Republic of the Philippines

COURT OF APPEALS
Manila

SPECIAL FOURTH (4TH) DIVISION

MARGARITO M. LANDICHO, CA-G.R. SP NO. 158321

HERMILO T. GUMBA, JUANITO
G. SERNA, DEOGRACIAS B.
TORNO, EDWARD M. BALGUA, Members:
Petitioners,
LIBREA-LEAGOGO, Chairperson,
- versus - CRUZ, R., and
*
LEGASPI, JJ.
NATIONAL LABOR RELATIONS
COMMISSION (FOURTH
DIVISION), FACILITIES & Promulgated:
PROPERTY MANAGEMENT
TECHNOLOGIES, INC.,
EMERSON G. MEDRANA, September 6, 2019
ROXANNE G. DELOS SANTOS,
Respondents.
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

Cruz, R.A., J.:

THE CASE

This is a Petition for Certiorari under Rule 65 of the 1997 Rules

on Civil Procedure seeking to annul and set aside the Decision dated
June 29, 2018, as well as the Resolution dated August 31, 2018, both
issued by the National Labor Relations Commission (NLRC) in NLRC
LAC No. 01-000361-18, RAB Case No. NCR-06-07937-17, the
dispositive portions of which read:

(a) Decision dated June 29, 20181

xxx
“WHEREFORE, premises considered, the Appeal dated 29
December 2017 is PARTIALLY GRANTED. The assailed Decision
dated 29 November 2017 is AFFIRMED WITH MODIFICATION.
There is no illegal dismissal, actual or constructive, to speak
of.
There is no abandonment of [sic] the part of complainants-
C.A-G.R. SP No. 158321 Page 2 of 20
DECISION

appellees Margarito M. Landicho, Hermilo T. Gumba, Juanito G.

Serna, Deogracias B. Torno and Eduard M. Balgua.
Individual respondents-appellants Emerson G. Medrana and
Roxanne G. Delos Santos are hereby dropped as party-respondents
in this case.
Respondent-appellant Facilities & Properties Management
Technologies, Inc. is hereby ORDERED to cause the immediate
reinstatement of complainants-appellees Hermilo T. Gumba, Juanito
G. Serna, Deogracias B. Torno and Eduard M. Balgua to their former
positions without loss of seniority rights and privileges within ten (10)
days from receipt of this Decision.
Respondent-appellant Facilities & Properties Management
Technologies, Inc. is liable to pay complainant-appellee Margarito M.
Landicho, the following:
1) Retirement pay benefits; and
2) Attorney's fees equivalent to 10% of the total
monetary award.
The monetary awards herein granted shall earn legal interest
at the rate of six percent (6%) per annum from the date of the finality
of this Decision until fully paid.
Let this be forwarded to the Computation Department for
appropriate action, the computation of which shall form part of this
Decision.
SO ORDERED.”
xxx

(b) Resolution dated August 31, 2018 2

xxx
“WHEREFORE, premises considered, the Motion for
Reconsideration dated 27 July 2018 is DENIED. The Decision dated
29 June 2018 is AFFIRMED.
No further motions of similar nature shall be entertained.
SO ORDERED.”
xxx

THE ANTECEDENTS

This case originated from a Complaint 3 for illegal dismissal, non-

payment of wages, service incentive leave pay, overtime pay, holiday
premiums, 13th month pay and night shift differential, retirement pay,
C.A-G.R. SP No. 158321 Page 3 of 20
DECISION

moral and exemplary damages and attorney's fees filed by Margarito

M. Landicho, Hermilo T. Gumba, Juanito G. Serna, Deogracias B.
Torno and Edward M. Balgua, as complainants, against Facilities &
Property Management Technologies, Inc., Emerson G. Medrana and
Roxanne G. Delos Santos, as respondents.
Complainants averred that they were employed by Facilities &
Property Management Technologies, Inc. (FPMTI), a building
maintenance job contractor, as follows:
Name Position Period of Employment

Margarito Mendoza Landicho Electrician June 2008 to March 2017

Hermilo Traon Gumba Plumber June 2008 to March 2017
Juanito Galat Serna Electrician July 2008 to March 2017
Deogracias Barua Torno Carpenter June 2008 to March 2017
Edward Maala Balgua Plumber September 2012 to March 2017

They were assigned at the National Life Insurance Company

(NLIC) Building in Ayala Avenue, Makati City after signing a fixed-term
employment contract, which were renewed annually until the year
2010. Starting 2011, they were no longer made to sign employment
contracts but they continued to work for FPMTI until March 2017.
On March 3, 2017, complainants received a memorandum from
FPMTI informing them that its contract with NLIC as building
maintenance contractor was expiring on March 31, 2017. The End of
Contract Notices,4 similarly worded except with respect to their job
positions, read as follows:
xxx
“Please be informed that your project-based appointment with
FACILITIES & PROPERTY MANAGEMENT TECHNOLOGIES, INC.
as PLUMBER under NATIONAL LIFE INSURANCE COMPANY
PROJECT will end upon close of business hours of March 31, 2017.
Kindly coordinate to the HR Office for further instructions.
For your information and strict compliance.”
xxx

