Labor Law 2017 Updates & Remedies that both sides had meanwhile started the re-negotiation of the

at both sides had meanwhile started the re-negotiation of the economic provisions of their CBA 12 on March 5, 1993.13
Course Outline The continued concerted actions impelled HSBC to suspend the negotiations on March 19, 1993,14 and to issue
I. SUPREME COURT DECISIONS ON LABOR CASES memoranda, warnings and reprimands to remind the members of the Union to comply with HSBC's Code of Conduct.

a. Highlights of the 2016 Decisions Due to the sustained concerted actions, HSBC filed a complaint for ULP in the Arbitration Branch of the National Labor
i. Procedural requirements for valid strike (HSBC Employees Union vs. NLRC, G.R. No. 156635, Relations Commission (NLRC), docketed as NLRC-NCR Case No. 00-04-02481-93. The Labor Arbiter's decision was
January 11, 2016) appealed to the NLRC whose disposition to remand the case to the Labor Arbiter for further proceedings was in turn
BERSAMIN, J.: assailed. Ultimately, in G.R. No. 125038 entitled The Hongkong & Shanghai Banking Corporation Employees Union v.
A strike staged without compliance with the requirements of Article 263 1 of the Labor Code is illegal, and may cause the National Labor Relations Commission and The Hongkong & Shanghai Banking Corporation, Ltd., the Court affirmed the
termination of the employment of the participating union officers and members. However, the liability for the illegal disposition of the NLRC, and directed the remand of the case to the Labor Arbiter for further proceedings. 15
strike is individual, not collective. To warrant the termination of an officer of the labor organization on that basis, the
employer must show that the officer knowingly participated in the illegal strike. An ordinary striking employee cannot be The Union conducted a strike vote on December 19, 1993 after HSBC accorded regular status to Patrick King, the first
terminated based solely on his participation in the illegal strike, for the employer must further show that the employee person hired under the JEP. The majority of the members of the Union voted in favor of a strike.16 The following day, the
committed illegal acts during the strike. Union served its letter on HSBC in protest of the continued implementation of the JEP, and insisted that HSBC's
The Case modification of the salary structure under the JEP constituted ULP.

Under appeal is the decision promulgated on January 31, 2002 by the Court of Appeals (CA) in CA-GR. SP No. 56797 On December 22, 1993, at around 12:30 p.m., the Union's officers and members walked out and gathered outside the
entitled The Hongkong & Shanghai Banking Corporation Employees Union, et al. v. National Labor Relations Commission premises of HSBC's offices on Ayala Avenue, Makati and Ortigas Center, Pasig. 17 According to HSBC, the Union members
and The Hongkong & Shanghai Banking Corporation, Ltd.,2 which disposed as follows: blocked the entry and exit points of the bank premises, preventing the bank officers, including the chief executive officer,
from entering and/or leaving the premises.18 This prompted HSBC to resort to a petition for habeas corpus on behalf of its
WHEREFORE, the instant petition is DISMISSED and the questioned decision of the National Labor Relations officials and employees thus prevented from leaving the premises, whom it airlifted on December 24, 1993 to enable
Commission is AFFIRMED with MODIFICATION. them to leave the bank premises.19

Private respondent Hongkong & Shanghai Banking Corporation is ordered to pay each of the following: Isabelo Molo, On December 24, 1993, HSBC filed its complaint to declare the strike illegal. 20 The HSBC also petitioned for injunction
Elvira Orlina, Samuel Ellarma, Rosario Flores, Rebecca Fajardo, Ma. Victoria Luna, Malou Dizon, Ruben Atienza, Melo (with prayer for temporary restraining order (TRO)/writ of prohibitory injunction) in the NLRC, which issued the TRO
Gaba, Nelia Deriada, Fe Esperanza Gerong, Manuel Herrera, Rosalina Juliet Loquellano, Mercedes Paule, Binche Motus, on January 6, 1994, and the writ of preliminary injunction on January 31, 1994. 21 On November 22, 2001, the Court
Antonio del Rosario, Francisca del Mundo and Maida Militante: upheld the actions taken in that case in The Hongkong and Shanghai Banking Corporation Employees Union v. National
Labor Relations Commission and The Hongkong and Shanghai Banking Corporation Limited.22
(a) full backwages from the time of their dismissal in 1993 up to the time this decision becomes final; and
In the meantime, HSBC issued return-to-work notices to the striking employees on December 22, 1993. Only 25
employees complied and returned to work. Due to the continuing concerted actions, HSBC terminated the individual
(b) separation pay equivalent to one-half (1/2) month salary for every year of service up to 1993.
petitioners on December 27, 1993.23 The latter, undeterred, and angered by their separation from work, continued their
SO ORDERED.3 concerted activities.

Also under review is the resolution promulgated on December 9, 2002 whereby the CA denied the petitioners' motion for Ruling of the Labor Arbiter
reconsideration.4
On August 2, 1998, Labor Arbiter (LA) Felipe P. Pati declared the strike illegal for failure of the Union to file the notice of
strike with the Department of Labor and Employment (DOLE); to observe the cooling-off period; and to submit the
Antecedents results of the strike vote to the National Conciliation and Mediation Board (NCMB) pursuant to Article 263 of the Labor
Code. He concluded that because of the illegality of the strike the Union members and officers were deemed to have lost
In the period material to this case, petitioner Hongkong & Shanghai Banking Corporation Employees Union (Union) was their employment status. Lie disposed thusly:
the duly recognized collective bargaining agent of the rank-and-file employees of respondent Hongkong & Shanghai
Banking Corporation (HSBC). A collective bargaining agreement (CBA) governed the relations between the Union and its
members, on one hand, and HSBC effective April 1, 1990 until March 31, 1993 for the non-representational (economic) WHEREFORE, premises considered, judgment is hereby rendered as follows:
aspect, and effective April 1, 1990 until March 31, 1995 for the representational aspect. 5 The CBA included a salary chanRoblesvirtualLawlibrary
structure of the employees comprising of grade levels, entry level pay rates and the individual pays depending on the 1. The 22 December 1993 strike conducted by the union is hereby declared illegal;
length of service.6
2. The following Union officers and members who participated in the 22 December 1993 strike are hereby deemed to
On January 18, 1993, HSBC announced its implementation of a job evaluation program (JEP) retroactive to January 1, have lost their employment status as of that date, namely: Dalisay Dela Chica, Isabelo Molo, Danilo Alonso, Alvar Rosales,
1993. The JEP consisted of a job designation per grade level with the accompanying salary scale providing for the Russel Palma, Imelda Hernandez, Vicente Llacuna, Josefina Ortiguero, Agustin Iligan, Ma. Asuncion Kimseng, Miguel Sison,
minimum and maximum pay the employee could receive per salary level.7 By letter dated January 20, 1993,8 the Union Raul Geronimo, Marilou Cadena, Ana Tamonte, Yolanda Enciso, Avelino Relucio, Joralyn Gongora, Corazon Albos,
demanded the suspension of the JEP, which it labeled as an unfair labor practice (ULP). In another letter dated January Anabella Gozales, Ma. Corazon Baltazar, Maria Luz Jimenez, Concordio Madayag, Elvira Orlina, Ma. Lourdes Austria,
22, 1993, the Union informed HSBC that it would exercise its right to concerted action. On the same day of January 22, Josephine Landas, Samuel Ellarma, Rosario Flores, Editha Broqueza, Marina Sal vac ion, Ma. Cecilia Ocampo, Rebecca
1993, the Union members started picketing during breaktime while wearing black hats and black bands on their arms Fajardo, Ma. Victoria Luna, Ma. Theresa Ofelia Galang, Benigno Amion, Mercedes Castro, Gerardo de Leon, Rowena
and other appendages.9 In its letter dated January 25, 1993, HSBC responded by insisting that the JEP was an express Ocampo, Malou Dizon, Juliet Dacumos, Blandina dela Pena, Ruben Atienza, Ma. Fe Temporal, Mcllo Gaba, Herman
recognition of its obligation under the CBA.10 The Union's concerted activities persisted for 11 months, 11 notwithstanding Camposanto, Nelia Deriada, Lolito Hilis, Ma. Dulce Abellar, Grace Mabunay, Fe Esperanza Gerong, Romeo Tumlos, Sonia
Argos, Manuel Herrera, Joselito Gonzaga, Uldarico Pedida, Cynthia Calangi, Rosalina Loquellano, Marcial Gonzaga, to pay (a) P5,000.00 and (b) one-half (1/2) month salary for every year of service up to December 1993 to each of the
Mercedes Paule, Jess Nicolas, Teodoro Motus, Blanche Motus, Daisy Martinez Fagutao, Antonio del Rosario, Emmanuel following respondents: Isabelo Molo, Elvira Orlina, Samuel Ellarma, Rosario Flores, Rebecca Fajardo, Ma. Victoria Luna,
Justin Grey, Francisca del Mundo, Juliet Cruz, Rodrigo Durano, Carmina Rivera, David Atanacio, Jr., Ofelia Rabuco, Alfred Malou Dizon, Ruben Atienza, Melo Gaba, Nelia Deriada, Fe Esperanza Gerong, Manuel Herrera, Rosalina Juliet Loquellano,
Tan Jr., Catalina Yee, Menandro Caligaga, Melorio Maida Militante, Antonio Marilon, and Leonila Peres, Emma Mateo, Mercedes Paule. Binche Motus, Antonio del Rosario, Francisca del Mundo and Maida Militante.
Felipe Vital, Jr., Mario Fermin, and Virgilio Reli;
SO ORDERED.25ChanRoblesVirtualawlibrary
3. The Union, its officers and members are hereby held jointly and severally liable to pay the Bank the amount of
P45,000.00 as actual damages.
The petitioners filed their motion for reconsideration, but the NLRC denied their motion. 26
All the other claims for moral and exemplary damages are denied for lack of merit.
Judgment of the CA
SO ORDERED.24ChanRoblesVirtualawlibrary
On certiorari, the CA, through the assailed judgment promulgated on January 31, 2002,27 deleted the award of indemnity,
Decision of the NLRC but ordered HSBC to pay baekwages to the 18 employees in accordance with Serrano v. National Labor Relations
Commission,28 to wit:
On appeal, the NLRC modified the ruling of LA Pati, and pronounced the dismissal of the 18 Union members unlawful for
failure of LISBC to accord procedural due process to them, viz.: In Ruben Serrano v. NLRC and Isetcmn Department Store xxx, the Court ruled that an employee who is dismissed, whether
or not for just or authorized cause but without prior notice of his termination, is entitled to full baekwages from the time
xxx [W]e note, however, that as per the submission of the parties, not all the respondents (members) have been he was terminated until the decision in his case becomes final, when the dismissal was for cause; and in case the
identified by complainant as having violated the law on free ingress and egress (i.e., Article 264[e]). A meticulous review dismissal was without just or valid cause, the backwages shall be computed from the time of his dismissal until his actual
of the testimonies given during trial and a comparison of the same show that 25 respondents were not named by reinstatement. In the case at bar, where the requirement of notice and hearing was not complied with, the aforecited
complainant's witnesses. doctrine laid down in the Serrano case applies.29

Of the 25, 6 of them (Rabuco, Salvacion, Castro, Dacumos, Calangi and Nicolas) have already settled with the complainant On motion for reconsideration, the CA reiterated its judgment, and denied HSBC's motion to delete the award of
during the pendency of the appeal. Of the remaining 19, one respondent is a union officer (Rivera) while the remaining backwages.30
18 respondents (Molo, Orlina, Ellarma, Flores, Fajardo, Luna, Dizon, Atienza, Gaba, Deriada, Gerong, Herrera, Loquellano,
Paule, Motus, Del Rosario, Mundo and Militante) are neither officers nor members who have been pinpointed as having Hence, this appeal by petition for review on certiorari.
committed illegal act[s]. We, therefore, disagree with the Labor Arbiter's generalization that these 18 respondents have
similarly lost their employment status simply because they participated in or acquiesced to the holding of the strike. Pending the appeal, petitioners Elvira A. Orlina, Rosario A. Flores, Ma. Victoria C. Luna, Malou Dizon, Fe Esperanza
Gerong, Francisca del Mundo, and Ruben Atienza separately presented motions to withdraw as petitioners herein by
xxxx virtue of their having individually executed compromise agreements/quitclaims with HSBC.31 The Court granted all the
motions to withdraw;32 hence, this adjudication relates only to the remaining petitioners.
Only insofar as the xxx 18 respondents are concerned, We rule that complainant did fail to give them sufficient
opportunity to present their side and adequate opportunity to answer the charges against them. More was expected from
Issues
complainant and its observance of due process may not be dispensed with no matter how brazen and blatant the
violation or its rules and regulations may have perceived. The twin requirement of notice and hearing in termination
The remaining petitioners raise the following grounds in support of their appeal, namely:
cases are as much indispensable and mandatory as the procedural requirements enumerated in Article 262 of the Labor
Code. In this case, We cannot construe complainant's notice to return-to-work as substantial compliance with due
process requirement. I

Contrary however to respondents' insistence that complainant failed to observe due process in the case of the 18 THE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW IN HOLDING THAT ALL THE PETITIONERS WERE
respondents does not mean that they are automatically entitled to backwages or reinstatement. Consistent with decided VALIDLY DISMISSED
cases, these respondents are entitled only to indemnity for complainant's omission, specifically to the amount of A
P5,000.00 each, xxx The Court of Appeals cannot selectively apply the right to due process in determining the validity of the dismissal of the
employee
As a final word, and only as regard these 18 respondents, We take note of the fact that they have remained silent B
spectators, if not mere bystanders, in the illegal strike and illegal acts committed by the other individual respondents, The refusal to lift the strike upon orders of the HSBC is not just cause for the dismissal of the employees
and since the grounds for which they have been terminated do not involve moral turpitude, the consequences for their C
acts must nevertheless be tempered with some sense of compassion. Consistent with prevailing jurisprudence and in the The HSBC is liable for damages for having acted in utter bad faith by dismissing the petitioners after having previously
interest of social justice, We find the award of separation pay to each of the 18 respondents equivalent to one-half (1/2) submitted the dispute to the NLRC
month salary for every year of service as equitable and proper. D
Union officers who did not knowingly participate in the strike do not lose their employment status
XXXX E
The responsibility for illegal acts committed in the course of a strike is individual and not collective
WHEREFORE, the decision dated 26 August 1998 is hereby AFFIRMED with the modification that complainant is ordered F
The January 5, 1994 incident does not warrant the dismissal of the petitioners involved thereat
G The right to strike is a constitutional and legal right of all workers because the strike, which seeks to advance their right
The penalty, if any, imposable on union officers should be suspension and not dismissal to improve the terms and conditions of their employment, is recognized as an effective weapon of labor in their struggle
for a decent existence. However, the right to strike as a means for the attainment of social justice is never meant to
II oppress or destroy the employers. Thus, the law prescribes limits on the exercise of the right to strike. 40cralawred

THE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW IN HOLDING THAT THE STRIKE WAS ILLEGAL Article 263 of the Labor Code specifies the limitations on the exercise of the right to strike, viz.:
A
The test of good faith laid down by this Honorable Court is whether the union is of the reasonable belief that the Article 263. Strikes, picketing, and lockouts, x x x
management was committing an unfair labor practice
B xxxx
The decision as to when to declare the strike is wholly dependent on the union, and the same cannot negate good faith
C (c) In cases of bargaining deadlocks, the duly certified or recognized bargaining agent may file a notice of strike or the
The Court of Appeals committed grave error in concluding that this Court had already ruled on the validity of the employers may file a notice of lockout with the [Department] at least 30 days before the intended date thereof. In cases of
implementation of the Job Evaluation Program and no longer considered the evidence presented by petitioners to unfair labor practices, the period of notice shall be 15 days and in the absence of a duly certified or recognized bargaining
establish unfair labor practice on the part of the HSBC agent, the notice of strike may be filed by any legitimate labor organization in behalf of its members. However, in case of
D dismissal from employment of union officers duly elected in accordance with the union constitution and by-laws, which
The doctrine automatically making a strike illegal due to non-compliance with the mandatory procedural requirements may constitute union busting, where the existence of the union is threatened, the 15-day cooling off period shall not
needs to be revisited apply and the union may take action immediately.
The petitioners argue that they were illegally dismissed; that the CA erred in selectively applying the twin notice (d) The notice must be in accordance with such implementing rules and regulations as the [Secretary] of Labor and
requirement; that in the case of the Union officers, there must be a prior showing that they had participated in the illegal Employment may promulgate.
strike before they could be terminated from employment, but that HSBC did not make such showing, as, in fact,
petitioners Carmina C. Rivera and Mario T. Fermin were on leave during the period of the strike; 33 that they could not be (e) During the cooling-off period, it shall be the duty of the [Department] to exert all efforts at mediation and conciliation
dismissed on the ground of insubordination or abandonment in view of participation in a concerted action being a to effect a voluntary settlement. Should the dispute remain unsettled until the lapse of the requisite number of clays from
guaranteed right; that their participation in the concerted activities out of their sincere belief that HSBC had committed the mandatory filing of the notice, the labor union may strike or the employer may declare a lockout.
ULP in implementing the JEP constituted good faith to be appreciated in their favor; that their actions merited only their
suspension at most, not the extreme penalty of dismissal; and that the prevailing rule that non-compliance with the (f) A decision to declare a strike must be approved by a majority of the total union membership in the bargaining unit
procedural requirements under the Labor Code before staging a strike would invalidate the strike should be revisited concerned, obtained by secret ballot in meetings or referenda called for that purpose. A decision to declare a lockout
because the amendment under Batas Pambansa Blg. 227 indicated the legislative intent to ease the restriction on the must be approved by a majority of the board of directors of the corporation or association or of the partners in a
right to strike. partnership, obtained by secret ballot in a meeting called for that purpose. The decision shall be valid for the duration of
the dispute based on substantially the same grounds considered when the strike or lockout vote was taken. The
HSBC counters that the appeal raises factual issues already settled by the CA, NLRC, and the LA, rendering such issues [Department] may, at its own initiative or upon request of any affected party, supervise the conduct of the secret
inappropriate for determination in this appeal; that it was not liable for illegal dismissal because the petitioners had balloting. In every case, the union or the employer shall furnish the [Department] the results of the voting at least seven
willfully staged their illegal strike without prior compliance with Article 263 of the Labor Code;34 that the procedural days before the intended strike or lockout, subject to the cooling-off period herein provided.
requirements of Article 263 of the Labor Code were mandatory and indispensable conformably with Article 26435 of the
Labor Code, which, in relation to Article 263(c), (d) and (f), expressly made such non-compliance a prohibited activity; xxxx
that for this reason Article 264 penalized the Union officers who had participated in the illegal strike with loss of their
employment status;36 that good faith could not be accorded to the petitioners because aside from the non-compliance
with the mandatory procedure, they did not present proof to show that the strike had been held for a lawful purpose, or The procedural requirements for a valid strike are, therefore, the following, to wit: (1) a notice of strike filed with the
that the JEP had amounted to ULP, or that they had made a sincere effort to settle the disagreement; 37 and that as far as DOLE at least 30 days before the intended date thereof, or 15 days in case of ULP; (2) a strike vote approved by the
the 18 employees were concerned, they were entitled only to nominal damages, not backwages, following the ruling in majority of the total union membership in the bargaining unit concerned, obtained by secret ballot in a meeting called for
Agabon v. National Labor Relations Commission38 that meanwhile modified the doctrine in Serrano v. National Labor that purpose; and (3) a notice of the results of the voting at least seven days before the intended strike given to the DOLE.
Relations Commission.39 These requirements are mandatory, such that non-compliance therewith by the union will render the strike illegal. 41

Two main issues to be resolved are, therefore, namely: (1) whether the strike commenced on December 22, 1993 was According to the CA, the petitioners neither filed the notice of strike with the DOLE, nor observed the cooling-off period,
lawfully conducted; and (2 whether the petitioners were illegally dismissed. nor submitted the result of the strike vote. Moreover, although the strike vote was conducted, the same was done by
Ruling of the Court open, not secret, balloting,42 in blatant violation of Article 263 and Section 7, Rule XIII of the Omnibus Rules
Implementing the Labor Code.43 It is not amiss to observe that the evident intention of the requirements for the strike-
We PARTLY GRANT the petition for review on certiorari. notice and the strike-vote report is to reasonably regulate the right to strike for the attainment of the legitimate policy
objectives embodied in the law.44 As such, the petitioners committed a prohibited activity under Article 264(a) of the
Labor Code, and rendered their strike illegal.
I
Non-compliance with Article 263 of the
We underscore that the language of the law itself unmistakably bears out the mandatory character of the limitations it
Labor Code renders a labor strike illegal
has prescribed, to wit:
Art. 264. Prohibited activities. - (a) No labor organization or employer shall declare a strike or lockout without first comfortable enjoyment of life or property, when accompanied by intimidation, threats, violence, and coercion as to
having bargained collectively in accordance with Title VII of this Book or without first having filed the notice required constitute nuisance, should be regulated.54 In fine, the strike, even if justified as to its ends, could become illegal because
in the preceding Article or without the necessary strike or lockout vote first having been obtained and reported of the means employed, especially when the means came within the prohibitions under Article 264(e) of the Labor
to the [Department], (emphasis supplied) Code:55

xxxx III
Good faith did not avail because of the
Accordingly, the petitioners' plea for the revisit of the doctrine to the effect that the compliance with Article 263 was patent violation of Article 263 of the Labor Code
mandatory was entirely unwarranted. It is significant to remind that the doctrine has not been established by judicial
declaration but by congressional enactment. Verba legis non est recedendum. The words of a statute, when they are clear,
plain and free from ambiguity, must be given their literal meaning and must be applied without interpretation. 45 Had the The petitioners assert their good faith by maintaining that their strike was conducted out of their sincere belief that HSBC
legislators' intention been to relax this restriction on the right of labor to engage in concerted activities, they would have had committed ULP in implementing the JEP. They had also hoped that HSBC would be willing to negotiate matters
stated so plainly and unequivocally. related to the JEP considering that the economic aspect of the CBA was set to expire on March 31, 1993.

We rule out good faith on the part of the petitioners.

II
Commission of unlawful acts during
The petitioners' disregard of the procedural requirements for conducting a valid strike negated their claim of good faith.
the strike further rendered the same illegal
For their claim to be upheld, it was not enough for them to believe that their employer was guilty of ULP, for they must
also sufficiently show that the strike was undertaken with a modicum of obeisance to the restrictions on their exercise of
The petitioners insist that all they did was to conduct an orderly, peaceful, and moving picket. They deny employing any
the right to strike prior to and during its execution as prescribed by the law. They did not establish their compliance with
act of violence or obstruction of HSBC's entry and exit points during the period of the strike.
the requirements specifically for the holding of the strike vote and the giving of the strike notice. 56
The contrary was undeniably true. The strike was far from orderly and peaceful. HSBC's claim that from the time when
The petitioners should entirely bear the consequence of their non-compliance with the legal requirements. As we said in
the strike was commenced on December 22, 1993 the petitioners had on several instances obstructed the ingress into
Pilipino Telephone Corporation v. Pilipino Telephone Employees Association (PILTEA):57
and egress from its offices in Makati and in Pasig was not competently disputed, and should thus be accorded credence in
the light of the records. We agree with HSBC, for all the affidavits46 and testimonies of its witnesses,47 as well as the
photographs48 and the video recordings49 reviewed by LA Pati depicted the acts of obstruction, violence and intimidation [W]e do not find any reason to deviate from our rulings in Gold City Integrated Port Service, Inc. and Nissan Motors
committed by the petitioners during their picketing. It was undeniable that such acts of the strikers forced HSBC's Philippines, Inc. It bears emphasis that the strike staged by the Union in the instant case was illegal for its procedural
officers to resort to unusual means of gaining access into its premises at one point. 50 In this connection, LA Pati even infirmities and for defiance of the Secretary's assumption order. The CA, the NLRC and the Labor Arbiter were
observed as follows: unanimous in finding that bad faith existed in the conduct of the subject strike. The relevant portion of the CA Decision
states:
chanRoblesvirtualLawlibrary
[I]t must be pointed out that the Bank has shown by clear and indubitable evidence that most of the respondents have
xxx We cannot go to the extent of ascribing good faith to the means taken in conducting the strike. The
actually violated the prescription provided for in paragraph (b) of Article 264 on free ingress and egress. The incident
requirement of the law is simple, that is — 1. Give a Notice of Strike; 2. Observe the cooling period; 3. Observe the
depicted in the video footage of 05 January 1994, which has been viewed several times during the trial and even
mandatory seven day strike ban; 3. If the act is union busting, then the union may strike doing away with the cooling-off
privately, demonstrates beyond doubt that the picket was a non-moving, stationary one - nothing less but a
period, subject only to the seven-day strike ban. To be lawful, a strike must simply have a lawful purpose and should be
barricade. This office is more than convinced that the respondents, at least on that day, have demonstrated an
executed through lawful means. Here, the union cannot claim good faith in the conduct of the strike because, as can
abnormally high degree of hatred and anger at the Bank and its officers (including the Bank's chief executive
be gleaned from the findings of the Labor Arbiter, this was an extensively coordinated strike having been
officer who fell to the ground as a result of the pushing and shoving) leading them to do anything to carry out
conducted all throughout the offices of PILTEL all over the country. Evidently, the strike was planned. Verily, they
their resolve not to let anymore inside the Bank. Additionally, as observed by this Labor Arbiter, the tensed and
cannot now come to court hiding behind the shield of "good faith." Be that as it may, petitioners claim good faith only in
disquieting relation between the parties became all the more apparent during the actual hearings as clearly evident from
so far as their grounds for the strike but not on the conduct of the strike. Consequently, they still had to comply with the
the demeanor and actuations of the respondents.51 (Emphasis supplied)
procedural requirements for a strike, which, in this case, they failed to do so.58ChanRoblesVirtualawlibrary

The situation during the strike actually went out of hand because of the petitioners' illegal conduct, compelling HSBC to
IV
secure an injunction from the NLRC as well as to file its petition for habeas corpus in the proper court in the interest of its
The finding on the illegal strike did not justify the
trapped officers and employees; and at one point to lease an helicopter to extract its employees and officers from its
wholesale termination of the strikers from employment
premises on the eve of Christmas Day of 1993.
The next issue to resolve is whether or not HSBC lawfully dismissed the petitioners for joining the illegal strike.
For sure, the petitioners could not justify their illegal strike by invoking the constitutional right of labor to concerted
actions. Although the Constitution recognized and promoted their right to strike, they should still exercise the right
As a general rule, the mere finding of the illegality of the strike does not justify the wholesale termination of the strikers
within the bounds of law.52 Those bounds had been well-defined and well-known. Specifically, Article 264(e) of the Labor
from their employment.59 To avoid rendering the recognition of the workers' right to strike illusory, the responsibility for
Code expressly enjoined the striking workers engaged in picketing from committing any act of violence, coercion or
the illegal strike is individual instead of collective.60 The last paragraph of Article 264(a) of the Labor Code defines the
intimidation, or from obstructing the free ingress into or egress from the employer's premises for lawful purposes, or
norm for terminating the workers participating in an illegal strike, viz.:
from obstructing public thoroughfares.53 The employment of prohibited means in carrying out concerted actions
injurious to the right to property of others could only render their strike illegal. Moreover, their strike was rendered
unlawful because their picketing which constituted an obstruction to the free use of the employer's property or the
Article 264. Prohibited Activities -xxx We declare the illegality of the termination of the employment of the 18 members of the Union for failure of HSBC to
prove that they had committed illegal acts during the strike. We also declare that Daisy Fagutao was unlawfully dismissed
xxxx because HSBC did not adduce substantial evidence establishing her presence and her commission of unlawful acts during
the strike.
Any worker whose employment has been terminated as a consequence of any unlawful lockout shall be entitled to
reinstatement with full backwages. Any union officer who knowingly participates in an illegal strike and any We clarify that the 18 employees, including Fagutao and Union officer Fermin, were illegally dismissed because of lack of
worker or union officer who knowingly participates in the commission of illegal acts during a strike may be any valid ground to dismiss them, and for deprivation of procedural due process. Thus, we take exception to that portion
declared to have lost his employment status: Provided, That mere participation of a worker in a lawful strike shall not of the NLRC ruling that held:
constitute sufficient ground for termination of his employment, even if a replacement had been hired by the employer
during such lawful strike, (emphasis supplied) We here note that all of the herein named respondents were terminated by complainant for reasons other than their
holding of an participation in the illegal strike. Specifically, the grounds for their termination were enumerated in the
Conformably with Article 264, we need to distinguish between the officers and the members of the union who participate notices of termination sent out by complainant as follows: abandonment, insubordination and seriously hampering
in an illegal strike. The officers may be deemed terminated from their employment upon a finding of their knowing operations. To Our mind, the complainant in the exercise of its management prerogative, had every reason to discipline
participation in the illegal strike, but the members of the union shall suffer the same fate only if they are shown to have these respondents for their disregard of the complainant's return-to-work order and for the damage sustained by reason
knowingly participated in the commission of illegal acts during the strike. Article 264 expressly requires that the officer thereof. Although these 18 respondents did not commit any illegal act during the strike, We can not simply ignore the fact
must have knowingly participated in the illegal strike. We have explained this essential element in Club Filipino, Inc. v. that they nonetheless breached complainant's rules and regulations and which acts serve as valid causes to terminate
Bautista,61 thusly: their employment. These respondents took a risk when they refused to heed complainant's lawful order and knowingly
caused damage and prejudice to complainant's operations; they should be prepared to take the consequences and be held
accountable for their actions. Whether or not complainant observed due process prior to the termination of these
Note that the verb "participates" is preceded by the adverb "knowingly." This reflects the intent of the legislature to
respondents is however a totally different matter.74ChanRoblesVirtualawlibrary
require "knowledge" as a condition sine qua non before a union officer can be dismissed from employment for
participating in an illegal strike. The provision is worded in such a way as to make it very difficult for employers to
circumvent the law by arbitrarily dismissing employees in the guise of exercising management prerogative. This is but We hold that said employees' right to exercise their right to concerted activities should not be defeated by the directive of
one aspect of the State's constitutional and statutory mandate to protect the rights of employees to self-organization.62 HSBC for them to report back to work. Any worker who joined the strike did so precisely to assert or improve the terms
and conditions of his work.75 Otherwise, the mere expediency of issuing the return to work memorandum could suffice to
stifle the constitutional right of labor to concerted actions. Such practice would vest in the employer the functions of a
The petitioners assert that the CA erroneously affirmed the dismissal of Carmina Rivera and Mario Fermin by virtue of
strike breaker,76 which is prohibited under Article 264(c) of the Labor Code.
their being officers of the Union despite lack of proof of their having participated in the strike.
The petitioners' refusal to leave their cause against HSBC constituted neither insubordination nor abandonment. For
The assertion is partly correct.
insubordination to exist, the order must be: (1) reasonable and lawful; (2) sufficiently known to the employee; and (3) in
connection to his duties.77 None of these elements existed in this case.
In the case of Fermin, HSBC did not satisfactorily prove his presence during the strike, much less identify him as among
the strikers. In contrast, Union president Ma. Dalisay dela Chica testified that Fermin was not around when the Union's
As to abandonment, two requirements need to be established, namely: (1) the failure to report for work or absence must
Board met after the strike vote to agree on the date of the strike. 63 In that regard, Corazon Fermin, his widow, confirmed
be without valid or justifiable reason; and (2) there must be a clear intention to sever the employer-employee
the Union president's testimony by attesting that her husband had been on leave from work prior to and during the
relationship. The second element is the more decisive factor and must be manifested by overt acts. 78 In that regard, the
strike because of his heart condition.64 Although Corazon also attested that her husband had fully supported the strike,
employer carries the burden of proof to show the employee's deliberate and unjustified refusal to resume his
his extending moral support for the strikers did not constitute sufficient proof of his participation in the strike in the
employment without any intention of returning.79 However, the petitioners unquestionably had no intention to sever the
absence of a showing of any overt participation by him in the illegal strike. The burden of proving the overt participation
employer-employee relationship because they would not have gone to the trouble of joining the strike had their purpose
in the illegal strike by Fermin solely belonged to HSBC, which did not discharge its burden. Accordingly, Fermin, albeit an
been to abandon their employment.80
officer of the Union, should not be deemed to have lost his employment status.
Moreover, we cannot subscribe to the view that the striking employees should be dismissed for having seriously
However, the dismissal of Rivera and of the rest of the Union's officers, namely: Ma. Dalisay dela Chica, Marvilon Militante
hampered and damaged HSBC's operations. In this aspect of the case, HSBC did not discharge its burden to prove that the
and David Atanacio, is upheld. Rivera admitted joining the picket line on a few occasions. 65 Dela Chica, the Union
acts of the employees constituted any of the just causes under the Labor Code or were prohibited under the company's
president, had instigated and called for the strike on December 22, 1993.66 In addition, HSBC identified Dela Chica67 and
code of conduct as to warrant their dismissal.
Militante68 as having actively participated in the strike. Their responsibility as the officers of the Union who led the illegal
strike was greater than the responsibility of the members simply because the former had the duty to guide their
members to obey and respect the law.69 When said officers urged and made their members violate the law, their V
dismissal became an appropriate penalty for their unlawful act.70 The law granted to HSBC the option to dismiss the Non-compliance with due process resulted
officers as a matter of right and prerogative.71 in illegal dismissal; the employer's liability
depended on the availing circumstances
Unlike the Union's officers, the ordinary striking members could not be terminated for merely taking part in the illegal
strike. Regardless of whether the strike was illegal or not, the dismissal of the members could be upheld only upon proof While Article 264 authorizes the termination of the union officers and employees, it does not remove from the employees
that they had committed illegal acts during the strike. They must be specifically identified because the liability for the their right to due process. Regardless of their actions during the strike, the employees remain entitled to an opportunity
prohibited acts was determined on an individual basis.72 For that purpose, substantial evidence available under the to explain their conduct and why they should not be penalized. In Suico v. National Labor Relations Commission,81 we have
attendant circumstances justifying the penalty of dismissal sufficed.73 reiterated the need for the employers to comply with the twin-notice requirement despite the cause for the termination
arising from the commission of the acts prohibited by Article 264, thus:
Art. 277(b) in relation to Art. 264(a) and (e) recognizes the right to due process of all workers, without distinction as to Re: NOTICE OF RETURN TO WORK
the cause of their termination. Where no distinction is given, none is construed. Hence, the foregoing standards of due __________________________________________________
process apply to the termination of employment of Suico, et al. even if the cause therefor was their supposed involvement
in strike-related violence prohibited under Art. 264 (a) and (e).82 On ___________________ at ________ o'clock in the morning/afternoon, you "walked-out" by leaving your assigned work station
without prior permission/leave during work hours.
Consequently, failure of the employer to accord due process to its employees prior to their termination results in illegal
You arc hereby directed to report back for work at the start of banking hours on the day immediately following
dismissal.
knowledge or receipt of this notice. Should you report for work no disciplinary action shall be imposed on you. Ibis is
without prejudice to any action the Bank may take against the Union.
The petitioners maintain that the CA applied the twin-notice requirement in favor of the 18 employees. HSBC disagrees,
claiming instead that the award of backwages in favor of said employees should be modified following Agabon.
Should you fail to report back for work within the period abovestated, the Bank shall be forced to terminate your
employment and take all appropriate measures to continue serving its clients.86
We partially agree with both parties.

