor
N. Nerbes and Armenia F. Suravilla to have been illegally dismissed.

The Compromise Agreement between petitioner BDO Unibank, Inc. (formerly Equitable PCI Bank) and
respondent Suravilla is APPROVED and the motion to withdraw petition with respect to respondent Suravilla is
accordingly GRANTED.

Respondent Suravilla is ORDERED to pay to movant-intervenor Jabla Brigola Bagas & Sampior Law Offices,
as represented by Atty. Emmanuel R. Jabla, the attorney's fees equivalent to 10% of the amount received by
respondent Suravilla, or PhP 348,751.27.

The Labor Arbiter is DIRECTED to recompute the proper amount of backwages and separation pay due to
respondent Nerbes in accordance with this decision.

SO ORDERED.

ii. Penalty is too harsh 
 1. BDO Unibank, Inc. vs. Nerbes, G.R. No. 208735, July 19, 2017
(ibid.)


f. Totality of Infractions 
 i. Maula vs. Ximex Delivery Express, Inc., G.R. No. 207838, January 25, 2017



January 25, 2017

G.R. No. 207838

LEO T. MAULA, Petitioner

vs.
XIMEX DELIVERY EXPRESS, INC, Respondent

DECISION

PERALTA, J.:

This petition for review on certiorari under Rule 45 of the Rules of Civil Procedure seeks to reverse the
November 20, 2012 Decision1 and June 21, 2013 Resolution2 of the Court of Appeals (CA) in CA G.R. SP No.

34
121176, which set aside the December 15, 2010 Resolution3 and July 20, 2011 Decision4 of the National Labor
Relations Commission (NLRC) that affirmed the February 18, 2010 Decision5 of the Labor Arbiter (LA) finding
the illegal dismissal of petitioner.

On May 12, 2009, petitioner Leo T. Maula filed a complaint against respondent Ximex Delivery Express, Inc.
and its officers (Jerome Ibafiez, Lili beth Gorospe, and Amador Cabrera) for illegal dismissal, underpayment of
salary/wages, non-payment/underpayment of overtime pay, underpayment of holiday premium, underpayment
of 13th month pay, non-payment of ECOLA, non-payment/underpayment of night shift differential, illegal
deduction, illegal suspension, regularization, harassment, underremittance of SSS premiums, deduction of tax
without tax identification number, moral and exemplary damages, and attorney's fees. 6

The factual antecedents, according to petitioner, are as follows:

Petitioner was hired by the respondent as Operation Staff on March 23, 2002. As Operation Steff, he performed
a variety of duties such as but not limited to documentation, checker, dispatcher or airfreight coordinator. He
[was] on call anytime of the day or night. He was rendering night duty which [started] at 6:00 p.m. More often it
went beyond the normal eight-hour schedule such that he normally rendered duty until 6:00 or 7:00 the
following morning. This [was] without payment of the corresponding night shift differential and overtime pay. His
salary from March 2002 to December 2004 was PhP3,600.00 per month; from January 2005 to July 25, 2006 at
PhP6,200.00 per month; from July 26, 2006 to March 15, 2008 at PhP7,500.00 per month; from March 16,
2008 to February 15, 2009 at PhP9,412.00 per month; and, from February 16, 2009 to March 31, 2009 at
PhP9,932.00 per month. x x x.

Petitioner's employment was uneventful until came February 18, 2009 when the [respondent's] HRD required
him and some other employees to sign a form sub-titled "Personal Data for New Hires." When he inquired
about it he was told it was nothing but merely for the twentypeso increase which the company owner allegedly
wanted to see. He could not help but entertain doubts on the scheme as they were hurriedly made to sign the
same. It also [appeared] from the form that the designated

salary/wage [was] daily instead of on a monthly basis. x x x.

On February 21, 2009, a Saturday evening, they were surprised to receive an invitation from the manager for a
dinner and drinking spree in a restaurant-bar. It indeed came as a surprise as he never had that kind of
experience with the manager in his seven (7) years working for the company.

On February 25, 2009, he, together with some other concerned employees[,] requested for a meeting with their
manager together with the manager of the HRD. They questioned the document and aired their side voicing
their apprehensions against the designation "For New Hires" since they were long time regular employees
earning monthly salary/wages and not daily wage earners. The respondent company's manager[,] Amador
Cabrera[,] retorted: "Ay wala yan walang kwenta yan." When he disclosed that he consulted a lawyer,
respondent Cabrera insisted it was nothing and aceordingly, no lawyer could say that it really matters. Cabrera
even dared the petitioner to present the lawyer. The meeting was concluded. When he was about to exit from
the conference room he was addressed with the parting words: "Baka gusto mo, mag-labor ka!" He did not
react. On March 4, 2009, petitioner filed a complaint before the National Conciliation and Mediation Board.
During the hearing held on March 25, 2009, it was stipulated/agreed upon that:

(1) Company's counsel admits that petitioner is a regular employee;

(2) There shall be no retaliatory action between petitioner and the company arising from this complaint;

(3) Issues anent BIR and SSS shall be brought to the proper forum.

xxx

Not long thereafter, or on March 25, 2009, in the evening, a supposed problem cropped up. A misroute of cargo
was reported and the company [cast] the whole blame on the petitioner. It was alleged that he erroneously
wrote the label on the box - the name and destination, and allegedly [was] the one who checked the cargo. The
imputation is quite absurd because it was the client who actually wrote the name and destination, whereas, it
was not the petitioner but his co-employee who checked the cargo. The following day, he received a
memorandum charging him with "negligence in performing duties."

On April 2, 2009 at 4:00 p.m., he received another memorandum of "reassignment" wherein he was directed to
report effective April 2, 2009 to Richard Omalza and Ferdinand Marzan in another department of the company.
But then, at around 4:30 p.m. of the same day, he was instructed by the HR manager to proceed to his former
office for him to train his replacement. He went inside the warehouse and at around 6:00 p.m. he began
teaching his replacement. At 8:00 p.m.[,] his replacement went outside. He waited for sometime and came to
know later when he verified outside that the person already went straight home. When he went back inside, his
supervisor insisted [to] him to continue with his former work, but due to the "reassignment paper" he had some

35
reservations. Sensing he might again be framed up and maliciously accused of such as what happened on
March 25, 2009, he thus refused. Around 10:30 p.m., he went home. x x x.

The following day, an attempt to serve another memorandum was made on him. This time he was made to
explain by the HR Manager why he did not perform his former work and not report to his reassignment. It only
[validated] his apprehension of a set-up. For how could he be at two places at [the same] time (his former work
is situated in Sucat, Parafiaque, whereas, his new assignment is in FTI, Taguig City). It bears emphasizing that
the directive for him to continue discharging his former duties was merely verbal. At this point, petitioner lost his
composure. Exasperated, he refused to receive the memorandum and thus retorted "Segura naabnormal na
ang utak mo" as it dawned on him that they were out looking for every means possible to pin him down.

Nonetheless, he reported to his reassignment in FTI Taguig on April 3, 2009. There he was served with the
memorandum suspending him from work for thirty (30) days effective April 4, 2009 for alleged "Serious
misconduct and willful disobedience by the employee of the lawful orders of his employer or representative in
connection with his work." His apprehension was thus confirmed. x x x.

On April 8, 2009, he filed a case anew with the NCMB x x x Hearings were scheduled at the NCMB on April 20,
27, and May 5, 2009 but the respondents never appeared. On May 4, 2009, he reported to the office only to be
refused entry. Instead, a dismissal letter was handed to him.x x x.

On May 5, 2009, at the NCMB, the mediator decided that the case be brought to the National Labor Relations
Commission for arbitration. Thus, he withdrew his complaint. On May 12, 2009[,] he was able to refile his
complaint with the Arbitration Branch of the NLRC. Efforts were exerted by the Labor Arbiter to encourage the
parties to amicably settle but without success. 7

Respondent countered that: it is a duly registered domestic corporation engaged in the business of cargo
forwarding and truck-hauling; petitioner and several other employees misinterpreted the use of its old form "For
New Hires," that they were relegated to the status of new employees when in fact they have been employed for
quite some time already; after the conciliation conference before the NCMB, it relied on his promise that he
would not disturb the peace in the company premises, which proved to be wishful thinking; as to the
misdelivered cargo of Globe Telecoms, initial investigation disclosed that he was tasked to check the correct
information in the package to ensure prompt delivery, hence, a Memorandum dated March 27, 2009 was
issued to him to explain his side; thereafter, it was learned from his co-employees that he abandoned his work
a few hours after logging in, which was a serious disobedience to the HR Head's order for him to teach the new
employees assigned to his group; also, he refused to accept a company order with respect to his transfer of
assignment to another client, Fullerlife; for the series of willful disobedience, a Memorandum dated April 3,
2009 was personally served to him by Gorospe, but he repeatedly refused to receive the memorandum and
howled at her, "Seguro na abnormal ang utak mo!"; his arrogant actuations, which were directed against a
female superior who never made any provocation and in front of many employees, were contemptuous, gravely
improper, and breeds disrespect, even ignominy, against the company and its officers; on April 3, 2009,
another memorandum was issued to give him the opportunity to explain his side and to inform him of his
preventive suspension for thirty (30) days pending investigation; and the management, after evaluating the
gravity of the charge and the number of infractions, decided to dismiss him from employment through a notice
of dismissal dated April 27, 2009, which was sent via registered mail.

The LA ruled for petitioner, opining that:

[Petitioner] had cause for alarm and exasperation it appearing that after he joined a complaint in the NCMB, in
a brief period from [March 27, 2009] to [April 3, 2009], [he] was served with a memo on alleged mishandling
which turned out to be baseless, he was reassigned with no clear explanation and was being charged for
disobedience of which was not eventually acted upon. There is no indication that the altercation between [him]
and the HR Manager was of such aggravated character as to constitute serious misconduct.

This Office finds, on the other hand, that the respondents appeared bent on terminating the services of
complainant following his taking the respondents to task for the new form and in the eventual dispute before the
NCMB.

As to the relief, [petitioner], as an illegally dismissed employee[,] is entitled to the twin relief of reinstatement
with backwages. However, considering the attendant circumstances, it would not be to the best interest of the
[petitioner] to be reinstated as he would be working under an unjustified suspicion from his employer. Thus, this
office finds the award of full backwages from the time of dismissal on [April 27, 2009] up to [the] date of this
decision and separation pay of one month pay per year of service in order.

Thus, the backwages due to the [petitioner] is computed at P9,932.00 x 10 months x 1.08 or P107,265.00. His
separation pay is also set at ₱9,932.00 x 8 years or P79,456.00. Other claims are dismissed for lack of factual
and legal basis.

Individual respondents Jerome Ibanez, Lilibeth Gorospe and Amador Cabrera are held liable for being the
responsible officers of the respondent company.

36
WHEREFORE, in view of the foregoing, decision is hereby rendered declaring the dismissal of the [petitioner]
to be illegal and ordering respondents XIMEX DELIVERY EXPRESS, INC., JEROME IBANEZ, LILIBETH
GOROSPE and AMADOR CABRERA to pay [petitioner] the amount of P186,721.00, as computed above, as
backwages and separation pay. All other claims are dismissed.

SO ORDERED.8

On appeal, the NLRC affirmed in toto the LA's decision. It added:

While We concur that each employee should deal with his coemployees with due respect, the attending
circumstances[,] however[,] should be taken into consideration why said utterance was made in order to arrive
at a fair and equitable decision in this case.

In a span of one week[,] [petitioner] received three (3) [memoranda] requiring him to explain three (3) different
offenses. The utterance was more of an outburst of [his] emotion, having been subjected to three [memoranda]
in successive days, the last of which placed him under suspension for 30 days. Clearly[,] said utterance
[cannot] be considered grave and agravated in character to warrant the dismissal of herein [petitioner]. x x x. 9

Respondent and its accountable officers moved for reconsideration.10 In partially granting the motion, the NLRC
ruled that while the memoranda charging petitioner of negligence, misconduct, and disobedience were
unfounded and that he could not be blamed for his emotional flare-up due to what he considered as successive
retaliatory actions, there was no malice or bad faith on the part of Ibanez, Gorospe, and Cabrera to justify their
solidary liability with respondent.11 Petitioner did not move to reconsider the modified judgment.

Still aggrieved, respondent elevated the case to the CA, which reversed and set aside the December 15, 2010
Resolution and the July 20, 2011 Decision of the NLRC. The appellate court held:

x x x [A]fter a careful scrutiny of the facts on record, we find that [petitioner's] behavior constitute serious
misconduct which was of grave and aggravated character. When he threw the Memorandum served on him by
HR Supervisor Gorospe in front of her and when he later on shouted at her, "Siguro na abnormal ang utak
mo!", he was not only being disrespectful, he also manifested a willful defiance of authority and insubordination.
Much more, he did it in the presence of his co-employees which if not corrected would create a precedent to
[respondent's] detriment. [Petitioner's] actuations were willfully done as shown by the foul language he used
against his superior, with apparent wrongful intent and not mere error in judgment, making him unfit to continue
working for [respondent]. [Petitioner] attempted to blame [respondent] for his behaviour allegedly because he
was provoked by the successive memoranda it issued to him in a span of two (2) days. This, however, is a
lame excuse and did not in any way justify the inflammatory language he used against Gorospe and the
throwing of the Memorandum at the HR Supervisor, in the presence of his co-employees at that. Condoning his
behaviour is not what the law contemplates when it mandated a liberal treatment in favor of the working man.
An employer cannot be compelled to continue employing an employee guilty of acts inimical to the employer's
interest, justifying loss of confidence in him. A company has the right to dismiss its erring employees as a
measure of self-protection against acts inimical to its interest. x x x.

xxxx

Further, in a long line of cases, it was ruled that accusatory and inflammatory language used by an employee
to the employer or superior can be a ground for dismissal or termination. Likewise, it did not escape Our
attention that [petitioner] had been intentionally defying the orders of his immediate superiors when he refused
to train his replacement prior to his transfer at Fullerlife in Taguig City despite being told to do so. This defiance
was also manifested when he left his work station without his superior's permission. Undoubtedly, [petitioner's]
behavior makes him unfit to continue his employment with [respondent] who was rendered helpless by his acts
of insubordination.

On the other hand, [respondent] complied with the due process requirements in effecting [petitioner's]
dismissal. It furnished the latter two (2) written notices, first, in Memorandum dated April 3, 2009 apprising him
of the charge of serious misconduct for which his dismissal was sought and second, in Notice of Dismissal
dated April 27, 2009 which informed him of [respondent's] decision to dismiss him. 12

The petition is meritorious.

Standard of Review

In a Rule 45 petition of the CA decision rendered under Rule 65, We are guided by the following rules:

[I]n a Rule 45 review (of the CA decision rendered under Rule 65), the question of law that confronts the Court
is the legal correctness of the CA decision - i.e., whether the CA correctly determined the presence or absence
of grave abuse of discretion in the NLRC decision before it, and not on the basis of whether the NLRC decision
on the merits of the case was correct. ...

37
Specifically, in reviewing a CA labor ruling under Rule 45 of the Rules of Court, the Court's review is limited to:

(1) Ascertaining the correctness of the CA's decision in finding the presence or absence of a grave abuse of
discretion. This is done by examining, on the basis of the parties' presentations, whether the CA correctly
determined that at the NLRC level, all the adduced pieces of evidence were considered; no evidence which
should not have been considered was considered; and the evidence presented supports the NLRC findings;
and

(2) Deciding any other jurisdictional error that attended the CA’s interpretation or application of the law. 13

The general rule is that certiorari does not lie to review errors of judgment of a quasi-judicial tribunal since the
judicial review does not go as far as to examine and assess the evidence of the parties and to weigh their
probative value.14 However, the CA may grant the petition when the factual findings complained of are not
supported by the evidence on record; when it is necessary to prevent a substantial wrong or to do substantial
justice; when the findings of the NLRC contradict those of the Labor Arbiter; and when necessary to arrive at a
just decision of the case.15

As will be shown later, none of the recognized exceptions is present in this case; hence, the CA .erred when it
made its own factual determination of the matters involved and, on that basis, reversed the NLRC ruling that
affirmed the findings of the labor arbiter. While this Court, in a Rule 45 petition, is not a trier of facts and does
not analyze and weigh again the evidence presented before the tribunals below, the conflicting findings of the
administrative bodies exercising quasi-judicial functions and the CA compels Us to make Our own independent
findings of facts. 16

Termination of Employment

While an employer is given a wide latitude of discretion in managing its own affairs, in the promulgation of
policies, rules and regulations on work-related activities of its employees, and in the imposition of disciplinary
measures on them, the exercise of disciplining and imposing appropriate penalties on erring employees must
be practiced in good faith and for the advancement of the employer's interest and not for the purpose of
defeating or circumventing the rights of employees under special laws or under valid agreements. 17 The reason
being that -

Security of tenure of workers is not only statutorily protected, it is also a constitutionally guaranteed right. Thus,
any deprivation of this right must be attended by due process of law. This means that any disciplinary action
which affects employment must pass due process scrutiny in both its substantive and procedural aspects.

The constitutional protection for workers elevates their work to the status of a vested right. It is a vested right
protected not only against state action but against the arbitrary acts of the employers as well. This court in
Philippine Movie Pictures Workers' Association v. Premier Productions, Inc. categorically stated that "[t]he right
of a person to his labor is deemed to be property within the meaning of constitutional guarantees." Moreover, it
is of that species of vested constitutional right that also affects an employee's liberty and quality of life. Work
not only contributes to defining the individual, it also assists in determining one's purpose. Work provides for
the material basis of human dignity. 18

Dismissal from employment have two facets: first, the legality of the act of dismissal, which constitutes
substantive due process; and, second, the legality of the manner of dismissal, which constitutes procedural due
process. 19 The burden of proof rests upon the employer to show that the disciplinary action was made for lawful
cause or that the termination of employment was valid.20 In administrative and quasi-judicial proceedings, the
quantum of evidence required is substantial evidence or "such relevant evidence as a reasonable mind might
accept as adequate to support a conclusion."21 Thus, unsubstantiated suspicions, accusations, and conclusions
of the employer do not provide legal justification for dismissing the employee. 22 When in doubt, the case should
be resolved in favor of labor pursuant to the social justice policy of our labor laws and the 1987 Constliution. 23

Act of Dismissal

Respondent manifestly failed to prove that petitioner's alleged act constitutes serious misconduct.

Misconduct is improper or wrong conduct; it is the transgression of some established and definite rule of action,
a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in
judgment.24The 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. 25 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. 26

While this Court held in past decisions that accusatory and inflammatory language used by an employee to the
employer or superior can be a ground for dismissal or termination,27 the circumstances peculiar to this case find
the previous rulings inapplicable. The admittedly insulting and unbecoming language uttered by petitioner to the

38
HR Manager on April 3, 2009 should be viewed with reasonable leniency in light of the fact that it was
committed under an emotionally charged state. We agree with the labor arbiter and the NLRC that the on-the-
spur-of-the-moment outburst of petitioner, he having reached his breaking point, was due to what he perceived
as successive retaliatory and orchestrated actions of respondent. Indeed, there was only lapse in judgment
rather than a premeditated defiance of authority.

Further, petitioner's purported "thug-like" demeanor is not serious in nature. Despite the "grave embarassment"
supposedly caused on Gorospe, she did not even take any separate action independent of the company.
Likewise, respondent did not elaborate exactly how and to what extent that its "nature of business" and
"industrial peace" were damaged by petitioner's misconduct. It was not shown in detail that he has become
unfit to continue working for the company and that the continuance of his services is patently inimical to
respondent's interest.

Even if a just cause exists, the employer still has the discretion whether to dismiss the employee, impose a
lighter penalty, or condone the offense committed.28 In making such decision, the employee's past offenses may
be taken into consideration.29

x x x In Merin v. National Labor Relations Commission, this Court expounded on the principle of totality of
infractions as follows:

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
petitioner should not be taken singly and separately. Fitness for continued employment cannot be
compartmentalized into tight little cubicles of aspects of character, conduct and ability separate and
independent of each other. While it may be true that petitioner was penalized for his previous infractions, this
does not and should not mean that his employment record would be wiped clean of his infractions. After all, the
record of an employee is a relevant consideration in determining the penalty that should be meted out since an
employee's past misconduct and present behavior must be taken together in determining the proper imposable
penalty[.] Despite the sanctions imposed upon petitioner, he continued to commit misconduct and exhibit
undesirable behavior on board. Indeed, the employer cannot be compelled to retain a misbehaving employee,
or one who is guilty of acts inimical to its interests.30

In this case, respondent contends that aside from petitioner's disrespectful remark against Gorospe, he also
committed several prior intentional misconduct, to wit: erroneous packaging of a cargo of respondent's client,
abandoning work after logging in, failing to teach the rudiments of his job to the new employees assigned to his
group despite orders from his superior, and refusing to accept the management's order on the transfer of
assignment. After evaluating the gravity of the charges and the number of infractions, respondent decided to
dismiss petitioner from his employment.

We do not agree. Respondent cannot invoke the principle of totality of infractions considering that petitioner's
alleged previous acts of misconduct were not established in accordance with the requirements of procedural
due process. In fact, respondent conceded that he "was not even censured for any infraction in the past." It
admitted that "[the] March 25, 2009 incident that [petitioner] was referring to could not be construed as laying
the predicate for his dismissal, because [he] was not penalized for the misrouting incident when he had
adequately and satisfactorily explained his side. Neither was he penalized for the other [memoranda] previously
or subsequently issued to him."31

This Court finds the penalty of dismissal too harsh. Not every case of insubordination or willful disobedience by
an employee reasonably deserves the penalty of dismissal because the penalty to be imposed on an erring
employee must be commensurate with the gravity of his or her offense. 32Petitioner's termination from
employment is also inappropriate considering that he had been with respondent company for seven (7) years
and he had no previous derogatory record. It is settled that notwithstanding the existence of a just cause,
dismissal should not be imposed, as it is too severe a penalty, if the employee had been employed for a
considerable length of time in the service of his or her employer, and such employment is untainted by any kind
of dishonesty and irregularity.33

Manner of dismissal

The procedural due process requirement was not complied with. King of Kings Transport, Inc. v.
Mamac, 34 provided for the following rules in terminating the services of employees:

(1) The first written notice to be served on the employees should contain the specific causes or grounds for
termination against them, and a directive that the employees are given the opportunity to submit their written
explanation within a reasonable period. "Reasonable opportunity" under the Omnibus Rules means every kind
of assistance that management must accord to the employees to enable them to prepare adequately for their
defense. This should be construed as a period of at least five (5) calendar days from receipt of the notice to
give the employees an opportunity to study the accusation against them, consult a union official or lawyer,
gather data and evidence, and decide on the defenses they will raise against the complaint. Moreover, in order
to enable the employees to intelligently prepare their explanation and defenses, the notice should contain a

39
detailed narration of the facts and circumstances that will serve as basis for the charge against the employees.
A general description of the charge will not suffice. Lastly, the notice should specifically mention which
company rules, if any, are violated and/or which among the grounds under Art. 282 is being charged against
the employees.

(2) After serving the first notice, the employers should schedule and conduct a hearing or conference wherein
the employees will be given the opportunity to: (1) explain and clarify their defenses to the charge against them;
(2) present evidence in support of their defenses; and (3) rebut the evidence presented against them by the
management. During the hearing or conference, the employees are given the chance to defend themselves
personally, with the assistance of a representative or counsel of their choice. Moreover, this conference or
hearing could be used by the parties as an opportunity to come to an amicable settlement.

(3) After determining that termination of employment is justified, the employers shall serve the employees
a written notice of termination indicating that: (1) all circumstances involving the charge against the
employees have been considered; and (2) grounds have been established to justify the severance of their
employment.35

Later, Perez, et al. v. Phil. Telegraph and Telephone Co. et al., 36 clarified that an actual or formal hearing is not
an absolute requirement. The Court en bane held:

>>

Article 277(b) of the Labor Code provides that, in cases of termination for a just cause, an employee must be
given "ample opportunity to be heard and to defend himself." Thus, the opportunity to be heard afforded by law
to the employee is qualified by the word "ample" which ordinarily means "considerably more than adequate or
sufficient." In this regard, the phrase "ample opportunity to be heard" can be reasonably interpreted as
extensive enough to cover actual hearing or conference. To this extent, Section 2(d), Rule I of the
Implementing Rules of Book VI of the Labor Code is in conformity with Article 277(b).

Nonetheless, Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code should not be taken
to mean that holding an actual hearing or conference is a condition sine qua non for compliance with the due
process requirement in termination of employment. The test for the fair procedure guaranteed under Article
277(b) cannot be whether there has been a formal pretermination confrontation between the employer and the
employee. The "ample opportunity to be heard" standard is neither synonymous nor similar to a formal hearing.
To confine the employee's right to be heard to a solitary form narrows down that right. It deprives him of other
equally effective forms of adducing evidence in his defense. Certainly, such an exclusivist and absolutist
interpretation is overly restrictive. The "very nature of due process negates any concept of inflexible procedures
universally applicable to every imaginable situation."

The standard for the hearing requirement, ample opportunity, is couched in general language revealing the
legislative intent to give some degree of flexibility or adaptability to meet the peculiarities of a given situation.
To confine it to a single rigid proceeding such as a formal hearing will defeat its spirit.

Significantly, Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code itself provides that
the so-called standards of due process outlined therein shall be observed "substantially," not strictly. This is a
recognition that while a formal hearing or conference is ideal, it is not an absolute, mandatory or exclusive
avenue of due process.

An employee's right to be heard in termination cases under Article 277(b) as implemented by Section 2(d),
Rule I of the Implementing Rules of Book VI of the Labor Code should be interpreted in broad strokes. It is
satisfied not only by a formal face to face confrontation but by any meaningful opportunity to controvert the
charges against him and to submit evidence in support thereof.

A hearing means that a party should be given a chance to adduce his evidence to support his side of the case
and that the evidence should be taken into account in the adjudication of the controversy. "To be heard" does
not mean verbal argumentation alone inasmuch as one may be heard just as effectively through written
explanations, submissions or pleadings. Therefore, while the phrase "ample opportunity to be heard" may in
fact include an actual hearing, it is not limited to a formal hearing only. In other words, the existence of an
actual, formal "trial-type" hearing, although preferred, is not absolutely necessary to satisfy the employee's right
to be heard.

xxxx

[T]he employer may provide an employee with ample opportunity to be heard and defend himself with the
assistance of a representative or counsel in ways other than a formal hearing. The employee can be fully
afforded a chance to respond to the charges against him, adduce his evidence or rebut the evidence against
him through a wide array of methods, verbal or written.

40
After receiving the first notice apprising him of the charges against him, the employee may submit a written
explanation (which may be in the form of a letter, memorandum, affidavit or position paper) and offer evidence
in support thereof, like relevant company records (such as his 201 file and daily time records) and the sworn
statements of his witnesses. For this purpose, he may prepare his explanation personally or with the assistance
of a representative or counsel. He may also ask the employer to provide him copy of records material to his
defense. His written explanation may also include a request that a formal hearing or conference be held. In
such a case, the conduct of a formal hearing or conference becomes mandatory, just as it is where there exist
substantial evidentiary disputes or where company rules or practice requires an actual hearing as part of
employment pretermination procedure. To this extent, we refine the decisions we have rendered so far on this
point of law.

This interpretation of Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code reasonably
implements the "ample opportunity to be heard" standard under Article 277(b) of the Labor Code without unduly
restricting the language of the law or excessively burdening the employer. This not only respects the power
vested in the Secretary of Labor and Employment to promulgate rules and regulations that will lay down the
guidelines for the implementation of Article 277(b). More importantly, this is faithful to the mandate of Article 4
of the Labor Code that "[a]ll doubts in the implementation and interpretation of the provisions of [the Labor
Code], including its implementing rules and regulations shall be resolved in favor of labor."

In sum, the following are the guiding principles in connection with the hearing requirement in dismissal cases:

(a) "ample opportunity to be heard" means any meaningful opportunity (verbal or written) given to the employee
to answer the charges against him and submit evidence in support of his defense, whether in a hearing,
conference or some other fair, just and reasonable way.

(b) a formal hearing or conference becomes mandatory only when requested by the employee in writing or
substantial evidentiary disputes exist or a company rule or practice requires it, or when similar

circumstances justify it.

(c) the "ample opportunity to be heard" standard in the Labor Code prevails over the "hearing or conference"
requirement in the implementing rules and regulations.37

In this case, the Memorandum dated April 3, 2009 provided:

Ito ay patungkol sa pangyayari kanina, mga bandang alas kuwatro ng hapon, na kung saan ang mga ipinakita
at ini-asal mo sa akin bilang iyong HR Supervisor na pagbato/paghagis na may kasamang pagdadabog ang
memo na ibinigay para sa iyo na nagsasaad na ikaw ay pinagpapaliwanag lamang sa mga alegasyon laban sa
iyo na dinulog sa aming tanggapan. Ikaw ay binigyan ng pagkakataon na ibigay ang iyong paliwanag ngunit
ang iyong ginawa ay, ikaw ay nagdabog at inihagis ang memo sa harapan mismo ng iyong HR Supervisor sa
kadahilanang hindi mo lamang matanggap ang mga alegasyong inirereklamo tungkol sayo. Ang paninigaw mo
at pagsasabi na "Abnormal pala utak mo eh" sa HR Supervisor mo na mas nakatataas sa iyo sa harap ng
maraming empleyado ay nagpapakita lang na ikaw ay lumabag sa patakaran ng kumpanya na "Serious
Misconduct and willful disobedience by the employee of the lawful orders of his employer or
representative in connection with his work."

Dahil dito, ang pamunuan ay nagdesisyon na ikaw ay suspendihin ng tatlumpung araw (30) habang
isinasagawa ang imbestigasyon at ito ay magsisimula pagkatanggap mo ng liham na ito.

Para sa iyong kaalaman at pagsunod.38

On the other hand, the dismissal letter dated April 27, 2009, which was also signed by Gorospe, stated:

Ito ay patungkol sa pangyayari na kung saan, ipinakita mo ang hindi kagandahang asal at kagaspangan ng
iyong pag-uugali at hindi pagbibigay ng respeto sa mas nakatataas sa iyo. Na kung saan ay iyong
ibinato/inihagis ang memo para sa iyo na nagsasaad na ikaw ay pinagpapaliwanag at binibigyan ng
pagkakataon na marinig ang iyong panig laban sa mga alegasyon na iyong kinakaharap. Ang paninigaw mo at
pagsasabi na "Abnormal pala utak mo eh" sa akin na HR Supervisor mo na mas nakatataas sa iyo sa harap
ng maraming empleyado ay nagpapakita lamang na ikaw ay lumabag sa patakaran ng kumpanya,
ang "Serious Misconduct by the employee of the lawful orders of his employer or representative in
connection with his work." Nais naming sabihin na hindi pinahihintulutan ng pamunuan ang ganitong mga
pangyayari. Dahil dito, ang pamunuan ay nagdesisyon na ikaw ay tanggalin sa kumpanyang ito na
magsisimula pagkatanggap mo ng sulat [na] ito. Paki sa ayos ang iyong mga trabahong maiiwan. 39

Evidently, Memorandum dated April 3, 2009 does not contain the following: a detailed narration of facts and
circumstances for petitioner to intelligently prepare his explanation and defenses, the specific company rule
violated and the corresponding penalty therefor, and a directive giving him at least five (5) calendar days to
submit a written explanation. No ample opportunity to be heard was also accorded to petitioner. Instead of

41
devising a just way to get the side of petitioner through testimonial and/or documentary evidence, respondent
took advantage of his "refusal" to file a written explanation. This should not be so. An employer is duty-bound to
exert earnest efforts to arrive at a settlement of its differences with the employee. While a full adversarial
hearing or conference is not required, there must be a fair and reasonable opportunity for the employee to
explain the controversy at hand.40 Finally, the termination letter issued by respondent miserably failed to satisfy
the requisite contents of a valid notice of termination. Instead of discussing the facts and circumstances to
support the violation of the alleged company rule that imposed a penalty of dismissal, the letter merely repeats
the self-serving accusations stated in Memorandum dated April 3, 2009.

Preventive Suspension

Similar to a case,41 no hearing or conference was called with respect to petitioner's alleged misconduct. Instead,
he was immediately placed under preventive suspension for thirty (30) days and was dismissed while he was
still serving his suspension. According to respondent, it is proper to suspend him pending investigation because
his continued employment poses serious and imminent threat to the life of the company officials and also
endanger the operation of the business of respondent, which is a common carrier dutybound to observe extra
ordinary diligence. 42

Preventive suspension may be legally imposed against an employee whose alleged violation is the subject of
an investigation. The purpose of suspension is to prevent-harm or injury to the company as well as to fellow
employees.43 The pertinent rules dealing with preventive suspension are found in Sections 8 and 9 of Rule
XXIII, Book V of the Omnibus Rules Implementing the Labor Code, which read:

SEC. 8. Preventive suspension. - The employer may place the worker concerned under preventive
suspension if his continued employment poses a serious and imminent threat to the life or property of the
employer or of his co-workers.

SEC. 9. Period of suspension. - No preventive suspension shall last longer than thirty (30) days. The
employer shall thereafter reinstate the worker in his former or in a substantially equivalent position or the
employer may extend the period of suspension provided that during the period of extension, he pays the wages
and other benefits due to the worker. In such case, the worker shall not be bound to reimburse the amount paid
to him during the extension if the employer decides, after completion of the hearing, to dismiss the worker.

As succinctly stated above, preventive suspension is justified where the employee's continued employment
poses a serious and imminent threat to the life or property of the employer or of the employee's co-
workers. Without this kind of threat, preventive suspension is not proper.44 Here, it cannot be said that
1âw phi1

petitioner posed a danger on the lives of the officers or employees of respondent or their properties. Being one
of the Operation Staff, which was a rank and file position, he could not and would not be able to sabotage the
operations of respondent. The difficulty of finding a logical and reasonable connection between his assigned
tasks and the necessity of his preventive suspension is apparent from the fact that even respondent was not
able to present concrete evidence to support its general allegation.

WHEREFORE, premises considered, the petition is GRANTED. The November 20, 2012 Decision and June
21, 2013 Resolution of the Court of Appeals in CA G.R. SP No. 121176, which set aside the December 15,
2010 Resolution and July 20, 2011 Decision of the National Labor Relations Commission that affirmed the
February 18, 2010 Decision of the Labor Arbiter finding the illegal dismissal of petitioner, are
hereby REVERSED AND SET ASIDE. The Labor Arbiter is DIRECTED to recompute the proper amount of
backwages and separation pay due to petitioner in accordance with this decision.

SO ORDERED.


 i. Computation 
 1. C.I.C.M. Mission Seminaries School of Theology, Inc., Fr. Romeo Nimez, CICM
vs. Perez, G.R. 
 No. 220506, January 18, 2017 


January 18, 2017

G.R. No. 220506

C.I.C.M. MISSION SEMINARIES (MARYHURST, MARYHEIGHTS, MARYSHORE AND MARYHILL)

SCHOOL OF THEOLOGY, INC., FR. ROMEO NIMEZ, CICM, Petitioners
vs.
MARIA VERONICA C. PEREZ, Respondent

DECISION

MENDOZA, J.:

42
In this petition for review on certiorari1 under Rule 45 of the Rules of Court, petitioner C.I.C.M. Mission
Seminaries (Maryhurst, Maryheights, Maryshore and Maryhill) School of Theology, Inc., and Fr. Romeo Nimez,
CICM (petitioners), seek the review of the May 27, 2015 Decision2 and September 7, 2015 Resolution3 of the
Court of Appeals (CA) in CA-G.R. SP. No. 137132.

In the assailed rulings, the CA dismissed the petitioners' petition for certiorari filed under Rule 65 of the Rules
of Court questioning the September 8, 2014 Resolution of the National Labor Relations Commission (NLRC) in
LER Case No. 07-205-14, which affirmed the July 10, 2014 Order of the Labor Arbiter (LA) in NLRC Case No.
NCR-12-14242-07, issued in favor of Maria Veronica C. Perez (respondent).

The Antecedents

This controversy is an offshoot of an illegal dismissal case filed by the respondent against the petitioners. In its
June 16, 2008 Decision, the LA recognized respondent's right to receive from the petitioners backwages and
separation pay in lieu of reinstatement. Thus, it ordered the petitioners to pay respondent the aggregate
amount of :P286,670.58. The LA decision was affirmed by the NLRC, by the CA and by this Court in G.R. No.
200490.

The decision became final and executory on October 4, 2012, as evidenced by the Entry of Judgment.
Consequently, respondent moved for the issuance of a writ of execution. The petitioners opposed and moved
for the issuance of a certificate of satisfaction of judgment, alleging that their obligation had been satisfied by
the release of the cash bond in the amount of ₱272,337.05 to respondent.

In its July 10, 2014 Order, the LA ruled that the cash bond posted by the petitioners was insufficient to satisfy
their obligation. Thus, it ordered the issuance of a writ of execution, to wit:

After evaluation, this Office deems it proper to grant [respondent's] Motion for Issuance of Writ of Execution.
The fact that [petitioner CICM's] cash bond has been released to respondent in the amount of ₱272,337.05
does not mean full satisfaction of the award as petitioner CICM insists.

The Decision dated 16 June 200[8] which was affirmed by the Commission, the Court of Appeals and the
Supreme Court specifically states that [respondent] is entitled to backwages and separation pay until the finality
of the Decision. Further, the Resolution of the Court of Appeals dated February 2, 2012 stressed the need to
recompute the monetary award specifically with regard to the payment of backwages, separation pay and
attorney's fees, so as to update the total monetary award to which respondent is entitled in accordance with
prevailing laws and jurisprudence.

This Office therefore ordered the recomputation of complainant's award of additional backwages from 07 June
2008 until 04 October 2012, the finality of the Supreme Court decision, and additional separation pay also until
04 October 2012. The total award therefore is ₱1,847,088.89. From this amount should be deducted the
amount respondent received at ₱272,337.05. Thus, the additional backwages and separation pay due is
₱1,575,751.84. Since there is no more legal hindrance in the enforcement of the judgment; this Office orders
the issuance of the writ of execution. 4

Undaunted, the petitioners elevated an appeal before the NLRC. Nevertheless, in its September 8, 2014
Decision, the NLRC affirmed the ruling of the LA.

Aggrieved, the petitioners filed a petition for certiorari with the CA. Meanwhile, the LA issued an undated writ of
execution addressed to the Sheriff, who, in turn, impleinented it by garnishing upon CICM's bank deposit with
BPI Family Savings Bank. CICM moved for the urgent quashal of the said writ and for the garnishment to be
lifted. On January 14, 2015, the LA issued an order lifting the notice of garnishment made on CICM's bank
accounts. Nonetheless, on April 13, 2015, the LA still ordered the issuance of a writ of execution to enforce the
balance of the judgment award. The dispositive portion reads:

WHEREFORE, premises considered, the Urgent Motion to Quash Writ of Execution is granted. The Writ of
Execution dated 3 October 2014 is hereby ordered quashed effective immediately. The Motion to Lift
Garnishment of CICM Missionaries, Inc.'s account with BPI Family Savings Bank will be lifted upon release of
its bond covered by BPI Check No. 0000704053 in the amount of ₱266,670.58 (O.R. No. 6742637) to
[respondent].

Let a Writ of Execution be issued against [petitioners] to enforce the balance of the judgment award.5

On May 27, 2015, the CA dismissed the petition filed by the petitioners. The petitioners moved for
reconsideration. In its September 7, 2015 Resolution, the CA denied their motion.

Hence, this petition.

43
The petitioners, therefore, ask this Court to determine "what should be the legal basis for the computation of
the backwages and separation pay of an illegally dismissed employee in a case where reinstatement was not
ordered despite appeals made by said employee which [delayed] the final resolution of the issue on
reinstatement."6

The petitioners challenge the affirmation by the CA and NLRC of the July 10, 2014 Order of the LA, which
recomputed respondent's award of additional backwages and separation pay until October 4, 2012, the finality
of this Court's decision in G.R. No. 200490. They argue that the computation of backwages and separation pay
of respondent should be only up to June 16, 2008, the date when the LA rendered her decision in the main
case and which was also the date when reinstatement was refused. They contend that although the cases cited
by the CA - Surima v. NLRC, 7 Gaco v. NLRC, 8 Oscar Ledesma and Company v. NLRC,9 Labor v.
NLRC, 10 Rasonable v. NLRC11 and Bustamante v. NLRC, 12 commonly held that the computation of the
separation pay and backwages shall be up to the time of finality of this Court's decision, the same were not
applicable to their case. They point varying factual antecedents and claim that in the cases mentioned, the
employers were the ones who appealed, thereby delaying the resolution of the illegal dismissal cases before
the LA. Thus, the increase in the awards should necessarily be shouldered by the employer. This
circumstance, however, is not present in this case. In other words, they posit that if the employer caused the
delay in satisfying the judgment award, the computation should be up to the finality of the case. If it were the
employee's fault, as in this case, the computation should only run until the time actual reinstatement is no
longer possible nor practicable. 13

In her Comment, 14 respondent argued that the recomputation of the total monetary award should be until
October 4, 2012 (the date when the main case became final); and that her appeal of the main case should not
prejudice her as she had the right to file the same.

In their Reply, 15 the petitioners contended that the computation made by the LA in the main case, which has
become final and executory, could no longer be disturbed following the doctrine of immutability of judgment.

The Court's Ruling

The Court finds no merit in the petition.

To begin with, the petitioners failed to append the required affidavit of service. The rule is, such affidavit is
essential to due process and the orderly administration of justice even if it is used merely as proof that service
has been made on the other party. 16 The utter disregard of this requirement as held in a catena of cases
cannot be justified by harking to substantial justice and the policy of liberal construction of the Rules. Indeed,
technical rules of procedure are not meant to frustrate the ends of justice. Rather, they serve to effect the
proper and orderly disposition of cases and, thus, effectively prevent the clogging of court dockets. 17 Thus, in
Ferrer v. Villanueva, 18 the Court held that petitioner's failure to append the proof of service to his petition
for certiorari was a fatal defect.

Hence, the denial of this case is in order.

For the guidance of the bench and the bar, however, the Court opts to also delve into the merits of the case. 1avvphi1

As a precept, the Court's duty in a Rule 45 petition, assailing the decision of the CA in a labor case elevated to
it through a Rule 65 petition, is limited only to the determination of whether the CA committed an error in
judgment in declaring the absence or existence, as the case may be, of grave abuse of discretion on the part of
the NLRC. 19

As a consequence, the Court shall examine only whether the CA erred in not finding grave abuse of discretion
when the NLRC affirmed the LA' s findings that the separation pay in lieu of reinstatement as well as
backwages due to respondent should be recomputed until the finality of the Court's decision in G.R. No.
200490, despite the fact that the delay in the resolution of the said case was brought about by respondent
herself.

On this point, the Court rules in the negative.

Grave abuse of discretion, which has been defined as a capricious and whimsical exercise of judgment so
patent and gross as to amount to an evasion of a positive duty or a virtual refusal to perform a duty enjoined by
law,20requires proof that the CA committed errors such that its decision was not made in contemplation of law.
The burden of proof rests upon the party who asserts. 21

The petitioners, however, failed to carry out such burden.

The decision of the CA is based on long standing jurisprudence that in the event the aspect of reinstatement is
disputed, backwages, including separation pay, shall be computed from the time of dismissal until the finality of
the decision ordering the separation pay. In Gaco v. NLRC, 22 it was ruled that with respect to the payment of

44
backwages and separation pay in lieu of reinstatement of an illegally dismissed employee, the period shall be
reckoned from the time compensation was withheld up to the finality of this Court's decision. This was
reiterated in Surima v. NLRC 23 and Session Delights Ice Cream and Fast Foods v. CA. 24

The reason for this was explained in Bani Rural Bank, Inc. v. De Guzman. 25 When there is an order of
separation pay (in lieu of reinstatement or when the reinstatement aspect is waived or subsequently ordered in
light of a supervening event making the award of reinstatement no longer possible), the employment
relationship is terminated only upon the finality of the decision ordering the separation pay. The finality of the
decision cutsoff the employment relationship and represents the final settlement of the rights and obligations of
the parties against each other. Hence, backwages no longer accumulate upon the finality of the decision
ordering the payment of separation pay because the employee is no longer entitled to any compensation from
the employer by reason of the severance of his employment. One cannot, therefore, attribute patent error on
the part of the CA when it merely affirmed the NLRC's conclusion, which was clearly based on jurisprudence.

Plainly, it does not matter if the delay caused by an appeal was brought about by the employer or by the
employee. The rule is, if the LA's decision, which granted separation pay in lieu of reinstatement, is appealed
by any party, the employer-employee relationship subsists and until such time when decision becomes final
and executory, the employee is entitled to all the monetary awards awarded by the LA.

In this case, respondent remained an employee of the petitioners pending her partial appeal. Her employment
was only severed when this Court, in G.R. No. 200490, affirmed with finality the rulings of the CA and the labor
tribunals declaring her right to separation pay instead of actual reinstatement. Accordingly, she is entitled to
have her backwages and separation pay computed until October 4, 2012, the date when the judgment of this
Court became final and executory, as certified by the Clerk of Court, per the Entry of Judgment in G.R. No.
200490.

The Court would not have expected the CA and the NLRC to rule contrary to the above pronouncements. If it
were otherwise, all employees who are similarly situated will be forced to relinquish early on their fight for
reinstatement, a remedy, which the law prefers over severance of employment relation. Furthermore, to favor
the petitioners' position is nothing short of a derogation of the State's policy to protect the rights of workers and
their welfare under Article II, Section 8 of the 1987 Constitution. 26

The petitioners, nonetheless, claim that it was not their fault why the amounts due ballooned to the present
level. They are mistaken. Suffice it to state that had they not illegally dismissed respondent, they will not be
where they are today. They took the risk and must suffer the consequences.

Finally, the Court disagrees with the petitioners' assertion that a recomputation would violate the doctrine of
immutability of judgment. It has been settled that no essential change is made by a recomputation as this step
is a necessary consequence that flows from the nature of the illegality of dismissal declared in that decision. By
the nature of an illegal dismissal case, the reliefs continue to add on until full satisfaction thereof. The
recomputation of the awards stemming from an illegal dismissal case does not constitute an alteration or
amendment of the final decision being implemented. The illegal dismissal ruling stands; only the computation of
the monetary consequences of the dismissal is affected and this is not a violation of the principle of immutability
of final judgments.27

WHEREFORE, the petition is DENIED. The Temporary Restraining Order issued by this Court on February 3,
2016 is hereby LIFTED.

SO ORDERED.

2. United Coconut Chemicals, Inc. vs. Valmores, G.R. No. 201018, July 12, 2017 


July 12, 2017

G.R. No. 201018

UNITED COCONUT CHEMICALS, G.R. NO. 201018, INC., Petitioner

vs.
VICTORIANO B. V ALMORES, Respondent

DECISION

BERSAMIN, J.:

The base figure in the determination of full backwages is fixed at the salary rate received by the employee at
the time he was illegally dismissed. The award shall include the benefits and allowances regularly received by

45
the employee as of the time of the illegal dismissal, as well as those granted under the Collective Bargaining
Agreement (CBA), if any.

The Case

The petitioner United Coconut Chemicals, Inc. (UCCI) appeals the decision promulgated on August 23,
2011,1whereby the Court of Appeals (CA) upheld the order of the National Labor Relations Commission
(NLRC)2 to remand the case to the Labor Arbiter for the re-computation of the respondent's full backwages.

Antecedents

UCCI hired the respondent as its Senior Utilities Inspector with a monthly salary of ₱ll,194.00. He then became
a member of the United Coconut Chemicals, Inc. Employees' Labor Organization (UELO) until his expulsion
sometime in 1995.3 Due to the expulsion, UELO formally demanded that UCCI terminate the services of the
respondent pursuant to the union security clause of the CBA. UCCI dismissed him on February 22, 1996. 4 He
then filed a complaint for illegal dismissal in the NLRC.5 After due proceedings, the Labor Arbiter dismissed his
complaint for lack of merit.6 On appeal, however, the NLRC reversed the Labor Arbiter and disposed as follows:

WHEREFORE, premises considered, the appeal is GRANTED. The Decision appealed from is SET ASIDE and
a new one entered finding respondents liable for illegal dismissal and ordered them to reinstate complainant to
his former position without loss of seniority rights and with full backwages from the date of dismissal on 22
February 1996 to the date of actual reinstatement.

SO ORDERED.7

The parties, including UELO, moved for reconsideration. The NLRC denied the motions for reconsideration of
the respondent and UELO, but partially granted UCCI's motion by granting its prayer to be exempted from
paying backwages.8

Consequently, the respondent and UELO separately elevated the matter to the CA on certiorari, insisting that
the NLRC thereby committed grave abuse of discretion amounting to lack or excess of jurisdiction.

On January 18, 2002,9 the CA promulgated its decision disposing as follows:

WHEREFORE, foregoing considered, the DECISION of the Third Division of NLRC dated November 29, 2000
is AFFIRMED in all respect.

The Resolution of the Third Division of NLRC dated January 31, 2001 which states:

"The motion for reconsideration filed by respondent United Coconut Chemicals from the decision of November
29, 2000 is partially GRANTED in that it is not held liable insofar as the award of full backwages in favor of
complainant is concerned."

is ordered DELETED and declared null and void.

SO ORDERED.10

Still, UCCI appealed to the Court, which, on November 17, 2003, denied the petition for review
on certiorari.11 The denial became final and executory on February 26, 2004;12 hence, the respondent moved for
the execution of the judgment in his favor.

On January 18, 2010, Labor Arbiter Michaela A. Lontoc issued an order decreeing thusly:

WHEREFORE, respondent [UCCI's] motion to hold respondent UELO primarily liable to pay complainant the
herein monetary awards and/or direct respondent UELO to reimburse [UCCI] of whatever amount it may be
made to pay complainant, disguised as a motion for clarification, is DENIED for lack of legal basis.

Complainant's motion for execution dated 29 November 2000 is GRANTED. Let a writ of execution be issued
for its immediate implementation.

SO ORDERED.13

Labor Arbiter Lontoc opined that the backwages due to the respondent should be computed by excluding the
benefits under the CBA, to wit:

46
In fine, we compute the backwages of complainant beginning 22 February 1996 as directed in the 29
November 2000 decision of the NLRC up to 30 June 2008. Complainant was admittedly reinstated to work
effective on 01 July 2008, with the corresponding wages beginning said period paid and received by
complainant until he was declared in AWOL and consequently terminated from work. Thus;

Backwages: ₱l 1,194.00 x 148.26 months = ₱l,659,622.44

13th Month Pay: ₱l,659,622.44 I 12 months = ₱138,301.87
SILP: ₱l 1,194.00 30 days x 5 days/12 mos.
x 148.26 mos.= ₱23,050.31
TOTAL ₱l,820,974.62

We do not neglect that in some of complainant's pleadings, he offered the computation of his backwages,
which included a list of the benefits he claimed should be included, thus:

Safety
Monthly Meal Financial Medical
Incentive SOFA
Wage Subsidy Grant Assistance
Pay
1996 11,194.00 22.50 --- 1,000.00 2,500.00 3,800.00
1997 12,444.00 25.00 --- 1,000.00 2,500.00 3,800.00
1998 13,814.00 35.00 300.00 2,500.00 4,000.00 5,500.00
1999 15,314.00 35.00 300.00 2,500.00 4,000.00 5,500.00
2000 15,314.00 37.00 300.00 2,500.00 4,000.00 5,500.00
2001 16,314.00 37.00 300.00 2,500.00 4,000.00 5,500.00
2002 17,314.00 37.00 300.00 2,500.00 4,000.00 5,500.00
2003 19,064.00 40.00 500.00 2,500.00 4,000.00 6,500.00
2004 20,564.00 40.00 500.00 2,600.00 4,000.00 6,500.00
2005 22,564.00 40.00 500.00 2,600.00 5,000.00 10,000.00
2006 24,564.00 40.00 500.00 2,600.00 5,000.00 10,000.00
2007 26,614.00 40.00 500.00 2,600.00 5,000.00 10,000.00

One-time CBA increase 2000 ₱20,000.00

Built-in OT/NSD ₱5,044.29/annum
Other bonuses ₱5,000/annum
Rice subsidy one sack I month
Uniform ₱8,765.00 monetary
equivalent/annum
Christmas package ₱l,000.00 I annum
VL/SL 46 days I annum

We cannot recognize these alleged CBA granted benefits. While the term "backwages" used in Article 279 of
the Labor Code includes the benefits which the complainant should have received had he not been dismissed
from work, benefits which are not prescribed by law of those referring to benefits granted by the employer
either pursuant to the CBA or its benevolence, cannot be recognized unless duly proved. The decision dated
29 November 2000, which is the subject of the instant execution proceedings, did not recognize the foregoing
alleged CBA and company issued benefits, although they were enumerated by complainant in his position
paper. Neither did we find the basis of these alleged CBA negotiated benefits. While complainant attached a
few pages of what purports to be their collective bargaining agreement, the effectivity date thereof was never
presented for the NLRC and for us to determine the dates of their applicability. Thus, complainant's entitlement
to these benefits was not substantially proven. For the same reason, we have no basis to consider the same.
Except for the bare allegation that he should have been paid these benefits, no proof of such grant was
presented by complainant.

Corollary, we can only recognize the legally mandated benefits

that need not be established by substantial evidence, i.e., the 13th month

47
pay and service incentive leave.14

On June 29, 2010, the NLRC issued its resolution remanding the case to the Labor Arbiter for the
recomputation of the backwages inclusive of the benefits granted under the CBA,15 disposing:

WHEREFORE, the decision dated 10 January 2010 is MODIFIED. The case is remanded to the Arbitration
Branch of origin only for the purpose of recomputation of complainant's full backwages using the Collective
Bargaining Agreement for the covered period as basis of computation. Respondent [UCCI] is directed to furnish
the office of the Labor Arbiter's copies of the Collective Bargaining Agreement pertinent thereto.

The other findings are AFFIRMED.

SO ORDERED.16

The NLRC observed that there was a need to include the benefits granted under the CBA; that in the personnel
action form submitted by UCCI, the reinstatement salary of the respondent amounted to ₱26,614.00 as
opposed to the Pl 1,194.00 alleged salary at the time of his dismissal; and the disparity should have prompted
the Labor Arbiter to probe into his claim of entitlement to the benefits under the CBA as part of his backwages. 17

Judgment of the CA

Not satisfied, UCCI assailed the resolution issued on June 29, 2010 by the NLRC on certiorari.

On August 23, 2011, the CA upheld the NLRC, agreeing with the latter's observation that UCCI had failed to
submit the documents providing the details of the benefits granted to its employees from the time when the
respondent was illegally terminated until his reinstatement on July 1, 2008. It cited Fulache v. ABS-CBN
Broadcasting Corporation18in holding that illegally dismissed employees were also entitled to the CBA benefits. 19

Upon denial of its motion for reconsideration,20 UCCI now appeals by petition for review on certiorari.

We note that during the pendency of the appeal, Isaias A. Valmores, Sr. and Leonarda B. Valmores, the
parents of the respondent, prayed for their substitution herein in view of the respondent's intervening demise. 21

Issues

UCCI submits that:

THE COMPUTATION FOR THE PAYMENT OF BACKWAGES SHOULD CONFORM TO ESTABLISHED

JURISPRUDENCE WHICH PROVIDES THAT THE BASE FIGURE TO BE USED IN THE COMPUTATION OF
BACKWAGES IS PEGGED AT THE WAGE RATE AT THE TIME OF THE EMPLOYEE'S DISMISSAL
UNQUALIFIED BY DEDUCTIONS, INCREASES AND/OR MODIFICATIONS GRANTED IN THE INTERIM22

Citing BPI Employees' Union-Metro Manila v. Bank of the Philippine Islands,23 UCCI posits that in determining
the respondent's backwages the prospective increases in wages as well as the benefits provided in the CBA
should be excluded; that, as a consequence, the base figure for computing the respondent's backwages should
be his basic salary prevailing at the time of his dismissal, unqualified by deductions or increases; that the ruling
of the CA and the NLRC to include the CEA-granted benefits was without legal basis and was contrary to
prevailing jurisprudence; and that at any rate the respondent did not establish that he was enjoying such CBA
benefits at the time of his dismissal.

In contrast, the respondent, now represented by his parents, manifests that he would not oppose the
computation of the backwages in accordance with the BPI Employees' Union-Metro Manila ruling, provided
that: (1) the 12% interest per annum imposed from the time when the decision became final until full payment
based on BPI Employees' Union-Metro Manila should be applied herein; and (2) that all CBA benefits being
received by the respondent at the time of his dismissal should be added to his basic salary. He maintains that
UCCI should alone be held liable for the payment of backwages instead of being held jointly liable with UELO.

In riposte, UCCI argues that it could not be solely held liable for the payment of backwages because of the
express ruling of the NLRC on November 29, 2000 (as upheld by the CA and affirmed by this Court) declaring it
and UELO liable for illegal dismissal; and that the respondent cannot belatedly raise the matter during the
period of execution inasmuch as the matter should have been properly raised while the NLRC's decision was
still on appeal.

In fine, the Court shall now determine the following, namely: (1) the correct basis for computing the backwages
of the respondent; (2) the nature of UCCI's liability for payment of full backwages; and (3) the proper interest
rate to be imposed on the judgment award.

48
 Ruling of the Court

We deny the petition for review on certiorari.

I
Backwages include all benefits previously
enjoyed by the illegally dismissed employee

The extent of the backwages to be awarded to an illegally dismissed employee has been set in Article 279 24 of
the Labor Code, viz.:

Article 279. Security of Tenure. - In cases of regular employment, the employer shall not terminate the services
of an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed
from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full
backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the
time his compensation was withheld from him up to the time of his actual reinstatement.

The settled rule is that full backwages shall be pegged at the wage rate at the time of the employee's dismissal,
unqualified by any deductions and increases, thus:

[T]he determination of the salary base for the computation of backwages requires simply an application of
judicial precedents defining the term "backwages." An unqualified award of backwages means that the
employee is paid at the wage rate at the time of his dismissal. Furthermore, the award of salary differentials is
not allowed, the established rule being that upon reinstatement, illegally dismissed employees are to be paid
their backwages without deduction and qualification as to any wage increases or other benefits that may have
been received by their co-workers who were not dismissed or did not go on strike.25

The base figure for the computation of backwages should include not only the basic salary but also the regular
allowances being received, such as the emergency living allowances and the 13th month pay mandated by the
law.26 The purpose for this is to compensate the worker for what he has lost because of his dismissal, and to set
the price or penalty on the employer for illegally dismissing his employee.27

Conformably with the foregoing guidelines, the Labor Arbiter did not err in using ₱11,194.00 as the base figure
because the sum represented the respondent's wage rate at the time of his dismissal on February 22, 1996.
Also, the Labor Arbiter properly included in the computation the respondent's 13th month pay and service
incentive leave.

The respondent insisted before the Labor Arbiter that his CBA-granted benefits should be included, but UCCI
opposed, citing the 2011 ruling in BPI Employees' Union-Metro Manila v. Bank of the Philippine Islands. It
contended that any computation that reflected increases during the period of his dismissal would be incorrect
for want of legal basis and for being contrary to prevailing jurisprudence.

We agree with UCCI.

The base figure to be used in reckoning full backwages is the salary rate of the employee at the time of his
dismissal. The amount does not include the increases or benefits granted during the period of his dismissal
because time stood still for him at the precise moment of his termination, and move forward only upon his
reinstatement. Hence, the respondent should only receive backwages that included the amounts being
received by him at the time of his illegal dismissal but not the benefits granted to his co-employees after his
dismissal.

The Court is also aware of the reality that salary increases and benefits are not automatically given to the
worker, but are given subject to conditions. As such, the respondent's claim for the increases in salary, meal
subsidy, safety incentive pay, SOFA, financial grant and medical assistance for the period from 1997 until
2007, and one-time CBA increase, should be excluded from his backwages.

CBA allowances and benefits that the respondent was regularly receiving before his illegal dismissal on
February 22, 1996 should be added to the base figure of ₱11, 194.00. This is because Article 279 of the Labor
Code decrees that the backwages shall be "inclusive of allowances, and to his other benefits or their monetary
equivalent." Considering that the law does not distinguish between the benefits granted by the employer and
those granted under the CBA, he should not be denied the latter benefits.

Nonetheless, the respondent still had to prove his entitlement to the benefits by submitting proof of his having
received the same at the time of his illegal dismissal. In BPI Employees' Union-Metro Manila, the claim for CBA
benefits such as the signing bonus, medical and doctor's allowance, and dental allowance was denied because
the employee was unable to prove that he was receiving such benefits at the time of the illegal dismissal. To do
so, therefore, the respondent must have submitted before the Labor Arbiter sufficient evidence establishing his
receiving meal subsidy, SOFA, financial grant, medical assistance, built-in overtime and night shift differential,

49
rice subsidy, uniform allowance, Christmas package, vacation and sick leave at the time he was dismissed.
Yet, the respondent was unable to discharge his burden because the relevant documents, including the CBA,
had been in UCCI's exclusive possession and custody. Unfortunately, the Labor Arbiter did not rule on his
motion to compel the production of the documents by subpoena duces tecum because, as the NLRC put it:28

The Labor Arbiter did not recognize the CBA benefits which complainant alleged should have been included in
the computation because the complainant failed to prove the same. On 2 June 2008, the complainant filed a
motion xxxx for computation of backwages and issuance of subpoena to the personnel manager/payroll officer
or any employee of respondent employer-company to bring documents as well as the Collective Bargaining
Agreement in force related to the latest salary/benefits of a Senior Utilities Operator and to testify thereon. This
motion was not resolved by the Labor Arbiter. xxxx On 1 July 2008, respondent [UCCI] in its personnel action
form xxx admitted complainant's re-instatement salary to be ₱26,614.00 per month. The difference or disparity
between the amount of ₱l1,194.00 allegedly complainant's salary at the time of his dismissal on 26 February
2006 and ₱26,614.00 salary of complainant for the month of July 2008 should have prompted the Labor Arbiter
to dig deeper into the allegations of complainant that he is entitled to other benefits under the CBA, the same to
form part of the full backwages awarded to him.

The observations of the CA on this are adopted with approval, to wit:

In the case at bench, it is undisputed that private respondent was a regular employee of petitioner UCCI and a
member of UELO. A perusal of the records also shows that his expulsion from the union was deemed
1âw phi1

unjustified. This was the finding of the Former Sixth Division of this Court in its Decision dated January 18,
2002. Had private respondent not been unlawfully ousted from the union and unjustly terminated from work, he
would have been entitled to the benefits being regularly received by the employees of petitioner UCCI who are
members of the bargaining unit. As aptly noted by the NLRC, petitioner UCCI failed to submit the documents
providing the details of benefits granted to its employees from the time of private respondent's dismissal on
February 22, 1996 up to the date of his reinstatement. The presumption that evidence willfully suppressed
would be adverse if produced thus applies. Consequently, We sustain the NLRC's ruling that private
respondent's full backwages should be re-computed in order to include the benefits regularly given to petitioner
UCCI's employees under the CBA.29

We consider as patent error on the part of the Labor Arbiter to declare that the respondent had not proved his
entitlement to the CBA benefits. Accordingly, the remand to enable the proper determination of the CBA
benefits that the respondent had been receiving as of February 22, 2006 is proper and necessary.

II
UCCI is solely liable for
the payment of backwages

The respondent submits that UCCI, as the employer, was solely liable for the payment of backwages. UCCI
counters that the NLRC's decision promulgated on November 29, 2000, which the Court already affirmed,
declared both UCCI and the UELO as liable for the backwages to the respondent; and insists that because the
NLRC's decision had already become final and executory, no modifications thereof can be allowed without
violating the rule on immutability of a final decision.

UCCI is mistaken.

The November 29, 2000 decision of the NLRC faulted the UCCI for dismissing the respondent without cause
and for non-observance of procedural due process. The body of the decision explained how the UELO had
wrongly expelled him from its membership, but such explanation was made only to highlight how the UCCI had
not conducted its own investigation of the circumstances behind his expulsion in order to determine for itself
whether or not the union security clause was applicable. Although the NLRC did not include in the body of its
decision anything to the effect that UELO should be liable for the respondent's expulsion, it nonetheless
decreed:

WHEREFORE, premises considered, the appeal is GRANTED. The Decision appealed from is SET ASIDE and
a new one entered finding respondents liable for illegal dismissal and ordering them to reinstate complainant to
his former position without loss of seniority rights and with full backwages from the date of dismissal on 22
February 1996 to the date of actual reinstatement.

SO ORDERED.30

There is thus a conflict between the body of the decision and the dispositive portion or the fallo. As a rule,
the fallo controls in such a situation on the theory that the fallo is the final order, while the opinion stated in the
body is a mere statement ordering nothing.31 However, where the inevitable conclusion from the body of the
decision is so clear as to show that there was a mistake in the dispositive portion, the body of the decision
should prevail.32Indeed, the rationality of the decision should justify the fallo. To say otherwise is to tolerate a
farce. We have no doubt at all that the exception fully applies herein.

50
Verily, the petitioner, as the employer effecting the unlawful dismissal, was solely liable for the backwages of
the respondent, its employee. In General Milling Corporation v. Casio,33 we explained the liability of the
employer in case of the unlawful termination pursuant to the union security provision of the CBA, viz.:

x x x x Despite a closed shop provision in the CBA and the expulsion of Casio, et al. from IBP-Local 31, law
and jurisprudence imposes upon GMC the obligation to accord Casio, et al. substantive and procedural due
process before complying with the demand of IBP-Local 31 to dismiss the expelled union members from
service. The failure of GMC to carry out this obligation makes it liable for illegal dismissal of Casio, et al.

In Malayang Samahan ng mga Manggagawa sa M. Greenfield, the Court held that notwithstanding the fact that
the dismissal was at the instance of the federation and that the federation undertook to hold the company free
from any liability resulting from the dismissal of several employees, the company may still be held liable if it was
remiss in its duty to accord the would-be dismissed employees their right to be heard on the matter.

III
The interest rate to be imposed on
the judgment award

The position of the respondent that the interest rate to be imposed on the monetary award should be fixed at l
2% per annum reckoned from the finality of the decision of the NLRC until full payment is warranted and
upheld. Pursuant to Article 2209 of the Civil Code,34 interest at the legal rate should be imposed on the
monetary awards in favor of the respondent because UCCI incurred a delay in discharging its legal obligations
to pay him full backwages. In BPI Employees Union-Metro Manila,35 the Court, conformably with Eastern
Shipping Lines, Inc. v. Court of Appeals,36 imposed interest of 12% per annum on the monetary award in favor
of the employee from the finality of the decision until full satisfaction "for the delay caused." Considering that
the decision of the NLRC in favor of the respondent became final and executory on November 17,
2003, Eastern Shipping Lines, Inc. was the prevailing rule on the legal rate of interest.

WHEREFORE, the Court GRANTS the Motion for Substitution filed by the Heirs of Victoriano B. Valmores,
and, accordingly, AUTHORIZES the substitution of the respondent by his parents Spouses Isaias A. Valmores,
Sr. and Leonarda B. Valmores; DENIES the petition for review on certiorari for its lack of merit;
and AFFIRMS the decision promulgated on August 23, 2011 by the Court of Appeals, subject to the
following MODIFICATIONS, namely:

(a) REMANDING the case to the Labor Arbiter for the recomputation of respondent Victoriano B. Valmores' full
backwages using the base figure of ₱l1,194.00 plus the other benefits and allowances granted under the
Collective Bargaining Agreement being regularly received by him as of February 22, 1996, and

(b) DECLARING petitioner United Coconut Chemicals, Inc. solely liable to pay the respondent's full backwages
plus legal interest of 12% per annum of the total monetary awards computed from finality of the illegal dismissal
case on November 17, 2003 until their full satisfaction.

Costs of suit to be paid by the petitioner.