A week before March 31, 2017, Roxanne B. Guce-Delos Santos,

HR Manager of FPMTI, called complainants to a meeting where they
were informed that they would be pulled out from the NLIC Building,
that they need to reapply again to be transferred to another
assignment and that they are not entitled to any separation pay or
retirement benefits. During the last days of March 2017, they were
C.A-G.R. SP No. 158321 Page 4 of 20
DECISION

given a clearance form to sign for them to receive their last wages and
13th month pay. Seeing that the clearance form indicates that they
were resigning, they refused to sign the same and instead requested
from FPMTI new assignments. The HR Manager told complainants
that if they refuse to sign the clearance, no new assignments would be
given to them. They were then asked to leave the office premises.
When they went back to the office a few days after to follow up, they
were prohibited by the guards to enter. The HR Manager refused to
see them, saying that there was no work assignment for them until
they agree to re-apply.
Complainants went to the NLRC and filed a Single-Entry
Approach (SenA)5 on April 7, 2017 and thereafter, a Complaint on
June 2, 2017.
On June 19, 2017, the complainants received a letter 6 from
FPMTI dated June 16, 2017 directing them to report to the office for
their new assignment to another project, viz.:
xxx
“Hindi lingid sa inyong kaalaman na natapos ang ating kontrata sa
National Life Insurance Company noong Marso 31, 2017. Sa
kagandahang palad, ay may nagbukas na bagong proyekto na
nangangailangan ng iyong serbisyo. Ang nasabing proyekto ay
magsisimula sa Hulyo 1, 2017 at ang mga detalye nito ay personal
na tatalakayin nang kinauukulan.
Kaugnay nito, ikaw ay pinapupunta sa Head Office sa darating na
Huwebes, Hunyo 22, 2017 sa ika-10 nang umaga (10:00 am) para
pag-usapan ang pre-deployment instructions.”
xxx

However, since they were being asked to sign a resignation letter

before they can re-apply, complainants decided to just pursue the case
they filed with the NLRC.
For their part, FPMTI averred that it is a legitimate job contractor
engaged in the business of providing expert facilities management
services to various reputable clienteles for facilities, property,
construction management, technical service, mall and parking service
contracts. One of its former clients is the National Life Insurance
Company (NLIC). In the course of its business operations, NLIC
sought the services of FPMTI for the performance of engineering and
technical services for its building located in Makati City. On June 12,
2008, FPMTI and NLIC entered into a Memorandum of Agreement
(MOA) for the former to be the latter's service maintenance provider.
Pursuant thereto, FPMTI assigned its employees to serve as
C.A-G.R. SP No. 158321 Page 5 of 20
DECISION

plumbers, electricians, masons, varnishers and carpenters, among

others, for the duration of the project. The MOA was enforced and
renewed annually for eight (8) years until its termination and non-
renewal in March 2017. Among those deployed and assigned to
perform the contracted services were complainants.
In March 2017, FPMTI and NLIC agreed to mutually terminate
their MOA when a new holding company acquired ownership over
NLIC after having been placed under receivership for five (5) years.
Consequently, the HR Manager of FPMTI issued individual notices to
the complainants informing them that their deployment to the NLIC
Building will end upon the close of business hours of March 31, 2017.
They were directed to report for work as soon as possible for further
instructions on their next deployment.
Despite receipt of the notice, complainants did not bother to
report for work and continued with the unauthorized absences despite
repeated phone calls and text messages sent to them directing them
to immediately report for work.
On June 16, 2017, the HR Manager sent the complainants
individual notices where she informed them that a new project will
begin on July 1, 2017 and that they are required to immediately report
for work to discuss the next assignment. Despite this, complainants
adamantly refused to report for work despite the repeated instructions
and directive from the company, insisting that they are already old
employees and that they just wish to receive their retirement pay
and/or separation pay from the Company. In the meantime, they went
on continuous unauthorized absences. They had no choice but to
consider their unauthorized absences under the company's “no work,
no pay” policy.
After due proceedings, the labor arbiter rendered a Decision on
November 29, 2017, the fallo of which reads:
xxx
“WHEREFORE, premises considered, Facilities & Property
Management Technologies, Inc. is hereby ordered to pay
complainants the provisional (computed to date) sum of ONE
MILLION THREE HUNDRED FIFTEEN THOUSAND EIGHTY ONE
PESOS AND SEVEN CENTAVOS (P1,315,081.07) representing:
1. Full backwages computed from the time of their dismissal
up to finality of this decision;
2. Separation pay computed up to finality of this decision,
equivalent to one month wage for every year of service, it being
understood that a fraction of six months is considered one full year;
C.A-G.R. SP No. 158321 Page 6 of 20
DECISION