Article 277(b)83 of the Labor Code mandates compliance with the twin-notice requirement in terminating an employee, As the notice indicates, HSBC did not fully apprise the strikers of the ground under the Labor Code that they had
viz.: supposedly violated. It also thereby deprived them the ample opportunity to explain and justify their actions. Instead, it
manifested therein its firm resolve to impose the extreme penalty of termination should they not comply with the order.
Article 277. Miscellaneous Provisions. - Plainly, the tenor of the notice was short of the requirements of a valid first notice.

xxxx The second notice was as follows:

(b) Subject to the constitutional right of workers to security of tenure and their right to be protected against dismissal Re: NOTICE OF TERMINATION
except for a just and authorized cause and without prejudice to the requirement of notice under Article 283 of this Code, __________________________________________________________
the employer shall furnish the worker whose employment is sought to be terminated a written notice containing
a statement of the causes for termination and shall afford the latter ample opportunity to be heard and to defend On_________ , 1993, you and a majority of the rank-and-file staff "walked out" by leaving your respective work stations
himself with the assistance of his representative, if he so desires, in accordance with company rules and regulations without prior leave and failed to return.
promulgated pursuant to guidelines set by the Department of Labor and Employment, x x x (Emphasis supplied)
You were directed to report back for work when a copy of the Bank's Memorandum/Notice to Return to Work
dated________________ 1993 was:
In King of Kings Transport, Inc. v. Mamac,84 we have laid down the contents of the notices to be served upon an employee
prior to termination, as follows:
1. [ ] Posted on the Bank's premises on_______________
2. [ ] served on your (sic) personally on____________________.
(1) The first written notice to be served on the employees should contain the specific causes or grounds for termination 3. [ ] delivered to your last known address on file with the Bank and received by you (your representative) on
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 Despite being directed to return to work, you have failed to comply.
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 Your "walk-out" is an illegal act amounting to abandonment, insubordination, and seriously hampering and damaging the
accusation against them, consult a union official or lawyer, gather data and evidence, and decide on the defenses they will bank's operations. Consequently, your employment with the Bank is terminated effective ____________________, 1993. 87
raise against the complaint. Moreover, in order to enable the employees to intelligently prepare their explanation and
defenses, the notice should contain a detailed narration of the facts and circumstances that will serve as basis for the
charge against the employees. A general description of the charge will not suffice. Lastly, the notice should specifically The second notice merely ratified the hasty and unilateral decision to terminate the petitioners without the benefit of a
mention which company rules, if any, are violated and/or which among the grounds under Art. 282 is being notice and hearing. Hence, this notice should be struck down for having violated the right of the affected employees to
charged against the employees. due process.

xxxx The failure by HSBC to strictly observe the twin-notice requirement resulted in the illegal dismissal. However, the extent
of its liability should depend on the distinct circumstances of the employees.
(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 HSBC should be held liable for two types of illegal dismissal — the first type was made without both substantive and
considered; and (2) grounds have been established to justify the severance of their employment.85 (Emphasis procedural due process, while the other was based on a valid cause but lacked compliance with procedural due process.
supplied) To the first type belonged the dismissal of Fermin, Fagutao and the 18 employees initially identified by the NLRC, while
the second type included the rest of the petitioners.

HSBC admitted issuing two pro forma notices to the striking employees. The first notice, sent on December 22, 1993, HSBC maintains that the dismissed 18 employees should not be entitled to backwages in conformity with Agabon.
reads as follows:
We disagree. Agabon involved the second type of dismissal, not the first type to which the 18 employees belonged. The
rule for employees unlawfully terminated without substantive and procedural due process is to entitle them to the reliefs
provided under Article 27988 of the Labor Code, that is, reinstatement without loss of seniority rights and other privileges PDF
and to his full backwages, inclusive of allowances, and other benefits or their monetary equivalent computed from the
time the compensation was withheld up to the time of actual reinstatement. However, the award of baekwages is subject
iii. Prerogative to transfer employees (Echo 2000 Commercial Corporation vs. ILIPINO-ECHO
to the settled policy that when employees voluntarily go on strike, no baekwages during the strike shall be awarded. 89
2000 CHAPTER-CLO, G.R. No. 214092, January 11, 2016)
January 11, 2016
As regards reinstatement, the lapse of 22 years since the strike now warrants the award of separation pay in lieu of
G.R. No. 214092
reinstatement, the same to be equivalent of one (1) month for every year of service. 90 Accordingly, Fermin who did not
participate in the strike, should be paid full baekwages plus separation pay of one (1) month per year of service, while ECHO 2000 COMMERCIAL CORPORATION, EDWARD N. ENRIQUEZ, LEONORA K. BENEDICTO and ATTY. GINA
petitioners Isabelo Molo, Samuel Ellarma, Rebecca Fajardo, Melo Gaba, Nelia Deriada, Manuel Herrera, Rosalina Juliet WENCESLAO, Petitioners,
Loquellano, Mercedes Paule, Blanche Motus, Antonio del Rosario, Maida Militante and Daisy Fagutao, who admitted their vs.
participation in the strike, were entitled to baekwages except during the period of the strike, and to separation pay of one OBRERO FILIPINO-ECHO 2000 CHAPTER-CLO, ARLO C. CORTES and DAVE SOMIDO, Respondents.
(1) month per year of service in lieu of reinstatement. REYES, J.:
Before the Court is the petition for review on certiorari1 filed by Echo 2000 Commercial Corporation (Echo) to assail the
In Agabon, we said that a dismissal based either on a just or authorized cause but effected without due process should be Decision2 rendered on September 24, 2013 and Resolution3 issued on March 28, 2014 by the Court of Appeals (CA) in
upheld. The employer should be nonetheless liable for non-compliance with procedural due process by paying indemnity CA-G.R. SP No. 121393. The CA affirmed the Decision4 dated April 15, 2011 of the National Labor Relations Commission's
in the form of nominal damages amounting to P30,000.00. (NLRC) Fifth Division, which declared that Arlo C. Cortes (Cortes) and Dave Somido (Somido) (respondents) were
illegally dismissed from employment by Echo. Edward N. Enriquez (Enriquez), Leonora K. Benedicto (Benedicto) and
In view of the non-observance of procedural due process by HSBC, the following petitioners should be entitled to nominal Atty. Gina Wenceslao (Atty. Wenceslao) used to be Echo's General Manager, Operations and Human Resources Officer,
damages of P30,000.00 each,91 namely: Ma. Dalisay dela Chica, Marvilon Militante, David Atanacio, Carmina Rivera, and External Counsel, respectively (Echo and the three officers are to be referred collectively as the petitioners). The CA
Russel Palma, Imelda Hernandez, Vicente Llacuna, Josefina A. Ortiguerro, Ma. Asuncion Kimseng, Miguel R. Sison, Raul P. and NLRC's rulings reversed the Decision5 of Labor Arbiter (LA) Renaldo O. Hernandez (Hernandez), who found the
Geronimo, Marilou Cadena, Ana Tamonte, Avelino Relucio, Joralyn Gongora, Corazon Albos, Anabella Gonzales, Ma. respondents' termination from service as valid.
Corazon Baltazar, Maria Luz Jimenez, Editha Broqueza, Ma. Theresa Galang, Benigno Amoin, Gerardo de Leon, Rowena
Ocampo, Hernan Camposanto, Lolito Hilis, Grace Mabunay, Joselito Gonzaga, Uldarico Pedida, Marcial Gonzaga, Jose Antecedents
Teodoro Motus, Emmanuel Justin Grey, Julieta Cruz, Rodrigo Durano, Catalina Yee, Menandro Caligagan, Leonila Perez,
and Emma Mateo. Echo is a provider of warehousing management and delivery services.

ACCORDINGLY, the Court AFFIRMS the decision promulgated on January 31, 2002 in CA-G.R. SP No. 56797 with King 8 Commercial Corporation (King 8), Echo's predecessor, initially employed Cortes on September 17, 2002, and
MODIFICATION that respondent Hongkong & Shanghai Banking Corporation (HSBC) shall pay: Somido, on October 12, 2004. Echo thereafter absorbed the respondents as employees on April 1, 2005. In 2008, Somido
was made a Warehouse Checker, while Cortes, a Forklift Operator.6

1. Mario S. Fermin, full backwages and separation pay equivalent to one (1) month per year of service in lieu of In January of 2009, the respondents and their co-workers formed Obrero Pilipino-Echo 2000 Commercial Chapter
reinstatement; (Union). Cortes was elected as Vice-President while Somido became an active member. The respondents claimed that the
Union's President, Secretary and one of the board members were subsequently harassed, discriminated and eventually
2. Isabelo Molo, Samuel Ellarma, Rebecca Fajardo, Melo Gaba, Nelia Deriada, Manuel Herrera, Rosalina Juliet terminated from employment by Echo.7
Loquellano, Mercedes Paule, Blanche Motus, Antonio del Rosario, Maida Militante and Daisy Fagutao,
backwages except during the period of the strike, and separation pay equivalent to one (1) month per year of
service in lieu of reinstatement; and
In May of 2009, Echo received information about shortages in peso value arising from the movement of products to and
3. Ma. Dalisay dela Chica, Marvilon Militante, David Atanacio, Carmina Rivera, Russel Palma, Imelda Hernandez, from its warehouse. After an immediate audit, Echo suspected that there was a conspiracy among the employees in the
Vicente Llacuna, Josefina A. Ortiguerro, Ma. Asuncion Kimseng, Miguel R. Sison, Raul P. Geronimo, Marilou warehouse. Since an uninterrupted investigation was necessary, Echo, in the exercise of its management prerogative,
Cadena, Ana Tamonte, Avelino Relucio, Joralyn Gongora, Corazon Albos, Anabella Gonzales, Ma. Corazon decided to re-assign the staff. The respondents were among those affected.8
Baltazar, Maria Luz Jimenez, Editha Broqueza, Ma. Theresa Galang, Benigno Amion, Gerardo de Leon, Rowena
Ocampo, Hernan Camposanto, Lolito Hilis, Grace Mabunay, Joselito Gonzaga, Uldarico Pedida, Marcial Gonzaga, On July 7, 2009, Enriquez issued a memorandum informing the respondents of their transfer to the Delivery Section,
Jose Teodoro Motus, Emmanuel Justin Grey, Julieta Cruz, Rodrigo Durano, Catalina Yee, Menandro Caligagan, which was within the premises of Echo's warehouse. The transfer would entail no change in ranks, status and salaries.9
Leonila Perez and Emma Mateo, indemnity in the form of nominal damages in the amount of P30,000.00 each.
On July 14, 2009, Somido wrote Echo a letter10 indicating his refusal to be promoted as a "Delivery Supervisor." He
explained that he was already happy as a Warehouse Checker. Further, he was not ready to be a Delivery Supervisor
since the position was sensitive and required more expertise and training, which he did not have.
No pronouncement as to costs.
Cortes similarly declined Echo's offer of promotion claiming that he was contented in his post then as a Forklift Operator.
SO ORDERED.cralawlawlibrary
He also alleged that he would be more productive as an employee if he remained in his post. He also lacked prior
supervisory experience.11
ii. Procedural due process in employee dismissal; Two written notices (Balais vs. Se’lon by
Aimee, G.R. No. 196557, June 15, 2016) On July 16, 2009, Enriquez, sans consent of the respondents, informed the latter of their assignments/designations,
effective July 17, 2009, as Delivery Supervisors with the following duties: (a) act as delivery dispatchers of booked and
planned deliveries for the day; (b) ensure the early loading of goods to the delivery trucks to avoid late take-offs; (c) man SO ORDERED.23
delivery teams for the trucks; (d) check the operational and cleanliness conditions of the trucks; (e) attend to delivery
concerns of account specialists of their outlets; and (f) call the attention of other warehouse personnel and report the In sustaining the respondents' arguments, the NLRC explained that at the time of the farmer's dismissal, they had been
same to the Human Resources Department regarding absences/tardiness, incomplete uniforms, appearances, refusal to employed by Echo for several years since 2002 and 2004, respectively. There were no prior untoward incidents.
accept delivery trips and other matters affecting warehouse productivity.12 However, things changed when the Union was formed. When the two did not agree to be transferred, they were
terminated for insubordination, a mere ploy to lend a semblance of legality to a pre-conceived management strategy.24
Echo alleged that the respondents did not perform the new duties assigned to them. Hence, they were each issued a
memorandum, dated July 16, 2009, requiring them to explain in writing their failure to abide with the new The NLRC denied the petitioners' motion for reconsideration.25
assignments.13
The Proceedings Before the CA
On July 18, 2009, Echo clarified through a memo that the respondents were designated as "Delivery Coordinators" and
The petitioners thereafter filed a Petition for Certiorari.26 In the herein assailed Decision dated September 24, 2013, the
not "Supervisors."14
CA affirmed in toto the NLRC's ruling citing the following as grounds:
Thereafter, successive memoranda were issued by Echo to the respondents, who refused to acknowledge receipt and
A transfer is a movement from one position to another which is of equivalent rank, level or salary, without break in
comply with the directives therein. The Memoranda15 dated July 20, 2009 suspended them without pay for five days for
service. Promotion, on the other hand, is the advancement from one position to another with an increase in duties and
their alleged insubordination. The Memoranda16 dated August 8, 2009 informed them of their termination from
responsibilities as authorized by law, and usually accompanied by an increase in salary.
employment, effective August 15, 2009, by reason of their repeated refusal to acknowledge receipt of Echo's memoranda
and flagrant defiance to assume the duties of Delivery Coordinators. x x x There is no doubt that said position of Delivery Supervisor/Coordinator entails great duties and responsibilities of
overseeing ECHO's business and involves discretionary powers. x x x What is important is the change in the nature of
The Proceedings Before the LA
work which resulted in an upgrade of their work condition and increase of duties and responsibilities which constitute
On August 17, 2009, the respondents filed before the NLRC a complaint against Echo for unfair labor practice, illegal promotion and not a mere transfer.
dismissal, illegal suspension, illegal deductions and payment of money claims, damages and attorney's fees.17 The
A transfer that results in promotion cannot be done without the employee's consent since there is no law that compels an
respondents claimed that they were offered promotions, which were mere ploys to remove them as rank-and-file
employee to accept a promotion for the reason that a promotion is in the nature of a gift or reward, which a person has a
employees, and oust them as Union members.18
right to refuse. When [the respondents] refused to accept their promotion as Delivery Supervisors/Coordinators, they
The petitioners, on the other hand, insisted that the respondents were merely transferred, and not promoted. Further, were exercising a right and they cannot be punished for it. He who uses his own legal right injures no one. Thus, [the
the respondents arrogantly refused to comply with Enriquez's directives. Their insubordination constituted just cause to respondents'] refusal to be promoted was not a valid cause for their dismissal.
terminate them from employment.19
Anent the award of moral damages, exemplary damages and attorney's fees, We agree with the NLRC that [the
On April 20, 2010, LA Hernandez dismissed the respondents' complaint for reasons stated below: (a) the claims of union- respondents] are entitled to the same.
busting, harassment and discrimination were not supported by evidence;20 (b) no promotions occurred as the duties of
xxxx
the Delivery Supervisors/Coordinators were merely reportorial in nature and not indicative of any authority to hire, fire
or change the status of other employees;21 and (c) Echo properly exercised its management prerogative to order the x x x We agree with the NLRC that the dismissal of [the respondents] was tainted with bad faith as they were dismissed
transfer, and this was done without intended changes in the ranks, salaries, status or places of assignment of the by ECHO for refusing to accept their promotion as Delivery Supervisor[s]/Coordinator[s]. x x x The NLRC also found that
respondents.22 ECHO's act of transferring [the respondents] from Forklift Operator and Warehouse Checker x x x to Delivery
Supervisors/Coordinators was aimed to remove them among the rank-and-file employees which amounts to union
The Proceedings Before the NLRC
interference. Without the leadership of Cortes, as Vice-President, and Somido, as an active member, the union would be
The respondents filed an appeal assailing LA Hernandez's ruling. The dispositive portion of the NLRC's Decision dated severely weakened, especially since most of its officers were already terminated by ECHO. xx x.27 (Citations omitted)
April 15, 2011 is quoted below:
The petitioners filed a motion for reconsideration, which the CA denied through the Resolution28 dated March 28,
WHEREFORE, premises considered, the appeal is GRANTED. The appealed decision of the [LA] dated April 20, 2010 is 2014.1âwphi1
REVERSED and SET ASIDE and a new one is entered declaring [the petitioners] guilty of unfair labor practice and illegal
Issues
dismissal of the [respondents]. [The petitioners] are ordered to immediately reinstate [the respondents] to their
previous positions without loss of seniority rights and other privileges/benefits and to pay [the respondents] the Unperturbed, the petitioners are now before the Court raising the issues of whether or not:
following:
(1) the respondents were illegally suspended and terminated, hence, entitled to payment of their money claims, damages
1. full backwages from the time of their dismissal up to their actual reinstatement; and attorney's fees;
2. the sum of P20,000.00 as moral damages[;] (2) Echo and its officers are guilty of unfair labor practice; and
3. the sum of P20,000.00 as exemplary damages; and ten [percent (10%)] of the monetary award as attorney's fees. (3) Echo's officers, who are sued as nominal parties, should be held liable to pay the respondents their money claims.29
All other monetary claims are dismissed for lack of substantiation.
In support thereof, the petitioners claim that the respondents' refusal to comply with the management's transfer order A transfer is a movement from one position to another which is of equivalent rank, level or salary, without break in
constitutes just cause to terminate the latter from employment. Echo also points out that before it closed shop on July 6, service. Promotion, on the other hand, is the advancement from one position to another with an increase in duties and
2011, the Union continued existing despite the respondents' dismissal from service. Hence, there is no factual basis in the responsibilities as authorized by law, and usually accompanied by an increase in salary. Conversely, demotion involves a
NLRC and CA's ruling that the respondents' termination is intertwined with union-busting.30 situation where an employee is relegated to a subordinate or less important position constituting a reduction to a lower
grade or rank, with a corresponding decrease in duties and responsibilities, and usually accompanied by a decrease in
The petitioners further argue that the respondents failed to establish by substantial evidence that Echo's officers, namely, salary.35 (Citations omitted and emphasis and underscoring ours)
Enriquez, Benedicto and Atty. Wenceslao, acted with malice. Thus, they cannot be held liable as well.31
For promotion to occur, there must be an advancement from one position to another or an upward vertical movement of
Corollarily, the dismissal being valid, there is no ground to grant the respondents' prayer for reinstatement and payment the employee's rank or position. Any increase in salary should only be considered incidental but never determinative of
of money claims and damages.32 whether or not a promotion is bestowed upon an employee.36

In their Comment,33 the respondents reiterate that their transfer/promotion was conceived to pave the way for their An employee is not bound to accept a promotion, which is in the nature of a gift or reward. Refusal to be promoted is a
eventual termination from employment. Moreover, even before the respondents could convey their acceptance or refusal valid exercise of a right.37 Such exercise cannot be considered in law as insubordination, or willful disobedience of a
to the transfer/promotion, they were promptly replaced by newly-hired contractual employees. lawful order of the employer, hence, it cannot be the basis of an employee's dismissal from service.38
Ruling of the Court In the case at bench, a Warehouse Checker and a Forklift Operator are rank-and-file employees. On the other hand, the
job of a Delivery Supervisor/Coordinator requires the exercise of discretion and judgment from time to time. Specifically,
The Court partially grants the instant petition.
a Delivery Supervisor/Coordinator assigns teams to man the trucks, oversees the loading of goods, checks the conditions
The first two issues, being interrelated, shall be discussed jointly. of the trucks, coordinates with account specialists in the outlets regarding their delivery concerns, and supervises other
personnel about their performance in the warehouse. A Delivery Supervisor/Coordinator's duties and responsibilities
The offer of transfer is, in legal contemplation, a promotion, which the respondents validly refused. Such refusal cannot are apparently not of the same weight as those of a Warehouse Checker or Forklift Operator. Hence, despite the fact that
be the basis for the respondents' dismissal from service. The finding of unfair labor practice and the award of moral and no salary increases were effected, the assumption of the post of a Delivery Supervisor/Coordinator should be considered
exemplary damages do not however follow solely by reason of the dismissal. a promotion. The respondents' refusal to accept the same was therefore valid.

Article 212(13) of the Labor Code distinguishes from each other as follows the concepts of managerial, supervisory and Notwithstanding the illegality of the respondents' dismissal, the Court finds no sufficient basis to award moral and
rank-and-file employees: exemplary damages.

"Managerial employee" is one who is vested with the powers or prerogatives to lay down and execute management A dismissal may be contrary to law but by itself alone, it does not establish bad faith to entitle the dismissed employee to
policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees. Supervisory moral damages. The award of moral and exemplary damages cannot be justified solely upon the premise that the
employees are those who, in the interest of the employer, effectively recommend such managerial actions if the exercise employer dismissed his employee without just or authorized cause.39
of such authority is not merely routinary or clerical in nature but requires the use of independent judgment. All
employees not falling within any of the above definitions are considered rank-and-file employees for purposes of this
Book. (Italics ours)
In the instant case, the right not to accept an offered promotion pertained to each of the respondents. However, they
As to the extent of management prerogative to transfer/promote employees, and the differences between transfer on one exhibited disrespectful behavior by their repeated refusal to receive the memoranda issued by Echo and by their
hand, and promotion, on the other, Coca-Cola Bottlers Philippines, Inc. v. Del Villar34 is instructive, viz: continued presence in their respective areas without any work output.40 The Court thus finds that although the
respondents' dismissal from service for just cause was unwarranted, there is likewise no basis for the award of moral and
[L]abor laws discourage interference in employers' judgment concerning the conduct of their business. exemplary damages in their favor. Echo expectedly imposed disciplinary penalties upon the respondents for the latter's
intransigence. Albeit the Court is not convinced of the character and extent of the measures taken by Echo, bad faith
In the pursuit of its legitimate business interest, management has the prerogative to transfer or assign employees from cannot be inferred solely from the said impositions.
one office or area of operation to another - provided there is no demotion in rank or diminution of salary, benefits, and
other privileges; and the action is not motivated by discrimination, made in bad faith, or effected as a form of punishment Anent the NLRC and CA's conclusion that Echo committed unfair labor practice, the Court disagrees.
or demotion without sufficient cause. xx x.
Unfair labor practices violate the constitutional right of workers and employees to self-organization, are inimical to the
x x x In the case of Blue Dairy Corporation v. National Labor Relations Commission, we described in more detail the legitimate interests of both labor and management, including their right to bargain collectively and otherwise deal with
limitations on the right of management to transfer employees: each other in an atmosphere of freedom and mutual respect, disrupt industrial peace and hinder the promotion of
healthy and stable labor-management relations.41
x x x [I]t cannot be used as a subterfuge by the employer to rid himself of an undesirable worker. In particular, the
employer must be able to show that the transfer is not unreasonable, inconvenient or prejudicial to the employee; nor The respondents allege that their transfer/promotion was intended to deprive the Union of leadership and membership.
does it involve a demotion in rank or a diminution of his salaries, privileges and other benefits. xxx. They claim that other officers were already dismissed. The foregoing, however, lacks substantiation. Unfair labor practice
is a serious charge, and the respondents failed to show that the petitioners conclusively interfered with, restrained, or
xxxx coerced employees in the exercise of their right to self-organization.

Enriquez, Benedicto and Atty. Wenceslao cannot be held personally liable for the respondents' money claims.
Lambert Pawnbrokers and Jewelry Corporation, et al. v. Binamira42 expounds on the liabilities of corporate officers to The case is REMANDED to the Labor Arbiter, who is hereby DIRECTED to COMPUTE the monetary benefits awarded in
illegally dismissed employees. The Court declared: accordance with this Decision.

As a general rule, only the employer-corporation, partnership or association or any other entity, and not its officers, SO ORDERED.
which may be held liable for illegal dismissal of employees or for other wrongful acts. This is as it should be because a
corporation is a juridical entity with legal personality separate and distinct from those acting for and in its behalf and, in iv. No automatic award of moral and exemplary damages in labor cases
general, from the people comprising it. A corporation, as a juridical entity, may act only through its directors, officers and v. Liabilities of corporate officers in illegal dismissal (Echo 2000 Commercial Corporation vs.
employees. Obligations incurred as a result of the directors' and officers' acts as corporate agents, are not their personal ILIPINO-ECHO 2000 CHAPTER-CLO, G.R. No. 214092, January 11, 2016)
liability but the direct responsibility of the corporation they represent. It is settled that in the absence of malice and bad January 11, 2016
faith, a stockholder or an officer of a corporation cannot be made personally liable for corporate liabilities. They are only G.R. No. 214092
solidarily liable with the corporation for the illegal termination of services of employees if they acted with malice or bad ECHO 2000 COMMERCIAL CORPORATION, EDWARD N. ENRIQUEZ, LEONORA K. BENEDICTO and ATTY. GINA
faith. In Philippine American Life and General Insurance v. Gramaje, bad faith is defined as a state of mind affirmatively WENCESLAO, Petitioners,
operating with furtive design or with some motive of self-interest or ill will or for ulterior purpose. It implies a conscious vs.
and intentional design to do a wrongful act for a dishonest purpose or moral obliquity.43 (Citations omitted and OBRERO FILIPINO-ECHO 2000 CHAPTER-CLO, ARLO C. CORTES and DAVE SOMIDO, Respondents.
underlining ours) DECISION
REYES, J.:
In the instant petition, the respondents failed to specify and sufficiently prove the alleged acts of Enriquez, Benedicto and Before the Court is the petition for review on certiorari1 filed by Echo 2000 Commercial Corporation (Echo) to
Atty. Wenceslao from which malice or bad faith can be concluded. Hence, there is no reason to invoke the exception to the assail the Decision2 rendered on September 24, 2013 and Resolution3 issued on March 28, 2014 by the Court of Appeals
general rule on non-liability of corporate officers. (CA) in CA-G.R. SP No. 121393. The CA affirmed the Decision4 dated April 15, 2011 of the National Labor Relations
Commission's (NLRC) Fifth Division, which declared that Arlo C. Cortes (Cortes) and Dave Somido (Somido)
In lieu of actual reinstatement, the respondents are entitled to separation pay. (respondents) were illegally dismissed from employment by Echo. Edward N. Enriquez (Enriquez), Leonora K. Benedicto
(Benedicto) and Atty. Gina Wenceslao (Atty. Wenceslao) used to be Echo's General Manager, Operations and Human
"In cases of illegal dismissal, the accepted doctrine is that separation pay is available in lieu of reinstatement when the Resources Officer, and External Counsel, respectively (Echo and the three officers are to be referred collectively as the
latter recourse is no longer practical or in the best interest of the parties."44 petitioners). The CA and NLRC's rulings reversed the Decision5 of Labor Arbiter (LA) Renaldo O. Hernandez
(Hernandez), who found the respondents' termination from service as valid.
The Court notes that the respondents were terminated from service on August 15, 2009, or more than six years ago.
Their reinstatement will not be practical and to the best interest of the parties. The Court thus finds more prudence in Antecedents
awarding separation pay to the respondents equivalent to one (1) month pay for every year of service, with a fraction of
at least six (6) months considered as one (1) whole year, from the time of their illegal dismissal up to the finality of this
Echo is a provider of warehousing management and delivery services.
Decision.

An annual interest of six percent (6%) is imposed on the monetary award. King 8 Commercial Corporation (King 8), Echo's predecessor, initially employed Cortes on September 17, 2002, and
Somido, on October 12, 2004. Echo thereafter absorbed the respondents as employees on April 1, 2005. In 2008, Somido
In accordance with Nacar v. Gallery Frames,45 the Court now imposes an interest on the monetary awards at the rate of was made a Warehouse Checker, while Cortes, a Forklift Operator.6
six percent (6%) per annum from the date of finality of this Decision until full payment
In January of 2009, the respondents and their co-workers formed Obrero Pilipino-Echo 2000 Commercial Chapter
WHEREFORE, the instant petition is PARTIALLY GRANTED. The Decision and Resolution of the Court of Appeals in CA-
(Union). Cortes was elected as Vice-President while Somido became an active member. The respondents claimed that the
G.R. SP No. 121393, dated September 24, 2013 and March 28, 2014, respectively, are MODIFIED.
Union's President, Secretary and one of the board members were subsequently harassed, discriminated and eventually
terminated from employment by Echo.7
The petitioner, Echo 2000 Commercial Corporation, is hereby declared guilty of illegal dismissal. In addition to the
National Labor Relations Commission's award of attorney's fees, Echo 2000 Commercial Corporation is likewise
ORDERED to pay the respondents, Arlo C. Cortes and Dave Somido, the following: In May of 2009, Echo received information about shortages in peso value arising from the movement of products to
and from its warehouse. After an immediate audit, Echo suspected that there was a conspiracy among the employees in
(a) separation pay in lieu of actual reinstatement equivalent to one (1) month pay for every year of service, with a the warehouse. Since an uninterrupted investigation was necessary, Echo, in the exercise of its management prerogative,
fraction of at least six (6) months considered as one (1) whole year from the time of the dismissal up to the finality of this decided to re-assign the staff. The respondents were among those affected.8
Decision;
On July 7, 2009, Enriquez issued a memorandum informing the respondents of their transfer to the Delivery Section,
(b) full backwages from the time of the illegal dismissal up to the finality of this Decision; and which was within the premises of Echo's warehouse. The transfer would entail no change in ranks, status and salaries.9
(c) interest on all monetary awards at the rate of 6% per annum from the finality of this Decision until full payment.
On July 14, 2009, Somido wrote Echo a letter10 indicating his refusal to be promoted as a "Delivery Supervisor." He
The amounts awarded as moral and exemplary damages by the National Labor Relations Commission to Arlo C. Cortes explained that he was already happy as a Warehouse Checker. Further, he was not ready to be a Delivery Supervisor
and Dave Somido are however deleted for lack of basis. since the position was sensitive and required more expertise and training, which he did not have.
 Cortes similarly declined Echo's offer of promotion claiming that he was contented in his post then as a Forklift illegal dismissal of the [respondents]. [The petitioners] are ordered to immediately reinstate [the respondents] to their
Operator. He also alleged that he would be more productive as an employee if he remained in his post. He also lacked previous positions without loss of seniority rights and other privileges/benefits and to pay [the respondents] the
prior supervisory experience.11 following:

On July 16, 2009, Enriquez, sans consent of the respondents, informed the latter of their assignments/designations, 1. full backwages from the time of their dismissal up to their actual reinstatement;
effective July 17, 2009, as Delivery Supervisors with the following duties: (a) act as delivery dispatchers of booked and
planned deliveries for the day; (b) ensure the early loading of goods to the delivery trucks to avoid late take-offs; (c) man
2. the sum of P20,000.00 as moral damages[;]
delivery teams for the trucks; (d) check the operational and cleanliness conditions of the trucks; (e) attend to delivery
concerns of account specialists of their outlets; and (f) call the attention of other warehouse personnel and report the
same to the Human Resources Department regarding absences/tardiness, incomplete uniforms, appearances, refusal to 3. the sum of P20,000.00 as exemplary damages; and ten [percent (10%)] of the monetary award as attorney's fees.
accept delivery trips and other matters affecting warehouse productivity.12
All other monetary claims are dismissed for lack of substantiation.
Echo alleged that the respondents did not perform the new duties assigned to them. Hence, they were each issued a
memorandum, dated July 16, 2009, requiring them to explain in writing their failure to abide with the new
SO ORDERED.23
assignments.13

In sustaining the respondents' arguments, the NLRC explained that at the time of the farmer's dismissal, they had
On July 18, 2009, Echo clarified through a memo that the respondents were designated as "Delivery Coordinators"
been employed by Echo for several years since 2002 and 2004, respectively. There were no prior untoward incidents.
and not "Supervisors."14
However, things changed when the Union was formed. When the two did not agree to be transferred, they were
terminated for insubordination, a mere ploy to lend a semblance of legality to a pre-conceived management strategy.24
Thereafter, successive memoranda were issued by Echo to the respondents, who refused to acknowledge receipt
and comply with the directives therein. The Memoranda15 dated July 20, 2009 suspended them without pay for five days
The NLRC denied the petitioners' motion for reconsideration.25
for their alleged insubordination. The Memoranda16 dated August 8, 2009 informed them of their termination from
employment, effective August 15, 2009, by reason of their repeated refusal to acknowledge receipt of Echo's memoranda
and flagrant defiance to assume the duties of Delivery Coordinators. The Proceedings Before the CA

The Proceedings Before the LA The petitioners thereafter filed a Petition for Certiorari.26 In the herein assailed Decision dated September 24,
2013, the CA affirmed in toto the NLRC's ruling citing the following as grounds:
On August 17, 2009, the respondents filed before the NLRC a complaint against Echo for unfair labor practice, illegal
dismissal, illegal suspension, illegal deductions and payment of money claims, damages and attorney's fees.17 The A transfer is a movement from one position to another which is of equivalent rank, level or salary, without break in
respondents claimed that they were offered promotions, which were mere ploys to remove them as rank-and-file service. Promotion, on the other hand, is the advancement from one position to another with an increase in duties and
employees, and oust them as Union members.18 responsibilities as authorized by law, and usually accompanied by an increase in salary.

The petitioners, on the other hand, insisted that the respondents were merely transferred, and not promoted. x x x There is no doubt that said position of Delivery Supervisor/Coordinator entails great duties and
Further, the respondents arrogantly refused to comply with Enriquez's directives. Their insubordination constituted just responsibilities of overseeing ECHO's business and involves discretionary powers. x x x What is important is the change
cause to terminate them from employment.19 in the nature of work which resulted in an upgrade of their work condition and increase of duties and responsibilities
which constitute promotion and not a mere transfer.
On April 20, 2010, LA Hernandez dismissed the respondents' complaint for reasons stated below: (a) the claims of
union-busting, harassment and discrimination were not supported by evidence;20 (b) no promotions occurred as the A transfer that results in promotion cannot be done without the employee's consent since there is no law that
duties of the Delivery Supervisors/Coordinators were merely reportorial in nature and not indicative of any authority to compels an employee to accept a promotion for the reason that a promotion is in the nature of a gift or reward, which a
hire, fire or change the status of other employees;21 and (c) Echo properly exercised its management prerogative to person has a right to refuse. When [the respondents] refused to accept their promotion as Delivery
order the transfer, and this was done without intended changes in the ranks, salaries, status or places of assignment of Supervisors/Coordinators, they were exercising a right and they cannot be punished for it. He who uses his own legal
the respondents.22 right injures no one. Thus, [the respondents'] refusal to be promoted was not a valid cause for their dismissal.