SO ORDERED.

ii. Not due when dismissal is for just cause 
 1. Bravo vs. Urios College (Now Father Saturnino Urios
University), G.R. No. 198066, June 7, 2017



June 7, 2017

G.R. No. 198066

YOLANDO T. BRAVO, Petitioner

vs.
URIOS COLLEGE (NOW FATHER SATURNINO URI OS UNIVERSITY) and/or FR. JOHN CHRISTIAN U.
YOUNG,, Respondents

DECISION

LEONEN, J.:

The employer must adduce proof of actual involvement in the alleged misconduct for loss of trust and
confidence to warrant the dismissal of fiduciary rank-and-file employees. However, "mere existence of a basis

51
for believing that [the] employee has breached the trust [and confidence] of [the] employer" is sufficient for
managerial employees.1

Through this Petition for Review,2 Yolando T. Bravo (Bravo) challenges the Decision3 dated January 31, 2011
and Resolution4 dated July 14, 2011 of the Court of Appeals in CA-G.R. SP No. 02407-MIN. The Court of
Appeals reinstated the Executive Labor Arbiter's decision, which upheld petitioner's dismissal from service. 5

Bravo was employed as a part-time teacher6 in 1988 by Urios College, now called Father Satumino Urios
lJniversity.7 In addition to his duties as a part-time teacher, Bravo was designated as the school's comptroller
from June 1, 2002 to May 31, 2002.8

Urios College organized a committee to formulate a new "ranking system for non-academic employees for
school year 2001-2002." The committee was composed of the Vice-President for Academic Affairs, Dr. Aldefa
Yumo; the Human Resources Department Head, Atty. Josefe C. Sorrera-Ty; and the Vice-President for
Administration, Dr. Wilma Balmocena. "[U]nder [the proposed ranking] system, the position of Comptroller was
classified as an office [h]ead while the position of VicePresident for Finance was classified as [m]iddle
[m]anagement."9

The proposed ranking system for school year 2001-2002 was presented to Bravo for comments. 10 Bravo
recommended that "the position of Comptroller should be classified as a middle management position [because
it was] ... informally merged with . . . the position of [V]ice[ P]resident for [F]inance." 11 In addition, the
Comptroller and the VicePresident for Finance performed similar functions, which included follow up of payroll
preparation, verification of daily cash vouchers, and certification of checks issued by the school. Moreover, they
were responsible for the control of checkbooks issuance to the Cashier, preparation of departmental budget
guidelines, supervision of reports and payments to various government agencies, and analysis and
interpretation of financial statements. 12Bravo further suggested that since he assumed the duties of Comptroller
and Vice-President for Finance, his salary scale should be upgraded. 13

The committee allegedly agreed with Bravo and accepted his recommendations. 14
Bravo was then directed to
arrange a salary adjustment schedule for the new ranking system. 15

Later, Bravo obtained his employee ranking slip which showed his evaluation score and the change of his rank
"from office head to middle manager-level IV."16 The change, however, was merely superimposed. The
employee ranking slip bore the signatures of the Human Resources Department Head, the Vice-President for
Administration, and the President ofUrios College.17

The implementation of the new ranking system for non-academic employees and administrators for school year
2001-2002 and the corresponding schedule of salary adjustments were reflected on the October 15, 2001
payroll. This was opposed by several individuals within the school.18

Urios College formed another committee to adopt a new ranking system for school year 2002-2003. After
deliberation, the committee decided to maintain the ranking system used in the previous school year for school
year 2002-2003. In the employee's ranking profile report, the position of Comptroller was classified as middle
management. 19

Meanwhile, Urios College decided to undertake a structural reorganization.20 During this period, Bravo occupied
the Comptroller position in a "hold-over" capacity until May 31, 2003. He was reappointed to the same position,
which expired on May 31, 2004. Bravo was then designated as a full-time teacher21 in the college department
for school year 2004-2005.22

In October 2004, Urios College organized a committee to review the ranking system implemented during
school year 2001-2002.23 In its report, the committee found that the ranking system for school year 2001-2002
caused salary distortions among several employees. 24 There were also discrepancies in the salary adjustments
of Bravo and of two (2) other employees, namely, Nena A. Turgo and Cherry I. Tabada.25 The committee
discovered that "the Comptroller's Office solely prepared and implemented the [s]alary [a]djustment [s]chedule"
without prior approval from the Human Resources Department. 26

The committee recommended, among others, that Bravo be administratively charged for serious misconduct or
willful breach of trust under Article 28227 of the Labor Code.28 Bravo allegedly misclassified several positions and
miscomputed his and other employees' salaries.29

On March 16, 2005, Bravo received a show cause memo requiring him to explain in writing why his services
should not be terminated for his alleged acts of serious misconduct:

The committee noted a discrepancy in the Schedule of Salary Adjustments, the implementation of which was
entirely based on the computation that was then the responsibility of your office (Comptroller). For this reason,
you are advised to explain or show cause why your employment with Urios College will not be terminated for

52
Serious Misconduct due to intentional misclassification/miscomputation of your salary and some employees
named hereunder, thereby causing prejudice not only to the school but also to said employees as well.

1. As Comptroller then, you belong to Office Heads classification. However, in the Schedule of Salary
Adjustment, you are misclassified as Middle Manager, that resulted to overpayment in your salary by
PhP 3,651.76 per month since June 2001.

Also, having passed the comprehensive exam and oral defense for your master's degree, your salary
adjustment based on your educational qualification ought to be is (sic) PhP 800.00 only. However,
what is reflected in the Schedule of Salary Adjustment is PhP 1,000.00, which amount is appropriately
given to Master's Degree holders. Considering that you have not even finished the degree up to the
present, such circumstance resulted to overpayment in your salary by PhP 200.00 per month since
June 2001.

This means that you have been receiving a monthly salary more than what is due to you. The
overpayment therefore of PhP 3,851.76 per month (PhP 3,651.76 plus PhP 200.00) from June 2001
up to February 2005 presently amounts to PhP 185,131.34.

2. As Community Extension Service Officer then, Mrs. Nena A. Turgo belongs to Office Heads
classification. However, in the Schedule of Salary Adjustment, she was misclassified as Office Staff,
which resulted to underpayment by PhP 2,888.99 on her monthly salary. From June 2001 to February
2005 the underpayment is in the total amount of PhP 140,356.76.

3. Ms. Cherry I. Tabada only passed the comprehensive examination for Master of Arts in Educational
Management in Urios College. This entitled her [to] PhP 500.00 adjustment in salary due to
Educational Qualification (E.Q.). However, what is reflected in the Schedule of Salary Adjustment is
PhP 1,000.00, which resulted to overpayment in salary by PhP 500.00 from June 2001 to March 2003,
or in the total amount of PhP 11,000.00.

The foregoing actuations would necessarily affect your character as a teacher in the Commerce Program, and
as an employee of the school, whose honesty and integrity ought to be beyond reproach to serve as role model
for the students in this institution.

We are therefore requesting for your written explanation relative to these matters within three (3) days from
receipt of this memorandum. Documentary evidence, if there be any, [may be] attached to the written
explanation. You may avail the aid of a legal counsel.

Your failure to submit your written explanation as requested will be construed as a waiver on your part, as a
consequence of which the school may take such appropriate action on the bases of the available records in
connection with the matters made subject of this memorandum. For your compliance.30

A committee was organized to investigate the matter. 31 Hearings were conducted on April 5, 2005, April 9,
2005, and once in May 2005, after which the parties submitted their respective position papers.32 In his Position
Paper, Bravo alleged that he did not prepare the ranking system for school year 2001-2002. It was the ranking
committee which categorized the position of Comptroller as middle management. 33

The committee found that Bravo floated the idea of his salary adjustment, which Urios College never formally
approved.34 The committee also discovered an irregularity in the implementation of the ranking system for
school year 2001-2002.35 Flordeliz V. Rosero (Rosero) of the Human Resources Department attested that
Bravo failed to follow the school's protocol in computing employees' salaries. 36

According to Rosero, the Human Resources Department would prepare a summary table for each department
containing the names of employees, their respective ranks, and the points they earned from their regular
evaluation.37 The accomplished summary tables were forwarded to the Comptroller's Office, which would then
designate each employee's salary based on a salary scale.38 When the ranking system for school year 2001-
2002 was implemented, the Comptroller's Office prepared its own summary table,39 which did not indicate each
employee's rank or bear the signature of the Human Resources Department Head.40

Bravo was found guilty of serious misconduct for which he was ordered to return the sum of ₱ 179,319.16,
representing overpayment of his monthly salary.41 He received a copy of the investigation committee's decision
on July 15, 2005.42

On July 25, 2005, Urios College notified Bravo of its decision to terminate his services43 for serious misconduct
and loss of trust and confidence.44 Upon receipt of the termination letter, Bravo immediately filed before
Executive Labor Arbiter Benjamin E. Pelaez (Executive Labor Arbiter Pelaez) a complaint for illegal dismissal
with a prayer for the payment of separation pay, damages, and attorney's fees. 45

53
In the Decision46 dated December 27, 2005, Executive Labor Arbiter Pelaez dismissed the complaint for lack of
merit.47 Bravo's act of"assigning to himself an excessive and unauthorized salary rate while working as a
[C]omptroller" constituted serious misconduct and willful breach of trust and confidence for which he may be
dismissed.48

Bravo appealed the Decision of Executive Labor Arbiter Pelaez. 49 In the Resolution50 dated January 31, 2007,
the National Labor Relations Commission found that Bravo's dismissal from service was illegal. There was no
clear showing that Bravo violated any school policy.51 Moreover, Bravo received the increased salary in good
faith.52 The National Labor Relations Commission also found that Urios College "failed to afford [Bravo] the
opportunity to be heard and to defend himself with the assistance of counsel."53 Urios College was ordered to
pay Bravo separation pay instead of reinstating him to his former position due to strained relations. Full
backwages and attorney's fees were likewise awarded.54

Urios College assailed National Labor Relations Commission's Resolution dated January 31, 2007 through a
petition for certiorari before the Court of Appeals.55

In the Decision dated January 31, 2011, the Court of Appeals reversed the National Labor Relations
Commission's Resolution and reinstated the decision of Executive Labor Arbiter Pelaez.56

The Court of Appeals ruled that Urios College had substantial basis to dismiss Bravo from service on the
ground of serious misconduct and loss of trust and confidence. 57 Bravo occupied a highly sensitive position as
the school's Comptroller. "[I]n the course of his duties, [he] granted himself additional salaries" without proper
authorization.58Rank-and-file employees may only be dismissed from service for loss of trust and confidence if
the employer presents proof that the employee participated in the alleged misconduct. However, for managerial
employees, it is sufficient that the employer has reasonable ground to believe that the employee is responsible
for the alleged misconduct. 59

Bravo moved for reconsideration but his motion was denied in the Resolution60 dated July 14, 2011.

Bravo filed a Petition for Review61 before this Court on August 31, 2011 to which respondent filed a Comment
on January 6, 2012.62 In the Resolution dated January 30, 2013, this Court gave due course to the Petition and
required the parties to submit their respective memoranda.63

Petitioner asserts that he acted in good faith. He insists that key school officials, including the Human
Resources Department Head,64 classified the position of Comptroller as middle management. 65 Thus, he cannot
be held accountable for the change in the rank of Comptroller from that of office head to middle management. 66

Petitioner argues that suggesting an upgrade in his rank and salary cannot be considered serious
misconduct. 67 He claims that he did not transgress any established rule or policy as "he was duly authorized ...
to receive the benefits of a middle[-]management employee."68 Petitioner further argues that a dismissal based
on loss of trust and confidence must rest on an actual breach of duty.69 It may not be invoked by an employer
without any factual basis. 70

Petitioner adds that he was not given ample opportunity to be heard and defend himself. 71 Respondent refused
to furnish petitioner the minutes of the investigation proceedings and copies of official documents, all of which
respondent had in its custody. 72 Moreover, petitioner was not given the opportunity to comment on the
selection of the members of the investigating committee. 73

On the other hand, respondent asserts that there was substantial evidence to dismiss petitioner on the ground
of serious misconduct and loss of trust and confidence under the Labor Code. 74 Petitioner failed to follow
regular protocol with respect to the computation of his and other employees' salaries.75 Respondent
emphasizes that petitioner occupies a highly sensitive position. Hence, his integrity should be beyond
reproach. 76 Proof beyond reasonable doubt is not required in termination cases based on loss of trust and
confidence 77 as long as there is reasonable ground to believe that the employee committed an act of
dishonesty.78

Respondent contends that petitioner's right to procedural due process was not violated.79 Petitioner was present
during the hearings and was even given copies of the documents presented against him. Moreover, respondent
required petitioner to submit his position paper after the investigation. 80

The case presents the following issues for this Court's resolution:

First, whether petitioner's employment was terminated for a just cause;81

Second, whether petitioner was deprived of procedural due process;82 and

Finally, whether petitioner is entitled to the payment of separation pay, backwages, and attorney's fees. 83

54
Petitioner's dismissal from employment was valid.

Under Article 297 of the Labor Code, an employer may terminate the services of an employee for the following
just causes:

Article 297. [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.-

To warrant termination of employment under Article 297(a) of the Labor Code, the misconduct must be serious
or "of such grave and aggravated character."84 Trivial and unimportant acts are not contemplated under Article
297(a) of the Labor Code.85

In addition, the misconduct must "relate to the performance of the employee's duties" that would render the
employee "unfit to continue working for the employer."86 Gambling during office hours,87 sexual intercourse
within company premises, 88 sexual harassment, 89 sleeping while on duty,90 and contracting work in competition
with the business of one's employer91 are among those considered as serious misconduct for which an
employee's services may be terminated.

Recently, this Court has emphasized that the rank-and-file employee's act must have been "performed with
wrongful intent" to warrant dismissal based on serious misconduct. 92 Dismissal is deemed too harsh a penalty
to be imposed on employees who are not induced by any perverse or wrongful motive despite having
committed some form of misconduct.

Hence, in Moreno v. San Sebastian College-Recoletos, 93 this Court deemed the penalty of dismissal as
disproportionate to the committed offense94 because the employee was neither induced by nor motivated by a
perverse or wrongful intent in violating the school's policy on external teaching engagements. 95

The same line of reasoning was applied in Universal Robina Sugar Milling Corp. v. Albay96 wherein union
members assisted the implementation of a writ of execution issued in their favor without proper authority. This
Court found that the union members did not act "with intent to gain or with wrongful intent." Instead, they were
impelled by their desire to collect the balance of their unpaid benefits, which the Department of Labor and
Employment awarded to them. 97

Thus, to warrant the dismissal from service of a rank-and-file employee under Article 297(a) of the Labor Code,
the misconduct (1) must be serious, (2) should "relate to the performance of the employee's duties," (3) should
render the employee "unfit to continue working for the employer," and (4) should "have been performed with
wrongful intent."98

There is no evidence that the position of Comptroller was officially reclassified as middle management by
respondent. Petitioner's employment ranking slip, if at all, only constituted proof of petitioner's evaluation score.
It hardly represented the formal act of respondent in reclassifying the position of Comptroller. Hence, petitioner
could not summarily assign to himself a higher salary rate without rendering himself unfit to continue working
for respondent.

However, it appears that petitioner was neither induced nor motivated by any wrongful intent. He believed in
good faith that respondent had accepted and approved his recommendations on the proposed ranking scale for
school year 2001-2002.

Nevertheless, due to the nature of his occupation, petitioner's employment may be terminated for willful breach
of trust under Article 297(c), not Article 297(a), of the Labor Code.

55
A dismissal based on willful breach of trust or loss of trust and confidence under Article 297 of the Labor Code
entails the concurrence of two (2) conditions.

First, the employee whose services are to be terminated must occupy a position of trust and confidence. 99

There are two (2) types of positions in which trust and confidence are reposed by the employer, namely,
managerial employees and fiduciary rank-and-file employees. 100 Managerial employees are considered to
occupy positions of trust and confidence because they are "entrusted with confidential and delicate
matters." 101 On the other hand, fiduciary rank-and-file employees refer to those employees, who, "in the normal
and routine exercise of their functions, regularly handle significant amounts of [the employer's] money or
property." 102 Examples of fiduciary rank-and-file employees are "cashiers, auditors, property
custodians,"103 selling tellers, 104 and sales managers. 105 It must be emphasized, however, that the nature and
scope of work and not the job title or designation determine whether an employee holds a position of trust and
confidence. 106

The second condition that must be satisfied is the presence of some basis for the loss of trust and confidence.
This means that "the employer must establish the existence of an act justifying the loss of trust and
confidence."107Otherwise, employees will be left at the mercy of their employers.108

Different rules apply in determining whether loss of trust and confidence may validly be used as a justification in
termination cases. Managerial employees are treated differently than fiduciary rank-and-file
1âwphi 1

employees.109 In Caoile v. National Labor Relations Commission: 110

[W]ith respect to rank-and-file personnel, loss of trust and confidence as ground for valid dismissal requires
proof of involvement in the alleged events in question, and that mere uncorroborated assertions and
accusations by the employer will not be sufficient. But, as regards a managerial employee, mere existence of a
basis for believing that such employee has breached the trust of his employer would suffice for his dismissal.
Hence, in the case of managerial employees, proof beyond reasonable doubt is not required, it being sufficient
that there is some basis for such loss of confidence, such as when the employer has reasonable ground to
believe that the employee concerned is responsible for the purported misconduct, and the nature of his
participation therein renders him unworthy of the trust and confidence demanded by his position. 111 (Citations
omitted)

Although a less stringent degree of proof is required in termination cases involving managerial employees,
employers may not invoke the ground of loss of trust and confidence arbitrarily. 112 The prerogative of employers
in dismissing a managerial employee "must be exercised without abuse of discretion." 113

Set against these parameters, this Court holds that petitioner was validly dismissed based on loss of trust and
confidence. Petitioner was not an ordinary rank-and-file employee. His position of responsibility on delicate
financial matters entailed a substantial amount of trust from respondent. The entire payroll account depended
on the accuracy of the classifications made by the Comptroller. It was reasonable for the employer to trust that
he had basis for his computations especially with respect to his own compensation. The preparation of the
payroll is a sensitive matter requiring attention to detail. Not only does the payroll involve the company's
finances, it also affects the welfare of all other employees who rely on their monthly salaries.

Petitioner's act in assigning to himself a higher salary rate without proper authorization is a clear breach of the
trust and confidence reposed in him. In addition, there was no reason for the Comptroller's Office to undertake
the preparation of its own summary table because this was a function that exclusively pertained to the Human
Resources Department. Petitioner offered no explanation about the Comptroller's Office's deviation from
company procedure and the discrepancies in the computation of other employees' salaries.114 Petitioner's
position made him accountable in ensuring that the Comptroller's Office observed the company's established
procedures. It was reasonable that he should be held liable by respondent on the basis of command
responsibility. 115

II

In termination based on just causes, the employer must comply with procedural due process by furnishing the
employee a written notice containing the specific grounds or causes for dismissal. 116 The notice must also direct
the employee to submit his or her written explanation within a reasonable period from the receipt of the
notice. 117Afterwards, the employer must give the employee ample opportunity to be heard and defend himself
or herself. A hearing, however, is not a condition sine qua non.118

A formal hearing only becomes mandatory in termination cases when so required under company rules or
when the employee requests for it. 119

Previously, a formal hearing was considered as an indispensable component of procedural due process in
dismissal cases. 120 However, in Perez v. Philippine Telegraph and Telephone Co., this Court clarified: 121

56
The test for the fair procedure guaranteed under Article 277 (b) [now, Article 292(b)] cannot be whether there
has been a formal pretermination confrontation between the employer and the employee. The "ample
opportunity to be heard" standard is neither synonymous nor similar to a formal hearing. To confine the
employee's right to be heard to a solitary form narrows down that right. It deprives him of other equally effective
forms of adducing evidence in his defense. Certainly, such an exclusivist and absolutist interpretation is overly
restrictive. The "very nature of due process negates any concept of inflexible procedures universally applicable
to every imaginable situation. "

Significantly, Section 2 (d), Rule I of the Implementing Rules of Book VI of the Labor Code itself provides that
the so-called standards of due process outlined therein shall be observed "substantially", not strictly. This is a
recognition that while a formal hearing or conference is ideal, it is not an absolute, mandatory or exclusive
avenue of due process.

An employee's right to be heard in termination cases under Article 277 (b) as implemented by Section 2 (d),
Rule I of the Implementing Rules of Book VI of the Labor Code should be interpreted in broad strokes. It is
satisfied not only by a formal face to face confrontation but by any meaningful opportunity to controvert the
charges against him and to submit evidence in support thereof .

... "To be heard" does not mean verbal argumentation alone inasmuch as one may be heard just as effectively
through written explanations, submissions or pleadings. Therefore, while the phrase "ample opportunity to be
heard" may in fact include an actual hearing, it is not limited to a formal hearing only. In other words, the
existence of an actual, formal "trial-type" hearing, although preferred, is not absolutely necessary to satisfy the
employee's right to be heard. 122 (Emphasis in the original, citations omitted)

Any meaningful opportunity for the employee to present evidence and address the charges against him or her
satisfies the requirement of ample opportunity to be heard.123

Finally, the employer must serve a notice informing the employee of his or her dismissal from employment.

In this case, respondent complied with all the requirements of procedural due process in terminating petitioner's
employment. Respondent furnished petitioner a show cause memo stating the specific grounds for dismissal.
The show cause memo also required petitioner to answer the charges by submitting a written
explanation.124Respondent even informed petitioner that he may avail the services of counsel. Respondent then
conducted a thorough investigation. Three (3) hearings were conducted on separate occasions. 125 The findings
of the investigation committee were then sent to petitioner.126 Lastly, petitioner was given a notice of
termination 127containing respondent’s final decision.

Ordinarily, employees play no part in selecting the members of the investigating committee. That petitioner was
not given the chance to comment on the selection of the members of the investigating committee does not
mean that he was deprived of due process. In addition, there is no evidence indicating that the investigating
committee was biased against petitioner. Hence, there is no merit in petitioner's claim that he was deprived of
due process.

Under Article 294 of the Labor Code, 128 the reliefs of an illegally dismissed employee are reinstatement and
full backwages. "Backwages is a form of relief that restores the income that was lost by reason of [the
employee's] dismissal" from employment.129 It is "computed from the time that [the employee's] compensation
was withheld ... [until] his [or her] actual reinstatement."130 However, when reinstatement is no longer feasible,
separation pay is awarded.131

Considering that there was a just cause for terminating petitioner from employment, there is no basis to award
him separation pay and backwages. There are also no factual and legal bases to award attorney's fees to
petitioner.

WHEREFORE, the Petition for Review is DENIED. The Court of Appeals' Decision dated January 31, 2011 in
CA-G.R. SP No. 02407-MIN is AFFIRMED.

SO ORDERED.

n. Resignation 
 i. Defense of resignation by employer 
 1. Grande vs. Philippine Nautical Training

College, G.R. No. 213137, March 1, 2017 


March 1, 2017

G.R. No. 213137

57
FLORDALIZA LLANES GRANDE, Petitioner
vs
PHILIPPINE NAUTICAL TRAINING COLLEGE, Respondent

DECISION

PERALTA, J.:

Before us is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Court which seeks to annul and
set aside the Amended Decision2 dated November 7, 2013 and the Resolution dated June 25, 2014 of the
Court of Appeals (CA) in CA-G.R. SP No. 125444. The CA reversed on reconsideration its Decision3 dated
March 27, 2013 affirming the Decision4 of the National Labor Relations Commission (NLRC), Sixth Division, in
NLRC Case No. LAC 08-002290-11 and the Decision5 of the Labor Arbiter which held that petitioner did not
voluntarily resign but was illegally dismissed by respondent.

The factual antecedents are as follows:

Respondent Philippine Nautical Training College, or PNTC, is a private entity engaged in the business of
providing maritime training and education.6 In 1988, respondent employed petitioner as Instructor for medical
courses like Elementary First Aid and Medical Emergency.7 In April 1998, she became the Course Director of
the Safety Department.8 Respondent was then principally engaged in providing maritime training for seafarers.9

In 2002, petitioner was appointed Course Director for the Training Department of respondent school. In
November 2007, she resigned as she had to pursue graduate studies and carry on her plan to immigrate to
Canada.10

In May 2009, petitioner was invited by respondent to resume teaching since it intended to offer BS Nursing and
other courses for maritime training. In July 2009, petitioner was, again, employed by respondent as Director for
Research and Course Department. As such, she was responsible for the development, revisions and execution
of training programs.11

In September 2010, petitioner was given the additional post of Assistant Vice-President (VP) for Training
Department. For the two positions she was holding, petitioner was given a salary of Thirty Thousand Pesos
(₱30,000.00) and an allowance in the amount of Twenty Thousand Pesos (₱20,000.00).12

In February 2011, several employees of respondent's Registration Department, including the VP for Training
Department were placed under preventive suspension in view of the anomalies in the enlistment of students. 13

On March 1, 2011, the VP for Corporate Affairs, Frederick Pios (Pios), called petitioner for a meeting. Pios
relayed to petitioner the message of PNTC's President, Atty. Hernani Fabia, for her to tender her resignation
from the school in view of the discovery of anomalies in the Registration Department that reportedly involved
her. Pios assured petitioner of absolution from the alleged anomalies if she would resign.14

Petitioner then prepared a resignation letter, signed it and filed it with the Office of the PNTC President. The
respondent accomplished for her the necessary exit clearance.15 The resignation letter16 of petitioner reads:

Atty. Hemani Fabia

President
Philippine Nautical Training Institute

Sir,

This is to officially file my resignation effective March 2, 2011 as Director for Research and Course
Development/ AVP.

Thank you.

(Sgd) Flordaliza L. Grande

In the evening of the same date, petitioner, accompanied by counsel, filed a police blotter for a complaint for
unjust vexation against Pios.17 The police blotter reads in full:

"One (1) Flordaliza Grande y Llanes, 36yo, M, (sic) Asst. Vice Pres. For Training and Dir. For Research and
Dev't came here in our office to lodge her [complaint] against Frederick G. Pios Vice Pres. Corporate Affairs.

NOC: UNJUST VEXATION

58
 xxxx

Facts of the case:

On or about cited DTPO complainant was called by Ms. Luchi Banaag for meeting by Mr. Frederick G. Pios
(suspect) at the office. Mr. Pios was telling her that there were some unfounded anomalies discovered and
being attributed to her; complainant was shocked upon hearing the same. With this, he forced the complainant
to file resignation from employment, and in return made her [assurance] to absolve from the said unfounded
anomalies, complainant considering that she was being accused of unfounded anomalies, she was
force (sic) to succumb to the order and execute her resignation letter immediately, and Mr. Pios (suspect)
uttered that he was following orders from the President of PNTC Colleges, Hemani Fabia-President, as
narrated by complainant."18

The next day, March 2, 2011, petitioner accompanied by counsel, filed a complaint for illegal dismissal 19 with
prayer for reinstatement with full backwages, money claims, damages, and attorney's fees against
respondent.20

In her position paper, petitioner alleged that she was forced to resign from her employment. On the other hand,
respondent claimed that petitioner voluntarily resigned to evade the pending administrative charge against
her.21

On July 29, 2011, Labor Arbiter (LA) Arthur L. Amansec rendered a Decision, the dispositive portion of which
states:

WHEREFORE, judgment is hereby made finding the complainant's claim of forced resignation established by
substantial evidence. Concomitantly, her resignation of March 1, 2011 is hereby declared null and void, and by
way of restoring the status quo, the respondent school is ordered to reinstate her to her former or substantially
equivalent position without loss of seniority rights but without backwages. In case the complainant does not
want to be reinstated, she may, upon her option, accept, in lieu of reinstatement, a separation pay amounting to
₱75,000.00 (her half month salary of ₱25,000.00 multiplied by three (3) years of service), plus ten percent
(10%) thereof as attorney's fees.

Other claims are dismissed for lack of merit.

SO ORDERED.22

Thereafter, respondent elevated the case before the NLRC, Sixth Division. On February 29, 2012, the NLRC
affirmed the Decision of the LA.

A motion for reconsideration was filed by respondent, but the same was denied by the NLRC on May 31,
2012.23

Aggrieved, respondent filed a petition for certiorari before the CA. In a Decision dated March 27, 2013, the CA
affirmed the Decision of the NLRC. Thefallo states:

WHEREFORE, the petition is DISMISSED. In view of the foregoing premises, the assailed Decision dated
February 29, 2012 and Resolution dated May 31, 2012 of the National Labor Relations Commission in NLRC
LAC No. 08-002290-11, are AFFIRMED with the

MODIFICATION that Flordaliza L. Grande is GRANTED payment of backwages, computed from the time she
was illegally dismissed on March 1, 2011 up to the time she is actually reinstated to her former or substantially
equivalent position, and attorney's fees equivalent to 10% of the total monetary award.

SO ORDERED.24

A motion for reconsideration was filed by the respondent which was granted by the CA on November 7, 2013
and reversed its Decision dated March 27, 2013. The decretal portion of the Amended Decision states:

WHEREFORE, the motion for reconsideration is GRANTED. The Court Decision dated March 27, 2013 is
RECONSIDERED AND SET ASIDE. Accordingly, the complaint of respondent Flordaliza L. Grande is
DISMISSED.

SO ORDERED.25

Hence, this petition, raising the following errors:

59
x x x The Court of Appeals seriously erred in issuing CONFLICTING DECISIONS (Decision dated 27 March
2013 and Amended Decision dated 7 November 2013) composed by the same set of Division Members
although the Motion for Reconsideration filed by the private respondent did not present new arguments and/or
facts (rather merely reiterating the arguments in the Petition for Certiorari) warranting a re-examination and re-
evaluation of its earlier Decision.

II

x x x The Court of Appeals seriously erred in considering the Petition for Certiorari filed by the private
respondents despite the absence of any grave abuse of discretion on the part of the Labor Arbiter a quo and
NLRC, Sixth Division.26

In the petition, petitioner averred that respondent did not present any new argument in its motion for
reconsideration before the CA as to warrant the reversal of the Decision of the CA dated March 27, 2013. She
stressed that she had no real intention of leaving her employment. She was really surprised and shocked when
she was forced to resign despite having "wholeheartedly" served the school for years. Her resignation letter
which she described as "simply worded" signified her involuntariness in the execution of the document. It was
the "undue influence and pressure" exerted upon her by respondent that compelled her to submit the
resignation letter. That was the reason why she immediately filed the case for illegal dismissal the day after she
tendered her resignation letter. Also, petitioner attached in her petition the Special Cash Audit Report dated
March 11, 201127 which was the result of the audit conducted on the PNTC upon its request. The report shows
that it is the VP for Training/Registrar who was made to account for the irregularity in the collection reports.

In the Comment28 of respondent to the petition, it maintained that petitioner voluntarily resigned from
employment. As her resignation was voluntary, she was not dismissed from her employment. According to
respondent, the acts of petitioner - the resignation, the blotter with the police, the continued processing of
clearance the day after the resignation and the filing of the illegal dismissal case - showed that she used
"calculated reasoning to protect herself from possible charges that PNTC may file against her." Respondent
added that, notwithstanding the absence of liability of petitioner in the Special Cash Audit Report, it filed
criminal complaints against petitioner.

In the Comment29 of petitioner to Respondent's Motion to Admit Rejoinder with Rejoinder, she countered that
the two complaints filed against her before the Prosecutor's Office by respondent were both dismissed. She
reiterated that she had been consistent in all her pleadings that her clearance was processed on the very day
that she tendered her resignation letter, and did not extend the day after, since she was then with the NLRC for
the filing of the instant complaint.

We grant the petition.

It is well settled that in labor cases, the factual findings of the NLRC are accorded respect and even finality by
this Court when they coincide with those of the LA and are supported by substantial evidence. 30

In the same vein, factual findings of the CA are generally not subject to this Court's review under Rule 45.
However, the general rule on the conclusiveness of the factual findings of the CA is also subject to well-
recognized exceptions such as where the CA's findings of facts contradict those of the lower court, or the
administrative bodies, as in this case. All these considered, we are compelled to make a further calibration of
the evidence at hand.31

Respondent claimed that petitioner voluntarily resigned from employment. For the resignation of an employee
to be a viable defense in an action for illegal dismissal, an employer must prove that the resignation was
voluntary, and its evidence thereon must be clear, positive and convincing. The employer cannot rely on the
weakness of the employee's evidence.32

Quite notable in the instant case is the fact that respondent was silent as to the alleged meeting with petitioner
on March 1, 2011. As in fact, as found by the LA and the NLRC, "neither Pios nor Fabia came forth through an
Affidavit to deny" the meeting.33 All that respondent could say is that on March 1, 2011, petitioner "suddenly and
without reason tendered her resignation". And that, respondent then became suspicious of the "abruptness" of
the resignation, such that, it conducted an investigation and discovered that petitioner was the one who signed
the Enrollment Report, submitted to the Maritime Training Council, which contained names of students who
were not officially enrolled with the school.34

From the aforesaid statement of respondent, it can be deduced that on March 1, 2011, when petitioner
"suddenly" resigned, there was no discovery yet as to the alleged anomaly involving petitioner. This is quite
contrary to the statements of respondent in its Comment to the petition, thus:

12.7. The action of Grande was premeditated. There was no threat employed upon her. Prior to her
resignation, PNTC found out that there were discrepancies in the enrollment reports signed by Grande and the
system database of PNTC as to the list of enrollees. Likewise, there were enrollment reports signed by
GRANDE stating that her husband, Nelson Grande, was the assigned professor to a particular course when the

60
latter was, actually, abroad. When confronted with these discrepancies, GRANDE resigned from work and even
filed a complaint for unjust vexation apparently to avoid any legal suit to be filed by PNTC against her and to
cover up for her misdeeds and that of her husband. x x x.35

There was, therefore, an admission by respondent that a confrontation occurred before petitioner "suddenly"
tendered her resignation. And that, it was not true that respondent became "suspicious" of the "abruptness" in
the resignation which prompted the respondent to conduct an investigation.

Also, quite interesting is the statement of respondent that it was in February 2011 when it discovered that there
were questionable transactions involving registration of enrollees, and that respondent found that aside from
the employees in the Registration Department, there were also high-ranking officers who were probably
involved in the anomalous transaction. And according to respondent, they then discreetly started an
investigation on the possible involvement of the officers.36 If these were true, why did respondent immediately
granted clearance to petitioner in a day, if there was then an ongoing investigation on the involvement of high-
ranking officers. We should not disregard the fact that petitioner is the Assistant Vice-President for the Training
Department.

We do not, therefore, believe the statement of respondent in its comment to the petition that it had no reason to
deny clearance to petitioner because the investigation was still ongoing, thus:

12.4. The clearance obtained by GRANDE is of no moment. At the time GRANDE resigned and obtained her
clearance, the investigation as to those who are liable for the anomalous activities was still ongoing. x x x 37

As observed by the NLRC, if petitioner was being investigated for an administrative charge, why was she
cleared from liabilities. The more logical thing to do is to hold her clearance until all the liabilities have been
settled. The haste by which she was cleared by all departments would reveal that respondent really wanted
petitioner to go. And it was even admitted by respondent that petitioner still had accountabilities in terms of
borrowed books.38 Why was then petitioner cleared? The logical answer is respondent really wanted petitioner
to go.

Hence, We echo the ruling of the CA in its Decision dated March 27, 2013:

x x x. Not a scintilla of evidence was adduced to convinced the labor tribunal that respondent was not illegally
terminated. While petitioner argued that the excerpt on the conversation which transpired between respondent
1âw phi1

and Pios is untrue, this however, was not effectively refuted. The failure of Pios or Fabia to submit an affidavit
to disprove that a conversation had actually taken place is fatal, for the burden to prove the fact of resignation
lies with the employer.

xxxx

It is also worthy to note that after respondent tendered her resignation, petitioner immediately approved her
clearance form. This is totally incompatible with petitioner's claim that respondent was one of the high-ranking
officials who may have participated in the anomalies at school. The more logical and acceptable approach
would have been to hold respondent's clearance until she has settled her accountability with the company. 39

Resignation is the voluntary act of an employee who is in a situation where one believes that personal. reasons
cannot be sacrificed in favor of the exigency of the service, and has no other choice but to dissociate from
employment. Resignation is a formal pronouncement or relinquishment of an office, and must be made with the
intention of relinquishing the office accompanied by the act of relinquishment. A resignation must be
unconditional and with the intent to operate as such.40

In voluntary resignation, the employee is compelled by personal reason(s) to disassociate himself from
employment. It is done with the intention of relinquishing an office, accompanied by the act of abandonment. To
determine whether the employee indeed intended to relinquish such employment, the act of the employee
before and after the alleged resignation must be considered.41

We concur with the findings of the NLRC that the acts of petitioner before and after she tendered her
resignation would show that undue force was exerted upon petitioner: (1) the resignation letter of petitioner was
terse and curt, giving the impression that it was hurriedly and grudgingly written; (2) she was in the thick of
preparation for an upcoming visit and inspection from the Maritime Training Council; it was also around that
time that she had just requested for the acquisition of textbooks and teaching aids, a fact which is incongruent
with her sudden resignation from work;42 (3) in the evening, she filed an incident report/police blotter before the
Intramuros Police Station; and (4) the following day she filed a complaint for illegal dismissal.

In order to withstand the test of validity, resignations must be made voluntarily and with the intention of
relinquishing the office, coupled with an act of relinquishment. Therefore, in order to determine whether the
employees truly intended to resign from their respective posts, we must take into consideration the totality of
circumstances in each particular case.43

61
We emphasize that petitioner filed her complaint against the respondent in the NLRC the day after she
tendered her resignation. Indeed, voluntary resignation is difficult to reconcile with the filing of a complaint for
illegal dismissal. The filing of the complaint belies respondent's claim that petitioner voluntarily resigned. As
held by this Court in Valdez v. NLRC44 which was reiterated in the case of Fungo v. Lourdes School of
Mandaluyong:45

x x x It would have been illogical for herein petitioner to resign and then file a complaint for illegal dismissal.
Resignation is inconsistent with the filing of the said complaint. 46

Petitioner's intention to leave the school, as well as her act of relinquishment, is not present in the instant case.
On the contrary, she vigorously pursued her complaint against respondent. It is a clear manifestation that she
had no intention of relinquishing her employment.47 The element of voluntariness in petitioner's resignation is,
therefore, missing.48

By vigorously pursuing the litigation of her action against respondent, petitioner clearly manifested that she has
no intention of relinquishing her employment, which act is wholly incompatible to respondent's assertion that
she voluntarily resigned.49

In termination cases, burden of proof rests upon the employer to show that the dismissal is for a just and valid
cause, and failure to do so would necessarily mean that the dismissal was illegal. In Mobile Protective &
Detective Agency v. Ompad,50 We ruled that should the employer interpose the defense of resignation, it is
incumbent upon the employer to prove that the employee voluntarily resigned.51 On this point, respondent failed
to discharge the burden.

In its Amended Decision, the CA did not believe that a conversation took place between petitioner and Pios, the
excerpt of which is hereunder reproduced:

"Pios: Flor, do you have any idea on why I need to talk to you now? Actually, yung mga nangyayaring gayon,
medyo nainvolve ka eh. Grande: Ako, may involvement sa nangyayari? Well, direct me to the point.

Pios: I was talked by [sic ]Atty. Fabia and gave me instructions to talk to you and ask you to resign.

Grande: For what reasons?

Pios: Ok, sabihin ko na sa yo, it came to our knowledge that you went to the office of Ricky Ty and asked for a
legal advice on what was [sic] happened to Nita.

Grande: Haah! What di totoo yan!

Pios: Well unang nakarating sa amin na balita, and you are even asking Ricky Ty for an employment.

Grande: That's a big lie. Actually red, kilala mo ba ako talaga? Why do I need to seek legal assistance to [sic]
other people eh samantalang I have a sister and a nephew who are lawyers? That is not fair. Halatang ploy mo
ito sa akin para idawit mo ako sa nangyayari kay Mam Nitz!

Pios: Well, madami pa kasing lumutang na resulta sa investigation. Like this one (showing an Enrollment List
Form). Is this your signature?

Grande: 0. why?

Pios: Kais [sic] it was noticed that your husband's name was declared here as Instructor for Basic Safety
Course. Eh nag check kami ng records sa accounting, the inclusive dates declared eh on board mister mo.

Grande: Hala, buti pa kayo alam nyo ung schedule ng mister ko. Hindi mo kasi alam kung pano ang reporting
nyan. Ang ginagawang registration they have to out [sic] a name on that Instructor and Assessor portion ung
name ng taong declared officially sa maritime Training Council. Eh wala na sila na malagay na pangalan ng
qualified and accredited instructor, that is why nilagay pangalan nya. Hay naku, lahat ng training center ganyan
gawa and dating ginagawang PNTI yan due to lack of qualified Instructor. Kung tutuusin nga eh, dapat
binayaran nyo pa si Nelson kasi ginagamit ninyo pangalan nya kahit di nya alam. Actually, we did a favor for
the company, kulang kayo sa Qualified Instructor eh, so kami na gagawa ng paraan para may ma-declare na
Instructor.

Pios: Yeah, we have checked on accounting, di naman sya nabayaran sa ganyan period. Saka I understand
what you are trying to say, na iintindihan ko ang prose so.

Grande: Kaya nga Red eh, ang dami nyong accusations sa akin and yet, wala kayang [sic] mapakitang
evidence.

62
Pios: Saka why did you sign?

Grande: Ha? Syempre, wala si Mam Nitz. Saka nag forge ba ako ng pirma ni Mam Nitz? Di ba nakalagay dyan
for? Saka ako ang next in line na pipirma pag wala sya. Kelangan ngi-submit ang form sa MTC.

Pios: Another thing Flor, dib a [sic] may na send sa yong text si Nita regarding sa text ni Leah Fabia, na she is
not putting her weight around para mapaalis ka dito. Kaso di nya talaga gusto na nandito ka.

Grande: Well, that's not my problem anymore, kayo ang kumontak sa akin then all of a sudden ganyan nyo
ako. Tell me honestly, influence ni Leah Fabia itong usapan natin noh?

Pios: No, it was Atty. Fabia who wants it.

Grande: You don't know what you are talking about. It's not fair to me to get this kind of treatment.

Pios: Kaya nga Flor eh, there is no point of staying. Mabait pa nga ako say o [sic] eh, coz I believe in you, kaya
lang Flor, utos ng Management eh. Alam mo naman na okay naman tayo, maski ako, di ko gusto itong sinasabi
ko say o [sic], kaso I have to obey. I just want to carry out the order.52

However, the CA relied on the said conversation excerpt to show that no threat or force was exerted by
respondent on petitioner for her to resign from employment, thus:

It is unfathomable how respondent could actually recount every word that was said by her and Pios. To be able
to quote such a detailed conversation that was not even recorded or transcribed is absurd, to say the least. As
memory is, most often than not, fleeting and momentary, evidentiary weight cannot as easily be accorded to it.

xxxx

Again, even assuming that the quoted conversation actually took place, no indication of threat or force can be
adduced from the language used by Pios. He did not even warn respondent that she will be terminated if she
refused to resign. Quite telling, the conversation between Pios and respondent may well be regarded as a
discussion on the irregularities that took place in the company rather than a confrontation to force respondent
to resign. There was no clear act of discrimination, insensibility or disdain on the part of Pios so as to force
respondent to resign and sever her employment from the company. x x x.

Respondent's eventual act of resigning and thereafter causing the matter to be recorded in the police blotter
are appreciated as a well thought-out plan carried out in order to preempt the investigation conducted by
petitioner. In fact, right after she tendered her resignation, respondent wasted no time in obtaining a clearance
from the different offices of petitioner which left the latter with no sufficient time to verify if she had a hand in the
illegal schemes.53

We are not persuaded by the reasoning of the CA. While indeed there was no employment of force from the
language used by Pios, We are convinced that there was the presence of undue influence exerted on petitioner
for her to leave her employment. The conversation showed that respondent wanted to terminate petitioner's
employment but would want it to appear that she voluntarily resigned. Undue influence is defined under Article
1337 of the Civil Code, thus:

Art. 1337. There is undue influence when a person takes improper advantage of his power over the will of
another, depriving the latter of a reasonable freedom of choice. The following circumstances shall be
considered: the confidential, family, spiritual, and other relations between the parties, or the fact that the person
alleged to have been unduly influenced was suffering from mental weakness, or was ignorant or in financial
distress.54

As correctly observed by the LA, petitioner's resignation immediately tendered after the conversation is not
voluntary. With an order coming from the President of PNTC, no less, undue influence and pressure was
exerted upon petitioner.

Petitioner declared in her petition that she "felt lambasted" when she was told about the order of PNTC
President for her to resign considering her exemplary performance in the school. She narrated that when she
returned to the school in July 2009 as Director for Research and Course Department, the offered courses of the
school rose from 29 to 48 courses. As in fact in 2010, she was offered the position of Assistant Vice-President
for Training Department.55 These statements of petitioner were not disputed by respondent in its comment to
the petition.

Indeed, it is very unlikely that petitioner who was in the thick of preparation for an upcoming visit and inspection
from the Maritime Training Council and who had just requested for the acquisition of textbooks and teaching
aids, and had just submitted a Master Plan to the corporate officers would simply resign voluntarily. She was in

63
the process of compiling the necessary documents and library holdings for submission to the Maritime Training
Council. Clearly, her consent was vitiated.56

It must be noted that she was not among those preventively suspended in February 2011, which include the
Vice-President for Training, in view of the ongoing investigation in the Registration Department. We, therefore,
believe that petitioner felt the undue pressure exerted on her to resign from employment despite her
"exemplary performance" and having served the school for years. We agree with petitioner that she was then
without "proper discernment" when she prepared the one-liner resignation letter.

Also, as a sign that respondent really wanted petitioner to go is the fact that the former immediately issued the
latter her clearance showing the signatures from different departments of the school.57 If petitioner was being
investigated for an administrative charge, why was she cleared from liabilities.

In administrative proceedings, the quantum of proof required is substantial evidence, which is more than a
mere scintilla of evidence, but such amount of relevant evidence which a reasonable mind might accept as
adequate to justify a conclusion. The Court of Appeals may review the factual findings of the NLRC and reverse
its ruling if it finds that the decision of the NLRC lacks substantial basis.58

In the case at bar, petitioner's letter of resignation and the circumstances antecedent and contemporaneous to
the filing of the complaint for illegal dismissal are substantial proof of petitioner's involuntary
resignation. Taken together, the above circumstances are substantial proof that petitioner's resignation was
1âwphi1

voluntary.

Factual findings of labor officials who are deemed to have acquired expertise in matters within their respective
jurisdictions are generally accorded not only respect, but even finality, and are binding on the Us. Verily, their
conclusions are accorded great weight upon appeal, especially when supported by substantial evidence.
Consequently, We are not duty-bound to delve into the accuracy of their factual findings, in the absence of a
clear showing that the same were arbitrary and bereft of any rational basis.59 Accordingly, the finding of illegal
dismissal by both the LA and the NLRC, as affirmed by the CA in its Decision dated March 27, 2013, must be
upheld.

We reiterate that it is axiomatic in labor law that the employer who interposes the defense of voluntary
resignation of the employee in an illegal dismissal case must prove by clear, positive and convincing evidence
that the resignation was voluntary; and that the employer cannot rely on the weakness of the defense of the
employee. The requirement rests on the need to resolve any doubt in favor of the working man.60
1âwphi1

Furthermore, in an illegal dismissal case, the onus probandi rests on the employer to prove that the dismissal
of an employee is for a valid cause. Having based its defense on resignation, it is incumbent upon respondent,
as employer, to prove that petitioner voluntarily resigned. From the totality of circumstances and the evidence
on record, it is clear that respondent failed to discharge its burden. We have held that if the evidence presented
by the employer and the employee are in equipoise, the scales of justice must be tilted in favor of the latter.61

Under Article 279 of the Labor Code, an employee unjustly dismissed from work is entitled to reinstatement and
backwages, among others. Reinstatement restores the employee who was unjustly dismissed to the position
from which he was removed, that is, to his status quo ante dismissal, while the grant of backwages allows the
same employee to recover from the employer that which he had lost by way of wages as a result of his
dismissal. These twin remedies - reinstatement and payment of backwages - make the dismissed employee
whole who can then look forward to continued employment. Thus, do these two remedies give meaning and
substance to the constitutional right of labor to security of tenure.62 Petitioner is, therefore, entitled to
reinstatement with full backwages.

WHEREFORE, the Petition for Review on Certiorari is hereby GRANTED. The assailed Amended Decision
dated November 7, 2013 and Resolution dated June 25, 2014 of the Court of Appeals in CA-G.R. SP No.
125444, respectively, are hereby SET ASIDE. The Decision dated February 29, 2012 and Resolution dated
May 31, 2012 of the National Labor Relations Commission in NLRC Case No. LAC 08-002290-11
are AFFIRMED with MODIFICATION that Flordaliza L. Grande is GRANTED payment of backwages,
computed from the time she was illegally dismissed on March 1, 2011 up to the time she is actually reinstated
to her former or substantially equivalent position, and attorney's fees equivalent to 10% of the total monetary
award. Legal interest shall be computed at the rate of six percent (6%) per annum of the total monetary award
from date of finality of this Decision until full satisfaction

SO ORDERED.

64
 ii. Clear and convincing evidence 
 1. Grande vs. Philippine Nautical Training College, G.R. No. 213137,
March 1, 2017 


March 1, 2017

G.R. No. 213137

FLORDALIZA LLANES GRANDE, Petitioner

vs
PHILIPPINE NAUTICAL TRAINING COLLEGE, Respondent

DECISION

PERALTA, J.:

Before us is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Court which seeks to annul and
set aside the Amended Decision2 dated November 7, 2013 and the Resolution dated June 25, 2014 of the
Court of Appeals (CA) in CA-G.R. SP No. 125444. The CA reversed on reconsideration its Decision3 dated
March 27, 2013 affirming the Decision4 of the National Labor Relations Commission (NLRC), Sixth Division, in
NLRC Case No. LAC 08-002290-11 and the Decision5 of the Labor Arbiter which held that petitioner did not
voluntarily resign but was illegally dismissed by respondent.

The factual antecedents are as follows:

Respondent Philippine Nautical Training College, or PNTC, is a private entity engaged in the business of
providing maritime training and education.6 In 1988, respondent employed petitioner as Instructor for medical
courses like Elementary First Aid and Medical Emergency.7 In April 1998, she became the Course Director of
the Safety Department.8 Respondent was then principally engaged in providing maritime training for seafarers.9

In 2002, petitioner was appointed Course Director for the Training Department of respondent school. In
November 2007, she resigned as she had to pursue graduate studies and carry on her plan to immigrate to
Canada.10

In May 2009, petitioner was invited by respondent to resume teaching since it intended to offer BS Nursing and
other courses for maritime training. In July 2009, petitioner was, again, employed by respondent as Director for
Research and Course Department. As such, she was responsible for the development, revisions and execution
of training programs.11

In September 2010, petitioner was given the additional post of Assistant Vice-President (VP) for Training
Department. For the two positions she was holding, petitioner was given a salary of Thirty Thousand Pesos
(₱30,000.00) and an allowance in the amount of Twenty Thousand Pesos (₱20,000.00).12

In February 2011, several employees of respondent's Registration Department, including the VP for Training
Department were placed under preventive suspension in view of the anomalies in the enlistment of students. 13

On March 1, 2011, the VP for Corporate Affairs, Frederick Pios (Pios), called petitioner for a meeting. Pios
relayed to petitioner the message of PNTC's President, Atty. Hernani Fabia, for her to tender her resignation
from the school in view of the discovery of anomalies in the Registration Department that reportedly involved
her. Pios assured petitioner of absolution from the alleged anomalies if she would resign.14

Petitioner then prepared a resignation letter, signed it and filed it with the Office of the PNTC President. The
respondent accomplished for her the necessary exit clearance.15 The resignation letter16 of petitioner reads:

Atty. Hemani Fabia

President
Philippine Nautical Training Institute

65
Sir,

This is to officially file my resignation effective March 2, 2011 as Director for Research and Course
Development/ AVP.

Thank you.

(Sgd) Flordaliza L. Grande

In the evening of the same date, petitioner, accompanied by counsel, filed a police blotter for a complaint for
unjust vexation against Pios.17 The police blotter reads in full:

"One (1) Flordaliza Grande y Llanes, 36yo, M, (sic) Asst. Vice Pres. For Training and Dir. For Research and
Dev't came here in our office to lodge her [complaint] against Frederick G. Pios Vice Pres. Corporate Affairs.

NOC: UNJUST VEXATION

xxxx

Facts of the case:

On or about cited DTPO complainant was called by Ms. Luchi Banaag for meeting by Mr. Frederick G. Pios
(suspect) at the office. Mr. Pios was telling her that there were some unfounded anomalies discovered and
being attributed to her; complainant was shocked upon hearing the same. With this, he forced the complainant
to file resignation from employment, and in return made her [assurance] to absolve from the said unfounded
anomalies, complainant considering that she was being accused of unfounded anomalies, she was
force (sic) to succumb to the order and execute her resignation letter immediately, and Mr. Pios (suspect)
uttered that he was following orders from the President of PNTC Colleges, Hemani Fabia-President, as
narrated by complainant."18

The next day, March 2, 2011, petitioner accompanied by counsel, filed a complaint for illegal dismissal 19 with
prayer for reinstatement with full backwages, money claims, damages, and attorney's fees against
respondent.20

In her position paper, petitioner alleged that she was forced to resign from her employment. On the other hand,
respondent claimed that petitioner voluntarily resigned to evade the pending administrative charge against
her.21

On July 29, 2011, Labor Arbiter (LA) Arthur L. Amansec rendered a Decision, the dispositive portion of which
states:

WHEREFORE, judgment is hereby made finding the complainant's claim of forced resignation established by
substantial evidence. Concomitantly, her resignation of March 1, 2011 is hereby declared null and void, and by
way of restoring the status quo, the respondent school is ordered to reinstate her to her former or substantially
equivalent position without loss of seniority rights but without backwages. In case the complainant does not
want to be reinstated, she may, upon her option, accept, in lieu of reinstatement, a separation pay amounting to
₱75,000.00 (her half month salary of ₱25,000.00 multiplied by three (3) years of service), plus ten percent
(10%) thereof as attorney's fees.

Other claims are dismissed for lack of merit.

SO ORDERED.22

Thereafter, respondent elevated the case before the NLRC, Sixth Division. On February 29, 2012, the NLRC
affirmed the Decision of the LA.

A motion for reconsideration was filed by respondent, but the same was denied by the NLRC on May 31,
2012.23

Aggrieved, respondent filed a petition for certiorari before the CA. In a Decision dated March 27, 2013, the CA
affirmed the Decision of the NLRC. Thefallo states:

WHEREFORE, the petition is DISMISSED. In view of the foregoing premises, the assailed Decision dated
February 29, 2012 and Resolution dated May 31, 2012 of the National Labor Relations Commission in NLRC
LAC No. 08-002290-11, are AFFIRMED with the

66
MODIFICATION that Flordaliza L. Grande is GRANTED payment of backwages, computed from the time she
was illegally dismissed on March 1, 2011 up to the time she is actually reinstated to her former or substantially
equivalent position, and attorney's fees equivalent to 10% of the total monetary award.

SO ORDERED.24

A motion for reconsideration was filed by the respondent which was granted by the CA on November 7, 2013
and reversed its Decision dated March 27, 2013. The decretal portion of the Amended Decision states:

WHEREFORE, the motion for reconsideration is GRANTED. The Court Decision dated March 27, 2013 is
RECONSIDERED AND SET ASIDE. Accordingly, the complaint of respondent Flordaliza L. Grande is
DISMISSED.

SO ORDERED.25

Hence, this petition, raising the following errors:

x x x The Court of Appeals seriously erred in issuing CONFLICTING DECISIONS (Decision dated 27 March
2013 and Amended Decision dated 7 November 2013) composed by the same set of Division Members
although the Motion for Reconsideration filed by the private respondent did not present new arguments and/or
facts (rather merely reiterating the arguments in the Petition for Certiorari) warranting a re-examination and re-
evaluation of its earlier Decision.

II

x x x The Court of Appeals seriously erred in considering the Petition for Certiorari filed by the private
respondents despite the absence of any grave abuse of discretion on the part of the Labor Arbiter a quo and
NLRC, Sixth Division.26

In the petition, petitioner averred that respondent did not present any new argument in its motion for
reconsideration before the CA as to warrant the reversal of the Decision of the CA dated March 27, 2013. She
stressed that she had no real intention of leaving her employment. She was really surprised and shocked when
she was forced to resign despite having "wholeheartedly" served the school for years. Her resignation letter
which she described as "simply worded" signified her involuntariness in the execution of the document. It was
the "undue influence and pressure" exerted upon her by respondent that compelled her to submit the
resignation letter. That was the reason why she immediately filed the case for illegal dismissal the day after she
tendered her resignation letter. Also, petitioner attached in her petition the Special Cash Audit Report dated
March 11, 201127 which was the result of the audit conducted on the PNTC upon its request. The report shows
that it is the VP for Training/Registrar who was made to account for the irregularity in the collection reports.

In the Comment28 of respondent to the petition, it maintained that petitioner voluntarily resigned from
employment. As her resignation was voluntary, she was not dismissed from her employment. According to
respondent, the acts of petitioner - the resignation, the blotter with the police, the continued processing of
clearance the day after the resignation and the filing of the illegal dismissal case - showed that she used
"calculated reasoning to protect herself from possible charges that PNTC may file against her." Respondent
added that, notwithstanding the absence of liability of petitioner in the Special Cash Audit Report, it filed
criminal complaints against petitioner.

In the Comment29 of petitioner to Respondent's Motion to Admit Rejoinder with Rejoinder, she countered that
the two complaints filed against her before the Prosecutor's Office by respondent were both dismissed. She
reiterated that she had been consistent in all her pleadings that her clearance was processed on the very day
that she tendered her resignation letter, and did not extend the day after, since she was then with the NLRC for
the filing of the instant complaint.

We grant the petition.

It is well settled that in labor cases, the factual findings of the NLRC are accorded respect and even finality by
this Court when they coincide with those of the LA and are supported by substantial evidence. 30

In the same vein, factual findings of the CA are generally not subject to this Court's review under Rule 45.
However, the general rule on the conclusiveness of the factual findings of the CA is also subject to well-
recognized exceptions such as where the CA's findings of facts contradict those of the lower court, or the
administrative bodies, as in this case. All these considered, we are compelled to make a further calibration of
the evidence at hand.31

67
Respondent claimed that petitioner voluntarily resigned from employment. For the resignation of an employee
to be a viable defense in an action for illegal dismissal, an employer must prove that the resignation was
voluntary, and its evidence thereon must be clear, positive and convincing. The employer cannot rely on the
weakness of the employee's evidence.32

Quite notable in the instant case is the fact that respondent was silent as to the alleged meeting with petitioner
on March 1, 2011. As in fact, as found by the LA and the NLRC, "neither Pios nor Fabia came forth through an
Affidavit to deny" the meeting.33 All that respondent could say is that on March 1, 2011, petitioner "suddenly and
without reason tendered her resignation". And that, respondent then became suspicious of the "abruptness" of
the resignation, such that, it conducted an investigation and discovered that petitioner was the one who signed
the Enrollment Report, submitted to the Maritime Training Council, which contained names of students who
were not officially enrolled with the school.34

From the aforesaid statement of respondent, it can be deduced that on March 1, 2011, when petitioner
"suddenly" resigned, there was no discovery yet as to the alleged anomaly involving petitioner. This is quite
contrary to the statements of respondent in its Comment to the petition, thus:

12.7. The action of Grande was premeditated. There was no threat employed upon her. Prior to her
resignation, PNTC found out that there were discrepancies in the enrollment reports signed by Grande and the
system database of PNTC as to the list of enrollees. Likewise, there were enrollment reports signed by
GRANDE stating that her husband, Nelson Grande, was the assigned professor to a particular course when the
latter was, actually, abroad. When confronted with these discrepancies, GRANDE resigned from work and even
filed a complaint for unjust vexation apparently to avoid any legal suit to be filed by PNTC against her and to
cover up for her misdeeds and that of her husband. x x x.35

There was, therefore, an admission by respondent that a confrontation occurred before petitioner "suddenly"
tendered her resignation. And that, it was not true that respondent became "suspicious" of the "abruptness" in
the resignation which prompted the respondent to conduct an investigation.

Also, quite interesting is the statement of respondent that it was in February 2011 when it discovered that there
were questionable transactions involving registration of enrollees, and that respondent found that aside from
the employees in the Registration Department, there were also high-ranking officers who were probably
involved in the anomalous transaction. And according to respondent, they then discreetly started an
investigation on the possible involvement of the officers.36 If these were true, why did respondent immediately
granted clearance to petitioner in a day, if there was then an ongoing investigation on the involvement of high-
ranking officers. We should not disregard the fact that petitioner is the Assistant Vice-President for the Training
Department.

We do not, therefore, believe the statement of respondent in its comment to the petition that it had no reason to
deny clearance to petitioner because the investigation was still ongoing, thus:

12.4. The clearance obtained by GRANDE is of no moment. At the time GRANDE resigned and obtained her
clearance, the investigation as to those who are liable for the anomalous activities was still ongoing. x x x 37

As observed by the NLRC, if petitioner was being investigated for an administrative charge, why was she
cleared from liabilities. The more logical thing to do is to hold her clearance until all the liabilities have been
settled. The haste by which she was cleared by all departments would reveal that respondent really wanted
petitioner to go. And it was even admitted by respondent that petitioner still had accountabilities in terms of
borrowed books.38 Why was then petitioner cleared? The logical answer is respondent really wanted petitioner
to go.

Hence, We echo the ruling of the CA in its Decision dated March 27, 2013:

x x x. Not a scintilla of evidence was adduced to convinced the labor tribunal that respondent was not illegally
terminated. While petitioner argued that the excerpt on the conversation which transpired between respondent
1âw phi1

and Pios is untrue, this however, was not effectively refuted. The failure of Pios or Fabia to submit an affidavit
to disprove that a conversation had actually taken place is fatal, for the burden to prove the fact of resignation
lies with the employer.

xxxx

It is also worthy to note that after respondent tendered her resignation, petitioner immediately approved her
clearance form. This is totally incompatible with petitioner's claim that respondent was one of the high-ranking
officials who may have participated in the anomalies at school. The more logical and acceptable approach
would have been to hold respondent's clearance until she has settled her accountability with the company. 39

Resignation is the voluntary act of an employee who is in a situation where one believes that personal. reasons
cannot be sacrificed in favor of the exigency of the service, and has no other choice but to dissociate from

68
employment. Resignation is a formal pronouncement or relinquishment of an office, and must be made with the
intention of relinquishing the office accompanied by the act of relinquishment. A resignation must be
unconditional and with the intent to operate as such.40

In voluntary resignation, the employee is compelled by personal reason(s) to disassociate himself from
employment. It is done with the intention of relinquishing an office, accompanied by the act of abandonment. To
determine whether the employee indeed intended to relinquish such employment, the act of the employee
before and after the alleged resignation must be considered.41

We concur with the findings of the NLRC that the acts of petitioner before and after she tendered her
resignation would show that undue force was exerted upon petitioner: (1) the resignation letter of petitioner was
terse and curt, giving the impression that it was hurriedly and grudgingly written; (2) she was in the thick of
preparation for an upcoming visit and inspection from the Maritime Training Council; it was also around that
time that she had just requested for the acquisition of textbooks and teaching aids, a fact which is incongruent
with her sudden resignation from work;42 (3) in the evening, she filed an incident report/police blotter before the
Intramuros Police Station; and (4) the following day she filed a complaint for illegal dismissal.

In order to withstand the test of validity, resignations must be made voluntarily and with the intention of
relinquishing the office, coupled with an act of relinquishment. Therefore, in order to determine whether the
employees truly intended to resign from their respective posts, we must take into consideration the totality of
circumstances in each particular case.43

We emphasize that petitioner filed her complaint against the respondent in the NLRC the day after she
tendered her resignation. Indeed, voluntary resignation is difficult to reconcile with the filing of a complaint for
illegal dismissal. The filing of the complaint belies respondent's claim that petitioner voluntarily resigned. As
held by this Court in Valdez v. NLRC44 which was reiterated in the case of Fungo v. Lourdes School of
Mandaluyong:45

x x x It would have been illogical for herein petitioner to resign and then file a complaint for illegal dismissal.
Resignation is inconsistent with the filing of the said complaint. 46

Petitioner's intention to leave the school, as well as her act of relinquishment, is not present in the instant case.
On the contrary, she vigorously pursued her complaint against respondent. It is a clear manifestation that she
had no intention of relinquishing her employment.47 The element of voluntariness in petitioner's resignation is,
therefore, missing.48

By vigorously pursuing the litigation of her action against respondent, petitioner clearly manifested that she has
no intention of relinquishing her employment, which act is wholly incompatible to respondent's assertion that
she voluntarily resigned.49

In termination cases, burden of proof rests upon the employer to show that the dismissal is for a just and valid
cause, and failure to do so would necessarily mean that the dismissal was illegal. In Mobile Protective &
Detective Agency v. Ompad,50 We ruled that should the employer interpose the defense of resignation, it is
incumbent upon the employer to prove that the employee voluntarily resigned.51 On this point, respondent failed
to discharge the burden.

In its Amended Decision, the CA did not believe that a conversation took place between petitioner and Pios, the
excerpt of which is hereunder reproduced:

"Pios: Flor, do you have any idea on why I need to talk to you now? Actually, yung mga nangyayaring gayon,
medyo nainvolve ka eh. Grande: Ako, may involvement sa nangyayari? Well, direct me to the point.

Pios: I was talked by [sic ]Atty. Fabia and gave me instructions to talk to you and ask you to resign.

Grande: For what reasons?

Pios: Ok, sabihin ko na sa yo, it came to our knowledge that you went to the office of Ricky Ty and asked for a
legal advice on what was [sic] happened to Nita.

Grande: Haah! What di totoo yan!

Pios: Well unang nakarating sa amin na balita, and you are even asking Ricky Ty for an employment.

Grande: That's a big lie. Actually red, kilala mo ba ako talaga? Why do I need to seek legal assistance to [sic]
other people eh samantalang I have a sister and a nephew who are lawyers? That is not fair. Halatang ploy mo
ito sa akin para idawit mo ako sa nangyayari kay Mam Nitz!

69
Pios: Well, madami pa kasing lumutang na resulta sa investigation. Like this one (showing an Enrollment List
Form). Is this your signature?

Grande: 0. why?

Pios: Kais [sic] it was noticed that your husband's name was declared here as Instructor for Basic Safety
Course. Eh nag check kami ng records sa accounting, the inclusive dates declared eh on board mister mo.

Grande: Hala, buti pa kayo alam nyo ung schedule ng mister ko. Hindi mo kasi alam kung pano ang reporting
nyan. Ang ginagawang registration they have to out [sic] a name on that Instructor and Assessor portion ung
name ng taong declared officially sa maritime Training Council. Eh wala na sila na malagay na pangalan ng
qualified and accredited instructor, that is why nilagay pangalan nya. Hay naku, lahat ng training center ganyan
gawa and dating ginagawang PNTI yan due to lack of qualified Instructor. Kung tutuusin nga eh, dapat
binayaran nyo pa si Nelson kasi ginagamit ninyo pangalan nya kahit di nya alam. Actually, we did a favor for
the company, kulang kayo sa Qualified Instructor eh, so kami na gagawa ng paraan para may ma-declare na
Instructor.

Pios: Yeah, we have checked on accounting, di naman sya nabayaran sa ganyan period. Saka I understand
what you are trying to say, na iintindihan ko ang prose so.

Grande: Kaya nga Red eh, ang dami nyong accusations sa akin and yet, wala kayang [sic] mapakitang
evidence.

Pios: Saka why did you sign?

Grande: Ha? Syempre, wala si Mam Nitz. Saka nag forge ba ako ng pirma ni Mam Nitz? Di ba nakalagay dyan
for? Saka ako ang next in line na pipirma pag wala sya. Kelangan ngi-submit ang form sa MTC.

Pios: Another thing Flor, dib a [sic] may na send sa yong text si Nita regarding sa text ni Leah Fabia, na she is
not putting her weight around para mapaalis ka dito. Kaso di nya talaga gusto na nandito ka.

Grande: Well, that's not my problem anymore, kayo ang kumontak sa akin then all of a sudden ganyan nyo
ako. Tell me honestly, influence ni Leah Fabia itong usapan natin noh?

Pios: No, it was Atty. Fabia who wants it.

Grande: You don't know what you are talking about. It's not fair to me to get this kind of treatment.

Pios: Kaya nga Flor eh, there is no point of staying. Mabait pa nga ako say o [sic] eh, coz I believe in you, kaya
lang Flor, utos ng Management eh. Alam mo naman na okay naman tayo, maski ako, di ko gusto itong sinasabi
ko say o [sic], kaso I have to obey. I just want to carry out the order.52

However, the CA relied on the said conversation excerpt to show that no threat or force was exerted by
respondent on petitioner for her to resign from employment, thus:

It is unfathomable how respondent could actually recount every word that was said by her and Pios. To be able
to quote such a detailed conversation that was not even recorded or transcribed is absurd, to say the least. As
memory is, most often than not, fleeting and momentary, evidentiary weight cannot as easily be accorded to it.

xxxx

Again, even assuming that the quoted conversation actually took place, no indication of threat or force can be
adduced from the language used by Pios. He did not even warn respondent that she will be terminated if she
refused to resign. Quite telling, the conversation between Pios and respondent may well be regarded as a
discussion on the irregularities that took place in the company rather than a confrontation to force respondent
to resign. There was no clear act of discrimination, insensibility or disdain on the part of Pios so as to force
respondent to resign and sever her employment from the company. x x x.

Respondent's eventual act of resigning and thereafter causing the matter to be recorded in the police blotter
are appreciated as a well thought-out plan carried out in order to preempt the investigation conducted by
petitioner. In fact, right after she tendered her resignation, respondent wasted no time in obtaining a clearance
from the different offices of petitioner which left the latter with no sufficient time to verify if she had a hand in the
illegal schemes.53

We are not persuaded by the reasoning of the CA. While indeed there was no employment of force from the
language used by Pios, We are convinced that there was the presence of undue influence exerted on petitioner
for her to leave her employment. The conversation showed that respondent wanted to terminate petitioner's

70
employment but would want it to appear that she voluntarily resigned. Undue influence is defined under Article
1337 of the Civil Code, thus:

Art. 1337. There is undue influence when a person takes improper advantage of his power over the will of
another, depriving the latter of a reasonable freedom of choice. The following circumstances shall be
considered: the confidential, family, spiritual, and other relations between the parties, or the fact that the person
alleged to have been unduly influenced was suffering from mental weakness, or was ignorant or in financial
distress.54

As correctly observed by the LA, petitioner's resignation immediately tendered after the conversation is not
voluntary. With an order coming from the President of PNTC, no less, undue influence and pressure was
exerted upon petitioner.

Petitioner declared in her petition that she "felt lambasted" when she was told about the order of PNTC
President for her to resign considering her exemplary performance in the school. She narrated that when she
returned to the school in July 2009 as Director for Research and Course Department, the offered courses of the
school rose from 29 to 48 courses. As in fact in 2010, she was offered the position of Assistant Vice-President
for Training Department.55 These statements of petitioner were not disputed by respondent in its comment to
the petition.