3. Retirement pay of complainant Margarito M. Landicho,

provided that his separation pay and retirement benefits shall be
computed only up to finality of this decision but in no case beyond
the time he reaches 65 years of age;
4. Attorney's fees equivalent to ten (10%) of the total monetary
award.
All other claims are dismissed for lack of merit. All other
claims are dismissed for lack of merit. [sic]
SO ORDERED.”
xxx

The labor arbiter ruled that the complainants have established

the fact of their dismissal as shown by the records. It was undisputed
that at the time of their engagements, they were hired as project
employees as reflected in their contracts. However, starting 2011,
complainants no longer signed project employment contracts but they
continuously worked with respondent company until March 2017. The
labor arbiter thus concluded that their project employment was
converted to a regular employment after having been engaged without
any project employment contract for so long a time. He gave more
credence to the complainants' claim that they reported for work but
they were asked to undergo clearance procedure, as they were able to
present a copy of the clearance form which they were required to
accomplish in relation to their resignation/retirement. The fact that they
were made to undergo clearance procedure was taken by the labor
arbiter as proof of their termination from employment. There was
likewise no Termination Report submitted to the Department of Labor
and Employment (DOLE) pursuant to its Department Order No. 19,
Series of 1993.
Complainant Margarito M. Landicho was declared to be entitled
to retirement pay under the Labor Code. At the time of his dismissal,
he was already 62 years old. Since he has become a regular
employee in 2011 until his dismissal in March 2017, he has rendered
more than five (5) years of service.
The other money claims were denied for the failure of
complainants to elaborate on the same.
Respondents, as appellants, elevated the case on appeal to the
NLRC, raising the following issues:
I
THE LABOR ARBITER COMMITTED GRAVE ABUSE OF
C.A-G.R. SP No. 158321 Page 7 of 20
DECISION

DISCRETION AND SERIOUS ERRORS IN HIS FACTUAL

FINDINGS AND IN CONCLUDING THAT THE
COMPLAINANTS WERE ILLEGALLY DISMISSED FROM
EMPLOYMENT.
II
THE LABOR ARBITER COMMITTED GRAVE ABUSE OF
DISCRETION AND SERIOUS ERRORS IN AWARDING
THE COMPLAINANTS' CLAIMS FOR PAYMENT OF
BACKWAGES, SEPARATION PAY, RETIREMENT PAY,
AND ATTORNEY'S FEES.

Respondents-appellants maintained that the records were bereft

of any indication that the complainants were deprived of any work
assignments or were prevented from returning to work. They argued
that the complainants-appellees' Pinagsama-samang Sinumpaang
Salaysay was self-serving and that the clearance forms they were
being made to sign were a requirement of the NLIC in order to ensure
that their properties in the possession of the complainants-appellees
were turned-over before their departure and that they were not leaving
any accountability with the NLIC.
In its Decision dated June 29, 2018, the NLRC found no illegal
dismissal, actual or constructive, on the part of the respondents-
appellants.
While it upheld the status of the complainants-appellees as
regular employees, it nevertheless held that complainants-appellees
failed to establish the fact of their dismissal, viz.:
xxx
“xxx [T]here was no credible evidence presented to show that
they were indeed dismissed from work when they were made to
undergo clearance procedure and informed that the only way that
they can continue working for respondents-appellants was to re-
apply or was prevented from returning to their work by respondents-
appellants. xxx”
xxx

It held that there was nothing in the notices sent by the

respondents-appellants to the complainants-appellees that would
show that their employment was ended by the termination of the
service agreement between respondents-appellants and NLIC. As for
the Application for Clearance Form presented by complainants-
appellees as proof of their dismissal, the NLRC declared that
C.A-G.R. SP No. 158321 Page 8 of 20
DECISION

respondents-appellants had adequately proven that such clearance

proceeding was only for the purpose of clearing their employees from
any accountability with their previous client NLIC, as shown by the fact
that one of the signatories was the Building Administrator of NLIC,
Carla Tolentino.
Despite such finding, the NLRC nevertheless did not agree with
respondents-appellants' argument that complainants no longer
reported for work and refused to heed their notices, stating that:
xxx
“The alleged failure of the complainants-appellees to heed the
16 July 2017 Notice to Report for Re-deployment cannot be taken
against them since said notices were sent after they had already filed
their complaint with this Commission on 2 June 2017. Thus, while
We do not rule that such belated sending of Notices to Report for
Re-deployment was an afterthought as it may really take some time
for a job contractor to find another project and that the said notice
were sent within the six (6) month period allowed by jurisprudence
before constructive dismissal sets-in, complainants-appellees cannot
be faulted to having doubts about the sincerity of respondents-
appellants in offering them another project to be re-deployed in
considering that they knew that respondents-appellants may have
already received the summons sent by the Office of the Labor Arbiter
at the time they received the said Notices. Neither could
complainants-appellees' subsequent employment with another job
contractor and engagement of complainant-appellee Deogracias
Torno as an independent contractor for the re-partitioning and re-
layout of the National Life Insurance Company Building's office
spaces for lease can taken [sic] as a [sic] indication of abandonment
of their respective work with respondents-appellants. They cannot be
blamed for immediately seeking another source of income in their
belief that they were dismissed when they were required to undergo
clearance procedure and while awaiting the outcome of the illegal
dismissal case they filed against respondents-appellants.”
xxx