The Proceedings Before the NLRC Anent the award of moral damages, exemplary damages and attorney's fees, We agree with the NLRC that [the
respondents] are entitled to the same.
The respondents filed an appeal assailing LA Hernandez's ruling. The dispositive portion of the NLRC's Decision
dated April 15, 2011 is quoted below: xxxx

WHEREFORE, premises considered, the appeal is GRANTED. The appealed decision of the [LA] dated April 20, 2010 x x x We agree with the NLRC that the dismissal of [the respondents] was tainted with bad faith as they were
is REVERSED and SET ASIDE and a new one is entered declaring [the petitioners] guilty of unfair labor practice and dismissed by ECHO for refusing to accept their promotion as Delivery Supervisor[s]/Coordinator[s]. x x x The NLRC also
found that ECHO's act of transferring [the respondents] from Forklift Operator and Warehouse Checker x x x to Delivery "Managerial employee" is one who is vested with the powers or prerogatives to lay down and execute management
Supervisors/Coordinators was aimed to remove them among the rank-and-file employees which amounts to union policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees. Supervisory employees
interference. Without the leadership of Cortes, as Vice-President, and Somido, as an active member, the union would be are those who, in the interest of the employer, effectively recommend such managerial actions if the exercise of such
severely weakened, especially since most of its officers were already terminated by ECHO. xx x.27 (Citations omitted) authority is not merely routinary or clerical in nature but requires the use of independent judgment. All employees not
falling within any of the above definitions are considered rank-and-file employees for purposes of this Book. (Italics ours)
The petitioners filed a motion for reconsideration, which the CA denied through the Resolution28 dated March 28,
2014.1âwphi1 As to the extent of management prerogative to transfer/promote employees, and the differences between transfer
on one hand, and promotion, on the other, Coca-Cola Bottlers Philippines, Inc. v. Del Villar34 is instructive, viz:
Issues
[L]abor laws discourage interference in employers' judgment concerning the conduct of their business.
Unperturbed, the petitioners are now before the Court raising the issues of whether or not:
In the pursuit of its legitimate business interest, management has the prerogative to transfer or assign employees
from one office or area of operation to another - provided there is no demotion in rank or diminution of salary, benefits,
(1) the respondents were illegally suspended and terminated, hence, entitled to payment of their money claims,
and other privileges; and the action is not motivated by discrimination, made in bad faith, or effected as a form of
damages and attorney's fees;
punishment or demotion without sufficient cause. xx x.

(2) Echo and its officers are guilty of unfair labor practice; and
x x x In the case of Blue Dairy Corporation v. National Labor Relations Commission, we described in more detail the
limitations on the right of management to transfer employees:
(3) Echo's officers, who are sued as nominal parties, should be held liable to pay the respondents their money
claims.29
x x x [I]t cannot be used as a subterfuge by the employer to rid himself of an undesirable worker. In particular, the
employer must be able to show that the transfer is not unreasonable, inconvenient or prejudicial to the employee; nor
In support thereof, the petitioners claim that the respondents' refusal to comply with the management's transfer does it involve a demotion in rank or a diminution of his salaries, privileges and other benefits. xxx.
order constitutes just cause to terminate the latter from employment. Echo also points out that before it closed shop on
July 6, 2011, the Union continued existing despite the respondents' dismissal from service. Hence, there is no factual
xxxx
basis in the NLRC and CA's ruling that the respondents' termination is intertwined with union-busting.30

A transfer is a movement from one position to another which is of equivalent rank, level or salary, without break in
The petitioners further argue that the respondents failed to establish by substantial evidence that Echo's officers,
service. Promotion, on the other hand, is the advancement from one position to another with an increase in duties and
namely, Enriquez, Benedicto and Atty. Wenceslao, acted with malice. Thus, they cannot be held liable as well.31
responsibilities as authorized by law, and usually accompanied by an increase in salary. Conversely, demotion
involves a situation where an employee is relegated to a subordinate or less important position constituting a reduction
Corollarily, the dismissal being valid, there is no ground to grant the respondents' prayer for reinstatement and to a lower grade or rank, with a corresponding decrease in duties and responsibilities, and usually accompanied by a
payment of money claims and damages.32 decrease in salary.35 (Citations omitted and emphasis and underscoring ours)

In their Comment,33 the respondents reiterate that their transfer/promotion was conceived to pave the way for For promotion to occur, there must be an advancement from one position to another or an upward vertical
their eventual termination from employment. Moreover, even before the respondents could convey their acceptance or movement of the employee's rank or position. Any increase in salary should only be considered incidental but never
refusal to the transfer/promotion, they were promptly replaced by newly-hired contractual employees. determinative of whether or not a promotion is bestowed upon an employee.36

Ruling of the Court An employee is not bound to accept a promotion, which is in the nature of a gift or reward. Refusal to be promoted
is a valid exercise of a right.37 Such exercise cannot be considered in law as insubordination, or willful disobedience of a
lawful order of the employer, hence, it cannot be the basis of an employee's dismissal from service.38
The Court partially grants the instant petition.

In the case at bench, a Warehouse Checker and a Forklift Operator are rank-and-file employees. On the other hand,
The first two issues, being interrelated, shall be discussed jointly.
the job of a Delivery Supervisor/Coordinator requires the exercise of discretion and judgment from time to time.
Specifically, a Delivery Supervisor/Coordinator assigns teams to man the trucks, oversees the loading of goods, checks
The offer of transfer is, in legal contemplation, a promotion, which the respondents validly refused. Such the conditions of the trucks, coordinates with account specialists in the outlets regarding their delivery concerns, and
refusal cannot be the basis for the respondents' dismissal from service. The finding of unfair labor practice and supervises other personnel about their performance in the warehouse. A Delivery Supervisor/Coordinator's duties and
the award of moral and exemplary damages do not however follow solely by reason of the dismissal. responsibilities are apparently not of the same weight as those of a Warehouse Checker or Forklift Operator. Hence,
despite the fact that no salary increases were effected, the assumption of the post of a Delivery Supervisor/Coordinator
should be considered a promotion. The respondents' refusal to accept the same was therefore valid.
Article 212(13) of the Labor Code distinguishes from each other as follows the concepts of managerial, supervisory
and rank-and-file employees:
 Notwithstanding the illegality of the respondents' dismissal, the Court finds no sufficient basis to award moral and "In cases of illegal dismissal, the accepted doctrine is that separation pay is available in lieu of reinstatement when
exemplary damages. the latter recourse is no longer practical or in the best interest of the parties."44

A dismissal may be contrary to law but by itself alone, it does not establish bad faith to entitle the dismissed The Court notes that the respondents were terminated from service on August 15, 2009, or more than six years ago.
employee to moral damages. The award of moral and exemplary damages cannot be justified solely upon the premise Their reinstatement will not be practical and to the best interest of the parties. The Court thus finds more prudence in
that the employer dismissed his employee without just or authorized cause.39 awarding separation pay to the respondents equivalent to one (1) month pay for every year of service, with a fraction of
at least six (6) months considered as one (1) whole year, from the time of their illegal dismissal up to the finality of this
Decision.
In the instant case, the right not to accept an offered promotion pertained to each of the respondents. However, they
exhibited disrespectful behavior by their repeated refusal to receive the memoranda issued by Echo and by their
continued presence in their respective areas without any work output.40 The Court thus finds that although the An annual interest of six percent (6%) is imposed on the monetary award.
respondents' dismissal from service for just cause was unwarranted, there is likewise no basis for the award of moral and
exemplary damages in their favor. Echo expectedly imposed disciplinary penalties upon the respondents for the latter's
In accordance with Nacar v. Gallery Frames,45 the Court now imposes an interest on the monetary awards at the
intransigence. Albeit the Court is not convinced of the character and extent of the measures taken by Echo, bad faith
rate of six percent (6%) per annum from the date of finality of this Decision until full payment
cannot be inferred solely from the said impositions.

WHEREFORE, the instant petition is PARTIALLY GRANTED. The Decision and Resolution of the Court of Appeals in
Anent the NLRC and CA's conclusion that Echo committed unfair labor practice, the Court disagrees.
CA-G.R. SP No. 121393, dated September 24, 2013 and March 28, 2014, respectively, are MODIFIED.

Unfair labor practices violate the constitutional right of workers and employees to self-organization, are inimical to
The petitioner, Echo 2000 Commercial Corporation, is hereby declared guilty of illegal dismissal. In addition to the
the legitimate interests of both labor and management, including their right to bargain collectively and otherwise deal
National Labor Relations Commission's award of attorney's fees, Echo 2000 Commercial Corporation is likewise
with each other in an atmosphere of freedom and mutual respect, disrupt industrial peace and hinder the promotion of
ORDERED to pay the respondents, Arlo C. Cortes and Dave Somido, the following:
healthy and stable labor-management relations.41

(a) separation pay in lieu of actual reinstatement equivalent to one (1) month pay for every year of service, with a
The respondents allege that their transfer/promotion was intended to deprive the Union of leadership and
fraction of at least six (6) months considered as one (1) whole year from the time of the dismissal up to the finality of this
membership. They claim that other officers were already dismissed. The foregoing, however, lacks substantiation. Unfair
Decision;
labor practice is a serious charge, and the respondents failed to show that the petitioners conclusively interfered with,
restrained, or coerced employees in the exercise of their right to self-organization.
(b) full backwages from the time of the illegal dismissal up to the finality of this Decision; and
Enriquez, Benedicto and Atty. Wenceslao cannot be held personally liable for the respondents' money
claims. (c) interest on all monetary awards at the rate of 6% per annum from the finality of this Decision until full payment.

Lambert Pawnbrokers and Jewelry Corporation, et al. v. Binamira42 expounds on the liabilities of corporate officers The amounts awarded as moral and exemplary damages by the National Labor Relations Commission to Arlo C.
to illegally dismissed employees. The Court declared: Cortes and Dave Somido are however deleted for lack of basis.

As a general rule, only the employer-corporation, partnership or association or any other entity, and not its officers, The case is REMANDED to the Labor Arbiter, who is hereby DIRECTED to COMPUTE the monetary benefits
which may be held liable for illegal dismissal of employees or for other wrongful acts. This is as it should be because a awarded in accordance with this Decision.
corporation is a juridical entity with legal personality separate and distinct from those acting for and in its behalf and, in
general, from the people comprising it. A corporation, as a juridical entity, may act only through its directors, officers and
vi. Separation pay in lieu of reinstatement
employees. Obligations incurred as a result of the directors' and officers' acts as corporate agents, are not their personal
vii. Interest on monetary award
liability but the direct responsibility of the corporation they represent. It is settled that in the absence of malice and bad
viii. Burden to prove involuntariness in resignation (Iladan vs. La Suerte Manpower Agency, Inc,
faith, a stockholder or an officer of a corporation cannot be made personally liable for corporate liabilities. They are only
G.R. No. 203882, January 11, 2016)
solidarily liable with the corporation for the illegal termination of services of employees if they acted with malice or bad
SECOND DIVISION
faith. In Philippine American Life and General Insurance v. Gramaje, bad faith is defined as a state of mind affirmatively
January 11, 2016
operating with furtive design or with some motive of self-interest or ill will or for ulterior purpose. It implies a conscious
G.R. No. 203882
and intentional design to do a wrongful act for a dishonest purpose or moral obliquity.43 (Citations omitted and
LORELEI O. ILADAN, Petitioner,
underlining ours)
vs.
LA SUERTE INTERNATIONAL MANPOWER AGENCY, INC., and DEBBIE LAO, Respondents.
In the instant petition, the respondents failed to specify and sufficiently prove the alleged acts of Enriquez, DECISION
Benedicto and Atty. Wenceslao from which malice or bad faith can be concluded. Hence, there is no reason to invoke the DEL CASTILLO, J.:
exception to the general rule on non-liability of corporate officers. By this Petition for Review on Certiorari, 1 petitioner Lorelei O. Iladan (Iladan) assails the May 16, 2012 Decision2
and October 4, 2012 Resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. 119903, which reversed the
February 23, 20114 and March 31, 20115 Resolutions of the National Labor Relations Commission (NLRC) and
In lieu of actual reinstatement, the respondents are entitled to separation pay.
consequently dismissed her complaint for illegal dismissal against respondents La Suerte International Manpower struck down respondents’ allegation that they did not charge any placement fee considering that they are engaged
Agency, Inc. (La Suerte) and its President and General Manager Debbie Lao (Lao). in recruitment and placement for profit. Besides, Iladan submitted evidence to prove payment thereof.

Factual Antecedents Thus, the Labor Arbiter awarded Iladan her salaries corresponding to the unexpired portion of her contract, net of
the P35,000.00 she had already received. Respondents were also ordered to refund the placement fee, and to pay
moral and exemplary damages as well as attorney’s fees. Thus:
La Suerte is a recruitment agency duly authorized by the Philippine Overseas Employment Administration (POEA)
to deploy workers for overseas employment. On March 20, 2009, La Suerte hired Iladan to work as a domestic
helper in Hongkong for a period of two years with a monthly salary of HK$3,580.00.6 On July 20, 2009, Iladan was WHEREFORE, premises considered, complainant’s complaint is meritorious as she was illegally terminated by
deployed to her principal employer in Hongkong, Domestic Services International (Domestic Services), to work as respondents.
domestic helper for Ms. Muk Sun Fan.
Respondents La Suerte International Manpower Agency, Domestic Services International and Debbie S. Lao, are
On July 28, 2009 or barely eight days into her job, Iladan executed a handwritten resignation letter.7 On August 6, jointly and solidarily liable to pay complainant Lorelei O. Iladan the following monetary awards, to wit:
2009, in consideration of P35,000.00 financial assistance given by Domestic Services, Iladan signed an Affidavit of
Release, Waiver and Quitclaim8 duly subscribed before Labor Attache Leonida V. Romulo (Labor Attache Romulo)
1. Refund of complainant’s placement fee of P90,000.00 plus 12% per annum;
of the Philippine Consulate General in Hongkong. On the same date, an Agreement,9 was signed by Iladan,
Conciliator-Mediator Maria Larisa Q. Diaz (Conciliator-Mediator Diaz) and a representative of Domestic Services,
whereby Iladan acknowledged that her acceptance of the financial assistance would constitute as final settlement of 2. Payment of complainant’s 24 monthly salary based on the contract at HK$3,580.00 per month or its Philippine
her contractual claims and waiver of any cause of action against respondents and Domestic Services. The Agreement Peso equivalent less the P35,000.00 given as financial assistance;
was also subscribed before Labor Attache Romulo. On August 10, 2009, Iladan returned to the Philippines. 3. Moral damages of P100,000.00;
4. Exemplary damages of P30,000.00;
5. Attorney’s fee of 10% of the total monetary award.
Thereafter, or on November 23, 2009, Iladan filed a Complaint10 for illegal dismissal, refund of placement fee,
SO ORDERED.16
payment of salaries corresponding to the unexpired portion of the contract, as well as moral and exemplary
damages, against respondents. Iladan alleged that she was forced to resign by her principal employer, threatened
with incarceration; and that she was constrained to accept the amount of P35,000.00 as financial assistance as she Ruling of the National Labor Relations Commission
needed the money to defray her expenses in going back to the Philippines. She averred that the statements in the
Affidavit of Release, Waiver and Quitclaim and the Agreement were not fully explained in the language known to
On appeal with the NLRC, respondents averred that the Labor Arbiter erred in holding that the resignation was not
her; that they were considered contracts of adhesion contrary to public policy; and were issued for an unreasonable
voluntary. They claimed that Iladan’s unsubstantiated allegations of harassment and coercion cannot prevail over a
consideration. Iladan claimed to have been illegally dismissed and entitled to backwages corresponding to the
waiver and a settlement which were verified by the Philippine Consulate officials in the regular performance of
unexpired portion of the contract, reimbursement of the placement fee in the amount of P90,000.00, as well as
their duties. They also insisted that there was no credible proof that placement fee was paid.
payment of damages and attorney’s fee for the litigation of her cause.

In a Resolution17 dated February 23, 2011, the NLRC dismissed the appeal and affirmed the Labor Arbiter’s
To prove that she incurred debts for the placement fee, Iladan presented a) a mortgage deed11 and a deed12 of
judgment. The NLRC observed that respondents’ dismissal was without just cause and due process since no specific
transfer of rights over her family’s properties in favor of other persons, b) a sworn statement13 of her mother,
reason was given for Iladan’s alleged voluntary resignation. The NLRC found credible Iladan’s claim that the amount
Rebecca U. Ondoy (Ondoy), stating that Iladan paid P30,000.00 in cash to respondents for the placement fee, and
she received from respondents as financial assistance was not a settlement but an enticement for her to leave her
borrowed P60,000.00 from Nippon Credit Corp., Inc. (Nippon), a lending company referred by respondents, and c) a
workplace. Further, the NLRC ruled that while the Affidavit of Release, Waiver and Quitclaim and the Agreement
demand letter14 from Nippon demanding payment of her loan.
were executed before Consular officials, it cannot be presumed that the consular officials regularly performed their
duties because respondents failed to adduce proof that the contents of these documents were fully explained in the
Respondents, on the hand, averred that Iladan was not illegally dismissed but voluntarily resigned as shown by: (1) language known to Iladan. The NLRC noted that respondents’ general denial that placement fee was paid cannot
her handwritten resignation letter and (2) the Affidavit of Release, Waiver and Quitclaim and the Agreement, both prevail over the positive allegations of witness supported by evidence.
voluntarily executed by her before Philippine Consulate officials in Hongkong. Respondents also denied collecting a
placement fee considering the prohibition in the POEA rules against the charging of placement fee for domestic
Respondents filed a motion for reconsideration which was denied in the NLRC Resolution18 of March 31, 2011.
helpers deployed to Hongkong.

Ruling of the Court of Appeals

Ruling of the Labor Arbiter

Respondents sought recourse to the CA via a Petition for Certiorari. In a Decision19 dated May 16, 2012, the CA
In a Decision15 dated August 11, 2010, the Labor Arbiter declared Iladan to have been illegally dismissed and that
granted the Petition for Certiorari, reversed the findings of both the Labor Arbiter and NLRC and dismissed Iladan’s
she was only forced by respondents to resign. The Labor Arbiter was not persuaded by respondents’ allegation that
complaint for illegal dismissal. According to the CA, Iladan was not dismissed but voluntarily resigned as
Iladan resigned since she was barely eight days into her job without specifying any credible reason considering
substantially proven by her resignation letter, the Affidavit of Release, Waiver and Quitclaim and the Agreement
what she had gone through to get employment abroad. The Labor Arbiter did not consider the Affidavit of Release,
which were both executed before the Philippine Consulate General as well as her acceptance of P35,000.00 as full
Waiver and Quitclaim and the Agreement as proofs that Iladan voluntarily resigned because she was not assisted by
settlement of her claims. Iladan’s execution and signing of a settlement and affidavit duly assisted by the Labor
any lawyer or Consulate official who could have explained the import of these documents. Moreover, quitclaims are
Attache and a Conciliator-Mediator convinced the CA that Iladan voluntarily severed her employment relation with
looked upon with disfavor and do not estop employees from pursuing their just claims. The Labor Arbiter also
respondents. Moreover, the CA held that Iladan failed to prove that she paid any placement fee. Hence, the CA from the fact that the person from whom it comes has the necessary means or ability to inflict the threatened injury
attributed grave abuse of discretion on the part of the NLRC in ruling that Iladan was coerced into resigning and in to his person or property. In the instant case, not one of these essential elements was amply proven by [Iladan].
holding that placement fee was paid despite absence of any factual basis. Bare allegations of threat or force do not constitute substantial evidence to support a finding of forced
resignation.25
Iladan filed a motion for reconsideration which was denied in the CA Resolution20 of October 4, 2012.
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 one has no other choice but to dissociate oneself
Issues
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
Hence, this Petition raising the following issues: (1) whether the CA may reverse the factual findings of both the relinquishment, the acts of the employee before and after the alleged resignation must be considered in determining
Labor Arbiter and the NLRC; (2) whether Iladan’s resignation and her execution of the Affidavit of Release, Waiver whether in fact, he or she intended to sever from his or her employment.26
and Quitclaim and the Agreement were all voluntarily made; (3) whether Iladan’s acceptance of the financial
assistance constitutes final settlement of her claims against respondents; (4) whether Iladan was illegally
In the instant case, Iladan executed a resignation letter in her own handwriting. She also accepted the amount of
dismissed; and (5) whether Iladan paid any placement fee.
P35,000.00 as financial assistance and executed an Affidavit of Release, Waiver and Quitclaim and an Agreement, as
settlement and waiver of any cause of action against respondents. The affidavit of waiver and the settlement were
Our Ruling acknowledged/subscribed before Labor Attache Romulo on August 6, 2009, and duly authenticated by the
Philippine Consulate. An affidavit of waiver duly acknowledged before a notary public is a public document which
cannot be impugned by mere self-serving allegations.27 Proof of an irregularity in its execution is absolutely
The Petition is without merit. The CA did not err in finding that the NLRC committed grave abuse of discretion in its
essential. The Agreement likewise bears the signature of Conciliator-Mediator Diaz. Thus, the signatures of these
decision.
officials sufficiently prove that Iladan was duly assisted when she signed the waiver and settlement. Concededly, the
presumption of regularity of official acts may be rebutted by affirmative evidence of irregularity or failure to
Iladan contends that the CA failed to prove any grave abuse of discretion on the part of the NLRC and thus had no perform a duty.28 In this case, no such evidence was presented. Besides, "[t]he Court has ruled that a waiver or
basis in reversing the NLRC resolutions which affirmed the Labor Arbiter’s Decision. She argues that a writ of quitclaim is a valid and binding agreement between the parties, provided that it constitutes a credible and
certiorari may not be used to correct the Labor Arbiter’s and NLRC’s evaluation of evidence and factual findings. She reasonable settlement, and that the one accomplishing it has done so voluntarily and with a full understanding of its
avers that the factual findings of the Labor Arbiter and the NLRC are entitled to great weight and should be import."29 Absent any extant and clear proof of the alleged coercion and threats Iladan allegedly received from
accorded respect and finality. respondents that led her to terminate her employment relations with respondents, it can be concluded that Iladan
resigned voluntarily.
Iladan’s arguments are untenable. In a special civil action for certiorari, the CA has ample authority to receive and
review the evidence and make its own factual determination.21 Thus, the CA is not precluded from reviewing No placement fee was paid.
factual findings and conclusions of the NLRC when it finds that the NLRC committed grave abuse of discretion in
disregarding evidence material to the controversy.22 In the present case, we find that the Labor Arbiter and the
Anent Iladan’s claim of payment of placement fee, the Court finds no sufficient evidence that payment had been
NLRC acted with grave abuse of discretion because their factual findings were arrived at in disregard of the
made. Iladan and her mother’s affidavit attesting to its payment are self-serving evidence and deserve no weight at
evidence.
all. Neither did the mortgage loan and deed of transfer executed in favor of third persons as well as the letter from
Nippon prove that placement fee was paid to respondents. These documents merely show that Iladan is indebted to
Iladan’s resignation was voluntary; there was no illegal dismissal. certain persons and to Nippon; however, they do not prove that these indebtedness were incurred in connection
with the placement fee she purportedly paid to respondents. As aptly ruled by the CA, Iladan has the burden of
proving, with clear and convincing evidence, the fact of payment.
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.23 All told, the Labor Arbiter and the NLRC erred in finding that petitioner was illegally dismissed as no substantial
evidence was adduced to sustain this finding. As shown above, Iladan failed to substantiate her claim of illegal
dismissal for there was no proof that her resignation was tainted with coercion and threats, as she strongly claims.
Iladan maintains that she was threatened and coerced by respondents to write the resignation letter, to accept the
financial assistance and to sign the waiver and settlement.1âwphi1 Consequently, she insists that her act of
resigning was involuntary. "Although the Supreme Court has, more often than not, been inclined towards the workers and has upheld their
cause in their conflicts with the employers, such inclination has not blinded it to the rule that justice is in every case
for the deserving, to be dispensed in the light of the established facts and applicable law and doctrine."30
The Court is not convinced as we find no proof of Iladan’s allegations. It is a settled jurisprudence that it is
incumbent upon an employee to prove that his resignation is not voluntary.24 However, Iladan did not adduce any
competent evidence to prove that respondents used force and threat. WHEREFORE, the Petition is DENIED. The May 16, 2012 Decision and October 4, 2012 Resolution of the Court of
Appeals in CA-G.R. SP No. 119903 are AFFIRMED.
For intimidation to vitiate consent, the following requisites must be present: (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 SO ORDERED.
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
 ix. Presumption of regularity of official acts on release, waiver, and authentication +639173215330
x. Doubt in the evidence of parties in labor cases (Lagahit vs. Pacific Concord Container Lines,
Sent: 8-Nov-2002
G.R. No. 177680, January 13, 2016; Cocoplans, Inc. vs. Villapando, G.R. No. 183129, May 30,
2016) 12:50:548
FIRST DIVISION
January 13, 2016
The petitioner immediately tried to contact Cuenca, but the latter refused to take her calls. On the same day, the
G.R. No. 177680
petitioner learned from clients and friends that the respondents had disseminated notices, flyers and memos
JENNIFER C. LAGAHIT, Petitioner,
informing all clients of Pacific Concord that she was no longer connected with the company as of November 8,
vs.
2002.9 Pacific Concord also caused the publication of the notice to the public in the Sunstar Daily issue of December
PACIFIC CONCORD CONTAINER LINES/MONETTE CUENCA (BRANCH MANAGER), Respondents.
15, 2002.10
DECISION
BERSAMIN, J.:
We resolve the appeal of petitioner Jennifer Lagahit from the decision promulgated on May 10, 2006,1 whereby the On November 13, 2002, the petitioner sent a letter to Pacific Concord,11 which reads as follows:
Court of Appeals (CA) disposed in CA-G.R. SP No. 00991 entitled Pacific Concord Container Lines and Monette Cuenca
v. National Labor Relations Commission, Fourth Division, and Jennifer Lagahit, as follows:
November 13, 2002

WHEREFORE, in view of the foregoing, the petition is hereby GRANTED and the assailed Decision dated
Branch Manager
December 15, 2004 promulgated by the National Labor Relations Commission, Fourth Division, Cebu
City, in NLRC Case No. V-000529-2003/RAB Case No. VII-11-2271-2002, as well as the Resolution dated
May 25, 2005 are hereby REVERSED and SET ASIDE. Petitioner is ORDERED to pay private respondent PACIFIC CONCORD CONTAINER LINES, INC.
the amount of P25,000.00 as nominal damages. Further, the preliminary injunction issued by this Court is N&N Building A.C. Cortes Mandaue City
likewise made permanent.
Attention: Monette Cuenca
No pronouncement as to costs.
Madam,
SO ORDERED.2
In connection with your text message and flyers advising me that you have terminated my employment,
Antecedents please arrange and expedite settlement of all benefits due to me under the law.

In February 2000, respondent Pacific Concord Container Lines (Pacific Concord), a domestic corporation engaged in In as much as the facts of my termination has not been formally detailed to me, I believe I was deprived of
cargo forwarding,3 hired the petitioner as an Account Executive/Marketing Assistant.4 In January 2002, Pacific the due process that would have given me the chance to formally present my side. It startled me at first
Concord promoted her as a sales manager with the monthly salary rate of P25,000.00, and provided her with a but I have accepted my fate. However, we both have names and reputations to protect. Factual
brand new Toyota Altis plus gasoline allowance.5 On November 8, 2002, she reported for work at 9:00 a.m. and left incidents made as basis of my termination can help us mutually clear our names.12
the company premises at around 10:30 a.m. to make client calls. At 1:14 p.m. of that day, she received the following
text message from respondent Monette Cuenca, to wit:
Thank you,

TODAY U R OFFICIALY NT CONNECTED WITH US.

(Sgd)
Sender: MONETTE JENNIFER LAGAHIT
+639173215330
Cuenca replied to the letter on November 25, 2002,13 advising the petitioner thusly:
Sent: 8-Nov-2002
13:14:016 25 November 2002

Cuenca also sent a text message to Roy Lagahit, the petitioner’s husband, as follows: TO : MS. JENNIFER C. LAGAHIT
FM : PACIFIC CONCORD CONTAINER LINES, INC. CEBU BRANCH
IBALIK KARON DAYON ANG AUTO OG PALIHUG LANG
RE : UNCOLLECTED ACCOUNTS
KO OG KUHA SA NYONG BUTANG OG DI NAKO MO
STORYA NI JENIFER. IL WAIT7 Herewith is the list of your uncollected accounts as of November 22, 2002.
Sender: MONETTE
Kindly take note that you have personally guaranteed the above accounts. Moreover, you have reported it TOTAL=============== P200,000.00
as your income and you have already availed the commission due for the above shipments. VVVVVVVVV

We are therefore holding the release of the monies due to you until we can collect the above accounts. within ten (10) days from receipt hereof, through the Cashier of this Arbitration Branch.

xxxx Other claims are DISMISSED for lack of merit.1âwphi1

SO ORDERED.23
(Sgd)

Ruling of the NLRC

MONETTE G. CUENCA

On appeal, the NLRC affirmed the ruling of the Labor Arbiter with modification, viz.:
Branch Manager

WHEREFORE, the Decision dated June 9, 2002 of the Labor Arbiter is MODIFIED by AFFIRMING his finding that
On November 26, 2002, the petitioner filed her complaint for constructive dismissal in the Regional Arbitration the respondents are guilty of illegally dismissing the complainant from her employment, but MODIFYING his award
Branch of the National Labor Relations Commission (NLRC) in Cebu City.14 for separation pay computed at one (1) month salary for every year of service, a fraction of at least six (6) months
being considered one (1) year from the complainant’s first day of employment in February 2000 UNTIL THE
In their position paper,15 the respondents denied having terminated the petitioner despite the fact that there were FINALITY OF THIS DECISION; and backwages starting November 8, 2002 UNTIL THE FINALITY OF THIS DECISION.
valid grounds to do so. They insisted that the petitioner had betrayed the trust and confidence reposed in her when
she: (a) used the company-issued vehicle for her own personal interest; (b) failed to achieve her sales quota, and to The appeal of the respondents is dismissed for lack of merit.
enhance and develop the Sales Department; (c) enticed her marketing assistant, Jo Ann Otrera, to resign and join her
in transferring to another forwarding company; (d) applied for other employment during office hours and using
company resources; (e) solicited and offered the services of Seajet International, Inc. during her employment with xxxx
Pacific Concord; (f) received a personal commission from Wesport Line, Inc. for container shipments; and (g)
illegally manipulated and diverted several containers to Seajet International.16 SO ORDERED.24

The respondents claimed that Pacific Concord even issued at one time a memorandum to the petitioner17 to cite The NLRC found that the respondents did not observe due process in terminating the services of the petitioner; and
her insubordination in refusing to participate in the company’s teambuilding activity; that in the two meetings held rejected their claim that she had resigned on November 13, 2002.25
on September 27, 200218 and October 9, 2002,19 she was afforded the chance to explain her side on the reports
that she was looking for other employment, but she dismissed the reports as mere speculations and assured them of
her loyalty; that although valid grounds to terminate the petitioner already existed, they did not dismiss her; and The respondents filed their motion for reconsideration,26 but the NLRC denied their motion on May 25, 2005.27
that she voluntarily resigned on November 13, 2002 after probably sensing that the management had gotten wind
of her anomalous transactions.20 They submitted affidavits to support their allegations.21 Decision of the CA