Indeed, it is very unlikely that petitioner who was in the thick of preparation for an upcoming visit and inspection
from the Maritime Training Council and who had just requested for the acquisition of textbooks and teaching
aids, and had just submitted a Master Plan to the corporate officers would simply resign voluntarily. She was in
the process of compiling the necessary documents and library holdings for submission to the Maritime Training
Council. Clearly, her consent was vitiated.56

It must be noted that she was not among those preventively suspended in February 2011, which include the
Vice-President for Training, in view of the ongoing investigation in the Registration Department. We, therefore,
believe that petitioner felt the undue pressure exerted on her to resign from employment despite her
"exemplary performance" and having served the school for years. We agree with petitioner that she was then
without "proper discernment" when she prepared the one-liner resignation letter.

Also, as a sign that respondent really wanted petitioner to go is the fact that the former immediately issued the
latter her clearance showing the signatures from different departments of the school.57 If petitioner was being
investigated for an administrative charge, why was she cleared from liabilities.

In administrative proceedings, the quantum of proof required is substantial evidence, which is more than a
mere scintilla of evidence, but such amount of relevant evidence which a reasonable mind might accept as
adequate to justify a conclusion. The Court of Appeals may review the factual findings of the NLRC and reverse
its ruling if it finds that the decision of the NLRC lacks substantial basis.58

In the case at bar, petitioner's letter of resignation and the circumstances antecedent and contemporaneous to
the filing of the complaint for illegal dismissal are substantial proof of petitioner's involuntary
resignation. Taken together, the above circumstances are substantial proof that petitioner's resignation was
1âwphi1

voluntary.

Factual findings of labor officials who are deemed to have acquired expertise in matters within their respective
jurisdictions are generally accorded not only respect, but even finality, and are binding on the Us. Verily, their
conclusions are accorded great weight upon appeal, especially when supported by substantial evidence.
Consequently, We are not duty-bound to delve into the accuracy of their factual findings, in the absence of a
clear showing that the same were arbitrary and bereft of any rational basis.59 Accordingly, the finding of illegal
dismissal by both the LA and the NLRC, as affirmed by the CA in its Decision dated March 27, 2013, must be
upheld.

We reiterate that it is axiomatic in labor law that the employer who interposes the defense of voluntary
resignation of the employee in an illegal dismissal case must prove by clear, positive and convincing evidence
that the resignation was voluntary; and that the employer cannot rely on the weakness of the defense of the
employee. The requirement rests on the need to resolve any doubt in favor of the working man.60
1âwphi1

Furthermore, in an illegal dismissal case, the onus probandi rests on the employer to prove that the dismissal
of an employee is for a valid cause. Having based its defense on resignation, it is incumbent upon respondent,
as employer, to prove that petitioner voluntarily resigned. From the totality of circumstances and the evidence
on record, it is clear that respondent failed to discharge its burden. We have held that if the evidence presented
by the employer and the employee are in equipoise, the scales of justice must be tilted in favor of the latter.61

Under Article 279 of the Labor Code, an employee unjustly dismissed from work is entitled to reinstatement and
backwages, among others. Reinstatement restores the employee who was unjustly dismissed to the position
from which he was removed, that is, to his status quo ante dismissal, while the grant of backwages allows the
same employee to recover from the employer that which he had lost by way of wages as a result of his

71
dismissal. These twin remedies - reinstatement and payment of backwages - make the dismissed employee
whole who can then look forward to continued employment. Thus, do these two remedies give meaning and
substance to the constitutional right of labor to security of tenure.62 Petitioner is, therefore, entitled to
reinstatement with full backwages.

WHEREFORE, the Petition for Review on Certiorari is hereby GRANTED. The assailed Amended Decision
dated November 7, 2013 and Resolution dated June 25, 2014 of the Court of Appeals in CA-G.R. SP No.
125444, respectively, are hereby SET ASIDE. The Decision dated February 29, 2012 and Resolution dated
May 31, 2012 of the National Labor Relations Commission in NLRC Case No. LAC 08-002290-11
are AFFIRMED with MODIFICATION that Flordaliza L. Grande is GRANTED payment of backwages,
computed from the time she was illegally dismissed on March 1, 2011 up to the time she is actually reinstated
to her former or substantially equivalent position, and attorney's fees equivalent to 10% of the total monetary
award. Legal interest shall be computed at the rate of six percent (6%) per annum of the total monetary award
from date of finality of this Decision until full satisfaction

SO ORDERED.

iii. Forced resignation 
 1. Doble vs. ABB, Inc., G.R. No. 215627, June 5, 2017 


June 5, 2017

G.R. No. 215627

LUIS S. DOBLE, JR., Petitioner

vs.
ABB, INC./NITIN DESAI, Respondents

DECISION

PERALTA, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court, seeking to reverse and set aside
the minute Resolution 1 dated November 29, 2013 and Resolution2 dated November 28, 2014 issued by the
Court of Appeals, and to reinstate with modification the Decision dated November 29, 2012 of the Labor Arbiter
in NLRC-Case No. NCR-03- 04889-12.

Petitioner Luis S. Doble, Jr., a duly licensed engineer, was hired by respondent ABB, Inc. as Junior Design
Engineer on March 29, 1993. During almost nineteen (19) years of his employment with the respondent ABB,
Inc. prior to his disputed termination, Doble rose through the ranks and was promoted as follows:

1. 1994 -Design Engineer

2. 1996 - Sales Engineer of the Network Protection

3. 1999 - Senior Sales Engineer of the Power Technology Utility Automation Business

4. March 2005 - Manager for Sales Sub-Station Automation Business Unit, Power System Division

5. July 2006 - Officer-In-Charge of the Power Technology Utility Business Unit

6. March 2007 - Senior Manager and Head of the Power Technology Utility Automation, Power System Division

7. November 2008 - Local Division Manager, Power System Division

8. March 2010 - Vice-President and Local Division Manager of Power System Division.

As a matter of policy, ABB, Inc. conducts the yearly Performance and Development Appraisal of all its
employees. In all years prior to 2008, Doble was rated with grades three (3) or four (4), which are equivalent to
Strong Performance or Superior Results. In the years 2008, 2009, and 2010, he received a performance rating
of 4 for superior results.

On March 2, 2012, Doble was called by respondent ABB, Inc. Country Manager and President Nitin Desai, and
was informed that his performance rating for 2011 is one (1) which is equivalent to unsatisfactory performance.

72
On March 13, 2012, at about 10:45 a.m., a company Executive Assistant informed Doble that he has a meeting
with ABB, Inc. President Desai and Country Human Resource (HR) Manager Marivic Miranda at 11: 15 a.m. in
the Luzon Conference Room of ABB, Inc.

During the meeting, ABB, Inc. President Desai explained to Doble that the Global and Regional Management
have demanded for a change in leadership due to the extent of losses and level of discontent among the ranks
of the PS Division. Desai then raised the option for Doble to resign as Local Division Manager of the PS
Division. Thereafter, HR Manager Miranda told Doble that he would be paid separation pay equivalent to 75%
of his monthly salary for every year of service, provided he would submit a letter of resignation, and gave him
until 12:45 p.m. within which to decide.

Shocked by the abrupt decision of the management, Doble asked why he should be the one made to resign.
Miranda said that it was the decision of the management, and left him alone in the conference room to decide
whether or not to resign. At this juncture, the parties gave contrasting accounts on the ensuing events which
led to the termination of Doble's employment.

Doble narrated in his Position Paper how he was constructively dismissed and forced to resign:

21. [HR Manager Miranda] came back at about 12:45 o'clock in the afternoon and asked the complainant if he
was able to decide already. Complainant told Mrs. Miranda that he could not decide because he was in a
quandary why he was [the one being] made to resign;

22. Then, Mrs. Miranda said that complainant could be given One Month Separation Pay per year of service
instead of 75% of the monthly salary. Complainant again asked Mrs. Miranda why he was the one being made
to resign. Mrs. Miranda repeated that it was the decision of the management;

23. Complainant told Mrs. Miranda that he was already so hungry, thirsty, weak and tired because of extreme
pressure. So, he asked Mrs. Miranda to allow him to go back to his office and to buy food in the canteen;

24. Mrs. Miranda said that she would be the one to request somebody to buy food for him and that he
(complainant) should just eat in the conference room;

25. However, complainant appealed to Mrs. Miranda to allow him to return to his office where he could eat. She
allowed complainant under [the] condition that he should go back to the conference room at 2:00 o'clock in the
afternoon. Mrs. Miranda instructed complainant not to leave the company premises to take lunch and informed
him that she gave instruction to the security guard of the gate not to allow him to go outside the company;

26. At 2:00 o'clock in the afternoon, complainant returned to the Luzon Conference Room. Mrs. Miranda asked
complainant [about] the letter of resignation. Complainant answered that he had not prepared a resignation
letter. Complainant did not prepare the resignation letter because he was aware that respondents were actually
terminating his services illegally and without due process, that the letter of resignation he was being made to
prepare was only a "palusot" (to borrow the word of Cong. Farinas) of respondent.

27. Mrs. Miranda again told the complainant to prepare the resignation letter as she said there was a need to
complete the process within that day and further told him that he would not be allowed to leave the company
without finishing all the necessary papers and that he would not be permitted to return to the company on
the following days;

28. Complainant could not do anything. Under the extreme pressure and threat of Mrs. Miranda, he went
to his office and prepared the letter of resignation;

29. In his office, complainant was surprised when he did not have an access anymore on the server and could
not use his computer. He learned from the IT personnel that after the office hours on March 12, 2012 his
access to the computer system was already cut upon instruction of the top management. So, he just used the
computer of his staff in the preparation of the letter of resignation;

30. At about 4:30 o'clock in the afternoon, the Country HR Manager Mrs. Miranda came to the office of the
complainant to get the resignation letter. Complainant gave it to Mrs. Miranda. The letter states that:

March 13, 2012

"To: Mr. Nitin Desai President

Marivic Miranda Country HR

Dear Sir/Madam,

73
As per your instruction, I am sending you my immediate resignation effective today, March 13, 2012 as
Vice-President of Power Systems Division.

Very Truly Yours,

SGD. Luis S. Doble, Jr."

xxx

Upon reading it, Mrs. Miranda did not like the contents and told the complainant to make another letter of
resignation and instructed him to put the words, "tendering my immediate resignation" and to remove the
words, "as per your instruction."

31. Complainant told Mrs. Miranda that he could not change the letter because he made the letter upon her
instruction. But, Mrs. Miranda insisted to revise the letter of resignation and submit it before 7:00 o'clock in the
evening. Though against his conscience, complainant revised the letter of resignation. Complainant was also
told by Mrs. Miranda if he would purchase the company Car Plan of the 2009 Ford Escape being used by him
so that the balance leasing cost could be deducted from his separation pay. As complainant could do nothing,
he just agreed to buy the car. Mrs. Miranda also informed complainant that she would be the one to prepare the
letter of intent to purchase the car for him to sign. Then, Mrs. Miranda left.

32. About 6:30 o'clock in the evening, complainant submitted the revised letter of resignation. His revised letter
of resignation following the instruction of Mrs. Miranda states that:

March 13, 2012

"To: Mr. Nitin Desai

President

Marivic Miranda
Country HR

Dear Sir/Madam,

I am tendering my immediate resignation effective today, March 13, 2012 as Vice-President of Power
Systems Division.

Very Truly Yours,

SGD. Luis S. Doble, Jr."

xxxx

33. About 8:00 o'clock in the evening, Mrs. Miranda went to the office of the complainant and let him sign the
Letter of Intent to purchase the car and the Letter of Acceptance dated March 13, 2012. x x x The letter [of
acceptance] states that:

March 13, 2012

Luis S. Doble, Jr.

Vice-President
PS Division

Thru: Nitin Desai

Country HR Manager and President

Dear Luis,

Relative to your letter dated March 13, 2012 informing us of your resignation from ABB effective March
13, 2012 please be informed that the same is accepted after your completion of the Company's
Clearance process.

Thank you for your support to ABB, Inc., and we wish you luck in your future endeavors.

Truly Yours,

74
SGD. Marivic Miranda
Country HR Manager

Received by:

SGD. Luis S. Doble, Jr.

Date: 3/13/2012"

Mrs. Miranda also brought with her the Employee Clearance Sheet dated March 13, 2012 of complainant
already signed by her with same date March 13, 2012. Then, she let complainant surrender the company ID,
mobile phone, laptop and cabinet keys. She went to the car of the complainant in the parking area, checked it
and got the Caltex Gasoline Star Card and the Safety Medical Kit;

34. At time, it was already about 8:30 o'clock in the evening. Complainant was tired, stressed, weak, felt
uneasy, mentally and psychologically disturbed and hungry as his detention had lasted for more than eight (8)
hours already from 11: 15 o'clock in the morning to 8 :40 o'clock in evening;

35. Complainant was only allowed to leave the office at about 8:40 o'clock in the evening. Mrs. Miranda called
and informed the gate guard to already allow the complainant to leave the company premises; x x x. 3

On the part of ABB, Inc., HR Manager Miranda narrated in her affidavit how Doble voluntarily resigned:

6. x x x At about 12:45 p.m., I returned to the Luzon Room and he told me that he has yet to decide. At this
time, he requested tha t he would want to go to his room and eat lunch. I offered that I could request someone
to buy for him food instead. He reiterated his request to go back to his room and eat and I said by all means he
can;

7. Thereafter, I told him that we may meet again to discuss his resignation. He asked what time and I replied
that 2:00 p.m. would be ideal. He agreed. At around 2:00 p.m., Mr. Doble did not come back to the Luzon room.
At 2:30 p.m., however, we met again;

8. At this meeting, I asked him whether he has made a decision. He then attempted to negotiate by proposing
to get a resignation benefit equivalent to 1.5 month's pay and said that if he is given said amount, there will be
no issue, no labor case between him and ABB, Inc. I told him that the request could not be accommodated, as
the policy provides 75% month's pay for every year of service. I then suggested to him that he could talk to Mr.
Desai regarding this request but he declined. At this point, he requested that the separation benefit be higher,
as he anticipates that there will still be deductions thereon. I left the room to confer with Mr. Desai, and ABB's
Chief Finance Officer, Mr. Robert Ramos. It was agreed that we can extend a one-month pay per every year of
service to Mr. Doble in consideration of his tenure of service with ABB. Thereafter, I returned to the Luzon
Room to inform Mr. Doble that ABB would be willing to give him a separation benefit equivalent to one-month
pay per every year of service. Unrelenting, he again negotiated the possibility of a higher amount. I replied that
this is ABB's final and last offer. He then said that he will draft his letter of resignation.

xxxx

10. At around 4:30 p.m., Mr. Doble handed me a resignation letter which read as follows: "as per your
instruction, I am sending you my immediate resignation effective today, March 13, 2012 as Vice-President of
Power Systems Division." I expressed my strong disagreement with the wordings of the resignation letter and
asked him to remove the phrase "as per your instruction." ABB and I never gave him any instruction/s to resign.
I emphasized to him that it was his decision to resign. Thus, he agreed to revise the letter. Also, contrary to Mr.
Doble' s assertion in his Position Paper, I never imposed any deadline on the submission of the revised letter.

11. He then brought up the possibility of purchasing the company-issued vehicle. I responded that it is possible
but he has to make a request. I volunteered to draft the document signifying his intent to purchase the
company-issued vehicle.

12. At about 6:00 p.m., Mr. Doble went to my office and gave me the revised resignation letter. I then told him
that I will prepare the acceptance letter, the clearance form and request to purchase the vehicle. I asked him
whether he will come to my office or shall I go to his office. He responded that I should just go to his office.

13. Around 7:00 p.m., I gave him a copy of ABB's letter of acceptance of his resignation and the employee's
clearance form. As he has already returned the company-issued mobile phone and laptop computer to me, I
acknowledged the same and then signed the employee clearance form to reflect the surrender of these items. I
also gave him the draft of the intent to purchase the company-issued vehicle, which he there and then signed.
He left the clearance form to me for routing to the various heads of office in ABB.

75
14. It was at this point that he asked me as to when he will receive the resignation benefit, as some of his
payables are coming up in the following days. I told him that processing usually takes 5-7 work days because a
big part of the resignation benefit will not come directly from ABB but from the retirement plan manager- BPI.
Nevertheless, I told him that I would do my best to have the resignation benefit released to him, if possible, on
16 March 2012 and told him to give me his personal mobile number and to make follow-ups via text message.

15. On 23 March 2012, I met Mr. Doble at McDonald's Alabang Town Center - the venue that we both agreed
to meet because his vehicle could not go farther because of the vehicle volume reduction scheme and because
it was the graduation of his son later in the afternoon. Thereat, he received the check for his resignation benefit
and signed all the pertinent documents, including a Release and Quitclaim.4

On March 26, 2012, Doble filed a Complaint5 for illegal dismissal with prayer for reinstatement and payment of
backwages, other monetary claims and damages.

In a Decision dated November 29, 2012, the Labor Arbiter 6 held that Doble was illegally dismissed because his
resignation was involuntary, and ordered ABB, Inc. and Desai to pay his backwages and separation pay, since
reinstatement is no longer feasible. The dispositive portion of the Decision reads:

IN VIEW OF THE FOREGOING, respondent[s] is [are] directed to pay the complainant of his backwages from
the time of complainant's dismissal up to the finality of this Decision and such award is computed at One Million
Six Hundred Forty-Eight Thousand Nine Hundred Seventeen Pesos and 24/100 (₱ 1,648,917 .24) as of this
date, the computation of which is shown below:

Backwages:

3/13112 - 11/29112 = 8.53 Mos.

₱193,308 x 8.53 mos.= .................. ₱ 1,648,917.24

Complainant is deemed paid of his separation pay. The rest of the claims are dismissed for lack of merit. SO
ORDERED.7

Aggrieved by the Decision of the Labor Arbiter, ABB, Inc. and Desai filed an appeal, whereas Doble filed a
partial appeal from the dismissal of his monetary claims.

In a Decision dated June 26, 2013, the two (2) Commissioners8 of the NLRC Sixth Division voted to grant the
appeal filed by ABB, Inc. and Desai, and to dismiss the partial appeal of Doble. They found that the resignation
of Doble being voluntary, there can be no illegal dismissal and no basis for the award of other monetary claims,
damages and attorney's fees. However, one NLRC Commissioner9 dissented in this wise:

The complainant has no reason to resign, much less to abruptly resign on March 13, 2012. What happened on
that day was that complainant was called to a meeting by the company President who told him that his
performance or rating the previous year was unsatisfactory. In the same meeting the President gave him the
option to resign. x x x In simple terms, the company wants to get rid of him so he can either resign or be fired.
Clearly, his resignation is not voluntary. Besides, why would he file for illegal dismissal and reinstatement if he
voluntarily resigned? 10

Doble filed a motion for reconsideration, but the NLRC denied the motion in a Resolution dated August 14,
2013 for lack of compelling reason to disturb its findings and conclusions. Dissatisfied with the NLRC Decision
and Resolution, Doble filed a petition for certiorari before the Court of Appeals (CA).

In a minute Resolution11 dated November 29, 2013, the CA dismissed outright the Petition
for Certiorari because (1) "the assailed National Labor Relations Commission (NLRC) Decision and Resolution
attached are mere 'CERTIFIED PHOTOCOP(IES)' and not duplicate originals or certified true copies;" and (2)
"petitioner's counsel's MCLE Compliance No. III- 0006542' xxx does not appear to have complied with the
Fourth (IV) MCLE compliance period."

In a Resolution dated November 28, 2014, the CA also denied petitioner's motion for reconsideration because
(1) the NLRC Decision and Resolution attached to the petition were certified "photo" copies, unlike the specific
requirement for a certified "true" copy, or a "clearly legible duplicate original or certified true copy" of the
assailed disposition, and (2) petitioner's counsel conceded his inability to comply with the MCLE requirement. 12

Disgruntled with the Resolutions of the CA, Doble filed this petition for review on certiorari, raising the following
arguments:

I. WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS ERRED AND COMMITTED GRAVE
ABUSE OF DISCRETION IN DISMISSING THE PETITION ON MERE TECHNICALITY DESPITE THAT

76
PETITIONER HAS THE MOST PERSUASIVE REASON TO RELAX THE APPLICATION OF THE RULES OF
PROCEDURES TO AFFORD HIM THE OPPORTUNITY TO VENTILATE HIS CASE ON THE MERITS.

II. WITH DUE RESPECT, THE QUESTIONED RESOLUTIONS ARE CONTRARY TO THE LIBERAL
APPLICATION OF THE RULES OF PROCEDURE AND TO THE CASE OF GALANG VS. COURT OF
APPEALS, ET AL., G.R. NO. 76221, JULY 29, 1991.

III. WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS SHOULD HA VE DECIDED THE
PETITION ON THE MERITS INSTEAD OF DISMISSING THE SAME PURELY ON TECHNICAL GROUNDS IN
THE INTEREST OF JUSTICE AND EQUITY AND THAT THE ASSAILED RESOLUTIONS ARE CONTRARY
TO THE CASE OF YONG CHAN KIM VS. PEOPLE OF THE PHILIPPINES, HON. EDGAR D. GUSTILO,
PRESIDING JUDGE, RTC, 6TH WDUCIAL REGION, BRANCH 28, ILOILO CITY AND COURT APPEALS (13
TH DIVISION), SOUTHEAST ASIAN FISHERIES DEVELOPMENT CENTER AQUACULTURE DEPARTMENT
(SEAFDEC), G.R. NO. 84719, AUGUST 10, 1989. 13

Faulting grave abuse of discretion against the NLRC for dismissing his complaint for illegal dismissal, Doble
prays for the reinstatement of the Decision of the Labor Arbiter with the following modifications:

1. ordering the respondents, jointly and severally, to reinstate the petitioner with full backwages without loss of
seniority rights and benefits from the time he was dismissed until his actual reinstatement;

2. ordering the respondents, jointly and severally, to pay petitioner the following allowance and benefits -

a. Recreational allowance of ₱l80,000.00 per year;

b. Bonus of 3.9 months of his total monthly salary equivalent to an average of P750,000.00 every year;

c. Rice subsidy monthly converted to cash in the average amount of ₱20,400.00 per year;

d. 15 days sick leave, 15 days vacation leave and 3 days long service leave per year; and

e. 13th month pay equivalent to one (1) month salary.

3. ordering the respondents, jointly and severally, to pay petitioner ₱l,000,000.00 as moral damages;

4. condemning the respondents, jointly and severally, to pay petitioner ₱l,000,000.00 as exemplary damages;

5. ordering the respondents, jointly and severally, to pay a fine of ₱l ,000,000.00 for dismissing the petitioner
without due process;

6. ordering the respondents, jointly and severally, to pay petitioner ₱100,000.00 as actual damages for
acceptance fee and ₱5,000.00 per hearing;

7. ordering the respondents, jointly and severally, to pay 10% attorney's fees of the total monetary award. 14

The petition is partly impressed with merit on procedural grounds, but still devoid of substantive merit.

On the procedural aspect, the Court rules that the CA gravely erred when it dismissed outright the Petition
for Certiorari and refused to reinstate the same, despite the fact that the two defects noted in the minute
Resolution dated November 29, 2013 have already been substantially rectified.

First, the CA gravely erred in dismissing the petition on the ground that the assailed NLRC Decision and
Resolution attached thereto are mere "certified photocopies" and not duplicate originals or certified true copies.
The CA's inordinate nitpicking on procedural requirements is contrary to the Court's ruling in Coca-Cola Bottlers
Phils., Inc. v. Cabalo: 15

The problem presented is not novel. In fact, it is a fairly recurrent one in petitions for certiorari of NLRC
decisions as it seems to be the practice of the NLRC to issue certified "xerox copies" only instead of certified
"true copies." We have, however, put an end to this issue in Quintano v. NLRC when we declared that there is
no substantial distinction between a photocopy or a "Xerox copy" and a "true copy" for as long as the
photocopy is certified by the proper officer of the court, tribunal, agency or office involved or his duly-
authorized representative and that the same is a faithful reproduction of the original. We held therein:

The submission of the duplicate original or certified true copy of judgment, order, resolution or ruling subject of
a petition for certiorari is essential to determine whether the court, body or tribunal, which rendered the same,
indeed, committed grave abuse of discretion. The provision states that either a legible duplicate original or

77
certified true copy thereof shall be submitted. If what is submitted is a copy, then it is required that the same is
certified by the proper officer of the court, tribunal, agency or office involved or his duly-authorized
representative. The purpose for this requirement is not difficult to see. It is to assure that such copy is a faithful
reproduction of the judgment, order, resolution or ruling subject of the petition.

xxx xxx xxx

Indeed, for all intents and purposes, a certified Xerox copy is no different from a certified true copy of the
original document. The operative word in the term certified true copy under Section 3, Rule 46 of the Rules of
Court is certified. The word means made certain. It comes from the Latin word certificare meaning, to make
certain. Thus, as long as the copy of the assailed judgment, order, resolution or ruling submitted to the court
has been certified by the proper officer of the court, tribunal, agency or office involved or his duly-authorized
representative and that the same is a faithful reproduction thereof, then the requirement of the law has been
complied with. It is presumed that, before making the certification, the authorized representative had compared
the Xerox copy with the original and found the same a faithful reproduction thereof. 16

In this case, a perusal of the attached NLRC Decision and Resolution shows that they are indeed certified
photocopies of the said decision and resolution. Each page of the NLRC Decision and the Resolution has
1âwphi1

been certified by the NLRC Sixth Division's Deputy Clerk of Court, Atty. Cherry P. Sarmiento, who is
undisputedly the proper officer to make such certification. 17 Moreover, the attached copies of the NLRC
Decision and Resolution appear to be faithful reproductions thereof. Thus, there is substantial compliance with
Section 1, Rule 65 of the Rules of Court which provides that any petition filed under Rule 65 should be
accompanied by a certified true copy of the judgment, order or resolution subject thereof.

Second, the CA also gravely erred in denying the Motion for Reconsideration of the Resolution dated
November 29, 2013 which dismissed the Petition for Certiorari on the ground that petitioner's counsel had
conceded his inability to comply with the Mandatory Continuing Legal Education (MCLE) requirement.

On point is People v. Arrojado18 where it was held that the failure of a lawyer to indicate in his or her pleadings
the number and date of issue of his or her MCLE Certificate of Compliance will no longer result in the dismissal
of the case:

In any event, to avoid inordinate delays in the disposition of cases brought about by a counsel's failure to
indicate in his or her pleadings the number and date of issue of his or her MCLE Certificate of Compliance, this
Court issued an En Banc Resolution, dated January 14, 2014 which amended B.M. No. 1922 by repealing the
phrase "Failure to disclose the required information would cause the dismissal of the case and the expunction
of the pleadings from the records" and replacing it with "Failure to disclose the required information would
subject the counsel to appropriate penalty and disciplinary action." Thus, under the amendatory Resolution, the
failure of a lawyer to indicate in his or her pleadings the number and date of issue of his or her MCLE
Certificate of Compliance will no longer result in the dismissal of the case and expunction of the pleadings from
the records. Nonetheless, such failure will subject the lawyer to the prescribed fine and/or disciplinary action. 19

Granted that the Petition for Certiorari was filed before the CA on October 29, 2013 even before the effectivity
of En Banc Resolution dated January 14, 2014 which amended B.M. No. 1922, 20 it bears to stress that
petitioner's counsel later submitted Receipts of Attendance in the MCLE Lecture Series for his MCLE
Compliance IV21 on March 3, 2014 and the Certificate of Compliance 22 albeit on January 26, 2015. Hence, the
CA erred in issuing the assailed November 28, 2014 Resolution denying Doble's motion for reconsideration,
there being no more reason not to reinstate the petition for certiorari based on procedural defects which have
already been corrected. Needless to state, liberal construction of procedural rules is the norm to effect
substantial justice, and litigations should, as much as possible, be decided on the merits and not on
technicalities.

While as a general rule, only errors of law are reviewed by the Court in petitions for review under Rule 45, one
of the well-recognized exceptions to this rule is when the factual findings of the NLRC contradict those of the
labor arbiter. 23 In the interest of substantial justice, judicial economy and efficiency, and given that the records
on hand are sufficient to make a determination of the validity of Doble's dismissal, the Court may re-evaluate
and review the factual findings of the labor tribunals, instead of remanding the case before the CA for the
resolution of the case on the merits.

On the substantive issue of whether Doble was illegally dismissed, the Court holds that he voluntarily resigned,
and was not constructively dismissed.

In illegal dismissal cases, the fundamental rule is that when an employer interposes the defense of resignation,
the burden to prove that the employee indeed voluntarily resigned necessarily rests upon the employer. 24 The
concepts of constructive dismissal and resignation are discussed in Gan v. Galderma Philippines, Inc., 25 thus:

To begin with, constructive dismissal is defined as quitting or cessation of work because continued employment
is rendered impossible, unreasonable or unlikely; when there is a demotion in rank or a diminution of pay and
other benefits. It exists if an act of clear discrimination, insensibility, or disdain by an employer becomes so

78
unbearable on the part of the employee that it could foreclose any choice by him except to forego his continued
employment. There is involuntary resignation due to the harsh, hostile, and unfavorable conditions set by the
employer. The test of constructive dismissal is whether a reasonable person in the employee's position would
have felt compelled to give up his employment/position under the circumstances.

On the other hand, "[r]esignation is the voluntary act of an employee who is in a situation where one believes
that personal reasons cannot be sacrificed in favor of the exigency of the service, and one has no other choice
but to dissociate oneself from employment. It is a formal pronouncement or relinquishment of an office, with the
intention of relinquishing the office accompanied by the act of relinquishment. As the intent to relinquish must
concur with the overt act of relinquishment, the acts of the employee before and after the alleged resignation
must be considered in determining whether he or she, in fact, intended to sever his or her employment."26

Guided by these principles, the Court agrees with the NLRC that ABB, Inc. and Desai were able to prove by
substantial evidence that Doble voluntarily resigned, as shown by the following documents (1) the affidavit of
ABB, Inc. 's HR Manager Miranda;27 (2) the resignation letter;28 the letter of intent to purchase service
vehicle;29 and ABB, Inc. 's acceptance letter,30 all dated March 13, 2012, (3) the Employee Clearance
Sheet;31 (4) the Certificate of Employment dated March 23, 2012;32 (5) photocopy of Bank of the Philippine
Islands manager's check33 in the amount of ₱2,009,822.72, representing the separation benefit; (6) Employee
Final Pay Computation,34 showing payment of leave credits, rice subsidy and bonuses, amounting to
₱805,399.35; and (7) the Receipt, Release and Quitclaim for a consideration of the total sum of
₱2,815,222.07.35

For his part, Doble insisted that he was constructively dismissed because he was threatened, detained as if he
were a prisoner, unreasonably pressured and compelled to write a resignation letter for more than eight (8)
hours inside the company office. Because of the incident, which supposedly besmirched his reputation, he
claimed to have suffered embarrassment before his staff and other personnel, sleepless nights, moral shock
and anxiety. He even claimed to have received calls and text messages from customers, competitors,
colleagues and friends because of what the company did to him. Apart from his bare and self-serving
allegations, however, Doble failed to present substantial documentary or testimonial evidence to corroborate
the same. It is well settled that bare allegations of constructive dismissal, when uncorroborated by the evidence
on record, cannot be given credence.36 Neither can it be held that Doble was constructively dismissed because
there is no evidence on record of any act of clear discrimination, insensibility, or disdain towards him which
rendered his continued employment unbearable or forced him to terminate his employment from ABB, Inc.,
much less a claim of demotion in rank or a diminution of pay and other benefits.

Since Doble claims to have been forced to submit a resignation letter, it is incumbent upon him to prove with
clear and convincing evidence that his resignation was not voluntary, but was actually a case of constructive
dismissal, i.e., a product of coercion or intimidation.37 Coercion exists when there is a reasonable or well-
grounded fear of an imminent evil upon a person or his property or upon the person or property of his spouse,
descendants or ascendants.38 The requisites for intimidation to vitiate one's consent are stated in St. Michael
Academy v. NLRC,39thus:

.... (1) that the intimidation caused the consent to be given; (2) that the threatened act be unjust or unlawful; (3)
that the threat be real or serious, there being evident disproportion between the evil and the resistance which
all men can offer, leading to the choice of doing the act which is forced on the person to do as the lesser evil;
and (4) that it produces a well-grounded fear from the fact that the person from whom it comes has the
necessary means or ability to inflict the threatened injury to his person or property x x x.

After a careful review of the records, the Court finds that the above-stated requisites are absent, and that the
NLRC has exhaustively discussed that Doble was not coerced into submitting a resignation letter, thus:

" [c]omplainant has been employed with Respondent-ABB for nineteen (19) years. He is holding one of the top
positions in the company and answerable only to the President, herein Respondent-Desai. He is a highly
educated man. It is improbable that a man of his stature may be pressured into doing something that he does
not want to do. Being a man of high educational attainment and qualifications, he is expected to know the
import of everything he executes. His claim that he was forced to resign by HR Miranda is unbelievable. The
Complainant is the Vice President and Local Division Manager of the Power System Division of the
Respondent-ABB, while HR Miranda is the Country HR Manager. The latter does not outrank the former. It is
likewise unbelievable that the HR Manager would prevent the Complainant from leaving the premises of the
company nor prevent him from taking his lunch wherever he wants to take it. HR Miranda simply does not have
that power and she cannot possibly do that to a high-ranking officer who has served the company for nineteen
(19) years. The event of 13 March 2012 is undoubtedly stressful to the Complainant as the top management
had already expressed displeasure with his performance. But such degree of tension is expected in a
corporation environment where the primordial consideration is to earn profit. As stated in the sworn statement
of HR Miranda, the Complainant was given the option to resign by Respondent-Desai. Her statement that the
Complainant negotiated for a higher benefit is more attuned with what actually transpired on 13 March 2012.
The retirement plan for Respondent-ABB only gives a retiree 75% of his monthly pay for every year of service.
The Complainant was able to get a higher rate equivalent to one (1) month salary for every year of service.

79
The Complainant prepared his resignation letter in his own office. His first letter was not accepted by HR
Miranda because it gave the impression that he was being directed or ordered to resign. HR Miranda made it
clear to him that he is not being ordered to resign as it is his own decision whether to resign or not. The
Complainant submitted another resignation letter which was accepted by Respondent-ABB through its Country
HR Manager. Thereafter, the Complainant no longer reported for work as his resignation was effective
immediately. It was ten (10) days after he submitted his resignation letter that he again met with HR Miranda to
get his retirement benefits. The meeting took place outside the company premises. If, indeed, the resignation of
the Complainant was involuntary, he could have easily sought legal counsel or advice right after he left the
company premises on 13 March 2012. Instead, he waited for his clearance to be processed and his check
prepared. He cannot claim that he was still under duress from March 14 to 22, 2012. The Complainant waited
to be given his benefits first, and three (3) days thereafter filed his complaint before this Office. This is hardly
the mindset of a person who is not in control of his life.40

On the other hand, the Court disagrees with the findings of the Labor Arbiter that Doble's resignation was not
voluntary based on the following events, to wit: (1) on March 2, 2012, Doble's Performance and Development
Approval rating in 2011 is unsatisfactory; (2) there are no prior circumstances that may show his intention to
resign; (3) on March 13, 2012, Desai raised the option for him to resign, after explaining that due to the extent
of losses and level of discontent among the ranks of the PS Division, the Global and Regional management
have demanded for a change in leadership; (4) from the circumstances surrounding his resignation, the option
to resign did not originate from Doble but from Desai, whose actuations was not a mere suggestion but a
directive or order that was effected on the same day of March 13, 2012; (5) HR Manager Miranda's affidavit
clearly show that Doble underwent pressure to resign because starting 11 :00 a.m. until 6:00 p.m. of even date,
the option to resign was reiterated and repeated until he handed a revised resignation letter; and (6) Doble was
not given the opportunity or option to stay in the service.

Even if the option to resign originated from the employer, what is important for resignation to be deemed
voluntary is that the employee's intent to relinquish must concur with the overt act of relinquishment. There can
be no doubt as to the drastic and shocking nature of the abrupt decision of ABB, Inc. to let Doble resign on
March 13, 2012 after almost 19 years of dedicated and satisfactory service, on account of the extent of losses,
the level of discontent among the ranks of PS Division, and the ABB, Inc. Global and Regional management's
demand for a change in leadership. It bears emphasis, however, that between the start of the conference at
around 11:00 a.m. and about eight (8) hours later in the evening when he left the company premises, Doble
negotiated for a higher separation pay, i.e., from 7 5o/o of the monthly salary for every year of service allowed
under the company retirement plan up to double that amount, or 1.5 month's pay for every year of service. In
fact, Doble tendered a resignation letter only after being offered a better separation benefit of 1-month pay for
every year of service, and even submitted a separate letter expressing his intent to buy his service vehicle.
After considering the acts of Doble before and after his resignation, the Court is convinced of Doble's clear
intention to sever his employment with ABB, Inc.

Doble claimed that while inside the conference room at about 2:00 p.m. of March 13, 2012, "he was aware that
respondents were actually terminating his services illegally and without due process, that the letter of
resignation he was being made to prepare was only a 'palusot' (to borrow the word of Cong. Farinas) of
respondents (ABB, Inc. and Desai)."41 Despite being aware of the illegality of his dismissal, Doble submitted a
resignation letter and a letter of intent to purchase his service vehicle, allowed Miranda to process his
resignation papers, met her outside company premises on March 23, 2012 to sign a waiver and quitclaim and
to receive his separation benefits. In view of the lapse of considerable period between his resignation until the
execution of a quitclaim and receipt of his separation benefits about ten (10) days later, the Court is inclined to
rule that the filing of his complaint for illegal dismissal on March 26, 2012 is a mere afterthought, if not a mere
pretention.

Doble further cited the supposed propensity of ABB, Inc. to illegally dismiss its employees, who had filed a
complaint for illegal dismissal against the company and were eventually awarded backwages and separation
pay. Suffice it to state that Doble failed to prove that he is similarly situated with his co-workers, and that they,
likewise, voluntarily executed a resignation letter and a waiver and quitclaim, and received a reasonable
separation pay, before filing their respective complaints for illegal dismissal against the company. Instead of
presenting copies of final decisions of the labor tribunals to substantiate his claim, Doble merely submitted
photocopies 42 of vouchers and checks, showing that his co-workers were paid certain amounts of money on
account of their labor cases. Verily, such checks and vouchers are inadequate to prove that he was illegally
dismissed and should likewise be awarded monetary claims.

It is curious to note that despite his allegations that "under the extreme pressure and threat of Mrs. Miranda, he
went to his office and prepared the letter of resignation"43 and that "she gave instruction to the security guard of
the gate not to allow him to go outside the company,"44 Doble neither impleaded her as respondent in the
complaint for illegal dismissal nor sought to hold her jointly and severally liable, together with the company and
its President, for monetary claims and damages. The Court is befuddled that Doble is not prosecuting his claim
against HR Manager Miranda, who was the only one who personally dealt with him during the crucial moments
before and after his claimed forced resignation on March 13, 2012, as well as facilitated the release of his
separation benefits upon his execution of a waiver and quitclaim on March 23, 2012. Accordingly, the Court has
no reason to doubt and thus gives more credence to the affidavit of Miranda regarding the circumstances of
Doble's voluntary resignation rather than his version of constructive dismissal and forced resignation, which are
based on bare and self-serving allegations.

80
Concededly, under prevailing jurisprudence, a deed of release of quitclaim does not bar an employee from
demanding benefits to which he is legally entitled.45 Employees who received their separation pay are not
barred from contesting the legality of their dismissal, and the acceptance of such benefits would not amount to
estoppel. The basic reason for this is that such quitclaims and/or complete releases are null and void for being
contrary to public policy.

Be that as it may, not all quitclaims are invalid and against public policy. "If the agreement was voluntarily
entered into and represents a reasonable settlement, it is binding on the parties and may not later be disowned
simply because of a change of mind. It is only where there is a clear proof that the waiver was wangled from an
unsuspecting or gullible person, or the terms of settlement are unconscionable on its face, that the law will step
in to annul the questionable transaction. "46 Cases abound where the Court gave effect to quitclaims executed
by the employees when the employer is able to prove the following requisites: (1) the employee executes a
deed of quitclaim voluntarily; (2) there is no fraud or deceit on the part of any of the parties; (3) the
consideration of the quitclaim is credible and reasonable; and (4) the contract is not contrary to law, public
order, public policy, morals or goods customs, or prejudicial to a third person with a right recognized by
law.47 ABB, Inc. and Desai proved by substantial evidence the presence of all these requisites through the
following documents: (1) the affidavit of ABB, Inc. 's HR Manager Miranda;48 (2) the Certificate of
Employment;49 (3) photocopy of Bank of the Philippine Islands manager's check50 in the amount of
₱2,009,822.72, representing the separation benefit; (4) Employee Final Pay Computation,51 showing payment
of leave credits, rice subsidy and bonuses, amounting to ₱805,399.35; and (5) the Receipt, Release and
Quitclaim for a consideration of the total sum of ₱2,815,222.07. 52

Doble can hardly claim that he was forced to execute the Receipt, Release and Quitclaim on March 23, 2012,
because he met Miranda alone outside company premises at McDonalds, Alabang Town Center, Muntinlupa
City. He cannot also claim that there was fraud or deceit nor that the consideration for the waiver and quitclaim
was unjust and unreasonable. That no portion of his retirement pay will be released or his urgent need for
funds does not constitute the pressure or coercion contemplated by law as a valid reason to nullify a
quitclaim. 53 While "dire necessity" may be an acceptable ground to annul quitclaims if the consideration is
unconscionably low and the employee was tricked into accepting it, the same is not an acceptable ground for
annulling the release when it is not shown that the employee has been forced to execute it. 54 As aptly pointed
out by the NLRC, Doble is a Vice-President of the company, a highly educated person, i.e., a duly-licensed
engineer, who had worked with the company for almost 19 years, and the benefits he received from his
resignation in the total amount of P2,815,222.07 are undisputedly more than that allowed under the company
retirement plan. As a person of high educational attainment and managerial employment stature, Doble is
expected to know the import of everything 'he executes,55and cannot be easily duped into signing a quitclaim
against his will.

There is also no merit in Doble's contention that the Receipt, Release and Quitclaim is void because it was
made to appear that he appeared before a notary public on April 10, 2012 when in fact he already filed an
illegal dismissal complaint on March 26, 2012. Regardless of the fact that it was improperly notarized, the said
quitclaim is a valid and binding contract between him and ABB, Inc., since the authenticity and due execution
thereof is undisputed. Such lack of proper notarization does not render a private document void or without legal
effect, but merely exposed the notary public to prosecution for possible violation of notarial laws, as well as the
one who caused the same for falsification of public document.

Anent his monetary claims for 13th month pay, yearly bonus of about ₱750,000.00, 15 days vacation leave, 3
days long service leave, recreational allowance of ₱l80,000.00 per year, and rice subsidy of ₱20,400.00, Doble
argued that he is entitled thereto in light of the rule that where there is a finding of illegal dismissal, an
employee who is unjustly dismissed shall be entitled to reinstatement without loss of seniority rights, benefits
and other privileges or its monetary equivalent computed from the time compensation was withheld up to the
time of actual reinstatement. Suffice it to stress that there being no illegal dismissal in this case, Doble's
monetary claims must be denied for lack of legal basis.

Finally, since the Decision of the NLRC finding Doble to have voluntarily resigned is supported by substantial
evidence and in accord with law and prevailing jurisprudence, no grave abuse of discretion, amounting to lack
or excess of jurisdiction may be imputed against the NLRC for having dismissed his complaint for illegal
dismissal against ABB, Inc. and Desai.

WHEREFORE, the petition for review on certiorari is PARTLY GRANTED for being impressed with merit on
procedural issues and PARTLY DENIED for lacking merit on substantial issues. Accordingly, the assailed
Resolutions dated November 29, 2013 and November 28, 2014 of the Court of Appeals
are REVERSED and SET ASIDE, while the Decision dated June 26, 2013 and Resolution dated August 14,
2013 of the National Labor Relations Commission are AFFIRMED.

SO ORDERED.

iv. Option to resign 
 1. Cosue vs. Ferritz Integrated Development Corporation, et al., G.R. No. 230664, July
24, 2017



81
 July 24, 2017

G.R. No. 230664

EDWARD M. COSUE, Petitioner

vs.
FERRITZINTEGRATED DEVELOPMENT CORPORATION, MELISSA TANYA F. GERMINO AND ANTONIO
A. FERNANDO, Respondents

DECISION

TIJAM, J.:

This is a Petition for Review under Rule 45 of the Rules of Court, assailing the Court of Appeals' (CA's)
Decision1dated December 2, 2016 and Resolution2 dated February 23, 2017, in CA-G.R. SP No. 142491, which
affirmed the Resolutions of the National Labor Relations Commission (NLRC)3 upholding the Labor Arbiter's
finding4 that petitioner Edward M. Cosue was not illegally dismissed.

The Facts

Petitioner started working for respondent Ferritz Integrated Development Corporation (FIDC) on August 23,
1993 as a construction worker. He subsequently became a regular employee of FIDC, performing work as
janitor/maintenance staff.

Around 5 p.m. of July 10, 2014, respondent Melissa Tanya Germino (Germino), as Head of FIDC's Property
Management Division, asked petitioner to stay in the FIDC's building to watch over the generator due to the
frequent power outage, and to assist the guards on duty since they were newly hired. Petitioner agreed.

According to petitioner, around 9 p.m. on July 10, 2014, he saw two security guards (the Officer-in-Charge and
one Gomez), together with an unidentified man, on their way to the electrical room. They had a knapsack which
did not look heavy. When they left the room, petitioner saw Gomez carrying the knapsack which, by this time,
appeared to contain something heavy. The next morning, petitioner borrowed the key to the electrical room and
together with fellow maintenance personnel, Joel Alcallaga (Alcallaga), looked for the electrical wires that were
stored therein. Unfortunately, the wires were no longer there. Petitioner was convinced that the two guards and
their unidentified companion took the wires. At 1 p.m., he was summoned by Germino who verbally informed
him that he was suspended from July 16, 2014 to August 13, 2014 on suspicion that he stole the electrical
wires. Beginning July 16, 2014 until August 13, 2014, he was no longer allowed to work.5 Thus, on October 9,
2014, he filed a Complaint against FIDC, Germino and FIDC President Antonio Fernando (collectively,
respondents), for actual illegal dismissal and underpayment of salaries, with prayer for moral and exemplary
damages and attorney's fees.6 In his Position Paper, petitioner additionally made claims for underpayment of
his holiday pay, 13th month pay and service incentive leave pay. He sought to recover on the alleged
underpayments for the period covering "three (3) years backward from the time of the filing of (his) complaint."7

Refuting petitioner's version of the events, respondents alleged that at 7 p.m. on July 10, 2014, Alcallaga's bag
was found to contain bundled wires when it was examined by the security personnel, per routine, as he
checked out from his shift. Alcallaga returned the wires to the electrical room shortly after he was interrogated
by the security personnel. The following day, petitioner and Alcallaga obtained the keys to the electrical room
after misrepresenting to the key custodian that they had been ordered by the head of the FIDC electrical staff to
inspect the room. Thereafter, it was discovered that the electrical wires returned by Alcallaga to the electrical
room were nowhere to be found. Following an investigation, Germino issued a memorandum of suspension to
petitioner for obtaining the keys to the electrical room and entering without permission, and for leaving his post
and joining Alcallaga in the electrical room. Petitioner was suspended for twenty-five (25) days from July 16,
2014 to August 13, 2014, pending further investigation. Petitioner returned to FIDC on August 13, 2014, but
was told to come back as Germino was on leave. When petitioner came back on August 27, 2014, he was able
to speak to Germino and they agreed that he would voluntarily resign. However, petitioner did not file his
resignation, and eventually instituted his Complaint for illegal dismissal.8

Respondents further averred that years ago, petitioner admitted to acting as messenger and depositing money
in the bank for Rizza Alenzuela, the company accountant, who was later discovered to have stolen hundreds of
thousands of pesos by collecting from tenants and depositing said collection to her account. However, because
petitioner was the son of their longest-staying employee who died due to an illness, he was given a second
chance on condition that another offense would lead to the termination of his employment. 9

Respondents argued that there was no illegal dismissal as there was an agreement between FIDC and
petitioner that the latter would just resign. As petitioner reneged on this agreement and chose to be absent, he
should be considered absent without leave. As for petitioner's money claims, FIDC averred that petitioner was
entitled to receive only his latest unpaid salary, if any, and his pro rata l 3th month pay.10 Respondents,
however, would later concede that there were underpayments which would have to be computed.

82
The Labor Arbiter's Rulin2

On February 12, 2015, the Labor Arbiter (LA) rendered her Decision, the dispositive portion of which reads:

WHEREFORE, premises considered, the complaint for illegal dismissal is dismissed for lack of evidence to
support the same. Respondent Ferritz Integrated Development Corporation, is hereby ordered to reinstate
complainant, Edward M. Cosue, to his former position, without loss of seniority rights but without backwages.

The order of reinstatement is immediately executory and the respondents are hereby directed to submit a
report of compliance to the said order without (sic) ten (10) calendar days from receipt of the said decision.

Respondent Ferritz Integrated Development Corporation is further ordered to pay salary differentials in the
amount of P8,819.0l.

All other claims are dismissed for lack of merit.

SO ORDERED.11

The LA held that other than petitioner's general assertion that he was dismissed, no evidence was presented to
support such claim. Petitioner was admittedly suspended from July 16, 2014 to August 13, 2014. Thus, as of
July 27, 2014, the date of dismissal as averred in petitioner's Complaint, he was still serving his preventive
suspension. In fact, he was not barred from the premises or categorically informed that he was already
dismissed from work.12

The LA stressed that the rule that the employer bears the burden of proof in illegal dismissal cases could not be
applied as respondents denied dismissing petitioner.13

The LA, however, found no reason to conclude that petitioner abandoned his job, absent proof of petitioner's
clear intention to sever the employer-employee relationship.

Backwages were not awarded as there was neither dismissal nor abandonment. However, finding that there
was underpayment of salaries, the LA awarded salary differentials computed at PhP8,8l9.01.

Petitioner's Partial Appeal

In his partial appeal from the LA's Decision, petitioner asked the NLRC to declare him to have been "illegally
(constructively) dismissed" and entitled to full backwages from the time of illegal dismissal up to actual
reinstatement. He also prayed for the payment of his service incentive leave pay, underpaid 13th month pay,
holiday pay and overtime pay, his 13th month pay for 2014, moral and exemplary damages, and attorney's
fees.

The NLRC's Resolutions

In its Resolution14 dated May 29, 2015, the NLRC denied petitioner's partial appeal and affirmed the LA's
Decision, holding that the established facts showed that petitioner was not dismissed by FIDC. The NLRC also
held that since the claims for service incentive leave, overtime pay and 13th month pay were not indicated in
the Complaint nor prayed for in petitioner's Position Paper, the LA did not gravely abuse her discretion in not
awarding them. Furthermore, the NLRC found it improper to award damages and attorney's fees given its
finding that there was no illegal dismissal.

The NLRC denied petitioner's Motion for Reconsideration in its Resolution15 dated July 20, 2015.

The CA's Ruling

The NLRC's Resolutions were affirmed in the assailed Decision and Resolution of the CA issued in
the certiorariproceeding instituted by petitioner under Rule 65 of the Rules of Court.

The CA found sufficient reasons to uphold respondents' position. It rejected petitioner's argument that he had
been constructively dismissed, holding that petitioner was merely suspended for 25 days. Such suspension,
said the CA, was a valid exercise of management prerogative pending administrative investigation on the
incident of theft.

Hence, the instant Petition.

Petitioner's Arguments

83
Petitioner maintained that he was constructively dismissed because he reported to work immediately after his
suspension but was not anymore allowed to work. He argued that mere absence or failure to report to work is
not tantamount to abandonment of work. He also asserted that to be dismissed for abandonment, an employee
must be shown to have been absent without a valid or justifiable reason, and to have a clear intention to sever
the employer-employee relationship, and that the burden of proof falls on the employer. Petitioner further
averred that FIDC failed to show proof of payment of his other monetary claims.

The Court's Ruling

Only errors of law are generally reviewed in Rule 45 petitions assailing decisions of the CA, and questions of
fact are not entertained.16 Accordingly, the Court does not re-examine conflicting evidence or reevaluate the
credibility of witnesses.17 The Court is not a trier of facts, and this doctrine applies with greater force in labor
cases.18 When supported by substantial evidence, factual findings of labor officials, who are deemed to have
acquired expertise in matters within their respective jurisdiction, are generally accorded not only respect but
even finality, more so when upheld by the CA.19

Petitioner has not shown cause for the Court to depart from this rule.

As the LA, NLRC and the CA found, petitioner was not illegally dismissed. This common finding is supported by
substantial evidence, defined as "that amount of relevant evidence which a reasonable mind might accept as
adequate to justify a conclusion."20

Petitioner himself alleged that he was suspended from July 16, 2014 to August 13, 2014 pending further
investigation of the pilferage of electrical wires. Thus, on July 27, 2014, the date of dismissal alleged in his
Complaint, petitioner was still serving his suspension; his employment was not terminated.

Petitioner's claim that he was not allowed to report for work after his suspension was unsubstantiated.
Petitioner has not shown by any evidence that he was barred from the premises. Furthermore, an entry in the
FIDC security logbook for August 27, 2014, which petitioner had not challenged, showed him informing security
personnel that he came to FIDC because he was asked to report to the office. The rule is that evidence not
objected to is deemed admitted and may be validly considered by the court in arriving at its judgment. 21 This is
true even if by its nature, the evidence is inadmissible and would have surely been rejected if it had been
challenged at the proper time.22

Petitioner's claim of constructive dismissal fails. Bare allegations of constructive dismissal, when
uncorroborated by the evidence on record, as in this case, cannot be given credence.23

In Jo mar S. Verdadero v. Barney A utolines Group of Companies Transport, Inc., et. al.,24the Court held that:

Constructive dismissal exists where there is cessation of work, because "continued employment is rendered
impossible, unreasonable or unlikely, as an offer involving a demotion in rank or a diminution in pay" and other
benefits. Aptly called a dismissal in disguise or an act amounting to dismissal but made to appear as if it were
not, constructive dismissal may, likewise, exist if an act of clear discrimination, insensibility, or disdain by an
employer becomes so unbearable on the part of the employee that it could foreclose any choice by him except
to forego his continued employment.25

In this case, records do not show any demotion in rank or a diminution in pay made against petitioner. Neither
1âw phi 1

was there any act of clear discrimination, insensibility or disdain committed by respondents against petitioner
which would justify or force him to terminate his employment from the company.26

Respondents' decision to give petitioner a graceful exit is perfectly within their discretion. It is settled that there
is nothing reprehensible or illegal when the employer grants the employee a chance to resign and save face
rather than smear the latter's employment record.27

The rule is that one who alleges a fact has the burden of proving it; thus, petitioner was burdened to prove his
allegation that respondents dismissed him from his employment. It must be stressed that the evidence to prove
this fact must be clear, positive and convincing. The rule that the employer bears the burden of proof in illegal
dismissal cases finds no application here because the respondents deny having dismissed the petitioner. 28 In
illegal dismissal cases, while the employer bears the burden to prove that the termination was for a valid or
authorized cause, the employee must first establish by substantial evidence the fact of dismissal from service. 29

In the instant case, other than petitioner's bare allegation of having been dismissed, there was no evidence
presented to show that his employment was indeed terminated by respondents. In the absence of any showing
of an overt or positive act proving that respondents had dismissed petitioner, the latter's claim of illegal
dismissal cannot be sustained - as the same would be self-serving, conjectural and of no probative value. 30

Petitioner's insistence that he had been unjustifiably dismissed for abandonment of his job, without the benefit
of due process, is untenable. Firstly, petitioner failed to establish that he had been dismissed. Secondly, it was

84
not respondents' position that petitioner abandoned his job. As they were waiting for petitioner to tender his
resignation conformably with their agreement, they did not consider petitioner's absence as an abandonment of
his job which would necessitate the sending of a notice of abandonment or an order to return to work.31

In this regard, the Court's ruling in Nightowl Watchman & Security Agency, Inc. v. Nestor Lumahan,32reiterated
in Dee Jay's Inn and Cafe and/or Melinda Ferraris v. Ma. Lorina Raneses,33is instructive:

We find that the CA erred in disregarding the NLRC's conclusion that there had been no dismissal, and in
immediately proceeding to tackle Nightowl's defense that Lumahan abandoned his work.

The CA should have first considered whether there had been a dismissal in the first place. To our mind, the CA
missed this crucial point as it presumed that Lumahan had actually been dismissed. The CA's failure to
properly appreciate this point - which led to its erroneous conclusion - constitutes reversible error that justifies
the Court's exercise of its factual review power.

xxxx

We agree with the NLRC that Lumahan stopped reporting for work on April 22, 1999, and never returned, as
Nightowl sufficiently supported this position with documentary evidence.

xxxx

In addition, we find that Lumahan failed to substantiate his claim that he was constructively dismissed when
Nightowl allegedly refused to accept him back when he allegedly reported for work from April 22, 1999 to June
9, 1999. In short, Lumahan did not present any evidence to prove that he had, in fact, reported back to work.

xxxx

All told, we cannot agree with the CA in finding that the NLRC committed grave abuse of discretion in
evaluating the facts based on the records and in concluding therefrom that Lumahan had not been dismissed.

xxxx

As no dismissal was carried out in this case, any consideration of abandonment - as a defense raised by an
employer in dismissal situations - was clearly misplaced. To our mind, the CA again committed a reversible
error in considering that Nightowl raised abandonment as a defense.

xxxx

The CA, agreeing with LA Demaisip, concluded that Lumahan was illegally dismissed because Nightowl failed
to prove the existence of an overt act showing Lumahan's intention to sever his employment. To the CA, the
fact that Nightowl failed to send Lumahan notices for him to report back to work all the more showed no
abandonment took place.

The critical point the CA missed, however, was the fact that Nightowl never raised abandonment as a defense.
What Nightowl persistently argued was that Lumahan stopped reporting for work beginning April 22, 1999; and
that it had been waiting for Lumahan to show up so that it could impose on him the necessary disciplinary
action for abandoning his post at Steelwork, only to learn that Lumahan had filed an illegal dismissal complaint.
Nightowl did not at all argue that Lumahan had abandoned his work, thereby warranting the termination of his
employment.

Significantly, the CA construed these arguments as abandonment of work under the labor law construct. We
find it clear, however, that Nightowl did not dismiss Lumahan; hence, it never raised the defense of
abandonment.

xxxx

Finally, failure to send notices to Lumahan to report back to work should not be taken against Nightowl despite
the fact that it would have been prudent, given the circumstance, had it done so. Report to work notices are
required, as an aspect of procedural due process, only in situations involving the dismissal, or the possibility of
dismissal, of the employee. Verily, report-to-work notices could not be required when dismissal, or the
possibility of dismissal, of the employee does not exist. (Citation ommitted and emphasis ours.)

Since there was neither dismissal nor abandonment, the CA correctly sustained the LA and the NLRC's
decision to order petitioner's reinstatement but without backwages, consistent with the following
pronouncement in Danilo Leonardo v. National Labor Relations Commission and Reynaldo's Marketing
Corporation, et. al.:34

85
Accordingly, given that FUERTE may not be deemed to have abandoned his job, and neither was he
constructively dismissed by private respondent, the Commission did not err in ordering his reinstatement but
without backwages. In a case where the employee's failure to work was occasioned neither by his
abandonment nor by a termination, the burden of economic loss is not rightfully shifted to the employer; each
party must bear his own loss.35 (Citation ommitted)

Although not specified in the proforma Complaint, petitioner's claim for underpayment of holiday pay, 13th
month pay and service incentive leave pay was alleged in his Position Paper.36 In fact, respondents squarely
addressed this issue in their Rejoinder, stating that "(w)hat is left therefore that respondent should pay are the
underpayments which should now be computed properly."37 Thus, the labor tribunals were not precluded from
passing upon this cause of action.38 Petitioner's cause of action "should be ascertained not from a reading of his
complaint alone but also from a consideration and evaluation of both his complaint and position paper." 39

Petitioner was found to have been paid salaries below the minimum wage rates and was, thus, awarded salary
differentials in the amount of ₱8,819.01 for the period October 9, 2011 to July 27, 2014. 40 Holiday pay, 13th
month pay and service incentive leave pay are all computed based on an employee's salary. Therefore, there
is necessarily an underpayment if these benefits were computed and paid based on salaries below minimum
wage rates.

Anent petitioner's claim for his 13th month pay for 2014, the same was not alleged in his Complaint or his
Position Paper. It appears to have been raised for the first time in his partial appeal to the NLRC. However, it
should be noted that respondents effectively admitted in their Position Paper that petitioner was entitled to
his pro-rata 13th month pay for 2014.41 To withhold this benefit from petitioner, despite respondents' admission
that he should be paid the same, will not serve the ends of substantial justice. Hand in hand with the concept of
admission against interest, the concept of estoppel, a legal and equitable concept, necessarily must come into
play.42 Furthermore, it is settled that technical rules of procedure may be relaxed in labor cases to serve the
demands of substantial justice.43

The LA is, thus, directed to determine any underpayment of holiday pay, 13th month pay and service incentive
leave pay for the period covered by the award of salary differentials, and to compute the corresponding
differentials. The LA is further directed to compute petitioner's pro rata 13th month pay for 2014.

In San Miguel Corporation v. Eduardo L. Teodosio44, the Court held that:

xxxx

Moral damages are recoverable where the dismissal of the employee was attended by bad faith or fraud or
constituted an act oppressive to labor, or was done in a manner contrary to morals, good customs or public
policy. On the other hand, exemplary damages are proper when the dismissal was e:ff ected in a wanton,
oppressive or malevolent manner, and public policy requires that these acts must be suppressed and
discouraged.45

In the present case, petitioner failed to sufficiently establish that he had been dismissed, let alone in bad faith
or in an oppressive or malevolent manner. Petitioner, thus, cannot rightfully claim moral and exemplary
damages.46

Petitioner, however, is entitled to attorney's fees at ten percent (10%) of the total monetary award.47 It has been
determined that petitioner was underpaid his wages. Attorney's fees may be recovered by an employee whose
wages have been unlawfully withheld.48 There need not even be any showing that the employer acted
maliciously or in bad faith; there need only be a showing that lawful wages were not paid accordingly, as in this
case.49

WHEREFORE, the Court of Appeals' Decision dated December 2, 2016 and Resolution dated February 23,
2017, in CA-G.R. SP No. 142491, are AFFIRMED with MODIFICATION in that petitioner is additionally entitled
to: (a) differentials in any underpaid holiday pay, 13th month pay and service incentive leave pay for the period
October 9, 2011 to July 27, 2014; (b) pro rata 13th month pay for 2014; and (c) attorney's fees at ten percent
(10%) of the total monetary award.

The case is remanded to the Labor Arbiter for the determination of any underpayment of holiday pay, 13th
month pay and service incentive leave pay for the period October 9, 2011 to July 27, 2014, and for the proper
computation of the corresponding differentials. The Labor Arbiter is also directed to compute petitioner's pro
rata 13th month pay for 2014. The Labor Arbiter shall report compliance with these directives within thirty (30)
days from notice of this Decision.

SO ORDERED.

o. Abandonment of work 
 i. Immediate filing of illegal dismissal 


86
 1. Brown vs. Marswin Marketing, Inc., et al., G.R. No. 206981, March 15, 2017 
 PDF

ii. Premature filing of labor case 
 1. Claudia's Kitchen, Inc. vs. Tanguin, G.R. No. 221096, June 28,
2017



June 28, 2017

G.R. No. 221096

CLAUDIA'S KITCHEN, INC. and ENZO SQUILLANTINI, Petitioners

vs.
MA. REALIZA S. TANGUIN, Respondent

DECISION

MENDOZA, J.:

This is a petition for review on certiorari seeking to modify the April 15, 2015 Decision1 and October 13, 2015
Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 130332, which modified the November 29, 2012
Decision3 and April 4, 2013 Resolution4 of the National Labor Relations Commission (NLRC) in NLRC NCR CN.
01-01520-11/ NLRC LAC No. 02-000693-12, a case for illegal dismissal.

The Antecedents

Respondent Ma. Realiza S. Tanguin (Tanguin) was employed by petitioner Claudia's Kitchen, Inc. (Claudia's
Kitchen) on June 20, 2001. She performed her functions as a billing supervisor in Manila Jockey Club's Turf

Club Building in San Lazaro Leisure and Business Park (SLLBP), Carmona, Cavite. Her duties and
responsibilities involved 1) Sorting and preparing suppliers' billing statements; 2) Releasing check payments to
the suppliers after being approved and signed by the management; 3) Giving job assignment to employees; 4)
Training and conducting orientation of new employees and monitoring their progress; 5) Encoding daily and
monthly menu production; 6) Preparing and submitting weekly and monthly inventory and sales reports to the
head office; 7) Handling petty cash funds and depositing daily and weekly collections; and 8) Programming
cash register.

Tanguin averred that on October 26, 2010, she was placed on preventive suspension by Marivic
Lucasan (Lucas an), Human Resources Manager, for allegedly forcing her co-employees to buy silver jewelry
from her during office hours and inside the company premises. On the same date, she was directed by
Lucasan to submit her written explanation on the matter. Tanguin admitted that she was selling silver jewelry,
but she denied that she did so during office hours. On October 30, 2010, she was barred by a security guard
from entering the company premises. She was informed by her co-employees, namely Khena Nama, Jordan
Lopez and Rose Marie Esquejo that they were forced to write letters against her, or else they would be
terminated from their work.

For their part, Claudia's Kitchen and Enzo Squillantini, its President, (petitioners) countered that in October
2010, they received reports fromsome employees that Tanguin was allegedly forcing some of them to buy
silver jewelry from her during office hours and inside the company premises, which the latter admitted. In order
to conduct a thorough investigation, she was placed under preventive suspension on October 26, 2010. On
October 27, 2010, the petitioners sent Tanguin a letter requiring her to submit a written explanation as to why
she should not be charged for conducting business within the company premises and during office hours.
During her suspension, the petitioners discovered her habitual tardiness and gross negligence in the
computation of the total number of hours worked by her co-employees. Subsequently, they sent letters to her,
to wit:

1. First Notice - sent on November 17, 2010 requiring Tanguin to report to the Head Office on November 19,
2010 at 10:00 o'clock in the morning to explain her alleged infractions; 5

2. Second Notice - sent on November 24, 2010 requiring Tanguin to explain the charges against her;6

3. Third Notice - sent on November 25, 2010 requiring Tanguin to report to the Head Office and to explain the
charges against her; 7

4. Letter- sent on December 1, 2010 reminding Tanguin thatshe was still an employee of Claudia's Kitchen
anddirecting her to report back to work;8 and

5. Final Letter - sent on December 2, 2010 requiring Tanguin to report for work on December 3, 2010 at 10:00
a.m.9

87
Tanguin, however, failed to act on these notices.

The LA Ruling

In a Decision, 10 dated December 22, 2011, the LA ruled that Tanguin' s preventive suspension was justified
because, as supervisor, she was in possession of the company's cash fund and collections. It stressed that she
was not illegally dismissed. Nevertheless, the LA ordered the petitioners to pay Tanguin her unpaid salary.
The falloreads:

WHEREFORE, a Decision is hereby rendered declaring that Complainant was not illegally DISMISSED.
Respondents are hereby ordered to pay Complainant her salary from October 10 to 25, 2010 as follows:

UNPAID SALARY

10/10- 25/10 - 15 days

P13,600/26x15 = P7,846.15

All other claims are DISMISSED for lack of merit.

SO ORDERED. 11

Unsatisfied, Tanguin elevated an appeal the before NLRC.

The NLRC Ruling

In its November 29, 2012 Decision, the NLRC partly granted Tanguin's appeal. It opined that there was no
scintilla of proof that she was dismissed from service. It pointed out that it was she who chose not to report for
work despite receipt of notices requiring her to report to the head office.

It stated that the nature of her position as billing supervisor, whereby she held company funds and gave job
assignments to the employees, was sufficient basis for the preventive suspension.

The NLRC, however, found that Tanguin did not abandon her work when she failed to report for work despite
notice. It stated that the filing of the complaint for illegal dismissal negated the claim of abandonment. The
NLRC concluded that there was neither dismissal nor abandonment. Thus, she should be reinstated to her
former position, but without backwages. The dispositive portion reads:

WHEREFORE, premises considered, the instant appeal is PARTLY GRANTED. The decision dated
December22, 2011insofar as the money award is concerned is affirmed in toto. However, appellees are
directed to reinstate appellant to her former position or to a similar equivalent position without loss of seniority
rights and other privileges sans backwages.

SO ORDERED. 12

Unconvinced, the petitioners filed a partial motion for reconsideration thereto. In its April 4, 2013 Resolution,
the NLRC denied the same.

Aggrieved, the petitioners filed a petition for certiorari with the CA.

The CA Ruling

In its assailed decision, dated April 15, 2015, the CA modified the NLRC ruling. It wrote that reinstatement was
not proper because such remedy was applicable only to illegally dismissed employees. It added that the
petitioners did not dismiss her from employment as evidenced by several notices sent to her requiring her to
report back to work and to explain the charges against her.

The CA, however, applied the doctrine of strained relations and ordered the payment of separation pay to
Tanguin instead of compelling the petitioners to accept her in their employ. It opined that she was employed as
a billing supervisor and such a sensitive position required no less than the trust and confidence of her employer
as she was routinely charged with the care and custody of the funds and property of her employer; and that as
a necessary consequence of the judicial controversy, an atmosphere of antipathy and antagonism may be
generated as to adversely affect her efficiency and productivity if she would be reinstated. Hence, the CA
disposed the case in this wise:

88
WHEREFORE, in view of the foregoing premises, the petition is PARTLY GRANTED. The Decision of the
NLRC dated November 29, 2012 and the April 4, 2013 Resolution of the National Labor Relations Commission
(NLRC) NLRC NCR CN. 01-01520-11/ NLRC LAC No. are hereby MODIFIED as follows:

1. Private respondent Ma. Realiza S. Tanguin is not entitled to reinstatement in view of the strained relationship
between her and the petitioners;

2. In view of the petitioners' assertion of the doctrine of strained relations, they are in effect dismissing private
respondent Tanguin on the ground of loss of confidence; and

3. As a measure of social justice, We award separation pay in favor of private respondent Ma. Realiza S.
Tanguin.

Accordingly, let this case be remanded to the Labor Arbiter for the computation of the proper separation pay of
private respondent Tanguin within fifteen (15) days from notice hereof.