The NLRC thus concluded that with the lack of evidence of

dismissal and the lack of intent on the part of the complainants-
appellees to abandon their work, the remedy is reinstatement but
without backwages.
Since the respondents-appellants did not assail the ruling on
Margarito M. Landicho's entitlement to retirement benefits, and
inasmuch as he is indeed qualified thereto, the NLRC sustained the
labor arbiter's ruling in respect thereof.
The NLRC also found no proof of bad faith or malice on the part
of respondents-appellants, hence the respondents-appellants
C.A-G.R. SP No. 158321 Page 9 of 20
DECISION

Emerson G. Medrana and Roxanne G. Delos Santos were held to be

not personally liable for the money claims. For the same reason,
respondents-appellants are not liable for moral and exemplary
damages. However, the award of attorney's fees were found to be
proper because Margarito M. Landicho was compelled to litigate to
satisfy his monetary claims and interests.
Complainants filed a Motion for Reconsideration which was
denied for lack of merit by the NLRC through its Resolution dated
August 31, 2018.
Hence, this Petition.

THE ISSUE BEFORE US

Complainants-appellees, now as petitioners, raise the sole issue

for Our resolution, to wit:

[WHETHER OR NOT] THE HONORABLE PUBLIC

RESPONDENT NATIONAL LABOR RELATIONS
TH
COMMISSION (NLRC) 4 DIVISION COMMITTED
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK
OR EXCESS OF JURISDICTION WHEN IT RENDERED
THE QUESTIONED RESOLUTION DATED AUGUST 31,
2018 AND DECISION DATED JUNE 29, 2018.

It is petitioners' position that private respondents failed to perfect

their appeal before the NLRC because their Motion to Reduce Bond
was not accompanied by proof and evidence to establish their financial
incapacity to post the required amount of cash bond.
Petitioners likewise maintain that they have adequately proven
their dismissal through the averments in their Pinagsama-samang
Sinumpaang Salaysay as well as the clearance forms that they were
being made to sign in connection with their resignation/retirement.
On the part of private respondents, they contend that they were
able to sufficiently explain in their Motion to Reduce Bond their inability
to post a bond equivalent to the judgment award by presenting
pertinent entries in the Audited Financial Statements of FPMTI. They
also argue that the NLRC correctly ruled that the petitioners failed to
prove the fact of their dismissal, maintaining that the expiration of the
MOA between FPMTI and NLIC did not result in the dismissal of the
petitioners, that the instruction to the petitioners for them to complete
C.A-G.R. SP No. 158321 Page 10 of 20
DECISION

their exit clearance is not tantamount to dismissal, and that there is no

factual or legal basis to grant petitioners' claim for the payment of
separation pay.

OUR RULING

It is axiomatic that where a Petition for Certiorari under Rule 65

of the Rules of Court alleges grave abuse of discretion, the petitioner
should establish that the respondent court or tribunal acted in a
capricious, whimsical, arbitrary or despotic manner in the exercise of
its jurisdiction as to be equivalent to lack of jurisdiction. 7 The abuse of
discretion must be so patent and gross as to amount to an "evasion of
a positive duty or to a virtual refusal to perform a duty enjoined by law,
or to act at all in contemplation of law, as where the power is exercised
in an arbitrary and despotic manner by reason of passion and hostility."
Furthermore, the use of a petition for certiorari is restricted only to
"truly extraordinary cases wherein the act of the lower court or quasi-
judicial body is wholly void."8
In labor cases elevated to Us via Petition for Certiorari, We can
grant this prerogative writ upon Our finding that the NLRC acted with
grave abuse of discretion in arriving at its factual conclusions. To make
such finding, We necessarily has to view the evidence if only to
determine if the NLRC ruling had basis in evidence. 9
Petitioners allege that the NLRC committed grave abuse of
discretion when it allowed the reduction of the cash bond filed by the
private respondents for purposes of perfecting their appeal before the
NLRC.
Article 22910 of the Labor Code sets forth the rules on appeal
from the labor arbiter's monetary award, which provides:

xxx
“ARTICLE 229. Appeal. – Decisions, awards, or orders of the
Labor Arbiter are final and executory unless appealed to the
Commission by any or both parties within ten (10) calendar days
from receipt of such decisions, awards, or orders. Such appeal may
be entertained only on any of the following grounds:
(a) If there is prima facie evidence of abuse of discretion on
the part of the Labor Arbiter;
(b) If the decision, order or award was secured through fraud
or coercion, including graft and corruption;
C.A-G.R. SP No. 158321 Page 11 of 20
DECISION