Ruling of the Labor Arbiter On May 10, 2006, the CA promulgated its decision granting the respondents’ petition for certiorari, and annulling
the decision of the NLRC. It pronounced that there were sufficient justifications to terminate the petitioner’s
Labor Arbiter Julie C. Rendoque rendered a decision on June 9, 2003, declaring that the respondents were not able services for disloyalty and willful breach of trust, viz.:
to prove that the petitioner had committed acts constituting betrayal of trust; that they had not informed her prior
to her dismissal of the offenses she had supposedly committed;22 and that owing to the illegality of the dismissal, In the present case, it is clear that Lagahit deliberately committed successive acts which translated to
they were liable for backwages and separation pay, to wit: blatant disloyalty and willful breach of the trust reposed upon her by Pacific, and acts which, in the final
reckoning are obviously detrimental to the material interest of the company under which she is
WHEREFORE, VIEWED FROM THE FOREGOING, judgment is hereby rendered declaring herein respondents employed. From January 2002, Lagahit was found to have committed a series of willful acts which may
GUILTY of ILLEGALLY DISMISSING complainant from her employment. Consequently, respondents PACIFIC reasonably and expectedly arouse Pacific’s distrust and a consequent finding of Lagahit’s unfitness to
CONCORD CONTAINER LINES/MONEETTE [sic] CUENCA are hereby ordered to pay, jointly and severally, continue her employment, thus: (a) Lagahit has been persistent in applying for employment in other
complainant JENNIFER C. LAGAHIT with the following: competing cargoforwarding companies; (b) Lagahit even enticed her Marketing Assistant to join her
quest to find anoher job outside Pacific and at a competing company at that; (c) Lagahit rendered actual
services at competing companies for a fee and commission while she was still under the employee of
a. Separation Pay P 25,000.00 Pacific and was regularly receiving salary therefrom; and (d) Lagahit brought and referred prospective
b. Backwages P175,000.00 shipping clients to other cargoforwarding corporations. Verily, the commission of the foregoing acts
vividly demonstrated, not only, Lagahit’s disloyalty and unfaithfulness to her employer, but likewise her
blatant ingratitude to the company from which she derives her regular source of livelihood, considering PETITIONER IS ENTITLED TO HER CLAIMS FOR SEPARATION PAY AND BACKWAGES31
that, incidentally, the performance of these disloyal and inimical acts commenced when Lagahit was just
newly promoted to the higher post of Sales Manager at Pacific.
The petitioner argues that the CA erroneously concluded that she had been dismissed considering that the
respondents had initially denied her having dismissed her, and claimed instead that she had voluntarily resigned;
xxxx that the Labor Arbiter and the NLRC had correctly concluded that she had not resigned, but had been illegally
terminated without substantive and procedural due process;32 and that the evidence adduced against her that the
CA relied upon to sufficiently establish her breach of trust were speculative and hearsay.33
Lagahit is not an ordinary rank-and-file employee of Pacific, but contrarily, is by far an employee
authorized to formulate significant company plans and policies, and whose designation and basic
functions, on its face, betrays the fact that too much trust and confidence was indeed reposed upon her. In contrast, the respondents aver that:(a) the petitioner occupied a position of trust and confidence that she
As borne by the records, Lagahit occupies the responsible post of Sales Manager, and as such her basic breached by working for, serving, and soliciting clients in behalf of competing cargo-forwarding companies using
functions, inter alia, consists [sic] of the following: (1) formulation of strategic action and marketing plans the respondents’ resources;34 (b) she had not explained her meetings, job applications and moonlighting with
to make the Pacific Sales Department successful, (2) implementation of marketing strategies to help competing companies;35 (c) the sworn statements narrating her breach of trust and disloyalty to the company
Pacific Sales team achieve its periodic target, (3) direct transaction with various shipping clients, and (4) submitted by the respondents substantially justified her dismissal on the ground of loss of trust and confidence;36
in having a free hand in dealing with various shipping lines. Quite significantly, Lagahit was given and (d) her resignation letter confirmed that she no longer desired to work for the company considering that she
sensitive and responsible functions that goes deep into the financial success, or otherwise ruin, of Pacific, succeeded in landing a job with Seajet Lines in just three days after her resignation.37
which is more than a clear testament to the fact her position is accorded with trust and confidence.
Did the petitioner resign as sales manager of Pacific Concord? Did Pacific Concord have sufficient grounds to
Such being the case, Lagahit owes it to herself and to Pacific to work religiously and with undivided time terminate her for breach of trust and confidence under Article 28238 of the Labor Code?
and attention to promote the latter’s business interests. Unfortunately, such was not the case. As it turned Ruling of the Court
out, Lagahit made a consistent attempt to seek employment at other cargo forwarding companies that We find merit in the appeal.
directly compete with the business of Pacific, obviously, constituting a willful breach of trust I
consequentially resulting to Pacific’s loss of confidence in Lagahit’s loyalty and efficacy. Worse, Lagahit Lagahit did not resign from her employment
conducted her job applications during office hours when she should have been rendering her services for On the first issue, we find in favor of the petitioner.
Pacific. Furthermore, the height of her disloyalty exhibited its face when Lagahit begun to actually render In cases of unlawful dismissal, the employer bears the burden of proving that the termination was for a valid or
services and refer prospective shipping clients to other competing cargo-forwarding companies for a fee authorized cause, but before the employer is expected to discharge its burden of proving that the dismissal was
and commission, at the same time employed with Pacific and receiving regular salary therefrom.28 legal, the employee must first establish by substantial evidence the fact of her dismissal from employment.39 In this
case, the petitioner proved the overt acts committed by the respondents in abruptly terminating her employment
through the text messages sent by Cuenca to the petitioner and her husband, as well as the notices distributed to the
Nonetheless, the CA held that despite the existence of a valid cause to terminate her employment Pacific Concord
clients and published in the Sun Star. It is notable that the respondents did not deny or controvert her evidence on
was liable for nominal damages of P25,000.00 for denying the petitioner’s right to due process.29
the matter. Thereby, she showed Pacific Concord’s resolve to terminate her employment effective November 8,
2002.
The CA denied the petitioner’s motion for reconsideration on March 30, 2007.30 Hence, this appeal.
On the other hand, the respondents’ insistence that the petitioner had resigned was bereft of factual support. As a
Issues rule, the employer who interposes the resignation of the employee as a defense should prove that the employee
voluntarily resigned.40 A valid resignation is the voluntary act of an employee who finds herself in a situation
where she believes that personal reasons cannot be sacrificed in favor of the exigency of the service and that she has
The petitioner imputes the following errors to the CA, namely:
no other choice but to disassociate herself from employment.41 The resignation must be unconditional and with a
clear intention to relinquish the position.42 Consequently, the circumstances surrounding the alleged resignation
I must be consistent with the employee’s intent to give up the employment.43 In this connection, the acts of the
employee before and after the resignation are considered to determine whether or not she intended, in fact, to
relinquish the employment.44
THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN GIVING UNDUE WEIGHT AND
CREDENCE TO THE RESPONDENTS’ LATEST DEFENSE, THEREBY DISTURBING THE FINDINGS OF FACT
OF THE LABOR ARBITER AND NLRC WHO SHARE THE SAME FINDINGS; The facts and circumstances before and after the petitioner’s severance from her employment on November 8, 2002
did not show her resolute intention to relinquish her job. Indeed, it would be unfounded to infer the intention to
relinquish from her November 13, 2002 letter, which, to us, was not a resignation letter due to the absence
II
therefrom of anything evincing her desire to sever the employer-employee relationship. The letter instead
presented her as a defenseless employee unjustly terminated for unknown reasons who had been made the subject
THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN FINDING MS. LAGAHIT TO of notices and flyers informing the public of her unexpected termination. It also depicted her as an employee meekly
HAVE BEEN VALIDLY DISMISSED ON THE GROUND OF LOSS OF TRUST AND CONFIDENCE; accepting her unexpected fate and requesting the payment of her backwages and accrued benefits just to be done
with the employer.
III
For sure, to conclude that the petitioner resigned because of her letter of November 13, 2002 is absurd in light of
the respondents having insisted that she had been terminated from her employment earlier on November 8, 2002.
In that regard, every resignation presupposes the existence of the employer-employee relationship; hence, there Job Description
can be no valid resignation after the fact of termination of the employment simply because the employee had no - Promotes services being offered by the company
employer-employee relationship to relinquish.
- Must generate new accounts for the company
II
- Responsible for motivating the Sales Team to hit their respective QUOTA and TARGET
Lagahit did not breach her employer’s trust;
her dismissal was, therefore, illegal
- Responsible for the Strategic Planning and Action Plan for the Sales Department

Having settled the issue of the dismissal in the petitioner’s favor, we next resolve whether or not the CA correctly
- Should submit Production Report on a weekly basis for the Sales Department specifying each sales
ruled the petitioner’s dismissal as justified on the ground of breach of trust and confidence.
contribution for the week

The petitioner assails the CA for upholding her termination based on speculations and hearsay, and for entirely
- Responsible in inspiring and developing confidence of the Sales Team
disregarding the factual findings in her favor of the LA and the NLRC.45 In contrast, the respondents maintain that
the allegation of disloyalty against her was substantiated by the affidavits they had submitted that the CA relied on
to sustain the validity of her dismissal.46 - Responsible in promoting, formulating, implementing market strategy that will help achieve the target
of the Sales Department
We agree with the petitioner.
- Coordinates regularly with the Sales people on their day to day activities regarding rates and
operational matters
To justify the dismissal of an employee, the employer must, as a rule, prove that the dismissal was for a just cause,
and that the employee was afforded due process prior to dismissal. As a complementary principle, the employer has
the onus of proving the validity of the dismissal with clear, accurate, consistent, and convincing evidence.47 The - Keeps track all sales transactions, assist the sales people in their problem regarding rates and
employer’s case succeeds or fails on the strength of its evidence, not on the weakness of that adduced by the operational matters
employee, in keeping with the principle that the scales of justice should be tilted in favor of the latter in case of
doubt in the evidence presented by them.48
- Gathers and provides sales leads, replied to agents’ inquiries regarding sales matters

In its decision, the CA recognized the wide latitude of discretion given to the management in terminating managers
- Transacts rates and other related cargo needs with the shipping lines
for breach of trust and confidence. It declared Pacific Concord to have justifiably resorted to terminating the
petitioner’s employment as a measure of self-preservation in view of her repeated acts of disloyalty that were
prejudicial to its interest.49 - Promotes and maintains good relations with clients

The CA was thereby gravely mistaken. - Prepares quotation to the clients for intended shipments

Article 282(c)50 of the Labor Code authorizes an employer to dismiss an employee for committing fraud, or for - Performs other tasks, duties and responsibilities as may be assigned from time to time
willful breach of the trust reposed by the employer. However, loss of confidence is never intended to provide the
employer with a blank check for terminating its employee.51 For this to be a valid ground for the termination of the
- Reports directly to the Branch Manager54
employee, the employer must establish that: (1) the employee must be holding a position of trust and confidence;
and (2) the act complained against would justify the loss of trust and confidence.52
Her position as sales manager did not immediately make the petitioner a managerial employee. The actual work
that she performed, not her job title, determined whether she was a managerial employee vested with trust and
There are two classes of employees vested with trust and confidence. To the first class belong the managerial
confidence.55 Her employment as sales manager was directly related with the sales of cargo forwarding services of
employees or those vested with the powers or prerogatives to lay down management policies and to hire, transfer,
Pacific Concord, and had nothing to do with the implementation of the management’s rules and policies. As such, the
suspend, lay-off, recall, discharge, assign or discipline employees or effectively recommend such managerial actions.
position of sales manager came under the second class of employees vested with trust and confidence. Therein was
The second class includes those who in the normal and routine exercise of their functions regularly handle
the flaw in the CA’s assailed decision. Although the mere existence of the basis for believing that the managerial
significant amounts of money or property. Cashiers, auditors, and property custodians are some of the employees in
employee breached the trust reposed by the employer would normally suffice to justify a dismissal,56 we should
the second class.53
desist from applying this norm against the petitioner who was not a managerial employee.

The petitioner discharged the following duties and responsibilities as sales manager, to wit:
At any rate, the employer must present clear and convincing proof of an actual breach of duty committed by the
employee by establishing the facts and incidents upon which the loss of confidence in the employee may fairly be
SALES MANAGER made to rest.57 The required amount of evidence for doing so is substantial proof. With these guidelines in mind,
we cannot hold that the evidence submitted by the respondents (consisting of the three affidavits) sufficiently
 established the disloyalty of the petitioner. The affidavits did not show how she had betrayed her employer’s trust. The factual antecedents are as follows.
Specifically, the affidavit of Russell B. Noel58 only stated that she and her husband Roy had met over lunch with
Garcia Imports and a certain Wilbur of Sea-Jet International Forwarder in the first week of November 2002. To
Respondent Ma. Socorro R. Villapando, began working as a Financial Advisor for petitioner Cocoplans, Inc., (Coco plans)
conclude that such lunch caused Pacific Concord to lose its trust in the petitioner would be arbitrary. Similarly, the
in 1995. On October 11, 2000, she was eventually promoted to Division Head/Senior Sales Manager.
affidavit of Mark Anthony G. Lim59 was inconclusive. Therein affiant Lim deposed:

On November 4, 2002, however, her employment was terminated by Cocoplans, through its President, Caesar T.
1. That I was present when Ms. Vivian Veloso, former Branch Manager of Westport Line Inc., disclosed to Ms.
Michelena, on the alleged ground that she was deliberately influencing people to transfer to another company thereby
Monette Cuenca and Ms. Mitzie Ibona on November 11, 2002 at the office of Admiral Overseas Shipping Corp.,
breaching the trust and losing the confidence given to her by Cocoplans.5 Consequently, Villapando filed an action for
where she is presently employed with, that Ms. Jennifer C. Lagahit received a personal commission or rebate for the
illegal dismissal alleging that she was dismissed without the just cause mandated by law. In her Position Paper,6
full container shipments moved via Westport Line Inc. in the amount of USD 50.00 per container.60
Villapando alleged the following pertinent facts:

The foregoing statement was bereft of the particulars about how the petitioner had entered into the transaction, as
2. On September 25, 2002, respondent Michelena talked to complainant and accused the latter of ordering her
well as about the prejudice that Pacific Concord had suffered from her receipt of the commission. Also, that this
subordinates to ''stop selling" and of influencing them to "leave the company" by way of sympathy to Dario B.
information was made known to Cuenca three days after she had already terminated the petitioner belied the
Martinez who was compelled to resign from the company due to a personal quarrel with respondent
relevance of the information to the termination.
Michelena. In the said conversation, respondent Michelena told complainant that "we cannot work together"
and "I want your resignation tomorrow."
In her affidavit,61 Jo Ann Otrera declared that the petitioner had called other forwarding companies to inquire
about any vacant positions, and that the petitioner had enticed her to transfer to another company. However, such
3. In a written statement signed by a number of officers of COCOPLANS, a copy of which is hereto attached as
declarations did not provide the sufficient basis to warrant the respondents’ loss of confidence in the petitioner. We
Annex "B," it was attested that complainant did not order a "stop selling" and that complainant did not
stress that although her supposedly frantic search for gainful employment opportunities elsewhere should be
influence her subordinates to leave the company.
considered as inappropriate for being made during office hours, the same did not constitute willful breach of trust
and confidence of the employer. The loss of trust and confidence contemplated under Article 282(c) of the Labor
Code is not ordinary but willful breach of trust. Verily, the breach of trust is willful if it is intentional, knowing, 4. On September 26, 2002, and September 27, 2002, Jaclyn Yang, the Secretary of respondent Michelena
deliberate and without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or persistently followed up from complainant the resignation letter being required by respondent Michelena.
inadvertently.62 Most importantly, the cause of the loss of trust must be work-related as to expose the employee as
unfit to continue working for the employer.63
5. Harassed and pressured, complainant wrote a letter dated October 3, 2002 to Atty. Alfredo Tumacder, Jr.,
the Managing Director of COCO PLANS, INC., a copy of which is hereto attached as Annex "C." In said letter,
Considering that the petitioner’s duties related to the sales of forwarding services offered by Pacific Concord, her complainant categorically denied that she ordered "stop selling." She also denied that she influenced her
calling other forwarding companies to inquire for vacant positions did not breach the trust reposed in her as sales subordinates to leave the company. She also expressed that she is resigning as required by respondent
manager. Such act, being at worst a simple act of indiscretion, did not constitute the betrayal of trust that merited Michelena.
the extreme penalty of dismissal from employment. We remind that dismissal is a penalty of last resort, to be meted
only after having appreciated and evaluated all the relevant circumstances with the goal of ensuring that the ground
6. On October 4, 2002, respondent Michelena sent a letter to complainant, a copy of which is hereto attached as
for dismissal was not only serious but true.64
Annex "D," changing his original position. Surprisingly, respondent Michelena did not accept the resignation
that he originally asked for and instead convened a Committee on Employee Discipline. Complainant was also
WHEREFORE, the Court GRANTS the petition for review on certiorari; REVERSES and SETS ASIDE the decision placed under preventive suspension in said letter. Obviously, respondents realized that they erred in not
promulgated on May 10, 2006 by the Court of Appeals; REINSTATES the decision of the National Labor Relations investigating the issues first before asking complainant to resign.
Commission rendered on December 15, 2004 subject to the MODIFICATION that the total monetary awards shall
earn interest at the rate of 6% per annum from the finality of this decision until full satisfaction; and ORDERS the
7. In a letter dated October 9, 2002, a copy of which hereto attached as Annex "E," complainant stated -
respondents to pay the costs of suit.

"x x x I also do not understand why you want an investigation while you have effectively convicted
SO ORDERED.
me and terminated me during the said meeting on September 25, 2002. As far as I know, I have
May 30, 2016
already been terminated.
G.R. No. 183129
COCOPLANS, INC. and CAESAR T. MICHELENA, Petitioners,
vs. In any event, may I know what are the accusations against me and who are accusing me. May I also
MA. SOCORRO R. VILLAPANDO, Respondent. know your reason and basis for the preventive suspension."
DECISION
PERALTA, J.:
8. COCOPLANS sent a letter to complainant on October 22, 2002, a copy of which is hereto attached as Annex
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to reverse and set aside
"F," asking complainant to submit a written explanation and extending the preventive suspension. She was
the Decision1 dated February 4, 2008 and Resolution2 dated May 27, 2008 of the Court of Appeals (CA) in CA-G.R. SP No.
then furnished with a Sworn Statement of Mila Perez and David Sandoval, a copy of which is hereto attached as
88759, which reversed the Decision3 dated July 30, 2004 of the National Labor Relations Commission (NLRC) in NLRC
Annex "G." There was no explanation given as to the imposition of preventive suspension, much less for the
Case CA No. 039310-04 and NLRC Case No. SRAB-IV-11-7279-02-B, which, in tum, reversed the Decision4 dated January
extension thereof.
30, 2004 of the Labor Arbiter NLRC Case No. SRAB-IV-11-7279-02-B.
 9. In response, complainant submitted an explanation letter dated October 25, 2002, a copy of which is hereto Again, in March 2002, the Complainant officiated a division meeting in Lipa City, together with the said First Vice-
attached as Annex "H." She denied the accusations that she ordered to stop selling and that she was influencing President for Marketing, attended by sales associates from Lipa, Lucena, Mindoro and San Pablo branches of COCOPLANS,
her subordinates to leave COCOPLANS and transfer to Pioneer Allianz. as well as by the Branch Cashier, Ms. Sharon Gurango. In that meeting, the cashier, Ms. Gurango was told that 70-80% of
the Sales Force will move out of COCOPLANS and the Complainant asked her if [she] "was willing to join the group, and
her answer was yes. Thereafter, Ms. Gurango was kept constantly updated on the developments on the said plan by the
10. Thereafter, complainant was furnished with a letter dated October 28, 2002, a copy of which is hereto
Complainant and that the group might leave COCOPLANS either June or July 2002. Attached also hereto as Annex "B" and
attached as Annex "I" and an Affidavit of respondent Michelena, a copy of which is hereto attached as Annex
made integral part hereof is the sworn report of the said Branch Cashier, Ms. Sharon Gurango, dated September 19, 2002.
"J." Respondent Michelena alleged that complainant was the one who wanted to resign although he admitted
that he asked his secretary to follow up the resignation letter from complainant.
Because of the persistent flow of information that the Sales Force will proceed with their planned mass resignations as
agitated by the Complainant, the President of COCOPLANS confronted her on September 20, 2002 and when asked -
11. In response, complainant sent a letter dated October 29, 2002, copy hereto attached as Annex "K," denying
the allegations of respondent Michelena and reiterating her previous statement that she was being forced to
resign. "Did you at any time during this year tell your people of leaving COCOPLANS for another company?"

12. In a letter dated November 4, 2002 signed by respondent Michelena, a copy of which is hereto attached as The Complainant replied "Yes Sir!" thereby directly admitting the truth of the information received by the President
Annex "L," complainant was formally terminated.7 himself. Attached as Annex "C" and made integral part hereof is the affidavit of the President of COCOPLANS. Having been
embarrassed, the Complainant later on filed a resignation letter, which was not accepted, as the Committee on Employee
Discipline was already convened to conduct a hearing on the alleged acts committed by the complainant, and to receive
Thus, Villapando maintained that she was illegally dismissed for her employment was terminated on baseless and
any further explanation on the matter.
untruthful grounds. According to her, Michelena simply wanted to oust her from the company because he felt that she
was sympathizing with the Vice-President for Marketing, Dario B. Martinez, an officer with whom Michelena had a
personal quarrel.8 That she was influencing the company's employees to transfer to another company, particularly, Attached hereto and marked as Annex "D" and likewise made integral part of this position paper, is the notice to the
Pioneer Allianz, was improbable and preposterous for she never invited nor encouraged anyone to leave the company. In Complainant dated October 4, 2002 regarding the meeting scheduled by the Committee on Employee Discipline setting
fact, up until the present time, not a single subordinate nor Villapando, herself, has transferred to said other company. the date, October 10, 2002 for Complainant to give her explanation, and putting her on preventive suspension for three
(3) weeks. Notwithstanding receipt of said notice, the Complainant, for reasons known only to her, did not attend said
meeting. However, the witnesses who submitted their sworn statements attended the meeting, as shown in the minutes
In support of her stance, Villapando submitted a written statement9 signed by Ms. Milagros Perez, Senior Area Manager,
of the meeting, hereto attached marked as Annex "E" and made integral part hereof. Still, the complainant was given
together with six (6) other officers of the company, wherein they attested that Villapando never influenced them to
another opportunity to explain why no disciplinary action should be taken against her for her deliberate attempt to
resign or join another company. With respect to a contradictory Joint Affidavit 10 likewise executed by the same Ms.
encourage sales staff to move to another company. Attached hereto and marked as Annex "F" is another notice to the
Perez, together with Senior Area Manager David M. Sandoval, wherein they stated that Villapando, indeed, motivated
Complainant giving her until October 25, 2002 to explain her position.
them to transfer to another company,

While the Complainant did file a written explanation, the Committee on Employee Discipline decided to schedule another
Villapando alleged that the written statement earlier signed by Ms. Perez belies the Joint Affidavit she subsequently
meeting for further clarification, and notice about this meeting was duly received by the Complainant. Attached hereto as
executed.11 Thus, the contents of the written statement should be controlling. In view of the baseless allegations the
Annex "G" and made integral part hereof is said notice of hearing. However, on said date of hearing, Complainant again
company dismissed her on, Villapando prayed that her termination from employment be declared illegal and that she be
failed to appear. Consequently, on November 4, 2002 the Committee on Employee Discipline rendered a final
awarded full backwages, separation pay, and moral damages.
recommendation, a copy of which is also hereto attached marked as Annex "H," and thereupon the President of COCO
PLANS advised the Complainant of her termination for cause. x x x13
In their opposing Position Paper,12 however, petitioners Cocoplans and Michelena attested to a different set of factual
antecedents, to wit:
Based on the aforequoted set of facts, together with the supporting evidence submitted, petitioners insist that
Villapando's suspension and eventual termination was for just cause due to the fact that she wilfully breached
It has been discovered by herein respondents that the Complainant has instigated the Sales Force of COCOPLANS in her petitioners' trust in her when she deliberately encouraged her very own sales staff to move to another company.14
area of responsibility, to either slow down sales production or completely stop selling, then join a mass resignation and
transfer to a competitor company which was allegedly much better than COCO PLANS.
On January 30, 2004, the Labor Arbiter ruled in favor of Villapando finding that she was illegally terminated from her
employment.1âwphi1 According to the Labor Arbiter, evidence clearly shows that the initial investigation conducted by
This sinister plot started sometime in the middle of February 2002, when a meeting was presided by the then First Vice- the Committee on Employee Discipline was merely to determine the truth about the allegations of Villapando in her
President for Marketing of COCOPLANS, who instead of discussing new trends in marketing strategies and how to resignation letter that she was being forced to resign. But in Michelena's desire to terminate Villapando's employment, he
improve sales production, concentrated more on his sentiments and personal problems with the company. One month instructed the committee to expand the scope of investigation to her alleged acts of motivating her subordinates to
thereafter, the Complainant called a Managers' meeting and informed them that the said First Vice-President for transfer to another company. He fished for evidence resulting in conflicting testimonies made by the same witnesses. But
Marketing and his group, will transfer to another company. As a member of that group, the Complainant was motivating as between the written statement and the joint affidavit, the Labor Arbiter found that the written statement earlier
the Sales Managers to join the said transfer as the other company was purportedly better than COCOPLANS. The signed by Ms. Perez was more credible.15 Hence, he granted Villapando' s prayer for full backwages and separation pay
Complainant was also convincing the Sales Managers to join the mass resignations nationwide thereby paralyzing sales and further ordered the payment of attorney's fees in the dispositive portion of his Decision which provides:
production for COCOPLANS. Attached hereto as Annex "A" and made integral part of this position paper is the joint
affidavit of two (2) sales managers who attended that crucial meeting and attested to the truth of what transpired
thereat.
WHEREFORE, judgment is hereby rendered ordering the respondent to pay complainant her full backwages to until the I.
finality of this decision which partially computed as of this date in the amount of P678,291.92 and to pay her separation
pay equivalent to one month salary per year of service in the amount of P336,000.00.
THE HONORABLE SUPREME COURT MAY PASS UPON THE QUESTION OF FACT OF THE CASE CONSIDERING THE
CONFLICTING DECISIONS OF THE COURT OF APPEALS AND THE NLRC.
Respondent is likewise ordered to pay 10% of the total monetary award as attorney's fees in the amount of Pl 01,429.19.
II.
All other claims are hereby dismissed.
PRIVATE RESPONDENT WAS TERMINATED FOR JUST CAUSE.
SO ORDERED.16
Petitioners ask the Court to give due course to its petition and review the factual scenario of the instant case considering
On July 30, 2004, however, the NLRC disagreed with the Labor Arbiter in its Decision holding that the matter of the disparity in the findings of the tribunals below. They essentially argue that contrary to the ruling of the CA, the pieces
resignation is a non-issue as the termination of Villapando's employment was affected for reasons other than her of evidence they presented sufficiently prove that Villapando is guilty of instigating its employees to engage in a mass
resignation. 17 According to the NLRC, the two essential elements of a lawful termination of employment, namely: (1) resignation and to transfer to a competitor company. First, they claim that the Joint Affidavit of Mr. Sandoval and Ms.
that the employee be afforded due process, i.e., he must be given an opportunity to be heard and to defend himself; and Perez cannot be said to be doubtful by the mere fact that Ms. Perez is a signatory to an earlier letter which contradicts her
(2) that the dismissal must be for valid cause, arc present in this case. sworn statement. This is because, on the one hand, said earlier written statement was not notarized nor affirmed by Ms.
Perez during the administrative investigation.23 On the other hand, the Joint Affidavit was notarized and affirmed by its
affiants before the investigating panel. Thus, as between the two pieces of evidence, the Joint Affidavit should be given
With regard to the first requisite, the NLRC held that while initially, Villapando was being investigated on her allegation
probative weight and credence. Petitioners add that even assuming that the contradiction of statements put in doubt the
that she was being forced to resign, the records clearly reveal that she was nonetheless duly informed of the accusations
Joint Affidavit, this should not be the case as to Mr. Sandoval who did not make any prior inconsistent statement. Hence,
against her as well as the requisite opportunity to be heard and to defend herself. This was shown by a series of letters
as to him, at least, his statements therein should be given credence.
Villapando received informing her of her alleged acts of betrayal and consequently inviting her to appear before the
Committee on Employee Discipline to give her explanations thereon.
Second, petitioners assert that the non-presentation of Ms. Gurango's Affidavit to the investigation panel is immaterial for
it still serves as substantial evidence for petitioners to believe that Villapando was indeed guilty of breaching their
As for the second requisite, the NLRC found sufficient basis positively establishing its existence. According to the
trust.24 Third, petitioners reiterate the probative value of the petitioner Michelena's Affidavit wherein he alleged that
Commission, the Labor Arbiter failed to mention that there were two other competent witnesses, namely, Mr. David
when he asked Villapando if she told her people to leave Cocoplans for another company, she answered in the
Sandoval and Ms. Sharon Gurango, who not only executed their affidavits, but who likewise presented themselves before
affirmative.25 In view of the foregoing,
the investigating panel and attested as to the veracity of their sworn statements.18 Thus, as between the written
statement of Villapando's witnesses and the sworn statements of Cocoplans, the NLRC opined that the latter ought be
given greater credence and probative value in view of the jurisprudential teaching that affidavits are generally petitioners insist that Villapando' s dismissal was valid and just.
considered inferior to the testimony given in open court.19 Considering, therefore, that Villapando was sufficiently
proven to have surreptitiously engaged in activity gravely adverse to and patently inimical to the legitimate business
The Court, however, is not convinced.
interests of herein company, said company's right to dismiss a managerial employee for breach of trust and loss of
confidence is upheld.
At the outset, the Court notes that as a rule, the findings of fact of the CA are final and conclusive, and this Court will not
review them on appeal. This is because under the Rules of Court and settled jurisprudence, a petition for review on
Yet, in its February 4, 2008 Decision, the CA disagreed with the NLRC and reinstated the Labor Arbiter's Decision, finding
certiorari under Rule 45 of the Rules of Court is limited to questions of law.26 When, however, the following instances
that while Villapando was duly afforded the required due process mandated by law, the evidence adduced by herein
occur, these factual issues may be resolved by the Court:
petitioners was not substantial enough to support their allegation that Villapando deliberately influenced people to
transfer to another company.20 First of all, the appellate court held that the Joint Affidavit executed by Mr. Sandoval and
Ms. Perez was put in doubt and cannot be relied on in view of the fact that Ms. Perez is also a signatory to an earlier letter x x x (1) the conclusion is a finding grounded entirely on speculation, surmise and conjecture; (2) the inference made is
which directly contradicts her sworn statements in said affidavit.21 Secondly, the CA noted that as regards the Affidavit manifestly mistaken; (3) there is grave abuse of discretion; ( 4) the judgment is based
of the company's branch cashier, Ms. Sharon Gurango, the same cannot also be considered for it was never presented
during the time the Committee on Employee Discipline was still investigating the charges against Villapando as it only
on a misapprehension of facts; (5) the findings of fact are conflicting; (6) the CA goes beyond the issues of the case and its
surfaced during the proceedings before the Labor Arbiter. Thus, Villapando never had the opportunity to answer the
findings are contrary to the admissions of both appellant and appellee; (7) the findings of fact of the CA are contrary to
charges therein. Finally, the CA found no probative value in the Affidavit of petitioner Michelena for the same merely
those of the trial court; (8) said findings of facts are conclusions without citation of specific evidence on which they are
contained hearsay information. Considering, therefore, that the evidence against Villapando was not substantial enough
based; (9) the facts set forth in the petition as well as in the petitioner's main and reply briefs are not disputed by the
to prove the alleged disloyal acts, the appellate court held that petitioners failed to discharge the burden of proving its
respondent; and (10) the findings of fact of the CA are premised on the supposed absence of evidence and contradicted
just and valid cause for dismissing
by the evidence on record.27

Villapando. Thus, her dismissal was unjustified.22

In light of the fact that the findings of the CA and the Labor Arbiter are contrary to those of the NLRC, the Court deems it
necessary to make its own evaluation of the findings of fact of the instant case.
In its Resolution dated May 27, 2008, the CA further denied petitioners' Motion for Reconsideration finding no cogent
reason to revise or reverse its Decision. Hence, this petition invoking the following grounds:
Settled is the rule that to constitute a valid dismissal from employment, two (2) requisites must concur, viz.: (a) the Case of Ma. Socorro R. Villapando, Senior Sales Manager - South Tagalog Operations," dated November 4, 2002, the
employee must be afforded due process, i.e., he must be given an opportunity to be heard and defend himself; and (b) the affidavit of Ms. Gurango was never considered by the committee since all that was brought before it was only the joint
dismissal must be for a valid cause, as provided in Article 282 of the Labor Code, or for any of the authorized causes affidavit of Milagros Perez and David Sandoval and the affidavit of private respondent Michelena. Having not been
under Articles 283 and 284 of the same Code. 28 In the case before the Court, it is already undisputed that petitioners brought before the committee, therefore, the petitioner never had the opportunity to answer the charges against her in
duly afforded Villapando the opportunity to be heard and defend herself, thereby complying with the first requisite. The the Gurango affidavit. As such, the said affidavit should not be considered.
issue that remains, therefore, is whether Villapando was dismissed for valid and just cause.
At any rate, even if the Gurango affidavit would be considered, the said affidavit docs not, in any way, prove that the
Article 282( c) of the Labor Code provides that an employer may terminate an employment for fraud or willful breach by petitioner influenced people to join another company. All that the affidavit proves is that it was the First Vice-President
the employee of the trust reposed in him by his employer or duly authorized representative. As firmly entrenched in our Dario B. Martinez who tried to influence Sharon H. Gurango to move to another company and not the petitioner [Socorro]
jurisprudence, loss of trust and confidence, as a just cause for termination of employment, is premised on the fact that an R. Villapando. While the said affidavit appears to show that the petitioner knew of Mr. Martinez's plans of moving to
employee concerned holds a position where greater trust is placed by management and from whom greater fidelity to another company, mere knowing and deliberately influencing people to leave the company are two very different
duty is correspondingly expected. The betrayal of this trust is the essence of the offense for which an employee is things.33
penalize.29
Thus, in view of the irregularities identified by the CA, the Court cannot take Ms. Gurango's affidavit into account. In
To be a valid ground for dismissal, loss of trust and confidence must be based on a willful breach of trust and founded on dismissing an employee for just cause, it must be shown that the employer fairly made a determination of just cause in
clearly established facts. A breach is willful if it is done intentionally, knowingly and purposely, without justifiable excuse, good faith, taking into consideration all of the evidence available to him. But as the appellate court noted, the affidavit of
as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. It must rest on substantial Ms. Gurango was never presented before the investigation panel, merely surfacing only during the proceedings before
grounds and not on the employer's arbitrariness, whims, caprices or suspicion; otherwise, the employee would eternally the Labor Arbiter, in spite of the fact that the same was supposedly executed as early as September 9, 2002, an entire
remain at the mercy of the employer. Loss of confidence must not also be indiscriminately used as a shield by the month before the time the Committee on Employee Discipline convened. Thus, not only is there no showing that said
employer against a claim that the dismissal of an employee was arbitrary. And, in order to constitute a just cause for affidavit was considered by petitioners in arriving at their decsiion to dismiss Villapando, Villapando never had the
dismissal, the act complained of must be work-related and show that the employee concerned is unfit to continue opportunity to address the accusations stated therein. As such, the Court cannot consider the same.
working for the employer.30
Neither can the Court give due regard to the affidavit of petitioner Michelena for as the CA mentioned, he did not witness
It must also be noted that in termination cases, the burden of proving just and valid cause for dismissing an employee first-hand Villapando's alleged disloyal acts of influencing people to transfer to a competing company.34 Moreover,
from his employment rests upon the employer. Failure by the employer to discharge this burden shall result in the Michelena's allegation that Villapando answered in the affirmative when he asked her if she told her subordinates to
finding that the dismissal is unjustified.31 In fact, a dismissed employee is not even required to prove his innocence of leave Cocoplans for another company can hardly suffice as convincing proof in light of the obvious hostility between him
the charges levelled against him by his employer. This is because the determination of the existence of a just cause must and Villapando as well as Villapando's categorical and repeated denials of the imputations against her.
be exercised with fairness and in good faith and after observing due process for loss of trust and confidence, as a ground
of dismissal, has never been intended to afford an occasion for abuse due to its subjective nature. It should not be used as
Thus, bearing in mind the fact that the Court cannot take into consideration the foregoing documentary proof submitted
a subterfuge for causes which are illegal, improper, and unjustified. It must be genuine and not a mere afterthought
by petitioners for the aforestated reasons, it appears that the only remaining piece of evidence that petitioners could
intended to justify an earlier action taken in bad faith. Let it not be forgotten that what is at stake is the means of
have used in arriving at their decision to dismiss Villapando is the Joint Affidavit executed by Ms. Perez and Mr. Sandoval.
livelihood, the name, and the reputation of the employee. To countenance an arbitrary exercise of that
Yet, as pointed out by the appellate court, the probative value of the same is rather doubtful.

prerogative is to negate the employee's constitutional right to security of tenure.32

It is not disputed that apart from the Joint Affidavit, records reveal another document likewise executed by Ms. Perez
containing statements directly contradictory to those found in the Joint Affidavit. To this Court, the same, indeed, casts
In the instant case, the Court does not find the evidence presented by petitioners to be substantial enough to discharge doubt on the reliability of the Joint Affidavit. The fact that the earlier written statement was not notarized nor affirmed by
the burden of proving that Villapando was, indeed, dismissed for just cause. As borne by the records, petitioners Ms. Perez does not automatically make it fabricated, especially since no proof was offered to sufficiently dispute its
submitted the following pieces of evidence in support of their claims: (1) Affidavit of Ms. Gurango dated September 19, authenticity. In the face of two conflicting pieces of evidence, the Court is curious as to why petitioners did not exert any
2002; (2) effort in verifying with Ms. Perez the reliability of said documents. Moreover, even granting the Joint Affidavit to be valid
as to Mr. Sandoval, such affidavit cannot adequately amount to instigating a "mass resignation" with the end goal of
completely abandoning petitioner Cocoplans.35 If there were really multiple invitations to join "nationwide mass
Affidavit of petitioner Michelena dated October 21, 2002; and (3) Joint Affidavit of Mr. Sandoval and Ms. Perez dated
resignations," petitioners could have easily found many other witnesses, apart from Mr. Sandoval, to categorically attest
October 9, 2002. Yet, as clearly discussed by the CA, the documents fail to convince.
thereto. Also, if Villapando truly desired to boycott Cocoplans and convince Mr. Sandoval in transferring to another
company, why is that she promoted him to Senior Area Manager in May 200236 an act that might even encourage him to
First of all, there exist certain discrepancies surrounding the presentation of Ms. Gurango's affidavit that warrant the stay?
Court's attention. In the words of the appellate court:
To repeat, in justifying dismissals due to loss of trust and confidence, there must be an actual breach of duty committed
Regarding the Affidavit of Sharon H. Gurango, dated September 19, 2002, the Court notes that this affidavit was never by the employee, established by substantial evidence.37 The Court is of the view, however, that a single Joint Affidavit of
presented during the time that the Committee on Employee Discipline was still investigating the charges against the doubtful probative value can hardly be considered as substantial. Had petitioners provided the Court with other
petitioner as the said affidavit surfaced only during the proceedings before the labor arbiter. The Court further notes that convincing proof, apart from said Joint Affidavit, that Villapando had, indeed, wilfully influenced her subordinates to
the said affidavit's date (September 9, 2002) is even way before the convening of the Committee on Employee Discipline transfer to a competing company, their claims of loss of confidence could have been sustained. As the Court now sees it,
(October 10, 2002), thus, the Court is curious as to why the said affidavit was never presented during the committee's petitioners terminated the services of Villapando on the mere basis of the Joint Affidavit executed by Ms. Perez and Mr.
investigatory hearings. In fact, based on the final report of the said committee entitled "Final Recommendation on the
Sandoval, which, as previously discussed, is put in doubt by conflicting evidence. Hence, in the absence of sufficient proof, (RAB XI-09-00774-2007), and remanded the case to the Regional Arbitration Branch, Region XI, Davao City for
the Court finds that petitioners failed to discharge the onus of proving the validity of Villapando' s dismissal. further proceedings.