SO ORDERED. 13

The petitioners moved for reconsideration, but their motion was denied by the CA in the assailed October 13,
2015 Resolution.

ISSUE

WHETHER SEPARATION PAY IN LIEU OF REINSTATEMENT MAY BE AWARDED TO AN EMPLOYEE

WHO WAS NOT DISMISSED FROM EMPLOYMENT.

The petitioners argued that the CA erred in awarding separation pay in the absence of any authorized cause for
termination of employment; and that its conclusion that it sought to terminate respondent due to loss of
confidence was refuted by the evidence on record.

In her Comment, 14 dated April 25, 2016, Tanguin averred that the petitioners sent her notices to return to work
only after she had filed an illegal dismissal complaint against them before the Labor Arbiter; that on October 27,
2010, she was barred from entering her workplace by Martin Martinez, the Cost Comptroller; and that the
charges of negligence in computing the number of hours worked by her co-employees and habitual tardiness
were merely concocted.

In their Reply, 15 dated January 4, 2017, the petitioners contended that separation pay could not be awarded on
the ground of social justice when the dismissal was based on the just causes under Article 282 of the Labor
Code; and that to grant separation pay in her favor would unjustly reward her for her infractions.

The Court's Ruling

Respondent was not dismissed from employment

In cases of illegal dismissal, the employer bears the burden of proof to prove that the termination was for a
valid or authorized cause. 16 But before the employer must bear the burden of proving that the dismissal was
legal, the employees must first establish by substantial evidence that indeed they were dismissed. If there is no
dismissal, then there can be no question as to the legality or illegality thereof. 17 In Machica v. Roosevelt
Services Center, Inc.,18 the Court enunciated:

The rule is that one who alleges a fact has the burden of proving it; thus, petitioners were burdened to prove
their allegation that respondents dismissed them from their employment. It must be stressed that the evidence
to prove this fact must be clear, positive and convincing. The rule that the employer bears the burden of proof
in illegal dismissal cases finds no application here because the respondents deny having dismissed the
petitioners. 19

Tanguin miserably failed to discharge this burden. She simply alleged that a security guard barred her from
entering her workplace. Yet, she offered no evidence to prove the same. Absent any evidence that she was
prevented from entering her workplace, what remained was her bare allegation, which could not certainly be
considered substantial evidence. At any rate, granting that she was barred, there was a lawful basis therefor as
she had been placed under preventive suspension pending investigation.

On the other hand, the petitioners were able to prove that they did not dismiss Tanguin from employment
because she was still under investigation as evidenced by several notices 20 requiring her to report to work and
submit an explanation as to the charges hurled against her. In fact, in its December 1, 2010 letter, they
reminded her that she was still an employee of Claudia's Kitchen.

89
Instead of answering the allegations against her, she opted to file an illegal dismissal complaint with the Labor
Arbiter. Clearly, her complaint for illegal dismissal was premature, if not pre-emptive.

There wasno abandonment on the part of respondent

The Court further agrees with the findings of the LA, the NLRC and the CA that Tanguin was not guilty of
abandonment. Tan Brothers CorporationofBasilan City v. Escudero21 extensively discussed abandonment in
laborcases:

As defined under established jurisprudence, abandonment is the deliberate and unjustified refusal of an
employee to resume his employment. It constitutes neglect of duty and is a just cause for termination of
employment under paragraph (b) of Article 282 [now Article 296] of the Labor Code. To constitute
abandonment, however, there must be a clear and deliberate intent to discontinue one's employment without
any intention of returning. In this regard, two elements must concur: (1) failure to report for work or absence
without valid or justifiable reason; and (2) a clear intention to sever the employer-employee relationship, with
the second element as the more determinative factor and being manifested by some overt acts. Otherwise
stated,' absence must be accompanied by overt acts unerringly pointing to the fact that the employee simply
does not want to work anymore. It has been ruled that the employer has the burden of proof to show a
deliberate and unjustified refusal of the employee to resume his employment without any intention of
returning.22 [Emphasis supplied]

In this case, records are bereft of any indication that Tanguin's failure to report for work was with a clear intent
to sever her employment relationship with the petitioners. Mere absence or failure to report for work, even after
a notice to return to work has been served, is not enough to amount to an abandonment of employment. 23

Moreover, Tanguin's act of filing a complaint for illegal dismissal with prayer for reinstatement negates any
intention to abandon her employment. 24 On the theory that the same is proof enough of the desire to return to
work, the immediate filing of a complaint for illegal dismissal, more so when it includes a prayer for
reinstatement, has been held to be totally inconsistent with a charge of abandonment. 25 To reiterate,
abandonment of position is a matter of intention and cannot be lightly inferred, much less legally presumed,
from certain equivocal acts. 26

The grant of separation pay in lieu of reinstatement hasno legal basis

Separationis pay warranted when the cause for termination is not attributable to the employee's fault, such as
those provided in Articles 29827 and 29928 of the Labor Code, as well as in cases of illegal dismissal where
reinstatement is no longer feasible. 29 On the other hand, an employee dismissed for any of the just causes
enumerated under Article 29730 of the same Code, being causes attributable to the employee's fault, is not, as a
general rule, entitled to separation pay. The non-grant of such right to separation is pay premised on the
reason that an erring employee should not benefit from their wrongful acts. 31 Under Section 7,32 Rule I, Book VI
of the Omnibus Rules Implementing the Labor Code, such dismissed employee is nonetheless entitled to
whatever rights, benefits, and privileges he may have under the applicable individual or collective agreement
with the employer or voluntary employer policy or practice.

As an exception, case law allows the grant of separation pay or financial assistance to a legally-dismissed
employee as a measure of social justice or on grounds of equity. In Philippine Long Distance Telephone Co. v.
NLRC (PLDT), 33 the Court allowed the grant when the employee wasvalidly dismissed for causes other than
serious misconduct or those reflecting on his moral character.The payment of separation pay and
reinstatement are exclusive remedies.34The payment of separation pay replaces the legal consequences of
reinstatement to an employee who was illegally dismissed.35 To award separation pay in lieu of reinstatement to
an employee who was never dismissed by his employer would only give imprimatur to the unacceptable act of
an employee who is facing charges related to his employment, but instead of addressing the complaint against
him, he opted to file an illegal dismissal case against his employer.

In sum, separation pay is only awarded to a dismissed employee in the following instances: 1) in case of
closure of establishment under Article 298 [formerly Article 283] of the Labor Code; 2) in case of termination
due to disease or sickness under Article 299 [formerly Article 284] of the Labor Code; 3) as a measure of social
justice in those instances where the employee is validly dismissed for causes other than serious misconduct or
those reflecting on his moral character;36 4) where the dismissed employee's position is no longer available;37 5)
when the continued relationship between the employer and the employee is no longer viable due to the
strained relations between them;38 or 6) when the dismissed employee opted not to be reinstated, or the
payment of separation benefits would be for the best interest of the parties involved. 39 In all of these cases, the
grant of separation pay presupposes that the employee to whom it was given was dismissed from employment,
whether legally or illegally. In fine, as a general rule, separation pay in lieu of reinstatement could not be
awarded to an employee whose employment was not terminated by his employer.

In Dee Jay's Inn and Cafe v. Raneses, 40 the Court wrote that in "a case where the employee was neither found
to have been dismissed nor to have abandoned his/her work, the general course of action is for the Court to

90
dismiss the complaint, direct the employee to return to work, and order the employer to accept the
employee."

There were cases, however, wherein the Court awarded separation pay in lieu of reinstatement to the
employee even after a finding that there was neither dismissal nor abandonment. In Nightowl
Watchman & Security Agency, Inc. v. Lumahan (Nightowl)41 the Court awarded separation pay in view of the
findings of the NLRC that respondent stopped reporting for work for more than ten (10) years and never
returned, based on the documentary evidence of petitioner.

The circumstances in this case, however, does not warrant an application of the exception. Thus, the general
rule that no separation pay may be awarded to an employee who was not dismissed obtains in this case. In this
regard, it is only proper for Tanguin to report back to work and for the petitioners to accept her, without
prejudice to the on-going investigation against her.

No strained relations between the parties

Finally, the doctrine of strained relations, upon which the CA relied on to support its pay award of separation to
Tanguin, has also no application in this case. 1âwphi 1

Under the doctrine of strained relations, the payment of separation pay is considered an acceptable alternative
to reinstatement when the latter option is no longer desirable or viable. On one hand, such payment liberates
the employee from what could be a highly oppressive work environment. On the other hand, it releases the
employer from the grossly unpalatable obligation of maintaining in its employ a worker it could no longer trust.42

Strained relations must be demonstrated as a fact. 43 The doctrine of strained relations should not be used
recklessly or applied loosely nor be based on impression alone.44

The CA, in declaring that the relations of the parties are so strained such that reinstatement is no longer
feasible, merely stated that it would not be equitable for the petitioners to be ordered to maintain Tanguin in
their employ for it may only inspire vindictiveness on the part of the latter and that the filing of the illegal
dismissal case created an atmosphere of antipathy and antagonism between the parties. 45

That Tanguin would be spiteful towards the petitioners, however, is a mere presumption without any factual
basis. Further, the filing of an illegal dismissal case alone is not sufficient reason to engender a conclusion that
the relationship between employer and employee is already strained. The doctrine on strained relations cannot
be applied indiscriminately since every labor dispute almost invariably results in strained relations; otherwise,
reinstatement can never be possible simply because some hostility is engendered between the parties as a
result of their disagreement.46 Finally, it must be noted that Tanguin herself is asking for her reinstatement, the
same being one of the reliefs she prayed for in her Appeal47 before the NLRC and even in her Comment48 to the
petition for review filed by the petitioners.

To recapitulate, there was neither dismissal nor abandonment. At the time Tanguin initiated the illegal dismissal
case, the complaint had no basis. The status quo ante was that she was being asked to explain the accusation
against her. Instead of complying, she opted to file a complaint for illegal dismissal. It was premature, if not pre-
emptive, which the Court cannot tolerate or accommodate. At this time, her plea for reinstatement, backwages
and/or separation pay cannot be granted. Respondent should return to work and answer the complaints against
her and the petitioners should accept her, without prejudice to the result of the investigation against her.

WHEREFORE, the petition is GRANTED. Respondent Ma. RealizaS. Tanguin is hereby ordered to RETURN
TO WORK within fifteen days from the receipt of this decision. Petitioners Claudia's Kitchen, Inc. and Enzo
Squillantini are likewise ordered to ACCEPT respondent Ma. Realiza S. Tanguin, without prejudice to the result
of the investigation against her.

SO ORDERED.

p. Petition for Certiorari 
 i. Reglementary period vs. Petition for review on certiorari 


1. Nueva Ecija II Electric Cooperative, Inc., et al. vs. Mapagu, G.R. No. 196084, February 15, 2017 


February 15, 2017

G.R. No. 196084

NUEVA ECIJA II ELECTRIC COOPERATIVE, INC., AREA I, Mr. REYNALDO VILLANUEVA, President,
Board of Directors, and Mrs. EULALIA CASTRO, General Manager, Petitioners

91
vs.
ELMER B. MAPAGU, Respondent

DECISION

JARDELEZA, J.:

This is a Petition for Review on Certiorari1 assailing the September 2, 20102 and March 3, 20113 Resolutions of
the Court of Appeals (CA) in CA-G.R. SP No. 114690. The CA dismissed outright the petition for certiorari filed
by Nueva Ecija II Electric Cooperative, Inc., Area I (NEEC), Reynaldo Villanueva (Villanueva) and Eulalia
Castro (Castro) (collectively, petitioners) on the ground that their Verification and Certification against Forum
Shopping was unsigned.

Respondent Elmer B. Mapagu (Mapagu) was employed with NEEC as a data processor since May
1983.4 NEEC is an electric cooperative which supplies electricity to households in Nueva Ecija, including
Aliaga, where Mapagu resides.5 Upon the request of the NEEC Board of Directors, the National Electrification
Administration (NEA) conducted a special audit on the power bills and accounts receivables of the consumers,
as well as related internal control and procedure, of NEEC.6 The audit revealed unaccounted consumption or
readings which have accumulated due to under-reading and under-billing in prior years or months. Mapagu's
electric consumption was found to be under-read and under-billed by 12,845 kilowatt hours (kWhrs) and 1,918
kWhrs for the months of April 2004 and March to May 2005, respectively. This under-reading/under-billing
amounted to a total of P87,666.17.7 As a result, petitioners sent a Notice of Charges dated June 13, 2006
against Mapagu, charging him with grave violations of Sections 7.2.18 & 7.2.19 of the NEEC Code of Ethics
and Discipline (NEEC Code),8 to wit:

"Section 7.2.18 - Fraud or willful breach by the employee of the trust reposed in him/her by his/her supervisor
or by the management."

"Section 7.2.19 - All other acts of dishonesty which cause or tend to cause prejudice to the REC."9

Mapagu was informed that the penalty for the charges is dismissal for the first offense and was directed to
submit an answer within 72 hours from receipt of the Notice of Charges.10 In his answer, Mapagu denied under
oath that his electric meter was under-read and under-billed by 1,918 k Whrs. He asserted that he has no
meter reading from November 2002 to April 2005. He also argued that he availed of the amnesty offered and
given by the NEEC Officer in Charge General Manager Jun Capulong in connection with employees' meter
problems. Since the charges have been condoned, pardoned and disregarded, Mapagu maintains that he
cannot be charged with unaccounted consumption.11

NEEC created an Investigation and Appeals Committee (IAC) to investigate Mapagu and the other workers
implicated in the special audit. The IAC scheduled four conferences where data encoders and meter readers
were invited as resource persons.12

On September 5, 2006, the IAC issued its findings and recommendations. It held that while the charges of
under-reading and under-billing were not established, Mapagu failed to observe the highest degree of honesty
as an employee. He did not take action to correct his kWhr consumption despite knowledge that he has no
reading from 2002 to 2005. To the IAC, this was proof that Mapagu consented to the anomaly for his own
benefit.13 On account of his failure to protect the interest of NEEC, the IAC found him guilty of the charges
against him, with the additional finding that he also violated Section 7.2.3 of the NEEC Code for concealing
defective work resulting in the prejudice or loss of NEEC.

Nevertheless, and for humanitarian reasons, the IAC recommended that Mapagu only be suspended for two
years, on the condition that he execute a waiver in favor of NEEC management against the filing of any legal
action regarding his suspension. He was also ordered to pay his unbilled consumption worth ₱87,666.17. 14

On January 2, 2007, however, Mapagu received a Notice of Dismissal from service. Hence, he filed a
Complaint for illegal dismissal and non-payment of allowances against petitioners. He later amended the
Complaint to include a prayer for moral, exemplary and actual damages and attorney's fees, dropping his claim
for allowances.15 NEEC countered that Mapagu was dismissed due to valid and legal causes. His gross
dishonesty, fraud and willful misconduct were unveiled by the special audit conducted by the NEA. 16 NEEC
contended that the amnesty claimed by Mapagu cannot work in his favor because it only provided for a special
payment arrangement, where he was allowed to pay his under-billed obligation on installment for two years.17

In his November 30, 2007Decision,18 Labor Arbiter (LA) Leandro M. Jose ruled in favor of petitioners. Stating
that NEEC discharged its burden of proving that Mapagu was lawfully dismissed, LA Jose dismissed Mapagu's
Complaint for lack of merit.19

92
Mapagu appealed to the National Labor Relations Commission (NLRC), which reversed and set aside 20 the
ruling of the LA. The NLRC held that under the circumstances and facts of the case, the penalty of dismissal is
unwarranted. According to the NLRC, while the law does not condone wrongdoing by an employee, it urges a
moderation of the sanction that may be applied to him where a penalty less punitive would suffice.21 The NLRC
compared the penalty imposed upon Mapagu with the sanctions received by his co-employees who admitted
that they altered or tampered their meter reading slips. It found that despite the IAC recommendation of
dismissal from the service, the other employees were merely suspended and even given separation pay by the
petitioners.22 The NLRC observed:

Further, if respondents-appellees [herein petitioners] were able to condone, through Board Resolution No. 09-
11-05, those with tampered meters, under read meters, stop/slow meters and illegal connection through
payment of the unaccounted consumption, the dismissal of the complain[ant]-appellant all the more is shown to
be tainted with bad faith. The condonation of some employees who have committed acts punishable with
the (sic) dismissal and the dismissal of employees who have committed acts punishable with dismissal shows
the bias of appellees.23

The NLRC concluded that Mapagu is entitled to the twin relief of reinstatement and backwages. Considering,
however, that the trust reposed on Mapagu can no longer be restored, and reinstatement is no longer feasible,
the NLRC ordered the payment of separation pay reckoned from the time of Mapagu's employment up to the
finality of the Decision. The dispositive portion of the NLRC Decision reads:

WHEREFORE, premises considered, the appeal is hereby granted. The 30 November 2007 Decision of the
Labor Arbiter is reversed and set aside and a new one entered directing Nueva Ecija Electric Cooperative II to
pay Elmer Mapagu separation pay in an amount equivalent to one (1) month pay reckoned from his
employment up to the finality of this Decision and backwages reckoned from the time he was dismissed up to
the finality of this Decision. However, from his backwages, the amount pertaining to his two years suspension
must be deducted.

The claims for moral and exemplary damages are dismissed for want of merit.

SO ORDERED.24 (Emphasis in the original.)

Petitioners sought reconsideration but this was denied by the NLRC. Mapagu, meanwhile, filed a Motion for
Clarification and Motion for Partial Reconsideration. The NLRC denied the latter motion but clarified that the
separation pay referred to in the decretal pmiion of its Decision refers to one (1) month pay for every year of
service reckoned from the time of Mapagu's employment up to the finality of its Decision. 25 Petitioners elevated
the case to the CA via a petition for certiorari under Rule 65 of the Rules of Court (Rules).

In its September 2, 2010 Resolution, the CA dismissed the petition outright. It found that petitioners failed to
sign the attached Verification and Ce1iification against Forum Shopping and held that a defective verification
and certification is equivalent to non-compliance with the Rules. It also constitutes valid cause for dismissal of
the petition under the last paragraph of Section 3, Rule 46. Further, Section 5, Rule 7 of the Rules which
requires the pleader to submit a certification of non-forum shopping executed by the plaintiff or principal party,
is mandatory. Subsequent compliance cannot excuse a party from failing to comply in the first place. 26

Petitioners filed a Motion for Reconsideration which the CA denied. The CA noted that petitioners still failed to
attach a signed verification and certification of non-forum shopping.27 Petitioners seek recourse with us via a
petition for review under Rule 45.

Petitioners fault the CA for dismissing the case on the ground that not all of the petitioners signed the
Verification and Certification against Forum Shopping. They explained that only Castro, the General Manager
of NEEC, signed the verification and certification because she was authorized and empowered by the NEEC
Board of Directors through Resolution No. 02-18-0728 dated February 22, 2007, to sign on behalf of NEEC.
Likewise, Villanueva, the President of NEEC, executed a Special Power of Attorney29 (SPA) dated February 20,
2007, giving Castro the power to represent him in this case and to sign all the documents for and on his
behalf.30 More importantly, petitioners contend that Villanueva and Castro have only one defense--that they
were both sued as officers of NEEC. Thus, sharing a common interest, the execution by one of them of the
certificate of non-forum shopping constitutes substantial compliance with the Rules.31

Mapagu filed his Comment,32 claiming that the petition is filed out of time. He asserts that petitioners
themselves disclosed that they received the Resolution of the CA denying their Motion for Reconsideration on
March 17, 2011; hence, they only had until April 2, 2011 to file a petition for review on certiorari. The petition
was filed on May 5, 2011, well beyond the reglementary period. Thus, the questioned Resolutions of the CA
have become final and executory.33 With respect to the alleged SPA in favor of Castro, Mapagu allege that
NEEC only authorized Castro to represent Villanueva in the case before the NLRC and not before the CA.
Also, the Board Resolution of the NEEC refers only to pending cases as of February 22, 2007. Since the
original action for certiorari before the CA was filed only on July 23, 2010, Castro could not have validly signed
the verification and certification on behalf of NEEC on the basis of the February 22, 2007 SPA. 34

93
On the merits of the case, Mapagu attacks the LA's Decision for being rendered with grave abuse of discretion
because the latter did not explain how petitioners were able to prove the validity of his dismissal from the
service. He alleges that the LA merely declared petitioners as "victors without explanation." 35 He explains that
petitioners' charges against him relate to his status as a customer and not as an employee of NEEC.36 He
maintains that as a computer operator or data processor, he merely encoded the bills of industrial consumers.
This did not include residential consumers or those of NEEC employees.37 Mapagu attributes bias against
petitioners who he claimed treated him harshly compared to his co-employees who admitted their wrongdoings
and committed far worse offenses.38

On April 4, 2012, petitioners filed their Reply39 and insist that they have 60 days from March 17, 2011 (or until
May 1 7, 2011) to file the petition for review on certiorari. Since the petition was filed on May 6, 2011, they
maintain that the same was in fact, filed 11 days ahead of the deadline for submission.40

On December 13, 2011, Mapagu filed an Urgent Manifestation41 disclosing that since he had already been paid
the full monetary award granted him by the NLRC, petitioners are now released from any and all obligations to
him arising from the NLRC's judgment.

The issues raised are:

1. Whether the petition for review on certiorari was, filed before the CA within the reglementary period; and

2. Whether the CA erred in dismissing the petition for certiorari for non-compliance with the Rules.

II

We deny the petition.

The facts and material dates are undisputed. Petitioners received the September 2, 2010 Resolution of the CA
on September 14, 2010. They filed a Motion for Reconsideration and received the Resolution denying the same
on March 17, 2011. Thereafter, they filed a Motion for Extension of Time to File Petition for Review
on Certiorari with Payment of Docket Fees.42 They sought an extension of 20 days from April 1, 2011 or until
April 21, 2011 within which to file the appeal.

On May 6, 2011, they filed this petition. They allege that they have 60 days to file the appeal and in fact, they
claim that they are filing it 11 days ahead of the reglementary deadline. Petitioners insist that following Republic
v. Court of Appeals43 and Bello v. National Labor Relations Commission,44 petitions for review on certiorari can
be filed within 60 days from receipt of the order denying the motion for reconsideration.

Petitioners are gravely mistaken. The right to appeal is a mere statutory privilege and must be exercised only in
the manner and in accordance with the provisions of the law. One who seeks to avail of the right to appeal
must strictly comply with the requirement of the rules. Failure to do so leads to the loss of the right to
appeal.45 The case before us calls for the application of the requirements of appeal under Rule 45, to wit:

Sec. 1. Filing of petition with Supreme Court. - A party desiring to appeal by certiorari from a judgment or final
order or resolution of the Court of Appeals, the Sandiganbayan, the Regional Trial Court or other courts
whenever authorized by law, may file with the Supreme Court a verified petition for review on certiorari. The
petition shall raise only questions of law which must be distinctly set forth.

Sec. 2. Time for filing; extension. - The petition shall be filed within fifteen (15) days from notice of the
judgment or final order or resolution appealed from, or of the denial of the petitioner's motion for new
trial or reconsideration filed in due time after notice of the judgment. On motion duly filed and served,
with full payment of the docket and other lawful fees and the deposit for costs before the expiration of
the reglementary period, the Supreme Court may for justifiable reasons grant an extension of thirty (30)
days only within which to file the petition. (Emphasis supplied.)

Petitioners failed to comply with the foregoing provisions. They confuse petitions for review on certiorari under
Rule 45 with petitions for certiorari under Rule 65. It is the latter which is required to be filed within a period of
not later than 60 days from notice of the judgment, order or resolution. If a motion for new trial or
reconsideration is filed, the 60-day period shall be counted from notice of the denial of the motion. Sections 1
and 4 of Rule 65 read:

Sec. 1. Petition for certiorari. - When any tribunal, board or officer exercising judicial or quasi-judicial functions
has acted without or in excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack or
excess of jurisdiction, and there is no appeal, or any plain, speedy, and adequate remedy in the ordinary
course of law, a person aggrieved thereby may file a verified petition in the proper court, alleging the facts with
certainty and praying that judgment be rendered annulling or modifying the proceedings of such tribunal, board
or officer, and granting such incidental reliefs as law and justice may require.

94
The petition shall be accompanied by a certified true copy of the judgment, order or resolution subject thereof,
copies of all pleadings and documents relevant and pertinent thereto, and a sworn certification of non-forum
shopping as provided in the third paragraph of section 3, Rule 46.

xxx

Sec. 4. When and where petition filed. - The petition shall be filed not later than sixty (60) days from notice
of the judgment, order or resolution. In case a motion for reconsideration or new trial is timely filed,
1âwphi1

whether such motion is required or not, the sixty (60) day period shall be counted from notice of the
denial of said motion.x x x (Emphasis supplied.)

Petitioners' reliance on Republic and Bello are misplaced. In both cases, we are confronted with the issue of
whether the petitions for certiorari before the CA were filed out of time. No other issue was raised
in Republic and Bello. Further, it does not escape our attention that petitioners initially filed a motion for
extension of time to file a petition for review where they recognized that they only have until April 1, 2011 (or 15
days from receipt of the denial of their Motion for Reconsideration) to file the petition. Clearly, petitioners were
fully aware of the correct period for filing an appeal under Rule 45. Yet, in their actual petition, they maintain
that they have 60 days to file the appeal. We cannot countenance petitioners' obvious legal maneuvering.

A party litigant wishing to file a petition for review on certiorari must do so within 15 days from notice of the
judgment, final order or resolution sought to be appealed. Here, petitioners received the Resolution of the CA
denying their Motion for Reconsideration on March 17, 2011. Under the Rules, they have until April 1, 2011 to
file the petition. However; they filed the same only on May 6, 2011. This was 50 days beyond the 15-day period
provided under Section 2, Rule 45 and 30 days beyond the extension asked for. Even if petitioners were given
the maximum period of extension of 30 days, their petition before us still cannot stand. The Rules allow only for
a maximum period of 45 days within which an aggrieved party may file a petition for review on certiorari. By
belatedly filing their petition with the CA, petitioners have clearly lost their right to appeal.46

There are instances when we have relaxed the rules governing the periods of appeal to serve substantial
justice.47In Azores v. Securities and Exchange Commission,48 we held:

The failure of a party to perfect his appeal in the manner and within the period fixed by law renders the decision
sought to be appealed final, with the result that no court can exercise appellate jurisdiction to review the
decision. For it is more important that a case be settled than that it be settled right. It is only in exceptional
cases when we have allowed a relaxation of the rules governing the periods of appeals. As stated
in Bank of America, NT & SA v. Gerochi, Jr., typical of these cases are the following:

In Ramos vs. Bagasao, 96 SCRA 395, we excused the delay of four days in the filing of a notice of appeal
because the questioned decision of the trial court was served upon appellant Ramos at a time when her
counsel of record was already dead. Her new counsel could only file the appeal four days after the prescribed
reglementary period was over. In Republic vs. Court of Appeals, 83 SCRA 453, we allowed the perfection of an
appeal by the Republic despite the delay of six days to prevent a gross miscarriage of justice since the
Republic stood to lose hundreds of hectares of land already titled in its name and had since then been devoted
for educational purposes. In Olacao vs. National Labor Relations Commission, 177 SCRA 38, 41, we accepted
a tardy appeal considering that the subject matter in issue had theretofore beenjudicially settled, with finality, in
another case. The dismissal of the appeal would have had the effect of the appellant being ordered twice to
make the same reparation to the appellee.49 (Emphasis supplied, citation omitted. Italics in the original.)

None of the foregoing justifications are, however, present here. Petitioners remain adamant that they properly
observed the Rules when clearly they failed to do so. They did not even attempt to allude to any exceptional
circumstance that would move us to use our equity jurisdiction to allow a liberal application of the Rules.
Hence, we are constrained to declare that for petitioners' failure to file an appeal by certiorari within the
reglementary period, the assailed Resolutions of the CA had already become final and executory.

In the case of Gonzales v. Pe,50 we held that:

While every litigant must be given the amplest opportunity for the proper and just determination of his cause,
free from the constraints of technicalities, the failure to perfect an appeal within the reglementary period is not a
mere technicality. It raises a jurisdictional problem, as it deprives the appellate court of its jurisdiction over the
appeal. After a decision is declared final and executory, vested rights are acquired by the winning party. Just as
a losing party has the right to appeal within the prescribed period, the winning party has the correlative right to
enjoy the finality of the decision on the case.51

All told, considering that we have lost jurisdiction to review the case in view of the finality of the CA Decision,
we see no further reason to delve into the other issues raised by petitioners.

WHEREFORE, the petition is DENIED. The September 2, 2010 and March 3, 2011 Resolutions of the Court of
Appeals in CA-G.R. SP No. 114690 are hereby AFFIRMED.

95
SO ORDERED.

q. Loss of trust and confidence / Willful breach of trust 
 i. Failure to establish breach of trust 


1. Sta. Ana vs. Manila Jockey Club, Inc., G.R. No. 208459, February 15, 2017 


February 15, 2017

G.R. No. 208459

JULIETA B. STA. ANA, Petitioner

vs.
MANILA JOCKEY CLUB, INC., Respondent

DECISION

DEL CASTILLO, J.:

Before the Court is a Petition for Review on Certiorari assailing the July 11, 2012 Decision1 of the Court of
Appeals (CA) in CA-GR SP No. 114861. The CA affirmed the February 26, 2010 2 and April 30,
20103 Resolutions of the National Labor Relations Commission (NLRC), which in turn affirmed the September
28, 2009 Decision4 of the Labor Arbiter (LA) dismissing the illegal dismissal case against Manila Jockey Club,
Inc. (MJCI)/Atty. Alfonso Reyno (Atty. Reyno). Also challenged is the July 31, 2013 CA Resolution 5 denying the
Motion for Reconsideration on the assailed Decision.

Factual Antecedents

In May 1977, MJCI, a domestic corporation with legislative franchise to operate horse race betting, 6 hired
Julieta B. Sta. Ana (Sta. Ana) as outlet teller of its off-track betting (OTB) station in Tayuman, Manila (OTB
Tayuman). Because horse racing was not on a daily basis, Sta. Ana's work schedule was only for 12 days per
month with shifts from 5 p.m. to 10:30 p.m. on weekdays, and 1 p.m. to 7 p.m. on weekends. 7

As teller, Sta. Ana performed the following duties and functions:

1. Waits on [OTB] tellers' booth for customers/clients; sells betting tickets.

2. Answers bettor's inquiries, provides information on racing events, assists patrons with information, and takes
bet orders.

3. Processes cash payments through terminal registers; balances registers and makes daily ticket sales reports
after the races.

4. Handles cash and transactions with due diligence and honesty to the bettors and to the company as well.

5. Coordinates with the Betting Operations Department (BOD) on matters beyond the standard operating
procedure of the BOD.

6. Strictly observes and implements' company policies and procedures to protect the interests of the company
against unscrupulous bettors and operators

7. Reports incidents to the company on matters pertaining to the operations.

8, Submits or remits the cash sales for the day to the official collection team and/or to the assigned banks with
night depository box. 1âw phi 1

9. May be assigned to different OTBs as necessary to the company's operations.

10. Performs miscellaneous job-related duties as assigned.8

On November 13, 2008, however, MTCI issued a Memorandum9 stating that its Treasury Department was
discovered to have been illegally appropriating funds and lending it out to the employees of MJCI. As a result,
MTCI required its officers and employees to report any loan obtained from said department or any of its
personnel.

96
On December 21, 2008, MJCI’s Internal Auditing Department (IAD) submitted its Preliminary Report 10 indicating
that its Agudo OTB Branch (OTB Agudo) had unaccounted check remittances amounting to ₱44,377,455.00 for
the period January 10, 2008 to November 30, 2008.

On January 8, 2009, MJCI, through its Special Disciplinary Committee (SOC), formally charged11 Sta. Ana with
the following infractions:

x x x Julieta Sta. Ana- OTB Teller

DISHONESTY AND OTHER FRAUDULENT ACTS

[A.] Stealing or attempting to steal corporate property or money/corporate assets - 1st offense: dismissal

[B.] Malversation - 1st offense; dismissal

[C.] Engaging/conniving in anomalous transactions - 1st offense: dismissal12

In her Explanation,13 Sta. Ana denied committing any offense. She contended that even prior to the takeover of
the new management of MJCI, she had been engaged in the lending business to augment her income.

Later, MJCI served upon Sta. Ana a Notice of Investigation14 reiterating the accusations against her, and
narrating the circumstances surrounding her case, viz.:

Initial investigation revealed that there were unaccounted shortages incurred by the Cashier Department. The
Balance Sheet as of November 2008 indicated that the Cash on Hand amounted to around ₱198 million; actual
counting of the cash in vault revealed, however, that the actual amount is only around ₱3.1 million. At the
center of this irregularity and/or fraud is Josephine Tejada.

It has been reported that Josephine Tejada, without authority, has been lending large amount [sic] of money to
some MJCI personnel using corporate funds. It has likewise been reported that you [Sta. Ana] were abetting
Josephine Tejada in the said unauthorized lending or that you yourself has also been lending to some MJCI
personnel using corporate funds and without any authority from management. 15

The Notice further informed Sta. Ana of her 30-day suspension without pay effective January 16, 2009.

In her Answer,16 Sta. Ana averred that she did not know anything regarding MJCI's unaccounted money and
that her suspension was unjust. She maintained that she did not violate any company rule by engaging in the
lending business.

On January 30, 2009, Sta. Ana attended the hearing conducted by MJCI. 17

Sta. Ana and Josephine Tejada (Tejada), also submitted a Joint Affidavit18 dated January 20, 2009. Therein,
1avvphi 1

Tejada, MJCI's Assistant Head/Cashier, Treasury Department, denied doing business with Sta. Ana while Sta.
Ana asserted that she had been in the money lending business for 15 years, or even prior to the takeover by
the new management of MJCI, and that her capital was sourced from the sale of her fishing boats.

Sta. Ana likewise submitted a Supplement Affidavit19 dated February 2, 2009 alleging that in August 2008,
Benjie Sunga (Sunga) proposed to borrow money from her but since she could not personally attend to him,
she requested Tejada to give Sunga the money he needed. The following day, she paid Tejada the amount the
latter lent to Sunga. According to Sta. Ana, that was her only transaction with Tejada.

In its February 13, 2009 Report,20 the SDC found that Sta. Ana extended loans to the employees of MJCI during
office hours using its personnel as messenger. It further stated that on one occasion, Sta. Ana used corporate
funds without MJCI's authority, and with the assistance of Tejada. 21

Consequently, the SDC found Sta. Ana guilty of conspiring to defraud, illegally take funds, and cause
irreparable damage to MJCI; as such, MJCI lost its trust on her. It also declared that even granting that there
was no conspiracy, Sta. Ana, nonetheless, committed gross inexcusable negligence for failure to perform her
duties and protect the interest of MJCI. SDC recommended the dismissal of Sta. Ana and the filing of criminal
cases for qualified theft and other appropriate charges.

On February 16, 2009, MJCI issued a Notice of Termination22 to Sta. Ana.

On February 25, 2009, Sta. Ana filed a Complaint23 for illegal dismissal and payment of actual, moral and
exemplary damages, and attorney's fees against MJCI/ Atty. Reyno, its President.

97
In her Position Paper,24 Sta. Ana averred that she had been in the service for 31 years prior to her dismissal.
She stressed that she had bank deposits, real properties and fishing business to fund her lending business;
and, the fact that she lent money to her co-employees is not proof that she used MJCI's funds for her business.
She further insisted that there was no company rule prohibiting employees from engaging in their own
businesses. In addition, Sta. Ana contended that she had no direct access to her employer's money; thus, she
could not have stolen it. She pointed out that she never incurred a shortage in remitting the income of her OTB
Branch or the OTB Tayuman Branch. Lastly, Sta. Ana stated that her one-time request for Tejada to
accommodate Sunga is not evidence of any complicity with Tejada. Similarly, she should not be dragged into
the controversy in the Cashier/Treasury Department of MJCI just because she was a "kumare" of Tejada.

On the other hand, MJCI/Atty. Reyno countered in their Position Paper25 that it was incredible that the money
that Tejada advanced to Sunga came from Tejada's own fund. They insisted that the salary of Sta. Ana (of
₱6,700.00 per month), even including that of Tejada, was insufficient to fund a money lending business; hence,
the only logical conclusion was that the amount lent to Sunga came from MJCI's funds.

MJCI/Atty. Reyno remained firm that Sta. Ana committed dishonesty and connived with Tejada in an
anomalous transaction. They further declared that in its Report26 dated April 22, 2009, the SDC reiterated the
charge against Sta. Ana of operating a lending business and using a personnel of MJCI as conduit even during
office hours. That Sta. Ana supposedly used MJCI personnel in her business was derived from the statements
of two employees of MJCI, namely, Ramon Santos (Santos) and Ramon Pimentel (Pimentel).

Later, Sta. Ana argued in her Reply27 that MJCI/ Atty. Reyno maliciously and hastily concluded that she was in
cahoots with Tejada based only on the single transaction relating to Sunga. She also denied using MJCI's
personnel as conduit during office hours; she pointed out that considering her office schedule, she had enough
free time to engage in a lending business.

For their part, MJCI/ Atty. Reyno attached in their Reply28 the Affidavit29 of Sunga alleging that Sta. Ana advised
him to get money from Tejada. Thus, MJCI/Atty. Reyno maintained that Sta. Ana and Tejada were business
partners, and they committed dishonesty and connived in perpetrating an anomalous transaction against MJCI.

The parties filed their respective Rejoinders30 reiterating the contentions in their Position Papers and Replies.

Ruling of the Labor Arbiter

On September 28, 2009, the LA dismissed the Complaint for lack of merit. He declared that Sta. Ana conspired
with the other tellers against MJCI by issuing reports intended to conceal discrepancies in the remittance which
resulted in the unlawful taking of MJCI's funds, and that the money obtained by Sta. Ana was used in her
lending business.

The LA noted that Sta. Ana claimed that her capital was sourced from the proceeds of the sale of her fishing
vessels two years ago; yet, she also alleged that she started her lending business 15 years prior to the
takeover of the new management. The LA also concluded, based on the declarations of two employees, that
the amounts they borrowed from Sta. Ana were delivered by an employee of MJCI, that Sta. Ana had used an
MJCI's employee and company time in her business.

Lastly, the LA held that Sta. Ana's salary alone could not support her lending business. He also decreed that
the filing by MJCI of criminal cases against Sta. Ana proved its loss of trust and confidence in her, a valid
ground for dismissal from work.

Ruling of the National Labor Relations Commission

The NLRC affirmed the LA Decision. It ruled that MJCI validly dismissed Sta. Ana for loss of trust and
confidence; that although Sta. Ana might not have been directly involved in the discrepancies of the
remittances and in the preparation of reports to cover up such discrepancies, she was nonetheless a recipient
of the stolen money which she used in her lending business; that Sta. Ana's claim that her lending business
was funded by the sale of her fishing vessels two years ago contradicted her declaration that she commenced
her business 15 years earlier; and that Sta. Ana's statement, anent her co-employees who had loans from her,
did not indicate the dates when the borrowers obtained their loans from Sta. Ana.

Furthermore, the NLRC decreed that conspiracy between Sta. Ana and Tejada was established by Sunga's
admission that the money he borrowed from Sta. Ana came from Tejada; that Sta. Ana deliberately engaged in
a lending business and used corporate funds without MJCI's authority; and that the filing of a criminal case
against Sta. Ana proved the employer's loss of trust and confidence in her.

Lastly, the NLRC held that Atty. Reyno must be dropped as party-respondent because there was no showing
that he acted maliciously in furtherance of any illegal act of MJCI. It also affirmed the finding of the LA that
MJCI complied with the procedural requirements in dismissing Sta. Ana.

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On April 30, 2010, the NLRC denied the Motion for Reconsideration filed by Sta. Ana.

Ruling of the Court of Appeals

Sta. Ana filed with the CA a Petition for Certiorari contending that the NLRC committed grave abuse of
discretion amounting to lack or excess of jurisdiction when it ruled that she was validly dismissed from work.

On July 11, 2012, the CA affirmed the NLRC Resolutions.

The CA held that Sta. Ana regularly handled a large amount of money belonging to MJCI; thus, she occupied a
position of trust. The CA gave credence to Sunga's Affidavit where he declared that Sta. Ana told him that
Tejada was her (Sta. Ana) business partner. The CA further ruled that it could not see how Sta. Ana, with her
meager salary, could finance her lending business. It likewise sustained the view that Sta. Ana's statement that
she funded her business from the sale of her fishing boats two years ago contradicted her assertion that her
lending business commenced 15 years earlier.

In sum, the CA held that Sta. Ana connived with Tejada in stealing MJCI's funds and using it to finance her
lending business.

On July 31, 2013, the CA denied Sta. Ana's Motion for Reconsideration.

Undeterred, Sta. Ana filed this Petition for Review on Certiorari raising the following grounds:

THE RESPONDENT COURT OF APPEALS – 6TH DIVISION COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN AFFIRMING THE DECISION AND THE
RESOLUTION OF THE NATIONAL LABOR RELATIONS COMMISSION[;]

THE RESPONDENT COURT OF APPEALS – 6TH DIVISION COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN FINDING THAT PETITIONER WAS LEGALLY
DISMISSED ON THE BASIS OF THE LONE TESTIMONY OF MR. BENJIE SUNGA AND ON THE SPECIAL
DISCIPLINARY COMMITTEE REPORT DATED FEBRUARY 13, 2009[;AND,]

THE RESPONDENT COURT OF APPEALS – 6TH DIVISION COMMITTED GRAVE ABUSE OF DISCRETION
[AMOUNTING TO LACK] OR EXCESS OF JURISDICTION IN THEORIZING THAT PETITIONER AND THE
OTHER EMPLOYEES CONSPIRED [TO COMMIT] AN OFFENSE PUNISHABLE BY DISMISSAL.31

Sta. Ana maintains that MJCI failed to substantiate its allegation of conspiracy between her and Tejada. She
argues that the SDC found shortages in remittances in the OTB Agudo only, and not OTB Tayuman where she
was assigned. She also stresses that she was never assigned to the Agudo Branch and that she had no
transactions or dealings with said branch.

In addition, Sta. Ana avers that she never incurred any shortage in her remittances of the income of OTB
Tayuman. She likewise claims that her relationship with Tejada as "magkumare" should not be used as basis to
conclude that she was involved in the infraction committed by Tejada.

Sta. Ana insists that she has the financial capacity to engage in the lending business and MJCI did not conduct
any investigation on her financial background. She adds that she sold her fishing boats to infuse additional
capital into her business.

Furthermore, Sta. Ana asserts that she had no direct access to the vaults and bank accounts of MJCI; thus, it is
impossible that she could have used its funds.

Finally, Sta. Ana contends that she did not conduct her lending business during office hours or use an MTCI's
employee as conduit thereto. She reiterates that her work schedule permitted her to conduct her lending
business outside office hours, and there was no prohibition in the Employee's Handbook regarding extending of
loans to her co-employees.

On the other hand, MJCI counters that the instant Petition for Review on Certiorari ascribing grave abuse of
discretion against the CA must be dismissed because only questions of law may be raised in a petition under
Rule 45 of the Rules of Court.

In any event, MJCI argues that the Petition lacks merit because the CA did not commit any reversible error as
MJCI had sufficient basis for dismissing Sta. Ana on the ground of loss of trust and confidence. It reiterates that
Sta. Ana stole money from MJCI, and she abetted the commission of defalcation by Tejada in furtherance of
their illegal lending business.

99
In a Resolution32 dated October 13, 2014, the Court gave due course to the Petition and required the parties to
submit their respective memoranda.

Issue

Whether Sta. Ana was validly dismissed on the ground of loss of trust and confidence.

Our Ruling

The Petition is with merit,

As a rule, a petition under Rule 45 covers only questions of law as the factual findings of the CA are final and
binding upon the Court However, this rule allows certain exceptions including a situation where the CA
manifestly overlooked undisputed relevant facts, which if properly considered would support a different
conclusion,33 as in this case, In particular, the uniform finding of the LA, NLRC, and CA that Sta. Ana was
validly dismissed is unjustified because salient facts were overlooked, which, if properly considered, will prove
the absence of just cause in dismissing her from work.

It is settled that the employer has the right to dismiss an employee for just causes, which include willful breach
of trust and confidence. Complementary to such right is the burden of the employer to prove that the
employee's dismissal is for a just cause, and the employer afforded the latter due process before termination. 34

In this regard, to legally dismiss an employee on the ground of loss of trust, the employer must establish that a)
the employee occupied a position of trust and confidence, or has been routinely charged with the care and
custody of the employer's money or property; b) the employee committed a willful breach of trust based on
clearly established facts; and, c) such loss of tn1st relates to the employee's performance of duties. 35 In fine,
there must be actual breach of duty on the part of the employee to justify his or her dismissal on the ground of
loss of trust and confidence.36

In Manila Jockey Club, Inc. v. Trajano,37 where therein respondent was also a teller working for MJCI, like Sta.
Ana, the Court determined that the position of a selling teller is a position of trust and confidence since it
requires the handling and custody of tickets issued and bets made in the teller's station. Thus, Sta. Ana
undoubtedly occupied a position of trust and confidence.

However, while Sta. Ana occupied such position of tn1st and MJCI afforded her procedural due process, her
dismissal is still unwarranted because MJCI failed to discharge its burden of proving that she willfully breached
its trust, and such loss of trust relates to Sta. Ana's performance of duties.

To recall, MJCI issued a formal charge against Sta. Ana for dishonesty and other fraudulent acts for stealing or
attempting to steal corporate assets; malversation; and engaging in anomalous transactions. In its Report
dated February 13, 2009, the SDC specifically accused her of having used a co-employee in her personal
business during office hours; and, having lent money to another using MJCI's fond without authority, to wit:

x x x The SDC found other irregularities prejudicial to MJCI. [T]ejada and Purificacion were extending
unauthorized loans to MJCI personnel using corporate funds. This was confirmed by Atty. Juan S. Baun and
Mr. Noli Valencia. Ms. Purificacion also admitted overpaying late dividends and not reporting the
same. Another teller, x x x Julieta Sta. Ana has a personal lending operation within MJCI using MJCI
personnel as conduit and messenger apparently during office hours. [In] one instance, she also used
corporate funds without authority and with the assistance of x xx Tejada to lend to Benjamin
Sunga.38 (Emphasis supplied)

These allegations, however, are not supported by clear and convincing evidence.

One, MJCI argued that Sta. Ana used its personnel in her lending business during office hours. It will be
recalled that Sta. Ana was dismissed on February 16, 2009 pursuant to the SDC Report dated February 13,
2009. Notably, however, the specific statements as regards the accusation that Sta. Ana used in her lending
business an MJCI employee were mentioned for the first time only in the SDC Report dated April 22, 2009, as
follows:

x x x RAMON SANTOS

Mr. Santos is a Racetrack and Starting Gate Supervisor of MJCI. In his testimony, he admitted obtaining [a]
loan in the amount of ₱20,000.00, not from Tejada but from Sta Ana. The loan was received [in] October 2008,
in time for the enrolment of his children. The loan [was] delivered by an MJCI employee, driver Lito Maingat.

x x x RAMON PIMENTEL

100
Mr. Pimentel is the Head of the Food and Beverages at SLLBP, Carmona, Cavite. When asked if he obtained
any loan from any personnel of MJCI, he replied that while in Carmona, Cavite, he asked for [a] loan in the
amount of ₱4,000.00 from Sta. Ana through Atty. Juan Baun. The money was handed [to him] by Lito Maingat,
less 5% for the interest. He paid the loan with two post-dated checks.39

The statements of Santos and Pimentel only proved that they borrowed money from Sta. Ana, and the same
was delivered by Maingat. Significantly, there was no narration as to when the money was delivered. Otherwise
stated, there is no evidence that Sta. Ana engaged the services of an MJCI personnel during office hours.
Clearly, to accuse Sta. Ana of having used MJCI's personnel in her business during office hours remains a
bare allegation without corresponding proof.

Also worth stressing is the fact that MJCI did not refute Sta. Ana's assertion that the company rules do not
prohibit its employees from engaging in their own personal businesses. Likewise, the investigation conducted
by MJCI pertained only to OTB Agudo, which was not the branch where Sta. Ana was assigned. Moreover,
there was no showing that Sta. Ana's branch (OTB Tayuman) had incurred any shortage in its remittance to
MJCI.

Two, MJCI alleged that in one occasion and with Tejada's assistance, Sta. Ana used its money to lend to
Sunga. This accusation is pursuant to the Affidavit of Sunga, the pertinent portions of which read:

1. I am the Fleet Head of the Manila Jockey Club, Inc. (‘MJCI’) and I have been serving MJCI as such since
May 2003.

2. Sometime June 2008, I approached Ms. Julieta Sta. Ana to x x x borrow some money from her x x x

3. When I talked to Ms. Sta. Ana on the phone regarding my need to borrow the amount of ₱10,000.00, she
said that she did not have that amount at that time. She advised me that I can get the money from her business
partner, Ms. Josephine Tejada at the Cashier Department of MJCI in Strata 100, as they have an arrangement
for such loan requests.

4. Ms. Sta. Ana said I can pay her and she will settle with Ms. Tejada.

5. A few days after I talked to Ms. Sta. Ana, I went to see Ms. Tejada and she gave me personally the
₱10,000.00 I needed. She said that she has already talked to Ms. Sta. Ana regarding the loan.

6. I have already paid in full the amount I borrowed from Ms. Tejada and Ms. Sta. Ana which I paid on
installments.40

According to Sunga, he borrowed money from Sta. Ana but it was Tejada who gave it to him; and Sta. Ana told
him that Tejada was her business partner. However, there was neither allegation nor proof that the amount
involved was derived from the funds of MJCI.

The mere allegation that Tejada is the business partner of Sta. Ana does not by itself establish that Tejada is
involved in the business of Sta. Ana. Even granting for argument's sake that Tejada is involved in said
business, no evidence worthy of credence was adduced showing that this business derived capital from the
funds of MJCI.

The LA, NLRC, and the CA concluded that Sta. Ana was in conspiracy with Tejada because a) she made an
inconsistent declaration that she funded her business from the sale of her fishing vessels two years ago (from
the time she executed her Affidavit dated February 2, 2009) yet she also stated that she started her business
15 years prior to the takeover of MJCI' s new management; and b) Sta. Ana’s salary was insufficient to support
her business.

Such conclusion, however, is untenable.

From the narration of the SDC, during the hearing, Sta. Ana admitted owning fishing vessels as evidenced by a
permit to operate them; also, the SDC stated that Sta. Ana confirmed that these vessels were eventually sold
and their proceeds were used in her business. This only means that MTCI, through the SDC, was fully aware
that the sale of Sta. Ana's fishing vessels was for the purpose of infusing additional capital into her lending
business.

In addition, from the time Sta. Ana was under investigation, she made readily available documents to justify the
amount of her capital for her lending business. As noted by the SDC in its February 13, 2009 Report:

During the formal hearing, [Sta. Ana] submitted additional documents to show her capability to engage in loan
operations: These are:(1) Certification from PS Bank that x x x Sta. Ana has existing housing loan with
outstanding balance of ₱439,421.65, (2) Permit to Operate fishing vessels issued by [the] Maritime Industry

101
Authority, (3) various statement of accounts from BPI, HSBC, Citibank, BDO, Standard Chartered, Metrobank
credit cards. The three fishing vessels were already sold, according to her, and she used the proceeds in her
lending business.41

In her Position Paper, Sta. Ana attached the Certification42 from Philippine Savings Bank (PSBank) indicating
that she already paid interest and the principal amount of ₱80,984.15 and ₱560,578.35 respectively, and her
outstanding balance to PSBank was ₱439,421.65. Likewise, the annotations 43 in Transfer Certificate of Title No.
T-389599 under the name of Sta. Ana and her spouse proved that they had been mortgaging their real property
since 2003. The latest of such mortgage was on August 23, 2007 to secure the loan of One Million Pesos from
PSBank.

Based on the foregoing, Sta. Ana derived capital from the bank loans she obtained secured by real estate
mortgage on her property; and from the income of her fishing business; later, her fishing vessels were sold and
the proceeds thereof were infused as additional capital in her lending business. Simply put, she had funds
derived from sources other than her monthly salary; and, there was no direct linkage shown between Sta.
Ana's business and the alleged stolen funds of MJCI.

It is a cardinal rule that loss of trust and confidence should be genuine, and not simulated; it must arise from
dishonest or deceitful conduct, and must not be arbitrarily asserted in the face of overwhelming contrary
evidence.44While proof beyond reasonable doubt is not required, loss of trust must have some basis or such
reasonable ground for one to believe that the employee committed the infraction, and the latter's participation
makes him or her totally unworthy of the trust demanded by the position.45

Here, MJCI failed to prove that Sta. Ana committed willful breach of its trust. Particularly, it failed to establish
1âwphi1

that Sta. Ana used its employee for her personal business during office hours, and used its money; without
authority, to lend money to another. Hence, to dismiss her on the ground of loss of trust and confidence is
unwarranted.46

Under these circumstances. Sta. Ana is entitled to receive backwages and separation pay.

An illegally dismissed employee is entitled to two separate reliefs: full backwages and reinstatement. In such
case where reinstatement is no longer an option, payment of separation pay is justified. The Court considers
"considerable time," which includes the lapse of eight years or more (from the filing of the complaint up to the
resolution of the case) to support the grant of separation pay in lieu of reinstatement. Considering that about
eight years had passed from the time that Sta. Ana filed her complaint on February 25, 2009 then, her
reinstatement is an impractical option. Thus, instead of reinstatement, the Court grants her separation pay of
one month for every year of service. As regards backwages, she is entitled to receive full backwages, which
include allowances and other benefits due her or their monetary equivalent, computed from the time her
compensation was withheld up to the finality of this Decision.47

Finally, the Court finds that Sta. Ana is entitled to moral and exemplary damages as well as attorney's fees as
she prayed for in her Complaint.

The grant of moral damages is allowed where the employer acted in bad faith or in such a manner oppressive
to labor.48

During the administrative hearing, MJCI received in evidence relevant documents establishing her capacity to
engage in a lending business, and proving that she did not engage in any activity to defraud MJCI. Also a plain
reading of the statements of Santos and Pimentel would show that they did not explicitly declare that Sta. Ana
used another employee during office hours as conduit in her business. However, despite all these clear pieces
of evidence, and only on mere allegation of loss of trust, MJCI still dismissed her.

Therefore, for acting in "bad faith or such conscious design to do a wrongful act for a dishonest
purpose,"49 MJCI is liable to pay Sta. Ana ₱50,000.00 as moral damages. It is also liable to pay her ₱50,000.00
as exemplary damages to deter other employers from committing the same or similar act. At the same time, the
Court awards in her favor attorney's fees equivalent to 10% of the total monetary award as she was compelled
to litigate in order to protect her rights.50 The legal interest of 6% per annum shall be imposed on the total
monetary awards from the finality of this Decision until its full satisfaction. 51

WHEREFORE, the Petition is GRANTED. The Decision dated July 11, 2012 and Resolution dated July 31,
2013 of the Court of Appeals in CA-G.R. SP No. 114861 are REVERSED and SET ASIDE. Petitioner Julieta B.
Sta. Ana is declared to have been illegally dismissed from service. Accordingly, Manila Jockey Club, Inc. is
ordered to pay Julieta B. Sta. Ana the following: 1) full backwages inclusive of allowances and other benefits or
their monetary equivalent, computed from February 16, 2009, the date of her dismissal, until the finality of this
Decision; 2) separation pay equivalent to one month pay per year of service in lieu of reinstatement; 3)
₱50,000.00 as moral damages; 4) ₱50,000.00 as exemplary damages; and, 5) attorney's fees equivalent to
10% of the total monetary awards. These awards shall also earn legal interest at the rate of 6% per
annum from the finality of this Decision until its full satisfaction.

102
SO ORDERED.

ii. Actual and willful breach supported by substantial evidence 


1. Panaligan vs. Phyvita Enterprises Corporation, G.R. No. 202086, June 21, 2017 


June 21, 2017

G.R. No. 202086

NORMAN PANALIGAN, IRENEO VILLAJIN, and GABRIEL PENILLA, Petitioners

vs.
PHYVITA ENTERPRISES CORPORATION, Respondent

DECISION

LEONARDO-DE CASTRO, J.:

Before this Court is a petition for review on certiorari pursuant to Rule 45 of the 1997 Rules of Civil Procedure
seeking to reverse and set aside the Court of Appeals Decision 1 dated November 24, 2011 and
Resolution2 dated May 29, 2012 in CA-G.R. SP No. 111653, entitled "Phyvita Enterprises Corporation v.
National Labor Relations Commission, Norman Panaligan, lreneo Villajin, Gabriel Penilla." The former issuance
reversed and set aside the Decision3 dated June 9, 2009 as well as the Resolution4 dated September 25, 2009
of the National Labor Relations Commission (NLRC) which essentially ruled that petitioners Norman Panaligan,
lreneo Villajin and Gabriel Penilla (PANALIGAN, et al.) were illegally dismissed from their employment by
respondent Phyvita Enterprises Corporation (PHYVIT A) and were entitled to various monetary awards. The
Court of Appeals, thus, reinstated the Labor Arbiter's July 31, 2007 Decision 5 which dismissed the complaint for
illegal dismissal but held that petitioners were entitled to payment of salary differential. The May 29, 2012 Court
of Appeals Resolution, on the other hand, denied for lack of merit PANALIGAN, et al. 's, motion for
reconsideration.

We restate the salient facts as narrated in the assailed November 24, 2011 Court of Appeals Decision here:

Petitioner Phyvita Enterprises Corporation x x x [respondent herein] is a domestic corporation organized and
existing under the [sic] Philippine laws engaged in the business of health club massage parlor, spa and other
related services under the name and style of Starfleet Reflex Zone ("Starfleet").

Private respondents [petitioners herein] Norman Panaligan ("Panaligan"), Ireneo Villajin ("Villajin") and Gabriel
Penilla ("Penilla") x x x were the employees of Phyvita assigned as Roomboys at Starfleet. Panaligan was hired
last 1 March 2002. Villajin was hired last 22 October 2002 and Penilla was hired on 22 October 2002.

Sometime [on] 25 January 2005, the Finance Assistant of Phyvita for Starfleet Girly Enriquez ("Enriquez")
discovered that the amount of One Hundred Eighty Thousand Pesos (Php180,000.00) representing their sales
for 22nd, 23rd and 24th of January 2005 [was] missing including receipts, payrolls, credit card receipts and
sales invoices. She immediately reported the same to her immediate superior Jorge Rafols ("Jorge Rafols"). As
such, they searched for the missing documents and cash. However, their search remained futile.

On 26 January 2005, Jorge Rafols and Enriquez reported the incident to their Vice President for Operations
Henry Ting ("Henry Ting").

As advised by Phyvita's Legal Officer Maria Joy Ting ("Joy Ting"), they reported the alleged theft incident to the
Parafiaque City Police Station to conduct an investigation. However, the Parafiaque Police were not able to
gather sufficient information that would lead them as to who committed said theft. Being unsuccessful, the said
police investigation was merely entered into the police blotter.

On 4 April 2005, while the police investigation was pending, [Petitioners] together with other employees,
namely, Terio Arroyo ("Arroyo"), Nilo Mangco ("Mangco"), Bruce Maranquez ("Maranquez"), Michael Lachica
("Lachica"), Allan Grasparil ("Grasparil"), Allan Rose ("Rose"), Angelo Bemales ("Bemales"), Roberto Reyes
("Reyes"), Rommel Garcia ("Garcia"), Jay Ar Kasing ("Kasing"), Manuel Marquez ("Marquez") and Amel Pullan
("Pullan") filed a complaint before the Department of Labor and Employment (DOLE)- National Capital Region
(NCR) against Starfleet docketed as NCR 00-0504-IS-002. Their complaint was based on the alleged
underpayment of wages, nonpayment of legal/special holiday, five (5)-day service incentive leave pay, night
shift differential pay, no pay slip, signing of blank payroll, withheld salary due to non-signing of blank payroll.

103
Acting on the said complaint, on 13 April 2005, an inspection was conducted by the DOLE-NCR through its
Labor and Employment Officers Augusto Gwyne C. Lasay and Edgar B. Bumanglag.

In the interim, on 28 April 2005, individual Office Memoranda were issued by Starfleet's Assistant Operations
Manager Jerry Rafols ("Jerry Rafols") against [Petitioners] directing them to explain in writing why no
disciplinary action shall be imposed against them for alleged violation of Class Dl.14 of Starfleet's rules and
regulation[s], particularly any act of dishonesty, whether the company has incurred loss or not[,] more
specifically their alleged involvement in a theft wherein important documents and papers including cash were
lost which happened last 25 January 2005 at [Phyvita]'s establishment. [Petitioners] were, likewise, placed on
preventive suspension pending the investigation of the said alleged theft they committed. They were even
asked to report at Phyvita on the 3rd, 9th and 10th of May 2005, respectively. Upon personal service of the said
Office Memoranda, the said employees refused to receive the same.

Acting on the said Office Memoranda, only Panaligan submitted his hand written explanation which merely
stated "wala ako kinalaman sa ibinibintang [ sakin]."

Come the scheduled administrative hearing dates, [Petitioners] failed to attend the same. As such, Human
Resource Department Manager of Phyvita Leonor Terible issued Office Memoranda against the same
employees recommending them to participate in the administrative proceedings that Phyvita will conduct.

Having failed to participate in the investigation proceedings conducted by Phyvita, Memoranda dated 26 May
2005 were issued against [Petitioners] informing them that they are terminated from their employment on the
ground that they violated the company's rules and regulation[ s] by stealing company documents and cash.
They were also informed that such termination is without prejudice to the filing of criminal charges against
them.

On 17 June 2005, Arroyo, Mangco, Maranquez, Lachica and Grasparil agreed to settle their claims, in the
complaint filed before the DOLE-NCR, by way of Quitclaim and Releases duly executed before Senior Labor
and Employment Officer Marilou D. Tumanguil

On 28 June 2005, Phyvita, as represented by Enriquez, filed a criminal complaint for theft against [Petitioners]
including Marquez, Lorenzo, Devanadero and Rose before the Office of the City Prosecutor of Parañaque.

On 31 July 2005, by virtue of the aforesaid Quitclaim and Releases, the said complaint before the DOLE-NCR,
in so far as the [Petitioners], Rose, Bernales, Reyes, Garcia, Kasing, Marquez and Pullan are concerned, was
endorsed to the NCR Arbitration Branch of the NLRC for proper proceedings.

On 30 September 2005, the criminal complaint was dismissed by 3rd Assistant City Prosecutor Antonietta
Pablo-Medina there being no sufficient evidence submitted by the parties to warrant the finding of the crime of
theft against aforesaid employees.

On 14 November 2006, [Petitioners] filed the complaint with the NLRC alleging, inter alia, illegal dismissal and
payment of separation pay.

On 9 January 2007, they amended their complaint claiming for reinstatement and payment of full backwages,
instead of their previous claim for separation pay. The case was docketed as NLRC NCR 00-11-09431-06.

Conciliation failed, thus, the parties submitted their respective Position Papers and Reply.

In their Position Paper and Reply, the [Petitioners] argue that, as room boys of Starfleet, they were required to
report for work from 10 am to 7 pm as morning shift, 6 pm to 3 am as evening shift and 8 pm to 5 am as closing
shift. They were also required to work six (6) days a week, including holidays, without any overtime pay, holiday
pay, premium pay for holiday and rest day and service incentive leave pay. For their salary, they were only
receiving a basic monthly salary of Php3,600.00 or Php l38.00 per day. Being underpaid of their basic salary,
their 13th month pay were likewise underpaid. They were also not given their pro-rated 13th month pay after
their illegal dismissal last 2005. They also claim that Starfleet requires their employees to sign blank payroll
sheets before their salaries are given to them. They also assert that their termination was a mere retaliatory
measure on the part of Starfleet because they have filed a complaint before the DOLE and refused to amicably
settle the same. They claim that to unjustly accuse them of stealing would be a violation of Article 118 of the
Labor Code. Their dismissal was, likewise, in violation of the requirements provided by law and jurisprudence
to validly terminate them. The charge of theft against them was baseless. In fact, the said criminal complaint
against them was dismissed by the City Prosecutor for the simple reason that there was no direct, solid or
concrete proof directing them to the commission of theft. Starfleet also has no basis to terminate them on the
ground of loss of trust and confidence since said ground for dismissal was without any basis or proof.

Starfleet, Jorge Rafols and [Joy] Ting, on the other hand, stated in their Position Paper and Reply that
[Petitioners] got involved in the theft of important office documents and other valuable items on 25 January
2005. They were given an opportunity to explain themselves through Memoranda but they refused to receive

104
and acknowledge the same. They also did not appear during the administrative investigations. They claim that
[Petitioners'] dismissal were legal under Article 282 of the Labor Code since the commission of theft is a
serious misconduct and an act which gives rise to fraud or willful breach by the employee of the trust reposed
in him by his employer or duly authorized representative. Thus, it is a sufficient ground to justify their dismissal.
The dismissal of the criminal complaint against [Petitioners] is immaterial since they were still validly dismissed
based on breach of trust. They even alleged that the filing of the instant labor complaint was a mere
afterthought. In support of their claim that the employees were paid according to the mandated wage and
benefits, they presented copies of their payroll sheets. On the alleged double bookkeeping, Starfleet countered
the said allegation by stating that said blank payroll sheets does not prove anything primarily because they
were not signed by the manager nor the payroll officer and does not contain any data. These blank payroll
sheets were even the subject of the crime of theft which Starfleet filed against [Petitioners]. The fact that the
blank payroll sheets are in their possession establishes the fact that they unquestionably committed the crime
of theft[[.6]]

Labor Arbiter Jose G. De Vera declared in his Decision dated July 31, 2007 that P ANALIGAN, et al., were
legally terminated from employment on the ground of loss of trust and confidence. The dispositive portion of
said judgment reads:

WHEREFORE, all the foregoing premises being considered, judgment is hereby rendered ordering the
respondents to pay the complainants the sum of ₱29,000.00 each, or the aggregate sum of ₱87,000.00 as
salary differential.

All other claims, including the charge of illegal dismissal are dismissed for lack of merit. 7

Upon appeal by PANALIGAN, et al., the aforementioned ruling was reversed and set aside by the NLRC in its
Decision dated June 9, 2009. The NLRC arrived at the conclusion that P ANALIGAN, et al., were illegally
dismissed from employment, thus, ordering the following:

ACCORDINGLY, the appealed Decision is hereby REVERSED and SET ASIDE and a new one is ENTERED
declaring complainants to be illegally terminated whereby respondent-appellees Starfleet Reflex Zone/Jorge
Rafols and [Joy] Ting liable to pay complainants their separation pay in the amount of Php 69,524.00,
Php69,524.00 and Php 69,524.00 and; backwages in the amount of Php 473,425.17, Php473,425. l 7 and
Php473,425.17, respectively. Further, respondents are ordered to pay complainants their salary differentials in
the amount of Php48,251.84, Php48,251.84 and Php48,251.84, respectively. And, the amount of Php6,000.00,
Php6,000.00 and Php6,000.00, representing their respective unpaid salaries for the period of April 1-28, 2005.8

The NLRC subsequently denied PHYVITA's motion for reconsideration through a Resolution dated September
25, 2009.

Thus, PHYVIT A elevated this case to the Court of Appeals. The appellate court reversed the NLRC issuances
and reinstated the July 31, 2007 Decision of the Labor Arbiter, to wit:

WHEREFORE, the instant petition is hereby GRANTED. The assailed Decision dated 09 June 2009 and
Resolution 25 September 2009 issued by the National Labor Relations Commission are REVERSED and SET
ASIDE. The Decision dated 31 July 2007 of Labor Arbiter Jose G. De Vera is hereby REINSTATED.9

A motion for reconsideration filed by P ANALIGAN, et al., was denied for lack of merit by the Court of Appeals
in its Resolution dated May 29, 2012.

Hence, PANALIGAN, et al., filed the present petition with this Court relying on the following grounds in support
of the same:

I.

WITH ALL DUE RESPECT, THE COURT OF APPEALS COMMITTED AN ERROR OF LAW IN REVERSING
THE JUDGMENT AWARD FOR SALARY DIFFERENTIALS AND UNPAID SALARIES WHEN THE BASIS
FOR THE SAME WAS NOT EVEN DISCUSSED IN ITS DECISION.

II.

WITH UTMOST DEFERENCE, THE COURT OF APPEALS COMMITTED AN ERROR OF LAW IN HOLDING
THAT RESPONDENT HAD SUBSTANTIALLY PROVEN THE LEGALITY OF PETITIONERS' DISMISSAL DUE
TO SERIOUS MISCONDUCT DESPITE THE LACK OF CONVINCING EVIDENCE SHOWING THEIR
INVOLVEMENT IN THE ALLEGED INCIDENT OF THEFT AND THE LACK OF CONCRETE PROOF THAT
THE PAYROLLS WERE PART OF THE STOLEN ITEMS.

III.