(c) If made purely on questions of law; and

(d) If serious errors in the finding of facts are raised which
would cause grave or irreparable damage or injury to the appellant.
In case of a judgment involving a monetary award, an
appeal by the employer may be perfected only upon the posting
of a cash or surety bond issued by a reputable bonding
company duly accredited by the Commission in the amount
equivalent to the monetary award in the judgment appealed
from.” (emphasis supplied)
xxx

One of the requisites for the perfection of appeal with the NLRC
as enumerated in Section 4, Rule VI of the 2011 NLRC Rules of
Procedure11 is the posting of cash or surety bond. Section 6 of the
same Rules provides that “[n]o motion to reduce bond shall be
entertained except on meritorious grounds, and only upon the posting
of a bond in a reasonable amount in relation to the monetary award.”
The mere filing of a motion to reduce bond without complying with the
requisites in Section 6, Rule VI of the same rules shall not stop the
running of the period to perfect an appeal.
The case of McBurnie v. Ganzon12 has laid down the guidelines
on the matter of filing and acceptance of motions to reduce appeal
bond, to wit:
(a) The filing of a motion to reduce appeal bond shall be
entertained by the NLRC subject to the following
conditions: (1) there is meritorious ground; and (2) a
bond in a reasonable amount is posted;
(b) For purposes of compliance with condition no. (2), a
motion shall be accompanied by the posting of a
provisional cash or surety bond equivalent to ten
percent (10%) of the monetary award subject of the
appeal, exclusive of damages and attorney's fees;
(c) Compliance with the foregoing conditions shall
suffice to suspend the running of the 10-day
reglementary period to perfect an appeal from the
labor arbiter's decision to the NLRC;
(d) The NLRC retains its authority and duty to resolve
the motion to reduce bond and determine the final
amount of bond that shall be posted by the appellant,
still in accordance with the standards of “meritorious
grounds” and “reasonable amount”; and
C.A-G.R. SP No. 158321 Page 12 of 20
DECISION

(e) In the event that the NLRC denies the motion to

reduce bond, or requires a bond that exceeds the
amount of the provisional bond, the appellant shall
be given a fresh period of ten (10) days from notice
of the NLRC order within which to perfect the appeal
by posting the required appeal bond.

In the Motion to Reduce Bond 13 timely filed by private

respondents before the NLRC, they averred that FPMTI is unable to
post a cash bond equivalent to the total judgment award of One Million
Three Hundred Fifteen Thousand Eighty One and 7/100
(P1,315,081.07) Philippine Currency without crippling its business
operations. Showing FPMTI's net income from the year 2008 until
2016 through its Audited Financial Statements 14 attached to their
motion, private respondents contend that the income generated by the
company for all its other projects or contracts for one (1) year is not
enough to cover for the entire judgment award. Their motion was
accompanied by a cash bond equivalent to twenty percent (20%) of
the total judgment award, or Two Hundred Thirty Nine Thousand One
Hundred Five and 65/100 (P239,105.65) Philippine Currency.
The requirement on the existence of a “meritorious ground” was
explained in the McBurnie case as follows:
xxx
“The requirement on the existence of a 'meritorious ground'
delves on the worth of the parties' arguments, taking into account
their respective rights and the circumstances that attend the case.
The condition was emphasized in University Plans Incorporated v.
Solano, wherein the Court held that while the NLRC's Revised Rules
of Procedure “allows the [NLRC] to reduce the amount of the bond,
the exercise of the authority is not a matter of right on the part
of the movant, but lie within the sound discretion of the NLRC
upon a showing of meritorious grounds.” By jurisprudence, the
merit referred to may pertain to an appellant's lack of financial
capability to pay the full amount of the bond, the merits of the main
appeal such as when there is a valid claim that there was no illegal
dismissal to justify the award, the absence of an employer-employee
relationship, prescription of claims, and other similarly valid issues
that are raised in the appeal. For the purpose of determining a
'meritorious ground', the NLRC is not precluded from receiving
evidence, or from making a preliminary determination of the
merits of the appellant's contentions.”15 (emphasis supplied)
xxx

The NLRC has full discretion to grant or deny the motion to

reduce bond.16 The reduction of the bond is not a matter of right on the
C.A-G.R. SP No. 158321 Page 13 of 20
DECISION

part of the movant but lies within the sound discretion of the NLRC. 17
When the motion to reduce the bond is hinged on the purportedly
unhealthy state of private respondent company's finances, the NLRC
is not precluded from making a preliminary determination of its
financial capability to post the required bond, without necessarily
passing upon the merits. Since the intention is merely to give the
NLRC an idea of the justification for the reduced bond, the evidence
for the purpose would necessarily be less than the evidence required
for a ruling on the merits.18
Private respondents submitted copies of its Audited Financial
Statements to show that its net income is not enough to cover the
appeal bond equivalent to the total judgment award, which the NLRC
found satisfactory to allow private respondents to pay an appeal bond
on a reduced amount of twenty percent (20%) of the total judgment
award, double the required ten percent (10%) prescribed in the
McBurnie case. In this regard, the NLRC did not act wantonly or
arbitrarily in allowing the private respondents' appeal to proceed.
Now to the substantive issue of illegal dismissal.
The labor arbiter declared petitioners to be regular employees
and not project-based, to wit:
xxx
“It is not disputed that at the time of their engagements,
complainant[s] were hired as project employees. Their project
employment contracts clearly stated their status as project
employees and the duration of their engagement.
“Nevertheless, starting 2011, complainants no longer signed
any project employment contract. Nevertheless, they continuously
worked with respondent company until March 2017. Their having
been engaged without any project employment contract and for so
long a time converted their employment from one of project to a
regular employment.'
xxx