Indeed, while an employer may terminate managerial employees for just cause to protect its own interest, such The Facts
prerogative must be exercised with compassion and understanding bearing in mind that, in the execution of said
prerogative, what is at stake is not only the employee's position, but his very livelihood, his very breadbasket.38 As such,
Respondents Epifanio P. Mejares, Remegio C. Baluran, Jr., Dante Saycon, and Cecilio Cucharo (respondents) were
when there is doubt between the evidence submitted by the employer and that submitted by the employee, the scales of
among the complainants, represented by their labor union named "Nagkahiusang Mamumuo ng Bit, Djevon, at
justice must be tilted in favor of the employee. This is consistent with the rule that an employer's cause could only
Raquilla Farms sa Hijo Resources Corporation" (NAMABDJERA-HRC), who filed with the NLRC an illegal dismissal
succeed on the strength of its own evidence and not on the weakness of the employee's.39 Thus, when the breach of trust
case against petitioner Hijo Resources Corporation (HRC).
or loss of confidence alleged is not borne by clearly established facts, an employee's dismissal on said ground cannot be
sustained.
Complainants (which include the respondents herein) alleged that petitioner HRC, formerly known as Hijo
Plantation Incorporated (HPI), is the owner of agricultural lands in Madum, Tagum, Davao del Norte, which were
In view of the foregoing, the Court finds proper the CA's award of backwages in favor of Villapando computed from the
planted primarily with Cavendish bananas. In 2000, HPI was renamed as HRC. In December 2003, HRC’s application
date of her dismissal on November 4, 2002 up to the finality of this decision, the deletion of attorney's fees, as well as the
for the conversion of its agricultural lands into agri-industrial use was approved. The machineries and equipment
award of separation pay in lieu of reinstatement computed from the time of her engagement up to the finality of this
formerly used by HPI continued to be utilized by HRC.
decision. Due to petitioners' contention in their Memorandum of Appeal40 dated February 19, 2004, however, that the
Labor Arbiter erred in his determination of the exact date of the start of Villapando's employment with the company, the
Court deems it necessary to remand the case to the Labor Arbiter for purposes of computing the proper amount of Complainants claimed that they were employed by HPI as farm workers in HPI’s plantations occupying various
separation pay due to Villapando, with due regard to the evidence presented by the parties as to the beginning date of positions as area harvesters, packing house workers, loaders, or labelers. In 2001, complainants were absorbed by
Villapando' s engagement. HRC, but they were working under the contractor-growers: Buenaventura Tano (Bit Farm); Djerame Pausa (Djevon
Farm); and Ramon Q. Laurente (Raquilla Farm). Complainants asserted that these contractor-growers received
compensation from HRC and were under the control of HRC. They further alleged that the contractor-growers did
WHEREFORE, premises considered, the instant petition is DENIED. The assailed Decision dated February 4, 2008 and
not have their own capitalization, farm machineries, and equipment.
Resolution dated May 27, 2008 of the Court of Appeals in CA-G.R. SP No. 88759 are AFFIRMED with MODIFICATION.
Petitioners Cocoplans, Inc. and Caesar T. Michelena are hereby ORDERED to PAY respondent Ma. Socorro R. Villapando
the following: (I) backwages computed from the date of her dismissal on November 4, 2002 up to the finality of this On 1 July 2007, complainants formed their union NAMABDJERA-HRC, which was later registered with the
Decision; (2) separation pay in lieu of reinstatement computed from the time of her engagement up to the finality of this Department of Labor and Employment (DOLE). On 24 August 2007, NAMABDJERA-HRC filed a petition for
Decision; and (3) legal interest at six percent (6%) per annum of the total monetary awards, computed from the finality certification election before the DOLE.
of this Decision until full satisfaction thereof.
When HRC learned that complainants formed a union, the three contractor-growers filed with the DOLE a notice of
For this purpose, the records of this case are hereby REMANDED to the Labor Arbiter for the proper computation of the cessation of business operations. In September 2007, complainants were terminated from their employment on the
aforestated awards, with due regard to the evidence presented by the parties as to the beginning date of Villapando' s ground of cessation of business operations by the contractor-growers of HRC. On 19 September 2007, complainants,
engagement. represented by NAMABDJERA-HRC, filed a case for unfair labor practices, illegal dismissal, and illegal deductions
with prayer for moral and exemplary damages and attorney’s fees before the NLRC.
SO ORDERED.
On 19 November 2007, DOLE Med-Arbiter Lito A. Jasa issued an Order,4 dismissing NAMABDJERA-HRC’s petition
for certification election on the ground that there was no employer-employee relationship between complainants
xi. Loss of trust and confidence; determination of managerial employee for breach of trust
(members of NAMABDJERA-HRC) and HRC. Complainants did not appeal the Order of Med-Arbiter Jasa but pursued
xii. Burden of proof in illegal dismissal; Dismissed employee need not prove his innocence
the illegal dismissal case they filed.
xiii. Binding effect of finding of Med-Arbiter of ER-EE relationship on Labor Arbiter (Hijo
Resources Corporation vs. Mejares, G.R. No. 208986, January 13, 2016)
SECOND DIVISION On 4 January 2008, HRC filed a motion to inhibit Labor Arbiter Maria Christina S. Sagmit and moved to dismiss the
January 13, 2016 complaint for illegal dismissal. The motion to dismiss was anchored on the following arguments: (1) Lack of
G.R. No. 208986 jurisdiction under the principle of res judicata; and (2) The Order of the Med-Arbiter finding that complainants were
HIJO RESOURCES CORPORATION, Petitioner, not employees of HRC, which complainants did not appeal, had become final and executory.
vs.
EPIFANIO P. MEJARES, REMEGIO C. BAL URAN, JR., DANTE SAYCON, and CECILIO CUCHARO, represented by
The Labor Arbiter’s Ruling
NAMABDJERA-HRC, Respondents.
DECISION
CARPIO, J.: On 5 February 2008, Labor Arbiter Sagmit denied the motion to inhibit. Labor Arbiter Sagmit likewise denied the
The Case motion to dismiss in an Order dated 12 February 2008. Labor Arbiter Sagmit held that res judicata does not apply.
This petition for review1 assails the 29 August 2012 Decision2 and the 13 August 2013 Resolution3 of the Court of Citing the cases of Manila Golf & Country Club, Inc. v. IAC5 and Sandoval Shipyards, Inc. v. Pepito,6 the Labor Arbiter
Appeals in CA-G.R. SP No. 04058-MIN. The Court of Appeals reversed and set aside the Resolutions dated 29 June ruled that the decision of the Med-Arbiter in a certification election case, by the nature of that proceedings, does not
2009 and 16 December 2009 of the National Labor Relations Commission (NLRC) in NLRC No. MIC-03-000229-08 foreclose further dispute between the parties as to the existence or non-existence of employer-employee
relationship between them. Thus, the finding of Med-Arbiter Jasa that no employment relationship exists between
HRC and complainants does not bar the Labor Arbiter from making his own independent finding on the same issue. Whether the Court of Appeals erred in setting aside the NLRC ruling and remanding the case to the Labor Arbiter for
The non-litigious nature of the proceedings before the Med-Arbiter does not prevent the Labor Arbiter from hearing further proceedings.
and deciding the case. Thus, Labor Arbiter Sagmit denied the motion to dismiss and ordered the parties to file their
position papers.
The Ruling of the Court

HRC filed with the NLRC a petition for certiorari with a prayer for temporary restraining order, seeking to nullify
We find the petition without merit.
the 5 February 2008 and 12 February 2008 Orders of Labor Arbiter Sagmit.

There is no question that the Med-Arbiter has the authority to determine the existence of an employer-employee
The Ruling of the NLRC
relationship between the parties in a petition for certification election. As held in M.Y. San Biscuits, Inc. v. Acting Sec.
Laguesma:9
The NLRC granted the petition, holding that Labor Arbiter Sagmit gravely abused her discretion in denying HRC’s
motion to dismiss. The NLRC held that the Med-Arbiter Order dated 19 November 2007 dismissing the certification
Under Article 226 of the Labor Code, as amended, the Bureau of Labor Relations (BLR), of which the med-arbiter is
election case on the ground of lack of employer-employee relationship between HRC and complainants (members of
an officer, has the following jurisdiction –
NAMABDJERA-HRC) constitutes res judicata under the concept of conclusiveness of judgment, and thus, warrants
the dismissal of the case. The NLRC ruled that the Med-Arbiter exercises quasi-judicial power and the Med-Arbiter’s
decisions and orders have, upon their finality, the force and effect of a final judgment within the purview of the "ART. 226. Bureau of Labor Relations. – The Bureau of Labor Relations and the Labor Relations Division[s] in the
doctrine of res judicata. regional offices of the Department of Labor shall have original and exclusive authority to act, at their own initiative
or upon request of either or both parties, on all inter-union and intra-union conflicts, and all disputes, grievances or
problems arising from or affecting labor-management relations in all workplaces whether agricultural or non-
On the issue of inhibition, the NLRC found it moot and academic in view of Labor Arbiter Sagmit’s voluntary
agricultural, except those arising from the implementation or interpretation of collective bargaining agreements
inhibition from the case as per Order dated 11 March 2009.
which shall be the subject of grievance procedure and/or voluntary arbitration.

The Ruling of the Court of Appeals

The Bureau shall have fifteen (15) working days to act on labor cases before it, subject to extension by agreement of
the parties." (Italics supplied)
The Court of Appeals found the ruling in the Sandoval case more applicable in this case. The Court of Appeals noted
that the Sandoval case, which also involved a petition for certification election and an illegal dismissal case filed by
From the foregoing, the BLR has the original and exclusive jurisdiction to inter alia, decide all disputes, grievances
the union members against the alleged employer, is on all fours with this case. The issue in Sandoval on the effect of
or problems arising from or affecting labor-management relations in all workplaces whether agricultural or non-
the Med-Arbiter’s findings as to the existence of employer-employee relationship is the very same issue raised in
agricultural. Necessarily, in the exercise of this jurisdiction over labor-management relations, the med-arbiter has
this case. On the other hand, the case of Chris Garments Corp. v. Hon. Sto. Tomas7 cited by the NLRC, which involved
the authority, original and exclusive, to determine the existence of an employer-employee relationship between the
three petitions for certification election filed by the same union, is of a different factual milieu.
parties.

The Court of Appeals held that the certification proceedings before the Med-Arbiter are non-adversarial and merely
Apropos to the present case, once there is a determination as to the existence of such a relationship, the med-arbiter
investigative. On the other hand, under Article 217 of the Labor Code, the Labor Arbiter has original and exclusive
can then decide the certification election case.1âwphi1 As the authority to determine the employer-employee
jurisdiction over illegal dismissal cases. Although the proceedings before the Labor Arbiter are also described as
relationship is necessary and indispensable in the exercise of jurisdiction by the med-arbiter, his finding thereon
non-litigious, the Court of Appeals noted that the Labor Arbiter is given wide latitude in ascertaining the existence
may only be reviewed and reversed by the Secretary of Labor who exercises appellate jurisdiction under Article 259
of employment relationship. Thus, unlike the Med-Artbiter, the Labor Arbiter may conduct clarificatory hearings
of the Labor Code, as amended, which provides –
and even avail of ocular inspection to ascertain facts speedily.

"ART. 259. Appeal from certification election orders. – Any party to an election may appeal the order or results of the
Hence, the Court of Appeals concluded that the decision in a certification election case does not foreclose further
election as determined by the Med-Arbiter directly to the Secretary of Labor and Employment on the ground that
dispute as to the existence or non-existence of an employer-employee relationship between HRC and the
the rules and regulations or parts thereof established by the Secretary of Labor and Employment for the conduct of
complainants.
the election have been violated. Such appeal shall be decided within fifteen (15) calendar days."10

On 29 August 2012, the Court of Appeals promulgated its Decision, the dispositive portion of which reads:
In this case, the Med-Arbiter issued an Order dated 19 November 2007, dismissing the certification election case
because of lack of employer-employee relationship between HRC and the members of the respondent union. The
WHEREFORE, the petition is hereby GRANTED and the assailed Resolutions dated June 29, 2009 and December 16, order dismissing the petition was issued after the members of the respondent union were terminated from their
2009 of the National Labor Relations Commission are hereby REVERSED AND SET ASIDE. Let NLRC CASE No. RAB- employment in September 2007, which led to the filing of the illegal dismissal case before the NLRC on 19
XI-09-00774-0707 be remanded to the Regional Arbitration Branch, Region XI, Davao City for further proceedings. September 2007. Considering their termination from work, it would have been futile for the members of the
respondent union to appeal the Med-Arbiter’s order in the certification election case to the DOLE Secretary. Instead,
they pursued the illegal dismissal case filed before the NLRC.
SO ORDERED.8

The Issue
The Court is tasked to resolve the issue of whether the Labor Arbiter, in the illegal dismissal case, is bound by the DECISION
ruling of the Med-Arbiter regarding the existence or non-existence of employer-employee relationship between the JARDELEZA, J.:
parties in the certification election case. We resolve in this Petition for Review1 under Rule 45 of the Rules of Court, the issue of who among Diamond Farms,
Inc. ("DFI"), Diamond Farms Agrarian Reform Beneficiaries Multi-Purpose Cooperative ("DARBMUPCO") and the
individual contractors2 ("respondent-contractors") is the employer of the 400 employees ("respondent-workers").
The Court rules in the negative. As found by the Court of Appeals, the facts in this case are very similar to those in
the Sandoval case, which also involved the issue of whether the ruling in a certification election case on the
existence or non-existence of an employer-employee relationship operates as res judicata in the illegal dismissal DFI challenges the March 31, 2006 Decision3 and May 30, 2006 Resolution4 of the Court Appeals, Special Twenty-
case filed before the NLRC. In Sandoval, the DOLE Undersecretary reversed the finding of the Med-Arbiter in a Second Division, Cagayan De Oro City for being contrary to law and jurisprudence. The Decision dismissed DFI’s
certification election case and ruled that there was no employer-employee relationship between the members of the Petition for Certiorari in C.A.-G.R. SP Nos. 53806 and 61607 and granted DARBMUPCO’s Petition for Certiorari in
petitioner union and Sandoval Shipyards, Inc. (SSI), since the former were employees of the subcontractors. C.A.-G.R. SP No. 59958. It declared DFI as the statutory employer of the respondent-workers.
Subsequently, several illegal dismissal cases were filed by some members of the petitioner union against SSI. Both
the Labor Arbiter and the NLRC ruled that there was no employer-employee relationship between the parties, citing
The Facts
the resolution of the DOLE Undersecretary in the certification election case. The Court of Appeals reversed the NLRC
ruling and held that the members of the petitioner union were employees of SSI. On appeal, this Court affirmed the
appellate court’s decision and ruled that the Labor Arbiter and the NLRC erred in relying on the pronouncement of DFI owns an 800-hectare banana plantation ("original plantation") in Alejal, Carmen, Davao.5 Pursuant to Republic
the DOLE Undersecretary that there was no employer-employee relationship between the parties. The Court cited Act No. 6657 or the Comprehensive Agrarian Reform Law of 1988 ("CARL"), commercial farms shall be subject to
the ruling in the Manila Golf11 case that the decision in a certification election case, by the very nature of that compulsory acquisition and distribution,6 thus the original plantation was covered by the law. However, the
proceeding, does not foreclose all further dispute between the parties as to the existence or non-existence of an Department of Agrarian Reform ("DAR") granted DFI a deferment privilege to continue agricultural operations until
employer-employee relationship between them. 1998.7 Due to adverse marketing problems and observance of the so-called "lay-follow" or the resting of a parcel of
land for a certain period of time after exhaustive utilization, DFI closed some areas of operation in the original
plantation and laid off its employees.8 These employees petitioned the DAR for the cancellation of DFI’s deferment
This case is different from the Chris Garments case cited by the NLRC where the Court held that the matter of
privilege alleging that DFI already abandoned its area of operations.9 The DAR Regional Director recalled DFI’s
employer-employee relationship has been resolved with finality by the DOLE Secretary, whose factual findings were
deferment privilege resulting in the original plantation’s automatic compulsory acquisition and distribution under
not appealed by the losing party. As mentioned earlier, the Med-Arbiter’s order in this case dismissing the
the CARL.10 DFI filed a motion for reconsideration which was denied. It then appealed to the DAR Secretary.11
petition for certification election on the basis of non-existence of employer-employee relationship was
issued after the members of the respondent union were dismissed from their employment. The purpose of a
petition for certification election is to determine which organization will represent the employees in their In the meantime, to minimize losses, DFI offered to give up its rights and interest over the original plantation in
collective bargaining with the employer.12 The respondent union, without its member-employees, was thus favor of the government by way of a Voluntary Offer to Sell.12 The DAR accepted DFI’s offer to sell the original
stripped of its personality to challenge the Med-Arbiter’s decision in the certification election case. Thus, plantation. However, out of the total 800 hectares, the DAR only approved the disposition of 689.88 hectares. Hence,
the members of the respondent union were left with no option but to pursue their illegal dismissal case the original plantation was split into two: 689.88 hectares were sold to the government ("awarded plantation") and
filed before the Labor Arbiter. To dismiss the illegal dismissal case filed before the Labor Arbiter on the basis of the remaining 200 hectares, more or less, were retained by DFI ("managed area").13 The managed area is subject to
the pronouncement of the Med-Arbiter in the certification election case that there was no employer-employee the outcome of the appeal on the cancellation of the deferment privilege before the DAR Secretary.
relationship between the parties, which the respondent union could not even appeal to the DOLE Secretary because
of the dismissal of its members, would be tantamount to denying due process to the complainants in the illegal
On January 1, 1996, the awarded plantation was turned over to qualified agrarian reform beneficiaries ("ARBs")
dismissal case. This, we cannot allow.
under the CARL. These ARBs are the same farmers who were working in the original plantation. They subsequently
organized themselves into a multi-purpose cooperative named "DARBMUPCO," which is one of the respondents in
WHEREFORE, we DENY the petition. We AFFIRM the 29 August 2012 Decision and the 13 August 2013 Resolution this case.14
of the Court of Appeals in CA-G.R. SP No. 04058-MIN.
On March 27, 1996, DARBMUPCO entered into a Banana Production and Purchase Agreement ("BPPA")15 with
SO ORDERED. DFI.16 Under the BPPA, DARBMUPCO and its members as owners of the awarded plantation, agreed to grow and
cultivate only high grade quality exportable bananas to be sold exclusively to DFI.17 The BPPA is effective for 10
years.18
xiv. Presumption of job contractor as labor-only contractor (Diamond Farms vs. FARMS
AGRARIAN REFORM BENEFICIARIES MULTI-PURPOSE COOPERATIVE (DARBMUPCO), G.R.
Nos. 173254-55 & 173263, January 13, 2016; Manila Memorial Park Cemetery, Inc. vs. Lluz, On April 20, 1996, DARBMUPCO and DFI executed a "Supplemental to Memorandum Agreement" ("SMA").19 The
G.R. No. 208451, February 3, 2016) (pdf) SMA stated that DFI shall take care of the labor cost arising from the packaging operation, cable maintenance,
January 13, 2016 irrigation pump and irrigation maintenance that the workers of DARBMUPCO shall conduct for DFI’s account under
G.R. Nos. 173254-55 & 173263 the BPPA.20
DIAMOND FARMS, INC., Petitioner,
vs.
From the start, DARBMUPCO was hampered by lack of manpower to undertake the agricultural operation under the
SOUTHERN PHILIPPINES FEDERATION OF LABOR (SPFL)-WORKERS SOLIDARITY OF
BPPA because some of its members were not willing to work.21 Hence, to assist DARBMUPCO in meeting its
DARBMUPCO/DIAMOND-SPFL, DIAMOND FARMS AGRARIAN REFORM BENEFICIARIES MULTI-PURPOSE
production obligations under the BPPA, DFI engaged the services of the respondent-contractors, who in turn
COOPERATIVE (DARBMUPCO), VOLTER LOPEZ, RUEL ROMERO, PATRICIO CAPRECHO, REY DIMACALI,
recruited the respondent-workers.22
ELESIO EMANEL, VICTOR SINGSON, NILDA DIMACALI, PREMITIVO* DIAZ, RUDY VISTAL, ROGER MONTERO,
JOSISIMO GOMEZ and MANUEL MOSQUERA, Respondents.
The engagement of the respondent-workers, as will be seen below, started a series of labor disputes among awarded plantation and the managed area, respectively.40 It adjudged DFI and DARBMUPCO as solidarily liable
DARBMUPCO, DFI and the respondent-contractors. with the respondent-contractors for the monetary claims of the workers, in proportion to their net planted area.41

C.A. G.R. SP No. 53806 DARBMUPCO filed a motion for reconsideration which was denied.42 It filed a second motion for reconsideration in
the NLRC, which was also denied for lack of merit and for being barred under the NLRC Rules of Procedure.43
Hence, DARBMUPCO elevated the case to the CA by way of a Petition for Certiorari.44 The case was docketed as C.A.-
On February 10, 1997, respondent Southern Philippines Federation of Labor ("SPFL")—a legitimate labor
G.R. SP. No. 59958.
organization with a local chapter in the awarded plantation—filed a petition for certification election in the Office of
the Med-Arbiter in Davao City.23 SPFL filed the petition on behalf of some 400 workers (the respondent-workers in
this petition) "jointly employed by DFI and DARBMUPCO" working in the awarded plantation. The former Eleventh Division of the CA consolidated C.A. G.R. SP. No. 59958 and C.A.-G.R. SP No. 53806 in a
Resolution dated January 27, 2001.45
DARBMUPCO and DFI denied that they are the employers of the respondent-workers. They claimed, instead, that
the respondent-workers are the employees of the respondent-contractors.24 C.A.-G.R. SP No. 61607

In an Order dated May 14, 1997,25 the Med-Arbiter granted the petition for certification election. It directed the Pursuant to the May 4, 1999 Resolution of the SOLE approving the conduct of certification election, the Department
conduct of certification election and declared that DARBMUPCO was the employer of the respondent-workers. The of Labor and Employment ("DOLE") conducted a certification election on October 1, 1999.46 On even date, DFI filed
Order stated that "whether the said workers/employees were hired by independent contractors is of no moment. an election protest47 before the Med-Arbiter arguing that the certification election was premature due to the
What is material is that they were hired purposely to work on the 689.88 hectares banana plantation [the awarded pendency of a petition for certiorari before the CA assailing the February 18, 1999 and May 4, 1999 Resolutions of
plantation] now owned and operated by DARBMUPCO."26 the SOLE (previously discussed in C.A.-G.R. SP No. 53806).

DARBMUPCO appealed to the Secretary of Labor and Employment ("SOLE"). In a Resolution dated February 18, In an Order dated December 15, 1999,48 the Med-Arbiter denied DFI’s election protest, and certified SPFL-Workers
1999,27 the SOLE modified the decision of the Med-Arbiter. The SOLE held that DFI, through its manager and Solidarity of DARBMUPCO/DIAMOND-SPFL ("WSD-SPFL") as the exclusive bargaining representative of the
personnel, supervised and directed the performance of the work of the respondentcontractors. The SOLE thus respondent-workers. DFI filed a Motion for Reconsideration49 which the Med-Arbiter treated as an appeal, and
declared DFI as the employer of the respondent-workers.28 which the latter elevated to the SOLE.

DFI filed a motion for reconsideration which the SOLE denied in a Resolution dated May 4, 1999.29 In a Resolution dated July 18, 2000,50 the SOLE dismissed the appeal. The Resolution stated that the May 4, 1999
Resolution directing the conduct of certification election is already final and executory on June 4, 1999. It pointed
out that the filing of the petition for certiorari before the CA assailing the February 18, 1999 and May 4, 1999
On June 11, 1999, DFI elevated the case to the Court of Appeals ("CA") via a Petition for Certiorari30 under Rule 65
Resolutions does not stay the conduct of the certification election because the CA did not issue a restraining
of the Rules of Court. The case was raffled to the CA’s former Twelfth Division and was docketed as C.A.-G.R. SP No.
order.51 DFI filed a Motion for Reconsideration but the motion was denied.52
53806.

On October 27, 2000, DFI filed a Petition for Certiorari53 before the CA, docketed as C.A.-G.R. SP No. 61607.
C.A.-G.R. SP. No. 59958

In a Resolution dated August 2, 2005,54 the CA Twenty-Third Division consolidated C.A.-G.R. SP No. 61607 with
Meanwhile, on June 20, 199731 and September 15, 1997,32 SPFL, together with more than 300 workers, filed a case
C.A.-G.R. SP. No. 59958 and C.A. G.R. SP No. 53806.
for underpayment of wages, non-payment of 13th month pay and service incentive leave pay and attorney’s fees
against DFI, DARBMUPCO and the respondent-contractors before the National Labor Relations Commission
("NLRC") in Davao City. DARBMUPCO averred that it is not the employer of respondent-workers; neither is DFI. It The Assailed CA Decision and Resolution
asserted that the money claims should be directed against the true employer—the respondent-contractors.33
The CA was confronted with two issues:55
In a Decision dated January 22, 1999,34 the Labor Arbiter ("LA") held that the respondent-contractors are "labor-
only contractors." The LA gave credence to the affidavits of the other contractors35 of DFI (who are not party-
(1) "Whether DFI or DARBMUPCO is the statutory employer of the [respondent-workers] in these petitions; and
respondents in this petition) asserting that DFI engaged their services, and supervised and paid their laborers. The
affidavits also stated that the contractors had no dealings with DARBMUPCO, except that their work is done in the
awarded plantation.36 (2) Whether or not a certification election may be conducted pending the resolution of the petition for certiorari
filed before this Court, the main issue of which is the identity of the employer of the [respondent-workers] in these
petitions."
The LA held that, under the law, DFI is deemed as the statutory employer of all the respondent-workers.37 The LA
dismissed the case against DARBMUPCO and the respondent-contractors.38
On the first issue, the CA agreed with the ruling of the SOLE56 that DFI is the statutory employer of the respondent-
workers. It noted that the DFI hired the respondent-contractors, who in turn procured their own men to work in the
DFI appealed to the NLRC. In a Resolution dated May 24, 1999,39 the NLRC Fifth Division modified the Decision of
land owned by DARBMUPCO. Further, DFI admitted that the respondent-contractors worked under the direction
the LA and declared that DARBMUPCO and DFI are the statutory employers of the workers rendering services in the
and supervision of DFI’s managers and personnel. DFI also paid for the respondent-contractors’ services.57 The CA
said that the fact that the respondent-workers worked in the land owned by DARBMUPCO is immaterial. We deny the petition.
"Ownership of the land is not one of the four (4) elements generally considered to establish employer-employee
relationship."58
This case involves job contracting, a labor arrangement expressly allowed by law. Contracting or subcontracting is
an arrangement whereby a principal (or employer) agrees to put out or farm out with a contractor or subcontractor
The CA also ruled that DFI is the true employer of the respondent-workers because the respondent-contractors are the performance or completion of a specific job, work or service within a definite or predetermined period,
not independent contractors.59 The CA stressed that in its pleadings before the Med-Arbiter, the SOLE, and the CA, regardless of whether such job, work or service is to be performed or completed within or outside the premises of
DFI revealed that DARBMUPCO lacks manpower to fulfill the production requirements under the BPPA. This the principal.69 It involves a trilateral relationship among the principal or employer, the contractor or
impelled DFI to hire contractors to supply labor enabling DARBMUPCO to meet its quota. The CA observed that subcontractor, and the workers engaged by the contractor or subcontractor.70
while the various agencies involved in the consolidated petitions sometimes differ as to who the statutory employer
of the respondent-workers is, they are uniform in finding that the respondent-contractors are labor-only
Article 106 of the Labor Code of the Philippines71 (Labor Code) explains the relations which may arise between an
contractors.60
employer, a contractor, and the contractor’s employees,72 thus:

On the second issue, the CA reiterated the ruling of the SOLE61 that absent an injunction from the CA, the pendency
ART. 106. Contractor or subcontracting. − Whenever an employer enters into a contract with another person for the
of a petition for certiorari does not stay the holding of the certification election.62 The challenged Resolution of the
performance of the formers work, the employees of the contractor and of the latter’s subcontractor, if any, shall be
SOLE is already final and executory as evidenced by an Entry of Judgment dated July 14, 1999; hence, the merits of
paid in accordance with the provisions of this Code.
the case can no longer be reviewed.63

In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this
The CA thus held in its Decision dated March 31, 2006:
Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to
the extent of the work performed under the contract, in the same manner and extent that he is liable to employees
WHEREFORE, premises considered, this Court hereby ORDERS: directly employed by him.

(1) the DISMISSAL of the petitions in C.A.-G.R. SP No. 53806 and C.A.-G.R. SP No. 61607; and The Secretary of Labor and Employment may, by appropriate regulations, restrict or prohibit the contracting out of
labor to protect the rights of workers established under this Code. In so prohibiting or restricting, he may make
appropriate distinctions between labor-only contracting and job contracting as well as differentiations within these
(2) the GRANTING of the petition in C.A.-G.R. SP No. 59958 and the SETTING ASIDE of the assailed resolutions of the
types of contracting and determine who among the parties involved shall be considered the employer for purposes
NLRC dated 24 May 1999, 30 July 1999 and 26 June 2000, respectively.
of this Code, to prevent any violation or circumvention of any provision of this Code.

SO ORDERED.64
There is "labor-only" contracting where the person supplying workers to an employer does not have substantial
capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers
DFI filed a Motion for Reconsideration of the CA Decision which was denied in a Resolution dated May 30, 2006.65 recruited and placed by such person are performing activities which are directly related to the principal business of
such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer
who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by
DFI is now before us by way of Petition for Review on Certiorari praying that DARBMUPCO be declared the true
him.
employer of the respondent-workers.

The Omnibus Rules Implementing the Labor Code73 distinguishes between permissible job contracting (or
DARBMUPCO filed a Comment66 maintaining that under the control test, DFI is the true employer of the
independent contractorship) and labor-only contracting. Job contracting is permissible under the Code if the
respondent-workers.
following conditions are met:

Respondent-contractors filed a Verified Explanation and Memorandum67 asserting that they were labor-only
(a) The contractor carries on an independent business and undertakes the contract work on his own account under
contractors; hence, they are merely agents of the true employer of the respondent-workers.
his own responsibility according to his own manner and method, free from the control and direction of his
employer or principal in all matters connected with the performance of the work except as to the results thereof;
SPFL did not file any comment or memorandum on behalf of the respondent-workers.68 and

The Issue (b) The contractor has substantial capital or investment in the form of tools, equipment, machineries, work
premises, and other materials which are necessary in the conduct of his business.74
The issue before this Court is who among DFI, DARBMUPCO and the respondent-contractors is the employer of the
respondent-workers. In contrast, job contracting shall be deemed as labor-only contracting, an arrangement prohibited by law, if a person
who undertakes to supply workers to an employer:
Our Ruling
(1) Does not have substantial capital or investment in the form of tools, equipment, machineries, work premises and form of tools, equipment, machineries, work premises and other materials, and they recruited workers to perform
other materials; and activities directly related to the principal operations of their employer.81

(2) The workers recruited and placed by such person are performing activities which are directly related to the Before this Court, respondents-contractors again admitted that they are labor-only contractors. They narrated that:
principal business or operations of the employer in which workers are habitually employed.75
1. Herein respondents, Voltaire Lopez, Jr., et al., were commissioned and contracted by petitioner, Diamond
As a general rule, a contractor is presumed to be a labor-only contractor, unless such contractor overcomes the Farms, Inc. (DFI) to recruit farm workers, who are the complaining [respondent-workers] (as represented
burden of proving that it has the substantial capital, investment, tools and the like.76 by Southern Philippines Federation of Labor (SPFL) in this appeal by certiorari), in order to perform specific
farm activities, such as pruning, deleafing, fertilizer application, bud inject, stem spray, drainage, bagging, etc., on
banana plantation lands awarded to private respondent, Diamond Farms Agrarian Reform Beneficiaries Multi-
Based on the conditions for permissible job contracting, we rule that respondent-contractors are labor-only
Purpose Cooperative (DARBMUPCO) and on banana planted lands owned and managed by petitioner, DFI.
contractors.