105
WITH UTMOST DEFERENCE, THE COURT OF APPEALS COMMITTED AN ERROR OF LAW IN HOLDING
THAT RESPONDENT HAD SUBSTANTIALLY PROVEN THE LEGALITY OF PETITIONERS' DISMISSAL DUE
TO LOSS OF TRUST AND CONFIDENCE DESPITE THE FACT THAT IT IS SIMULA TED, USED AS A
SUBTERFUGE FOR ILLEGAL ACTION, ARBITRARILY ASSERTED AND A MERE AFTERTHOUGHT. 10

PANALIGAN, et al., argued that the assailed November 24, 2011 Decision of the Court of Appeals failed to
state any factual, legal and equitable justification why the NLRC's monetary awards for salary differential and
unpaid salaries were also set aside. They likewise asserted that theft, as the basis of their purported serious
misconduct, was not established by evidence since, according to them, the ruling of the Court of Appeals failed
to state how the alleged theft was committed by them and what evidence can be found on record to support
such finding. Lastly, they maintained that the alleged theft was utilized by PHYVIT A as a subterfuge to justify
their dismissal without adequate cause. They characterized the criminal complaint against them as a retaliatory
action by PHYVIT A for their refusal to settle and withdraw the complaint they filed with the Department of
Labor and Employment - National Capital Region Office (DOLE-NCR) for underpayment of wages and
nonpayment of other labor standard benefits.

On the other hand, PHYVIT A claimed that the Court of Appeals correctly ruled that there were just causes to
dismiss P ANALIGAN, et al., from their employment; namely, serious misconduct and loss of trust and
confidence. PHYVIT A contended that, despite the dismissal by the Office of the City Prosecutor of Parafiaque
of the criminal complaint for theft against P ANALIGAN, et al., on the ground of lack of probable cause, there
was substantial evidence to support a valid dismissal from employment as ruled by the Court of Appeals.
PHYVITA maintained that PANALIGAN, et al.'s possession of stolen payroll slips is sufficient to justify the
termination of P ANALIGAN, et al.

After an assiduous evaluation of the parties' submissions, we find the petition meritorious.

The fundamental question that needs to be resolved in this case is whether or not there exists just and valid
cause for the termination of PANALIGAN, et al.'s, employment by PHYVITA. A review of the conflicting findings
on this matter by the Labor Arbiter and the Court of Appeals, on one hand, and the NLRC, on the other, yields
the conclusion that the allegations of serious misconduct and loss of trust and confidence against PAN ALI
GAN, et al., cannot be upheld.

The applicable provision of law to this case is Article 297 of the Labor Code, as amended, which states:

ARTICLE 297. Termination by Employer. - An employer may terminate an employment for any of the following
causes:

(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or
representative in connection with his work;

(b) Gross and habitual neglect by the employee of his duties;

(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly
authorized representative;

(d) Commission of a crime or offense by the employee against the person of his employer or any
immediate member of his family or his duly authorized representative; and

(e) Other causes analogous to the foregoing. (Emphases supplied.)

In Maula v. Ximex Delivery Express, Inc, 11 this Court reiterated previous pronouncements on the nature of
serious misconduct as a just cause to terminate an employee according to the Labor Code. To quote:

Misconduct is improper or wrong conduct; it is the transgression of some established and definite rule of action,
a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in
judgment. The misconduct, to be serious within the meaning of the Labor Code, must be of such a grave and
aggravated character and not merely trivial or unimportant. 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.

On the other hand, loss of trust and confidence, as a just cause for termination of employment, is premised on
the fact that an employee concerned holds a position where greater trust is placed by management and from
whom greater fidelity to duty is correspondingly expected. The betrayal of this trust is the essence of the
offense for which an employee is penalized. 12 Loss of trust and confidence to be a valid cause for dismissal
must be work related such as would show the employee concerned to be unfit to continue working for the
employer and it must be based on a willful breach of trust and founded on clearly established facts. Such
breach is willful if it is done intentionally, knowingly, and purposely, without justifiable excuse as distinguished
from an act done carelessly, thoughtlessly, heedlessly or inadvertently. The loss of trust and confidence must

106
spring from the voluntary or willful act of the employee, or by reason of some blameworthy act or omission on
the part of the employee. 13

Willful breach of trust, as just cause for the termination of employment, is founded on the fact that the employee
concerned: (1) holds a position of trust and confidence, i.e., managerial personnel or those vested with powers
and prerogatives to lay down management policies and/or to hire, transfer, suspend, lay-off, recall, discharge,
assign or discipline employees; or (2) is routinely charged with the care and custody of the employer's money
or property, i.e., cashiers, auditors, property custodians, or those who, in normal and routine exercise of their
functions, regularly handle significant amounts of money or property. In any of these situations, it is the
employee's breach of the trust that his or her position holds which results in the employer's loss of
confidence. 14

For an employer to validly dismiss an employee on the ground of loss of trust and confidence under Article
282(c) of the Labor Code, the employer must observe the following guidelines: 1) loss of confidence should not
be simulated; 2) it should not be used as subterfuge for causes which are improper, illegal or unjustified; 3) it
may not be arbitrarily asserted in the face of overwhelming evidence to the contrary; and 4) it must be genuine,
not a mere afterthought to justify earlier action taken in bad faith. More importantly, it must be based on a willful
breach of trust and founded on clearly established facts. 15

Thus, in order to dismiss an employee on the ground of loss of trust and confidence, the employee must be
guilty of an actual and willful breach of duty duly supported by substantial evidence.16 Substantial evidence is
that amount of evidence which a reasonable mind might accept as adequate to support a conclusion. 17

In termination cases, the burden of proof rests on the employer to show that the dismissal is for a just
cause. 18 In the case at bar, PHYVITA failed to adduce substantial evidence that would clearly demonstrate that
PANALIGAN, et al., have committed serious misconduct or have performed actions that would warrant the loss
of trust and confidence reposed upon them by their employer. Contrary to the findings of the Court of Appeals
and the Labor Arbiter, no substantial evidence supports the allegation of theft leveled by PHYVITA against
PANALIGAN, et al. - the said criminal act being the underlying reason for the dismissal of the latter from being
employees of the former.

The records of this case clearly indicate that no direct evidence was presented to link PAN ALI GAN, et al., to
the theft that they allegedly committed. In fact, the questioned payroll sheets that PANALIGAN, et al., attached
1âw phi 1

to the labor complaint they filed before the DOLE-NCR are the only concrete proof that PHYVITA used to
support its allegation. However, the said documents were not specifically enumerated as among the stolen
items in the police report19 of the alleged incident of theft, while a previous incident report20 merely stated that
"several copies of payroll" were taken. PHYVIT A first claimed that these payroll sheets allegedly stolen from
Enriquez's safekeeping were the same ones in PANALIGAN, et al. 's, possession when its employee, Jesse
Pangilinan (Pangilinan), executed an affidavit21 to that effect right after attending a preliminary hearing of the
labor case initiated by PANALIGAN, et al. Pangilinan's statement was supported by the joint affidavit22 made by
Rommel Garcia (Garcia) and JayR Kasing (Kasing) who were also in PHYVITA's employ.

The problem with Pangilinan's statement is that it is self-serving since it favors his employer which is involved
in a labor dispute with PANALIGAN, et al., and it does not show criminal liability since it only establishes
PANALIGAN, et al.'s, possession of the questioned payroll sheets but not the fact that they themselves stole
the same.

Furthermore, Pangilinan's statement is inconsistent with the other facts on record. According to Pangilinan's
affidavit, he only knew that the questioned payroll sheets were in the possession of PANALIGAN, et al., when
they presented the same during the May 29, 2005 DOLE-NCR hearing. 23 The aforementioned date is crucial to
this case because the month before, or on April 28, 2005, PANALIGAN, et al., were preventively suspended
from work by PHYVIT A and given written notices to explain in writing within twenty-four (24) hours why they
should not face disciplinary sanction for their alleged involvement in the January 25, 2005 incident of
theft.24 Due to their non-appearance at the scheduled in-house investigation and conference, P ANALIGAN, et
al., were then served individual notices dated May 26, 2005, that they were terminated from PHYVITA's employ
for their alleged participation in the theft.25 Thereafter, sometime in June 2005, Garcia and Kasing purportedly
came forward and pointed to PAN ALI GAN, et al., as among the perpetrators of the alleged theft. Considering
the said chronology of events, there was no clear ground for PHYVIT A to preventively suspend and later
terminate the services of PANALIGAN, et al., when the company's actions predated the bases for doing so -
the discovery of the questioned payroll sheets by Pangilinan allegedly on May 29, 2005 as stated in his affidavit
and the revelations of Garcia and Kasing allegedly made sometime in June 2005. Alternatively stated,
respondent company had charged and terminated PAN ALI GAN, et al., before it had even obtained its
supposed "proof'' of their misdeed.

To be sure, the joint affidavit of Garcia and Kasing deserves scant consideration because it contains
statements which are hearsay. They merely claimed that another employee, Amel Pullan, told them that
PANALIGAN, et al., were part of the group that stole the questioned payroll sheets from the Executive Office.
Evidently, they did not have personal knowledge of the alleged theft. Furthermore, their claim was flatly denied
by PANALIGAN, et al. It is likewise interesting to note that Garcia and Kasing were former co-complainants of
PANALIGAN, et al., in the labor case at issue but later withdrew from pursuing it after entering into a

107
compromise agreement with PHYVITA along with six other complainants. Premises considered, their
statements cannot be fully relied upon because it is highly probable that the same may have been secured in
exchange for some consideration.

Similarly, the complaint-affidavit26 of Girly Enriquez (PHYVITA's Finance Assistant) and the affidavit of Jorge
Rafols (PHYVITA's Operations Manager) rely heavily on the assertions made by Pangilinan, Garcia and Kasing
in order for said affiants to arrive at their conclusion that PANALIGAN, et al., were responsible for the incident
of theft. They did not personally witness the commission of the alleged theft by PANALIGAN, et al. In fact, none
of PHYVITA's witnesses did as Pangilinan merely provided doubtful circumstantial evidence and Garcia and
Kasing put forward corroborating testimony that is undoubtedly hearsay and not of their personal knowledge.
Given these circumstances, these affidavits executed by PHYVITA's officers cannot be given probative weight.

PHYVIT A argues that, being in possession of stolen items, P ANALIGAN, et al., are presumed to have stolen
the same unless contradicted or overcome by other evidence as mandated by Rule 131, Section 30) of the
Revised Rules on Evidence, to wit:

SEC. 3. Disputable presumptions. - The following presumptions are satisfactory if uncontradicted, but may be
contradicted and overcome by other evidence:

xxxx

(j) That a person found in possession of a thing taken in the doing of a recent wrongful act is the taker and the
doer of the whole act; otherwise, that things which a person possesses, or exercises acts of ownership over,
are owned by him[.]

We have held that the application of the disputable presumption that a person found in possession of a thing
taken in the doing of a recent wrongful act is the taker and doer of the whole act is limited to cases where such
possession is either unexplained or that the proffered explanation is rendered implausible in view of
independent evidence inconsistent thereto.27 In the present case, petitioners' possession of the questioned
payroll sheets was explained by the sworn affidavit of former PHYVITA employee Allan Grasparil (Grasparil)
who freely admitted that he was the source of the documents which he allegedly received from Enriquez.
Significantly, PHYVIT A proffered no counter-statement from Enriquez specifically refuting Grasparil's narrative.

The June 9, 2009 Decision of the NLRC made use of Grasparil's testimony to support its finding that no
substantial evidence was shown to prove that P ANALIGAN, et al., were guilty of theft and that they were
illegally dismissed from employment, explaining thus:

Notably, a former employee of respondent-appellees by the name of Mr. Allan Grasparil explained that a co-
employee, Ms. Girly Enriquez, approached him on January 25, 2005 and required him to sign a payroll sheet.
Further, he was also directed to let his other co-workers to sign the same and to thereafter return it to her.
However, he failed to return the said document. That when they filed a complaint before the DOLE he allegedly
remembered the payroll sheet and they used it as evidence (p. 120, record). Remarkably, this crucial statement
of Mr. Grasparil was not disputed by respondents-appellees. Hence, deemed admitted pursuant to Section 32,
Rule 130 of the Revised Rules on Evidence, to wit:

An act or declaration made in the presence and within the hearing or observation of a party who does or says
nothing when the act or declaration is such as naturally to call for action or comment if not true, and when
proper and rossible for him to do so, may be given in evidence against him. 28

In Fernandez v. Newfield Staff Solutions, lnc.,29 we reiterated our previous ruling in Solas v. Power & Telephone
Supply Phils., Inc. 30 that this manner of silence constitutes an admission that fortifies the truth of the
employee's narration.

It is worth noting that Grasparil was also one of the original complainants in the labor case filed against
PHYVITA by PANALIGAN, et al., but later withdrew from the same after entering into a compromise agreement
with PHYVIT A not unlike Garcia and Kasing. Therefore, we have a situation wherein three similarly situated
individuals have divergent and conflicting claims over the important issue of who was the source of the
questioned payroll sheets with Grasparil openly admitting the same and Garcia and Kasing pointing to
PANALIGAN, et al., based solely on hearsay evidence. At the very least, this circumstance casts doubt upon
the evidence so far presented by both parties. With this development, we are compelled to uphold the case for
PANALIGAN, et al., since it is settled doctrine that if doubts exist between the evidence presented by the
employer and the employee, the scales of justice must be tilted in favor of the latter. 31

Grasparil also stated in his affidavit that aside from monetary consideration, his compromise agreement with
the company included a mutual desistance from the cases they filed against each other. PHYVITA allegedly
proceeded with the prosecution of the case against those who did not enter into a compromise with it. We
quote the relevant portion of Grasparil's affidavit here:

108
(3) Ukol po sa nasabing kaso sa nasabing ahensiya ng gobyemo [Department of Labor], ako po ay napilitang
makipagkasundo sa aming employer upang iurong ang aking reklamo laban sa kanila at sa pangakong hindi
nila ako idadawit sa kasong isinampa nila sa mga trabahador na nagreklamo laban sa kanila;

(4) Sa ganito pong sitwasyon ay binigyan nila ako ng halagang ₱15,000.00 bilang kabayaran sa
aking separation pay at pag-uurong ng kasong [sic] sa DEPARTMENT OF LABOR;

(5) Tinupad naman po nila ang kanilang pangako at hindi nila ako idinawit sa kaso na kanilang isinampa sa
aking mga kasama sa trabaho, subalit itinuloy po nila ang kaso laban sa aking mga kasamahang hindi
nakipagkasundo o nakipag-ayos sa kanila[.]32

Taking into consideration the fact that the DOLE-NCR conducted an inspection of the respondent's premises
on April 13, 2005 as a result of the labor complaint filed by PAN ALI GAN, et al., on April 4, 200533 and
PANALIGAN, et al., were implicated in the alleged January 25, 2005 theft incident only thereafter, a reasonable
inference can be made that PANALIGAN, et al.'s, termination of employment may have been indeed a
retaliatory measure designed to coerce them into withdrawing their complaint for underpayment of wages and
nonpayment of other labor standard benefits. Such an act is proscribed by Article 118 of the Labor Code which
states:

Art. 118. Retaliatory Measures - It shall be unlawful for an employer to refuse to pay or reduce the wages and
benefits, discharge or in any manner discriminate against any employee who has filed any complaint or
instituted any proceeding under this title or has testified or is about to testify in such proceedings.

There is no question that PANALIGAN, et al., occupied positions that are reposed with trust and confidence.
Jurisprudence states that the job of a roomboy or chambermaid in a hotel is clearly of such a nature as to
require a substantial amount of trust and confidence on the part of the employer. 34 There is merit as well in
PHYVITA's assertion that the dismissal of its criminal complaint does not necessarily exonerate
PANALIGAN, et al., from a charge of loss of trust and confidence. However, even with the lower burden of
proof in labor cases, there is a dearth of substantial evidence to support a finding that PANALIGAN, et al., were
indeed guilty of a willful breach of their employer's trust. We are constrained to conclude that there is no just
and valid cause to terminate the employment of PANALIGAN, et al., for loss of trust and confidence or even for
serious misconduct.

Therefore, we uphold the NLRC in finding that PANALIGAN, et al., were illegally dismissed from employment
by PHYVIT A and, thus, are entitled to separation pay, in lieu of reinstatement, and full backwages. Given the
obviously strained relations between the parties and the length of time that PANALIGAN, et al., have been
separated from their employment in PHYVIT A, we agree with the NLRC that the doctrine of strained relations
must apply wherein the payment of separation pay is considered an acceptable alternative to reinstatement
when the latter option is no longer desirable or viable. 35

Finally, we find no reason to disturb the NLRC's ruling regarding the award of salary differentials and unpaid
salaries for April 2005 to PANALIGAN, et al. The Labor Arbiter and the NLRC both found that PANALIGAN, et
al.'s, wages were underpaid based on the documents on record; they only differed in the period or the number
of months. We agree with the NLRC that PHYVITA should be liable for PANALIGAN, et al.'s, claims for
underpaid salaries that had not yet prescribed at the time of the filing of the complaint. Moreover, it is settled
even in labor cases that "one who pleads payment has the burden of proving it. Even where the plaintiff must
allege nonpayment, the general rule is that the burden rests on the defendant to prove payment, rather than on
the plaintiff to prove nonpayment. "36 In another case, we upheld the NLRC' s ruling that the burden of proof
rests on the employer to show that it has not committed any violation of labor standard laws, in particular the
full payment of the legally mandated wages.37 If PHYVITA had truly paid PANALIGAN, et al., their correct
wages, it had every opportunity to produce all relevant payrolls and documents in the proceedings below
instead of merely submitting incomplete documents relating to February 2005 salaries, 13th month pay and
service incentive leave.

WHEREFORE, the petition is GRANTED. The Decision dated November 24, 2011 and the Resolution dated
May 29, 2012 of the Court of Appeals in CA-G.R. SP No. 111653 are hereby REVERSED and SET
ASIDE. The Decision dated June 9, 2009 and the Resolution dated September 25, 2009 of the National Labor
Relations Commission in NLRCLAC Case No. 09-002564-07 and NLRC-NCR Case No. 00-11-09431-06 are
hereby REINSTATED.

SO ORDERED.

iii. Managerial employee 


1. PJ Lhuillier, Inc. vs. Camacho, G.R. No. 223073, February 22, 2017 


109
 February 22, 2017

G.R. No. 223073

PJ LHUILLIER, INC., Petitioner

vs.
HECTOR OREIL CIMAGALA CAMACHO, Respondent

DECISION

MENDOZA, J.:

This Petition for Review under Rule 45 of the Rules of Court seeks to annul the August 28, 2015 Decision 1 and
the February 19, 2016 Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 134879, which reversed
and set aside the December 27, 20133 and February 10, 20144 Resolutions of the National Labor Relations
Commission, 4thDivision, Quezon City (NLRC) in NLRC LAC No. 06-001854-13, in a complaint for illegal
dismissal.

The Antecedents

On July 25, 2011, petitioner P.J. Lhuillier, Inc. (PJLI), the owner and operator of the "Cebuana Lhuillier" chain
of pawnshops, hired petitioner Feliciano Vizcarra (Vizcarra) as PLJI's Regional Manager for Northern and
Central Luzon pawnshop operations5 and respondent Hector Oriel Cimagala Camacho (Camacho) as Area
Operations Manager (AOM) for Area 213, covering the province of Pangasinan. Camacho was assigned to
administer and oversee the operations of PJLI's pawnshop branches in the area.6

On May 15, 2012, Vizcarra received several text messages from some personnel assigned in Area 213,
reporting that Camacho brought along an unauthorized person, a non-employee, during the QTP operation
(pull-out of "rematado" pawned items) from the different branches of Cebuana Lhuillier Pawnshop in
Pangasinan. On May 18, 2012, Vizcarra issued a show cause memorandum directing Camacho to explain why
no disciplinary action should be taken against him for violating PJLI's Code of Conduct and Discipline which
prohibited the bringing along of non-employees during the QTP operations. 7 Camacho, in his
Memorandum, 8 apologized and explained that the violation was an oversight on his part for lack of sleep and
rest. With busy official schedules on the following day, he requested his mother's personal driver, Jose
Marasigan (Marasigan) to drive him back to Pangasinan. He admitted that Marasigan rode with him in the
service vehicle during the QTP operations.

During the formal investigation on June 1, 2012, Camacho admitted that he brought along a non-employee,
Marasigan, during the QTP operations on May 15, 2012. He explained that on May 12, 2012, he went home to
Manila to celebrate Mother's Day with his family on May 13, 2012. He drove himself using the service vehicle
assigned to him and arrived in Manila at around 11:00 o'clock in the evening. As he was expecting a hectic
work schedule the following day and was feeling tired due to lack of sleep for the past few days, he asked
Marasigan to drive him back to Pangasinan so he could catch some sleep on the way. Marasigan was
supposed to return to Manila on May 15, 2012, but because he was scheduled to go back to Manila on May 18,
2012, to attend a regional conference in Antipolo, he asked the former to remain in Pangasinan so that they
could travel back together to Manila on May 17, 2012. On the day of the QTP operations, Marasigan drove the
service vehicle from his apartment to the Area Office. Upon reaching the Area Office, the Area Driver took over
while Marasigan sat in the backseat of the vehicle. Camacho admitted that he knew that it was prohibited to
bring unauthorized personnel, especially a non-employee, during the QTP operations because this was
discussed in the seminars facilitated by the company's Security Service Division. He only realized his mistake
at the end of their 13-branch stop when he noticed that his companions were unusually quiet throughout the
trip.9 It was also discovered that Camacho committed another violation of company policy when he allowed an
unauthorized person to drive a company vehicle.

On June 14, 2012, the Formal Investigation Committee issued the Report of Formal Investigation. 10 The
committee concluded that Camacho was guilty as charged. It could not accept his explanation that the
confidentiality of the QTP operation slipped his mind because of his exhausting travel to Manila and, thus,
recommended that his services be terminated. According to the report, his act of bringing along an
unauthorized person, a non-employee, during the QTP operation was a clear violation of an established
company policy designed to safeguard the pawnshop against robberies and untoward incidents. His act was a
"willful neglect of duty which cause[d] prejudice to the Company." 11

On the basis of the June 14, 2012 Report of Formal Investigation, Vizcarra issued to Camacho the Notice of
Disciplinary Action12 where he was meted the penalty of Termination. This prompted him to file a
complaint13 before the Labor Arbiter (LA) against the petitioners for illegal dismissal, money claims, damages,
and attorney's fees.

The LA Ruling

110
In its May 14, 2013 Decision,14 the LA sustained Camacho's termination. He reasoned out in this wise:

Assuch, the fact that the Complainant admitted that he violated the rules and regulations of the
Respondents by bringing along his driver, a non-employee and an unauthorized person, during the
"QTP" operations, despite being fully aware that the same was prohibited, the Respondents were
clearly justified to terminate the employment of the Complainant on the ground of loss of trust and
confidence in view of the trust reposed upon the Complainant by the Respondents by virtue of his position as
Area Operations Manager.

Further, this Office finds that the Respondents have complied with the requirements of due process because,
aside from the show-cause memorandum xxx, an administrative hearing was held in order to give the
Complainant an opportunity to explain his side of the controversy.

Verily, there being a just cause to terminate the Complainant coupled by the compliance with the requirements
of due process, it logically follows that the Complainant was not illegally dismissed. 15[Emphasis and
Underscoring Supplied]

Aggrieved, Camacho appealed the LA decision to the NLRC, questioning the harshness of the penalty meted
out by PJLI. He argued that the infractions were purely unintentional and no more than an oversight on his part.

The NLRC Ruling

In its August 30, 2013 Decision, the NLRC reversed and set aside the May 14, 2013 Decision of the LA. It
declared the dismissal of Camacho as illegal. It opined that there was no indication that Camacho, in allowing
his mother's driver to be present during the conduct of the QTP operation, was motivated by malicious intent so
as to construe the infraction as serious misconduct punishable by dismissal. The infraction, if at all, constituted
"nothing more than an oversight or inadvertence, if not a necessity for him to conserve his energy and stay
alert during the QTP Operation" xxx. The conduct could not be considered as gross so as to warrant the
imposition of the supreme penalty of dismissal. 16

Dissatisfied with the said pronouncement, PJLI filed its Motion for Reconsideration 17 praying that the May 14,
2013 Decision of the LA be reinstated.

After a re-evalution of the case, in its December 27, 2013 Resolution, the NLRC found cogent reason to set
aside its August 30, 2013 Decision. It ruled that Camacho's transgression of the company policy warranted his
termination from the service. It wrote:

xxx. When the complainant brought his personal drive and allowed the latter to ride in the company vehicle
during the QTP operations on 15 May 2012, in utter violation of the respondent company's policy, the same
was detrimental not only to the interests of the respondent company, but also to the interest of the persons who
pawned the "rematado"items.18

Thus, the decretal portion of the decision reads:

IN VIEW WHEREOF, the Respondent's Motion for Reconsideration is GRANTED and the assailed Decision is
hereby SET ASIDE. The Labor Arbiter's Decision is hereby REINSTATED.

SO ORDERED.19

Camacho moved for a reconsideration but his motion was denied in the NLRC Resolution of February 10,
2014.

Aggrieved, Camacho filed a petition for certiorari under Rule 65 of the Rules of Court before the CA.

The CA Ruling

In its August 28, 2015 Decision, the CA reversed the NLRC resolutions. It held that contrary to the findings of
the LA and the NLRC, the misconduct of Camacho was not of a serious nature as to warrant a dismissal from
work. At most, said the CA, he was negligent and remiss in the exercise of his duty as an AOM. There was no
evidence that would show that said act was performed with wrongful intent. Moreover, Camacho's termination
from work could not be justified on the ground of loss of trust and confidence. For loss of trust and confidence
to be a valid ground, explained the CA, it must be based on willful breach of the trust reposed in the employee
by his employer. The breach must have been made intentionally, knowingly, and purposely without any
justifiable excuse as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. In
this case, the CA found that Camacho's act of bringing along his mother's driver during the QTP operation was
not willful as it was not done intentionally, knowingly and purposely. It was committed carelessly, thoughtlessly,

111
heedlessly or inadvertently. Even Camacho himself admitted that it was merely a case of human error on his
part, the same being prompted by his desire to finish his work as soon as possible. 20

In sum, the CA held that Camacho was illegally dismissed. The fallo of the assailed decision reads:

WHEREFORE, the instant Petition is GRANTED. The Resolutions promulgated on December 27, 2013 and
February 10, 2014 of the NLRC, 4th Division, Quezon City in NLRC LAC No. 06-001854-13 are
hereby REVERSED and SET ASIDE. The Decision of the said Commission promulgated on August 30, 2013
declaring the dismissal of petitioner as illegal is hereby REINSTATED.

SO ORDERED.21

In February 19, 2016 Resolution,22 the CA denied PJLI's motion for reconsideration.

Hence, this petition.

ISSUES:

WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW IN
RULING THAT PETITIONER FAILED TO COMPLY WITH THE SUBSTANTIVE REQUIREMENTS OF DUE
PROCESS IN THE DISMISSAL OF RESPONDENT.

WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW IN
RULING THAT THE PENALTY OF DISMISSAL WAS DISPROPORTIONATE TO THE INFRACTION
COMMITTED DUE TO LACK OF MALICIOUS INTENT ON THE PART OF RESPONDENT.

WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW IN
RULING THAT RESPONDENT IS ENTITLED TO REINSTATEMENT, BACKWAGES, 14 THMONTH PAY AND
ATTORNEY'S FEES.23

Petitioner PJLI basically argues that Camacho was guilty of serious misconduct when he brought along an
unauthorized driver during the QTP operation prompting it to lose trust and confidence in him. Such was a valid
ground for his dismissal from service.

First, the CA failed to consider the fact that during the QTP operation, it was neither Camacho nor his personal
driver who drove the company car. As a policy, in a QTP operation, a company driver (Area Driver) is assigned
to do the driving. As AOM, his participation in a QTP operation was limited to oversee the safe transport of
company assets. He was not to drive the vehicle. A driver was already assigned to him. As such, the fact that
he was feeling under the weather was not a good reason to bring along his mother's driver. This was the
reason why during the course of the QTP operations, his personal driver had to seat only at the back of the
vehicle. The presence of his personal driver was simply unnecessary, unjustified, and unwanted. 24

Second, PJLI has lost its trust and confidence on Camacho. PJLI considered his breach of the said established
security protocol as willful, contrary to the CA's finding. PJLI finds it hard to believe that his act was done
carelessly, thoughtlessly, heedlessly or inadvertently. It points out that on the day before the May 15, 2012
QTP operation, he left his personal driver in his apartment when he went to work on that day. On the day of the
QTP operation, however, a day which he knew that there would be a delicate operation, he decided to bring
him along. Clearly, the act was intended and not a mere oversight. 25

Third, considering the attendant circumstances surrounding the controversy, PJLI insists that the penalty of
dismissal was proper. As AOM, Camacho was expected to administer and oversee the operations of the
branches in his area. He was the eyes and ears of the company in all the operations and the overall
performances of his area. He was the steward of the assets of the company so much so that the highest level
of trust and confidence was reposed on him. This trust was lost when he breached a strict security regulation
designed to protect the assets and employees of PJLI. The act in question was a disregard of PJLI's mandate,
a behavior deleterious to the latter's interest.

Finally, PJLI reiterates that it complied with the requirements of both substantive and procedural due process in
effecting Camacho's dismissal; thus, the latter was not entitled to reinstatement, backwages, 14 th month pay,
and attorney's fees.

Position of Camacho

In his Comment, 26 dated July 28, 2016, Camacho countered that when he let his personal driver join the QTP
operation, he merely acted carelessly, thoughtlessly or heedlessly and not intentionally, knowingly, purposely,
or without justifiable excuse. Simply put, the act was a mere oversight. 27 As such, his transgression could not
be considered so gross as to warrant his termination. To consider "gross neglect of duty," the negligence must

112
be "characterized by the want of even slight care, acting or omitting to act in a situation where there is a duty to
act, not inadvertently but wilfully and intentionally, with a conscious indifference to consequences insofar as
other persons may be affected. "28

According to Camacho, considering that his act was not done intentionally, knowingly, purposely, or without
justifiable excuse, it could not be the basis for loss of trust and confidence, a ground for dismissal. 29 The
infraction "was brought about by poor physical and health condition of the respondent which caused his
indecision in bringing along his mother's driver in the QTP operations to assist him." 30

Camacho asserted that he should not be meted out with the ultimate penalty of dismissal especially that no
material damage was incurred by PJLI.

The Court's Ruling

The Court finds merit in the petition.

The core issue to be resolved in this case is whether respondent Camacho was illegally dismissed.

Security of Tenure v.

Management Prerogative

To begin with, it is well to recognize the Court's discussion in Imasen Philippine Manufacturing Corp., v.
Alcon, 31 on security of tenure viz-a-viz management prerogative, to wit:

The law and jurisprudence guarantee to every employee security of tenure. This textual and the ensuing
jurisprudential commitment to the cause and welfare of the working class proceed from the social justice
principles of the Constitution that the Court zealously implements out of its concern for those with less in life.
Thus, the Court will not hesitate to strike down as invalid any employer act that attempts to undermine workers'
tenurial security. All these the State undertakes under Article 279 (now Article 293) of the Labor Code which
bar an employer from terminating the services of an employee, except for just or authorized cause and upon
observance of due process.

In protecting the rights of the workers, the law, however, does not authorize the oppression or self-destruction
of the employer. The constitutional commitment to the policy of social justice cannot be understood to mean
that every labor dispute shall automatically be decided in favor of labor. The constitutional and legal protection
equally recognize the employer's right and prerogative to manage its operation according to reasonable
standards and norms of fair play.

Accordingly, except as limited by special law, an employer is free to regulate, according to his own judgment
and discretion, all aspects of employment, including hiring, work assignments, working methods, time, place
and manner of work, tools to be used, processes to be followed, supervision of workers, working regulations,
transfer of employees, worker supervision, layoff of workers and the discipline, dismissal and recall of workers.
As a general proposition, an employer has free reign over every aspect of its business, including the dismissal
of his employees as long as the exercise of its management prerogative is done reasonably, in good faith, and
in a manner not otherwise intended to defeat or circumvent the rights of workers. 32

From the foregoing, the Court is now tasked with the balancing of Camacho's right to security of tenure and of
PJLI's right to terminate erring employees in its exercise of its management prerogative.

Loss of Trust and

Confidence

Article 282(c) of the Labor Code authorizes the employer to dismiss an employee for committing fraud or for
willful breach of trust reposed by the employer on the employee. Loss of confidence, however, is never
intended to provide the employer with a blank check for terminating its employeea. 33 "Loss of trust and
confidence" should not be loosely applied in justifying the termination of an employee. Certain guidelines must
be observed for the employer to cite loss of trust and confidence as a ground for termination. Loss of
confidence should not be simulated. It should not be used as a subterfuge for causes which are improper,
illegal, or unjustified. Loss of confidence may not be arbitrarily asserted in the face of overwhelming evidence to
the contrary. It must be genuine, not a mere afterthought to justify earlier action taken in bad faith."34 For loss of
trust and confidence to be valid ground for termination, the employer must establish that: (1) the employee
holds a position of trust and confidence; and (2) the act complained against justifies the loss of trust and
confidence. 35

The first requisite mandates that the erring employee must be holding a position of trust and confidence. Loss
of trust and confidence is not a one-size- fits-all cause that can be applied to all employees without distinction

113
on their standing in the work organization. Distinction yet should be made as to what kind of position of trust is
the employee occupying.

The law contemplates two (2) classes of positions of trust. The first class consists of managerial
employees. They are as those who are vested with the power or prerogative to lay down management policies
and to hire, transfer, suspend, layoff, recall, discharge, assign or discipline employees or effectively
recommend such managerial actions. The second class consists of cashiers, auditors, property custodians,
etc. who, in the normal and routine exercise of their functions, regularly handle significant amounts of money or
property. 36

The question now is: To what classification does Camacho belong?

The parties do not dispute that Camacho was hired by PJLI as AOM of Area 213 which covered the province of
Pangasinan. He was primarily responsible for administering and controlling the operations of branches in his
assigned area, ensuring cost efficiency, manpower productivity and competitiveneness. He was also
responsible for overseeing/monitoring the overall security and integrity in the area, including branch personnel
safety, in coordination with PJLI's Security Services Division.37 In fact, as stated by the CA, his position required
the utmost trust and confidence as it entailed the custody, handling, or care and protection of PJLI's
property.38 Furthermore, as AOM, he was among those employees authorized to participate in the QTP
operations. He was tasked in overseeing the safe transport and handling of company assets during the said
operations.39

Clearly from the foregoing, it can be deduced that Camacho held a managerial position and, therefore, enjoyed
the full trust and confidence of his superiors. As a managerial employee, he was "bound by more exacting work
ethics" and should live up to this high standard of responsibility."40

The second requisite for loss of confidence as a valid ground for termination is that it must be based on a willful
breach of trust and founded on clearly established facts.

As can be culled from the records of the case, Camacho admitted that he had committed a breach of trust
when he brought along his mother's driver, an unauthorized person, during the QTP operation, a very sensitive
and confidential operation. As explained by PJLI in its petition for review:

xxx. On a daily basis, each Cebuana Lhuillier Pawnshop branch accepts valuable jewelry items, among other
personal properties, as collaterals for loans extended to its customers (pawners). When the loans expire
without the pawners redeeming their collaterals, the items are considered foreclosed
or rematado. The rematado items are then collected from the different Cebuana Lhuillier branches within the
area by authorized personnel for transport and deposit to another location. Thus, a single incident
of rematado pull-out involves millions and millions worth of jewelry items. This process of collection
of rematado items is so sensitive and confidential that even the procedure itself is referred to by code,
that is, "QTP operations." The schedule and route of a QTP operation are kept confidential by the AOM
and the Regional Manager until the actual date and only a select group of area personnel are
authorized to join the operation, namely, the AOM, the ATA or in their absence the Area Cashier, and
the Area Driver. Even branch personnel are not privy to the schedule of the pull-out of their
branch's rematado items. These regulations and procedures are in place for a reason. PJLI has been
victimized by highway roberry, hold-up and hijack incidents in the past.Asit can no longer afford to put its
assets and lives and safety of its employees at risk, Petitioner adopted confidential and stringent rules on QTP
operations.41 [Emphasis and Underscoring supplied]

In order to save himself from the effects of his transgression, Camacho leans on the argument that his
indiscretion was only an oversight and human error on his part and that his missteps did not result to damage
or loss on PJLI.42For this reason, he claims he should not be penalized with termination from the service.

The Court is not persuaded.

Camacho, as AOM, was a managerial employee. As such, he could be terminated on the ground of loss of
confidence by mere existence of a basis for believing that he had breached the trust of his employer.
Proof beyond reasonable doubt is not required. It would already be sufficient that there is some basis
for such loss of confidence, such as when the employer has reasonable ground to believe that the
concerned employee is responsible for the purported misconduct and the nature of his participation
therein. This distinguishes a managerial employee from a fiduciary rank-and-file where loss of trust and
confidence, as ground for valid dismissal, requires proof of involvement in the alleged events in question, and
that mere uncorroborated assertion and accusation by the employer will not be sufficient. 43

In this case, there was such basis. It was established that Camacho had breached PJLI's trust when he took an
unauthorized person with him to the QTP operation which was already a violation of company existing policy
and security protocol. His explanation that his alleged misdeed was brought about by his poor physical and
health condition on that day could not prevail over two significant details that PJLI pointed out in its petition, to
wit:

114
First of all, the Honorable Court of Appeals failed to consider one very important fact---- it was NOT
Respondent nor his personal driver who drove the service vehicle during the QTP operations. A company
driver, more specifically the Area Driver, is assigned to perform this task, and he is one of only three (3)
authorized personnel allowed to be present during a QTP operation. Xxx. He is NOT authorized to drive the
vehicle. He is not expected to perform any heavy physical work during this procedure. Thus, whether
Respondent was not in his best health condition that day is immaterial. There was no excuse at all for
Respondent to bring his personal driver. As a matter of fact, all that Respondent's driver did during the
May 15, 2012 pull-out of rematado items was to sit back and watch while the highly-confidential
operation was in progress. Clearly, the presence of Respondent's personal driver was unnecessary,
unjustified, and unwarranted.

Secondly, the Honorable Court of Appeals overlooked a very crucial detail in the sequence of events relating to
the instant case. A day prior to the May 15, 2012 QTP operations, Respondent personal driver was left
behind in his (Respondent's) apartment in Pangasinan while Respondent went through his usual work
routine. If he was able to do this on May 14, 2012, why did he bring his driver to work on May 15,
2012? Assuming he could not leave his driver behind in his apartment, he should have at least asked the driver
to wait in his office until the QTP operations in 13 pawnshop branches was completed. It is therefore
mysterious, highly suspicious in fact, that Respondent had to bring his driver on the day he was to conduct a
highly-critical and confidential operation, a schedule he himself has pre-determined. 44 [Emphases Supplied]

Simply put, his act was without justification. For this transgression, petitioner PJLI was placed in a difficult
position of withdrawing the trust and confidence that it reposed on respondent Camacho and eventually
deciding to end his employment. "Unlike other just causes for dismissal, trust in an employee, once lost is
difficult, if not impossible, to regain."45 PJLI cannot be compelled to retain Camacho who committed acts
inimical to its interests. A company has the right to dismiss its employees if only as a measure of self-
protection.46

Finally, although it may be true that PJLI did not sustain damage or loss on account of Camacho's action, this
is not reason enough to absolve him from the consequence of his misdeed. The fact that an employer did not
suffer pecuniary damage will not obliterate the respondent's betrayal of trust and confidence reposed on him by
his employer.47

WHEREFORE, the petition is GRANTED. The assailed August 28, 2015 Decision and the February 19, 2016
Resolution of the Court of Appeals in CA-G.R. SP No. 134879 are REVERSED and SET ASIDE. The
December 27, 2013 Resolution of the National Labor Relations Commission in NLRC LAC No. 06-001854-13
is REINSTATED.

SO ORDERED.

r. Project employment 
 i. Usually necessary and desirable 


1. E. Ganzon, Inc. (EGI) vs. Ando, G.R. No. 214183, February 20, 2017 


February 20, 2017

G.R. No. 214183

E. GANZON, INC. (EGI) and EULALIO GANZON, Petitioners

vs.
FORTUNATO B. ANDO, JR., Respondent

DECISION

PERALTA, J.:

This petition for review on certiorari under Rule 45 of the Rules of Civil Procedure (Rules) seeks to reverse the
February 28, 2014 Decision1 and September 4, 2014 Resolution2 of the Court of Appeals (CA) in CA-G.R. SP
No. 126624, which annulled the Resolutions dated May 25, 20123 and July 17, 20124 of the National Labor
Relations Commission (NLRC) which affirmed in toto the December 29, 2011 Decision5 of the Labor Arbiter.

On May 16, 2011, respondent Fortunato B. Ando, Jr. (Ando) filed a complaint6 against petitioner E. Ganzon,
Inc. (EGI) and its President, Eulalio Ganzon, for illegal dismissal and money claims for: underpayment of
salary, overtime pay, and 13th month pay; non-payment of holiday pay and service incentive leave; illegal
deduction; and attorneys fees. He alleged that he was a regular employee working as a finishing carpenter in
the construction business of EGI; he was repeatedly hired from January 21, 2010 until April 30, 2011 when he
was terminated without prior notice and hearing; his daily salary of ₱292.00 was below the amount required by

115
law; and wage deductions were made without his consent, such as rent for the barracks located in the job site
and payment for insurance premium.

EGI countered that, as proven by the three (3) project employment contract, Ando was engaged as a project
worker (Formworker-2) in Bahay Pamulinawen Project in Laoag, Ilocos Norte from June 1, 2010 to September
30, 20107and from January 3, 2011 to February 28, 20118 as well as in EGI-West Insula Project in Quezon City,
Metro Manila from February 22, 2011 to March 31, 2011;9 he was paid the correct salary based on the Wage
Order applicable in the region; he already received the 13th month pay for 2010 but the claim for 2011 was not
yet processed at the time the complaint was filed; and he voluntarily agreed to pay ₱500.00 monthly for the
cost of the barracks, beds, water, electricity, and other expenses of his stay at the job site.

The Labor Arbiter declared Ando a project employee of EGI but granted some of his money claims. The
dispositive portion of the Decision reads:

WHEREFORE, premises considered, judgment is hereby rendered Dismissing the complaint for illegal
dismissal for lack of merit.

However, respondents are ordered to pay jointly and severally complainant Fortunato Ando, Jr.

a.) underpayment of salary:

From 2/22/11 - 4/30/11

b.) Holiday pay:

From 1/21/10-4/30/11

c.) Service incentive leave pay:

From 1/21/10 -4/30/11

d.) Proportionate 13th month pay

From 1/1/11 - 4/30/11

The computation of the Computation and Examination Unit of this Office is made part of this Decision.

SO ORDERED.10

Both parties elevated the case to the NLRC,11 which dismissed the appeals filed and affirmed in toto the
Decision of the Labor Arbiter. Ando filed a motion for reconsideration,12 but it was denied. Still aggrieved, he
filed a Rule 65 petition before the CA,13 which granted the same. The fallo of the Decision ordered:

WHEREFORE, finding the petition to be impressed with merit, the same is hereby GRANTED. The assailed
NLRC resolutions dated May 25, 2012 and July 17, 2012, are hereby ANNULLED insofar as the matter of
illegal dismissal is concerned and a new judgment is hereby ENTERED declaring petitioner Fortunato Ando, Jr.
illegally dismissed from work. Private respondent E. Ganzon, Inc. (EGI) is hereby ORDERED to pay petitioner
Ando, Jr. his full backwages inclusive of his allowances and other benefits computed from April 30, 2011 (the
date of his dismissal) until finality of this decision. EGI is further ordered to pay petitioner Ando, Jr. separation
pay equivalent to one month salary.

The award of petitioner Ando, Jr.'s money claims granted by the Labor Arbiter and affirmed by the NLRC
is SUSTAINED.

SO ORDERED.14

EGI's motion for reconsideration15 was denied; hence, this case.

The petition is meritorious.

In labor cases, Our power of review is limited to the determination of whether the CA correctly resolved the
presence or absence of grave abuse of discretion on the part of the NLRC. The Court explained this
in Montoya v. Transmed Manila Corporation:16

x x x In a Rule 45 review, we consider the correctness of the assailed CA decision, in contrast with the
review for jurisdictional error that we undertake under Rule 65. Furthermore, Rule 45 limits us to the review

116
of questions of law raised against the assailed CA decision. In ruling for legal correctness, we have to view
the CA decision in the same context that the petition for certiorari it ruled upon was presented to it; we have to
examine the CA decision from the prism of whether it correctly determined the presence or absence of
grave abuse of discretion in the NLRC decision before it, not on the basis of whether the NLRC
decision on the merits of the case was correct. In other words, we have to be keenly aware that the CA
undertook a Ruic 65 review, not a review on appeal, of the NLRC decision challenged before it. This is the
approach that should be basic in a Rule 45 review of a CA ruling in a labor case. In question form, the
question to ask is: Did the CA correctly determine whether the NLRC committed grave abuse of
discretion in ruling on the case? 17

Errors of judgment are not within the province of a special civil action for certiorari under Rule 65, which is
merely confined to issues of jurisdiction or grave abuse of discretion. 18 Grave abuse of discretion connotes
judgment exercised in a capricious and whimsical manner that is tantamount to lack of jurisdiction.19 To be
considered "grave," discretion 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 at all in contemplation of law.20 In labor disputes, grave abuse of
discretion may be ascribed to the NLRC when its findings and conclusions reached are not supported by
substantial evidence or are in total disregard of evidence material to or even decisive of the controversy; when
it is necessary to prevent a substantial wrong or to do substantial justice; when the findings of the NLRC
contradict those of the LA; and when necessary to arrive at a just decision of the case.21

In the case at bar, We hold that the CA erred in ruling that the NLRC gravely abused its discretion when it
sustained the Labor Arbiter's finding that Ando is not a regular employee but a project employee of EGI.

The terms regular, project, seasonal and casual employment are taken from Article 28022 of the Labor Code,
as amended. In addition, Brent School, Inc. v. Zamora23 ruled that fixed-term employment contract is not per
se illegal or against public policy.24 Under Art. 280, project employment is one which "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." To be considered as project-based, the employer has the burden of proof to
show that: (a) the employee was assigned to carry out a specific project or undertaking and (b) the duration
and scope of which were specified at the time the employee was engaged for such project or undertaking. 25 It
must be proved that the particular work/service to be performed as well as its duration are defined in the
employment agreement and made clear to the employee who was informed thereof at the time of hiring. 26

The activities of project employees may or may not be usually necessary or desirable in the usual business or
trade of the employer. In ALU-TUCP v. National Labor Relations Commission,27 two (2) categories of project
employees were distinguished:

In the realm of business and industry, we note that "project" could refer to one or the other of at least two (2)
distinguishable types of activities. Firstly, a project could refer to a particular job or undertaking that is within the
regular or usual business of the employer company, but which is distinct and separate, and identifiable as such,
from the other undertakings of the company. Such job or undertaking begins and ends at determined or
determinable times. The typical example of this first type of project is a particular construction job or project of a
construction company. x x x. Employees who are hired for the carrying out of one of these separate projects,
the scope and duration of which has been determined and made known to the employees at the time of
employment, are properly treated as "project employees," and their services may be lawfully terminated at
completion of the project.

The term "project" could also refer to, secondly, a particular job or undertaking that is not within the regular
business of the corporation. Such a job or undertaking must also be identifiably separate and distinct from the
ordinary or regular business operations of the employer. The job or undertaking also begins and ends at
determined or determinable times. x x x28

As the assigned project or phase begins and ends at determined or determinable times, the services of the
project employee may be lawfully terminated at its completion.29

In this case, the three project employment contracts signed by Ando explicitly stipulated the agreement "to
engage [his] services as a Project Worker"30 and that:

5. [His] services with the Project will end upon completion of the phase of work for which [he was] hired for and
is tentatively set on (written date). However, this could be extended or shortened depending on the work
phasing.31

The CA opined that Ando's contracts do not bear the essential element of a project employment because while
his contracts stated the period by which he was engaged, his tenure remained indefinite. The appellate court
ruled that the stipulation that his services "could be extended or shortened depending on the work phasing"
runs counter to the very essence of project employment since the certainty of the completion or termination of
the projects is in question. It was noted that, based on Ando's payslips, his services were still engaged by EGI
even after his contracts expired. These extensions as well as his repeated rehiring manifested that the work he

117
rendered are necessary and desirable to EGI's construction business, thereby removing him from the scope of
project employment contemplated under Article 280.

We do not agree.

Records show that Ando's contracts for Bahay Pamulinawen Project were extended until December 31,
201032(from the original stated date of September 30, 2010) and shortened to February 15, 201133 (from the
original stated date of February 28, 2011) while his services in West Insula Project was extended until April 30,
201134 (from the original stated date of March 31, 2011). These notwithstanding, he is still considered as a
project, not regular, employee of EGI.

A project employment contract is valid under the law.

x x x By entering into such a contract, an employee is deemed to understand that his employment is
coterminous with the project. He may not expect to be employed continuously beyond the completion of the
1âw phi 1

project. It is of judicial notice that project employees engaged for manual services or those for special skills like
those of carpenters or masons, are, as a rule, unschooled. However, this fact alone is not a valid reason for
bestowing special treatment on them or for invalidating a contract of employment. Project employment
contracts are not lopsided agreements in favor of only one party thereto. The employer's interest is equally
important as that of the employee's for theirs is the interest that propels economic activity. While it may be true
that it is the employer who drafts project employment contracts with its business interest as overriding
consideration, such contracts do not, of necessity, prejudice the employee. Neither is the employee left
helpless by a prejudicial employment contract. After all, under the law, the interest of the worker is paramount. 35

The Court has upheld the validity of a project-based contract of employment provided that the period was
agreed upon knowingly and voluntarily 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 where it
satisfactorily appears that the employer and employee dealt with each other on more or less equal terms with
no moral dominance whatever being exercised by the former over the latter; and it is apparent from the
circumstances that the period was not imposed to preclude the acquisition of tenurial security by the
employee.36 Otherwise, such contract should be struck down as contrary to public policy, morals, good custom
or public order.37

Here, Ando was adequately notified of his employment status at the time his services were engaged by EGI for
the Bahay Pamulinawen and the West Insula Projects. The contracts he signed consistently stipulated that his
services as a project worker were being sought. There was an informed consent to be engaged as such. His
consent was not vitiated. As a matter of fact, Ando did not even allege that force, duress or improper pressure
were used against him in order to agree. His being a carpenter does not suffice.

There was no attempt to frustrate Ando's security of tenure. His employment was for a specific project or
undertaking because the nature of EGI's business is one which will not allow it to employ workers for an
indefinite period. As a corporation engaged in construction and residential projects, EGI depends for its
business on the contracts it is able to obtain. Since work depends on the availability of such contracts,
necessarily the duration of the employment of its work force is not permanent but coterminous with the projects
to which they are assigned and from whose payrolls they are paid.38 It would be extremely burdensome for EGI
as an employer if it would have to carry them as permanent employees and pay them wages even if there are
no projects for them to work on.39

Project employment should not be confused and interchanged with fixed-term employment:

x x x While the former requires a project as restrictively defined above, the duration of a fixed-term employment
agreed upon by the parties may be any day certain, which is understood to be "that which must necessarily
come although it may not be known when." The decisive determinant in fixed-term employment is not 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 the employment relationship.40

The decisive determinant in project employment is the activity that the employee is called upon to perform and
not the day certain agreed upon by the parties for the commencement and termination of the employment
relationship. Indeed, in Filsystems, Inc. v. Puente,41 We even ruled that an employment contract that does not
mention particular dates that establish the specific duration of the project does not preclude one's classification
as a project employee.

In this case, the duration of the specific/identified undertaking for which Ando was engaged was reasonably
determinable. Although the employment contract provided that the stated date may be "extended or shortened
depending on the work phasing," it specified the termination of the parties' employment relationship on a "day
certain," which is "upon completion of the phase of work for which [he was] hired for."42

A "day" x x x is understood to be that which must necessarily come, although is may not be known exactly
when. This means that where the final completion of a project or phase thereof is in fact determinable and the

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expected completion is made known to the employee, such project employee may not be considered regular,
notwithstanding the one-year duration of employment in the project or phase thereof or the one-year duration of
two or more employments in the same project or phase of the project.

The completion of the project or any phase thereof is determined on the date originally agreed upon or the date
indicated in the contract, or if the same is extended, the date of termination of project extension.43

Ando's tenure as a project employee remained definite because there was certainty of completion or
termination of the Bahay Pamulinawen and the West Insula Projects. The project employment contracts
sufficiently apprised him that his security of tenure with EGI would only last as long as the specific projects he
was assigned to were subsisting. When the projects were completed, he was validly terminated from
employment since his engagement was coterminous thereto.

The fact that Ando was required to render services necessary or desirable in the operation of EGI's business
for more than a year does not in any way impair the validity of his project employment contracts. Time and
again, We have held that the length of service through repeated and successive rehiring is not the controlling
determinant of the employment tenure of a project employee.44 The rehiring of construction workers on a
project-to-project basis does not confer upon them regular employment status as it is only dictated by the
practical consideration that experienced construction workers are more preferred.45 In Ando's case, he was
rehired precisely because of his previous experience working with the other phases of the project. EGI took into
account similarity of working environment. Moreover –

x x x It is widely known that in the construction industry, a project employee's work depends on the availability
of projects, necessarily the duration of his employment. It is not permanent but coterminous with the work to
which he is assigned. It would be extremely burdensome for the employer, who depends on the availability of
projects, to carry him as a permanent employee and pay him wages even if there are no projects for him to
work on. The rationale behind this is that once the project is completed it would be unjust to require the
employer to maintain these employees in their payroll. To do so would make the employee a privileged retainer
who collects payment from his employer for work not done. This is extremely unfair to the employers and
amounts to labor coddling at the expense of management.46

Finally, the second paragraph of Article 280, stating that an employee who has rendered service for at least
one (1) year shall be considered a regular employee, is applicable only to a casual employee and not to a
project or a regular employee referred to in paragraph one thereof.47

The foregoing considered, EGI did not violate any requirement of procedural due process by failing to give
Ando advance notice of his termination. Prior notice of termination is not part of procedural due process if the
termination is brought about by the completion of the contract or phase thereof for which the project employee
was engaged.48Such completion automatically terminates the employment and the employer is, under the law,
only required to render a report to the Department of Labor and Employment (DOLE) on the termination of
employment.49 In this case, it is undisputed that EGI submitted the required Establishment Employment Reports
to DOLE-NCR Makati/Pasay Field Office regarding Ando's "temporary lay-off" effective February 16, 2011 and
"permanent termination" effective May 2, 2011.50

WHEREFORE, premises considered, the petition is GRANTED. The February 28, 2014 Decision and
September 4, 2014 Resolution of the Court of Appeals in CA-G.R. SP No. 126624, which annulled the
Resolutions dated May 25, 2012 and July 17, 2012 of the National Labor Relations Commission which
affirmed in toto the December 29, 2011 Decision of the Labor Arbiter, are REVERSED AND SET ASIDE. The
Decision of the Labor Arbiter is REINSTATED.

SO ORDERED.

2. Herma Shipyard, Inc. vs. Oliveros, G.R. No. 208936, April 17, 2017 


April 17, 2017

G.R. No. 208936

HERMA SHIPYARD, INC, and MR. HERMINIO ESGUERRA, Petitioner,

vs.
DANILO OLIVEROS, JOJIT BASA ARNEL SABAL, CAMILO OLIVEROS, ROBERT NARIO, FREDERJCK
CATIG, RICARDO ONTALAN, RUBEN DELGADO, SEGUNDO LABOSTA, EXEQUIEL OLlVERIA, OSCAR
TIROL and ROMEO TRINIDAD, Respondent.

DECISION

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DEL CASTILLO, J.:

This Petition for review on Certiorari1 assails the decision2 dated 30, 2013 of the court of appeals (CA) in CA-
G.R SP No. 118068 that reversed the decision of the National Labor Relations Commissions (NLRC) and the
labor arbiter and declared that Danilo Oliveros, Jojit Basa, Arnel Sabal, Camilo Oliveros, Robert Nario,
Frederick Catig, Ricardo Ontalan, Ruben Delgado, Segundo Labosta, Exequiel Oliveria, Oscar Tirol and
Romeo Trinidad (respondents) are regular employees of petitioner Herma Shipyard Inc. (Herma Shipyard).

Factual Antecedents

Herma Shipyard is a domestic corporation engaged in the business of shipbuilding and repair. The respondents
were its employees occupying various positions such as welder, leadman, pipe fitter, laborer, helper, etc.

On June 17, 2009, the respondents filed before the Regional Arbitration Branch III, San Fernando City,
Parnpanga a Complaint 3 for illegal dismissal, regularization, and non-payment of service incentive leave pay
with prayer for the payment of full backwages and attorney's fees against petitioners. Respondents alleged that
they are Herma Shipyard's regular employees who have been continuously performing tasks usually necessary
and desirable in its business. On various dates, however, petitioners dismissed them from employment.

Respondents further alleged that as a condition to their continuous and Uninterrupted employment, petitioners
made them sign employment contracts for a fixed period ranging from one to four months to make it appear
that they were project-based employees. Per respondents, petitioners resorted to this scheme to defeat their
right to security of tenure, but in truth there was never a time when they ceased working for Henna Shipyard
due to expiration of project-based employment contracts. In fact, if they were indeed project employees,
petitioners should have reported to the Department of Labor and Employment (DOLE) the completion of such
project. But petitioners have never submitted such report to the DOLE.

For their defense, petitioners argued that respondents were its project-based employees in its shipbuilding
projects and that the specific project for which they were hired had already been completed, In support thereof,
Herma Shipyard presented contracts of employment, some of which are written in the vernacular and
denominated as kasunduang Paglilingkod (Pang-Proyektong Kawani).4

Ruling of the Labor Arbiter

On May 24, 2010, the Laborer Arbiter rendered a Decision 5 Dismissing respondents’ Complaint. The Laborer
Arbiter held that respondents were project-based employees whose services were validly terminated upon the
completion of the specific work for which they were individually hired. The dispositive portion of the Labor
Arbiter’s Decision reads:

WHEREFORE, premises considered, let the instant complaint be, as it is hereby ORDERED dismissed for lack
of merit.

AU the money cla.ims as well as moral and exemplary damages and attorney's fees raised by the
complainants in their complaint are likewise DENIED for lack of merit.

SO ORDERED.6

Respondents thus appealed to the NLRC.

Ruling of the National Labor Relations Commission

On September 7, 2010, the NLRC rendered its Decision7 denying respondents' appeal and affirming in toto the
Decision of the Labor Arbiter, It sustained the finding of the Labor Arbiter that based on their employment
contracts, respondents were project-based employees hired to do a particular project for a specific period of
time.

Respondents moved for reconsideration but the NLRC denied their Motion for Reconsideration 8 in its
November 11, 2010 Resolution.9

Unfazed, respondents filed a Petition for Certiorari10 before the CA imputing grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of the labor tribunals in finding that they were project-
based employees and in not awarding them service incentive leaves. Respondents contended that the labor
tribunals grievously erred in relying on the project employment contracts which were for a uniform duration of
one month. They argued that if it were true that they were project-based employees, the duration of their
employment should have coincided with the completion of the project for which they were hired and not for a
uniform period of one month.

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Ruling of the Court of Appeals

On May 30, 2013, the CA rendered its assailed Decision 11 granting respondents’ Petitions for Certiorari and
setting aside the labor tribunals’ Decision. It held that even if the contracts of employment indicated that
respondents were hired as project-based workers, their employment status have become regular since: they
were performing tasks that are necessary, desirable, and vital to the operation of petitioners’ business;
petitioners failed to present proof that respondents were hired for a specific period or that their employment
was coterminous with specific project; it is not clear from the contracts of employment presented that the
completion or termination of the project or undertaking was already determined at the time petitioners engaged
the services of respondents; respondents were made to work not only in one project but also in different
projects and were assigned to different departments of Herma Shipyard; respondents were repeatedly and
successively rehired as employees of Herma Shipyard; except with regard to respondent’s last employment,
petitioners failed to represent proof that they reported to the nearest public employment office the termination of
respondents’ previous employment or every time a project or a phase thereof had been completed; and,
petitioners failed to file as many reports of termination as there were shipbuilding and repair projects actually
completed, The CA concluded that the project employment contracts were indeed used as a device to
circumvent respondents’ right to security of tenure. The fallo of the assailed CA Decision reads:

WHEREFORE, the instant for certiorari is GRANTED. The assailed decision and resolution of the respondent
National Labor Relations Commission are REVERSED and SET ASIDE, and a new judgment is hereby
rendered holding petitioners as regular employees and declaring their dismissal as illegal. According, private
respondents are hereby ordered to REINSTATE petitioners to their former employment. Should reinstatement
be not possible due to strained relations, private respondents are ordered to pay petitioners their separation
pay equivalent to one month pay or one-half-month pay for every year of service. Whichever is higher, with full
backwages computed from the time of dismissal up to the finality of the decision. For this purpose, the case is
hereby REMANDED to the respondent NLRC for the computation of the amounts due petitioners.

SO OREDERED. 12

Petitioners moved for reconsideration. In a Resolution 13 dated August 30, 2013, however, the CA denied their
Motion for Reconsideration. 14

Hence, this Petition for Review on Certiorari assailing the May 30, 2013 Decision and August 30, 2013
Resolution of the CA, Petitioners anchor their Petition on the following arguments:

PREVAIL IN JURISPRUDENCE DICTATES THAT RESPONDENTS ARE NOT REGULAR EMPLOYEES OF

PETITIONER [HERMA SHIPYARD]. THEY ARE PROJECT EMPLOYEES WHOSE TERMS OF
EMPLOYMENT WERE VALIDLY TERMINATED UPON THE EXPIRATION OF THE TERM OF THEIR
PROJECT EMPLOYMENT CONTRACTS.

THE ASSAILED DECISION AND ASSAILED RESOLUTION RULED ON ISSUES WHICH WERE NEITHER
DISPUTED IN RESPONDENTS' PETITION FOR CERTIORARI NOR RAISED IN THE DECISION OF THE
HONORABLE [NLRC].

ASA BORNE BY THE PROJECT EMPLOYMENT CONTRACTS OF RESPONDENTS AND TERMINATION

REPORTS SUBMITTED TO THE DEPARTMENT OF LABOR AND EMPLOYMENT, RESPONDENTS
UNDOUBTEDLY PROJECTS EMPLOYEES OF PETITIONER [HERMA SHIPYARD].

THE HONORABLE COURT OF APPEALS FAILED TO CONSIDER THAT RESPONDENTS’ PETITION FOR
CERTIORARI DID NOT RAISE AS AN ISSUE AN ACTS COMMITTED BY THE HONORABLE [NLRC] WHICH
AMOUNTED TO GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDJCTION.

BY VIRTUE OF THE DOCTRINE OF SEPARATE JURIDICAL PERSONALITY, PETITIONER ESGUERRA

SHOULD NOT BE HELD LIABLE IN THE INSTANT LABOR COMPIAINT.

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THE HONORABLE COURT OF APPEALS FAILED TO GIVE WEIGHT AND RESPECT TO THE FACTUAL
FINDINGS OF THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION AND THE HONORABLE
LABOR ARBITER.

THE HONORABLE COURT OF APPEALS DID NOT ACQUIRE JURISDICTION OVER THE INSTANT CASE
AS THE HONORABLE NLRC'S DECISION AND RESOLUTION ALREADY BECAUSE EXECUTORY
CONSIDERING THAT RESPONDENTS' PETITION FOR CERTIORARI WAS FILED BEYOND THE
REGLEMENTARY PERIOD PRESCRIBED BY THE RULES.15

Petitioners contend, among others, that necessity and desirability of respondents’ services in Herma Shipyard’s
business are not the only factors to be considered in determining the nature of respondents; employment. They
assert that the CA should have also taken into consideration to the contracts of employment signed by the
respondents apprising them to the fact that their services were engaged for a particular project only and that
their employment was coterminous therewith. The authenticity and genuineness of said contracts, according to
petitioners, were never disputed by the respondent during the pendency of the case before the labor tribunals.
It was only in their comment 16 to the instant Petition that respondents disavow said contracts of employment for
allegedly being fictitious.

Petitioners aver that the CA also erred in ruling that he duration of respondents’ employment depends upon a
progress accomplishment as paragraph 10 of the employment contract readily shows that the same is
dependent upon the completion of the project indicated therein.

With regard to the repeated rehiring of the respondents, petitioners insist that the same will not result in
respondents becoming regular employees because length of service does not determine employment status.
What is controlling of specific project or undertaking, its completion having been determined and made known
to the employees at the time of their engagement. Thus, regardless of the number of projects for which
respondents had been repeatedly hired, they remained project-based employees because their engagements
were limited to a particular project only. Petitioners emphasize that Herma Shipyard merely accepts contracts
for shipbuilding and for repair of vessels. It is not engaged in the continuous production of vessels for sale
which would necessitate the hiring of a large number of permanent employees.

Respondents, for their part, deny having worked for a specific projects or undertaking. They insist that the
employment contracts presented by petitioners purportedly showing that they were project-based employees
are fictitious designed to circumvent the law. In any case, said contracts are not valid project employment
contracts because the completion of the project.

Our Ruling

The Petition is impressed by merit.

At the outset, the issue of whether petitioners were project-based employees is a question of fact that,
generally, cannot be passed and ruled upon by this Court in a petition for review on certiorari filed under Rule
45 of the rules of Court. It is settled that the jurisdiction of this Court in a Rule 45 petition is generally limited to
reviewing errors of law. Nevertheless, in view of the opposing views of the tribunals below, this Court shall take
cognizance of and resolve the factual issues involved in this case. 17

Who are project-based employees?

A project employee under Article 280 (now Article 294)18 of the Labor Code, as amended, is one whose
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, Thus:

Art, 280. Regular and Casual Employment. –The provisions of written agreement for the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be
regular where the employee has been engaged to perform activities which are usually necessary or desirable in
the usual business or trade of the employer, except where the employment has been fixed for a specific

Project or undertaking the completion or termination of which has been determined at the time of the
engagement of the employee or where the work or service to be performed is seasonal in nature and the
employment is for the duration of the season.

x x x x (Emphasis supplied)

The services of project-based employees are co-terminous with the project and may be terminated upon the
end or completion of the project or a phase thereof for which they were hired. 19 The principal test in
determining whether particular employees were engaged as project-based employees, as distinguished from

122
regular employees, is whether they were assigned to carry out a specific project or undertaking, the duration
and scope of which was specified at, and made known to them, at the time of their engagement. 20 It is crucial
that the employees were informed of their status 8rS project employees at the time of hiring and that the period
of their employment must be knowingly and voluntarily agreed upon by the parties, without any force, duress,
or improper pressure being brought to bear upon the employees or any other circumstances vitiating their
consent. 21

Respondents Knowingly and voluntarily

entered in and signed the project-based
employment contracts.

The records of this case reveal that for each and every project respondents were hired. They were adequately
informed of their employment status as project-based employees at least at the time they signed their
employment contracts. They were fully apprised of the nature and scope of their work whenever they affixed
their signature to their employment contract. Their contracts of employment (mostly written in the vernacular)
provide in no uncertain terms that they were hired as project-based employees whose services are
coterminous with the completion date thereof. They also contain a provision expressly stating that respondents’
employment shall end upon the arrival of the target completion date or upon the completion of such project.
Except for the underlined portions, the contract of employment read:

KASUNDUAN NG PAGLILINGKOD
(PANG-PROYEKTONG KAAWANI)

PARA SA KAALAMAN NG LAHAT:

ALAMIN NG LAHAT NA:

HERMA SHIPYARD, INC., isang korporasyon na itinatag at nananatili sa ilalim ng batas ng Pilipinas at may
tanggapan sa Herma IndustrialComplex, Mariveles, Bataan na kinakatwan [ni] EDUARDO S. CARANCIO ay
makikilala bilang kompanya; OLIVEROS, CAMILO IBAÑEZ, sapat ang gulang, Pilipino, may asawa/asawa na
tubong__________, naninirahan sa BASECO Country Aqwawan, Mariveles, Bataan dito ay nakikilala bilang
PANG-PROYEKTONG KAWANI;

NAGSASAYSAY NA:

NA, ang kumpanya ay nangangailangan ng paglilingkod ng isang Ship Fitter Class A sa panandaliang panahon
at bilang pang suporta sa paggawa at pagsasaayos ng proyekto para sa MT Masinop.