The NLRC concurred with the labor arbiter in this aspect,

because:
xxx
“Aside from the undisputed fact that initially complainants-
appellees were engaged by respondents-appellants as project-based
employees and that since 2011 up to the time of their alleged
dismissal they have been continuously employed sans any project
employment contract, the admission of respondents-appellants in
their pleadings that complainants-appellees are regular employees
C.A-G.R. SP No. 158321 Page 14 of 20
DECISION

whose employments were not terminated even after the end of their
service contract with National Life Insurance Company settled this
issue.
We also took into consideration the fact that in their appeal
respondents-appellants did not assail the ruling of the Labor Arbiter
a quo declaring complainants-appellees as their regular employees”.
xxx

Private respondents did not dispute this finding. It is their position

that the classification as to whether the complainants are regular
employees or project-based employees is immaterial and irrelevant to
the case because they maintain that there was no dismissal in the first
place.
As regular employees, their tenure is protected by Article 294 19 of
the Labor Code which provides:
xxx
“ARTICLE 294. 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.”
xxx

Petitioners claim that after they were pulled out from their
assignment at the NLIC Building, private respondents, without just or
authorized cause, no longer gave them new assignments and they
were made to sign clearance forms for them to receive their last pay,
and they were told that they need to re-apply to be re-deployed to
another assignment. We quote from petitioners' Pinagsama-samang
Sinumpaang Salaysay:20
xxx
“13. Na, noong mga huling araw ng March 2017 ay may ibinigay
silang papel sa amin na kailangan daw naming pirmahan. Na, ang
papel na iyon ay clearance daw namin upang makuha namin ang
sweldo sa huling limang araw na pinasok namin at 13 th month pay;
14. Na, kami ay nangamba at nag-alinlangan na pirmahan ang papel
dahil sa nakasaad dito na kami ay parang magreresign kung kaya't
hindi po namin pinirmahan ang naturang clearance at kami po ay
humingi sa pamunuan ng FACILITIES & PROPERTY
C.A-G.R. SP No. 158321 Page 15 of 20
DECISION

MANAGEMENT TECHNOLOGIES, INC. ng bagong assignment

kung saan ay hindi po namin kailangang pumirma ng naturang
clearance. Ngunit ang tugon lamang po ni Gng. Roxanne B. Guce-
Delos Santos na kung hindi kami magre-reapply at pipirma ng
sinasabing clearance ay wala na kaming maaasahan pang trabaho
sa FACILITIES & PROPERTY MANAGEMENT TECHNOLOGIES,
INC. at kami po ay pinaalis na sa opisina. Ang kopya po ng nasabing
Application for Clearance Form ay nakalakip dito bilang ANNEX “L”
series;
15. Bumalik po kami pagkalipas ng ilang araw upang mag-follow-up
ngunit hindi na po kami pinapasok pa ng guwardiya dahil wala na
nga raw pong bagong assignment sabi ng pamunuan at
nagbakasakali po kaming makausap si Gng. Roxanne B. Guce-
Delos Santos ngunit ayaw na po niyang humarap sa amin dahil wala
naman na raw trabahong nag-aantay sa amin kung hindi kami mag-
re-reapply;”
xxx

Private respondents do not deny petitioners' claim that they were

being made to sign clearance forms after their stint with the NLIC
ended, albeit arguing that it was merely a requirement of the NLIC to
ensure that their properties, real or personal, that are in the
possession of the petitioners, are returned before their departure and
to ensure a proper turn-over of assignments to the new personnel who
will take over their work at the NLIC.
Down the wire, the bone of contention therefore is whether the
act of making petitioners sign exit clearance forms is considered proof
of their dismissal.
In illegal dismissal cases, the employer has the burden of
proving that the employee's dismissal was legal. However, to
discharge this burden, the employee must first prove, by substantial
evidence, that he had been dismissed from employment. 21
Upon closer examination of the aforesaid clearance forms 22
which petitioners submitted as proof of their dismissal, We are inclined
to agree with petitioners that the clearance was not merely for
purposes of clearing the petitioners from any accountability with the
NLIC.
While We agree that the use of FPMTI's letterhead in the
clearance form is not enough to conclude that it was a clearance for
purposes of the severance of petitioners' employment with them, there
are however other glaring indications that would show such, one of
which is the list of signatories thereto.
The following are the signatories listed in the clearance form, to
C.A-G.R. SP No. 158321 Page 16 of 20
DECISION

wit:
DEPARTMENT SIGNATORY

BUILDING ADMINISTRATOR (NLIC) MS. CARLA TOLENTINO

HR/BENEFITS/ADMIN ASST (FPMTI) ARLENE G. FRANDO
PAYROLL/BILLING/ADMIN ASST (FPMTI) JHONALIE R. PASCUA
ACCOUNTING ASSISTANT (FPMTI) NIKKI N. MOLINO
OPERATIONS HEAD (FPMTI) ROXANNE G. DELOS SANTOS