2. All farm tools, implements and equipment necessary to performance of such farm activities were supplied by
There is no evidence showing that respondent-contractors are independent contractors. The respondent-
petitioner DFI to respondents Voltaire Lopez, Jr., et. al. as well as to respondents-SPFL, et. al. Herein respondents
contractors, DFI, and DARBMUPCO did not offer any proof that respondent-contractors were not engaged in labor-
Voltaire Lopez, Jr. et. al. had no adequate capital to acquire or purchase such tools, implements, equipment,
only contracting. In this regard, we cite our ruling in Caro v. Rilloraza,77 thus:
etc.

"In regard to the first assignment of error, the defendant company pretends to show through Venancio Nasol's own
3. Herein respondents Voltaire Lopez, Jr., et. al. As well as respondents-SPFL, et. al. were being directly
testimony that he was an independent contractor who undertook to construct a railway line between Maropadlusan
supervised, controlled and managed by petitioner DFI farm managers and supervisors, specifically on work
and Mantalisay, but as far as the record shows, Nasol did not testify that the defendant company had no control over
assignments and performance targets. DFI managers and supervisors, at their sole discretion and prerogative,
him as to the manner or methods he employed in pursuing his work. On the contrary, he stated that he was not
could directly hire and terminate any or all of the respondents-SPFL, et. al., including any or all of the herein
bonded, and that he only depended upon the Manila Railroad for money to be paid to his laborers. As stated by
respondents Voltaire Lopez, Jr., et. al.
counsel for the plaintiffs, the word ‘independent contractor’ means 'one who exercises independent employment
and contracts to do a piece of work according to his own methods and without being subject to control of his
employer except as to result of the work.' Furthermore, if the employer claims that the workmen is an independent 4. Attendance/Time sheets of respondents-SPFL, et. al. were being prepared by herein respondents Voltaire Lopez,
contractor, for whose acts he is not responsible, the burden is on him to show his independence. Jr., et. al., and correspondingly submitted to petitioner DFI. Payment of wages to respondents-SPFL, et. al. were
being paid for by petitioner DFI thru herein respondents Voltaire Lopez, [Jr.], et. al. The latter were also receiving
their wages/salaries from petitioner DFI for monitoring/leading/recruiting the respondents-SPFL, et. al.
Tested by these definitions and by the fact that the defendant has presented practically no evidence to
determine whether Venancio Nasol was in reality an independent contractor or not, we are inclined to think
that he is nothing but an intermediary between the defendant and certain laborers. It is indeed difficult to 5. No monies were being paid directly by private respondent DARBMUPCO to respondents-SPFL, et al., nor to herein
find that Nasol is an independent contractor; a person who possesses no capital or money of his own to pay his respondents Voltaire Lopez, [Jr.], et. al. Nor did respondent DARBMUPCO directly intervene much less supervise any
obligations to them, who files no bond to answer for any fulfillment of his contract with his employer and specially or all of [the] respondents-SPFL, et. al. including herein respondents Voltaire Lopez, Jr., et. al.82 (Emphasis
subject to the control and supervision of his employer, falls short of the requisites or conditions necessary for the supplied.)
common and independent contractor."78 (Citations omitted; emphasis supplied.)
The foregoing admissions are legally binding on respondent-contractors.83 Judicial admissions made by parties in
To support its argument that respondent-contractors are the employers of respondent-workers, and not merely the pleadings, or in the course of the trial or other proceedings in the same case are conclusive and so does not
labor-only contractors, DFI should have presented proof showing that respondent-contractors carry on an require further evidence to prove them.84 Here, the respondent-contractors voluntarily pleaded that they are
independent business and have sufficient capitalization. The record, however, is bereft of showing of even an labor-only contractors; hence, these admissions bind them.
attempt on the part of DFI to substantiate its argument.
A finding that a contractor is a labor-only contractor is equivalent to a declaration that there is an employer-
DFI cannot cite the May 24, 1999 Resolution of the NLRC as basis that respondent-contractors are independent employee relationship between the principal, and the workers of the labor-only contractor; the labor-only
contractors. Nowhere in the NLRC Resolution does it say that the respondent-contractors are independent contractor is deemed only as the agent of the principal.85 Thus, in this case, respondent-contractors are the labor-
contractors. On the contrary, the NLRC declared that "it was not clearly established on record that said [respondent- only contractors and either DFI or DARBMUPCO is their principal.
]contractors are independent, xxx."79
We hold that DFI is the principal.
Further, respondent-contractors admit, and even insist that they are engaged in labor-only contracting. As will be
seen below, respondent-contractors made the admissions and declarations on two occasions: first was in their
Under Article 106 of the Labor Code, a principal or employer refers to the person who enters into an agreement
Formal Appearance of Counsel and Motion for Exclusion of Individual Party-Respondents filed before the LA; and
with a job contractor, either for the performance of a specified work or for the supply of manpower.86 In this
second was in their Verified Explanation and Memorandum filed before this Court.
regard, we quote with approval the findings of the CA, to wit:

Before the LA, respondent-contractors categorically stated that they are "labor-only" contractors who have been
engaged by DFI and DARBMUPCO.80 They admitted that they do not have substantial capital or investment in the
The records show that it is DFI which hired the individual [respondent-contractors] who in turn hired their volatile and flammable which, if mishandled or not properly attended to, may cause serious injuries and damage to
own men to work in the 689.88 hectares land of DARBMUPCO as well as in the managed area of the property and the environment. Naturally, supervision by Petron is essential in every aspect of its product handling
plantation. DFI admits [that] these [respondent-contractors] worked under the direction and supervision of the in order not to compromise the integrity, quality and safety of the products that it distributes to the consuming
DFI managers and personnel. DFI paid the [respondent-contractors] for the services rendered in the plantation and public.97 (Citations omitted; emphasis supplied)
the [respondent-contractors] in turn pay their workers after they [respondent-contractors] received payment from
DFI. xxx DARBMUPCO did not have anything to do with the hiring, supervision and payment of the wages of the
That DFI is the employer of the respondent-workers is bolstered by the CA’s finding that DFI exercises control over
workers-respondents thru the contractors-respondents. xxx87 (Emphasis supplied.)
the respondent-workers.98 DFI, through its manager and supervisors provides for the work assignments and
performance targets of the respondent-workers. The managers and supervisors also have the power to directly hire
DFI does not deny that it engaged the services of the respondent-contractors. It does not dispute the claims of and terminate the respondent-workers.99 Evidently, DFI wields control over the respondent-workers.
respondent-contractors that they sent their billing to DFI for payment; and that DFI’s managers and personnel are
in close consultation with the respondent-contractors.88
Neither can DFI argue that it is only the purchaser of the bananas produced in the awarded plantation under the
BPPA,100 and that under the terms of the BPPA, no employer-employee relationship exists between DFI and the
DFI cannot argue that DARBMUPCO is the principal of the respondent-contractors because it (DARBMUPCO) owns respondent-workers,101 to wit:
the awarded plantation where respondent-contractors and respondent-workers were working;89 and therefore
DARBMUPCO is the ultimate beneficiary of the employment of the respondent-workers.90
UNDERTAKING OF THE FIRST PARTY

That DARBMUPCO owns the awarded plantation where the respondent-contractors and respondent-workers were
xxx
working is immaterial. This does not change the situation of the parties. As correctly found by the CA, DFI, as the
principal, hired the respondent-contractors and the latter, in turn, engaged the services of the respondent-
workers.91 This was also the unanimous finding of the SOLE,92 the LA,93 and the NLRC.94 Factual findings of the 3. THE FIRST PARTY [DARBMUPCO] shall be responsible for the proper conduct, safety, benefits and general
NLRC, when they coincide with the LA and affirmed by the CA are accorded with great weight and respect and even welfare of its members working in the plantation and specifically render free and harmless the SECOND PARTY
finality by this Court.95 [DFI] of any expense, liability or claims arising therefrom. It is clearly recognized by the FIRST PARTY that its
members and other personnel utilized in the performance of its function under this agreement are not
employees of the SECOND PARTY.102 (Emphasis supplied)
Alilin v. Petron Corporation96 is applicable. In that case, this Court ruled that the presence of the power of control on
the part of the principal over the workers of the contractor, under the facts, prove the employer-employee
relationship between the former and the latter, thus: In labor-only contracting, it is the law which creates an employer-employee relationship between the principal and
the workers of the labor-only contractor.103
[A] finding that a contractor is a ‘labor-only’ contractor is equivalent to declaring that there is an employer-
employee relationship between the principal and the employees of the supposed contractor." In this case, the Inasmuch as it is the law that forms the employment ties, the stipulation in the BPPA that respondent-workers are
employer-employee relationship between Petron and petitioners becomes all the more apparent due to the not employees of DFI is not controlling, as the proven facts show otherwise. The law prevails over the stipulations
presence of the power of control on the part of the former over the latter. of the parties. Thus, in Tabas v. California Manufacturing Co., Inc.,104 we held that:

It was held in Orozco v. The Fifth Division of the Hon. Court of Appeals that: The existence of an employer-employees relation is a question of law and being such, it cannot be made the
subject of agreement.1âwphi1 Hence, the fact that the manpower supply agreement between Livi and California
had specifically designated the former as the petitioners' employer and had absolved the latter from any liability as
This Court has constantly adhered to the "four-fold test" to determine whether there exists an employer-employee
an employer, will not erase either party's obligations as an employer, if an employer-employee relation otherwise
relationship between the parties.1âwphi1 The four elements of an employment relationship are: (a) the selection
exists between the workers and either firm. xxx105 (Emphasis supplied.)
and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the power to
control the employee’s conduct.
Clearly, DFI is the true employer of the respondent-workers; respondent-contractors are only agents of DFI. Under
Article 106 of the Labor Code, DFI shall be solidarily liable with the respondent-contractors for the rightful claims of
Of these four elements, it is the power to control which is the most crucial and most determinative factor, so
the respondent-workers, to the same manner and extent as if the latter are directly employed by DFI.106
important, in fact, that, the other elements may even be disregarded.

WHEREFORE, the petition is DENIED for lack of merit. The March 31, 2006 Decision and the May 30, 2006
Hence, the facts that petitioners were hired by Romeo or his father and that their salaries were paid by them do not
Resolution of the Court of Appeals in C.A.-G.R. SP Nos. 53806, 61607 and 59958 are hereby AFFIRMED.
detract from the conclusion that there exists an employer-employee relationship between the parties due to
Petron’s power of control over the petitioners. One manifestation of the power of control is the power to transfer
employees from one work assignment to another. Here, Petron could order petitioners to do work outside of their SO ORDERED.
regular "maintenance/utility" job. Also, petitioners were required to report for work everyday at the bulk plant,
observe an 8:00 a.m. to 5:00 p.m. daily work schedule, and wear proper uniform and safety helmets as prescribed
xv. Labor and employment matters cannot be subjected to agreement (Olimpia Housing, Inc. vs.
by the safety and security measures being implemented within the bulk plant. All these imply control. In an industry
Lapastora, G.R. No. 187691, January 13, 2016)
where safety is of paramount concern, control and supervision over sensitive operations, such as those performed
xvi. Impossibility of reinstatement due to closure of business (Olimpia Housing, Inc. vs.
by the petitioners, are inevitable if not at all necessary. Indeed, Petron deals with commodities that are highly
Lapastora, G.R. No. 187691, January 13, 2016)
 THIRD DIVISION Meanwhile, on May 10, 2002, the Labor Arbiter (LA) rendered a Decision9 in the instant case, holding that
January 13, 2016 Lapastora and Ubalubao were regular employees of OHI and that they were illegally dismissed. The dispositive
G.R. No.187691 portion of the decision reads as follows:
OLYMPIA HOUSING, INC., Petitioner,
vs.
WHEREFORE, finding complainants to have been illegally dismissed and as regular employees of [OHI] the latter is
ALLAN LAPASTORA and IRENE UBALUBAO, Respondents.
ordered to reinstate complainants to their former position or substantially equal position without loss of seniority
DECISION
rights and benefits. [OHI] is further ordered to pay complainants backwages, service incentive leave pay and
REYES, J.:
attorney’s fees as follows:
This is a Petition for Review on Certiorari1 filed under Rule 45 of the Rules of Court, assailing the Decision2 dated
April 28, 2009 of the Court of Appeals (CA) in CA-G.R. SP No. 103699, which affirmed the Decision dated December
28, 2007 and Resolution3 dated February 29, 2008 of the National Labor Relations Commission (NLRC) in NLRC 1. Backwages:
NCR Case No. 30-03-00976-00.
[Lapastora] - P171,616.60 and
The instant case stemmed from a complaint for illegal dismissal, payment of backwages and other benefits, and
regularization of employment filed by Allan Lapastora (Lapastora) and Irene Ubalubao (Ubalubao) against Olympic
[Ubalubao] - P170,573.44 from February 24, 2000 to date of decision which shall further be adjusted until their
Housing, Inc. (OHI), the entity engaged in the management of the Olympia Executive Residences (OER), a
actual reinstatement.
condominium hotel building situated in Makati City, owned by a Philippine-registered corporation known as the
Olympia Condominium Corporation (OCC). The complaint, which was docketed as NLRC NCR Case No. 30-03-
00976-00 (NLRC NCR CA No. 032043-02), likewise impleaded as defendants the part owner of OHI, Felix Limcaoco 2. P3,305.05 - ILP for Lapastora
(Limcaoco), and Fast Manpower and Allied Services Company, Inc. (Fast Manpower). Lapastora and Ubalubao
alleged that they worked as room attendants of OHI from March 1995 and June 1997, respectively, until they were
3. P3,426.04 - SILP for Ubalubao
placed on floating status on February 24, 2000, through a memorandum sent by Fast Manpower.4

4. 10% of the money awards as attorney’s fees.

To establish employer-employee relationship with OHI, Lapastora and Ubalubao alleged that they were directly
hired by the company and received salaries directly from its operations clerk, Myrna Jaylo (Jaylo). They also claimed
that OHI exercised control over them as they were issued time cards, disciplinary action reports and checklists of Other claims are dismissed for lack of merit.
room assignments. It was also OHI which terminated their employment after they petitioned for regularization.
Prior to their dismissal, they were subjected to investigations for their alleged involvement in the theft of personal
The claim against [Limcaoco] is hereby dismissed for lack of merit.
items and cash belonging to hotel guests and were summarily dismissed by OHI despite lack of evidence.5

SO ORDERED.10
For their part, OHI and Limcaoco alleged that Lapastora and Ubalubao were not employees of the company but of
Fast Manpower, with which it had a contract of services, particularly, for the provision of room attendants. They
claimed that Fast Manpower is an independent contractor as it (1) renders janitorial services to various In ruling for the existence of employer-employee relationship, the LA held that OHI exercised control and
establishments in Metro Manila, with 500 janitors under its employ; (2) maintains an office where janitors assemble supervision over Lapastora and Ubalubao through its supervisor, Anamie Lat. The LA likewise noted that
before they are dispatched to their assignments; (3) exercises the right to select, refuse or change personnel documentary evidence consisting of time cards, medical cards and medical examination reports all indicated OHI as
assigned to OHI; and (4) supervises and pays the wages of its employees.6 employer of the said employees.

Reinforcing OHI’s claims, Fast Manpower reiterated that it is a legitimate manpower agency and that it had a valid Moreover, the affidavit of OHI’s housekeeping coordinator, Jaylo, attested to the fact that OHI is the one responsible
contract of services with OHI, pursuant to which Lapastora and Ubalubao were deployed as room attendants. for the selection of employees for its housekeeping department. OHI also paid the salaries of the housekeeping staff
Lapastora and Ubalubao were, however, found to have violated house rules and regulations and were reprimanded by depositing them to their respective ATM accounts. That there is a contract of services between OHI and Fast
accordingly. It denied the employees’ claim that they were dismissed and maintained they were only placed on Manpower did not rule out the existence of employer-employee relationship between the former and Lapastora and
floating status for lack of available work assignments.7 Ubalubao as it appears that the said contract was a mere ploy to circumvent the application of pertinent labor laws
particularly those relating to security of tenure. The LA pointed out that the business of OHI necessarily requires the
services of housekeeping aides, room boys, chambermaids, janitors and gardeners in its daily operations, which is
Subsequently, on August 22, 2000, a memorandum of agreement was executed, stipulating the transfer of
precisely the line of work being rendered by Lapastora and Ubalubao.11
management of the OER from OHI to HSAI-Raintree, Inc. (HSAI-Raintree). Thereafter, OHI informed the Department
of Labor and Employment (DOLE) of its cessation of operations due to the said change of management and issued
notices of termination to all its employees. This occurrence prompted some union officers and members to file a Both parties appealed to the NLRC. OHI asseverated that the reinstatement of Lapastora and Ubalubao was no
separate complaint for illegal dismissal and unfair labor practice against OHI, OCC and HSAI-Raintree, docketed as longer possible in view of the transfer of the management of the OER to HSAI-Raintree.12
NLRC NCR CN 30-11-04400-00 (CA No. 032193-02), entitled Malonie D. Ocampo, et al. v. Olympia Housing, Inc., et al.
(Ocampo v. OHI). This complaint was, however, dismissed for lack of merit. The complainants therein appealed the
On December 28, 2007, the NLRC rendered a decision, dismissing the appeal for lack of merit, the dispositive
said ruling to the NLRC.8
portion of which reads as follows:
WHEREFORE, premises considered, the appeals of both the respondents and the complainants are DISMISSED, and invocation of the doctrine. The CA added that the prevailing jurisprudence is that the NLRC decision upholding the
the Decision of the [LA] is hereby AFFIRMED. All other claims are dismissed for lack of merit.13 validity of the closure of business and retrenchment of employees resulting therefrom will not preclude it from
decreeing the illegality of an employee’s dismissal. Considering that OHI failed to prove that the memorandum of
agreement between OCC and HSAI-Raintree had any effect on the employment of Lapastora and Ubalubao or that
The NLRC held that OHI is the employer of Lapastora and Ubalubao since Fast Manpower failed to establish the fact
there is any other valid or authorized cause for their termination from employment, the CA concluded that they
that it is an independent contractor. Further, it ruled that the memorandum of agreement between OCC and HSAI-
were unlawfully dismissed.27
Raintree did not render the reinstatement of Lapastora and Ubalubao impossible since a change in the management
does not automatically result in a change of personnel especially when the memorandum itself did not include a
provision on that matter.14 Unyielding, OHI filed the instant petition, reiterating its arguments before the CA. It added that, even assuming that
the facts warrant a finding of illegal dismissal, the cessation of operations of the company is a supervening event
that should limit the award of backwages to Lapastora and Ubalubao until October 1, 2000 only and justify the
Unyielding, OHI filed its Motion for Reconsideration15 but the NLRC denied the same in a Resolution16 dated
deletion of the order of reinstatement. After all, it complied with the notice requirements of the DOLE for a valid
February 29, 2008.
closure of business.28

In the meantime, in Ocampo v. OHI, the NLRC rendered a Decision17 dated November 22, 2002, upholding the
On April 4, 2011, Ubalubao, on her own behalf, filed a Motion to Dismiss/Withdraw Complaint and Waiver,29
validity of the cessation of OHI’s operations and the consequent termination of all its employees. It stressed that the
stating that she has decided to accept the financial assistance in the amount of ₱50,000.00 offered by OHI, in lieu of
cessation of business springs from the management’s prerogative to do what is necessary for the protection of its
all the monetary claims she has against the company, as full and complete satisfaction of any judgment that may be
investment, notwithstanding adverse effect on the employees. The discharge of employees for economic reasons
subsequently rendered in her favor. She likewise informed the Court that she had willingly and knowingly executed
does not amount to unfair labor practice.18 The said ruling of the NLRC was elevated on petition for certiorari to the
a quitclaim and waiver agreement, releasing OHI from any liability. She thus prayed for the dismissal of the
CA, which dismissed the same in Resolutions dated November 28, 200319 and June 23, 2004.20 The mentioned
complaint she filed against OHI.
resolutions were appealed to this Court and were docketed as G.R. No. 164160, which was, however, denied in the
Resolution21 dated July 26, 2004 for failure to comply with procedural rules and lack of reversible error on the part
of the CA. In a Resolution30 dated January 16, 2012, the Court granted Ubalubao’s motion and considered the case closed and
terminated as to her part, leaving Lapastora as the lone respondent in the present petition.
Ruling of the CA
Ruling of the Court
OHI, upon receipt of the adverse decision in NLRC NCR Case No. 30-03-00976-00, filed a Petition for Certiorari22
with the CA, praying that the Decision dated December 28, 2007 and Resolution dated February 29, 2008 of the Lapastora was illegally dismissed
NLRC be set aside. It pointed out that in the related case of Ocampo v. OHI, the NLRC took into consideration the
supervening events which transpired after the supposed termination of Lapastora and Ubalubao, particularly OHI’s
Indisputably, Lapastora was a regular employee of OHI. As found by the LA, he has been under the continuous
closure of business on October 1, 2000. The NLRC then likewise upheld the validity of the closure of business and
employ of OHI since March 3, 1995 until he was placed on floating status in February 2000. His uninterrupted
the consequent termination of employees in favor of OHI, holding that the measures taken by the company were
employment by OHI, lasting for more than a year, manifests the continuing need and desirability of his services,
proper exercises of management prerogative. OHI argued that since the said disposition of the NLRC in Ocampo v.
which characterize regular employment. Article 280 of the Labor Code provides as follows:
OHI was affirmed by both the CA and the Supreme Court, the principle of stare decisis becomes applicable and the
issues that had already been resolved in the said case may no longer be relitigated.23 At any rate, OHI argued that it
could not be held liable for illegal dismissal since Lapastora and Ubalubao were not its employees.24 Art. 280. Regular and casual employment. The provisions of written agreement to 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
On April 28, 2009, the CA rendered a Decision25 dismissing the petition, the dispositive portion of which reads as
trade of the employer, except where the employment has been fixed for a specific project or undertaking, the
follows:
completion or termination of which has been determined at the time of the engagement of the employee or where
the work or services to be performed is seasonal in nature and the employment is for the duration of the season.
WHEREFORE, the petition for certiorari is DISMISSED. The NLRC’s Decision dated December 28, 2007 and
Resolution dated February 29, 2008 in NLRC NCR Case No. 30-03-00976-00 (NLRC NCR CA No. 032043-02) are
An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any
AFFIRMED.
employee who has rendered at least one year of service, whether such service is continuous or broken, shall be
considered a regular employee with respect to the activity in which he is employed and his employment shall
SO ORDERED.26 continue while such activity exists.

The CA ruled that OHI’s cessation of operations on October 1, 2000 is not a supervening event because it transpired Based on records, OHI is engaged in the business of managing residential and commercial condominium units at the
long before the promulgation of the LA’s Decision dated May 10, 2002 in the instant case. In the same manner, the OER. By the nature of its business, it is imperative that it maintains a pool of housekeeping staff to ensure that the
ruling of the NLRC in Ocampo v. OHI does not constitute stare decisis to the present petition because of the apparent premises remain an uncluttered place of comfort for the occupants. It is no wonder why Lapastora, among several
dissimilarities in the attendant circumstances. For instance, Ocampo v. OHI was founded on the union members’ others, was continuously employed by OHI precisely because of the indispensability of their services to its business.
allegation that OHI’s claim of substantial financial losses to support closure of business lacked evidence, while in the The fact alone that Lapastora was allowed to work for an unbroken period of almost five years is all the same a
instant case, Lapastora and Ubalubao claimed illegal dismissal on account of their being placed on floating status reason to consider him a regular employee.
after they were implicated in a theft case. The differences in the facts and issues in the two cases rule out the
The attainment of a regular status of employment guarantees the employee’s security of tenure that he cannot be Still, OHI argues that the legality of the closure of its business had been the subject of the separate case of Ocampo v.
unceremoniously terminated from employment. "To justify fully the dismissal of an employee, the employer must, OHI, where the NLRC upheld the validity of the termination of all the employees of OHI due to cessation of
as a rule, prove that the dismissal was for a just cause and that the employee was afforded due process prior to operations. It asserts that since the ruling was affirmed by the CA and, eventually by this Court, the principle of stare
dismissal. As a complementary principle, the employer has the onus of proving with clear, accurate, consistent, and decisis becomes applicable. Considering the closure of its business, Lapastora can no longer be reinstated and
convincing evidence the validity of the dismissal."31 should instead be awarded backwages up to the last day of operations of the company only, specifically on October
1, 2000.35
OHI miserably failed to discharge its burdens thus making Lapastora’s termination illegal.
In Ting v. Velez-Ting,36 the Court elaborated on the principle of stare decisis, thus:
On the substantive aspect, it appears that OHI failed to prove that Lapastora’s dismissal was grounded on a just or
authorized cause. While it claims that it had called Lapastora’s attention several times for tardiness, unexplained The principle of stare decisis enjoins adherence by lower courts to doctrinal rules established by this Court in its
absences and loitering, it does not appear from the records that the latter had been notified of the company’s final decisions. It is based on the principle that once a question of law has been examined and decided, it should be
dissatisfaction over his performance and that he was made to explain his supposed infractions. It does not even deemed settled and closed to further argument. Basically, it is a bar to any attempt to relitigate the same issues,
show from the records that Lapastora was ever disciplined because of his alleged tardiness. In the same manner, necessary for two simple reasons: economy and stability. In our jurisdiction, the principle is entrenched in Article 8
allegations regarding Lapastora’s involvement in the theft of personal items and cash belonging to hotel guests of the Civil Code.37 (Citations omitted)
remained unfounded suspicions as they were not proven despite OHI’s probe into the incidents.
Verily, the import of the principle is that questions of law that have been decided by this Court and applied in
On the procedural aspect, OHI admittedly failed to observe the twin notice rule in termination cases. As a rule, the resolving earlier cases shall be deemed the prevailing rule which shall be binding on future cases dealing on the
employer is required to furnish the concerned employee two written notices: (1) a written notice served on the same intricacies. Apart from saving the precious time of the Court, the application of this principle is essential to the
employee specifying the ground or grounds for termination, and giving to said employee reasonable opportunity consistency of the rulings of the Court which is significant in its role as the final arbiter of judicial controversies.
within which to explain his side; and (2) a written notice of termination served on the employee indicating that
upon due consideration of all the circumstances, grounds have been established to justify his termination.32 In the
The CA correctly ruled that the principle of stare decisis finds no relevance in the present case. To begin with, there
present case, Lapastora was not informed of the charges against him and was denied the opportunity to disprove
is no doctrine of law that is similarly applicable in both the present case and in Ocampo v. OHI. While both are illegal
the same. He was summarily terminated from employment.
dismissal cases, they are based on completely different sets of facts and involved distinct issues. In the instant case,
Lapastora cries illegal dismissal after he was arbitrarily placed on a floating status on mere suspicion that he was
OHI argues that no formal notices of investigation, notice of charges or termination was issued to Lapastora since he involved in theft incidents within the company premises without being given the opportunity to explain his side or
was not an employee of the company but of Fast Manpower. any formal investigation of his participation. On the other hand, in Ocampo v. OHI, the petitioners therein questioned
the validity of OHI’s closure of business and the eventual termination of all the employees. Thus, the NLRC ruled
upon both cases differently.
The issue of employer-employee relationship between OHI and Lapastora had been deliberated and ruled upon by
the LA and the NLRC in the affirmative on the basis of the evidence presented by the parties. The LA ruled that
Lapastora was under the effective control and supervision of OHI through the company supervisor. She gave Nonetheless, the Court finds the recognition of the validity of OHI’s cessation of business in the Decision dated
credence to the pertinent records of Lapastora’s employment, i.e., timecards, medical records and medical November 22, 2002 of the NLRC, which was affirmed by the CA and this Court, a supervening event which inevitably
examinations, which all indicated OHI as his employer. She likewise noted Fast Manpower’s failure to establish its alters the judgment award in favor of Lapastora. The NLRC noted that OHI complied with all the statutory
capacity as independent contractor based on the standards provided by law. requirements, including the filing of a notice of closure with the DOLE and furnishing written notices of termination
to all employees effective 30 days from receipt.38 OHI likewise presented financial statements substantiating its
claim that it is operating at a loss and that the closure of business is necessary to avert further losses.39 The action
That there is an existing contract of services between OHI and Fast Manpower where both parties acknowledged
of the OHI, the NLRC held, is a valid exercise of management prerogative.
the latter as the employer of the housekeeping staff, including Lapastora, did not alter established facts proving the
contrary. The parties cannot evade the application of labor laws by mere expedient of a contract considering that
labor and employment are matters imbued with public interest. It cannot be subjected to the agreement of the Thus, while the finding of illegal dismissal in favor of Lapastora subsists, his reinstatement was rendered a legal
parties but rather on existing laws designed specifically for the protection of labor. Thus, it had been repeatedly impossibility with OHI’s closure of business.1âwphi1 In Galindez v. Rural Bank of Llanera, Inc.,40 the Court noted:
stressed in a number of jurisprudence that "[a] party cannot dictate, by the mere expedient of a unilateral
declaration in a contract, the character of its business, i.e., whether as labor-only contractor or as job contractor, it
Reinstatement presupposes that the previous position from which one had been removed still exists or there is an
being crucial that its character be measured in terms of and determined by the criteria set by statute."33
unfilled position more or less of similar nature as the one previously occupied by the employee. Admittedly, no such
position is available. Reinstatement therefore becomes a legal impossibility. The law cannot exact compliance with
The Court finds no compelling reason to deviate from the findings of the LA and NLRC, especially in this case when what is impossible.41
the same was affirmed by the CA. It is settled that findings of fact made by LAs, when affirmed by the NLRC, are
entitled not only to great respect but even finality and are binding on this Court especially when they are supported
Considering the impossibility of Lapastora’s reinstatement, the payment of separation pay, in lieu thereof, is proper.
by substantial evidence.34
The amount of separation pay to be given to Lapastora must be computed from March 1995, the time he
commenced employment with OHI, until the time when the company ceased operations in October 2000.42 As a
The principle of stare decisis is not applicable twin relief, Lapastora is likewise entitled to the payment of backwages, computed from the time he was unjustly
dismissed, or from February 24, 2000 until October 1, 2000 when his reinstatement was rendered impossible
without fault on his part.43
Finally, for OHI’s failure to prove the fact of payment, the Court sustains the award for the payment of service Assailed in this petition for review on certiorari1 are the Decision2 dated June 25, 2013 and the Resolution3 dated
incentive leave pay and 13th month pay. The rule, as stated in Mantle Trading Services, Inc. and/or Del Rosario v. March 17, 2014 of the Court of Appeals (CA) in CA-G.R. CEB SP No. 05403, which reversed and set aside the
NLRC, et al.,44 is that "the burden rests on the employer to prove payment, rather than on the employee to prove Decision4 dated April 29, 2010 and the Resolution5 dated June 30, 2010 of the National Labor Relations
nonpayment. The reason for the rule is that the pertinent personnel files, payrolls, records, remittances and other Commission (NLRC) in NLRC Case No. VAC-10-000977-2009, and accordingly, declared respondent Nicerato E.
similar documents — which will show that overtime, differentials, service incentive leave and other claims of Carbonilla, Jr. (Carbonilla, Jr.) to have been illegally dismissed by petitioner Cebu People's Multi-Purpose
workers have been paid — are not in the possession of the employee but in the custody and absolute control of the Cooperative (CPMPC).
employer."45 Considering that OHI did not dispute Lapastora’s claim for nonpayment of the mentioned benefits and
opted to disclaim employer-employee relationship, the presumption is that the said claims were not paid.
The Facts

The award for attorney’s fees of 10% of the monetary awards is likewise sustained considering that Lapastora was
On November 14, 2005, CPMPC hired Carbonilla, Jr. as a Credit and Collection Manager and, as such, was tasked
forced to litigate and, thus, incurred expenses to protect his rights and interests.46
with the handling of the credit and collection activities of the cooperative, which included recommending loan
approvals, formulating and implementing credit and collection policies, and conducting trainings.6 Sometime in
WHEREFORE, the Decision dated April 28, 2009 of the Court of Appeals in CA-G.R. SP No. 103699 is AFFIRMED 2007, CPMPC underwent a reorganization whereby Carbonilla, Jr. was also assigned to perform the duties of Human
with MODIFICATION in that OHI is hereby ORDERED to pay Allan Lapastora the following: (1) separation pay, in Resources Department (HRD) Manager, i.e., assisting in the personnel hiring, firing, and handling of labor disputes.7
lieu of reinstatement, computed from the time of his employment until the time of its closure of business, or from In 2008, he was appointed as Legal Officer and subsequently, held the position of Legal and Collection Manager.8
March 1995 to October 2000; (2) backwages, computed from the time of illegal dismissal until cessation of business,
or from February 24, 2000 to October 1, 2000; (3) service incentive leave pay and 13th month pay; and (4)
However, beginning February 2008, CPMPC, through its HRD Manager, Ma. Theresa R. Marquez (HRD Manager
attorney's fees.
Marquez), sent various memoranda to Carbonilla, Jr. seeking explanation on the various infractions he allegedly
committed. The aforesaid memoranda, as well as his replies thereto, are detailed as follows:
SO ORDERED.

CPMPC'S MEMORANDA: CARBONILLA, JR.'S REPLIES:

HRD 202 File 2008.02.19.017 dated February 19, 20089 He claimed that he was belatedly informed and was not given
xvii. Computation of separation pay and backwages when company already closed any written notification of the said meeting, and that he did not
xviii. Liability to pay indemnity for giving only 48 hours to submit reply (Quiro-Quiro vs. Balagtas find any relation of the said meeting to his job as a Legal
- Memorandum relative to his non-attendance to the CLIMBS
Credit Cooperative & Community Development, Inc., G.R. No. 209921, January 13, 2016) (pdf) Officer.10
HOME PROTEK Dinner Meeting.

HRD 202 File 2008.02.26.034 dated February 26, 200811- No reply.