NA, ang PANG-PROYEKTONG KAWANI ay nagpapahayag ng kanyang kakayahan at kagustuhang isagawa

ang proyektong iniaalok ng KUMPANYA at handing tuparin ang nasabing Gawain sa KUMPANYA sa ilalim ng
sumusunod na kundisyon;

Bilang pagkilala sa mga nasabing batayan, ang mga kinauukulang partido ay nagkakasundo at nagtatakda ng
mga sumusunod:

1) AngKUMPANYA ay pumapayag na bayaran ang serbisyo ng PANG-PROYEKTONG KAWANI

bilang Ship Fitter Class A sa nasabing proyekto simula 4/1/2009 hanggang 4/30/2009 o sa sandaling
matapos ang nasabing Gawain o anumang bahagi nito kung saan siya ay inupahan o kung saan ang
kanyang serbisyo ay kailangan at ang PANG-PROYEKTO KAWANI ay sumasang-ayon. Ang maga
gawaing nabanggit sa kasunduang ito ay hindi pangkaraniwang ginagawa ng KUMPANYA kundi para
lamang sa itinakdang panahon o hanggang matapos ang nasabing proyekto;

2) Ang KUMPANYA ay may karapatan na pawalang bias o kanselahin ang kasunduang ito anomang oras kung
mapatutunayan na ang PANG-PROYEKTONG KAWANI ay walang kakayahan na gawin ang naturang gawain
kung saan siya ay inupahan nang naaayon sa pamantayan o sa kagustuhan ng KUMPANYA o sa anumang
dahilan na naaayon sa batas, kasama na rito ang paglabag ng PANG-PROYEKTONG KAWANI sa mga
alituntunin ng KUMPANYA;

3) Ang PANG-PROYEKTONG KAWANI ay sumasang-ayon na gampanan ang mga gawaing ito para sa
KUMPANYA buong katapatan at husay;

4) Ang PANG-PROYEKTONG KAWANI ay magtratrabaho ng walong (8) oras sa bawat araw ng trabaho ayon
sa oras na itinakda ng KUMPANYA at siya ay babayaran ng ₱405 (₱397.00/basic+8/ecola) bawat araw at ito
ay kanyang matatanggap tuwing ika-labinlimang araw at katapusan ng buwan na kanyang ipinagtrabaho. Ang
PANG-PROYEKTONG KAWANI ay hindi babayaran sa mga araw na hindi siya pumasok sa trabaho sa
KUMPANYA;

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5) Lahat ng kaalaman o impormasyon na maaaring mabatid ns; PANG-PROYEKTONG KAWANI habang siya
ay may kaμgnayan sa KUMPANYA ay iingatan niya at hindi maaaring gamitin, ipasipi o ipaalam sa kaninuman
ng walang kaukulang pahintnlot lalo na kung ito ay maAaring makapinsala sa KUMPANYA;

6) Ang PANG-PROYEKTONG KAWANI ay nangangako na ibibigay ang kanyang panahon at buong

kakayahan para sa kapakanan ng KUMPANYA, tutugon sa lahat ng alintuntunin ng KUMPANYA, susunod s
autos ng mga namumuno na naaayon sa batas, at tatanggapin ang pananagutan sa lahat ng kanyang mga
galaw na maaaring makapinsala o makasakit sa kapwa kawani at sa ari-arian ng KUMPANYA, ganun din ang
kapakanan at ari-arian ng ibang tao;

7) Nababatid at nauunawaan ng bawat partido sa kasunduang ito na ang PANG-PROYEKTONG

KAWANI ay hindi maituturing na pampirmihan or "regular" na kawani ano man at gaano man katagal
ang kanyang paglingkod sa kumpanya. Sa ganitong kadahilanan, ang PANG-PROYEKTONG KAWANI
ay hindi tatanggap ng karaniwang benepisyo na ipinagkaloob sa pampirmihan o "regular" na kawani,
katulad ng bonuses, medical insurance, at retirement benefits, maliban sa ilang benepisyo na
pinagkakaloob ng batas.

8) Sa pagtupad ng mga nasabing gawa, nalalaman at inaasahan ng PANG-PROYEKTONG KAWANI ang ilang
kaakibat na peligro sa maayos na pagganap ng naturang mga gawa. Alam ng PANG-PROYEKTONG KAWANI
na ang KUMPANYA ay walang kinalaman sa bagay na ito at hindi dapat panagutin ukol dito;

9) Ang lahat ng mga nakasaad at nasusulat na mga kondisyon sa kasunduang ito ay nauunawaan at
naiintindihan ng PANG-PROYEKTONG KAWANI;

10) Ang kasunduang ito ay maaaring palawigin ng mas mahabang panahon na maaaring kailangan para sa
matagumpay na pagtatapos ng mga gawa o proyektong pinagkasunduan;

BILANG SAKSI sa kasunduang ito, ang mga partido ay lumagda ngayong ika-1 ng Abril 2009 sa Mariveles,
Bataaan, Pilipinas; 22 (Emphases supplied)

There is no indication that respondents were coerced into signing their employment contracts or that they
affixed their signature thereto against their will. While they claim that they signed the said contracts in order to
secure continuous employment, they have not, however presented sufficient evidence to support the same
other than their bare allegations. It is settled that "[c]ontracts for project employment are valid under the
law."23 Thus, in Jamias vs National Labor Relations Commission, 24 this court upheld the project employment
contracts which were knowingly and voluntarily signed by the employees for want of proof that the employers
employed force, intimidation, or fraudulently manipulated them into signing the same. Similarly in this case, by
voluntarily entering into the aforementioned project employment contracts, respondents are deemed to have
understood that their employment is coterminous with the particular project indicated therein. They cannot
expect to be employed continuously beyond the completion of such project because a project employment
terminates as soon as it is completed.

Performance by project-based
Employees of task necessary and
Desirable to the usual business
Operation of the employer will not
automatically result in their
regularization.

In disregarding the projects employment contracts and ruling that respondents are regular employees, the CA
took into consideration that respondents were performing tasks necessary and desirable to the business
operation of Herma Shipyard and that they were repeatedly hired. Thus:

[I]t is significant to note that even if the contracts of employment indicates that [respondents] were hired as
project workers, they are still considered regular employees on the ground that as welder, ship fitter, pipe fitter,
expediter and helper, [respondents’] services are all necessary, desirable and vital to the operation of the ship
building and repair business of [petitioners]. A confirmation of the necessity and desirability of their services is
the fact that [respondents] were continually and successively assigned to the different projects of private
respondents even after the completion of a particular project to which they were previously assigned. On this
score, it cannot be denied that petitioners were regular employees. 25

It is settled, however, that project-based employees may or may not be performing tasks usually necessary or
desirable in the usual business or trade of the employer. The fact that the job is usually necessary or desirable
in the business operation of the employer does not automatically imply regular employment; neither does it
impair the validity of the project employment contract stipulating a fixed duration of employment. 26 As this Court
held in ALU-TUCP v. National Labor Regulation Commission: 27

In the realm of business and industry, we note that ‘project’ could refer to one or the other of at least two (2)
distinguishable types of activities. Firstly, a project could refer to a particular job or undertaking that is within the

124
regular or usual business of the employer company, but which is distinct and separate, and identifiable as such,
from the other undertaking of the company. Such job or undertaking begins and ends at determined or
determinable times. The typical example of this first type of project is a particular construction job or project of a
construction company. A construction company ordinarily carries out two or more discrete identifiable
construction projects: e,g., a twenty-five-storey hotel in Makati; a residential condominium building in Baguio
City; and domestic air terminal in Iloilo City. Employees who are hired for the carrying out of one these separate
projects, the scope and duration of which has been determined and made known to the employees at the time
of employment are properly treated as ‘project employees.’ and their services may be lawfully terminated at
completion of the project.

The term ‘project’ could also refer to, secondly, a particular job or undertaking that is not within the regular
business of the corporation , Such a job or undertaking must also be identifiably separate and distinct from the
ordinary or regular business operations of the employer. The job or undertaking also begins and ends at
determined or determinable times. 28

Here, a meticulous examination of the contracts of employment reveals that while the tasks assigned to the
respondents were indeed necessary and desirable in the usual business of Herma Shipyard, the same were
distinct, separate, and identifiable from the other projects or contracts services. Below is the summary of the
respondents’ employment contracts indicating the positions they held, the specific projects for which they were
hired, and the duration or expected completion thereof:
1âw phi1

Names Positions Projects Durations

1. Ricardo J. Pipe Fitter MT Masinop 03/18/09-03/31/0929
Ontalon Pipe Fitter 12mb _phase 3 09/15/08-12/20/0830
Pipe Fitter 12mb/ Petrotrade 6 05/29/08-08/31/0831
Pipe Fitter Aleem Calaca 04/29/08-completion32
Pipe Fitter Hull 0102-phase 6 12/17107-03/03/0833
Pipe Fitter Hull 0103 & Hull 0104- phase 1 09/11/07-12/11/0734
2. Roberto T. Welder 6G MT Masinop 03/18/09-03/31/09 35
Nario Welder 6G 12 mb/ Matikas/ 06/02/08-07/31/08 36
Red Dragon
Welder 6G 22mb/12mb/Galapagos 03/04/08-06/05/08 37
/Petrotrade 7/Ma Oliva/ Solid
Sun/ Hagonoy/ Banga Uno/
Welder 6G Bigaa 10/18/07-12/18/07 38
Hull 0102-phase 5
3. Oscar J. Tirol Pipe Fitter Class B Red Dragon (installation of lube 01/16/09-02/15/09 39
oil, diesel oil, air compressed
line,
Freshwater cooling, lavatory,
Pipe Fitter sea water pipe line) 06/27/08-completion 40
------------- MT Magino/MV Diana 02/08/08 41 –
Petrotrade 7/Solid Gold 02/08/08 42
4. Exequiel R. Leadman 12mb/Petrotrade 6 05/29/08-08/31/08 43
Oliveria Leadman Red Dragon 05/29/08-05/31/08 44
Leadman Hull 0102-phase 6 12/01/07 45
Leadman Hull 0102-phase 5 03/03/08 46
Leadman Hull 0102-phase 4 09/11/07-11/30/07 47
06/07/07-08/27/07 48
5. Arnel S. Sabal Leadman MT Masinop 03/18/09-03/31/09 49
Leadman 12mb/-phase 3 09/15/08 50 –
Leadman 12mb/Petrotrade 6 12/20/08 51
Leadman 22mb/12mb/Galapagos 05/29/08-08/31/08 52
Petrotrade 7/ Ma Oliva 03/04/08-06/05/08 53
Solid Sun/ Hagonoy/
Banga Uno/ Bigaa
Leadman Hull 0102-phase 6
Leadman Hull 0102-phase 5 12/01/2007 54 -
Pipe Fitter Hull 0102-phase 4 3/03/08 55
------------- Hull 0102-phase 2 09/11/07-11/30/07 56
Pipe Fitter Hull 0102 06/13/07-09/04/07 57
Pipe Fitter PetroTrade8/EUN HEE 01/15/07-03/30/07 58
Pipe Fitter MT Angat 01/08/07-completion 59
Pipe Fitter M/T Pandi 05/17/06-completion 60
Pipe Fitter M/T Makisig 06/02/05 61 -06/25/05 62
Pipe Fitter Petro Trade - 7 12/08/04-completion 63
11/08/04-completion 64

125
 08/12/04 65 -09/13/04 66
6. Segundo Q. ABS Welder 6G MT Masinop 03/18/09-03/31/09 67
Labosta , Jr. ABS Welder 6G 12mb-phase 3 09/26/08-12/20/08 68
ABS Welder 6G PetroTrade 6/12 mb 08/01/08-10/31/08 69
ABS Welder 6G Cagayan de Oro/ Petrotrade 6/ 06/01/08-
Plaridel 07/31/31/08 70
7. Jojit A. Besa Leadman – ABS MT Masinop 03/18/09-03/31/09 71
6G 12mb/Barge Kwan Sing/ Solid 01/16/09-03/14/0972
Leadman – ABS Pearl 10/10/08-12/20/0873
6G 12mb-phase 3 12101/0%02/29/08 74
Leadman – ABS Hull 0102-phase 6 06/07/07-08/29/07 75
6G Hull 0102-phase 4 06/01/07-08/27/07 76
Leadman – ABS Hull 0102-phase4 08/07/06-completion77
6G MT Matilde/M/Tug Mira 04/15/06-completion78
Pipe Welder 6G MT Marangal/ MT Masikap/ MT
Pipe Welder Maginoo/ Petro Trade 8 03/01/06-completion79
Pipe Fitter MV ST Ezekiel Moreno 11/03/05-completion80
Pipe Fitter MT Plaridel/Monalinda
95/Tug Bout Sea Lion 05/31105-06/30/05
Pipe Fitter/Welder MT Angat/Banga Dos 11 /08/04-completion81
Pipe Fitter M/T Makisig 10/18/04-completion82
M/T Baliuag Oceantique
Pipe Fitter Petro Trade – 7 9/17/04-one month/
Pipe Fitter Petro Trade V/Guiguinto completion83
Pipe Fitter 08/03/04-two months/
completion83
Pipe Fitter 07 /03/04-one month/
Completion. 85
Pipe Fitter

Pipe Fitter
8. Camilo I. Shift Fitter Class A MT Masinop 04/01/09-04/30/0986
Oliveros Leadman Petrotrade 6/ Plaridel/ Red 06/03/08-09/10/0887
ABS Welder 6G Dragon
Welder Hull 0102/0103 01/15/08-completion88
Welder Hull 0102-phase 5 09/11/07/-12/04/0789
Welder Hull 0102-phase 4 06/06/07-08/28/0790
Welder Hull 0102-phase 3 04/12/07-06/12/0791
Ship Welder Hull 0102-phase 2 01/24/07-03/30/0792
22 mb oil tanker 09/06/06-completion93
9. Romeo I. Helper Modernization Project- painting 01/24/07-01 /28/0794
Trinidad of prod’n bldg. and overhead
Laborer crane 09/10/07-12/10/0795
Pin Jiq assembly, building table
construction, painting of ex-
Laborer oxygen bldg. frabrication of 04123/07-05/31/0796
slipways railings
Ground level of main
entrance road & CHB wall
plastering/repair of
Electrician/Laborer warehouse no 1 for conversion 12/04/06-completion97
to training bldg.
Construction of launchway and
perimeter fence
10. Ruben F. Leadman Red Dragon (water tight door 01/16/09-02/15/0998
Delgado installation, soft batch)
Leadman Red Dragon 10/13/08-12/20/0899
Leadman MV Ma Diana 06/28/08-completion 100
Ship Fitter Hull 0102-Phase 4 05/30/07-08/26/07101
Ship Fitter Thomas Cloma 12/03/07-completion101
Ship Fitter MV Solid Jade/ Construction of 03/10/07-completion103
New
Ship Fitter Caisson Gate 02/01/07104
MT Hagonoy 02/21/07105
Ship Fitter 01/09/07-completion 106
Ship Fitter MT Mabiuag 12/18/06107 -1/07 /07108
MT Ma Xenia

126
 11. Danilo I. Welder 3G. & 4G MT Hagonoy/ MT Masinop/MT 04/01 /09-04/15/09109
Oliveros Matikas
Welder 3G & 4G Hagonoy 03/20/09-03/31/09110
Welder 3G & 4G l2mb-phase 3 09/25/08-12/20/08111
Welder l2mb/Petrotrade 6 07/01/08-09/30/08112
Welder 3G & 4G Hull 0102-phase 6 12/08/07-03/08/08113
Welder Hull 0102-phase 5 09/10/07-12/10/07114
Welder Hull 0102 12/19/06-completion115
12. Frederick C. Pipe Fitter Class C MT Masinop 02/06/09-02/28/09116
Catig Pipe Fitter Class C 12mb 01/08/09-0l /31/09117
Helper 12mb_phase 3 09/15/08-completion 118
Helper 12mb/Petrotrade 6 05/29/08-08/31/08 119
Helper Hull 0102-phase 6 01 /02/08-03/31/08120
Helper Hull 0102, Hull 0103, 10/01/07-12/3l/07121
Hull 0104
Helper Hull 0103 phase 1 07/25/07-09/31/07122

As shown above, respondents were hired for various projects which are distinct, separate, and identifiable from
each other. The CA thus erred in immediately concluding that since respondents were performing tasks
necessary, desirable, and vital to Herma Shipyard's business operation, they are regular employees.

Repeated rehiring of project employees

to different projects does not ipso facto
make then regular employees.

"[T]he repeated and successive rehiring [of respondents as project-based employees] does not [also], by and
of itself: qualify them as regular employees. Case law states that length of service (through rehiring) is not the
controlling determinant of the employment tenure [of project-based employees but, as earlier mentioned],
whether the employment has been fixed for a specific project or unde1taking, with its completion having been
determined at the tin1e of [their] engagement." 123 Stated otherwise the rule that employees initially hired on a
temporary basis may become permanent employees by reason of their length of service is not applicable to
project-based employees. Our ruling in Villa v. National Labor Relations Commission 124 is instructive on the
matter, viz.:

Thus, the fact that petitioners worked for NSC under different project employment contracts for several years
cannot be made a basis to consider them as regular employees, for they remain project employees regardless
of the number of projects in which they have worked. Length of service is not the controlling determinant of the
employment tenure of a project employee. In the case of Mercado Sr. v. NLRC, this Court rule that the proviso
in the second paragraph of Article 280, providing that an employee who has served for at least one year, shall
be considered a regular employee, relates only to casual employees and not to project employees.

The rationale for the inapplicability of this rule to project-based employees was discussed in Dacles v.
Millennium Erectors Corporation,, 125 to wit:

x x x While generally, length of service provides a fair yardstick for determining when an employee initially hired
on a temporary basis becomes a permanent one, entitled to the security and benefits of regularization, this
standard will not be fair, if applied to the constrn9tion industry because construction firms cannot guarantee
work and funding for its payrolls beyond the life of each project as they have no control over the decisions and
resources of project proponents or owners. Thus, once the project is completed it would be unjust to require the
employer to maintain these employees in their payroll since this would be tantamount to making the employee
a privileged retainer who collects payment from his employer for work not done, and amounts to labor coddling
at the expense of management.126

Indeed, if we consider the nature of Henna Shipyard's business, it is clear that Herma Shipyard only hirG5
workers when it has existing contracts for shipbuilding and repair. It is not engaged in the business of building
vessels for sale which would require it to continuously construct vessels for its inventory and consequently hire
a number of permanent employees. In Sandoval Shipyards, Inc. v. National labor Relations
Commission 127 where therein petitioner was engaged in a similar kind of business this Court opined that:

It is significant to note that the corporation does not construct vessels for sale or othe1wise which will demand
continuous productions of ships and will need permanent or regular workers. It merely accepts contracts for
shipbuilding or for repair of vessels from third parties and, only, on occasion when it has work contract of this
nature that it hires workers to do the job which, needless to say, lasts only for less than a year or longer. 128

The completion of their work or project automatically terminates their employment, in which case, the employer
is, under the law, only obliged to render a report on the termination of the employment.

127
Hence, Herma Shipyard should be allowed '"to reduce [its] work force into a number suited for the remaining
work to be done upon the completion or proximate accomplishment of [each particular] project." 129 As for
respondents, since they were assigned to a project or a phase thereof which begins and ends a determined or
determinable times, their services were lawfully ten11inated upon the completion of such project or phase
thereof 130

Moreover, our examination of the records revealed other circumstances that convince us that respondents
were and remained project-based employees, albeit repeatedly rehired. Contrary to their claim, respondents'
employment were neither continuous and uninterrupted nor for a uniform period of one month; they were
intermittent with varying durations as well as gaps ranging from a few days to several weeks or months. These
gaps coincide with the completion of a particular project and the start of a new specific and distinct project for
which they were individually rehired. And for each completed project, petitioners submitted the required
Establishment Employment Records to the DOLE which is a clear indicator of project employment. 131 The
records also show that respondents' employment had never been extended beyond the completion of each
project or phase thereof fix which they had been engaged.

The project employment contract is not subject to a condition.

The CA likewise erred in holding that paragraph 10 of the employment contract allowing the extension of
respondents' employment violates the second requisite of project employment that the completion or
tem1ination of such project or undertaking be determined at the time of engagement of the employee. It reads:

10 Ang knsunduang ito maaaring palawigin ng mas mababang panahon na maaaring kailanganin para sa
matagumpay na pagtatapos ng mga gawn o proyektong pinagkasunduan; 132

To our mind, paragraph 10 is in harmony with the agreement of the parties that respondents' employment is
coterminous with the particular project stated in their contact. It was placed therein to ensure the successful
completion of the specific work fur which respondents were hired. Thus, in case of delay or where said work is
not finished within the estimated completion, respondents’ period of employment can be extended until it is
completed. In which case, the duration and nature of their employment remains the same as previously
determined in the project employment contract; it is still coterminous with the particular project for which they
were fully apprised of at the time of their engagement.

As to the requirement that the completion or termination of the specific project or undertaking for which
respondents were hired should be determined at the time of their engagement, we rule and so hold that it is
enough that Herma Shipyard gave the approximate or target completion date in the project employment
contract, Given the nature of its business and the scope of its projects which take months or even years to
finish~ we cam1ot expect Henna Shipyard to give a definite and exact completion date. It can only approximate
or estimate the completion date. What is important is that the respondents were apprised at the time of their
engagement that their employment is coterminous with the specific project and that should their employment be
extended by virtue of paragraph 10 the purpose of the extension is only to complete the same specific project,
and not to keep them employed even after the completion thereof. Put differently, paragraph l 0 does not allow
the parties to extend the period of respondents' employment after the co111pletion of the specific project for
which they were hired. Their employment can only be extended if that particular project, to which their
employment depends, remains unfinished.

In sum, the CA erred in disr9garding the project employment contracts and in concluding that respondents
have become regular employees because they were performing tasks necessary and desirable to the business
of Henna Shipyard and were repeatedly rehired. The Labor, Arbiter and the NLRC, which have expertise in
their specific and specialized jurisdiction, did not err, much less commit grave abuse of discretion in holding
that respondents were project-based employees. Their uniform conclusion is supported by substantial evidence
and should, therefore, be accorded not only respect, but even finality.

WHEREFOR, the instant Petition for Review on Certiorari is GRANTED. The assailed Decision dated May 30,
2013 of the Court of Appeals in CA-GR. SP No. 118068 is REVERSED and SETASIDE, The May 24, 20 l 0
Decision of the Labor Arbiter dismissing respondents' Complaint and affirmed by the National Labor Relations
Commission in its Decision dated September 7, 2010 is REINSTATED and AFFIRMED.

SO ORDERED.

ii. Length of service 
 1. E. Ganzon, Inc. (EGI) vs. Ando, G.R. No. 214183, February 20, 2017

(ibid.)

s. Retirement 
 i. Continued engagement after retirement 


1. De La Salle Araneta University vs. Bernardom, G.R. No. 190809, February 13, 2017 


128
 February 13, 2017

G.R. No. 190809

DE LA SALLE ARANETA UNIVERSITY, Petitioner

vs.
JUANITO c. BERNARDO, Respondent

DECISION

LEONARDO-DE CASTRO, J.:

Before Us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court filed by De La Salle-
Araneta University (DLS-AU) seeking the annulment and reversal of the Decision1 dated June 29, 2009 and
Resolution2dated January 4, 2010 of the Court of Appeals in CA-G.R. SP No. 106399, which affirmed in toto the
Decision3 of the National Labor Relations Commission (NLRC) in NLRC NCR CA No. 043416-05. The NLRC
reversed and set aside the Labor Arbiter's Decision4 dated December 13, 2004 in NLRC NCR Case No. 00-02-
02729-04 and found that respondent Juanito C. Bernardo (Bernardo) was entitled to retirement benefits.

On February 26, 2004, Bernardo filed a complaint against DLS-AU and its owner/manager, Dr. Oscar Bautista
(Dr. Bautista), for the payment of retirement benefits. Bernardo alleged that he started working as a part-time
professional lecturer at DLS-AU (formerly known as the Araneta University Foundation) on June 1, 1974 for an
hourly rate of ₱20.00. Bernardo taught for two semesters and the summer for the school year 1974-1975.
Bernardo then took a leave of absence from June 1, 197 5 to October 31, 1977 when he was assigned by the
Philippine Government to work in Papua New Guinea. When Bernardo came back in 1977, he resumed
teaching at DLS-AU until October '12, 2003, the end of the first semester for school year 2003-2004.
Bernardo's teaching contract was renewed at the start of every semester and summer. However, on November
8, 2003, DLS-AU informed Bernardo through a telephone call that he could not teach at the school anymore as
the school was implementing the retirement age limit for its faculty members. As he was already 75 years old,
Bernardo had no choice but to retire. At the time of his retirement, Bernardo was being paid ₱246.50 per hour. 5

Bernardo immediately sought advice from the Department of Labor and Employment (DOLE) regarding his
entitlement to retirement benefits after 27 years of employment. In letters dated January 20, 2004 6 and
February 3, 2004,7 the DOLE, through its Public Assistance Center and Legal Service Office, opined that
Bernardo was entitled to receive benefits under Republic Act No. 7641, otherwise known as the "New
Retirement Law," and its Implementing Rules and Regulations.

Yet, Dr. Bautista, in a letter8 dated February 12, 2004, stated that Bernardo was not entitled to any kind of
separation pay or benefits. Dr. Bautista explained to Bernardo that as mandated by the DLS-AU's policy and
Collective Bargaining Agreement (CBA), only full-time permanent faculty of DLS-AU for at least five years
immediately preceeding the termination of their employment could avail themselves of the postemployment
benefits. As part-time faculty member, Bernardo did not acquire permanent employment under the Manual of
Regulations for Private Schools, in relation to the Labor Code, regardless of his length of service.

Aggrieved by the repeated denials of his claim for retirement benefits, Bernardo filed before the NLRC, National
Capital Region, a complaint for non-payment of retirement benefits and damages against DLS-AU and Dr.
Bautista.

DLS-AU and Dr. Bautista averred that DLS-AU is a non-stock, non-profit educational institution duly organized
under Philippine laws, and Dr. Bautista was then its Executive Vice-President. DLS-AU and Dr. Bautista
countered that Bernardo was hired as a part-time lecturer at the Graduate School of DLS-AU to teach Recent
Advances in Animal Nutrition for the first semester of school year 2003-2004. As stated in the Contract for Part-
Time Faculty Member Semestral, Bernardo bound himself to teach "for the period of one semester beginning
June 9, 2003 to October 12, 2003." The contract also provided that "this Contract shall automatically expire
unless expressly renewed in writing."9 Prior contracts entered into between Bernardo and DLS-AU essentially
contained the same provisions. On November 8, 2003, DLS-AU informed Bernardo that his contract would no
longer be renewed. DLS-AU and Dr. Bautista were surprised when they received a letter from Bernardo on
February 18, 2004 claiming retirement benefits and Summons dated February 26, 2004 from the NLRC in
relation to Bernardo's complaint.10

DLS-AU and Dr. Bautista maintained that Bernardo, as a part-time employee, was not entitled to retirement
benefits. The contract between DLS-AU and Bernardo was for a fixed term, i.e., one semester. Contracts of
employment for a fixed term are not proscribed by law, provided that they had been entered into by the parties
without any force, duress, or improper pressure being brought to bear upon the employee and absent any other
circumstance vitiating consent. That DLS-AU no longer renewed Bernardo's contract did not necessarily mean
that Bernardo should be deemed retired from service.

DLS-AU and Dr. Bautista also contended that Bernardo, as a part-time employee, was not entitled to retirement
benefits pursuant to any retirement plan, CBA, or employment contract. Neither was DLS-AU mandated by law

129
to pay Bernardo retirement benefits. The compulsory retirement age under Article 302 [287] of the Labor Code,
as amended, is 65 years old. When the employee reaches said age, his/her employment is deemed
terminated. The matter of extension of the employee's service is addressed to the sound discretion of the
employer; it is a privilege only the employer can grant. In this case, Bernardo was effectively separated from
the service upon reaching the age of 65 years old. DLS-AU merely granted Bernardo the privilege to teach by
engaging his services for several more years after reaching the compulsory retirement age. Assuming
arguendo that Bernardo was entitled to retirement benefits, he should have claimed the same upon reaching
the age of 65 years old. Under Article 291 of the Labor Code, as amended, all money claims arising from
employer-employee relations shall be filed within three years from the time the cause of action accrues.

Still according to DLS-AU and Dr. Bautista, Bernardo had no cause of action against Dr. Bautista because the
latter was only acting on behalf of DLS-AU as its Executive Vice-President. It is a well-settled rule that a
corporation is a juridical entity with a legal personality separate and distinct from the people comprising it and
those acting for and on its behalf. There was no showing that Dr. Bautista acted deliberately or maliciously in
refusing to pay Bernardo his retirement benefits, so as to make Dr. Bautista personally liable for any corporate
obligations of DLS-AU to Bernardo.

Finally, DLS-AU asserted that Bernardo failed to establish the factual and legal bases for his claims for actual,
moral, and exemplary damages, and attorney's fees. There was no proof of the alleged value of the profits or
any other loss suffered by Bernardo because of the non-payment of his retirement benefits. There was likewise
no evidence of bad faith or fraud on the part of DLS-AU in refusing to grant Bernardo retirement benefits.

On December 13, 2004, the Labor Arbiter rendered its Decision dismissing Bernardo's complaint on the ground
of prescription, thus:

[T]he age of sixty-five (65) is declared as the compulsory retirement age under Article 287 of the Labor Code,
as amended. When the compulsory retirement age is reached by an employee or official, he is thereby
effectively separated from the service (UST Faculty Union v. National Labor Relations Commission, University
of Santo Tomas, G.R. No. 89885, August 6, 1990). As mentioned earlier, [Bernardo] is already seventy-five
(75) years old, and is way past the compulsory retirement age. If he were indeed entitled to receive his
retirement pay/benefits, he should have claimed the same ten (10) years ago upon reaching the age of sixty-
five (65).

In this connection, it would be worthy to mention that the Labor Code contains a specific provision that deals
with money claims arising out of employer-employee relationships. Article 291 of the Labor Code as amended
clearly provides:

"ART 291. MONEY CLAIMS. - All money claims arising from employer-employee relations accruing during the
effectivity of this Code shall be filed within three (3) years from the time the cause of action accrued; otherwise
they shall forever be barred.

xxxx

The prescriptive period referred to in Article 291 of the Labor Code, as amended applies to all kinds of money
claims arising from employer-employee relations including claims for retirement benefits.

The ruling of the Supreme Court in De Guzman v. Court of Appeals, (G.R. No. 132257, October 12, 1998),
squarely applies to the instant case:

"The language of Article 291 of the Labor Code does not limit its application only to "money claims specifically
recoverable under said Code, " but covers all money claims arising from employer-employee relations. Since
petitioners' demand for unpaid retirement/separation benefits is a money claim arising from their employment
by private respondent, Article 291 of the Labor Code is applicable. Therefore, petitioners' claim should be filed
within three years from the time their cause of action accrued, or forever barred by prescription. "

It cannot be denied that the claim for retirement benefits/pay arose out of employer-employee relations. In line
with the decision of the Supreme Court in De Guzman, it should be treated as a money claim that must be
claimed within three years from the time the cause of action accrued.

Thus, upon reaching the compulsory retirement age of sixty-five (65), [Bernardo] was effectively separated from
the service. Clearly, such was the time when his cause of action accrued. He should have sought the payment
of such benefits/pay within three (3) years from such time. It cannot be denied that [Bernardo] belatedly sought
the payment of his retirement benefits/pay considering that he filed the instant Complaint only ten (10) years
after his cause of action accrued. For failure to claim the retirement benefits/pay to which he claims to be
entitled within three (3) years from the time he reached the age of sixty-five (65), his claim should be forever
barred.11

The Labor Arbiter decreed:

130
WHEREFORE, premises considered, judgment is hereby rendered DISMISSING the instant Complaint on the
ground that the claim for retirement benefits/pay is already barred by prescription.12

Bernardo appealed the foregoing Labor Arbiter's Decision to the NLRC, arguing that since he continuously
worked for DLS-AU and Dr. Bautista until October 12, 2003, he was considered retired and the cause of action
for his retirement benefits accrued only on said date. There was clearly an agreement between Bernardo and
DLS-AU that the former would continue teaching even after reaching the compulsory retirement age of 65
years. In addition, under Republic Act No. 7641, part-time workers are entitled to retirement pay of one-half
month salary for every years of service, provided that the following conditions are present: (a) there is no
retirement plan between the employer and employees; (b) the employee has reached the age of 60 years old
for optional retirement or 65 years old for compulsory retirement; and (c) the employee should have rendered at
least five years of service with the employer. Bernardo avowed that all these conditions were extant in his case.

The NLRC, in its Decision dated June 30, 2008, reversed the Labor Arbiter's ruling and found that Bernardo
timely filed his complaint for retirement benefits. The NLRC pointed out that DLS-AU and Dr. Bautista, knowing
fully well that Bernardo already reached the compulsory age of retirement of 65 years old, still extended
Bernardo's employment. Thus, Bernardo's cause of action for payment of his retirement benefits accrued only
on November 8, 2003, when he was informed by DLS-AU that his contract would no longer be renewed and he
was deemed separated from employment. The principle of estoppel was also applicable against DLS-AU and
Dr. Bautista who could not validly claim prescription when they were the ones who permitted Bernardo to work
beyond retirement age. As to Bernardo's entitlement to retirement benefits, the NLRC held:

Equally untenable is the contention that [Bernardo], being a part time employee, is not entitled to retirement
benefits under Republic Act No. 7641. Indeed, a perusal of the retirement law does not exclude a part time
employee from enjoying retirement benefits. On this score, Republic Act No. 7641 explicitly provides as within
its coverage "all employees in the private sector, regardless of their position, designation, or status, and
irrespective of the method by which their wages are paid" (Section 1, Rules Implementing the New Retirement
Law) (Underlined for emphasis). The only exceptions are employees covered by the Civil Service Law;
domestic helpers and persons in the personal service of another; and employees in retail, service and
agricultural establishments or operations regularly employing not more than ten employees (ibid). Clearly,
[Bernardo] does not fall under any of the exceptions.

Lastly, it is axiomatic that retirement law should be construed liberally in favor of the employee, and all doubts
as to the intent of the laws should be resolved in favor of the retiree to achieve its humanitarian purpose (Re:
Gregorio G. Pineda, 187 SCRA 469, 1990). A contrary ruling would inevitably defy such settled rule. 13

In the end, the NLRC adjudged:

WHEREFORE, judgment is hereby rendered REVERSING and SETTING ASIDE the appealed decision of the
Labor Arbiter. Accordingly, a new one is issued finding [Bernardo] entitled to retirement benefits under Republic
Act No. 7641 and ordering [DLS-AU and Dr. Bautista] to pay [Bernardo] his retirement benefits equivalent to at
least one-half (1/2) month of his latest salary for every year of his service. Other claims are hereby denied for
lack of merit.14

In a Resolution dated September 15, 2008, the NLRC denied the Motion for Reconsideration of DLS-AU and
Dr. Bautista for lack of merit.

DLS-AU filed before the Court of Appeals a Petition for Certiorari and Prohibition, imputing grave abuse of
discretion on the part of the NLRC for (1) holding that Bernardo was entitled to retirement benefits despite the
fact that he was a mere part-time employee; and (2) not holding that Bernardo's claim for retirement benefits
was barred by prescription.

The Court of Appeals promulgated its Decision on June 29, 2009, affirming in toto the NLRC judgment. The
Court of Appeals ruled that the coverage of, as well as the exclusion from, Republic Act No. 7641 are clearly
delineated under Sections 1 and 2 of the Implementing Rules of Book VI, Rule II of the Labor Code, as well as
the Labor Advisory on Retirement Pay Law; and part-time employees are not among those excluded from
enjoying retirement benefits. Labor and social laws, being remedial in character, should be liberally construed
in order to further their purpose. The appellate court also declared that the NLRC did not err in relying on the
Implementing Rules of Republic Act No. 7641 because administrative rules and regulations issued by a
competent authority remain valid unless shown to contravene the Constitution or used to enlarge the power of
the administrative agency beyond the scope intended.

The Court of Appeals additionally determined that Bernardo's cause of action accrued only upon his separation
from employment and the subsequent denial of his demand for retirement benefits. To the appellate court, the
NLRC was correct in applying the equitable doctrine of estoppel since the continuous extension of Bernardo's
employment, despite him being well over the statutory compulsory age of retirement, prevented him from
already claiming his retirement benefits for he was under the impression that he could avail himself of the same
eventually upon the termination of his employment.

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The dispositive portion of the Decision of the Court of Appeals reads:

WHEREFORE, the petition is DISMISSED for lack of merit. The assailed Decision of the National Labor
Relations Commission, dated 30 June 2008, is hereby AFFIRMED in toto. [Bernardo's] application for the
issuance of a Temporary Restraining Order and/or Writ of Preliminary Injunction is accordingly DENIED.15

The Motion for Reconsideration of DLS-AU was denied by the Court of Appeals in its Resolution dated January
4, 2010.

Hence, DLS-AU lodged the present petition before us, raising the following issues:

WHETHER OR NOT PART-TIME EMPLOYEES ARE EXCLUDED FROM THE COVERAGE OF THOSE
ENTITLED TO RETIREMENT BENEFITS UNDER REPUBLIC ACT NO. [7641].

II.

WHETHER OR NOT A CLAIM FOR RETIREMENT BENEFITS FILED BEYOND THE PERIOD PROVIDED
FOR UNDER ART. 291 OF THE LABOR CODE HAS PRESCRIBED.16

We find the instant petition bereft of merit.

Bernardo is not questioning the

termination of his employment, but
only asserting his right to retirement
benefits.

There is no dispute that Bernardo was a part-time lecturer at DLS-AU, with a fixed-term employment. As a part-
time lecturer, Bernardo did not attain permanent status. Section 93 of the 1992 Manual of Regulations for
Private Schools provided:

Sec. 93. Regular or Permanent Status. - Those who have served the probationary period shall be made regular
or permanent. Full-time teachers who have satisfactorily completed their probationary period shall be
considered regular or permanent.

Per Section 92 of the same Regulations, probationary period for academic personnel "shall not be more than
three (3) consecutive years of satisfactory service for those in the elementary and secondary levels, six (6)
consecutive regular semesters of satisfactory service for those in the tertiary level, and nine (9) consecutive
trimesters of satisfactory service for those in the tertiary level where collegiate courses are offered on the
trimester basis."

Thus, jurisprudence identified the requisites which should concur for a private school teacher to acquire
permanent status, viz.: (1) the teacher is a full-time teacher; (2) the teacher must have rendered three
consecutive years of service; and (3) such service must have been satisfactory.17

Considering the foregoing requirements, a part-time employee would not attain permanent status no matter
how long he had served the school.18 Bernardo did not become a permanent employee of DLS-AU despite
teaching there as a part-time lecturer for a total of 27 years.

Our jurisprudence had likewise settled the legitimacy of fixed-term employment. In the landmark case of Brent
School, Inc. v. Zamora,19 the Court pronounced:

From the premise - that the duties of an employee entail "activities which are usually necessary or desirable in
the usual business or trade of the employer" - the conclusion does not necessarily follow that the employer and
employee should be forbidden to stipulate any period of time for the performance of those activities. There is
nothing essentially contradictory between a definite period of an employment contract and the nature of the
employee's duties set down in that contract as being "usually necessary or desirable in the usual business or
trade of the employer." The concept of the employee's duties as being "usually necessary or desirable in the
usual business or trade of the employer" is not synonymous with or identical to employment with a fixed term.
Logically, the decisive determinant in the term employment should not be the activities that the employee is
called upon to perform, but the day certain agreed upon by the parties for the commencement and termination
of their employment relationship, a day certain being understood to be "that which must necessarily come,
although it may not be known when." Seasonal employment, and employment for a particular project are
merely instances of employment in which a period, where not expressly set down, is necessarily implied.

xxxx

132
Accordingly, and since the entire purpose behind the development of legislation culminating in the present
Article 280 of the Labor Code clearly appears to have been, as already observed, to prevent circumvention of
the employee's right to be secure in his tenure, the clause in said article indiscriminately and completely ruling
out all written or oral agreements conflicting with the concept of regular employment as defined therein should
be construed to refer to the substantive evil that the Code itself has singled out: agreements entered into
precisely to circumvent security of tenure. It should have no application to instances where a fixed period of
employment was agreed upon knowingly and voluntarily 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
where it satisfactorily appears that the employer and employee dealt with each other on more or less equal
terms with no moral dominance whatever being exercised by the former over the latter. Unless thus limited in
its purview, the law would be made to apply to purposes other than those explicitly stated by its framers; it thus
becomes pointless and arbitrary, unjust in its effects and apt to lead to absurd and unintended consequences.

Such interpretation puts the seal on [Bibiso v. Victorias Milling Co., Inc.]upon the effect of the expiry of an
agreed period of employment as still good rule - a rule reaffirmed in the recent case of Escudero v. Office of the
President (G.R. No. 57822, April 26, 1989) where, in the fairly analogous case of a teacher being served by her
school a notice of termination following the expiration of the last of three successive fixedterm employment
contracts, the Court held:

"Reyes' (the teacher's) argument is not persuasive. It loses sight of the fact that her employment was
probationary, contractual in nature, and one with a definitive period. At the expiration of the period stipulated in
the contract, her appointment was deemed terminated and the letter informing her of the non-renewal of her
contract is not a condition sine qua non before Reyes may be deemed to have ceased in the employ of
petitioner UST. The notice is a mere reminder that Reyes' contract of employment was due to expire and that
the contract would no longer be renewed. It is not a letter of termination. The interpretation that the notice is
only a reminder is consistent with the court's finding in Labajo, supra. x xx."

Bernardo's employment with DLS-AU had always been for a fixed-term, i.e., for a semester or summer. Absent
allegation and proof to the contrary, Bernardo entered into such contracts of employment with DLS-AU
knowingly and voluntarily. Hence, Bernardo's contracts of employment with DLS-AU for a fixed term were valid,
legal, and binding. Bernardo's last contract of employment with DLS-AU ended on October 12, 2003, upon the
close of the first semester for school year 2003-2004, without DLS-AU offering him another contract for the
succeeding semester.

Nonetheless, that Bernardo was a part-time employee and his employment was for a fixed period are
immaterial in this case. Bernardo is not alleging illegal dismissal nor claiming separation pay. Bernardo is
asserting his right to retirement benefits given the termination of his employment with DLS-AU when he was
already 75 years old.

As a part-time employee with fixed-term

employment, Bernardo is
entitled to retirement benefits.

The Court declared in Aquino v. National Labor Relations Commission20 that retirement benefits are intended to
help the employee enjoy the remaining years of his life, lessening the burden of worrying for his financial
support, and are a form of reward for his loyalty and service to the employer. Retirement benefits, where not
mandated by law, may be granted by agreement of the employees and their employer or as a voluntary act on
the part of the employer.

In the present case, DLS-AU, through Dr. Bautista, denied Bernardo's claim for retirement benefits because
only full-time permanent faculty of DLS-AU are entitled to said benefits pursuant to university policy and the
CBA. Since Bernardo has not been granted retirement benefits under any agreement with or by voluntary act of
DLS-AU, the next question then is, can Bernardo claim retirement benefits by mandate of any law?

We answer in the affirmative.

Republic Act No. 7641 is a curative social legislation. It precisely intends to give the minimum retirement
benefits to employees not entitled to the same under collective bargaining and other agreements. It also
applies to establishments with existing collective bargaining or other agreements or voluntary retirement plans
whose benefits are Jess than those prescribed in said law.21

Article 302 [287] of the Labor Code, as amended by Republic Act No. 7641, reads:

Art. 302 [287]. Retirement. -Any employee may be retired upon reaching the retirement ageestablished in
the collective bargaining agreement or other applicable employment contract.

In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned
under existing Jaws and any collective bargaining agreement and other agreements: Provided however, That

133
an employee's retirement benefits under any collective bargaining and other agreement shall not be less than
those provided herein.

In the absence of retirement plan or agreement providing for retirement benefits of employees in the
establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty five (65)
years which is hereby declared the compulsory retirement age, who has served at least five (5) years in said
establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month
salary for every year of service, a fraction of at least six (6) months being considered as one whole year.

Unless the parties provide for broader inclusions, the term one-half month salary shall mean fifteen (15) days
plus one twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of service
incentive leaves.

xxxx

Retail, service and agricultural establishments or operations employing not more than ten (10)
employees or workers are exempted from the coverage of this provision.

Violation of this provision is hereby declared unlawful and subject to the penal provisions provided under Article
288 of this Code. (Emphases ours.)

Book VI, Rule II of the Rules Implementing the Labor Code clearly describes the coverage of Republic Act No.
7641 and specifically identifies the exemptions from the same, to wit:

Sec. 1. General Statement on Coverage. - This Rule shall apply to all employees in the private sector,
regardless of their position, designation or status and irrespective of the method by which their wages
are paid, except to those specifically exempted under Section 2 hereof. As used herein, the term "Act"
shall refer to Republic Act No. 7641, which took effect on January 7, 1993.

Section 2. Exemptions. - This Rule shall not apply to the following employees:

2.1 Employees of the National Government and its political subdivisions, including Government-owned
and/or controlled corporations, if they are covered by the Civil Service Law and its regulations.

2.2 Domestic helpers and persons in the personal service of another. (Deleted by Department Order No. 20
issued by Secretary Ma. Nieves R. Confessor on May 31, 1994.)

2.3. Employees of retail, service and agricultural establishments or operations regularly employing not
more than ten (10) employees. As used in this sub-section:

(a) "Retail establishment" is one principally engaged in the sale of goods to end-users for personal or
household use. It shall lose its retail character qualified for exemption if it is engaged in both retail and
wholesale of goods.

(b) "Service establishment" is one principally engaged in the sale of service to individuals for their own or
household use and is generally recognized as such.

(c) "Agricultural establishment/operation" refers to an employer which is engaged in agriculture. This term
refers to all farming activities in all its branches and includes, among others, the cultivation and tillage of the
soil, production, cultivation, growing and harvesting of any agricultural or horticultural commodities, dairying,
raising of livestock or poultry, the culture of fish and other aquatic products in farms or ponds, and any activities
performed by a farmer or on a farm as an incident to or in conjunctions with such farming operations, but does
not include the manufacture and/or processing of sugar, coconut, abaca, tobacco, pineapple, aquatic or other
farm products. (Emphases ours.)

Through a Labor Advisory dated October 24, 1996, then Secretary of Labor, and later Supreme Court Justice,
Leonardo A. Quisumbing (Secretary Quisumbing), provided Guidelines for the Effective Implementation of
Republic Act No. 7641, The Retirement Pay Law, addressed to all employers in the private sector. Pertinent
portions of said Labor Advisory are reproduced below:

A. COVERAGE

RA 7641 or the Retirement Pay Law shall apply to all employees in the private sector, regardless of their
position, designation or status and irrespective of the method by which their wages are paid. They shall
include part-time employees, employees of service and other job contractors and domestic helpers or
persons in the personal service of another.

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The law does not cover employees of retail, service and agricultural establishments or operations employing
not more than [ten] (10) employees or workers and employees of the National Government and its political
subdivisions, including Government-owned and/or controlled corporations, if they are covered by the Civil
Service Law and its regulations.

xxxx

C. SUBSTITUTE RETIREMENT PLAN

Qualified workers shall be entitled to the retirement benefit under RA 7641 in the absence of any individual or
collective agreement, company policy or practice. x x x (Emphasis ours.)

Republic Act No. 7641 states that "any employee may be retired upon reaching the retirement age x x x;" and
"[i]n case of retirement, the employee shall be entitled to receive such retirement benefits as he may have
earned under existing laws and any collective bargaining agreement and other agreements." The Implementing
Rules provide that Republic Act No. 7641 applies to "all employees in the private sector, regardless of their
position, designation or status and irrespective of the method by which their wages are paid, except to those
specifically exempted x x x." And Secretary Quisumbing' s Labor Advisory further clarifies that the employees
covered by Republic Act No. 7641 shall "include part-time employees, employees of service and other job
contractors and domestic helpers or persons in the personal service of another."

The only exemptions specifically identified by Republic Act No. 7641 and its Implementing Rules are: (1)
employees of the National Government and its political subdivisions, including government-owned and/or
controlled corporations, if they are covered by the Civil Service Law and its regulations; and (2) employees of
retail, service and agricultural establishments or operations regularly employing not more than 10 employees.

Based on Republic Act No. 7641, its Implementing Rules, and Secretary Quisumbing's Labor Advisory,
Bernardo, as a part-time employee of DLS-AU, is entitled to retirement benefits. The general coverage of
Republic Act No. 7641 is broad enough to encompass all private sector employees, and part-time employees
are not among those specifically exempted from the law. The provisions of Republic Act No. 7641 and its
Implementing Rules are plain, direct, unambiguous, and need no further elucidation. Any doubt is dispelled by
the unequivocal statement in Secretary Quisumbing's Labor Advisory that Republic Act No. 7641 applies to
even part-time employees.

Under the rule of statutory construction of expressio unius est exclusio alterius, Bernardo's claim for retirement
benefits cannot be denied on the ground that he was a part-time employee as part-time employees are not
among those specifically exempted under Republic Act No. 7641 or its Implementing Rules. Said rule of
statutory construction is explained thus:

It is a settled rule of statutory construction that the express mention of one person, thing, or consequence
implies the exclusion of all others. The rule is expressed in the familiar maxim, expressio unius est exclusio
alterius.

The rule of expressio unius est exclusio alterius is formulated in a number of ways. One variation of the rule is
the principle that what is expressed puts an end to that which is implied. Expressum facit cessare
taciturn. Thus, where a statute, by its terms, is expressly limited to certain matters, it may not, by interpretation
or construction, be extended to other matters.

xxxx

The rule of expressio unius est exclusio alterius and its variations are canons of restrictive interpretation. They
are based on the rules of logic and the natural workings of the human mind. They are predicated upon one's
own voluntary act and not upon that of others. They proceed from the premise that the legislature would not
have made specified enumeration in a statute had the intention been not to restrict its meaning and confine its
terms to those expressly mentioned.22

The NLRC and the Court of Appeals did not err in relying on the Implementing Rules of Republic Act No. 7641
in their respective judgments which favored Bernardo.

Congress, through Article 5 of the Labor Code, delegated to the Department of Labor and Employment (DOLE)
and other government agencies charged with the administration and enforcement of said Code the power to
promulgate the necessary implementing rules and regulations. It was pursuant to Article 5 of the Labor Code
that then Secretary of Labor Ma. Nieves R. Confesor issued on January 7, 1993 the Rules Implementing the
New Retirement Law, which became Rule II of Book VI of the Rules Implementing the Labor Code.

In ruling that Bernardo, as part-time employee, is entitled to retirement benefits, we do no less and no more
than apply Republic Act No. 7641 and its Implementing Rules issued by the DOLE under the authority given to
it by the Congress. Needless to stress, the Implementing Rules partake the nature of a statute and are binding

135
as if written in the law itself. They have the force and effect of law and enjoy the presumption of constitutionality
and legality until they are set aside with finality in an appropriate case by a competent court. 23

Moreover, as a matter of contemporaneous interpretation of law, Secretary Quisumbing's Labor Advisory has
persuasive effect. It is undisputed that in administrative law, contemporaneous and practical interpretation of
law by administrative officials charged with its administration and enforcement carries great weight and should
be respected, unless contrary to law or manifestly erroneous.24

We further find that the Implementing Rules and Secretary Quisumbing' s Labor Advisory are consistent with
Article 4 of the Labor Code, which expressly mandates that "all doubts in the implementation and interpretation
of the provisions of this Code, including its implementing rules and regulations, shall be resolved in favor of
labor." There being no compelling argument herein to convince us otherwise, we uphold the legality and validity
of the Implementing Rules and Secretary Quisumbing's Labor Advisory, and likewise apply the same to
Bernardo's case.

For the availment of the retirement benefits under Article 302 [287] of the Labor Code, as amended by Republic
Act No. 7641, the following requisites must concur: (1) the employee has reached the age of 60 years for
optional retirement or 65 years for compulsory retirement; (2) the employee has served at least five years in the
establishment; and (3) there is no retirement plan or other applicable agreement providing for retirement
benefits of employees in the establishment. Bernardo - being 75 years old at the time of his retirement, having
served DLS-AU for a total of 27 years, and not being covered by the grant of retirement benefits in the CBA - is
unquestionably qualified to avail himself of retirement benefits under said statutory provision, i.e., equivalent to
one-half month salary for every year of service, a fraction of at least six months being considered as one whole
year.25

Bernardo's employment was

extended beyond the compulsory
retirement age and the cause of
action for his retirement benefits
accrued only upon the termination of
his extended employment with DLS-AU.

Article 306 [291] of the Labor Code mandates:

Art. 306 [291]. Money claims. - All money claims arising from employer-employee relations accruing during the
effectivity of this Code shall be filed within three years from the time the cause of action accrued; otherwise
they shall be forever barred.

DLS-AU invokes UST Faculty Union v. National Labor Relations Commission,26 wherein it was held that when
an employee or official has reached the compulsory retirement age, he is thereby effectively separated from the
service. And so, DLS-AU maintains that Bernardo's cause of action for his retirement benefits, which is patently
a money claim, accrued when he reached the compulsory retirement age of 65 years old, and had already
prescribed when Bernardo filed his complaint only 10 years later, when he was already 75 years old.

We are not persuaded.

The case of UST Faculty Union is not in point as the issue involved therein was the right of a union to intervene
in the extension of the service of a retired employee. Professor Tranquilina J. Marilio (Prof. Marilio) already
reached the compulsory retirement age of 65 years old, but was granted by the University of Sto. Tomas (UST)
an extension of two years tenure. We ruled in said case that UST no longer needed to consult the union before
refusing to further extend Prof. Marilio' s tenure.1âwphi1

A cause of action has three elements, to wit, (1) a right in favor of the plaintiff by whatever means and under
whatever law it arises or is created; (2) an obligation on the part of the named defendant to respect or not to
violate such right; and (3) an act or omission on the part of such defendant violative of the right of the plaintiff or
constituting a breach of the obligation of the defendant to the plaintiff.27

Bernardo's right to retirement benefits and the obligation of DLS-AU to pay such benefits are already
established under Article 302 [287] of the Labor Code, as amended by Republic Act No. 7641. However, there
was a violation of Bernardo's right only after DLS-AU informed him on November 8, 2003 that the university no
longer intended to offer him another contract of employment, and already accepting his separation from
service, Bernardo sought his retirement benefits, but was denied by DLSAU. Therefore, the cause of action for
Bernardo's retirement benefits only accrued after the refusal of DLS-AU to pay him the same, clearly expressed
in Dr. Bautista's letter dated February 12, 2004. Hence, Bernardo's complaint, filed with the NLRC on February
26, 2004, was filed within the three-year prescriptive period provided under Article 291 of the Labor Code.

Even granting arguendo that Bernardo's cause of action already accrued when he reached 65 years old, we
cannot simply overlook the fact that DLS-AU had repeatedly extended Bernardo's employment even when he
already reached 65 years old. DLS-AU still knowingly offered Bernardo, and Bernardo willingly accepted,

136
contracts of employment to teach for semesters and summers in the succeeding 10 years. Since DLS-AU was
still continuously engaging his services even beyond his retirement age, Bernardo deemed himself still
employed and deferred his claim for retirement benefits, under the impression that he could avail himself of the
same upon the actual termination of his employment. The equitable doctrine of estoppel is thus applicable
against DLS-AU. In Planters Development Bank v. Spouses Lopez, 28 we expounded on the principle of
estoppels as follows:

Section 2, Rule 131 of the Rules of Court provides that whenever a party has, by his own declaration, act, or
omission, intentionally and deliberately led another to believe that a particular thing is true, and to act upon
such belief, he cannot, in any litigation arising out of such declaration, act or omission, be permitted to falsify it.

The concurrence of the following requisites is necessary for the principle of equitable estoppel to apply: (a)
conduct amounting to false representation or concealment of material facts or at least calculated to convey the
impression that the facts are otherwise than, and inconsistent with, those which the party subsequently
attempts to assert; (b) intent, or at least expectation that this conduct shall be acted upon, or at least influenced
by the other party; and (c) knowledge, actual or constructive, of the actual facts.

Inaction or silence may under some circumstances amount to a misrepresentation, so as to raise an equitable
estoppel. When the silence is of such a character and under such circumstances that it would become a fraud
on the other party to permit the party who has kept silent to deny what his silence has induced the other to
believe and act on, it will operate as an estoppel. This doctrine rests on the principle that if one maintains
silence, when in conscience he ought to speak, equity will debar him from speaking when in conscience he
ought to remain silent.

DLS-AU, in this case, not only kept its silence that Bernardo had already reached the compulsory retirement
age of 65 years old, but even continuously offered him contracts of employment for the next 10 years. It should
not be allowed to escape its obligation to pay Bernardo's retirement benefits by putting entirely the blame for
the deferred claim on Bernardo's shoulders.

WHEREFORE, premises considered, the instant Petition 1s DISMISSED for lack of merit. The Decision dated
June 29, 2009 and Resolution dated January 4, 2010 of the Court of Appeals in CA-G.R. SP No. 106399
are AFFIRMED.

SO ORDERED.

w. SSS Contributions 
 i. Acquittal from criminal case and extinguishment of civil liability 


1. Ambassador Hotel, Inc. vs. Social Security System, G.R. No. 194137, June 21, 2017 


June 21, 2017

G.R. No. 194137

AMBASSADOR HOTEL, INC., Petitioner

vs.
SOCIAL SECURITY SYSTEM, Respondent

DECISION

MENDOZA, J.:

This is a petition for review on certiorari seeking to reverse and set aside the July 29, 2010 Decision1 and
October 18, 2010 Resolution2 of the Court Appeals (CA) in CA-G.R. CV No. 87948, which affirmed in toto the
December 20, 2005 Decision 3 of the Regional Trial Court, Branch 218, Quezon City (RTC) in Criminal Case
No. Q-04-125458, a case for nonpayment of Social Security System (SSS) contributions.

Sometime in September 2001, the SSS filed a complaint with the City Prosecutor's Office of Quezon City
against Ambassador Hotel, Inc. (Ambassador Hotel) and its officers for non-remittance of SSS contributions
and penalty liabilities for the period from June 1999 to March 2001 in the aggregate amount of ₱769,575.48.

After preliminary investigation, the City Prosecutor's Office filed an Information, 4 dated January 28, 2004, before
the RTC charging Ambassador Hotel, Inc.'s Yolanda Chan (Yolanda), as Pr

esident and Chairman of the Board; and Alvin Louie Rivera, as Treasurer and Head of the Finance
Department, with violation of Section 22(a), in relation to Section 22(d) and Section 28(e) of Republic
Act (R.A.) No. 1161, as amended by R.A. No. 8282. Only Yolanda was arrested. Upon arraignment, she
pleaded not guilty. Thereafter, trial ensued.

137
Evidence of the Prosecution

The prosecution presented Maria Rezell C. De Ocampo (De Ocampo), Accounts Officer of SSS and Simeon
Nicolas Chan (Simeon), former President of Ambassador Hotel. Their combined testimonies tended to
establish the following:

De Ocampo was assigned to investigate the account of Ambassador Hotel. In the course of her investigation,
she discovered that the hotel was delinquent in its payment of contributions for the period from June 1999 to
March 2001, as an examination of the hotel's records revealed that its last payment was made in May 1999.
Thereafter, De Ocampo prepared a delinquency assessment and a billing letter for Ambassador Hotel. On April
17, 2001, she visited Ambassador Hotel, where a certain Guillermo Ciriaco (Ciriaco) assisted her. De Ocampo
then informed Ciriaco of the hotel's delinquency. She showed him the assessment, billing letter, and letter of
authority. De Ocampo also requested for the records of previous SSS payments, but the same could not be
produced. Thus, she told Ciriaco that Ambassador Hotel had to comply with the said request within fifteen (15)
days.

De Ocampo referred the matter to their Cluster Legal Unit. On May 23, 2001, she prepared an investigation
report stating that Ambassador Hotel failed to present the required reports and to fully pay their outstanding
delinquency. In turn, the Cluster Legal Unit issued a final demand letter to Ambassador Hotel. De Ocampo sent
the final demand letter to Ambassador Hotel via registered mail. She also returned to the hotel to personally
serve the said letter, which was received by Norman Cordon, Chief Operating Officer of Ambassador Hotel.

On July 4, 2001, Pilar Barzanilla of Ambassador Hotel went to the SSS office and submitted a list of unpaid
contributions from June 1999 to March 2001. On September 14, 2001, De Ocampo went back to the hotel to
1âw phi1

seek compliance with the demand letter. The representatives of the hotel requested that the delinquency be
settled by installment. They also submitted a collection list, the audited financial settlement and the request of
installment to the SSS. Ambassador Hotel, however, did not tender any postdated checks for the installment
payments.

De Ocampo concluded that based on the actual assessment and documents submitted, the unpaid
contributions of Ambassador Hotel from June 1999 to March 2001 amounted to ₱303,459.00. Further, as of
January 2, 2005, the hotel is liable for penalties in the amount of ₱531,341.44.

On the other hand, Simeon testified that he was the President of Ambassador Hotel from 1971 until he was
replaced in 1998; and that on April 25, 1998, her daughter, Yolanda, became the President of the hotel
pursuant to Board Resolution No. 7, series of 1998.5

Evidence of the Defense

The defense presented the following witnesses: Yolanda, President and Chairman of the Board of Ambassador
Hotel; Atty. Laurenao Galon (Atty. Galon), lawyer of Ambassador Hotel; Michael Paragas, Sheriff of RTC
Branch 46; and Norman D. Cordon (Cordon), Chief Operating Officer of Ambassador Hotel. Their testimonies
are summarized, to wit:

Yolanda was elected as President of Ambassador Hotel on April 25, 1998. Simeon, however, prevented her
from assuming her office and performing her functions as President. Consequently, she filed a case for grave
coercion and grave threats against Simeon and his allies. On the other hand, Simeon filed a case for injunction,
damages and declaration of nullity of the corporate meeting, which elected Yolanda as President. The case
was raffled to RTC Branch 46, which ruled in her favor. Pursuant to the Order, dated April 10, 2001 of R TC
Branch 46, she assumed the position of President of the hotel without any impediment.

Accordingly, Yolanda argued that because she was not performing the functions as the President of
Ambassador Hotel from April 25, 1998 until April 10, 2001, she could not be held criminally liable for the non-
payment of SSS contributions from June 1999 to March 2001.

Further, Cordon testified that the SSS indeed conducted an investigation as to their non-remittance of
contributions. He attempted to locate the records regarding their SSS contributions, but could not find any.
Cordon also communicated with the SSS, but it failed to respond and instead filed the present case against
them.

The RTC Ruling

In its December 20, 2005 Decision, the RTC held that Yolanda could not be held criminally liable for the non-
payment of SSS contributions because she was not performing the duties of the hotel's president from June
1999 to March 2001. It opined that Yolanda could not be considered as the managing head of the hotel within
the purview of Section 28(f) of R.A. No. 8282; thus, she was not criminally accountable. The RTC, however,
ruled that the acquittal of Yolanda did not absolve Ambassador Hotel from its civil liabilities. Thus, it concluded

138
that Ambassador Hotel must pay SSS in the amount of ₱584,804.00 as contributions for SSS Medicare and
Employee Compensation, including 3% penalties thereon.

Aggrieved, Ambassador Hotel filed an appeal insofar as the civil liability is concerned. It alleged that the RTC
did not acquire jurisdiction over its person because it was not a party in the said case.

The CA Ruling

In its assailed decision, dated July 29, 2010, the CA affirmed in toto the RTC ruling. It held that the payment of
SSS contributions is mandatory and its non-payment results in criminal prosecution. The appellate court stated
that every criminal liability carries with it civil liability. As Ambassador Hotel neither waived nor reserved its right
to institute a separate civil case, it was deemed instituted in the criminal case. The CA opined that the acquittal
of Yolanda did not extinguish the civil action against Ambassador Hotel as the RTC did not declare that the fact
from which the civil liability might arise did not exist. Moreover, it underscored that Ambassador Hotel was not
deprived of due process as its directors and officers were informed numerous times regarding its delinquency
and the pending case filed against it. The CA concluded that Ambassador Hotel was given every opportunity to
contest its obligation with the SSS yet it did nothing.

Ambassador Hotel moved for reconsideration, but its motion was denied by the CA in its assailed resolution,
dated October 18, 2010.

Hence, this petition.

ISSUES

WHETHER OR NOT THE LOWER COURT ACQUIRED JURISDICTION OVER THE PERSON OF THE
PETITIONER.

II

WHETHER OR NOT PETITIONER WAS DEPRIVED OF DUE PROCESS WHEN THE LOWER COURT
DECLARED IT LIABLE TO RESPONDENT SSS EVEN THOUGH IT IS NOT A PARTY TO THE CASE.

III

WHETHER OR NOT THE DECISION RENDERED BY THE LOWER COURT DECLARING PETITIONER
LIABLE TO RESPONDENT SOCIAL SECURITY SYSTEM FOR ALLEGED UNREMITTED SSS
CONTRIBUTION IS VALID.6

In its Memorandum, 7 Ambassador Hotel argued that it has a separate and distinct personality from its officers
such as Yolanda; that it was neither a party to the criminal case nor was summons issued against it, hence, the
RTC did not acquire jurisdiction over it; that it was deprived due process when the RTC ruled that it was civilly
liable for the unpaid SSS contributions even though the trial court had no jurisdiction over its person; and that
the RTC had no right to render an adverse decision against it because it was not a party in the criminal action.

In its Memorandum, 8 the SSS countered that under R.A. No. 8282, employers, including juridical entities, that
violate their obligation to remit the SSS contributions shall be criminally liable and that in cases of corporations,
it is the managing head that shall be the one criminally responsible. It argued that since Yolanda, as President
of Ambassador Hotel, was properly arrested, the RTC acquired jurisdiction over it. The SSS added that the
acquittal of Yolanda did not extinguish the civil liability of the hotel because it was deemed instituted in the
criminal action. Further, it highlighted that Ambassador Hotel was given sufficient notice of its delinquency and
the pending case against it.

The Court's Ruling

The petition is bereft of merit.

The Social Security System is a government agency imbued with a salutary purpose to carry out the policy of
the State to establish, develop, promote and perfect a sound and viable tax-exempt social security system
suitable to the needs of the people throughout the Philippines which shall promote social justice and provide
meaningful protection to members and their beneficiaries against the hazards of disability, sickness, maternity,
old- age, death and other contingencies resulting in loss of income or financial burden.9

The soundness and viability of the funds of the SSS in turn depend on the contributions of its covered
employee and employer members, which it invests in order to deliver the basic social benefits and privileges to

139
its members. The entitlement to and amount of benefits and privileges of the covered members are
contribution-based. Both the soundness and viability of the funds of the SSS as well as the entitlement and
amount of benefits and privileges of its members are adversely affected to a great extent by the non-remittance
of the much-needed contributions. 10

Ambassador Hotel is obligated to remit SSS contributions

Under Section 8(c) of R.A. No. 8282, an employer is defined as "any person, natural or juridical, domestic or
foreign, who carries on in the Philippines any trade, business, industry, undertaking, or activity of any kind and
uses the services of another person who is under his orders as regards the employment, except the
Government and any of its political subdivisions, branches or instrumentalities, including corporations owned or
controlled by the Government." Ambassador Hotel, as a juridical entity, is still bound by the provisions of R.A.
No. 8282. Section 22 (a) thereof states:

Remittance of Contributions. (a) The contributions imposed in the preceding section shall be remitted to the
SSS within the first ten (10) days of each calendar month following the month for which they are applicable or
within such time as the Commission may prescribe. Every employer required to deduct and to remit such
contributions shall be liable for their payment and if any contribution is not paid to the SSS as herein
prescribed, he shall pay besides the contribution a penalty thereon of three percent (3%) per month from the
date the contribution falls due until paid. If deemed expedient and advisable by the Commission, the collection
and remittance of contributions shall be made quarterly or semiannually in advance, the contributions payable
by the employees to be advanced by their respective employers: Provided, That upon separation of an
employee, any contribution so paid in advance but not due shall be credited or refunded to his employer.

Verily, prompt remittance of SSS contributions under the aforesaid provision is mandatory. Any divergence
from this rule subjects the employer not only to monetary sanctions, that is, the payment of penalty of three
percent (3%) per month, but also to criminal prosecution if the employer fails to: (a) register its employees with
the SSS; (b) deduct monthly contributions from the salaries/wages of its employees; or (c) remit to the SSS its
employees' SSS contributions and/or loan payments after deducting the same from their respective
salaries/wages. 11

To acquire jurisdiction over Ambassador Hotel, its managing head, director or partner must be arrested

As discussed above, even when the employer is a corporation, it shall still be held liable for the non-remittance
of SSS contributions. It is, however, the head, directors or officers that shall suffer the personal criminal liability.
Although a corporation is invested by law with a personality separate and distinct from that of the persons
composing it, 12 the corporate veil is pierced when a director, trustee or officer is made personally liable by
specific provision of law. 13 In this regard, Section 28 (f) of R.A. No. 8282 explicitly provides that "[i]f the act or
omission penalized by this Act be committed by an association, partnership, corporation or any other institution,
its managing head, directors or partners shall be liable to the penalties provided in this Act for the offense."
Thus, a corporation cannot invoke its separate judicial entity to escape its liability for non-payment of SSS
contributions.

To acquire jurisdiction over the corporation in a criminal case, its head, directors or partners must be served
with a warrant of arrest. Naturally, a juridical entity cannot be the subject of an arrest because it is a mere
fiction of law; thus, an arrest on its representative is sufficient to acquire jurisdiction over it. To reiterate, the law
specifically disregards the separate personality between the corporation and its officers with respect to
violations of R.A. No. 8282; thus, an arrest on its officers binds the corporation.

In this case, Yolanda, as President of Ambassador Hotel, was arrested and brought before the R TC.
Consequently, the trial court acquired jurisdiction over the person of Yolanda and of Ambassador Hotel as the
former was its representative. No separate service of summons is required for the hotel because the law simply
requires the arrest of its agent for the court to acquire jurisdiction over it in the criminal action. Likewise, there is
no requirement to implead Ambassador Hotel as a party to the criminal case because it is deemed included
therein through its managing head, directors or partners, as provided by Section 28 (f) of R.A. No. 8282.

The acquittal of Yolanda does not extinguish the civil liability of Ambassador Hotel

It is a basic rule that when a criminal action is instituted, the civil action for the recovery of civil liability arising
from the offense charged shall be deemed instituted with the criminal action unless the offended party waives
the civil action, reserves the right to institute it separately, or institutes the civil action prior to the criminal
action. 14Necessarily, when the Information was filed with the R TC, the civil action against Ambassador Hotel
for the recovery of civil liability arising from the non-remittance of SSS contributions was deemed instituted
therein.