We do not agree with the NLRC that the inclusion of the NLIC
Building Administrator as one of the signatories bolstered the claim of
private respondents that it was merely a clearance concerning the
accountabilities to NLIC. If it were so, it does not explain why there
was a need for four (4) departments in FPMTI to clear the employee
who was only supposedly being pulled out of a project. The clearance
clearly authorizes FPMTI to make any deductions from any amount of
salaries, benefits or wages which may be due the employee to cover
any and all his property or cash accountability, apparently both from
the NLIC and FPMTI as can be gleaned from the list of signatories.
Quite more telling is the last portion of the clearance which
states:
xxx
“This is to certify that ___________________ has been
cleared of all property/cash/accountability from FACILITIES &
PROPERTY MANAGEMENT TECHNOLOGIES, INC. This
clearance is being issued in connection with his/her
resignation/retirement.” (emphasis supplied)
xxx

In the same clearance form, the employee concerned was also

being required to submit the following: “(1) Maxicare (2) Company ID
(3) Handbook”. Notably, petitioners' company IDs were issued by
FPMTI and not by the NLIC. This begs the question: why would FPMTI
require the submission of the aforesaid items if the clearance only
concerns the accountabilities with the NLIC as private respondents
claim?
These circumstances, taken together, negate the claim of private
respondents that the clearance form is merely a templated document
used by FPMTI for employee movements. In this regard, We quote
with approval the observation of the labor arbiter regarding petitioners'
exit clearances, to wit:
xxx
C.A-G.R. SP No. 158321 Page 17 of 20
DECISION

“Second, the fact that complainants were made to undergo

clearance procedure, shows their termination from employment.
Note that the clearance was being required by the respondent
company and not the NLIC to which complainants were detailed. It
would have been understandable if the clearance was for liabilities in
relation to complainants' assignment and tenure at NLIC. In this
case, however, complainants were being asked to undergo
clearance from respondent F&PMTC [sic]. Being regular employees,
there was no need for complainants to undergo clearance.
Also, the clearance form, which was provided by respondents,
clearly indicated that the same was being accomplished in relation to
complainants' RESIGNATION/RETIREMENT. Yet, complainants did
not resign or file for retirement. Thus, by accomplishing the
clearance form, complainants were thus being “maneuvered” into
resigning from respondent company.
Moreover, why would respondents ask for complainants to
undergo clearance in relations [sic] to their
RESIGNATION/RETIREMENT if indeed their employment
automatically ceased on the basis of the end of the term of their
project-based employment? Is this a recognition that complainants
were in fact regular employees? The clearances required of
complainants were, thus, inconsistent and irreconcilable with the
stand of respondents that complainants were project-based
employees whose term of employment ceased effective March 31,
2017.
xxx
Finally, why would not respondents release complainants' last
pay which includes their 13th month pay and service incentive leave
pay, if indeed they were not dismissed as insisted upon [sic]
respondents. Why withhold their last pay if they were not dismissed?
More revealing is why was the release of their last pay tied to the
accomplishment of the respective clearance – that is – that their last
pay would be released only after accomplishing their clearances
which indicated that they resigned.”
xxx

The exit clearances being required of the petitioners to sign, in

conjunction with petitioners' allegations that they were told by private
respondents that they need to re-apply to be given new assignments,
show that private respondents were severing the employment of
petitioners.
The rule in labor cases is that the employer has the burden of
proving that the dismissal was for a just cause; failure to show this
would necessarily mean that the dismissal was unjustified and,
therefore, illegal.23 The two-fold requirements for a valid dismissal are
as follows: (1) dismissal must be for a cause provided for in the Labor
C.A-G.R. SP No. 158321 Page 18 of 20
DECISION

Code, which is substantive; and (2) the observance of notice and

hearing prior to the employee’s dismissal, which is procedural. 24
None of these requirements was complied with by the private
respondents, making petitioners' dismissal illegal.
An illegally dismissed employee is entitled to two reliefs:
backwages and reinstatement. The two reliefs provided are separate
and distinct. In instances where reinstatement is no longer feasible
because of strained relations between the employee and the employer,
separation pay is granted. In effect, an illegally dismissed employee is
entitled to either reinstatement, if viable, or separation pay if
reinstatement is no longer viable, and backwages. 25
As for the contention of private respondents that Petitioner
Margarito M. Landicho cannot both be entitled to separation pay and
retirement benefits, the case of Divine Word College of Laoag v. Mina 26
is instructive:
xxx
“x x x [T]he award of separation pay is distinct from the award
of backwages. The award of separation pay is also distinct from the
grant of retirement benefits. These benefits are not mutually
exclusive as '[r]etirement benefits are a form of reward for an
employee’s loyalty and service to an employer and are earned under
existing laws, [Collective Bargaining Agreements], employment
contracts and company policies.' Separation pay, on the other hand,
is that amount which an employee receives at the time of his
severance from employment, designed to provide the employee with
the wherewithal during the period that he is looking for another
employment. In the computation of separation pay, the Court
stresses that it should not go beyond the date an employee was
deemed to have been actually separated from employment, or
beyond the date when reinstatement was rendered impossible.”
xxx

WHEREFORE, premises considered, the petition is GRANTED.