Memorandum relative to his non-submission of Weekly
Executive Summary Reports and Itinerary for the months of
xix. Aspects of employee dismissal (NDC Tagum Foundation, Inc. vs. Sumakote, G.R. No. 190644,
January and February.
June 13, 2016) (pdf)
HRD 202 File 2008.02.26.035 dated February 26, 200812 - He stated that there was no policy requiring field collectors to
Memorandum on why he allowed Joelito Aguipo (Aguipo), a own – in a strict legal sense - a motorcycle, but merely to
contractual collector for the Bantayan Branch, to drive a possess the same so he can effect collections more efficiently.
motorcycle without a driver's license and not being the owner Besides, Aguipo was allowed to drive due to the urgency of
xx. Legal interest on nominal damages
thereof. collecting from the Bantayan Branch. In any case, there is an
xxi. Requisites that must concur in dismissal due to serious misconduct; Act of defiance that also
Affidavit of Undertaking13 exonerating CPMPC from any
breeds antagonism (Cebu People’s Multi-purpose Cooperative vs. Carbonilla, Jr., G.R. No.
liability.14
212070, January 27, 2016)
xxii. Totality of infractions principle HRD 202 File 2008.02.26.036 dated He sought clarification of the charges against him, and at the
xxiii. Offsetting of accountabilities against unpaid salaries and 13th month pay (Cebu People’s same time, threatened HRD Manager Marquez that if this
Multi-purpose Cooperative vs. Carbonilla, Jr., G.R. No. 212070, January 27, 2016) Memorandum is "proven malicious, [she] might be answerable
February 26, 200815- Memorandum on why he failed to: (a)
to a certain degree of civil liability which the 1987 Constitution
FIRST DIVISION account for a motorcycle being used by a former employee
has given to individuals."16
January 27, 2016 under his branch; and ( b) reclassify the vehicle of another
G.R. No. 212070 employee.
CEBU PEOPLE'S MULTI-PURPOSE COOPERATIVE and MACARIO G. QUEVEDO, Petitioners,
vs. HRD 202 File 2008.06.26.086 dated June 26, 200817 He dismissed the charge as made with malicious intent and
NICERATO E. CARBONILLA, JR., Respondent. aimed to discredit his person, claiming that he only had a
DECISION discussion with his superior, particularly, about Alfonso
- Memorandum on why he insulted his superior, CPMPC Chief
PERLAS-BERNABE, J.: Vasquez (Vasquez), who was unsystematically pulled out from
Operation Officer Agustina L. Bentillo (COO Bentillo), in front
his department without his consent. He added that if COO
of her subordinates, with the statement: "Ikaw ra may di Bentillo was indeed offended by his remarks, then it should not security guards to the government; (g) failing to inform the
mosalig ba, ka kwalipikado adto niya, maski mag contest pa mo, have taken almost a month before his attention was called branch managers of any
lupigon gani ka" 18 or "You're the only one who doesn't trust regarding the matter.20
her, she is very qualified, you even lose in comparison to
settlements or compromise agreements entered into by the
her."19
head office resulting in confusion as to payments; and (h)
failing to submit to HRD Manager Marquez the status of the
HRD 202 File 2008.06.26.087 dated June 26, 200821 Citing the Philippine Law Dictionary, he explained that
firearms and licenses assigned to the branch managers.
"[i]nsubordination means a quality or state of being
insubordinate to a person in authority." He maintained that he
- Memorandum on his alleged acts of insubordination and HRD 202 File 2008.07.04.095 dated July 4, 200832 His acts did not constitute gross misconduct, gross disrespect,
did not commit insubordination as he merely sought
gross disrespect when he questioned the authority of HRD or loss of trust and confidence as he only questioned the
clarification about the deferment of the hiring of a working
Manager Marquez to refuse the hiring of a new staff. suspicious transactions of CEO Quevedo regarding the sale of a
student by HRD Manager Marquez despite having prior - Memorandum on the allegations he made against the CEO
titled parcel of land owned by the cooperative for an
approval of CPMPC Chief Executive Officer (CEO), petitioner during the Board of Directors' inquiry hearing, which
inadequate consideration. He then added that as a member of
Macario G. Quevedo (CEO Quevedo ).22 constituted gross misconduct, gross disrespect, and loss of
CPMPC, he has the right to demand transparency of all the
trust and confidence.
transactions made by CEO Quevedo, of which its consequences
HRD 202 File 2008.06.26.088 dated June 26, 200823 Reiterating the definition of "insubordination" in Philippine
will affect the cooperative.33
Law Dictionary, he maintained that his act of clarifying with
the CEO the policy on hiring working students did not
- Memorandum on his alleged acts of insubordination and HRD 202 File 2008.07 .08.098 dated July 8, 200834 The said meeting was scheduled outside the regular meeting
constitute insubordination, but rather, was made in the
gross disrespect when he insisted before CEO Quevedo that he day and he was only informed about it on the day of the
exercise of his right to express.24
had the authority as Legal and Collection Manager to hire a meeting at which time, he was personally handling collection
- Memorandum on his failure to attend the management and
new staff. cases.35
operations committee meeting held on July 7, 2008 despite
prior notices.
HRD 202 File 2008.06.27.091 dated He only reviewed the subject documents and they were never
entrusted to him for safekeeping.27
HRD 202 File 2008.07.09.103 dated July 9, 200836 – He admitted that as head of the Legal Department, he endorsed
June 27, 200825 Memorandum relative to the mediation settlements which the documents for notarization to his friend who only charged
were forwarded for notarization to one Atty. Miñoza who is not P50.00 per document as compared to the legal retainers who
the authorized legal retainer of CPMPC. charged Pl00.00 per document. He added that "[t]he same is
- Memorandum asking Carbonilla, Jr. to tum-over to the officer-
more advantageous and secured rather than having it
in-charge custody of the following documents: Banco de Oro
notarized- by a 'murio-murio' notary public at the back of the
contract on staff loans, CPMPC firearm contracts and licenses,
Cebu City Hall."37
branch offices rentals, and others.26
HRD 202 File 2008.07.09.104 dated July 9, 200838 The two cases were re-filed before the Regional Trial Court on
HRD 202 File 2008.07.03.094 dated He interposed the following defenses:29 (a) he was not
May 29, 2008 as the amounts involved were beyond the
responsible for employment assessments having been
jurisdiction of the Municipal Trial Court (MTC). He also
transferred to the Legal Department; ( b) as then HRD - Memorandum on his failure to update the CEO and
July 3, 200828 explained that he was not aware of the filing of these cases
Manager, it was within his discretion to promote Batain whose management committee of the dismissal of the cases filed by
before the MTC as he was occupying the position of the HRD
appointment has been previously concurred in by the CEO; ( c) CPMPC against Spouses Alex and Alma Monisit in Civil Case No.
Manager at that time.39
- Memorandum on his alleged acts of gross negligence in: (a) he was not informed of the shortage committed by Batain nor R-52633 and against Spouses Helen and Rogelio Lopez in Civil
failing to submit the employment assessment of one Marcelina was it within his primary obligation to disclose the same; (d) Case No. R-53274.
M. Remonde (Remonde ); ( b) promoting one Mary Grace R. the printing of invitation was managed only by his legal
Batain (Batain) despite lack of any performance appraisal; ( c) assistant, Joel Semblante (Semblante) and Vasquez. However, HRD 202 File 2008.07.15.106 dated July 15, 200840 He explained that as head of the Legal Department, he was
failing to report the shortage of Batain the latter was unexpectedly transferred to another job responsible for the proper disposal of all legal documents and
assignment, leaving only Semblante to do the job, which may contracts, and the cancellation of said documents were done to
- Memorandum relative to Carbonilla, Jr. 's instruction to
have caused the unintentional mistake;30 (e) a certain Brenda protect the interest of the cooperative. Moreover, he claimed
amounting to Pl08,254.55; (d) disseminating a wrong schedule Semblante to pull out important records and vital documents,
Dela Cruz was the one responsible for the annotation of the that the erasures were caused by the
of mediation activity which caused confusion and pressure i.e., Compromise/ Settlement Agreement, Mediation Tracking
encumbrances of real and personal properties; (j) he was not
among branch managers; ( e) failing to annotate the Form, Agreement to Mediate, Mediator's Report, Evaluation of
responsible for the review of the contract between the agency
encumbrance on the certificate of title offered as collateral to Mediation, among others, from the head office without the cancellation of the notarial subscription since Carbonilla, Jr.
and its security guards as CPMPC had no employer-employee
CPMPC; (j) failing to review and verify its contract with the knowledge and approval of the management, which documents found the requirements of the notary public - which required
relationship with them; (g) he was unaware of the complaints
BISDA Security Agency (agency) which exposed CPMPC to were later on returned tampered and altered. all 125 respondents to appear personally and present their
of the branch managers regarding the payment confusion as a
third-party liability for failure of the agency to remit the Social community tax certificates - impractical. Moreover, he claimed
result of settlements or compromise agreements; and (h) it
Security System, Philhealth and Pag-IBIG premiums of its that the cancellation of the documents "was not for the
was not his duty to determine the status, custody, and licenses
purpose of falsifying or tampering the same[,] but merely to
of the firearms.31
protect the interest of the cooperative against possible
sanctions [or] circulating bogus documents. "41
 Carbonilla, Jr. moved for reconsideration,65 which was, however, denied in a Resolution66 dated June 30, 2010.
HRD 202 File 2008.07.16.107 dated July 16, 200842 – The delay in liquidation was due to the "agreement" he had Undaunted, he elevated the matter to the CA via a petition for certiorari.67
Memorandum relative to the unliquidated cash advances of the with the notary public about the disposition of the notarized
notarial transactions of the mediation agreements.43 documents. He claimed that in the afternoon of the same day,
he turned over the amount of P6,250.00 to the Accounting The CA Ruling
Department.44
In a Decision68 dated June 25, 2013, the CA reversed and set aside the NLRC ruling and accordingly, ordered
HRD 202 File 2008.07.19.111 dated July 19, 200845 - No reply.
Carbonilla, Jr.'s reinstatement and the remand of the case to the LA for the computation of his full backwages,
Memorandum on the alleged tampering and loss of CPMPC's
inclusive of allowances and other benefits, as well as attorney's fees.69 It held that the NLRC gravely abused its
vital records and documents, i.e., two (2) copies of the
discretion in declaring Carbonilla, Jr.'s dismissal as valid, considering that, other than CPMPC's series of memoranda
compromise settlement agreement.
and self-serving allegations, it did not present substantial documents to support a conclusion that would warrant
Carbonilla, Jr.'s valid dismissal.70 In fine, CPMPC failed to discharge the burden of proving that Carbonilla, Jr. 's
dismissal was for just causes.71
Unconvinced by Carbonilla, Jr.'s explanations, CPMPC scheduled several clarificatory hearings,46 but the former
failed to attend despite due notice.47 Later, CPMPC conducted a formal investigation where it ultimately found
Carbonilla, Jr. to have committed acts prejudicial to CPMPC's interests.48 As such, CPMPC, CEO Quevedo, sent Dissatisfied, petitioners moved for reconsideration,72 but the same was denied in a Resolution73 dated March 17,
Carbonilla, Jr. a Notice of Dismissal49 dated August 5, 2008 informing the latter of his termination on the grounds 2014; hence, this petition.
of: (a) loss of trust and confidence; (b) gross disrespect; (c) serious misconduct; (d) gross negligence; (e)
commission of a crime of falsification/inducing Aguipo to violate the law or the Land Transportation and Traffic The Issue Before the Court
Code; and (e) committing acts highly prejudicial to the interest of the cooperative.50

The core issue for the Court's resolution is whether or not the CA correctly ascribed grave abuse of discretion on the
Consequently, Carbonilla, Jr. filed the instant case for illegal dismissal, non-payment of salaries, 13th month pay, as part of the NLRC in ruling that Carbonilla, Jr. 's dismissal was valid.
well as damages and backawages, against CPMPC, before the NLRC, docketed as NLRC RAB VII-08-1856-2008.51 In
support of his claims, Carbonilla, Jr. denied the administrative charges against him, asserting that the Management
and Board of Directors of CPMPC merely orchestrated means to unjustly dismiss him from employment.52 The Court's Ruling

In defense, CPMPC maintained that the totality of Carbonilla, Jr.'s infractions was sufficient to warrant his dismissal, The petition is impressed with merit.
and that it had complied with the procedural due process in terminating him.53 Further, CPMPC pointed out that
Carbonilla, Jr. had been fully paid of all his benefits, notwithstanding his unsettled obligations to it in the form of To justify the grant of the extraordinary remedy of certiorari, petitioner must satisfactorily show that the court or
loans, insurance policy premiums, and cash advances, among others, amounting to a total of P129,455.00.54 quasi-judicial authority gravely abused the discretion conferred upon it. Grave abuse of discretion connotes a
capricious and whimsical exercise of judgment, done in a despotic manner by reason of passion or personal
The LA Ruling hostility, the character of which being 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.74
In a Decision55 dated July 1, 2009, the Labor Arbiter (LA) dismissed Carbonilla, Jr.' s complaint for lack of merit.56
The LA found that Carbonilla, Jr. committed a litany of infractions, the totality of which constituted just cause for the In labor disputes, grave abuse of discretion may be ascribed to the NLRC when, inter alia, its findings and
termination of his employment.57 Likewise, it was determined that CPMPC afforded Carbonilla, Jr. procedural due conclusions are not supported by substantial evidence, or that amount of relevant evidence which a reasonable
process prior to his termination, as evinced by the former's issuance of a series of memoranda, as well as its conduct mind might accept as adequate to justify a conclusion.75
of investigation with notices to the latter.58 Furthermore, the LA denied his claims for unpaid salaries and 13th
month pay, as records show that the aggregate amount of his monetary claims is not even enough to pay his Guided by the foregoing considerations, the Court finds that the CA committed reversible error in granting
accountabilities to CPMPC in the total amount of P129,455.00.59 Carbonilla, Jr. 's certiorari petition since the NLRC did not gravely abuse its discretion in ruling that he was validly
dismissed from employment as CPMPC was able to prove, through substantial evidence, the existence of just causes
Aggrieved, Carbonilla, Jr. appealed to the NLRC, which was docketed as NLRC Case No. VAC-10-000977-2009.60 warranting the same.

The NLRC Ruling Basic is the rule that an employer may validly terminate the services of an employee for any of the just causes
enumerated under Article 296 (formerly Article 282) of the Labor Code,76 namely:
In a Decision61 dated April 29, 2010, the NLRC affirmed the LA ruling. It found CPMPC to have substantially proven
the existence of just causes in dismissing Carbonilla, Jr., i.e., abuse of authority; disrespect to his colleagues and (a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or
superiors; being remiss in his duties; and commission of acts of misrepresentation.62 It further held that Carbonilla, representative in connection with his work;
Jr. was given the opportunity to present his side and to disprove the charges against him, but failed to do so.63
Finally, the NLRC explained that while Carbonilla, Jr. may indeed be entitled to his claims for unpaid salaries and (b) Gross and habitual neglect by the employee of his duties;
13th month pay, the same cannot be granted as his accountabilities with CPMPC were larger than said claims.64
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized Jr. as it constitutes conduct unbecoming of his managerial position and a serious breach of order and discipline in
representative; the workplace.92

(d) Commission of a crime or offense by the employee against the person of his employer or any immediate member With all these factored in, CPMPC's dismissal of Carbonilla, Jr. on the ground of serious misconduct was amply
of his family or his duly authorized representatives; and warranted.1âwphi1

(e) Other causes analogous to the foregoing. For another, Carbonilla, Jr. 's dismissal was also justified on the ground of loss of trust and confidence. According to
jurisprudence, loss of trust and confidence will validate an employee's dismissal when it is shown that: (a) the
employee concerned holds a position of trust and confidence; and ( b) he performs an act that would justify such
As may be gathered from the tenor of CPMPC's Notice of Dismissal, it is apparent that Carbonilla, Jr.'s employment
loss of trust and confidence.93 There are two (2) classes of positions of trust: first, managerial employees whose
was terminated on the grounds of, among others, serious misconduct and loss of trust and confidence.77
primary duty consists of the management of the establishment in which they are employed or of a department or a
subdivision thereof, and to other officers or members of the managerial staff; and second, fiduciary rank-and-file
On the first ground, case law characterizes misconduct as a transgression of some established and definite rule of employees, such as cashiers, auditors, property custodians, or those who, in the normal exercise of their functions,
action, a forbidden act, a dereliction of duty, willful in character and implies wrongful intent and not mere error regularly handle significant amounts of money or property. These employees, though rank-and-file, are routinely
injudgment.78 For misconduct to be considered as a just cause for termination, the following requisites must charged with the care and custody of the employer's money or property, and are thus classified as occupying
concur: (a) the misconduct must be serious; (b) it must relate to the performance of the employee's duties showing positions of trust and confidence.94
that the employee has become unfit to continue working for the employer; and (c) it must have been performed
with wrongful intent. 79
Records reveal that Carbonilla, Jr. occupied a position of trust and confidence as he was employed as Credit and
Collection Manager, and later on, as Legal and Collection Manager, tasked with the duties of, among others, handling
All of the foregoing requisites have been duly established in this case. Records reveal that Carbonilla, Jr. 's serious the credit and collection activities of the cooperative, which included recommending loan approvals, formulating
misconduct consisted of him frequently exhibiting disrespectful and belligerent behavior, not only to his colleagues, and implementing credit and collection policies, and conducting trainings.95 With such responsibilities, it is fairly
but also to his superiors. He even used his stature as a law graduate to insist that he is "above" them, often using evident that Carbonilla, Jr. is a managerial employee within the ambit of the first classification of employees afore-
misguided legalese to weasel his way out of the charges against him, as well as to strong-arm his colleagues and discussed. The loss of CPMPC's trust and confidence in Carbonilla, Jr., as imbued in that position, was later justified
superiors into succumbing to his arrogance. Carbonilla Jr.'s obnoxious attitude is highlighted by the following in light of the latter's commission of the following acts: (a) the forwarding of the mediation settlements for
documents on record: (a) his reply to HRD 202 File 2008.02.26.036 dated February 26, 2008 wherein he threatened notarization to a lawyer who was not the authorized legal retainer of CPMPC (HRD 202 File 2008.07.09.103 dated
HRD Manager Marquez with a lawsuit, stating that if the memorandum is "proven malicious, [she] might be July 9, 200896); (b) the pull-out of important records and vital documents from the office premises, which were
answerable to a certain degree of civil liability which the 1987 Constitution has given to individuals";80 (b) HRD either lost or returned already tampered and altered (HRD 202 File 2008.07.15.106 dated July 15, 200897 and HRD
202 File 2008.06.26.086 dated June 26, 200881 wherein he berated COO Bentillo in front of her subordinates with 202 File 2008.07.19.111 dated July 19, 200898); and (c) the incurring of unliquidated cash advances related to the
the statement: "[i]kaw ra may di mosalig ba, ka kwalipikado adto niya, maski mag contest pa mo, lupigon gani ka"82 notarial transactions of the mediation agreements (HRD 202 File 2008.07.16.107 dated July 16, 200899). While
or "[y ]ou're the only one who doesn't trust her, she is very qualified, you even lose in comparison to her[,]"83 and Carbonilla, Jr. posited that these actuations were resorted with good intentions as he was only finding ways for
his reply thereto wherein he dismissed the charge as made with malicious intent and aimed to discredit his CPMPC to save up on legal fees, this defense can hardly hold, considering that all of these transactions were not only
person;84 (c) HRD 202 File 2008.06.26.088 dated June 26, 200885 wherein he argued with the CEO Quevedo, highly irregular, but also done without the prior knowledge and consent of CPMPC's management. Cast against this
insisting that he had the authority to hire a new staff, and his reply thereto where he cited the Philippine Law light, Carbonilla, Jr.'s performance of the said acts therefore gives CPMPC more than enough reason to lose trust and
Dictionary to maintain that his act did not amount to insubordination;86 (d) HRD 202 File 2008.06.26.087 dated confidence in him. To this, it must be emphasized that "employers are allowed a wider latitude of discretion in
June 26, 200887 wherein he openly questioned the authority of HRD Manager Marquez in refusing to hire a new terminating the services of employees who perform functions by which their nature require the employer's full
staff and his reply thereto where he again cited the Philippine Law Dictionary to insist that he did not commit acts of trust and confidence. Mere existence of basis for believing that the employee has breached the trust and confidence
insubordination;88 and (e) HRD 202 File 2008.07.04.095 dated July 4, 200889 wherein he openly and improperly of the employer is sufficient and does not require proof beyond reasonable doubt. Thus, when an employee has
confronted the CPMPC CEO during a Board of Directors' inquiry hearing, to which he again maintained that his acts been guilty of breach of trust or his employer has ample reason to distrust him, a labor tribunal cannot deny the
did not constitute misconduct, gross disrespect, and loss of trust and confidence as he was only looking after the employer the authority to dismiss him,"100 as in this case.
welfare of the cooperative.90
Perforce, having established the actual breaches of duty committed by Carbonilla, Jr. and CPMPC's observance of
Indisputably, Carbonilla, Jr. 's demeanor towards his colleagues and superiors is serious in nature as it is not only due process, the Court no longer needs to further examine the other charges against Carbonilla, Jr., as it is already
reflective of defiance but also breeds of antagonism in the work environment. Surely, within the bounds of law, clear that the CA erred in ascribing grave abuse of discretion on the part of the NLRC when the latter declared that
management has the rightful prerogative to take away dissidents and undesirables from the workplace. It should CPMPC validly dismissed Carbonilla, Jr. from his job. The totality and gravity of Carbonilla, Jr. 's infractions
not be forced to deal with difficult personnel, especially one who occupies a position of trust and confidence, as will throughout the course of his employment completely justified CPMPC's decision to finally terminate his
be later discussed, else it be compelled to act against the best interest of its business. Carbonilla, Jr.'s conduct is also employment. The Court's pronouncement in Realda v. New Age Graphics, Inc.101 is instructive on this matter, to wit:
clearly work-related as all were incidents which sprung from the performance of his duties. Lastly, the misconduct
was performed with wrongful intent as no justifiable reason was presented to excuse the same. On the contrary,
The totality of infractions or the number of violations committed during the period of employment shall be
Carbonilla, Jr. comes off as a smart aleck who would even go to the extent of dangling whatever knowledge he had of
considered in determining the penalty to be imposed upon an erring employee. The offenses committed by
the law against his employer in a combative manner. As succinctly put by CPMPC, "[e]very time [Carbonilla, Jr.'s]
petitioner should not be taken singly and separately. Fitness for continued employment cannot be
attention was called for some inappropriate actions, he would always show his Book, Philippine Law Dictionary and
compartmentalized into tight little cubicles of aspects of character, conduct and ability separate and
would ask the CEO or HRD Manager under what provision of the law he would be liable for the complained action or
independent of each other. While it may be true that petitioner was penalized for his previous infractions, this
omission."91 Irrefragably, CPMPC is justified in no longer tolerating the grossly discourteous attitude of Carbonilla,
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 On July 22, 2008, respondent received a show-cause memorandum6 from Ms. Ruby O. Go, head of West Regional
employee's past misconduct and present behavior must be taken together in determining the proper imposable Operations, charging him of violating the bank's Code of Conduct when he mishandled various checkbooks under
penalty[.] Despite the sanctions imposed upon petitioner, he continued to commit misconduct and exhibit his custody. The matter was referred to SBSC's Investigation Committee which discovered, among others, that as of
undesirable behavior on board. Indeed, the employer cannot be compelled to retain a misbehaving employee, July 11, 2008, forty-one (41) pre-encoded checkbooks of the Quezon Avenue Branch were missing.7
or one who is guilty of acts inimical to its interests. 102 (Emphases and underscoring supplied)
At the scheduled conference before the Investigating Committee, respondent readily admitted having allowed the
On a final point, the Court notes that Carbonilla, Jr.'s award of unpaid salaries and 13th month pay were validly Branch Manager (i.e., Pinero) to bring out of the bank's premises the missing checkbooks and other bank forms on
offset by his accountabilities to CPMPC in the amount of P129,455.00.103 Pursuant to Article 1278104 in relation to the justification that the latter was a senior officer with lengthy tenure and good reputation. He claimed that it was
Article 1706105 of the Civil Code and Article 113 (c)106 of the Labor Code, compensation can take place between part of Pinero's marketing strategy to procure more clients for the bank and that he did not receive any
two persons who are creditors and debtors of each other.107 Considering that Carbonilla, Jr. had existing debts to consideration for consenting to such practice. He added that the reported missing checkbooks had been returned by
CPMPC which were incurred during the existence of the employer-employee relationship, the amount which may be Pinero to his custody after the inventory. 8
due him in wages was correctly deducted therefrom.
Pending investigation, respondent was transferred to SBSC's Pedro Gil Branch. On September 30, 2008, he was
WHEREFORE, the petition is GRANTED. The Decision dated June 25, 2013 and the Resolution dated March 17, again issued a memorandum9 directing him to explain his inaccurate reporting of some Returned Checks and Other
2014 of the Court of Appeals in CA-G.R. CEB SP No. 05403 are hereby REVERSED and SET ASIDE. Accordingly, the Cash Items (RCOCI) which amounted to P46,279.33. The said uncovered amount was treated as an account
Decision dated April 29, 2010 and the Resolution dated June 30, 2010 of the National Labor Relations Commission receivable for his account. 10 A month thereafter, respondent was again transferred and reassigned to another
in NLRC Case No. VAC-10-000977-2009 declaring respondent Nicerato E. Carbonilla, Jr. to have been validly branch in Sampaloc, Manila.11 Dismayed by his frequent transfer to different branches, respondent tendered his
dismissed by petitioner Cebu People's Multi-Purpose Cooperative are REINSTATED. resignation12 on November 10, 2008, effective thirty (30) days from submission. However, SBSC rejected the same
in view of its decision to terminate his employment on November 11, 2008 on the ground of habitual neglect of
duties. 13
SO ORDERED.

Consequently, respondent instituted a complaint for illegal dismissal with prayer for backwages, damages, and
xxiv. Independent contracts; fixed-term employment (Samonte vs. La Salle Greenhills, Inc., G.R. No.
attorney's fees against SBSC and its President, Herminio M. Famatigan, Jr. (petitioners), before the NLRC, docketed
199683, February 10, 2016)(pdf)
as NLRC-NCR Case No. 10-14683-09.14
xxv. Effect of repeated renewals of fixed-term contract
xxvi. Separation pay as a measure of social justice (Security Bank Savings Corporation (Formerly
Premiere Development Bank) vs. Singson, G.R. No. 214230, February 10, 2016) For their part,15 petitioners maintained that respondent was validly dismissed for cause on the ground of gross
1. Revisit of PLDT Doctrine negligence in the performance of his duties when he repeatedly allowed Pinero to bring outside the bank premises
2. Toyota Doctrine its pre-encoded checks and accountable forms in flagrant violation of the bank's policies and procedures, and in
FIRST DIVISION failing to call Pinero's attention on the matter which was tantamount to complicity and consent to the commission
February 10, 2016 of said irregularity.16
G.R. No. 214230
SECURITY BANK SAVINGS CORPORATION (formerly PREMIERE DEVELOPMENT BANK)/HERMINIO M.
The LA Ruling
FAMATIGAN, JR., Petitioners,
vs.
CHARLES M. SINGSON, Respondent. In a Decision17 dated July 26, 2010, the Labor Arbiter (LA) dismissed the complaint and accordingly, declared
DECISION respondent to have been terminated from employment for a valid cause. The LA found that respondent not only
PERLAS-BERNABE, J.: committed a violation of SBSC's Code of Conduct but also gross and habitual neglect of duties when he repeatedly
Assailed in this petition for review on certiorari1 is the Decision2 dated May 21, 2014 of the Court of Appeals (CA) allowed Pinero to bring outside the bank premises the checkbooks and bank forms despite knowledge of the bank's
in CA-G.R. SP No. 121053, which affirmed the Decision3 dated April 25, 2011 and the Resolution4 dated June 17, prohibition on the matter. According to the LA, the fact that SBSC suffered no actual loss or damage did not in any
2011 of the National Labor Relations Commission (NLRC) in NLRC LAC Case No. 08-001972-10, sustaining the way affect the validity of his termination. This notwithstanding, the LA awarded respondent separation pay by way
award of separation pay by way of financial assistance to respondent Charles M. Singson (respondent) despite of financial assistance in the amount of P218,500.00.
having been dismissed for just cause.
Aggrieved, petitioners appealed 18 to the NLRC, docketed as NLRC NCR Case No. 10-14683-09, assailing the grant of
The Facts financial assistance to respondent despite a finding that he was validly dismissed.

On November 25, 1985, respondent was initially employed by petitioner Premiere Development Bank (now The NLRC Ruling
Security Bank Savings Corporation [SBSC]) as messenger until his promotion as loans processor at its Sangandaan
Branch. Thereafter, he was appointed as Acting Branch Accountant and, in June 2007, as Acting Branch Manager. On
In a Decision19 dated April 25, 2011, the NLRC affirmed the LA decision, ruling that the grant of separation pay was
March 26, 2008, he was assigned to its Quezon Avenue Branch under the supervision of Branch Manager Corazon
justified on equitable grounds such as respondent's length of service, and that the cause of his dismissal was not due
Pinero (Pinero) and held the position of Customer Service Operations Head (CSOH) tasked with the safekeeping of
to gross misconduct or that reflecting on his moral character but rather, a weakness of disposition and grievous
its checkbooks and other bank forms.5
error in judgment. 20 It likewise observed that respondent never repeated the act complained of when he was
transferred to other branches. Thus, it found the award of separation pay of one-half (Yi) month pay for every year same at the expense of the efficiency of its operations. He too may be validly replaced. Under these and similar
of service to be reasonable. circumstances, however, the award to the employee of separation pay would be sustainable under the social justice
policy even if the separation is for cause.
Petitioners moved for reconsideration21 which was likewise denied in a Resolution22 dated June 17, 2011,
prompting them to elevate the matter to the CA on certiorari, docketed as CA-G.R. SP No. 121053.23 But where the cause of the separation is more serious than mere inefficiency, the generosity of the law must be
more discerning.1avvphi1 There is no doubt it is compassionate to give separation pay to a salesman if he is
dismissed for his inability to fill his quota but surely he does not deserve such generosity if his offense is
The CA Ruling
misappropriation of the receipts of his sales. This is no longer mere incompetence but clear dishonesty. x x x.

In a Decision24 dated May 21, 2014, the CA denied the petition and sustained the award of separation pay.
We hold that henceforth separation pay shall be allowed as a measure of social justice only in those
instances where the employee is validly dismissed for causes other than serious misconduct or those
The CA pointed out that separation pay may be allowed as a measure of social justice where an employee was reflecting on his moral character. Where the reason for the valid dismissal is, for example, habitual intoxication
validly dismissed for causes other than serious misconduct or those reflecting on his moral character. It held that or an offense involving moral turpitude, like theft or illicit sexual relations with a fellow worker, the employer may
since respondent's infractions involved violations of company policy and habitual neglect of duties and not serious not be required to give the dismissed employee separation pay, or financial assistance, or whatever other name it is
misconduct, and that his dismissal from work was not reflective of his moral character, the NLRC committed no called, on the ground of social justice.
grave abuse of discretion in sustaining the award of separation pay by way of financial assistance. It further
concluded that respondent did not commit a dishonest act since he readily admitted to the petitioners that he
A contrary rule would, as the petitioner correctly argues, have the effect, of rewarding rather than punishing the
allowed the Branch Manager to bring out the subject checkbooks. Moreover, it ruled that while respondent
erring employee for his offense. And we do not agree that the punishment is his dismissal only and that the
acquiesced to the latter's marketing strategy that was contrary to the bank's rules and regulations, there was no
separation pay has nothing to do with the wrong he has committed. Of course it has. Indeed, if the employee who
showing that his conduct was perpetrated with self-interest or for an unlawful purpose.
steals from the company is granted separation pay even as he is validly dismissed, it is not unlikely that he will
commit a similar offense in his next employment because he thinks he can expect a little leniency if he is again found
Hence, this petition. out. This kind of misplaced compassion is not going to do labor in general any good as it will encourage the
infiltration of its ranks by those who do not deserve the protection and concern of the Constitution. 32 (Emphasis
supplied)
The Issue Before the Court

Thus, in the PLDT case, the Court required that the grant of separation pay as financial assistance given in light of
The essential issue for the Court's resolution is whether or not the CA erred in upholding the award of separation
social justice be allowed only when the dismissal: (a) was not for serious misconduct; and (b) does not reflect on the
pay as financial assistance to respondent despite having been validly dismissed.
moral character of the employee or would involve moral turpitude.