Further, extinction of the penal action does not carry with it the extinction of the civil action, unless the
extinction proceeds from a declaration in a final judgment that the fact from which the civil liability might arise
did not exist. 15When Yolanda was acquitted in the criminal case because it was proven that she did not perform
the functions of the president from June 1999 to March 2001, it did not result in the dismissal of the civil case

140
against Ambassador Hotel. The RTC did not declare in its judgment that the fact from which the civil liability
might arise did not exist. Thus, the civil action, deemed impliedly instituted in the criminal case, remains.

The argument of Ambassador Hotel - that the RTC lost its jurisdiction over it when Yolanda was acquitted - fails
to convince. It is a well-settled rule that the jurisdiction of a court depends upon the state of facts existing at the
time it is invoked, and if the jurisdiction once attaches to the person and subject matter of the litigation, the
subsequent happening of events, although they are of such a character as would have prevented jurisdiction
from attaching in the first instance, will not operate to oust jurisdiction already attached. 16 Also, it is
fundamental that the jurisdiction of a court in criminal cases is determined by the allegations of the information
or criminal complaint and not by the result of the evidence presented at the trial, much less by the trial judge's
personal appraisal of the affidavits and exhibits attached by the fiscal to the record of the case without hearing
the parties and their witnesses nor receiving their evidence at a proper trial. 17

In this case, the Information alleged that Yolanda was the President of Ambassador Hotel. Moreover, such fact
was supported by the affidavits and exhibits attached to the Information. Hence, the R TC properly issued a
warrant of arrest over Yolanda pursuant to Section 28(f) of R.A. No. 8282 to acquire jurisdiction over her
person and that of Ambassador Hotel. From that moment, the jurisdiction over their persons was acquired.

Even though it was established during the trial that Yolanda was not performing the functions of the hotel's
president from June 1999 to March 2001, which negated her criminal responsibility, it is non sequitur that the
jurisdiction over Ambassador hotel will be detached. Any subsequent event during trial will not strip the RTC of
its jurisdiction because once it attaches, the same shall remain with the said court until it renders judgment.

To subscribe to the theory of Ambassador Hotel - that evidence will dictate the jurisdiction of the court - will
create a chaotic situation. It will be absurd for the courts to first conduct trial on the merits before it can
determine whether it has jurisdiction over the person or subject matter. The more logical and orderly approach
is for the court to determine jurisdiction by the allegations in the information or criminal complaint, as supported
by the affidavits and exhibits attached therein, and not by the evidence at trial. Once jurisdiction attaches, it
shall not be removed from the court until the termination of the case.

As the jurisdiction over Ambassador Hotel was obtained, it became a party in the case and, as will be
discussed later, it was given fair opportunity to present its evidence and controve1t the prosecution's evidence.
In fine, the RTC's jurisdiction over Ambassador Hotel continued in spite of Yolanda's acquittal.

Ambassador Hotel failed to controvert the evidence of its non-remittance of SSS contributions

The CA found that· Ambassador Hotel was well informed of its delinquency by the SSS even before the case
was filed. When the case was eventually filed, its directors and officers were also notified. Notably, even its
own lawyer, Atty. Galon, testified during trial on its behalf. Ambassador Hotel was given the opportunity to
present its defense before the court for its non-payment of SSS contributions. Thus, it was given the right to be
heard and controvert the evidence presented against it.

During trial, the prosecution established that the SSS, through De Ocampo, discovered that the last remittance
of SSS contributions by Ambassador Hotel was made in May 1999. She then informed the hotel of its
delinquency when she visited the establishment on April 17, 2001. She gave the hotel's representative the
delinquency assessment and the billing letter. De Ocampo also requested that the records of previous SSS
payments be presented, but these could not be produced. After referring the case to the Cluster Legal Unit, De
Ocampo sent a final demand letter to Ambassador Hotel by registered mail and personal service.
Notwithstanding the several notices of its delinquency, Ambassador Hotel failed to settle its obligations.
Moreover, though it offered to pay its delinquency through installment, no postdated checks were ever
submitted.

On the other hand, Ambassador Hotel's evidence simply focused on establishing that Yolanda was not acting
as its President from June 1999 to March 2001 because of an internal dispute. Although this may be sufficient
to eliminate the criminal liability of Yolanda, it does not justify the nonpayment of SSS contributions.
Ambassador Hotel did not squarely address the issue on its obligations because there was dearth of evidence
that it remitted the said contributions. Cordon, a witness for the hotel, even admitted that they were informed of
their delinquency and that they attempted to unearth its SSS records to defend its obligations, but failed to do
so. The hotel never proved that it had already paid its contributions or, if not, who should have been
accountable for its non-payment. Glaringly, even though Ambassador Hotel was given sufficient leeway to
explain its obligations, it did not take advantage of the said opportunity. Consequently, it had nothing else to
blame for its predicament but itself.

In fine, the Court is of the view that there is preponderance of evidence that Ambassador Hotel failed to remit
its SSS contributions from June 1999 to March 2001 in the amount of ₱584,804.00. It must pay the said
amount to the SSS plus interest at the legal rate of six percent (6%) per annum.

141
WHEREFORE, the petition is DENIED. The July 29, 2010 Decision and October 18, 2010 Resolution of the
Court Appeals in CA-G.R. CV No. 87948 are AFFIRMED with MODIFICATION in that the judgment award shall
earn interest at the rate of six percent (6%) per annum from the date of finality until fully paid.

SO ORDERED.

z. Burden of proof in illegal dismissal case 


i. Cosue vs. Ferritz Integrated Development Corporation, et al., G.R. No. 230664, July 24, 2017



July 24, 2017

G.R. No. 230664

EDWARD M. COSUE, Petitioner

vs.
FERRITZINTEGRATED DEVELOPMENT CORPORATION, MELISSA TANYA F. GERMINO AND ANTONIO
A. FERNANDO, Respondents

DECISION

TIJAM, J.:

This is a Petition for Review under Rule 45 of the Rules of Court, assailing the Court of Appeals' (CA's)
Decision1dated December 2, 2016 and Resolution2 dated February 23, 2017, in CA-G.R. SP No. 142491, which
affirmed the Resolutions of the National Labor Relations Commission (NLRC)3 upholding the Labor Arbiter's
finding4 that petitioner Edward M. Cosue was not illegally dismissed.

The Facts

Petitioner started working for respondent Ferritz Integrated Development Corporation (FIDC) on August 23,
1993 as a construction worker. He subsequently became a regular employee of FIDC, performing work as
janitor/maintenance staff.

Around 5 p.m. of July 10, 2014, respondent Melissa Tanya Germino (Germino), as Head of FIDC's Property
Management Division, asked petitioner to stay in the FIDC's building to watch over the generator due to the
frequent power outage, and to assist the guards on duty since they were newly hired. Petitioner agreed.

According to petitioner, around 9 p.m. on July 10, 2014, he saw two security guards (the Officer-in-Charge and
one Gomez), together with an unidentified man, on their way to the electrical room. They had a knapsack which
did not look heavy. When they left the room, petitioner saw Gomez carrying the knapsack which, by this time,
appeared to contain something heavy. The next morning, petitioner borrowed the key to the electrical room and
together with fellow maintenance personnel, Joel Alcallaga (Alcallaga), looked for the electrical wires that were
stored therein. Unfortunately, the wires were no longer there. Petitioner was convinced that the two guards and
their unidentified companion took the wires. At 1 p.m., he was summoned by Germino who verbally informed
him that he was suspended from July 16, 2014 to August 13, 2014 on suspicion that he stole the electrical
wires. Beginning July 16, 2014 until August 13, 2014, he was no longer allowed to work.5 Thus, on October 9,
2014, he filed a Complaint against FIDC, Germino and FIDC President Antonio Fernando (collectively,
respondents), for actual illegal dismissal and underpayment of salaries, with prayer for moral and exemplary
damages and attorney's fees.6 In his Position Paper, petitioner additionally made claims for underpayment of
his holiday pay, 13th month pay and service incentive leave pay. He sought to recover on the alleged
underpayments for the period covering "three (3) years backward from the time of the filing of (his) complaint."7

Refuting petitioner's version of the events, respondents alleged that at 7 p.m. on July 10, 2014, Alcallaga's bag
was found to contain bundled wires when it was examined by the security personnel, per routine, as he
checked out from his shift. Alcallaga returned the wires to the electrical room shortly after he was interrogated
by the security personnel. The following day, petitioner and Alcallaga obtained the keys to the electrical room
after misrepresenting to the key custodian that they had been ordered by the head of the FIDC electrical staff to
inspect the room. Thereafter, it was discovered that the electrical wires returned by Alcallaga to the electrical
room were nowhere to be found. Following an investigation, Germino issued a memorandum of suspension to
petitioner for obtaining the keys to the electrical room and entering without permission, and for leaving his post
and joining Alcallaga in the electrical room. Petitioner was suspended for twenty-five (25) days from July 16,
2014 to August 13, 2014, pending further investigation. Petitioner returned to FIDC on August 13, 2014, but
was told to come back as Germino was on leave. When petitioner came back on August 27, 2014, he was able
to speak to Germino and they agreed that he would voluntarily resign. However, petitioner did not file his
resignation, and eventually instituted his Complaint for illegal dismissal. 8

142
Respondents further averred that years ago, petitioner admitted to acting as messenger and depositing money
in the bank for Rizza Alenzuela, the company accountant, who was later discovered to have stolen hundreds of
thousands of pesos by collecting from tenants and depositing said collection to her account. However, because
petitioner was the son of their longest-staying employee who died due to an illness, he was given a second
chance on condition that another offense would lead to the termination of his employment. 9

Respondents argued that there was no illegal dismissal as there was an agreement between FIDC and
petitioner that the latter would just resign. As petitioner reneged on this agreement and chose to be absent, he
should be considered absent without leave. As for petitioner's money claims, FIDC averred that petitioner was
entitled to receive only his latest unpaid salary, if any, and his pro rata l 3th month pay.10 Respondents,
however, would later concede that there were underpayments which would have to be computed.

The Labor Arbiter's Rulin2

On February 12, 2015, the Labor Arbiter (LA) rendered her Decision, the dispositive portion of which reads:

WHEREFORE, premises considered, the complaint for illegal dismissal is dismissed for lack of evidence to
support the same. Respondent Ferritz Integrated Development Corporation, is hereby ordered to reinstate
complainant, Edward M. Cosue, to his former position, without loss of seniority rights but without backwages.

The order of reinstatement is immediately executory and the respondents are hereby directed to submit a
report of compliance to the said order without (sic) ten (10) calendar days from receipt of the said decision.

Respondent Ferritz Integrated Development Corporation is further ordered to pay salary differentials in the
amount of P8,819.0l.

All other claims are dismissed for lack of merit.

SO ORDERED.11

The LA held that other than petitioner's general assertion that he was dismissed, no evidence was presented to
support such claim. Petitioner was admittedly suspended from July 16, 2014 to August 13, 2014. Thus, as of
July 27, 2014, the date of dismissal as averred in petitioner's Complaint, he was still serving his preventive
suspension. In fact, he was not barred from the premises or categorically informed that he was already
dismissed from work.12

The LA stressed that the rule that the employer bears the burden of proof in illegal dismissal cases could not be
applied as respondents denied dismissing petitioner.13

The LA, however, found no reason to conclude that petitioner abandoned his job, absent proof of petitioner's
clear intention to sever the employer-employee relationship.

Backwages were not awarded as there was neither dismissal nor abandonment. However, finding that there
was underpayment of salaries, the LA awarded salary differentials computed at PhP8,8l9.01.

Petitioner's Partial Appeal

In his partial appeal from the LA's Decision, petitioner asked the NLRC to declare him to have been "illegally
(constructively) dismissed" and entitled to full backwages from the time of illegal dismissal up to actual
reinstatement. He also prayed for the payment of his service incentive leave pay, underpaid 13th month pay,
holiday pay and overtime pay, his 13th month pay for 2014, moral and exemplary damages, and attorney's
fees.

The NLRC's Resolutions

In its Resolution14 dated May 29, 2015, the NLRC denied petitioner's partial appeal and affirmed the LA's
Decision, holding that the established facts showed that petitioner was not dismissed by FIDC. The NLRC also
held that since the claims for service incentive leave, overtime pay and 13th month pay were not indicated in
the Complaint nor prayed for in petitioner's Position Paper, the LA did not gravely abuse her discretion in not
awarding them. Furthermore, the NLRC found it improper to award damages and attorney's fees given its
finding that there was no illegal dismissal.

The NLRC denied petitioner's Motion for Reconsideration in its Resolution15 dated July 20, 2015.

The CA's Ruling

143
The NLRC's Resolutions were affirmed in the assailed Decision and Resolution of the CA issued in
the certiorariproceeding instituted by petitioner under Rule 65 of the Rules of Court.

The CA found sufficient reasons to uphold respondents' position. It rejected petitioner's argument that he had
been constructively dismissed, holding that petitioner was merely suspended for 25 days. Such suspension,
said the CA, was a valid exercise of management prerogative pending administrative investigation on the
incident of theft.

Hence, the instant Petition.

Petitioner's Arguments

Petitioner maintained that he was constructively dismissed because he reported to work immediately after his
suspension but was not anymore allowed to work. He argued that mere absence or failure to report to work is
not tantamount to abandonment of work. He also asserted that to be dismissed for abandonment, an employee
must be shown to have been absent without a valid or justifiable reason, and to have a clear intention to sever
the employer-employee relationship, and that the burden of proof falls on the employer. Petitioner further
averred that FIDC failed to show proof of payment of his other monetary claims.

The Court's Ruling

Only errors of law are generally reviewed in Rule 45 petitions assailing decisions of the CA, and questions of
fact are not entertained.16 Accordingly, the Court does not re-examine conflicting evidence or reevaluate the
credibility of witnesses.17 The Court is not a trier of facts, and this doctrine applies with greater force in labor
cases.18 When supported by substantial evidence, factual findings of labor officials, who are deemed to have
acquired expertise in matters within their respective jurisdiction, are generally accorded not only respect but
even finality, more so when upheld by the CA.19

Petitioner has not shown cause for the Court to depart from this rule.

As the LA, NLRC and the CA found, petitioner was not illegally dismissed. This common finding is supported by
substantial evidence, defined as "that amount of relevant evidence which a reasonable mind might accept as
adequate to justify a conclusion."20

Petitioner himself alleged that he was suspended from July 16, 2014 to August 13, 2014 pending further
investigation of the pilferage of electrical wires. Thus, on July 27, 2014, the date of dismissal alleged in his
Complaint, petitioner was still serving his suspension; his employment was not terminated.

Petitioner's claim that he was not allowed to report for work after his suspension was unsubstantiated.
Petitioner has not shown by any evidence that he was barred from the premises. Furthermore, an entry in the
FIDC security logbook for August 27, 2014, which petitioner had not challenged, showed him informing security
personnel that he came to FIDC because he was asked to report to the office. The rule is that evidence not
objected to is deemed admitted and may be validly considered by the court in arriving at its judgment. 21 This is
true even if by its nature, the evidence is inadmissible and would have surely been rejected if it had been
challenged at the proper time.22

Petitioner's claim of constructive dismissal fails. Bare allegations of constructive dismissal, when
uncorroborated by the evidence on record, as in this case, cannot be given credence.23

In Jo mar S. Verdadero v. Barney A utolines Group of Companies Transport, Inc., et. al.,24the Court held that:

Constructive dismissal exists where there is cessation of work, because "continued employment is rendered
impossible, unreasonable or unlikely, as an offer involving a demotion in rank or a diminution in pay" and other
benefits. Aptly called a dismissal in disguise or an act amounting to dismissal but made to appear as if it were
not, constructive dismissal may, likewise, exist if an act of clear discrimination, insensibility, or disdain by an
employer becomes so unbearable on the part of the employee that it could foreclose any choice by him except
to forego his continued employment.25

In this case, records do not show any demotion in rank or a diminution in pay made against petitioner. Neither
1âw phi 1

was there any act of clear discrimination, insensibility or disdain committed by respondents against petitioner
which would justify or force him to terminate his employment from the company.26

Respondents' decision to give petitioner a graceful exit is perfectly within their discretion. It is settled that there
is nothing reprehensible or illegal when the employer grants the employee a chance to resign and save face
rather than smear the latter's employment record.27

144
The rule is that one who alleges a fact has the burden of proving it; thus, petitioner was burdened to prove his
allegation that respondents dismissed him from his employment. It must be stressed that the evidence to prove
this fact must be clear, positive and convincing. The rule that the employer bears the burden of proof in illegal
dismissal cases finds no application here because the respondents deny having dismissed the petitioner. 28 In
illegal dismissal cases, while the employer bears the burden to prove that the termination was for a valid or
authorized cause, the employee must first establish by substantial evidence the fact of dismissal from service. 29

In the instant case, other than petitioner's bare allegation of having been dismissed, there was no evidence
presented to show that his employment was indeed terminated by respondents. In the absence of any showing
of an overt or positive act proving that respondents had dismissed petitioner, the latter's claim of illegal
dismissal cannot be sustained - as the same would be self-serving, conjectural and of no probative value. 30

Petitioner's insistence that he had been unjustifiably dismissed for abandonment of his job, without the benefit
of due process, is untenable. Firstly, petitioner failed to establish that he had been dismissed. Secondly, it was
not respondents' position that petitioner abandoned his job. As they were waiting for petitioner to tender his
resignation conformably with their agreement, they did not consider petitioner's absence as an abandonment of
his job which would necessitate the sending of a notice of abandonment or an order to return to work.31

In this regard, the Court's ruling in Nightowl Watchman & Security Agency, Inc. v. Nestor Lumahan,32reiterated
in Dee Jay's Inn and Cafe and/or Melinda Ferraris v. Ma. Lorina Raneses,33is instructive:

We find that the CA erred in disregarding the NLRC's conclusion that there had been no dismissal, and in
immediately proceeding to tackle Nightowl's defense that Lumahan abandoned his work.

The CA should have first considered whether there had been a dismissal in the first place. To our mind, the CA
missed this crucial point as it presumed that Lumahan had actually been dismissed. The CA's failure to
properly appreciate this point - which led to its erroneous conclusion - constitutes reversible error that justifies
the Court's exercise of its factual review power.

xxxx

We agree with the NLRC that Lumahan stopped reporting for work on April 22, 1999, and never returned, as
Nightowl sufficiently supported this position with documentary evidence.

xxxx

In addition, we find that Lumahan failed to substantiate his claim that he was constructively dismissed when
Nightowl allegedly refused to accept him back when he allegedly reported for work from April 22, 1999 to June
9, 1999. In short, Lumahan did not present any evidence to prove that he had, in fact, reported back to work.

xxxx

All told, we cannot agree with the CA in finding that the NLRC committed grave abuse of discretion in
evaluating the facts based on the records and in concluding therefrom that Lumahan had not been dismissed.

xxxx

As no dismissal was carried out in this case, any consideration of abandonment - as a defense raised by an
employer in dismissal situations - was clearly misplaced. To our mind, the CA again committed a reversible
error in considering that Nightowl raised abandonment as a defense.

xxxx

The CA, agreeing with LA Demaisip, concluded that Lumahan was illegally dismissed because Nightowl failed
to prove the existence of an overt act showing Lumahan's intention to sever his employment. To the CA, the
fact that Nightowl failed to send Lumahan notices for him to report back to work all the more showed no
abandonment took place.

The critical point the CA missed, however, was the fact that Nightowl never raised abandonment as a defense.
What Nightowl persistently argued was that Lumahan stopped reporting for work beginning April 22, 1999; and
that it had been waiting for Lumahan to show up so that it could impose on him the necessary disciplinary
action for abandoning his post at Steelwork, only to learn that Lumahan had filed an illegal dismissal complaint.
Nightowl did not at all argue that Lumahan had abandoned his work, thereby warranting the termination of his
employment.

145
Significantly, the CA construed these arguments as abandonment of work under the labor law construct. We
find it clear, however, that Nightowl did not dismiss Lumahan; hence, it never raised the defense of
abandonment.

xxxx

Finally, failure to send notices to Lumahan to report back to work should not be taken against Nightowl despite
the fact that it would have been prudent, given the circumstance, had it done so. Report to work notices are
required, as an aspect of procedural due process, only in situations involving the dismissal, or the possibility of
dismissal, of the employee. Verily, report-to-work notices could not be required when dismissal, or the
possibility of dismissal, of the employee does not exist. (Citation ommitted and emphasis ours.)

Since there was neither dismissal nor abandonment, the CA correctly sustained the LA and the NLRC's
decision to order petitioner's reinstatement but without backwages, consistent with the following
pronouncement in Danilo Leonardo v. National Labor Relations Commission and Reynaldo's Marketing
Corporation, et. al.:34

Accordingly, given that FUERTE may not be deemed to have abandoned his job, and neither was he
constructively dismissed by private respondent, the Commission did not err in ordering his reinstatement but
without backwages. In a case where the employee's failure to work was occasioned neither by his
abandonment nor by a termination, the burden of economic loss is not rightfully shifted to the employer; each
party must bear his own loss.35 (Citation ommitted)

Although not specified in the proforma Complaint, petitioner's claim for underpayment of holiday pay, 13th
month pay and service incentive leave pay was alleged in his Position Paper.36 In fact, respondents squarely
addressed this issue in their Rejoinder, stating that "(w)hat is left therefore that respondent should pay are the
underpayments which should now be computed properly."37 Thus, the labor tribunals were not precluded from
passing upon this cause of action.38 Petitioner's cause of action "should be ascertained not from a reading of his
complaint alone but also from a consideration and evaluation of both his complaint and position paper." 39

Petitioner was found to have been paid salaries below the minimum wage rates and was, thus, awarded salary
differentials in the amount of ₱8,819.01 for the period October 9, 2011 to July 27, 2014. 40 Holiday pay, 13th
month pay and service incentive leave pay are all computed based on an employee's salary. Therefore, there
is necessarily an underpayment if these benefits were computed and paid based on salaries below minimum
wage rates.

Anent petitioner's claim for his 13th month pay for 2014, the same was not alleged in his Complaint or his
Position Paper. It appears to have been raised for the first time in his partial appeal to the NLRC. However, it
should be noted that respondents effectively admitted in their Position Paper that petitioner was entitled to
his pro-rata 13th month pay for 2014.41 To withhold this benefit from petitioner, despite respondents' admission
that he should be paid the same, will not serve the ends of substantial justice. Hand in hand with the concept of
admission against interest, the concept of estoppel, a legal and equitable concept, necessarily must come into
play.42 Furthermore, it is settled that technical rules of procedure may be relaxed in labor cases to serve the
demands of substantial justice.43

The LA is, thus, directed to determine any underpayment of holiday pay, 13th month pay and service incentive
leave pay for the period covered by the award of salary differentials, and to compute the corresponding
differentials. The LA is further directed to compute petitioner's pro rata 13th month pay for 2014.

In San Miguel Corporation v. Eduardo L. Teodosio44, the Court held that:

xxxx

Moral damages are recoverable where the dismissal of the employee was attended by bad faith or fraud or
constituted an act oppressive to labor, or was done in a manner contrary to morals, good customs or public
policy. On the other hand, exemplary damages are proper when the dismissal was e:ff ected in a wanton,
oppressive or malevolent manner, and public policy requires that these acts must be suppressed and
discouraged.45

In the present case, petitioner failed to sufficiently establish that he had been dismissed, let alone in bad faith
or in an oppressive or malevolent manner. Petitioner, thus, cannot rightfully claim moral and exemplary
damages.46

Petitioner, however, is entitled to attorney's fees at ten percent (10%) of the total monetary award.47 It has been
determined that petitioner was underpaid his wages. Attorney's fees may be recovered by an employee whose
wages have been unlawfully withheld.48 There need not even be any showing that the employer acted
maliciously or in bad faith; there need only be a showing that lawful wages were not paid accordingly, as in this
case.49

146
WHEREFORE, the Court of Appeals' Decision dated December 2, 2016 and Resolution dated February 23,
2017, in CA-G.R. SP No. 142491, are AFFIRMED with MODIFICATION in that petitioner is additionally entitled
to: (a) differentials in any underpaid holiday pay, 13th month pay and service incentive leave pay for the period
October 9, 2011 to July 27, 2014; (b) pro rata 13th month pay for 2014; and (c) attorney's fees at ten percent
(10%) of the total monetary award.

The case is remanded to the Labor Arbiter for the determination of any underpayment of holiday pay, 13th
month pay and service incentive leave pay for the period October 9, 2011 to July 27, 2014, and for the proper
computation of the corresponding differentials. The Labor Arbiter is also directed to compute petitioner's pro
rata 13th month pay for 2014. The Labor Arbiter shall report compliance with these directives within thirty (30)
days from notice of this Decision.

SO ORDERED.

ff. Security of tenure

 gg. Management prerogative 
 i. Transfer of employee 
 1. Chateu Royale
Sports and Country Club, Inc. vs. Balba, G.R. No. 197492, January 18, 2017



January 18, 2017

G.R. No. 197492

CHATEAU ROYALE SPORTS and COUNTRY CLUB, INC., Petitioner,

vs.
RACHELLE G. BALBA and MARINEL N. CONSTANTE, Respondents.

DECISION

BERSAMIN, J.:

The petitioner appeals the decision promulgated on January 10, 2011, 1 whereby the Court of Appeals (CA)
annulled and set aside the December 14, 2009 decision2 and February 26, 2010 resolution3 of the National
Labor Relations Commission (NLRC) dismissing the respondents' complaint for constructive dismissal.

Antecedents

On August 28, 2004, the petitioner, a domestic corporation operating a resort complex in Nasugbu, Batangas,
hired the respondents as Account Executives on probationary status.4 On June 28, 2005, the respondents were
promoted to Account Managers effective July 1, 2005, with the monthly salary rate of ₱9,000.00 plus
allowances totaling to ₱5,500.5 As part of their duties as Account Managers, they were instructed by the
Director of Sales and Marketing to forward all proposals, event orders and contracts for an orderly and
systematic bookings in the operation of the petitioner' s business. However, they failed to comply with the
directive. Accordingly, a notice to explain was served on them, 6 to which they promptly responded. 7

On October 4, 2005, the management served notices of administrative hearing8 on the respondents.
Thereupon, they sent a letter of said date asking for a postponement of the hearing.9 Their request was,
however, denied by the letter dated October 7, 2005, and at the same time informed them that the petitioner's
Corporate Infractions Committee had found them to have committed acts of insubordination, and that they were
being suspended for seven days from October 10 to 17, 2005, inclusive. 10

The suspension order was lifted even before its implementation on October 10, 2005.11

On October 10, 2005, the respondents filed a complaint for illegal suspension and non-payment of allowances
and commissions. 12

On December 1, 2005, the respondents amended their complaint to include constructive dismissal as one of
their causes of action based on their information from the Chief Financial Officer of the petitioner on the latter's
plan to transfer them to the Manila Office. 13 The proposed transfer was prompted by the shortage of personnel
at the Manila Office as a result of the resignation of three account managers and the director of sales and
marketing. Despite attempts to convince them to accept the transfer to Manila, they declined because their
families were living in Nasugbu, Batangas.

The respondents received the notice of transfer14 dated December 13, 2005 on December 28, 2005 15 directing
them to report to work at the Manila Office effective January 9, 2006. They responded by letter addressed to
Mr. Rowell David, the Human Resource Consultant of the petitioner, 16 explaining their reasons for declining the
order of transfer. Consequently, another request for incident report17 was served on them regarding their failure

147
to comply with the directive to report at the Manila office. Following respondents' respective responses, 18 the
petitioner sent a notice imposing on them the sanction of written reprimand for their failure to abide by the order
of transfer. 19

Ruling of the Labor Arbiter

On February 14, 2008, Labor Arbiter Arthur L. Amansec rendered his decision declaring that the respondents
had been constructively dismissed, and disposing thusly:20

WHEREFORE, judgment is hereby made finding respondent Chateau Royale Sports and Country Club, Inc. to
have constructively dismissed the complainants Rachelle G. Balba and Marinel N. Constante from
employment. Concomitantly, the respondent company is hereby ordered to pay each complainant one (1) year
backwages plus a separation pay, computed at a full month's pay for every year of service.

The respondent company is also ordered to pay each complainant ₱50,000.00 moral damages and ₱10,000.00
exemplary damages.

Ten (10%) attorney's fees are also awarded.

Other claims are dismissed for lack of merit.

SO ORDERED.21

Labor Arbiter Amansec opined that the respondents' transfer to Manila would not only be physically and
financially inconvenient, but would also deprive them of the psychological comfort that their families provided;
that being the top sales performers in Nasugbu, they should not be punished with the transfer; and that their
earnings would considerably diminish inasmuch as sales in Manila were not as lively as those in Nasugbu. 22

Ruling of the NLRC

On appeal,23 the NLRC reversed the ruling of the Labor Arbiter, and dismissed the complaint for lack of merit, to
wit:

WHEREFORE, the appeal of respondents Chateau Royale Sports and Country Club, Inc. is Granted.
Accordingly, the assailed February 14, 2008 decision is Set-Aside dismissing the complaint for lack of merit.

SO ORDERED.24

The NLRC found that the respondents had been informed through their respective letters of appointment of the
possibility of transfer in the exigency of the service; that the transfer was justified due to the shortage of
personnel at the Manila office; that the transfer of the respondents, being bereft of improper motive, was a valid
exercise of management prerogative; and that they could not as employees validly decline a lawful transfer
order on the ground of parental obligations, additional expenses, and the anxiety of being away from his family.

The respondents filed their motion for reconsideration,25 but the NLRC denied their motion on February 26,
2010.26

Decision of the CA

On January 10, 2011, the CA promulgated its decision granting the respondents' petition for certiorari, and
setting aside the decision of the NLRC, viz.:

WHEREFORE, premises considered, the assailed Decision dated December 14, 2009 and Resolution dated
February 26, 2010 of the NLRC, Second Division in NLRC LAC No. 07-002551-08 (NLRC-RAB-IV Case No.
10-21558-058) (NLRC-RAB-IV Case No. 02-22153-068) are hereby REVERSED and SET ASIDE. Private
respondent Chateau Royale is hereby ordered to REINSTATE petitioners Balba and Constante to their former
positions without loss of seniority rights and other privileges, and to pay said petitioners
full BACKWAGES inclusive of allowances and other benefits from the time their employment was severed up
to the time of actual reinstatement.

SO ORDERED.27

The CA ruled that the transfer of the respondents from the office in Nasugbu, Batangas to the Manila office was
not a legitimate exercise of management prerogative and constituted constructive dismissal; that the transfer to
the Manila office was not crucial as to cause serious disruption in the operation of the business if the
respondents were not transferred thereat; that the directive failed to indicate that the transfer was merely

148
temporary; that the directive did not mention the shortage of personnel that would necessitate such transfer;
and that the transfer would be inconvenient and prejudicial to the respondents.28

On June 22, 2011,29 the CA denied the petitioner's motion for reconsideration.

Issues

Hence, this appeal by the petitioner via petition for review on certiorari,30citing the following grounds:

THE HONORABLE COURT OF APPEALS GRIEVOUSLY ERRED IN CONCLUDING THAT TI-IE SHORTAGE
OF PERSONNEL IN THE MANILA OFFICE IS A MERE SUBTERFUGE RATHER THAN AN EXIGENCY JN
THE BUSINESS THEREBY TREATING THE TRANSFER OF RESPONDENTS AS UNREASONABLE

THE HONORABLE COURT OF APPEALS GRIEVOUSLY ERRED IN CONCLUDING THAT THE INTENDED
TRANSFER OF THE RESPONDENTS FROM NASUGBU, BATANGAS TO MANILA OFFICE CONSTITUTES
CONSTRUCTIVE DISMISSAL.31

The petitioner argues that the resignations of the Account Managers and the Director of Sales and Marketing
caused serious disruptions in the operations of the Manila office, thereby making the immediate transfer of the
respondents crucial and indispensable; that through their respective letters of appointment, the possibility of
their transfer to the Manila office had been made known to them even prior to their regularization; that if its
intention had been to expel them from the company, it would not have rehired them as regular employees after
the expiration of their probationary contract and even promoted them as Account Managers; that there was no
diminution of income and benefits as a result of the transfer; and that their immediate rejection of the transfer
directive prevented the parties from negotiating for additional allowances beyond their regular salaries.

The respondents counter that there was no valid cause for their transfer; that they were forced to transfer to the
Manila office without consideration of the proximity of the place and without improvements in the employment
package; that the alleged shortage of personnel in the Manila office due to the resignation of the account
managers was merely used to conceal the petitioner's illegal acts; and that notwithstanding their negative
response upon being informed of their impending transfer to Manila by Chief Finance Officer Marquez, the
petitioner still issued the transfer order directing them to report to the Manila office effective January 9, 2006.

The sole issue for resolution is whether or not the respondents were constructively dismissed.

Ruling of the Court

We find merit in the appeal.

In the resolution of whether the transfer of the respondents from one area of operation to another was valid,
finding a balance between the scope and limitation of the exercise of management prerogative and the
employees' right to security of tenure is necessary.32 We have to weigh and consider, on the one hand, that
management has a wide discretion to regulate all aspects of employment, including the transfer and re-
assignment of employees according to the exigencies of the business; 33 and, on the other, that the transfer
constitutes constructive dismissal when it is unreasonable, inconvenient or prejudicial to the employee, or
involves a demotion in rank or diminution of salaries, benefits and other privileges, or when the acts of
discrimination, insensibility or disdain on the part of the employer become unbearable for the employee, forcing
him to forego her employment. 34

In this case of constructive dismissal, the burden of proof lies in the petitioner as the employer to prove that the
transfer of the employee from one area of operation to another was for a valid and legitimate ground, like
genuine business necessity.35 We are satisfied that the petitioner duly discharged its burden, and thus
established that, contrary to the claim of the respondents that they had been constructively dismissed, their
transfer had been an exercise of the petitioner's legitimate management prerogative.

To start with, the resignations of the account managers and the director of sales and marketing in the Manila
office brought about the immediate need for their replacements with personnel having commensurate
experiences and skills. With the positions held by the resigned sales personnel being undoubtedly crucial to the
operations and business of the petitioner, the resignations gave rise to an urgent and genuine business
necessity that fully warranted the transfer from the Nasugbu, Batangas office to the main office in Manila of the
respondents, undoubtedly the best suited to perform the tasks assigned to the resigned employees because of
their being themselves account managers who had recently attended seminars and trainings as such. The
transfer could not be validly assailed as a form of constructive dismissal, for, as held in Benguet Electric
Cooperative v.Fianza,36management had the prerogative to determine the place where the employee is best

149
qualified to serve the interests of the business given the qualifications, training and performance of the affected
employee.

Secondly, although the respondents' transfer to Manila might be potentially inconvenient for them because it
would entail additional expenses on their part aside from their being forced to be away from their families, it
was neither unreasonable nor oppressive. The petitioner rightly points out that the transfer would be without
demotion in rank, or without diminution of benefits and salaries. Instead, the transfer would open the way for
their eventual career growth, with the corresponding increases in pay. It is noted that their prompt and repeated
opposition to the transfer effectively stalled the possibility of any agreement between the parties regarding
benefits or salary adjustments.

Thirdly, the respondents did not show by substantial evidence that the petitioner was acting in bad faith or had
ill-motive in ordering their transfer. In contrast, the urgency and genuine business necessity justifying the
1avvphi1

transfer negated bad faith on the part of the petitioner.

Lastly, the respondents, by having voluntarily affixed their signatures on their respective letters of appointment,
acceded to the terms and conditions of employment incorporated therein. One of the terms and conditions thus
incorporated was the prerogative of management to transfer and re-assign its employees from one job to
another "as it may deem necessary or advisable," to wit:

The company reserves the right to transfer you to any assignment from one job to another, or from one
department/section to another, as it may deem necessary or advisable.

Having expressly consented to the foregoing, the respondents had no basis for objecting to their transfer.
According to Abbot Laboratories(Phils.), Inc. v. National Labor Relations Commission,37the employee who has
consented to the company's policy of hiring sales staff willing to be assigned anywhere in the Philippines as
demanded by the employer's business has no reason to disobey the transfer order of management. Verily, the
right of the employee to security of tenure does not give her a vested right to her position as to deprive
management of its authority to transfer or re-assign her where she will be most useful. 38

In view of the foregoing, the NLRC properly appreciated the evidence and merits of the case in reversing the
decision of the Labor Arbiter. As such, the CA gravely erred in declaring that the NLRC had gravely abused its
discretion amounting to lack or excess of jurisdiction.

WHEREFORE, the Court REVERSES AND SETS ASIDE the decision of the Court of Appeals promulgated on
January 10, 2011; REINSTATES the decision issued on December 14, 2009 by the National Labor Relations
Commission; and ORDERS the respondents to pay the costs of suit.

SO ORDERED.

hh. Termination of employment 
 i. Stipulation to terminate is void 
 1. Dagasdas vs. Grand Placement
and General Services Corporation, G.R. No. 205727, January 18, 2017



January 18, 2017

G.R. No. 205727

RUTCHER T. DAGASDAS, Petitioner,

vs.
GRAND PLACEMENT AND GENERAL SERVICES CORPORATION, Respondent.

DECISION

DEL CASTILLO, J.:

Before us is a Petition for Review on Certiorari assailing the September 26, 2012 Decision1 of the Court of
Appeals (CA) in CA-G.R. SP No. 115396, which annulled and set aside the March 29, 20102 and June 2,
20103 Resolutions of the National Labor Relations Commission (NLRC) in NLRC LAC OFW-L-02-000071-10,
and concomitantly reinstated the November 27, 2009 Decision4 of the Labor Arbiter (LA) dismissing the
Complaint for lack of merit.

Also challenged is the January 28, 2013 Resolution5 denying the Motion for Reconsideration filed by Rutcher T.
Dagasdas (Dagasdas ).

Factual Antecedents

150
Grand Placement and General Services Corp. (GPGS) is a licensed

recruitment or placement agency in the Philippines while Saudi Aramco (Aramco) is its counterpart in Saudi
Arabia. On the other hand, Industrial & Management Technology Methods Co. Ltd. (ITM) is the principal of
GPGS, a company existing in Saudi Arabia. 6

In November 2007, GPGS, for and on behalf of ITM, employed Dagasdas as Network Technician. He was to
be deployed in Saudi Arabia under a one-year contract7 with a monthly salary of Saudi Riyal (SR) 5,112.00.
Before leaving the Philippines, Dagasdas underwent skill training8 and pre-departure orientation as Network
Technician.9Nonetheless, his Job Offer10 indicated that he was accepted by Aramco and ITM for the position of
"Supt."

Dagasdas contended that although his position under his contract was as a Network Technician, he actually
applied for and was engaged as a Civil Engineer considering that his transcript of records, 11 diploma 12 as well
as his curriculum vitae 13 showed that he had a degree in Civil Engineering, and his work experiences were all
related to this field. Purportedly9 the position of Network Technician was only for the purpose of securing a visa
for Saudi Arabia because ITM could not support visa application for Civil Engineers. 14

On February 8, 2008, Dagasdas arrived in Saudi Arabia.15 Thereafter, he signed with ITM a new employment
contract16 which stipulated that the latter contracted him as Superintendent or in any capacity within the scope
of his abilities with salary of SR5,112.00 and allowance of SR2,045.00 per month. Under this contract,
Dagasdas shall be placed under a three-month probationary period; and, this new contract shall cancel all
contracts prior to its date from any source.

On February 11, 2008, Dagasdas reported at ITM's worksite in Khurais, Saudi Arabia. 17 There, he was
allegedly given tasks suited for a Mechanical Engineer, which were foreign to the job he applied for and to his
work experience. Seeing that he would not be able to perform well in his work, Dagasdas raised his conce1n to
his Supervisor in the Mechanical Engineering Department. Consequently, he was transferred to the Civil
Engineering Department, was temporarily given a position as Civil Construction Engineer, and was issued
anidentification card good for one month. Dagasdas averred that on March 9, 2008, he was directed to exit the
worksite but Rashid H. Siddiqui (Siddiqui), the Site Coordinator Manager, advised him to remain in the
premises, and promised to secure him the position he applied for. However, before Dagasdas' case was
investigated, Siddiqui had severed his employment with ITM. 18

In April 2008, Dagasdas returned to Al-Khobar and stayed at the ITM Office.19 Later, 11M gave him a
termination notice20 indicating that his last day of work was on April 30, 2008, and he was dismissed pursuant to
clause 17.4.3 of his contract, which provided that ITM reserved the right to terminate any employee within the
three-month probationary period without need of any notice to the employee. 21

Before his repatriation, Dagasdas signed a Statement of Quitclaim22 with Final Settlement23 stating that ITM paid
him all the salaries and benefits for his services from February 11, 2008 to April 30, 2008 in the total amow1t of
SR7,156.80, and ITM was relieved from all financial obligations due to Dagasdas.

On June 24, 2008, Dagasdas returned to the Philippines.24 Thereafter, he filed an illegal dismissal case against
GPGS, ITM, and Aramco.

Dagasdas accused GPGS, ITM, and Aramco of misrepresentation, which resulted in the mismatch in the work
assigned to him. He contended that such claim was supported by exchanges of electronic mail (e-mail)
establishing that GPGS, ITM, and Aramco were aware of the job 1nismatch that had befallen him. 25 He also
argued that although he was engaged as a project employee, he was still entitled to security of tenure for the
duration of his contract. He maintained that GPGS, ITM, and Aramco merely invented "imaginary cause/s" to
terminate him. Thus, he claimed that he was dismissed without cause and due process of law. 26

GPGS, ITM, and Aramco countered that Dagasdas was legally dismissed. They explained that Dagasdas was
aware that he was employed as Network Technician but he could not perform his work in accordance with the
standards of his employer. They added that Dagasdas was informed of his poor performance, and he
conformed to his termination as evidenced by his quitclaim. 27 They also stressed that Dagasdas was only a
probationary employee since he worked for ITM for less than three months.28

Ruling of the Labor Arbiter

On November 27, 2009, the LA dismissed the case for lack of merit. The LA pointed out that when Dagasdas
signed his new employment contract in Saudi Arabia, he accepted its stipulations, including the fact that he had
to undergo probationary status. She declared that this new contract was more advantageous for Dagasdas as
his position was upgraded to that of a Superintendent, and he was likewise given an allowance ofSR2,045.00
aside from his salary of SR5,112.00 per month. According to the LA, for being more favorable, this new
contract was not prohibited by law. She also decreed that Dagasdas fell short of the expected work
performance; as such, his employer dismissed him as part of its management prerogative.

151
Consequently, Dagasdas appealed to the NLRC.

Ruling of the National Labor Relations Commission

On March 29, 2010, the NLRC issued a Resolution finding Dagasdas' dismissal illegal. The decretal portion of
the NLRC Resolution reads:

WHEREFORE, the decision appealed from is hereby REVERSED, and the respondent[s] are hereby ordered
to pay the complainant the salaries corresponding to the unexpired p01tion of his contract amounting to
SR46,008 (SR5112 x 9 months, or from May 1, 2008 to January 31, 2009), plus ten percent (10%) thereof as
attorney's foes. The respondents are jointly and severally liable for the judgment awards, which are payable in
Philippine currency converted on the basis of the exchange rate prevailing at the time of actual payment.

SO ORDERED.29

The NLRC stated that Dagasdas, who was a Civil Engineering graduate, was "recruited on paper" by GPGS as
Network Technician but the real understanding between the parties was to hire him as Superintendent. It held
that GPGS erroneously recruited Dagasdas, and failed to inform him that he was hired as a "Mechanical
Superintendent" meant for a Mechanical Engineer. It declared that while ITM has the prerogative to continue
the employment of individuals only if they were qualified, Dagasdas' dismissal amounted to illegal termination
since the mismatch between his qualifications and the job given him was no fault of his.

The NLRC added that Dagasdas should not be made to suffer the consequences of the miscommunication
between GPGS and ITM considering that the government obligates employment agencies recruiting Filipinos
for overseas work to "select only medically and technically qualified recruits."30

On June 2, 2010, the NLRC denied the Motion for Reconsideration of its Resolution dated March 29, 2010.

Undeterred, GPGS filed a Petition for Certiorari with the CA ascribing grave abuse of discretion on the part of
the NLRC in ruling that Dagasdas was illegally dismissed.

Ruling of the Court of Appeals

On September 26, 2012, the CA set aside the NLRC Resolutions and reinstated the LA Decision dismissing the
case for lack of merit.

The CA could not accede to the conclusion that the real agreement between the parties was to employ
Dagasdas as Superintendent. It stressed that Dagasdas left the Philippines pursuant to his employment
contract indicating that he was to work as a Network Technician; when he arrived in Saudi Arabia and signed a
new contract for the position of a Superintendent, the agreement was with no participation of GPGS, and said
new contract was only between Dagasdas and ITM. It emphasized that after commencing work as
Superintendent, Dagasdas realized that he could not perform his tasks, and "[s]eemingly, it was [Dagasdas]
himself who voluntarily withdrew from his assigned work for lack of competence." 31 It faulted the NLRC for
falling to consider that Dagasdas backed out as Superintendent on the excuse that the same required the skills
of a Mechanical Engineer.

In holding that Dagasdas' dismissal was legal, the CA gave credence to Dagasdas' Statement of Quitclaim and
Final Settlement. It ruled that for having voluntarily accepted money from his employer, Dagasdas accepted his
termination and released his employer from future financial obligations arising from his past employment with it.

On January 28, 2013, the CA denied Dagasdas' Motion for Reconsideration.

Hence, Dagasdas filed this Petition raising these grounds:

[1] THE HONORABLE COURT OF APPEALS COMMITIED A REVERSIBLE ERROR WHEN TT Rt.
VERSED THE FACTUAL FINDINGS OF THE NATIONAL LABOR RELATION’S COMMISSION. 32

[2] THE HONORABLE COURT OF APPEALS PATENTLY ERRED WITH ITS FINDINGS THAT THE
CONTRACT SIGNED BY DAGASDAS IN ALKHOBAR IS MORE ADVANTAGEOUS TO THE LATTER
AND THAT IT WAS [H]IS PERSONAL ACT OR DECISION [TO SIGN] THE SAME. 33

[3] THE HONORABLE COURT OF APPEALS ALSO GRAVELY ERRED IN FAULTING THE NLRC
FOR ITS FAILURE TO INVALIDATE OR DISCUSS THE FINAL SETTLEMENT AND STATEMENT OF
QUITCLAIM SIGNED BY [DAGASDAS].34

Dagasdas reiterates that he was only recruited "on paper" as a Network Technician but the real agreement
between him and his employer was to engage him as Superintendent in t'1e field of Civil Engineering, he being

152
a Civil Engineering graduate with vast experience in said field. He stresses that he was terminated because of
a "discipline mismatch" as his employer actually needed a Mechanical (Engineer) Superintendent, not a Civil
Engineer.

In addition, Dagasdas insists that he did not voluntarily back out from his work. If not for the discipline
mismatch, he could have performed his job as was expected of him. He also denies that the new employment
contract he signed while in Saudi Arabia was more advant1geous to him since the basic salary and allowance
stipulated therein are just the same with that in his Job Offer. He argues that the new contract was even
disadvantageous because it was inserted therein that he still had to undergo probationary status for three
months.

Finally, Dagasdas contends that the new contract he signed while in Saudi Arabia was void because it was not
approved by the Philippine Overseas Employment Administration (POEA). He also claims that CA should have
closely examined his quitclaim because he only signed it to afford his plane ticket for his repatriation.

On the other hand, G PGS maintains that Dagasdas was fully aware that he applied for and was accepted as
Network Technician. It also stresses that it was Dagasdas himself who decided to accept from ITM a new job
offer when he arrived in Saudi Arabia. It further declares that Dagasdas' quitclaim is valid as there is no
showing that he was compelled to sign it.

Issue

Was Dagasdas validly dismissed from work?

Our Ruling

The Petition is with merit.

As a rule, only questions of law may be raised in a petition under Rule 45 of the Rules of Court. However, this
rule allows certain exceptions, including a situation where the findings of fact of the courts or tribunals below
are conflicting.35 In this case, the CA and the NLRC arrived at divergent factual findings anent Dagasdas'
termination. As such, the Court deems it necessary to re-examine these findings and detemline whether the CA
has sufficient basis to annul the NLRC Decision, and set aside its finding that Dagasdas was illegally dismissed
from work.

Moreover, it is well-settled that employers have the prerogative to impose standards on the work quantity and
quality of their employees and provide measures to ensure compliance therewith. Non-compliance with work
standards may thus be a valid cause for dismissing an employee. Nonetheless, to ensure that employers will
not abuse their prerogatives, the same is tempered by security of tenure whereby the employees are
guaranteed substantive and procedural due process before they are dismissed from work. 36

Security of tenure remains even if employees, particularly the overseas Filipino workers (OFW), work in a
different jurisdiction. Since the employment contracts of OFWs are perfected in the Philippines, and following
the principle of lex loci contractus (the law of the place where the contract is made), these contracts are
governed by our laws, prin1arily the Labor Code of the Philippines and its implementing rules and
regulations.37 At the same time, our laws generally apply even to employment contracts of OFWs as our
Constitution explicitly provides that the State shall afford full protection to labor, whether local or
overseas.38 Thus, even if a Filipino is employed abroad, he or she is entitled to security of tenure, among other
constitutional rights.39

In this case, prior to his deployment and while still in the Philippines, Dagasdas was made to sign a POEA-
approved contract with GPGS, on behalf of ITM; and, upon arrival in Saudi Arabia, ITM made him sign a new
employment contract. Nonetheless, this new contract, which was used as basis for dismissing Dagasdas, is
void.

First, Dagasdas' new contract is in clear violation of his right to security of tenure.

Under the Labor Code of the Philippines the following are the just causes for dismissing an employee:

ARTICLE 297. [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;

153
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized
representative;

(d) Commission of a crime or offense by the employee against the person of his employer or any immediate
member of his family or his duly authorized representative; and

(e) Other causes analogous to the foregoing.40

However, per the notice of termination given to Dagasdas, ITM terminated him for violating clause 17.4.3 of his
new contract, viz.:

17.4 The Company reserves the right to terminate this agreement without serving any notice to the Consultant
in the following cases:

xxxx

17.4.3 If the Consultant is terminated by company or its client within the probation period of 3 months.41

Based on the foregoing, there is no clear justification for the dismissal of Dagasdas other than the exercise of
ITM's right to terminate him within the probationary period. While our Civil Code recognizes that parties may
stipulate in their contracts such terms and conditions as they may deem convenient, these terms and
conditions must not be contrary to law, morals, good customs, public order or policy.42 The above-cited clause
is contrary to law because as discussed, our Constitution guarantees that employees, local or overseas, are
entitled to security of tenure. To allow employers to reserve a right to terminate employees without cause is
violative of this guarantee of security of tenure.

Moreover, even assuming that Dagasdas was still a probationary employee when he was terminated, his
dismissal must still be with a valid cause. As regards a probationary employee, his or her dismissal may be
allowed only if there is just cause or such reason to conclude that the employee fails to qualify as regular
employee pursuant to reasonable standards made known to the employee at the time of engagement.43

Here, ITM failed to prove that it informed Dagasdas of any predetermined

standards from which his work will be gauged.44 In the contract he signed while still in the Philippines,
Dagsadas was employed as Network Technician; on the other hand, his new contract indicated that he was
employed as Superintendent. However, no job description - or such duties and responsibilities attached to
either position - was adduced in evidence. It thus means that the job for which Dagasdas was hired was not
definite from the beginning.

Indeed, Dagasdas was not sufficiently informed of the work standards for which his performance will be
measured. Even his position based on the job title given him was not fully explained by his employer. Simply
put, ITM failed to show that it set and communicated work standards for Dagasdas to follow, and on which his
efficiency (or the lack thereof) may be determined.

Second, the new contract was not shown to have been processed through the POEA. Under our Labor Code,
employers hiring OFWs may only do so through entities authorized by the Secretary of the Department of
Labor and Employment.45 Unless the employment contract of an OFW is processed through the POEA, the
same does not bind the concerned OFW because if the contract is not reviewed by the POEA, certainly the
State has no means of determining the suitability of foreign laws to our overseas workers. 46

This new contract also breached Dagasdas' original contract as it was entered into even before the expiration
of the original contract approved by the POEA. Therefore, it cannot supersede the original contract; its terms
and conditions, including reserving in favor of the employer the right to terminate an employee without notice
during the probationary period, are void.47

Third, under this new contract, Dagasdas was not afforded procedural due process when he was dismissed
from work.

As cited above, a valid dismissal requires substantive and procedural due process. As regards the latter, the
employer must give the concerned employee at least two notices before his or her tem1ination. Specifically, the
employer must inform the employee of the cause or causes for his or her termination, and thereafter, the
employer's decision to dismiss him. Aside from the notice requirement, the employee must be accorded the
opportunity to be heard.48

Here, no prior notice of purported infraction, and such opportunity to explain on any accusation against him was
given to Dagasdas. He was simply given a notice of termination. In fact, it appears that ITM intended not to
1âw phi 1

comply with the twin notice requirement. As above-quoted, under the new contract, ITM reserved in its favor

154
the right to terminate the contract without serving any notice to Dagasdas in specified cases, which included
such situation where the employer decides to dismiss the employee within the probationary period. Without
doubt, ITM violated the due process requirement in dismissing an employee.

Lastly, while it is shown that Dagasdas executed a waiver in favor of his employer, the same does not preclude
him from filing this suit.

Generally, the employee's waiver or quitclaim cannot prevent the employee from demanding benefits to which
he or she is entitled, and from filing an illegal dismissal case. This is because waiver or quitclaim is looked
upon with disfavor, and is frowned upon for being contrary to public policy. Unless it can be established that the
person executing the waiver voluntarily did so, with full understanding of its contents, and with reasonable and
credible consideration, the same is not a valid and binding undertaking. Moreover, the burden to prove that the
waiver or quitclaim was voluntarily executed is with the employer.49

In this case, however, neither did GPGS nor its principal, ITM, successfully discharged its burden. GPGS
and/or ITM failed to show that Dagasdas indeed voluntarily waived his claims against the employer.

Indeed, even if Dagasdas signed a quitclaim, it does not necessarily follow that he freely and voluntarily agreed
to waive all his claims against his employer. Besides, there was no reasonable consideration stipulated in said
1âw phi 1

quitclaim considering that it only determined the actual payment due to Dagasdas from February 11, 2008 to
April 30, 2008. Verily, this quitclaim, under the semblance of a final settlement, cannot absolve GPGS nor ITM
from liability arising from the employment contract of Dagasdas.50

All told, the dismissal of Dagasdas was without any valid cause and due process of law. Hence, the NLRC
properly ruled that Dagasdas was illegally dismissed. Evidently, it was an error on the part of the CA to hold
that the NLRC committed grave abuse of discretion amounting to lack or excess of jurisdiction when the NLRC
ruled for Dagasdas.

WHEREFORE, the Petition is GRANTED. The Decision dated September 26, 2012 and Resolution dated
January 28, 2013 of the Court of Appeals in CA-G.R. SP No. 115396 are REVERSED and SET
ASIDE. Accordingly, the March 29, 2010 and June 2, 2010 Resolutions of the National Labor Relations
Commission in NLRC LAC OFW-L-02-000071-10 are REINSTATED.

SO ORDERED.

ii. Employment contract 
 i. Lex loci contractus 


1. Dagasdas vs. Grand Placement and General Services Corporation, G.R. No. 205727, January 18,
2017

(ibid.)

G.R. No. 205727

RUTCHER T. DAGASDAS, Petitioner,

vs.
GRAND PLACEMENT AND GENERAL SERVICES CORPORATION, Respondent.

DECISION

DEL CASTILLO, J.:

Before us is a Petition for Review on Certiorari assailing the September 26, 2012 Decision1 of the Court of
Appeals (CA) in CA-G.R. SP No. 115396, which annulled and set aside the March 29, 20102 and June 2,
20103 Resolutions of the National Labor Relations Commission (NLRC) in NLRC LAC OFW-L-02-000071-10,
and concomitantly reinstated the November 27, 2009 Decision4 of the Labor Arbiter (LA) dismissing the
Complaint for lack of merit.

Also challenged is the January 28, 2013 Resolution5 denying the Motion for Reconsideration filed by Rutcher T.
Dagasdas (Dagasdas ).

Factual Antecedents

155
Grand Placement and General Services Corp. (GPGS) is a licensed

recruitment or placement agency in the Philippines while Saudi Aramco (Aramco) is its counterpart in Saudi
Arabia. On the other hand, Industrial & Management Technology Methods Co. Ltd. (ITM) is the principal of
GPGS, a company existing in Saudi Arabia. 6

In November 2007, GPGS, for and on behalf of ITM, employed Dagasdas as Network Technician. He was to
be deployed in Saudi Arabia under a one-year contract7 with a monthly salary of Saudi Riyal (SR) 5,112.00.
Before leaving the Philippines, Dagasdas underwent skill training8 and pre-departure orientation as Network
Technician.9Nonetheless, his Job Offer10 indicated that he was accepted by Aramco and ITM for the position of
"Supt."

Dagasdas contended that although his position under his contract was as a Network Technician, he actually
applied for and was engaged as a Civil Engineer considering that his transcript of records, 11 diploma 12 as well
as his curriculum vitae 13 showed that he had a degree in Civil Engineering, and his work experiences were all
related to this field. Purportedly9 the position of Network Technician was only for the purpose of securing a visa
for Saudi Arabia because ITM could not support visa application for Civil Engineers. 14

On February 8, 2008, Dagasdas arrived in Saudi Arabia.15 Thereafter, he signed with ITM a new employment
contract16 which stipulated that the latter contracted him as Superintendent or in any capacity within the scope
of his abilities with salary of SR5,112.00 and allowance of SR2,045.00 per month. Under this contract,
Dagasdas shall be placed under a three-month probationary period; and, this new contract shall cancel all
contracts prior to its date from any source.

On February 11, 2008, Dagasdas reported at ITM's worksite in Khurais, Saudi Arabia. 17 There, he was
allegedly given tasks suited for a Mechanical Engineer, which were foreign to the job he applied for and to his
work experience. Seeing that he would not be able to perform well in his work, Dagasdas raised his conce1n to
his Supervisor in the Mechanical Engineering Department. Consequently, he was transferred to the Civil
Engineering Department, was temporarily given a position as Civil Construction Engineer, and was issued
anidentification card good for one month. Dagasdas averred that on March 9, 2008, he was directed to exit the
worksite but Rashid H. Siddiqui (Siddiqui), the Site Coordinator Manager, advised him to remain in the
premises, and promised to secure him the position he applied for. However, before Dagasdas' case was
investigated, Siddiqui had severed his employment with ITM. 18

In April 2008, Dagasdas returned to Al-Khobar and stayed at the ITM Office.19 Later, 11M gave him a
termination notice20 indicating that his last day of work was on April 30, 2008, and he was dismissed pursuant to
clause 17.4.3 of his contract, which provided that ITM reserved the right to terminate any employee within the
three-month probationary period without need of any notice to the employee. 21

Before his repatriation, Dagasdas signed a Statement of Quitclaim22 with Final Settlement23 stating that ITM paid
him all the salaries and benefits for his services from February 11, 2008 to April 30, 2008 in the total amow1t of
SR7,156.80, and ITM was relieved from all financial obligations due to Dagasdas.

On June 24, 2008, Dagasdas returned to the Philippines.24 Thereafter, he filed an illegal dismissal case against
GPGS, ITM, and Aramco.

Dagasdas accused GPGS, ITM, and Aramco of misrepresentation, which resulted in the mismatch in the work
assigned to him. He contended that such claim was supported by exchanges of electronic mail (e-mail)
establishing that GPGS, ITM, and Aramco were aware of the job 1nismatch that had befallen him. 25 He also
argued that although he was engaged as a project employee, he was still entitled to security of tenure for the
duration of his contract. He maintained that GPGS, ITM, and Aramco merely invented "imaginary cause/s" to
terminate him. Thus, he claimed that he was dismissed without cause and due process of law. 26

GPGS, ITM, and Aramco countered that Dagasdas was legally dismissed. They explained that Dagasdas was
aware that he was employed as Network Technician but he could not perform his work in accordance with the
standards of his employer. They added that Dagasdas was informed of his poor performance, and he
conformed to his termination as evidenced by his quitclaim. 27 They also stressed that Dagasdas was only a
probationary employee since he worked for ITM for less than three months.28

Ruling of the Labor Arbiter

On November 27, 2009, the LA dismissed the case for lack of merit. The LA pointed out that when Dagasdas
signed his new employment contract in Saudi Arabia, he accepted its stipulations, including the fact that he had
to undergo probationary status. She declared that this new contract was more advantageous for Dagasdas as
his position was upgraded to that of a Superintendent, and he was likewise given an allowance ofSR2,045.00
aside from his salary of SR5,112.00 per month. According to the LA, for being more favorable, this new
contract was not prohibited by law. She also decreed that Dagasdas fell short of the expected work
performance; as such, his employer dismissed him as part of its management prerogative.

156
Consequently, Dagasdas appealed to the NLRC.

Ruling of the National Labor Relations Commission

On March 29, 2010, the NLRC issued a Resolution finding Dagasdas' dismissal illegal. The decretal portion of
the NLRC Resolution reads:

WHEREFORE, the decision appealed from is hereby REVERSED, and the respondent[s] are hereby ordered
to pay the complainant the salaries corresponding to the unexpired p01tion of his contract amounting to
SR46,008 (SR5112 x 9 months, or from May 1, 2008 to January 31, 2009), plus ten percent (10%) thereof as
attorney's foes. The respondents are jointly and severally liable for the judgment awards, which are payable in
Philippine currency converted on the basis of the exchange rate prevailing at the time of actual payment.

SO ORDERED.29

The NLRC stated that Dagasdas, who was a Civil Engineering graduate, was "recruited on paper" by GPGS as
Network Technician but the real understanding between the parties was to hire him as Superintendent. It held
that GPGS erroneously recruited Dagasdas, and failed to inform him that he was hired as a "Mechanical
Superintendent" meant for a Mechanical Engineer. It declared that while ITM has the prerogative to continue
the employment of individuals only if they were qualified, Dagasdas' dismissal amounted to illegal termination
since the mismatch between his qualifications and the job given him was no fault of his.

The NLRC added that Dagasdas should not be made to suffer the consequences of the miscommunication
between GPGS and ITM considering that the government obligates employment agencies recruiting Filipinos
for overseas work to "select only medically and technically qualified recruits."30

On June 2, 2010, the NLRC denied the Motion for Reconsideration of its Resolution dated March 29, 2010.

Undeterred, GPGS filed a Petition for Certiorari with the CA ascribing grave abuse of discretion on the part of
the NLRC in ruling that Dagasdas was illegally dismissed.

Ruling of the Court of Appeals

On September 26, 2012, the CA set aside the NLRC Resolutions and reinstated the LA Decision dismissing the
case for lack of merit.

The CA could not accede to the conclusion that the real agreement between the parties was to employ
Dagasdas as Superintendent. It stressed that Dagasdas left the Philippines pursuant to his employment
contract indicating that he was to work as a Network Technician; when he arrived in Saudi Arabia and signed a
new contract for the position of a Superintendent, the agreement was with no participation of GPGS, and said
new contract was only between Dagasdas and ITM. It emphasized that after commencing work as
Superintendent, Dagasdas realized that he could not perform his tasks, and "[s]eemingly, it was [Dagasdas]
himself who voluntarily withdrew from his assigned work for lack of competence." 31 It faulted the NLRC for
falling to consider that Dagasdas backed out as Superintendent on the excuse that the same required the skills
of a Mechanical Engineer.

In holding that Dagasdas' dismissal was legal, the CA gave credence to Dagasdas' Statement of Quitclaim and
Final Settlement. It ruled that for having voluntarily accepted money from his employer, Dagasdas accepted his
termination and released his employer from future financial obligations arising from his past employment with it.

On January 28, 2013, the CA denied Dagasdas' Motion for Reconsideration.

Hence, Dagasdas filed this Petition raising these grounds:

[1] THE HONORABLE COURT OF APPEALS COMMITIED A REVERSIBLE ERROR WHEN TT Rt.
VERSED THE FACTUAL FINDINGS OF THE NATIONAL LABOR RELATION’S COMMISSION. 32

[2] THE HONORABLE COURT OF APPEALS PATENTLY ERRED WITH ITS FINDINGS THAT THE
CONTRACT SIGNED BY DAGASDAS IN ALKHOBAR IS MORE ADVANTAGEOUS TO THE LATTER
AND THAT IT WAS [H]IS PERSONAL ACT OR DECISION [TO SIGN] THE SAME. 33

[3] THE HONORABLE COURT OF APPEALS ALSO GRAVELY ERRED IN FAULTING THE NLRC
FOR ITS FAILURE TO INVALIDATE OR DISCUSS THE FINAL SETTLEMENT AND STATEMENT OF
QUITCLAIM SIGNED BY [DAGASDAS].34

Dagasdas reiterates that he was only recruited "on paper" as a Network Technician but the real agreement
between him and his employer was to engage him as Superintendent in t'1e field of Civil Engineering, he being

157
a Civil Engineering graduate with vast experience in said field. He stresses that he was terminated because of
a "discipline mismatch" as his employer actually needed a Mechanical (Engineer) Superintendent, not a Civil
Engineer.

In addition, Dagasdas insists that he did not voluntarily back out from his work. If not for the discipline
mismatch, he could have performed his job as was expected of him. He also denies that the new employment
contract he signed while in Saudi Arabia was more advant1geous to him since the basic salary and allowance
stipulated therein are just the same with that in his Job Offer. He argues that the new contract was even
disadvantageous because it was inserted therein that he still had to undergo probationary status for three
months.

Finally, Dagasdas contends that the new contract he signed while in Saudi Arabia was void because it was not
approved by the Philippine Overseas Employment Administration (POEA). He also claims that CA should have
closely examined his quitclaim because he only signed it to afford his plane ticket for his repatriation.

On the other hand, G PGS maintains that Dagasdas was fully aware that he applied for and was accepted as
Network Technician. It also stresses that it was Dagasdas himself who decided to accept from ITM a new job
offer when he arrived in Saudi Arabia. It further declares that Dagasdas' quitclaim is valid as there is no
showing that he was compelled to sign it.

Issue

Was Dagasdas validly dismissed from work?

Our Ruling

The Petition is with merit.

As a rule, only questions of law may be raised in a petition under Rule 45 of the Rules of Court. However, this
rule allows certain exceptions, including a situation where the findings of fact of the courts or tribunals below
are conflicting.35 In this case, the CA and the NLRC arrived at divergent factual findings anent Dagasdas'
termination. As such, the Court deems it necessary to re-examine these findings and detemline whether the CA
has sufficient basis to annul the NLRC Decision, and set aside its finding that Dagasdas was illegally dismissed
from work.

Moreover, it is well-settled that employers have the prerogative to impose standards on the work quantity and
quality of their employees and provide measures to ensure compliance therewith. Non-compliance with work
standards may thus be a valid cause for dismissing an employee. Nonetheless, to ensure that employers will
not abuse their prerogatives, the same is tempered by security of tenure whereby the employees are
guaranteed substantive and procedural due process before they are dismissed from work. 36

Security of tenure remains even if employees, particularly the overseas Filipino workers (OFW), work in a
different jurisdiction. Since the employment contracts of OFWs are perfected in the Philippines, and following
the principle of lex loci contractus (the law of the place where the contract is made), these contracts are
governed by our laws, prin1arily the Labor Code of the Philippines and its implementing rules and
regulations.37 At the same time, our laws generally apply even to employment contracts of OFWs as our
Constitution explicitly provides that the State shall afford full protection to labor, whether local or
overseas.38 Thus, even if a Filipino is employed abroad, he or she is entitled to security of tenure, among other
constitutional rights.39

In this case, prior to his deployment and while still in the Philippines, Dagasdas was made to sign a POEA-
approved contract with GPGS, on behalf of ITM; and, upon arrival in Saudi Arabia, ITM made him sign a new
employment contract. Nonetheless, this new contract, which was used as basis for dismissing Dagasdas, is
void.

First, Dagasdas' new contract is in clear violation of his right to security of tenure.

Under the Labor Code of the Philippines the following are the just causes for dismissing an employee:

ARTICLE 297. [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;

158
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized
representative;

(d) Commission of a crime or offense by the employee against the person of his employer or any immediate
member of his family or his duly authorized representative; and

(e) Other causes analogous to the foregoing.40

However, per the notice of termination given to Dagasdas, ITM terminated him for violating clause 17.4.3 of his
new contract, viz.:

17.4 The Company reserves the right to terminate this agreement without serving any notice to the Consultant
in the following cases:

xxxx

17.4.3 If the Consultant is terminated by company or its client within the probation period of 3 months.41

Based on the foregoing, there is no clear justification for the dismissal of Dagasdas other than the exercise of
ITM's right to terminate him within the probationary period. While our Civil Code recognizes that parties may
stipulate in their contracts such terms and conditions as they may deem convenient, these terms and
conditions must not be contrary to law, morals, good customs, public order or policy.42 The above-cited clause
is contrary to law because as discussed, our Constitution guarantees that employees, local or overseas, are
entitled to security of tenure. To allow employers to reserve a right to terminate employees without cause is
violative of this guarantee of security of tenure.

Moreover, even assuming that Dagasdas was still a probationary employee when he was terminated, his
dismissal must still be with a valid cause. As regards a probationary employee, his or her dismissal may be
allowed only if there is just cause or such reason to conclude that the employee fails to qualify as regular
employee pursuant to reasonable standards made known to the employee at the time of engagement.43

Here, ITM failed to prove that it informed Dagasdas of any predetermined

standards from which his work will be gauged.44 In the contract he signed while still in the Philippines,
Dagsadas was employed as Network Technician; on the other hand, his new contract indicated that he was
employed as Superintendent. However, no job description - or such duties and responsibilities attached to
either position - was adduced in evidence. It thus means that the job for which Dagasdas was hired was not
definite from the beginning.