The Decision dated June 29, 2018, as well as the Resolution dated
August 31, 2018, both issued by the National Labor Relations
Commission in NLRC LAC No. 01-000361-18 (RAB Case No. NCR-
06-07937-17) are REVERSED and SET ASIDE. The labor arbiter
Decision dated November 29, 2017 is hereby REINSTATED.
SO ORDERED.

RAMON A. CRUZ
Associate Justice
C.A-G.R. SP No. 158321 Page 19 of 20
DECISION

WE CONCUR:

CELIA C. LIBREA-LEAGOGO
Associate Justice

GERMANO FRANCISCO D. LEGASPI

Associate Justice

CERTIFICATION

Pursuant to Article VIII, Section 13 of the Constitution, it is

hereby certified that the conclusions in the above decision were
reached in consultation before the case was assigned to the writer of
the opinion of the Court.

CELIA C. LIBREA-LEAGOGO
Chairperson, Special Fourth Division

*
Acting Junior Member per Office Order No. 413-19-RSF dated September 3, 2019.
1
Rollo, pp. 53-75.
2
Id., pp. 78-85.
3
Id., p. 205.
4
Id., p. 416.
5
Id., p. 203.
6
Id., p. 418.
7
Malayang Manggagawa ng Stayfast Phils., Inc. v. NLRC, G.R. No. 155306, August 28,
2013, citing Abedes v. Court of Appeals, 562 Phil. 262, 276 (2007).
8
Yu v. Judge Reyes-Carpio, G.R. No. 189207, June 15, 2011.
9
Diamond Taxi v. Llamas, Jr., G.R. No. 190724, March 12, 2014.
10
Formerly Article 223 of the Labor Code, as renumbered under DOLE Department Advisory
No. 01, Series of 2015.
11
SECTION 4. REQUISITES FOR PERFECTION OF APPEAL. - a) The appeal shall be:
(1) filed within the reglementary period provided in Section 1 of this Rule;
(2) verified by the appellant himself/herself in accordance with Section 4, Rule 7 of the
Rules of Court, as amended;
C.A-G.R. SP No. 158321 Page 20 of 20
DECISION

(3) in the form of a memorandum of appeal which shall state the grounds relied upon and
the arguments in support thereof, the relief prayed for, and with the statement of the date
the appellant received the appealed decision, award or order;
(4) in three (3) legibly typewritten or printed copies; and
(5) accompanied by:
i) proof of payment of the required appeal fee and legal research fee;
ii) posting of a cash or surety bond as provided in Section 6 of this Rule; and
iii) proof of service upon the other parties.
xxx xxx
12
G.R. No. 178034, 178117 & 186984-85, October 17, 2013.
13
Rollo, pp. 546-550.
14
Id., pp. 551-556-A.
15
McBurnie v. Ganzon, supra.
16
Garcia v. KJ Commercial, G.R. No. 196830, February 29, 2012, citing McBurnie v. Ganzon,
G.R. Nos. 178934, 178117, 186984 and 186985, September 18, 2009.
17
Turks Shawarma Company v. Pajaron, G.R. No. 207156, January 16, 2017, citing Nicol v.
Footjoy Industrial Corp., G.R. No. 159372, July 27, 2007.
18
Nicol v. Footjoy Industrial Corp., supra.
19
Formerly Article 279 of the Labor Code, as renumbered under DOLE Department Advisory
No. 01, Series of 2015.
20
Rollo, pp. 236-239.
21
Brown Madonna Press, Inc. v. Casas, G.R. No. 200898, June 15, 2015, citing Ledesma,
Jr. v. NLRC, G.R. No. 174585, October 19, 2007.
22
Rollo, pp. 147-149.
23
Skippers United Pacific, Inc. v. NLRC, G.R. No. 148893, July 12, 2006, citing Pascua v.
National Labor Relations Commission, G.R. No. 123518, March 13, 1998.
24
Id., citing Ranises v. National Labor Relations Commission, 330 Phil. 936, 942 (1996).
25
Advan Motor, Inc. v. Veneracion, G.R. No. 190944, December 13, 2017, citing Reyes v.
RP Guardians Security Agency, Inc., 708 Phil. 598, 604-605 (2013).
26
G.R. No. 195155, April 13, 2016.