Indeed, Dagasdas was not sufficiently informed of the work standards for which his performance will be
measured. Even his position based on the job title given him was not fully explained by his employer. Simply
put, ITM failed to show that it set and communicated work standards for Dagasdas to follow, and on which his
efficiency (or the lack thereof) may be determined.

Second, the new contract was not shown to have been processed through the POEA. Under our Labor Code,
employers hiring OFWs may only do so through entities authorized by the Secretary of the Department of
Labor and Employment.45 Unless the employment contract of an OFW is processed through the POEA, the
same does not bind the concerned OFW because if the contract is not reviewed by the POEA, certainly the
State has no means of determining the suitability of foreign laws to our overseas workers. 46

This new contract also breached Dagasdas' original contract as it was entered into even before the expiration
of the original contract approved by the POEA. Therefore, it cannot supersede the original contract; its terms
and conditions, including reserving in favor of the employer the right to terminate an employee without notice
during the probationary period, are void.47

Third, under this new contract, Dagasdas was not afforded procedural due process when he was dismissed
from work.

As cited above, a valid dismissal requires substantive and procedural due process. As regards the latter, the
employer must give the concerned employee at least two notices before his or her tem1ination. Specifically, the
employer must inform the employee of the cause or causes for his or her termination, and thereafter, the
employer's decision to dismiss him. Aside from the notice requirement, the employee must be accorded the
opportunity to be heard.48

Here, no prior notice of purported infraction, and such opportunity to explain on any accusation against him was
given to Dagasdas. He was simply given a notice of termination. In fact, it appears that ITM intended not to
1âw phi 1

comply with the twin notice requirement. As above-quoted, under the new contract, ITM reserved in its favor

159
the right to terminate the contract without serving any notice to Dagasdas in specified cases, which included
such situation where the employer decides to dismiss the employee within the probationary period. Without
doubt, ITM violated the due process requirement in dismissing an employee.

Lastly, while it is shown that Dagasdas executed a waiver in favor of his employer, the same does not preclude
him from filing this suit.

Generally, the employee's waiver or quitclaim cannot prevent the employee from demanding benefits to which
he or she is entitled, and from filing an illegal dismissal case. This is because waiver or quitclaim is looked
upon with disfavor, and is frowned upon for being contrary to public policy. Unless it can be established that the
person executing the waiver voluntarily did so, with full understanding of its contents, and with reasonable and
credible consideration, the same is not a valid and binding undertaking. Moreover, the burden to prove that the
waiver or quitclaim was voluntarily executed is with the employer.49

In this case, however, neither did GPGS nor its principal, ITM, successfully discharged its burden. GPGS
and/or ITM failed to show that Dagasdas indeed voluntarily waived his claims against the employer.

Indeed, even if Dagasdas signed a quitclaim, it does not necessarily follow that he freely and voluntarily agreed
to waive all his claims against his employer. Besides, there was no reasonable consideration stipulated in said
1âw phi 1

quitclaim considering that it only determined the actual payment due to Dagasdas from February 11, 2008 to
April 30, 2008. Verily, this quitclaim, under the semblance of a final settlement, cannot absolve GPGS nor ITM
from liability arising from the employment contract of Dagasdas.50

All told, the dismissal of Dagasdas was without any valid cause and due process of law. Hence, the NLRC
properly ruled that Dagasdas was illegally dismissed. Evidently, it was an error on the part of the CA to hold
that the NLRC committed grave abuse of discretion amounting to lack or excess of jurisdiction when the NLRC
ruled for Dagasdas.

WHEREFORE, the Petition is GRANTED. The Decision dated September 26, 2012 and Resolution dated
January 28, 2013 of the Court of Appeals in CA-G.R. SP No. 115396 are REVERSED and SET
ASIDE. Accordingly, the March 29, 2010 and June 2, 2010 Resolutions of the National Labor Relations
Commission in NLRC LAC OFW-L-02-000071-10 are REINSTATED.

SO ORDERED.

iii. Allegation of "forced to sign" 


1. Philippine National Bank vs. Dalmacio/ Dalmacio vs. Philippine National Bank, G.R. No. 202308/G.R.

 No. 202357, July 5, 2017



July 5, 2017

G.R. No. 202308

PHILIPPINE NATIONAL BANK, Petitioner

vs.
JUMELITO T. DALMACIO, Respondent

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

G.R. No. 202357

JUMELITO T. DALMACIO, Petitioner,

vs.
PHILIPPINE NATIONAL BANK and/or MS. CYNTHIA JAVIER, Respondents.

DECISION

TIJAM, J.:

Assailed in these consolidated Petitions for Review on Certiorari is the Decision1 dated September 21, 2011 of
the Court of Appeals (CA), in CA-G.R. SP. No. 115493. The CA Decision affirmed in part the National Labor
Relations Commission's (NLRC) March 30, 2010 Resolution,2 which in turn affirmed the Labor Arbiter's (LA)
June 30, 2009 Decision3 finding that the Philippine National Bank (PNB) effected a valid redundancy program.

160
The case stemmed from a complaint for illegal dismissal, underpayment of separation pay and retirement
benefits, illegal deduction, nonpayment of provident fund with prayer for damages and attorney's fees filed by
Jumelito T. Dalmacio (Dalmacio) and Emma R. Martinez (Martinez)4 as a result of their separation from PNB
way back September 15, 2005 due to PNB's implemention of its redundancy program. Dalmacio and · Martinez
were hired as utility worker and communication equipment operator, respectively, by the National Service
Corporation, a subsidiary of PNB. Years later, Dalmacio became an Information Technology (IT) officer of PNB,
while Martinez became a Junior IT Field Analyst.

In her June 30, 2009 Decision,5 LA Romelita N. Rioflorido ruled that PNB complied with the law and
jurisprudence in terminating the services of the complainants on the ground of redundancy.

On appeal, the NLRC, in its March 30, 2010 Resolution,6 affirmed the LA's Decision, and ruled that there is no
showing of bad faith on PNB's part in undertaking the redundancy program.

Dalmacio and Martinez's Motion for Reconsideration having been denied by the NLRC, Dalmacio filed a
Petition for Certiorari with the CA.

In its September 21, 2011 Decision,7 the CA affirmed in part the · March 30, 2010 Resolution of the NLRC, and
ruled, among others, that, "principles of justice and fair play call for the modification of the separation package
already received by herein petitioner. x x x the subtraction of the GSIS Gratuity Pay is inappropriate, therefore
the same should be returned to the petitioner."

Aggrieved, both parties appealed the Decision of the CA.

In his appeal,8 Dalmacio argues that: the CA erred in (1) upholding the validity of PNB's redundancy program;
(2) failing to rule that PNB's computation of his separation pay is erroneous; and, (3) ruling that the Deed of
Quitclaim and Release which he signed militates against his reinstatement.

For its part, PNB argues that:9 (1) The CA. erred in the exercise of its equity jurisdiction despite the clear and
limited scope of its jurisdiction in a special civil action of certiorari; and, (2) it was baseless for the CA to order
the return to Dalmacio of his GSIS Gratuity Pay.

Both Petitions are denied.

Essentially, the issues to be resolved in this case are: (1) Whether or not PNB validly implemented its
redundancy program; and, (2) Whether or not the CA correctly ordered PNB to return Dalmacio's GSIS Gratuity
Pay.

This Court resolves only questions of law; it does not try facts or examine testimonial or documentary evidence
on record.10 We may have at times opted for the relaxation of the application of procedural rules, but we have
resorted to this option only under exceptional circumstances.11 This Court, however, finds no justification to
warrant the application of any exception to the general rule in this case.

It bears stressing that the LA, the NLRC, and the CA, all ruled that PNB validly effected its redundancy
program. The CA held that:

[A]s aptly found by the labor tribunals, the redundancy program was an exercise of a sound business judgment
which We ought to respect and is beyond the ambit of Our review powers absent any showing that it is violative
of the Labor Code provisions or the general principles of fair play andjustice.12

Such being the case, factual findings of quasi-judicial bodies like the NLRC, particularly when they coincide
with those of the LA and, if supported by substantial evidence, are accorded respect and even finality by this
Court.13Thus, absent a showing of an error of law committed by the court or tribunal below, or of a whimsical or
capricious exercise of judgment, or a demonstrable lack of basis for its conclusions, this Court may not disturb
its factual findings.

However, at the risk of being repetitive, We make short shrift of Dalmacio's insistence that PNB's redundancy
program was not valid. We cannot subscribe to his claim that PNB did not apply fair and reasonable criteria in
concluding that Dalmacio's position had become redundant.

One of the authorized causes14 for the dismissal of an employee is redundancy.15 It exists when the service
capability of the workforce is in excess of what is reasonably needed to meet the demands of the business
enterprise.16 A position is redundant when it is superfluous, and superfluity of a position or positions could be
the result of a number of factors, such as the overhiring of workers, a decrease in the volume of business or the
dropping of a particular line or service previously manufactured or undertaken by the enterprise. 17 Time and
again, it has been ruled that an employer has no legal obligation to keep more employees than are necessary
for the operation of its business.18 For the implementation of a redundancy program to be valid, however, the
employer must comply with the following requisites: (1) written notice served on both the employees and the

161
Department of Labor and Employment (DOLE) at least one month prior to the intended date of termination of
employment; (2) payment of separation pay equivalent to at least one month pay for every year of service;
(3) good faith in abolishing the redundant positions; and (4) fair and reasonable criteria in ascertaining
what positions are to be declared redundant and accordingly abolished,19 taking into consideration such
factors as (a) preferred status; (b) efficiency; and (c) seniority, among others.20

In the case at bar, PNB was upfront with its employees about its plan to implement its redundancy program.
The LA correctly observed that:

[I]t is undisputed that the outsourcing of the service and maintenance of the Bank's computer hardware and
equipment to Technopaq, Inc. was devised and/or implemented after consultation with the affected employees
in the presence of their union officers between July 29 and August 5, 2005.21

This was echoed by the NLRC, thus:

Respondents were able to show substantial proof that it underwent redundancy program and that complainants
herein voluntarily accepted the Special Redundancy Package offered by respondent bank to its employees. In
fact, they were officially notified of the management's decision to terminate their employment as early as
August 15, 2005 x x x; and Complainants and their union officers were even consulted of the respondent's
decision to terminate its employees on [the] ground of redundancy between July 29 and August 5, 2005.
Complainants agreed and accepted the decision. x x x.22

Even the CA intoned that:

Even after he ceased working with private respondent PNB, petitioner was not left jobless as he readily
accepted a job offer with Technopaq who employed him for three years. Only after he ceased working with
Technopaq that he conveniently filed a case for illegal dismissal against PNB claiming other monetary benefits
allegedly due him and after receiving substantial amount of separation pay. Hence this Court suspects the
timing and intention of petitioner in filing the complaint for illegal dismissal. 23

Likewise, PNB's redundancy program was neither unfair nor unreasonable considering that it was within the
ambit of its management prerogative. As the CA observed:

PNB's action is within the ambit of "management prerogative" to upgrade and enhance the computer system of
the bank. Petitioner, being an IT officer whose job is to maintain the computer system of PNB, his position has
become patently redundant upon PNB's engagement of the contract service with Technopaq. x x x he was
appositely informed of PNB's move to contract the services of Technopaq and as a result thereof, there were
positions that were declared redundant including that of herein petitioner. x x x PNB conducted series of
meetings with herein petitioner and other affected employees to purposely look for placement of the displaced
employees to other positions suited for them. Finding no other alternative, PNB was constrained to terminate
herein petitioner who thereafter posed no objection thereto, consented to and willingly received the hefty
separation pay given to him. Moreover, records have it that PNB faithfully complied with the legal procedures
provided under Article 283 of the Labor Code as evidenced by the individual notices of termination served and
received by the petitioner as well as the Establishment Termination Report filed by PNB with the Department of
Labor.x x x.24

These factual findings evidently rule out Dalmacio's claim that PNB's redundancy program was unfair and
unreasonable and that PNB acted in bad faith in the implementation of the same.

Likewise, records show that PNB complied with the procedural requirements. PNB served Dalmacio and
Martinez Notices of Termination dated August 15, 2005, informing them that their termination due to
redundancy shall be effective September 15, 2005. PNB also filed an Establishment Termination Report dated
August 16, 2005 with the Regional Office of the DOLE, in order to report complainants' termination.

Contrary to Dalmacio's claim, the CA did not err in ruling that the Deed of Quitclaim and Release he signed
militates against his reinstatement.1âw phi1

Generally, deeds of release, waiver or· quitclaims cannot bar employees from demanding benefits to which
they are legally entitled or from contesting the legality of their dismissal since quitclaims are looked upon with
disfavor and are frowned upon as contrary to public policy.25 Where, however, the person making the waiver
has done so voluntarily, with a full understanding thereof, and the consideration for the quitclaim is credible and
reasonable, the transaction must be recognized as being a valid and binding undertaking.26

The requisites for a valid quitclaim are: (1) that there was no fraud or deceit on the part of any of the parties; (2)
that the consideration for the quitclaim is credible and reasonable; and (3) that the contract is not contrary to
law, public order, public policy, morals or good customs or prejudicial to a third person with a right recognized
by law.27

162
Not having sufficiently proved that he was forced to sign said Deed of Quitclaim and Release, Dalmacio cannot
expediently argue that quitclaims are looked upon with disfavor and considered ineffective to bar claims for the
full measure of a worker's legal rights. Indeed, it cannot even be said that Dalmacio did not fully understand the
consequences of signing the Deed of Quitclaim and Release. He is not an illiterate person who needs special
protection. He held a responsible position at PNB as an IT officer. It is thus safe to say that he understood the
contents of the Deed of Quitclaim and Release. There is also no showing that the execution thereof was tainted
with deceit or coercion. Although he claims that he was "forced to sign"28 the quitclaim, he nonetheless signed
it. In doing so, Dalmacio was compelled by his own personal circumstances, not by an act attributable to PNB.

Having settled the foregoing, this Court shall now address the issue on Dalmacio's GSIS Gratuity Pay.

A cursory reading of PNB's computation as regards Dalmacio's separation package appearing in its Petition
would clearly show that, indeed, his GSIS Gratuity Pay has been deducted from· his separation pay. This
should not be countenanced.

As correctly pointed out by the CA:

[U]nder the GSIS law, a government employee is required to take off a small part of his income and remit the
same to the GSIS as his monthly contributions. Considering such mandatory deductions, it is but fitting that
such gratuity pay is deemed separate and distinct from his separation package and should not be deducted
therefrom. x x x.29

Clearly, Dalmacio is entitled to his GSIS ·Gratuity Pay. Contrary to PNB's assertion, giving Dalmacio what is
due him under the law is not unjust enrichment.30

The inflexible rule in our jurisdiction is that social legislation must be liberally construed in favor of the
beneficiaries.31 Retirement laws, in particular, are liberally construed in favor of the retiree because their
objective is to provide for the retiree's sustenance and, hopefully, even comfort, when he no longer has the
capability to earn a livelihood.32 The liberal approach aims to achieve the humanitarian purposes of the law in
order that efficiency, security, and well-being of government employees may be enhanced.33 Indeed, retirement
laws are liberally construed and administered in favor of the persons intended to be benefited, and all doubts
are resolved in favor of the retiree to achieve their humanitarian purpose.34

WHEREFORE, the petitions are DENIED. The September 21, 2011 Decision of the Court of Appeals in CA-
G.R. SP. No. 115493, is AFFIRMED in toto.

SO ORDERED.

ii. Finality of decision for failure to appeal 


1. Javines vs. Xlibris a.k.a. Author Solutions, Inc., G.R. No. 214301, June 7, 2017 


June 1, 2017

G.R. No. 214301

RAMON MANUEL T. JAVINES, Petitioner

vs.
XLIBRIS a.k.a. AUTHOR SOLUTIONS, INC., JOSEPH STEINBACH, and STELLA MARS OUANO,,
Respondents

DECISION

TIJAM, J.:

Challenged in this Petition for Review 1 under Rule 45 are the Decision 2 dated June 26, 2014 and
Resolution 3dated August 28, 2014 of the Court of Appeals 4 (CA) in CA G.R. SP No. 08126, which affirmed the
decision of the National Labor Relations Commission (NLRC) of Cebu City holding that petitioner Ramon T.
Javines (Javines) had been dismissed with just cause but lacked compliance with procedural due process. For
lack of procedural due process, the CA modified the NLRC's award of nominal damages from PhP l0,000 to
PhP l,000 .

The facts of the instant case are simple and undisputed:

Javines was hired by respondent Xlibris as Operations Manager on September 1, 2011. Approximately 10
months after, or on July 27, 2012, J a vines was terminated for falsifying/tampering three meal receipts.

163
The falsification was discovered on July 5, 2012 when Javines submitted the meal receipts for reimbursement
to the finance department. Prompted by said discovery, the company's Finance Officer prepared an incident
report on the same day.

Consequently, a Notice to Explain was issued on July 6, 2012 to Javines for alleged violation of Sections 9.5
and 9.6 of the Employee's Code of Conduct and charging him with acts constituting dishonesty. 5 Xlibris
obtained certified copies of the meal receipts from the fast food chains concerned and Javines was notified that
the following receipts were tampered:

a. Franckfort, Inc. (KFC) O.R. No. 3452 dated 3/31/12 from PhP 540.00 to PhP 5,450.00;

b. McDonald's O.R. No. 027900 from PhP 107.00 to PhP 2,207.00; and

c. McDonald's O.R. No. 027822 dated 4/3/12 from PhP 164.00 to PhP 3,164.00.

On July 10, 2012, Javines submitted his written explanation, denying having tampered the receipts. He
explained that as Operations Manager, he is responsible for securing reimbursement for expenses incurred by
the supervisors under him. He further explained that it is the supervisors who subinit the receipts to him and for
which, he prepares a reimbursement request. Once the reimbursement is made, Javines distributes the cash to
the supervisor concerned. J a vines argued that while he prepares the request for reimbursement, he has no
knowledge or part in the tampered receipts. 6

On July 13, 2012, an administrative hearing was held. Javines failed to explain why and how the incident
transpired. Instead, Javines requested for further investigation since, at that time, he allegedly could not recall
who submitted the receipts to him. 7

Consequently, on the same day, notices to explain were sent to the supervisors under Javines. In their written
accounts, the supervisors· denied participation in the tampered receipts. 8

On July 27, 2012, Xlibris terminated Javines' employment through an "end of employment notice." 9

Javines then filed a complaint 10 for illegal dismissal. The complaint was, however, dismissed by the Labor
Arbiter who found that J a vines' dismissal was for just cause and with due process.

On appeal 11 , the NLRC modified the decision of the Labor Arbiter, finding that, while Javines was dismissed
for just cause, he was not afforded procedural due process. In particular, the NLRC noted that after the
administrative hearing, notices to explain were immediately sent to the supervisors who denied participation in
the falsification of the receipts. The NLRC noticed that no other hearing was called thereafter so as to afford
Javines the opportunity to confront the witnesses against him before he was dismissed. As such, the NLRC
awarded nominal damages in the amount of PhPl 0,000 in Javines' favor. 12

Javines failed to move for reconsideration 13 of the NLRC's decision while Xlibris' motion for partial
reconsideration was denied. Thus, only Xlibris elevated the case to the CA on certiorari on the sole issue that
the NLRC gravely abused its discretion in holding that it failed to comply with the requirements of procedural
due process. 14

By way of comment 15 , Javines reiterated his position that he was not afforded procedural due process
because his request for further investigation for purposes of identifying the source of the questioned meal
receipts was never granted. Additionally, Javines questioned the cause of his dismissal on the argument that
Xlibris failed to prove by substantial evidence the misconduct imputed against him. 16

The Ruling of the CA

The CA partially granted the petition. 17 it observed that while Javines was given a chance to explain his side
and adduce evidence in his defense through his written explanation and through the administrative hearing, he
was nevertheless not given the opportunity to rebut the additional pieces of evidence secured by Xlibris
thereafter and considered by Xlibris in arriving at the decision to terminate him.

However, the CA reduced the award of nominal damages from PhPl0,000 to PhPl,000 considering that the
altered meal receipts show a discrepancy of PhPl0,010.

The CA thus disposed:

IN LIGHT OF ALL THE FOREGOING, the instant petition for certiorari is PARTIALLY GRANTED. The Decision
dated July 16, 2013 arid Resolution dated September 30, 2013 of the NLRC of Cebu City in NLRC Case No.
YAC-05-000300-2013 (RAB Case No. VII-08-1185-2012), are MODIFIED, in that the NLRC's award of nominal
damages in favor of Ramon Manuel T. Javines is REDUCED to PhP1,000.00.

164
SO ORDERED. 18

Only Javines moved for reconsideration 19 of the CA Decision, arguing that he was not dismissed for just cause.
Xlibris opposed 20 Javines' motion for reconsideration on the ground that the issue as to whether or not Javines
was dismissed for cause was never raised in its petition for certiorari filed before the CA nor discussed in the
CA Decision. Xlibris further argued that the Labor Arbiter and the NLRC unanimously found that Javines was
dismissed for just cause, which findings Javines failed to challenge by interposing a timely appeal therefrom.

The CA denied 21 Javines' motion for reconsideration, prompting Javines to file the instant Petition.

The Issue

The lone issue to be resolved is whether the CA erred in affirming the NLRC'S finding that Javines was
dismissed for just cause.

The Ruling of this Court

The petition lacks merit.

The Labor Arbiter and the NLRC uniformly held that Javines' employment was terminated for just cause under
Article 297 (formerly Article 282) of the Labor Code. It is undisputed that from this unanimous finding, Javines
1âwphi1

failed to move for reconsideration nor challenged said.ruling before the CA. Consequently, the NLRC decision
finding Javines to have been dismissed for just cause. became final. For failure to file the requisite petition
before the CA, the NLRC decision had attained finality and had been placed beyond the appellate court's
power of review. Although appeal is an essential part of judicial process, the right thereto is not a natural right
or a part of due process but is merely a statutory privilege. Settled are the rules that a decision becomes final
as against a party who does not appeal the same 22 and an appellee who has not himself appealed cannot
obtain from the appellate court any affirmative relief other than those granted in the decision of the court
below. 23 Hence, the finding that Javines was dismissed for just cause must be upheld.

Javines' insistence that the petition for certiorari filed by Xlibris throws open the entire case for review such that
the issue of whether or not he was dismissed for just cause ought to have been addressed by the CA is entirely
misplaced.

While it is true that the appellate court is given broad discretionary power to waive the lack of proper
assignment of errors and to consider errors not assigned 24 , it has authority to do so in the following instances:
(a) when the question affects jurisdiction over the subject matter; (b) matters that are evidently plain or clerical
errors within contemplation of law; (c) matters whose consideration is necessary in arriving at a just decision
and complete resolution of the case, or in serving the interests of justice or avoiding dispensing piecemeal
justice; (d) matters raised in the trial court and are of record having some bearing on the issue submitted that
the parties failed to raise or that the lower court ignored; (e) matters closely related to an error assigned; and (f)
matters upon which the determination of a question properly assigned is dependent. 25

None of the aforesaid instances exists in the instant case. Thus, the CA. cannot be faulted for no longer
discussing the issue of whether indeed there exists just cause for his dismissal.

Instead, in the petition for certiorari filed before the CA, Xlibris only questioned the award of nominal damages
for failure to comply with procedural due process. Emphatically, neither Xlibris nor Javines further questioned
the CA' s award on this point. As such, the issue as to whether the requirements of procedural due process to
constitute a valid dismissal were complied with has been resolved with finality. In any event, such involves a
question of fact which the Court does not allow in a petition filed under Rule 45. 26 It has been consistently held
that the jurisdiction of the Court in cases brought before it from the CA via Rule 45 is generally limited to
reviewing errors of law and does not extend to a re-evaluation of the sufficiency of evidence upon which the
courts a quo had based its determination. 27 What is more, findings of fact of labor tribunals when affirmed by
the CA bind this Court. We find no compelling reason in this case to depart from the foregoing settled rules.

WHEREFORE, the petition is DENIED. The Decision dated June 26, 2014 and Resolution dated August 28,
2014 of the Court of Appeals finding petitioner Ramon Manuel T. Javines to have been dismissed for just cause
and awarding nominal damages in the amount of PhPl,000 in his favor are AFFIRMED in toto.

SO ORDERED.

ll. Authority of counsel 
 i. Presumed authorized 


1. Maersk Filipinas Crewing Inc., and Maersk Co. IOM Ltd. vs. Ramos, G.R. No. 184256, January 18,
2017
(ibid)


165
 January 18, 2017

G.R. No. 184256

MAERSK FILIPINAS CREWING INC., and MAERSK CO. IOM LTD., Petitioners,
vs.
JOSELITO R. RAMOS, Respondent.

DECISION

SERENO, CJ.:

The Petition for Review1 before us assails the Decision2 and Resolution3 of the Court of Appeals (CA) in CA-
G.R. SP No. 94964, affirming with modification the Resolution4 of the National Labor Relations Commission
(NLRC). The CA affirmed the findings of the NLRC that petitioners Maersk Filipinas Crewing, Inc. (Maersk Inc.)
and the Maersk Co. IOM, Ltd. (Maersk Ltd.) were liable to private respondent Joselito Ramos for disability
benefits. The appellate court, however, deleted the awards for moral and exemplary damages. 5

As culled from the records of the CA, the antecedent facts are as follows:

The facts of the case from which the present petition arose show that on October 3, 2001, petitioner Maersk
ltd., through its local manning agent petitioner Maersk Inc., employed private respondent as able-seaman of
M/V NKOSSA II for a period of four (4) months. Within the contract period and while on board the vessel, on
November 14, 2001, private respondent’s left eye was hit by a screw. He was repatriated to Manila on
November 21, 2001 and was referred to Dr. Salvador Salceda, the company-designated physician, for [a]
check-up.

Private respondent was examined by Dr. Anthony Martin S. Dolor at the Medical Center Manila on November
26, 2001 and was diagnosed with "corneal scar and cystic macula, left, post-traumatic." On November 29,
2001, he underwent a "repair of corneal perforation and removal of foreign body to anterior chamber, left eye."
He was discharged on December 2, 2001 with prescribed home medications and had regular check-ups. He
was referred to another ophthalmologist who opined that "no more improvement can be attained on the left eye
but patient can return back to duty with the left eye disabled by 30%."

On May 22, 2002, he was examined by Dr. Angel C. Aliwalas, Jr. at the Ospital ng Muntinlupa (ONM), Alabang,
Muntinlupa City, and was diagnosed with "corneal scar with post-traumatic cataract formation, left eye." On
May 28, 2002, he underwent [an] eye examination and glaucoma test at the Philippine General Hospital (PGH),
Manila.

Since private respondent's demand for disability benefit[s] was rejected by petitioners, he then filed with the
NLRC a complaint for total permanent disability, illness allowance, moral and exemplary damages and
attorney's fees. The parties filed with the NLRC their respective position papers, reply, and rejoinder.

Meanwhile, in his medical report dated July 31, 2002, Dr. Dolor stated that although private respondent's left
eye cannot be improved by medical treatment, he can return to duty and is still fit to work. His normal right eye
can compensate for the discrepancy with the use of correctional glasses. On August 30, 2002, petitioners paid
private respondent's illness allowance equivalent to one hundred twenty (120) days salary.

On October 5, 2002, private respondent was examined by Dr. Roseny Mae Catipon-Singson of Casa Medica,
Inc. (formerly MEDISERV Southmall, Inc.), Alabang, Muntinlupa City and was diagnosed to have ''traumatic
cataract with corneal scaring, updrawn pupil of the anterior segment of maculapathy OS. His best corrected
vision is 20/400 with difficulty." Dr. Catipon-Singson opined that private respondent "cannot be employed for
any work requiring good vision unless condition improves."

On November 19, 2002, private respondent visited again the ophthalmologist at the Medical Center Manila who
recommended "cataract surgery with intra-ocular lens implantation," after evaluation of the retina shall have
been done."

In his letter dated January 13, 2003 addressed to Jerome de los Angeles, General Manager of petitioner
Maersk Inc., Dr. Dolor answered that the evaluation of the physician from ONM could not have progressed in
such a short period of time, which is approximately one month after he issued the medical report dated April 13,
2002, and a review of the medical reports from PGH and the tonometry findings on the left and right eye
showed that they were within normal range, hence, could not be labeled as glaucoma. 6

On 15 May 2003, the labor arbiter (LA) rendered a Decision7 dismissing the Complaint:

166
WHEREFORE, premises considered, the instant complaint is DISMISSED for being prematurely filed. The
parties are enjoined to comply with the provisions of the POEA Standard Contract in relation to the AMOSUP-
MAERSK Company CSA. In the meantime, respondents Maersk Filipinas Crewing, Inc., and The Maersk Co.,
Ltd., are directed to provide continued medical assistance to complainant Joselito Ramos until he is declared fit
to work, or the degree of his disability has been assessed in accordance with the terms of the contract and the
CBA.

SO ORDERED.8

The LA held that the Philippine Overseas Employment Administration (POEA)-approved contract and Collective
Bargaining Agreement expressly provided for a situation in which the seafarer's appointed doctor disagrees
with the company-designated physician. In this case, both parties may agree to the appointment of a third
doctor, whose assessment would then be final on both parties.9 According to the LA, both failed to avail
themselves of this remedy.

On 28 July 2003, respondent filed a Manifestation 10 stating that on 21 July 2003, his counsel's messenger tried
to file with the NLRC a Notice of Appeal with Memorandum of Appeal. 11 However, upon arriving at around four
o' clock in the afternoon, the messenger found that the NLRC office was already closed due to a jeepney strike.
He then decided to file and serve copies of the notice with memorandum by registered mail. It was only on the
next day, 22 July 2003, that the filing of the rest of the copies and the payment of fees were completed. 12

In reply to respondent's Manifestation, petitioners filed a Motion for Outright Dismissal on the ground that the
appeal had been filed out of time.

In the meantime, on 30 July and 12 September 2003, respondent underwent cataract extraction on both
eyes. 13 On 7 January 2004, he was fitted with correctional glasses and evaluated. Dr. Dolor found that the
former's "right eye is 20/20, the left eye is 20/70, and when both eyes are being used, his best corrected vision
is 20/20." On the basis of that report, respondent was pronounced fit to work. 14

On 31 January 2006, the NLRC issued a Resolution 15 granting respondent's appeal and setting aside the LA's
decision:

WHEREFORE, premises considered, Complainant's appeal is partly GRANTED. The Labor Arbiter's Assailed
Decision in the above-entitled case is hereby VACATED and SET ASIDE. A new one is entered ordering
Respondents to jointly and severally pay Complainant the following: 1) disability compensation benefit in the
amount of US $6,270.00; 2) moral and exemplary damages in the form of interest at 12% of US $6,270.00 per
annum, reckoned from April 13, 2002, up to the time of payment of said disability compensation benefit; and 3)
attorney's fees equivalent to 10% of his total monetary award.

SO ORDERED. 16

The NLRC found that it was not "[respondent's] fault that he was not able to perfect his appeal on July 21,
2003, the latter part of said day having been declared non-working by NLRC NCR, itself. It is only just and fair,
therefore, that Complainant should be given until the next working day to perfect his appeal." 17

As regards the need to appoint a third doctor, the NLRC found it unnecessary considering that "there is really
no disagreement between respondents' company-designated physician and Complainant's physicians as to the
percentage [30%] of visual impairment of his left eye." 18 Thus, respondent was awarded disability
compensation benefit in the amount of USD6,270 for Grade 12 impediment, moral and exemplary damages,
and attorney's fees.19

On 17 February 2006, petitioners filed a Motion for Reconsideration,20 which the NLRC denied in its Resolution
dated 31 March 2006.21

Upon intermediate appellate review, the CA rendered a Decision22 on 31 July 2007, the dispositive portion of
which reads:

WHEREFORE, the assailed resolutions dated January 31, 2006 and March 31, 2006 of public respondent
NLRC, 2nd Division, in NLRC NCR CA No. 037183-03 (NLRC NCR Case No. OFW-M-02-06-1591-00) are
AFFIRMED with the MODIFICATION that the awards for moral and exemplary damages are DELETED.

SO ORDERED.23

The CA affirmed all the findings of the NLRC on both procedural and substantive issues, but deleted the award
of moral and exemplary damages, because there was no "sufficient factual legal basis for the awards x x
x."24 Here, the appellate court held that respondent "presented no proof of his moral suffering, mental anguish,
fright or serious anxiety and/or any fraud, malice or bad faith on the part of the petitioner."25 Consequently, there

167
being no moral damages, the award of exemplary damages did not lie.26 However, because respondent was
compelled to litigate to protect his interests, the CA sustained the award for attorney's fees. 27

On 24 August 2007, petitioners filed a Motion for Partial Reconsideration,28 arguing for the first time that
respondent's appeal filed with the NLRC was not perfected within the reglementary period. 29 They alleged that
they received a copy of the Manifestation of respondent denying that he had authorized the Sapalo Velez
Bundang & Bulilan Law Offices (SVBB) to continue representing him after the issuance of the LA's Decision on
15 May 2003.30Hence, they argued respondent was not bound by the notice of appeal or by the decisions
rendered by the NLRC. 31

On 8 August 2008, the CA issued a Resolution 32 denying the aforementioned motion.33

The CA held that respondent did not present any proof in support of his Manifestation that the SVBB had no
authority to represent him before the NLRC or in the continuation of the case in court. The appellate court then
ruled that the "presumption that SVBB is authorized to represent him before the NLRC and in the case at bar
stands."34

Hence, this appeal. 35

ISSUES

From the foregoing, the issues may be reduced to the following:

1. Whether counsel of respondent was authorized to represent the latter after the LA had rendered its Decision
on 15 May 2003;

2. Whether respondent perfected his appeal to the NLRC; and

3. Whether respondent is partially disabled and therefore entitled to disability compensation. 1âw phi 1

THE COURT'S RULING

We shall deal with the issues seriatim.

The SVBB law firm is presumed to

have authority to represent
respondent.

Anent the first procedural issue, petitioners allege that although the authority of an attorney to appear for and
on behalf of a party may be assumed, it can still be challenged by the adverse party concerned.36 In this case,
petitioners argue that the presumption of the SVBB 's authority to continue representing respondent was
"destroyed upon his filing of the Manifestation" precisely denying that authority. 37 It then follows that the appeal
filed by the law firm was unauthorized. As such, the appeal did not prevent the LA Decision dated 15 May 2003
from attaining finality. 38

We disagree.

Section 21, Rule 138 of the Rules of Court39 provides a presumption on a lawyer's appearance on behalf of a
client:

SEC. 21. Authority of attorney to appear. - An attorney is presumed to be properly authorized to represent
any cause in which he appears, and no written power of attorney is required to authorize him to appear
in court for his client, but the presiding judge may, on motion of either party and on reasonable grounds
therefor being shown, require any attorney who assumes the right to appear in a case to produce or prove the
authority under which he appears, and to disclose, whenever pertinent to any issue, the name of the person
who employed him, and may thereupon make such order as justice requires. An attorney willfully appearing in
court for a person without being employed, unless by leave of the court, may be punished for contempt as an
officer of the court who has misbehaved in his official transactions. (Emphasis ours)

Aside from the presumption of authority to represent a client in all stages of litigation, an attorney's appearance
is also presumed to be with the previous knowledge and consent of the litigant until the contrary is shown. 40

This presumption is strong, as the "mere denial by a party that he has authorized an attorney to appear for him,
in the absence of a compelling reason, is insufficient to overcome the presumption, especially when denial
comes after the rendition of an adverse judgment."41

168
In his Manifestation, private respondent averred that he ceased communications with the SVBB after 15 May
2003; that he did not cause the re-filing of his case; and that he did not sign any document for the continuation
of his case. However, he gave no cogent reason for this disavowal. As pointed out by the CA, he presented no
evidence other than the denial in his Manifestation.

Moreover, respondent only sent his Manifestation disclaiming the SVBB's authority on 1 February 2007. It was
submitted almost four years after the LA had dismissed his complaint for having been prematurely filed. By that
time, through the SVBB's efforts, the NLRC had already rendered a Decision favorable to respondent.

It puzzles us why respondent would renounce the authority of his supposed counsel at this late stage. The
attempt of petitioners to use this circumstance to their advantage - in order to avoid payment of liability - should
not be given any weight by this Court.

Respondent perfected his appeal

before the NLRC.

As to the second procedural issue, petitioners argue that respondent did not perfect his appeal before the
NLRC, considering his failure to file copies of the Notice of Appeal with Memorandum of Appeal and to pay the
necessary fees to the NLRC on time.

We again disagree.

The failure of respondent to file his appeal before the NLRC must be contextualized. We quote with favor its
1av vphi1

findings, as affirmed by the CA:

As regards the first issue, there is no question that July 21, 2003 was supposed to be the last day for the filing
by Complainant of his appeal form the Labor Arbiter's Decision. Incidentally, a working "day" at the NLRC NCR
consists of eight (8) hours of work from 8:00 a.m. to 5:00 p.m. Complainant, therefore, had until 5:00 p.m. of
July 21, 2003 to perfect his appeal. Notably, his counsel's messenger reached the NLRC NCR at 4:00 p.m. of
that day for the sole purpose of perfecting Complainant's appeal. Unfortunately, however, the NLRC NCR
closed its Office at 3:30 p.m., earlier than the normal closing time of 5:00 p.m., because of a jeepney strike.
Clearly, it was not Complainant's fault that he was not able to perfect his appeal on July 21, 2003, the latter part
of said day having been declared non-working by NLRC NCR, itself. It is only just and fair, therefore, that
Complainant should be given until the next working day to perfect his appeal. 42

In any case, we have always held that the "[c]ourts have the prerogative to relax procedural rules of even the
most mandatory character, mindful of the duty to reconcile both the need to speedily put an end to litigation and
the parties' right to due process."43

Respondent suffers from permanent

partial disability and is entitled to
disability compensation.

On the substantive issue, petitioners submit that the award of disability compensation is not warranted,
because the injury suffered by respondent cannot be considered permanent. It is curable or can be
corrected,44 since his continued fitness to work was certified by the company-designated physician in two
medical reports. 45

On the other hand, respondent asserts that no less than the company-designated physician had established
the extent of the former's visual impairment at 30%. Respondent posits that because of the injury to his left eye
and loss of vision, he has suffered the impairment of his earning capacity and can no longer practice his
profession as a seaman.46

We rule for respondent.

Preliminarily, it must be emphasized that this Court is not a trier of facts. It is not our function to weigh and try
the evidence all over again. Findings of fact of quasi-judicial bodies, especially when affirmed by the CA, are
generally accorded finality and respect.47 As long as these findings are supported by substantial evidence, they
must be upheld.48

Disability does not refer to the injury or the pain that it has occasioned, but to the loss or impairment of earning
capacity. There is disability when there is a diminution of earning power because of actual absence from work.
This absence must be due to the injury or illness arising from, and in the course of, employment. Thus, the
basis of compensation is reduction of earning power. 49

Section 2 of Rule VII of the Amended Rules on Employees' Compensation provides:

169
(c) A disability is partial and permanent if as a result of the injury or sickness the employee suffers a permanent
partial loss of the use of any part of his body.

Permanent partial disability occurs when an employee loses the use of any particular anatomical part of his
body which disables him to continue with his former work. 50

In this case, while petitioners' own company-designated physician, Dr. Dolor, certified that respondent was still
fit to work, the former admitted in the same breath that respondent's left eye could no longer be improved by
medical treatment. As early as 13 April 2002, Dr. Dolor had in fact diagnosed respondent's left eye as
permanently disabled, to wit:

Present ophthalmologic examination showed corneal scar and a cystic macula at the left eye. Vision on the
right eye is 20/20 and JI while the left showed only 20/60 and J6. Our ophthalmologist opined that no more
improvement can be attained on the left eye but patient can return back to duty with left eye disabled by 30%. 51

Petitioners' argument that the injury was curable because respondent underwent cataract extraction in on both
eyes in 2003, and Dr. Dolor issued a medical evaluation finding that respondent's best corrected vision for both
eyes was 20/20 (with correctional glasses),52 are thus inconsequential. The curability of the injury "does not
preclude an award for disability because, in labor laws, disability need not render the seafarer absolutely
helpless or feeble to be compensable; it is enough that it incapacitates him to perform his customary work." 53

Indeed, the operation, which supposedly led to the correction of respondent's vision, took place in 2003.
Respondent sustained his injury way back in 2001. During the span of roughly two years, he was not able
to reassume work as a seaman, resulting in the loss and impairment of his earning capacity. It is also
interesting to note that despite petitioners' contentions that respondent had been diagnosed as fit to
return to work, no reemployment offer was ever extended to him.

As to the extent and amount of compensation, petitioners stress that

Section 3254 of the POEA Standard Terms and Conditions Governing the Employment of Filipino Seafarers on
Board Ocean Going Vessels (Standard Employment Contract) only provides disability compensation benefits
for at least 50% loss of vision in one eye. Since the schedule does not include the injury suffered by
respondent, they assert that the award of disability benefits is unwarranted.

The Court finds no merit in this argument.

The POEA Standard Employment Contract was designed primarily for the protection and benefit of Filipino
seamen in the pursuit of their employment on board ocean-going vessels. In resolving disputes regarding
disability benefits, its provisions must be "construed and applied fairly, reasonably, and liberally in the seamen's
favor, because only then can the provisions be given full effect."55

Besides, the schedule of disabilities under Section 32 is in no way exclusive. Section 20.B.4 of the same POEA
Standard Employment Contract clearly provides that "[t]hose illnesses not listed in Section 32 of this Contract
are disputably presumed as work related." This provision only means that the disability schedule also
contemplates injuries not explicitly listed under it.

We therefore sustain the computational findings of the NLRC as affirmed by the CA, to wit:

Relative to the amount of disability compensation, Section 20.1.4.4 of the applicable CBA between AMOSUP
and Maersk Company (IOM) provides that the rate of compensation for 100% disability for Ratings is
US$60,000.00, with any differences, including less than 10% disability, to be pro-rata. Section 20.1.5 of said
CBA further provides that "xxx any seafarer assessed at less than 50% disability under the Contract but
certified as permanently unfit for further sea service in any capacity by the company doctor, shall also be
entitled to 100% compensation" (Pages 48-49, Records). It is clear from the latter provision that for a
seafarer to be entitled under said CBA to 100% compensation for less than 50% disability, it must be
the company doctor who should certify that the seafarer is permanently unfit for further sea service in
any capacity.

In the case at bar, Complainant had corneal scar, a cystic macula and 30% loss of vision on his left eye.
Thus, applying Section 3056 of the standard contract, We hold that Complainant's impediment grade is
Grade 12. Under Section 30-A 57 of the standard contract, a seafarer who suffered an impediment grade
of Grade 12 is entitled to 10.45% of the maximum rate. Significantly, the company physician did not
certify Complainant as permanently unfit for further sea service in any capacity. The company
physician certified that'' xxx patient can return back to duty with the left eye disabled by 301Y.1" (Page
39, Records). Complainant, therefore, is not entitled to 100% disability compensation benefit, but
merely 10.451Yo of US$60,000.00, which is computed as follows: US$60,000.00 x 10.45% = US$6,270.00.
Respondents, therefore, are liable to Complainant for US$6,270.00 as compensation benefit for his

170
permanent partial disability, to be paid in Philippine Currency equivalent at the exchange rate prevailing
during the time of payment. 58 (Emphases ours)

With respect to the award of attorney's fees, this Court affirms the findings of the CA in toto. Respondent is
entitled to attorney's fees pursuant to Article 2208(2) of the Civil Code,59 which justifies the award of attorney's
fees in actions for indemnity under workmen's compensation and employer liability laws.

WHEREFORE, the Petition for Review on Certiorari is hereby DENIED. The assailed Decision60 and
Resolution61 of the Court of Appeals in CA-G.R. SP No. 94964 are hereby AFFIRMED.

SO ORDERED.

ii. Constructive dismissal in relation to off-detail period 


1. Spectrum Security Services, Inc. vs. Grave, G.R. No. 196650, June 7, 2017



June 7, 2017

G.R. No. 196650

SPECTRUM SECURITY SERVICES, INC., Petitioner

vs.
DAVID GRAVE, ARIEL V. AROA, TOMASINO R. DE CHAVEZ, JR., LUCITO P. SAMARITA, SAIDOMAR M.
MAROHOM, LITO V. MAHILOM and OLIVER N. MARTIN, Respondents

DECISION

BERSAMIN, J.:

A security guard placed on reserved or off-detail status is deemed constructively dismissed only if the status
should last more than six months. Any claim of constructive dismissal must be established by clear and positive
evidence.

The Case

The petitioner seeks the reversal of the decision promulgated March 1, 2011, 1 whereby the Court of Appeals
(CA) dismissed its petition for certiorari and affirmed the decision of the National Labor Relations Commission
(NLRC) dated March 16, 2010 finding it liable for the illegal dismissal of respondent security guards. 2

Antecedents

The petitioner - a domestic corporation engaged in the business of providing security services - employed and
posted the respondents at the premises of Ibiden Philippines, Inc. (Ibiden) located in the First Philippine
Industrial Park in Sto. Tomas, Batangas. The controversy started when the petitioner implemented an action
plan as part of its operational and manpower supervision enhancement program geared towards the gradual
replacement of security guards at Ibiden. 3 Pursuant to the action plan, it issued separate "Notice(s) to Return
to Unit" to the respondents in July and August 2008 directing them to report to its head office and to update
their documents for re-assignment. 4

On August 14, 2008, the respondents filed their complaint against the petitioner for constructive dismissal in
Regional Arbitration Branch No. IV of the NLRC, claiming that the implementation of the action plan was a
retaliatory measure against them for bringing several complaints5 along with other employees of the petitioner
to recover unpaid holiday pay and 13th month pay. 6 The complaints were consolidated, and a decision was
later on rendered ordering the petitioner to pay to the respondents and their co-employees their unpaid
entitlements corresponding to the period from October 16, 2007 to June 30, 2008.7

Decision of the Labor Arbiter

On May 22, 2009, Labor Arbiter Enrico Angelo C. Portillo dismissed the complaint for constructive dismissal
upon finding that "there is no evidence adduced by complainants in the form of a termination letter and the like
to substantiate their claim that they were indeed unceremoniously terminated by [petitioner] Spectrum." 8 He
declared that the return to work notices issued by the petitioner belied the respondents' charge of illegal
dismissal, opining that a security guard could be considered as having been constructively dismissed only
when he had been placed on floating status for a period of more than six months.9

Ruling of the NLRC

171
Aggrieved, the respondents appealed to the NLRC. On March 16, 2010, the NLRC reversed the Labor Arbiter's
dismissal, and ordered the petitioner to reinstate the respondents with backwages. It noted that had the
petitioner really intended to re-assign the respondents to new posts, the petitioner should have indicated in the
notices the new postings or re-assignments, to wit:

It is too much coincidence that the complainants were relieved from their posts at Ibiden Phils., Inc. just sixteen
days after the six of them filed a complaint for recovery of certain money claims against the respondents, and
eight days after three of them filed a similar complaint against the respondents.

Moreover, if, as contended by the respondents, their intention in relieving the complainants from their posts
was simply to implement a "long standing policy of re-assignment/rotation", their "Action Plan", which has the
appearance of having been carefully laid out, should have provided for new assignments for the complainants.
The fact [is] that it does not indicate that the respondents never intended to give the complainants new
assignments. It is also too much of a coincidence that the only security guards who were affected by the
respondents' "Action Plan" were the complainants.

Ordinarily, where the security guards are relieved from their posts, they are given notices informing them of
their new assignments, or requiring them to explain certain charges against them. A notice directing a security
guard who had just been relieved from his post to simply report to the office of the security agency is a badge
of bad faith because it usually means that the security agency has no intention of giving him a new assignment.
Otherwise stated, the security agency has the burden of proving that the security guard who was relieved from
his post for other than disciplinary reasons was actually given a new assignment. Failing in this, it could only be
concluded that there was an unjustified dismissal.

WHEREFORE, the decision appealed from is hereby REVERSED. The respondent Spectrum Security
Services, Inc. is hereby ordered to REINSTATE the complainants, and to pay them FULL BACKWAGES from
the dates they were relieved from their last posts up to the dates of their actual reinstatement. In addition, the
said respondent is ordered to pay them ten (10%) percent of the total monetary award as attorney's fees.

For lack of employer-employee relationship, Ibiden Philippines, Inc. is hereby dropped as party-respondent
herein.

SO ORDERED.10

The NLRC denied the motion for reconsideration of the petitioner on May 17, 2010.

Decision of the CA

The petitioner assailed the adverse ruling of the NLRC in the CA on certiorari, contending that the NLRC
gravely abused its discretion amounting to lack or excess of its jurisdiction in arbitrarily ruling that the
respondents had been illegally dismissed by the petitioner.

On March 1, 2011, the CA promulgated its assailed decision upholding the NLRC, viz.:

WHEREFORE, upon the foregoing, the petition is DISMISSED. The assailed Decision dated 17 May 2010 of
the NLRC is hereby AFFIRMED.

SO ORDERED.11

The CA concluded that although the complaint for illegal dismissal was prematurely filed because six months
had not yet elapsed to warrant considering the dismissal as constructive dismissal, the continued failure to give
the respondents new assignments during the proceedings before the Labor Arbiter that exceeded the
reasonable six-month period rendered the petitioner liable for constructive dismissal of the respondents; that
the petitioner's insistence that the respondents had abandoned their employment was bereft of basis; and that
abandonment as a just ground for dismissal required clear, willful, deliberate and unjustified refusal on the part
of the employees to resume their employment; hence, their mere absence from work or failure to report for
work even after the notice to return was not tantamount to abandonment.

Issue

The petitioner submits that the CA erred in finding that the petitioner was guilty of illegally dismissing the
respondents despite the fact that the totality of the circumstances negated such finding.

Ruling of the Court

The appeal has merit.

172
The NLRC and the CA concluded that there was illegal or constructive dismissal in this case as the private
respondents were not given new assignments immediately after being placed on reserved status; that the lack
of any indication from the "Notices to Return to Unit" of their re-assignments was a badge of bad faith; and that
the timing was off because the action plan was implemented by the petitioner after the respondents had filed
the complaints for their monetary claims against the petitioner and received a favorable decision thereon.

The CA also pointed out that the petitioner's failure to provide the re-assignments or new posts for the
respondents during the proceedings exceeded the reasonable six-month period of being on reserved status;
hence, their off-detail became permanent.

We cannot uphold the CA.

Security guards, like other employees in the private sector, are entitled to security of tenure. However, their
situation should be differentiated from that of other employees or workers. The employment of security guards
generally depends on their employers' contracts with clients who are third parties to the employment
relationship, and the requirements of the latter for security services and what will be beneficial to them dictate
the posting of the security guards. It is also relevant to mention that their employers retain the management
prerogative to change their assignments and postings, and to decide to temporarily relieve them of their
assignments. In other words, their security of tenure, though it shields them from demotions in rank or
diminutions of salaries, benefits and other privileges, does not vest them with the right to their positions or
assignments that will prevent their transfers or re-assignments (unless the transfers or re-assignments are
motivated by discrimination or bad faith, or effected as a form of punishment or demotion without sufficient
cause). Such peculiar conditions of their employment render inevitable that some of them just have to undergo
periods of reserved or off-detail status that should not by any means equate to their dismissal. Only when the
period of their reserved or off-detail status exceeds the reasonable period of six months without re-assignment
should the affected security guards be regarded as dismissed.12

Indeed, there should be no indefinite lay-offs. After the period of six months, the employers should either recall
the affected security guards to work or consider them permanently retrenched pursuant to the requirements of
the law; otherwise, the employers would be held to have dismissed them, and would be liable for such
dismissals. 13

On December 18, 2001, the Department of Labor and Employment (DOLE), through Secretary Patricia A. Sto.
Tomas, adopted and promulgated DOLE Department Order No. 014-01 (Guidelines Governing the
Employment and Working Conditions of Security Guards and Similar Personnel in the Private Security
Industry) precisely to address the peculiarities of the situation of the security guards. Under DOLE Department
Order No. 014-01, the tenure of security guards in their employment is ensured by guaranteeing that their
services are to be terminated only for just or authorized causes expressly recognized by the Labor Code after
due process.

Of specific relevance is that Subsection 9.3 of DOLE Department Order No. 014-01 constitutes guidelines to be
followed when the security guards are placed on reserved status, to wit:

9.3 Reserved Status - A security guard or similar personnel may be placed in a workpool or on reserved status
due to lack of service assignments after expiration or termination of the service contract with the principal
where he/she is assigned, or due to the temporary suspension of agency operations.

No security guard or personnel can be placed in a workpool or on reserved status in any of the following
situations: a) after expiration of a service contract if there are other principals where he/she can be assigned; b)
as a measure to constructively dismiss the security guard; and c) as an act of retaliation for filing complaints
against the employer on violations of labor laws, among others.

If, after a period of 6 months, the security agency/employer cannot provide work or give an assignment to the
reserved security guard, the latter can be dismissed from service and shall be entitled to separation pay as
prescribed in subsection 5.6.

Security guards on reserved status who accept employment in other security agencies or employers before the
end of the above six-month period may not be given separation pay. 14

The respondents insist that they were constructively dismissed when they were relieved from their posts at
Ibiden. However, the Labor Arbiter found that such insistence was unsupported by any factual foundation
because there was no evidence showing that they had been dismissed. The finding of the Labor Arbiter is
correct. The notices sent to them contained nothing from which to justly infer their having been terminated from
their employment. Moreover, their complaint for illegal dismissal was even prematurely filed on August 14,
2008 because the notices15 were sent to each of them only in the period from July 3, 2008 to August 2, 2008.

Nor was the CA justified to simply dismiss the right of the petitioner to implement the action plan and thereby
effect the rotation and replacement of the respondents as their security guards posted at Ibiden. We have
already recognized the management prerogative of the petitioner as their employer to change their postings

173
and assignments without severing their employment relationship. 16 Although the CA might have regarded the
implementation of the action plan as dubious because the petitioner had relieved the respondents from their
posts at Ibiden just 16 days after they had brought their complaint for the recovery of certain money claims from
the former, thereby imputing bad faith to the petitioner would be bereft of factual or legal basis considering the
failure of the respondents to sufficiently establish the fact of their dismissal from their employment. In illegal
dismissal cases, the general rule is that the employer has the burden of proving that the dismissal was legal.
To discharge this burden, the employee must first prove, by substantial evidence, that he had been dismissed
from employment. 17 In this case, We find otherwise. Respondents failed to properly establish that they were
dismissed by the petitioner. Aside from the respondents' plain allegation that they were illegally dismissed by
the petitioner, no other evidence was presented by the respondents to support their contentions.

We can only uphold the Labor Arbiter's conclusion that the respondents had actually abandoned their
employment and had severed their employment relationship with the petitioner themselves. Despite having
been notified of the need for them to appear before the petitioner's head office to update their documents for
purposes of reposting, the respondents, except Lucito P. Samarita18 and Saidomar M. Marohom, 19 refused to
receive the notices, and did not sign the same, 20 without first knowing the contents of the memo.

The petitioner sufficiently established, too, that it did not ignore the respondents, contrary to their claims. As the
records bear out, one of the respondents reported to the head office but only to claim his salary and to avail
himself of a loan from the Social Security System (SSS);21 and that another respondent, Oliver Martin, albeit
notified of his endorsement to a new posting with a different client company, 22 did not report to the new posting.

Furthermore, assuming arguendo that when respondents reported to the human resource office and the
company did not provide them with new assignments at that time, the six-month period had not yet lapsed.
Note that the position paper submitted by the respondents to the NLRC was only received by the NLRC on
December 11, 2008. The reckoning of the end of the six-month period from the supposed termination (i.e., July
and August 2008, the period when they were each given the "Notice to Return to Unit") would only be in
January or February 2009.

Lastly, the CA erred in holding that the petitioner was guilty of providing the respondents with new assignments
during the pendency of the proceedings. It appears, indeed, that by the time the respondents appealed their
1âwphi1

case in the NLRC, some of them had already gained regular employment as security guards elsewhere during
their reserved status with the petitioner and prior to the lapse of the six-month period.

The new employments were indicated in their SSS employment history, 23 thusly:

Employment
Employee Name Employer Name
Date
Commander Security Services
Ariel Aroa 01-2009
Inc.
Phoenix Security & Allied
Lucito Samarita 08-2008
Services
Lito Mahilom 09-2008 Emirate Security Specialists
Tomasino De Commander Security Services
09-2008
Chavez Inc.
Oliver Martin
Sentinel Integrated Services
Saidomar 09-2008
Inc.
Marohom

The act of some of the respondents of gaining employment as security guards elsewhere constituted
abandonment of their employment with the petitioner. Abandonment requires the concurrence of two elements,
namely: one, the employee must have failed to report for work or must have been absent without valid or
justifiable reason; and, two, there must have been a clear intention on the part of the employee to sever the
employer-employee relationship manifested by some overt act.24 Although mere absence or failure to report for
work, even after notice to return, does not necessarily amount to abandonment, the law requires that there be
clear proof of deliberate and unjustified intent on the part of the employee to sever the employer-employee
relationship. Abandonment is a matter of intention and cannot be lightly presumed from certain equivocal acts.
In other words, the operative act is still the employee's ultimate act of putting an end to his employment.25

Contrary to the findings of the CA, the respondents intended to sever their employer-employee relationship with
the petitioner because they applied for and obtained employment with other security agencies while they were
on reserved status. Their having done so constituted a clear and unequivocal intent to abandon and sever their
employment with the petitioner. Thereby, the filing of their complaint for illegal dismissal was inconsistent with
the established fact of their abandonment.

174
WHEREFORE, the Court GRANTS the petition for review on certiorari; REVERSES and SETS ASIDE the
decision promulgated on March 1, 2011; and REINSTATES the decision of the Labor Arbiter dismissing the
complaint for illegal dismissal.

No pronouncement on costs of suit.

SO ORDERED.

oo. Off-detail status 
 i. Return to work order should indicate specific assignment 


1. Ibon vs. Genghis Khan Security Services and/or Marietta Vallespin, G.R. No. 221085, June 19, 2017


June 19, 2017

G.R. No. 221085

RAVENGAR G. IBON, Petitioner

vs.
GENGHIS KHAN SECURITY SERVICES and/or MARIETTA VALLESPIN, Respondents

DECISION

MENDOZA, J.:

This petition for review on certiorari seeks to reverse and set aside the July 3, 2015 Decision1 and October 13,
2015 Resolution 2 of the Court of Appeals (CA) in CA-G.R. SP No. 125948, which affirmed the April 24, 2012
Decision3and the May 22, 2012 Resolution4 of the National Labor Relations Commission (NLRC) in NLRC LAC
No. 01-000503-12(8)/NLRC NCR CN. 05-07463-11, a case for illegal dismissal.

Ravengar G. Ibon (petitioner) was employed as a security guard by Genghis Khan Security
Services (respondent)sometime in June 2008. He was initially assigned to a certain Mr. Solis in New Manila,
Quezon City. In July 2008, he was transferred to the 5th Avenue Condominium in Fort Bonifacio, Taguig City,
in September 2008 and was posted there until May 2009.5

In June 2009, petitioner was transferred to the Aspen Tower Condominium until his last duty on October 4,
2010. Thereafter, respondent promised to provide him a new assignment, which, however, did not happen. 6

On May 10, 2011, petitioner filed a Complaint 7 against respondent for illegal dismissal, with claims for
underpayment of wages, holiday and rest day premiums, service incentive leave pay, non-payment of
separation pay, and reimbursement of illegal deductions. 8 He alleged that he was no longer assigned to a new
post after his last duty on October 4, 2010; that he was merely receiving a daily salary of ₱384.00; and that in
the course of his employment, respondent would deduct ₱200.00 per month as cash bond from September
2008 until September 2010.9

For his part, respondent denied that petitioner was placed on a floating status for more than six (6) months. It
claimed that he was suspended on October 4, 2010 for sleeping on the job. Respondent added that petitioner
was endorsed to another client for re-assignment, which the latter refused because his license was due for
renewal. Since then, petitioner failed to report for work. 10

Sometime in November 2010, petitioner went to respondent's office to claim his 13th month pay, but the same
was not given to him because it was not yet due. Respondent then received a call from the Department of
Labor and Employment (DOLE) regarding petitioner's claim for 13th month pay, which was later on settled
during the proceedings before the DOLE. It then sent letters to petitioner requiring him to report for work, but he
did not show up. Hence, respondent was surprised to receive summons regarding the complaint for illegal
dismissal. 11

The LA Ruling

In its November 29, 2011 Decision, 12 the Labor Arbiter (LA) declared petitioner to have been constructively
dismissed because of respondent's failure to put him on duty for more than six (6) months. It ordered
respondent to pay petitioner backwages from May 5, 2011, the effective date of the constructive dismissal. The
LA also granted petitioner's prayer for separation pay in view of the parties' strained relationship, as well as his
claims for wage differential, service incentive leave pay and reimbursement of his cash bond.

175
Aggrieved, respondent appealed to the NLRC.

The NLRC Ruling

In its April 24, 2012 Decision, the NLRC reversed and set aside the decision of the LA. It opined that there was
no constructive dismissal because respondent did not intend to indefinitely place petitioner on a floating status.
The NLRC noted that respondent sent letters to petitioner requiring him to report back to work within the six-
month period. It added that respondent offered to reinstate petitioner during the proceedings before the LA, but
the said offer was rejected by the latter.

Further, the NLRC pointed out that even if the letters were not received by petitioner, respondent's act of
sending them showed that it did not wish to sever the employer-employee relationship. It, nevertheless,
sustained the money claims awarded by the LA.

Petitioner moved for reconsideration, but his motion was denied by the NLRC in a Resolution dated May 22,
2012.

Undaunted, petitioner filed a petition for certiorari before the CA.

The CA Ruling

In its assailed Decision, dated July 3, 2015, the CA affirmed the NLRC finding that petitioner was not
constructively dismissed. It wrote that the evidence on record showed that petitioner was required to report
back to work and that on October 21, 2010, he was offered a new assignment, which he refused. The CA
concluded that there was no dismissal to speak of as it was petitioner who manifested his lack of interest in
going back to work.

Hence, this petition raising the following:

ISSUES

WHETHER THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE RULING OF THE NLRC
THAT THE PETITIONER WAS NOT ILLEGALLY DISMISSED FROM EMPLOYMENT; AND

II

WHETHER THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE RULING OF THE NLRC
THAT THE PETITIONER IS NOT ENTITLED TO HIS MONETARY CLAIMS DUE TO ILLEGAL DISMISSAL. 13

Petitioner argues that he did not receive the letters requiring him to report back to work; that a perusal of the
letters revealed that the same did not indicate a specific assignment; that respondent had no intention to
reinstate him considering that he was placed on a floating status for a long period of time; and that he was
entitled to moral damages, exemplary damages and attorney's fees.

In its Comment, 14 dated March 21, 2016, respondent averred that petitioner's claim of illegal dismissal could
not overcome the evidence it presented to show that no dismissal took place; and that moral and exemplary
damages could only be awarded only when there is a finding of illegal dismissal and such dismissal is borne
out with malice and bad faith on the part of the employer.

In his Reply, 15 dated January 31, 2017, petitioner contended that the lack of service assignment for a
continuous period of six (6) months is an authorized cause for the termination of the employee, who is then
entitled to separation pay; and that respondent's offer of reinstatement was meant to negate an otherwise
consummated act of illegal dismissal.

The Court's Ruling

The petition is meritorious.

Only questions of law may be raised in a Rule 45 petition; exceptions

Generally, questions of fact are beyond the ambit of a petition for review under Rule 45 of the Rules of Court as
it is limited to reviewing only questions of law. The rule, however, admits of exceptions wherein the Court
expands the coverage of a petition for review to include a resolution of questions of fact. One of the exceptions
is when the findings of fact are conflicting. 16 The present petition falls under this exception as the findings of

176
fact by the NLRC, as affirmed by the CA, differed from those of the LA. The LA found that petitioner was
constructively dismissed whereas, the NLRC and the CA opined that petitioner was never dismissed.

Securityguardon floating statusvis-à-vis constructive dismissal

Respondent refutes petitioner's constructive dismissal by arguing that the latter was not placed on a floating
status for more than six (6) months because he was suspended on October 4, 2010 for sleeping on the job.
Further, it asserts that it sent letters to petitioner requiring him to report back to work and that it offered
reinstatement during the proceedings before the LA, which petitioner turned down. These arguments,
notwithstanding, there is basis to hold that petitioner was constructively dismissed.

In Reyes v. RP Guardians Security Agency, 17 the Court held that temporary off-detail of a security guard is
generally allowed, but is tantamount to constructive dismissal if the floating status extends beyond six (6)
months, to wit:

Temporary displacement or temporary off-detail of security guard is, generally, allowed in a situation where a
security agency's client decided not to renew their service contract with the agency and no post is available for
the relieved security guard. Such situation does not normally result in a constructive dismissal. Nonetheless,
when the floating status lasts for more than six (6) months, the employee may be considered to have been
constructively dismissed. No less than the Constitution guarantees the right of workers to security of tenure,
thus, employees can only be dismissed for just or authorized causes and after they have been afforded the due
process of law. 18 [Emphasis supplied]

Relative thereto, constructive dismissal may exist if an act of clear discrimination, insensibility, or disdain by an
employer becomes so unbearable on the part of the employee that it can foreclose any choice by him except to
forego his continued employment19 or when there is cessation of work because continued employment is
rendered impossible, or unlikely, as an offer involving a demotion in rank and a diminution in pay. 20

Security guard on floating status must be assigned to a specific posting

In the case at bench, petitioner was last deployed on October 4, 2010. Thus, it was incumbent upon
respondent to show that he was redeployed within six (6) months from the said date. Otherwise, petitioner
would be deemed to have been constructively dismissed.

A perusal of the records, however, reveals that aside from respondent's bare assertions that petitioner was
suspended, which the latter had denied, there was no evidence of the imposition of said penalty. Respondent
could have easily produced documents to support its contention that petitioner had been suspended,
considering that employers are required to observe due process in the discipline of employees.

Respondent could not rely on its letter requiring petitioner to report back to work to refute a finding of
constructive dismissal. The letters, dated November 5, 2010 and February 3, 2011, which were supposedly
1âwphi1

sent to petitioner merely requested him to report back to work and to explain why he failed to report to the office
after inquiring about his posting status. More importantly, there was no proof that petitioner had received the
letters.

In Tatel v. JLFP Investigation (JFLP Investigation), 21 the Court initially found that the security guard was
constructively dismissed notwithstanding the employer's letter ordering him to report back to work. It
expounded that in spite of the report-to-work order, the security guard was still constructively dismissed
because he was not given another detail or assignment. On motion for reconsideration, however, the Court
reversed its ruling after it was shown that the security guard was in fact assigned to a specific client, but the
latter refused the same and opted to wait for another posting.

A holistic analysis of the Court's disposition in JFLP Investigation reveals that: [1] an employer must assign the
security guard to another posting within six (6) months from his last deployment, otherwise, he would be
considered constructively dismissed; and [2] the security guard must be assigned to a specific or particular
client. A general return-to-work order does not suffice.

In Exocet Security and Allied Services Corporation v. Serrano (Exocet Security), 22 the Court absolved the
employer even if the security guard wason a floating status for more than six (6) months because the latter
refused the reassignment to another client, to wit:

In the controversy now before the Court, there is no question that the security guard, Serrano, was placed on
floating status after his relief from his post as a VIP security by his security agency's client. Yet, there is no
showing that his security agency, petitioner Exocet, acted in bad faith when it placed Serrano on such floating
status. What is more, the present case is not a situation where Exocet did not recall Serrano to work within the
six-month period as required by law and jurisprudence. Exocet did, in fact, make an offer to Serrano to go back
to work. xxx

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Clearly, Serrano's lack of assignment for more than six months cannot be attributed to petitioner Exocet. On
the contrary, records show that, as early as September 2006, or one month after Serrano was relieved as a VIP
security, Exocet had already offered Serrano a position in the general security service because there were no
available clients requiring positions for VIP security. Notably, even though the new assignment does not involve
a demotion in rank or diminution in salary, pay, or benefits, Serrano declined the position because it was not
the post that suited his preference, as he insisted on being a VIP Security. xxx

Thus, it is manifestly unfair and unacceptable to immediately declare the mere lapse of the six-month period of
floating status as a case of constructive dismissal, without looking into the peculiar circumstances that resulted
in the security guard's failure to assume another post. This is especially true in the present case where the
security guard's own refusal to accept a non-VIP detail was the reason that he was not given an assignment
within the six-month period. The security agency, Exocet, should not then be held liable.23 [Emphases supplied]

Applying the foregoing to the present controversy, respondent should have deployed petitioner to
a specific client within six (6) months from his last assignment. The correspondences allegedly sent to
petitioner merely required him to explain why he did not report to work. He was never assigned to a particular
client. Thus, even if petitioner actually received the letters of respondent, he was still constructively dismissed
because none of these letters indicated his reassignment to another client. Unlike in EcoxetSecurity and JFLP
Investigation, respondent is guilty of constructivedismissal because it never attempted to redeploy petitioner to
a definite assignment or security detail.

Further, petitioner's refusal to accept the offer of reinstatement could not have the effect of validating an
otherwise constructive dismissal considering the that same was made only after petitioner had filed a case for
illegal dismissal. Further, at the time the offer for reinstatement was made, petitioner's constructive dismissal
had long been consummated. 24 Such belated gesture does not absolve respondent from the consequences of
petitioner's dismissal.

WHEREFORE, the July 3, 2015 Decision and October 13, 2015Resolution of the Court of Appeals in CA-G.R.
SP No. 125948 are REVERSED and SET ASIDE. The November 29, 2011 Decision of theLabor Arbiter
is REINSTATED.

SO ORDERED.

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