The Court's Ruling

However, in the later case of Toyota Motor Philippines Corporation Workers Association v. NLRC (Toyota),33 the
Court further excluded from the grant of separation pay based on social justice the other instances listed under
The petition is meritorious. Article 282 (now 296) of the Labor Code, namely, willful disobedience, gross and habitual neglect of duty, fraud
or willful breach of trust, and commission of a crime against the employer or his family. But with respect to
analogous cases for termination like inefficiency, drug use, and others, the social justice exception could be made to
Separation pay is warranted when the cause for termination is not attributable to the employee's fault, such as
apply depending on certain considerations, such as the length of service of the employee, the amount involved,
those provided in Articles 29825 and 29926 of the Labor Code, as well as in cases of illegal dismissal where
whether the act is the first offense, the performance of the employee, and the like. 34
reinstatement is no longer feasible.27 On the other hand, an employee dismissed for any of the just causes
enumerated under Article 29728 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 pay is premised on the reason that Thus, in Central Philippines Bandag Retreaders, Inc. v. Diasnes,35 citing Toyota, the Court set aside the award of
an erring employee should not benefit from their wrongful acts.29 Under Section 7,30 Rule I, Book VI of the separation pay as financial assistance to the dismissed employee in view of the gross and habitual neglect of his
Omnibus Rules Implementing the Labor Code, such dismissed employee is nonetheless entitled to whatever rights, duties, pointing out that the constitutional policy to provide full protection to labor is not meant to be an instrument
benefits, and privileges he may have under the applicable individual or collective agreement with the employer or to oppress the employers:
voluntary employer policy or practice.
To reiterate our ruling in Toyota, labor adjudicatory officials and the CA must demur the award of separation pay
As an exception, case law instructs that in certain circumstances, the grant of separation pay or financial assistance based on social justice when an employee's dismissal is based on serious misconduct or willful disobedience; gross
to a legally dismissed employee has been allowed as a measure of social justice or on grounds of equity. In Philippine and habitual neglect of duty; fraud or willful breach of trust; or commission of a crime against the person of the
Long Distance Telephone Co. v. NLRC (PLDT),31 the Court laid down the parameters in awarding separation pay to employer or his immediate family - grounds under Article 282 of the Labor Code that sanction dismissals of
dismissed employees based on social justice: employees. They must be most judicious and circumspect in awarding separation pay or financial assistance as the
constitutional policy to provide full protection to labor is not meant to be an instrument to oppress the employers.
The commitment of the Court to the cause of labor should not embarrass us from sustaining the employers when
There should be no question that where it comes to such valid but not iniquitous causes as failure to comply with
they are right, as here. In fine, we should be more cautious in awarding financial assistance to the undeserving and
work standards, the grant of separation pay to the dismissed employee may be both just and compassionate,
those who are unworthy of the liberality of the law.36
particularly if he has worked for some time with the company. x x x It is not the employee's fault if he does not have
the necessary aptitude for his work but on the other hand the company cannot be required to maintain him just the
Guided by the foregoing, the Court finds the CA to have erred in awarding separation pay. Notably, respondent's long years of service and clean employment record will not justify the award of separation
pay in view of the gravity of the foregoing infractions.41 Length of service is not a bargaining chip that can simply
be stacked against the employer. 42 As ruled in Central Pangasinan Electric Cooperative, Inc. v. NLRC:43
To reiterate, the grant of separation pay to a dismissed employee is primarily determined by the cause of the
dismissal. In the case at bar, respondent's established act of repeatedly allowing Branch Manager Pinero to bring
the checkbooks and bank forms outside of the bank's premises in violation of the company's rules and regulations Although long years of service might generally be considered for the award of separation benefits or some form of
had already been declared by the LA to be gross and habitual neglect of duty under Article 282 of the Labor Code, financial assistance to mitigate the effects of termination, this case is not the appropriate instance for generosity
which finding was not contested on appeal by respondent. It was petitioners who interposed an appeal solely with under the Labor Code nor under our prior decisions. The fact that private respondent served petitioner for more
respect to the award of separation pay as financial assistance. As they aptly pointed out, the infractions, while not than twenty years with no negative record prior to his dismissal, in our view of this case, does not call for such
clearly indicative of any wrongful intent, is, nonetheless, serious in nature when one considers the employee's award of benefits, since his violation reflects a regrettable lack of loyalty and worse, betrayal of the company. If an
functions, rendering it inequitable to award separation pay based on social justice. As the records show, respondent employee's length of service is to be regarded as a justification for moderating the penalty of dismissal, such gesture
was the custodian of accountable bank forms in his assigned branch and as such, was mandated to strictly comply will actually become a prize for disloyalty, distorting the meaning of social justice and undermining the efforts of
with the monitoring procedure and disposition thereof as a security measure to avoid the attendant high risk to the labor to cleanse its ranks ofundesirables.44
bank. Indeed, it is true that the failure to observe the processes and risk preventive measures and worse, to take
action and address its violation, may subject the bank to regulatory sanction. It bears stressing that the banking
All told, the Court finds that the award of separation pay to respondent as a measure of social justice is riot
industry is imbued with public interest. Banks are required to possess not only ordinary diligence in the conduct of
warranted in this case. A contrary ruling would effectively reward respondent for his negligent acts instead of
its business but extraordinary diligence in the care of its accounts and the interests of its stakeholders. The banking
punishing him for his offense, in observation of the principle of equity.
business is highly sensitive with a fiduciary duty towards its client and the public in general, such that central
measures must be strictly observed. 37 It is undisputed that respondent failed to perform his duties diligently, and
therefore, not only violated established company policy but also put the bank's credibility and business at risk. The WHEREFORE, the petition is GRANTED. The Decision dated May 21, 2014 of the Court of Appeals in CA-G.R. SP No.
excuse that his Branch Manager, Pinero, merely prompted him towards such ineptitude is of no moment. He readily 121053 is hereby REVERSED and SET ASIDE deleting the award of separation pay in favor of Charles M. Singson.
admitted that he violated established company policy against bringing out checkbooks and bank forms, 38 which
means that he was well aware of the fact that the same was prohibited. Nevertheless, he still chose to, regardless of
SO ORDERED.
his superior's influence, disobey the same not only once, but on numerous occasions. All throughout, there is no
showing that he questioned the acts of Branch Manager Pinero; neither did he take it upon himself to report said
xxvii. Gross and habitual neglect of duty (Sugar Steel Industrial, Inc. vs. Albina, G.R. No. 168749,
irregularities to a higher authority. Hence, under these circumstances, the award of separation pay based on social
June 6, 2016)
justice would be improper.
FIRST DIVISION
G.R. No. 168749, June 06, 2016
A similar ruling was reached in the case of Philippine National Bank v. Padao39 where the Court disallowed the SUGARSTEEL INDUSTRIAL, INC. AND MR. BEN YAPJOCO, Petitioners, v. VICTOR ALBINA, VICENTE UY AND ALEX
payment of separation pay as financial assistance to an employee, i.e., a credit investigator in a bank, who has VELASQUEZ, Respondents.
repeatedly failed to perform his duties which amounted to gross and habitual neglect of duties under Article 282 DECISION
(now 296) of the Labor Code: BERSAMIN, J.:
The crux of this appeal is the extent of the authority of the Court of Appeals (CA) to review in a special civil action
for certiorari the findings of fact contained in the rulings of the National Labor Relations Commission (NLRC). The
The role that a credit investigator plays in the conduct of a bank's business cannot be overestimated. The amount of
petitioners insist that the CA's review is limited to the determination of whether or not the NLRC committed grave
loans to be extended by a bank depends upon the report of the credit investigator on the collateral being offered. If a
abuse of discretion amounting to lack or excess of jurisdiction; hence, it cannot disregard the findings of fact of the
loan is not fairly secured, the bank is at the mercy of the borrower who may just opt to have the collateral
NLRC to resolve the issue of illegal dismissal. The respondents maintain the contrary.
foreclosed. If the scheme is repeated a hundredfold, it may lead to the collapse of the bank.
The Case

xxxx On appeal is the decision promulgated on January 9, 2004,1 whereby the CA granted the respondents' petition for
certiorari, and overturned the decision rendered by the NLRC in favor of the petitioners. 2
Padao's repeated failure to discharge his duties as a credit investigator of the bank amounted to gross and habitual
neglect of duties under Article 282 (b) of the Labor Code. He not only failed to perform what he was employed to do, Antecedents
but also did so repetitively and habitually, causing millions of pesos in damage to PNB. Thus, PNB acted within the
bounds of the law by meting out the penalty of dismissal, which it deemed appropriate given the circumstances. Respondents Victor Albina, Vicente Uy and Alex Velasquez charged the petitioners in the Regional Arbitration
Branch of the National Labor Relations Commission (NLRC) in Cebu City with having illegally dismissed them as
kettleman, assistant kettleman, and inspector, respectively. The CA's assailed decision detailed the following factual
xxxx antecedents, to wit:

However, Padao is not entitled to financial assistance. In Toyota Motor Phils. Corp. Workers Association v. NLRC, the At around 4:00 a.m. of August 16, 1996, a clog-up occurred at the kettle sheet guide. At that time, the
Court reaffirmed the general rule that separation pay shall be allowed as a measure of social justice only in those petitioners were on duty working in their assigned areas. As a consequence, twenty (20) GI sheets were
instances where the employee is validly dismissed for causes other than serious misconduct, willful clogged-up inside the kettle, causing damage to the private respondent. On the same day, a memorandum
disobedience, gross and habitual neglect of duty, fraud or willful breach of trust, commission of a crime was issued by Mr. Ben S. Yapjoco, manager of the private respondent, requiring all the petitioners to
against the employer or his family, or those reflecting on his moral character. These five grounds are just submit written explanation on the aforesaid incident and why no action shall be taken against them for
causes for dismissal as provided in Article 282 of the Labor Code.40 gross negligence. In response to the memorandum, the petitioners submitted their respective
explanations. discretion; and that the CA thus exceeded its jurisdiction in making its own findings after re-assessing the facts and
the sufficiency of the evidence presented to the LA.
Subsequently, in a memorandum dated August 20, 1996, Mr. Yapjoco. informed all the petitioners to
attend a conference in connection with the aforesaid incident. On August 26, 1996, individual notices of Did the CA depart from well-settled rules on what findings the CA could review on certiorari?11
suspension were sent to the petitioners pending final decision relative to the incident. On August 29,
1996, Mr. Yapjoco again sent individual notices of termination of employment to all petitioners, stating Ruling of the Court
that after the management conducted an investigation on the circumstances surrounding the incident,
the petitioners were found guilty of gross neglect of duty and by reason thereof, they were terminated The petition for review on certiorari lacks merit. The CA acted in accordance with the pertinent law and
from their employment.3 jurisprudence.

In the decision rendered on April 27, 1998,4 the Labor Arbiter (LA) ruled that although the dismissal of the As a rule, the certiorari proceeding, being confined to the correction of acts rendered without jurisdiction, in excess
respondents was justified because of their being guilty of gross negligence, the petitioners should pay them their of jurisdiction, or with grave abuse of discretion that amounts to lack or excess of jurisdiction, is limited in scope
separation pay at the rate of 1/2 month per year of service. and narrow in character. As such, the judicial inquiry in a special civil action for certiorari in labor litigation
ascertains only whether or not the NLRC acted without jurisdiction or in excess of its jurisdiction, or with grave
On appeal, the NLRC, observing that the ground stated in support of the respondents' appeal - that "the decision abuse of discretion amounting to lack or in excess of jurisdiction. 12
with all due respect, is not supported by evidence and is contrary to the facts obtaining" - was not among those
expressly enumerated under Article 223 of the Labor Code, upheld the LA's decision on December 23, 1998,5viz.: We find that the CA did not exceed its jurisdiction by reviewing the evidence and deciding the case on the merits
despite the judgment of the NLRC already being final. We have frequently expounded on the competence of the CA
in a special civil action for certiorari to review the factual findings of the NLRC.13 In Univac Development, Inc. v.
WHEREFORE, the appeal of complainants is hereby DISMISSED for failure of the appellants to comply
Soriano,14 for instance, we have pronounced that the CA is "given the power to pass upon the evidence, if and when
with Article 223 of the Labor Code. Consequently, the decision of the Labor Arbiter is AFFRIMED.
necessary, to resolve factual issues," wit hout contravening the doctrine of the immutability of judgments. The
power of the CA to pass upon the evidence flows from its original jurisdiction over the special civil action for
SO ORDERED.6
certiorari, by which it can grant the writ of certiorari to correct errors of jurisdiction on the part of the NLRC should
the latter's factual findings be not supported by the evidence on record; or when the granting of the writ of
On May 8, 2000, the NLRC denied the respondents,7 motion for reconsideration, opining thusly: certiorari is necessary to do substantial justice or to prevent a substantial wrong; or when the findings of the NLRC
contradict those of the LA; or when the granting of the writ of certiorari is necessary to arrive at a just decision in
We reiterate Our ruling that complainants' appeal was not filed in the manner prescribed by law, hence the case.15 The premise is that any decision by the NLRC that is not supported by substantial evidence is a decision
should be properly dismissed. Besides, even if We decide the appeal on its merits, We find no cogent definitely tainted with grave abuse of discretion.16 Should the CA annul the decision of the NLRC upon its finding of
reason to depart from the ruling of the Labor Arbiter supported as it is by the evidence on jurisdictional error on the part of the latter, then it has the power to fully lay down whatever the latter ought to
record.8ChanRoblesVirtualawlibrary have decreed instead as the records warranted. The judicial function of the CA in the exercise of its certiorari
jurisdiction over the NLRC extends to the careful review of the NLRC's evaluation of the evidence because the
factual findings of the NLRC are accorded great respect and finality only when they rest on substantial evidence.
Judgment of the CA Accordingly, the CA is not to be restrained from revising or correcting such factual findings whenever warranted by
the circumstances simply because the NLRC is not infallible. Indeed, to deny to the CA this power is to diminish its
Aggrieved, the respondents assailed the result through their petition for certiorari in the CA, averring that: corrective jurisdiction through the writ of certiorari.

THE HONORABLE COMMISSION COMMITTED GRAVE ABUSE OF DISCRETION IN AFFIRMING IN TOTO The policy of practicing comity towards the factual findings of the labor tribunals does not preclude the CA from
THE DECISION OF THE LABOR ARBITER DECLARING THE DISMISSAL OF THE PETITIONERS AS VALID reviewing the findings, and from disregarding the findings upon a clear showing of the NLRC's capricious, whimsical
ON THE GROUND OF GROSS NEGLIGENCE. or arbitrary disregard of the evidence or of circumstances of considerable importance crucial or decisive of the
controversy.17 In such eventuality, the writ of certiorari should issue, and the CA, being also a court of equity, then
enjoys the leeway to make its own independent evaluation of the evidence of the parties as well as to ascertain
In the judgment promulgated on January 9, 2004,9 the CA granted the petition for certiorari. It ruled that the NLRC's whether or not substantial evidence supported the NLRC's ruling.
affirmance of the LA's decision did not accord with the evidence on record and the applicable law and
jurisprudence; that the dismissal of the respondents' appeal constituted grave abuse of discretion amounting to lack
or excess of jurisdiction;10 and that based on its review the respondents had been illegally dismissed considering II
that the petitioners did not establish that the respondents were guilty of gross and habitual neglect.
In the assailed judgment, the CA cogently stated as follows:
Issues
The assigned error in the petitioner's appeal that the decision of the Labor Arbiter upholding the validity
In this recourse, the petitioners submit that the CA gravely abused its discretion by disregarding the factual findings of their dismissal is not supported by the evidence or is contrary to the facts obtaining, can be reasonable
of the LA that the NLRC affirmed; that such findings, being supported by substantial evidence, were binding and construed to fall under either the afore-quoted paragraph (a) or paragraph (d) of Article 223 of the Labor
conclusive on the CA; that the review of the decisions of the NLRC through certiorari was confined to determining Code. The petitioners were meted by their employer (herein private respondent) the supreme penalty of
issues of want or excess of jurisdiction and grave abuse of discretion amounting to lack or excess of jurisdiction; dismissal from their employment. In appealing the assailed decision, they believe that the Labor Arbiter
that certiorari required a clear showing that the respondent court or officer exercising judicial or quasi-judicial committed error or abuse of discretion which if not corrected would cause them grave or irreparable
functions committed an error of jurisdiction because an error of judgment was not necessarily grave abuse of damage or injury. To give the rule a different interpretation would be contrary to the spirit of the Labor
Code which provides for the liberal construction of the rules. Thus, in meritorious cases, liberal (not
literal) interpretation of the rule becomes imperative and technicalities should not be resorted to in
derogation of the intent and purpose of the rules - the proper and just determination of a litigation. 18 And, lastly, anent the error in the dispositive portion of the judgment of the C A, it appears that the CA's decision
cited the consolidated cases of NLRC NCR Case No. 00-11-07903-94 and NLRC NCR Case No. 00-11-08208-94 as the
rulings being rev ersed and set aside. A reading of the dispositive portion reveals that the error was limited to the
We uphold the CA's setting aside of the decision of the NLRC.
reference to a different docket number. The correct docket number was instead NLRC Case No. V-000391-98 (RAB
Case No. VIM0-1292-96). It should be plain that the error was clerical, not substantial, and this is borne out by the
To start with, the NLRC affirmed the decision of the LA based on its observation that the alleged ground for the
undeniable fact that the CA correctly stated the dates of the assailed decision and resolution of the NLRC,
respondents' appeal - that "the decision with all due respect, is not supported by evidence and is contrary to the
specifically December 23, 1998 and May 8, 2000, respectively. To be also noted is that the CA correctly stated
facts obtaining" - was not one of those expressly enumerated under Article 223 of the Labor Code.
August 29, 1996 as the date when the respondents were terminated.
We cannot sustain the NLRC's basis for its affirmance of the LA's decision. Article 223 19 of the Labor Code
WHEREFORE, the Court DENIES the petition for review on certiorari; and AFFIRMS the decision promulgated on
pertinently states:
January 9, 2004 as herein MODIFIED, to wit:

Art. 223. Appeal - Decisions, awards, or orders of the Labor Arbiter are final and executory unless
WHEREFORE, the instant petition is GRANTED. The assailed Decision dated December 23, 1998 and
appealed to the Commission by any or both parties within ten (10) calendar days from receipt of such
Resolution dated May 8, 2000, of public respondent NLRC, Fourth Division, Cebu City in NLRC Case No.
decisions, awards, or orders. Such appeal may be entertained only on any of the following grounds:
V-000391-98 (RAB Case No. VII-10-1292-96) arc hereby REVERSED and SET ASIDE. In lieu thereof, the
petitioners [Victor Albina, Vicente Uy and Alex Velasquez] are hereby reinstated with full backwages
(a) If there is prima facie evidence of abuse of discretion on the part of the Labor Arbiter;
from the time their employment were terminated on August 29, 1996 up to the time the decision herein
becomes final. However, if reinstatement is no longer feasible, due to the strained relations between the
(b) If the decision, order or award was secured through fraud or coercion, including graft and corruption;
parties, the private respondent [Sugarsteel Industrial, Inc.] is ordered to pay the petitioners their
separation pay equivalent to one (1) month for every year of service, in addition to the backwages.
(c) If made purely on questions of law; and
SO ORDERED.
(d) If serious errors in the findings of facts are raised which would cause grave or irreparable damage or
injury to the appellant.
The petitioners shall pay the costs of suit.
x x x x.
SO ORDERED.cralawlawlibrary
xxviii. Immorality as ground for dismissal (Capin-Cadiz vs. Brent Hospital and Colleges, Inc., G.R.
In our view, the CA acted judiciously in undoing the too literal interpretation of Article 223 of the Labor Code by the
187417, February 24, 2016)
NLRC. The enumeration in the provision of the grounds for an appeal actually encompassed the ground relied upon
G.R. No. 187417, February 24, 2016
by the respondents in their appeal. Their phrasing of the ground, albeit not hewing closely (or literally) to that of
CHRISTINE JOY CAPIN-CADIZ, Petitioner, v. BRENT HOSPITAL AND COLLEGES, INC., Respondent.
Article 223, related to the first and the last grounds under the provision. In dismissing the appeal on that basis, the
DECISION
NLRC seemed to prefer form and technicality to substance and justice. Thereby, the NLRC acted arbitrarily, for its
REYES, J.:
dismissal of the appeal became entirely inconsistent with the constitutional mandate for the protection to labor. 20
This is a petition for review on certiorari1 under Rule 45 of the Rules of Court assailing the Resolutions dated July
22, 20082 and February 24, 20093 of the Court of Appeals (CA) in CA-G.R. SP No. 02373-MIN, which dismissed the
Secondly, the CA's overturning of the NLRC's ruling was based on its finding that the petitioners did not sufficiently
petition filed by petitioner Christine Joy Capin-Cadiz (Cadiz) on the following grounds: (1) incomplete statement of
establish the just and valid cause to dismiss the respondents from their employment. As the assailed judgment
material dates; (2) failure to attach registry receipts; and (3) failure to indicate the place of issue of counsel's
indicates, the CA's review was thorough and its ruling judicious. The CA thereby enforced against the petitioners the
Professional Tax Receipt (PTR) and Integrated Bar of the Philippines (IBP) official receipts.
respected proposition that it was the employer who bore the burden to show that the dismissal was for just and
Antecedent Facts
valid cause.21 The failure of the petitioners to discharge their burden of proof as the employers necessarily meant
that the dismissal was illegal.22 The outcome could not be any other way.
Cadiz was the Human Resource Officer of respondent Brent Hospital and Colleges, Inc. (Brent) at the time of her
indefinite suspension from employment in 2006. The cause of suspension was Cadiz's Unprofessionalism and
In order to warrant the dismissal of the employee for just cause, Article 282 (b) of the Labor Code requires the
Unethical Behavior Resulting to Unwed Pregnancy. It appears that Cadiz became pregnant out of wedlock, and Brent
negligence to be gross and habitual. Gross negligence is the want of even slight care, acting or omitting to act in a
imposed the suspension until such time that she marries her boyfriend in accordance with law.
situation where there is duty to act, not inadvertently but willfully and intentionally, with a conscious indifference
to consequences insofar as other persons may be affected.23 Habitual neglect connotes repeated failure to perform
Cadiz then filed with the Labor Arbiter (LA) a complaint for Unfair Labor Practice, Constructive Dismissal, Non-
one's duties for a period of time, depending upon the circumstances.24 Obviously, a single or isolated act of
Payment of Wages and Damages with prayer for Reinstatement.4
negligence does not constitute a just cause for the dismissal of the employee. 25cralawred

The ground for dismissal, according to the LA, was gross negligence. Considering, however, that the petitioners did Ruling of the Labor Tribunals
not refute the respondents' claim that the incident was their first offense, and that the petitioners did not present
any evidence to establish the supposed habitual neglect on the part of the respondents, like employment or other In its Decision5 dated April 12, 2007, the LA found that Cadiz's indefinite suspension amounted to a constructive
records indicative of the service and personnel histories of the respondents during the period of their employment, dismissal; nevertheless, the LA ruled that Cadiz was not illegally dismissed as there was just cause for her dismissal,
the CA reasonably found and concluded that the just cause to dismiss them was not established by substantial that is, she engaged in premarital sexual relations with her boyfriend resulting in a pregnancy out of wedlock. 6 The
evidence. LA further stated that her "immoral conduct x x x [was] magnified as serious misconduct not only by heir getting
pregnant as a result thereof before and without marriage, but more than that, also by the fact that Brent is an
institution of the Episcopal Church in the Philippines operating both a hospital and college where [Cadiz] was both partners do not have any legal impediment to marry. Cadiz surmises that the reason for her suspension was
employed."7 The LA also ruled that she was not entitled to reinstatement "at least until she marries her boyfriend," not because of her relationship with her then boyfriend but because of the resulting pregnancy. Cadiz also lambasts
to backwages and vacation/sick leave pay. Brent, however, manifested that it was willing to pay her 1311 month Brent's condition for her reinstatement - that she gets married to her boyfriend - saying that this violates the
pay. The dispositive portion of the decision reads: stipulation against marriage under Article 136 of the Labor Code. Finally, Cadiz contends that there was substantial
compliance with the rules of procedure, and the CA should not have dismissed the petition. 18
WHEREFORE, judgment is hereby rendered, ordering [Brent] to pay [Cadiz] 13th month pay in the sum
of Seven Thousand Nine Hundred Seventy & 11/100 Pesos (P7,970.11). Brent, meanwhile, adopts and reiterates its position before the LA and the NLRC that Cadiz's arguments are
irrational and out of context. Brent argues, among others, that for Cadiz to limit acts of immorality only to extra-
All other charges and claims are hereby dismissed for lack of merit. marital affairs is to "change the norms, beliefs, teachings and practices of BRENT as a Church institution of the x x x
Episcopal Church in the Philippines."19
SO ORDERED.8ChanRoblesVirtualawlibrary
Ruling of the Court
Cadiz appealed to the National Labor Relations Commission (NLRC), which affirmed the LA decision in its
Ordinarily, the Court will simply gloss over the arguments raised by Cadiz, given that the main matter dealt with by
Resolution9 dated December 10, 2007. Her motion for reconsideration having been denied by the NLRC in its
the CA were the infirmities found in the petition and which caused the dismissal of her case before it. In view,
Resolution10 dated February 29, 2008, Cadiz elevated her case to the CA on petition for certiorari under Rule 65.
however, of the significance of the issues involved in Cadiz's dismissal from employment, the Court will resolve the
petition including the substantial grounds raised herein.
Ruling of the CA
The issue to be resolved is whether the CA committed a reversible error in ruling that: (1) Cadiz's petition is
The CA, however, dismissed her petition outright due to technical defects in the petition: (1) incomplete statement dismissible on ground of technical deficiencies; and (2) the NLRC did not commit grave abuse of discretion in
of material dates; (2) failure to attach registry receipts; and (3) failure to indicate the place of issue of counsel's PTR upholding her dismissal from employment.
and IBP official receipts.11 Cadiz sought reconsideration of the assailed CA Resolution dated July 22, 2008 but it was
denied in the assailed Resolution dated February 24, 2009.12 The CA further ruled that "a perusal of the petition will Rules of procedure are mere
reveal that public respondent NLRC committed no grave abuse of discretion amounting to lack or excess of tools designed to facilitate the
jurisdiction x x x holding [Cadiz's] dismissal from employment valid."13 attainment of justice

Hence, the present petition. Cadiz argues that - In dismissing outright Cadiz's petition, the CA found the following defects: (1) incomplete statement of material
dates; (2) failure to attach registry receipts; and (3) failure to indicate the place of issue of counsel's PTR and IBP
I official receipts.

Rule 46, Section 3 of the Rules of Court states the contents of a petition filed with the CA under Rule 65, viz, "the
THE HONORABLE [NLRC] GRAVELY ABUSED ITS DISCRETION WHEN IT HELD TFIAT [CADIZ'S] petition shall x x x indicate the material dates showing when notice of the judgment or final order or resolution
IMPREGNATION OUTSIDE OF WEDLOCK IS A GROUND FOR THE TERMINATION OF [CADIZ'S] subject thereof was received, when a motion for new trial or reconsideration, if any, was filed and when notice of
EMPLOYMENT14 the denial thereof was received." The rationale for this is to enable the CA to determine whether the petition was
filed within the period fixed in the rules.20 Cadiz's failure to state the date of receipt of the copy of the NLRC
II decision, however, is not fatal to her case since the more important material date which must be duly alleged in a
petition is the date of receipt of the resolution of denial of the motion for reconsideration,21 which she has duly
complied with.22
THE [NLRC] COMMITTED GRAVE ABUSE OF DISCRETION WHEN IT UPHELD THE DISMISSAL OF [CADIZ]
ON THE GROUND THAT THE INDEFINITE SUSPENSION WAS VALID AND REQUIRED [CADIZ] TO FIRST
The CA also dismissed the petition for failure to attach the registry receipt in the affidavit of service. 23 Cadiz points
ENTER INTO MARRIAGE BEFORE SHE CAN BE ADMITTED BACK TO HER EMPLOYMENT 15
out, on the other hand, that the registry receipt number was indicated in the petition and this constitutes substantial
compliance with the requirement. What the rule requires, however, is that the registry receipt must be appended to
III the paper being served.24 Clearly, mere indication of the registry receipt numbers will not suffice. In fact, the
absence of the registry receipts amounts to lack of proof of service. 25 Nevertheless, despite this defect, the Court
RESPONDENT [NLRC] GRAVELY ABUSED ITS DISCRETION WHEN IT DENIED [CADIZ'S] CLAIM FOR finds that the ends of substantial justice would be better served by relaxing the application of technical rules of
BACKWAGES, ALLOWANCES, SICK LEAVE PAY, MATERNITY PAY AND MORAL AND EXEMPLARY procedure.26 With regard to counsel's failure to indicate the place where the IBP and PTR receipts were issued,
DAMAGES AND ATTORNEY'S FEES16 there was substantial compliance with the requirement since it was indicated in the verification and certification of
non-forum shopping, as correctly argued by Cadiz's lawyer.27cralawred
IV
Time and again, the Court has emphasized that rules of procedure are designed to secure substantial justice. These
are mere tools to expedite the decision or resolution of cases and if their strict and rigid application would frustrate
THE [CA] MISPLACED APPLICATION OF THE MATERIAL DATA RULE RESULTING TO GRAVE ABUSE OF rather than promote substantial justice, then it must be avoided. 28
DISCRETION WHEN IT DISMISSED THE APPEAL17
Immorality as a just cause for
termination of employment
Cadiz contends, among others, that getting pregnant outside of wedlock is not grossly immoral, especially when
Both the LA and the NLRC upheld Cadiz's dismissal as. one attended with just cause. The LA, while ruling that Leus involved the same personal circumstances as the case at bench, albeit the employer was a Catholic and
Cadiz's indefinite suspension was tantamount to a constructive dismissal, nevertheless found that there was just sectarian educational institution and the petitioner, Cheryl 1 Santos Leus (Leus), worked as an assistant to the
cause for her dismissal. According to the LA, "there was just cause therefor, consisting in her engaging in premarital school's Director of the Lay Apostolate and Community Outreach Directorate. Leus was dismissed from employment
sexual relations with Carl Cadiz, allegedly her boyfriend, resulting in her becoming pregnant out of wedlock." 29 The by the school for having borne a child out of wedlock. The Court ruled in Leus that the determination of whether a
LA deemed said act to be immoral, which was punishable by dismissal under Brent's rules and which likewise conduct is disgraceful or immoral involves a two-step process: first, a consideration of the totality of the
constituted serious misconduct under Article 282(a) of the Labor Code. The LA also opined that since Cadiz was circumstances surrounding the conduct; and second, an assessment of the said circumstances vis-a-vis the
Brent's ITuman Resource Officer in charge of implementing its rules against immoral conduct, she should have been prevailing norms of conduct, i.e., what the society generally considers moral and respectable.
the "epitome of proper conduct."30 The LA ruled:
In this case, the surrounding facts leading to Cadiz's dismissal are straightforward - she was employed as a human
[Cadiz's] immoral conduct by having premarital sexual relations with her alleged boy friend, a former resources officer in an educational and medical institution of the Episcopal Church of the Philippines; she and her
Brent worker and her co-employee, is magnified as serious misconduct not only by her getting pregnant boyfriend at that time were both single; they engaged in premarital sexual relations, which resulted into pregnancy.
as a result thereof before and without marriage, but more than that, also by the fact that Brent is an The labor tribunals characterized these as constituting disgraceful or immoral conduct. They also sweepingly
institution of the Episcopal Church in the Philippines xxx committed to "developing competent and concluded that as Human Resource Officer, Cadiz should have been the epitome of proper conduct and her
dedicated professionals xxx and in providing excellent medical and other health services to the indiscretion "surely scandalized the Brent community."38
community for the Glory of God and Service to Humanity." x x x As if these were not enough, [Cadiz] was
Brent's Human Resource Officer charged with, among others, implementing the rules of Brent against The foregoing circumstances, however, do not readily equate to disgraceful and immoral conduct. Brent's Policy
immoral conduct, including premarital sexual relations, or fornication xxx. She should have been the Manual and Employee's Manual of Policies do not define what constitutes immorality; it simply stated immorality as
epitome of proper conduct, but miserably failed. She herself engaged in premarital sexual relations, a ground for disciplinary action. Instead, Brent erroneously relied on the standard dictionary definition of
which surely scandalized the Brent community, x x x.31 fornication as a form of illicit relation and proceeded to conclude that Cadiz's acts fell under such classification, thus
constituting immorality.39

The NLRC, for its part, sustained the LA's conclusion. Jurisprudence has already set the standard of morality with which an act should be gauged - it is public and secular,
not religious.40 Whether a conduct is considered disgraceful or immoral should be made in accordance with the
The Court, however, cannot subscribe to the labor tribunals' conclusions. prevailing norms of conduct, which, as stated in Leus, refer to those conducts which are proscribed because they are
detrimental to conditions upon which depend the existence and progress of human society. The fact that a
Admittedly, one of the grounds for disciplinary action under Brent's policies is immorality, which is punishable by particular act does not conform to the traditional moral views of a certain sectarian institution is not sufficient
dismissal at first offense32 Brent's Policy Manual provides: reason to qualify such act as immoral unless it, likewise, does not conform to public and secular standards. More
importantly, there must be substantial evidence to establish that premarital sexual relations and pregnancy out of
CATEGORY IV wedlock is considered disgraceful or immoral.41

The totality of the circumstances of this case does not justify the conclusion that Cadiz committed acts of
In accordance with Republic Act No. 1052,33 the following are just cause for terminating an employment immorality. Similar to Leus, Cadiz and her boyfriend were both single and had no legal impediment to marry at the
of an employee without a definite period: time she committed the alleged immoral conduct. In fact, they eventually married on April 15, 2008. 42 Aside from
these, the labor tribunals' respective conclusion that Cadiz's "indiscretion" "scandalized the Brent community" is
xxxx speculative, at most, and there is no proof adduced by Brent to support such sweeping conclusion. Even Brent
admitted that it came to know of Cadiz's "situation" only when her pregnancy became manifest.43 Brent also
2. Serious misconduct or willful disobedience by the employee of the orders of his employer or conceded that "[a]t the time [Cadiz] and Carl R. Cadiz were just carrying on their boyfriend-girlfriend relationship,
representative in connection with his work, such as, but not limited to the following: there was no knowledge or evidence by [Brent] that they were engaged also in premarital sex."44 This only goes to
chanRoblesvirtualLawlibrary show that Cadiz did not flaunt her premarital relations with her boyfriend and it was not carried on under
xxxx scandalous or disgraceful circumstances. As declared in Leus, "there is no law which penalizes an unmarried mother
by reason of her sexual conduct or proscribes the consensual sexual activity between two unmarried persons; that
b. Commission of immoral conduct or indecency within the company premises, such as an act neither does such situation contravene[s] any fundamental state policy enshrined in the Constitution." 45 The fact
of lasciviousness or any act which is sinful and vulgar in nature. that Brent is a sectarian institution does not automatically subject Cadiz to its religious standard of morality absent
an express statement in its manual of personnel policy and regulations, prescribing such religious standard as gauge
c. Immorality, concubinage, bigamy.34ChanRoblesVirtualawlibrary as these regulations create the obligation on both the employee and the employer to abide by the same.46

Brent, likewise, cannot resort to the MRPS because the Court already stressed in Leus that "premarital sexual
Its Employee's Manual of Policies, meanwhile, enumerates "[a]cts of immorality such as scandalous behaviour, acts relations between two consenting adults who have no impediment to marry each other, and, consequently,
of lasciviousness against any person (patient, visitors, co-workers) within hospital premises"35 as a ground for conceiving a child out of wedlock, gauged from a purely public and secular view of morality, does not amount to a
discipline and discharge. Brent also relied on Section 94 of the Manual of Regulations for Private Schools (MRPS), disgraceful or immoral conduct under Section 94(e) of the 1992 MRPS."47
which lists "disgraceful or immoral conduct" as a cause for terminating employment. 36
Marriage as a condition for reinstatement
Thus, the question that must be resolved is whether Cadiz's premarital relations with her boyfriend and the
resulting pregnancy out of wedlock constitute immorality. To resolve this, the Court makes reference to the recently The doctrine of management prerogative gives an employer the right to "regulate, according to his own discretion
promulgated case of Cheryll Santos Lens v. St. Scholastica 's College Westgrove and/or Sr. Edna Quiambao, OSB37 and judgment, all aspects of employment, including hiring, work assignments, working methods, the time, place and
manner of work, work supervision, transfer of employees, lay-off of workers, and discipline, dismissal, and recall of the backwages during the period of appeal should end on the date that a higher court reversed the labor arbitration
employees."48 In this case, Brent imposed on Cadiz the condition that she subsequently contract marriage with her ruling of illegal dismissal.61 If applied in Cadiz's case, then the computation of backwages should be from November
then boyfriend for her to be reinstated. According to Brent, this is "in consonance with the policy against 17, 2006, which was the time of her illegal dismissal, until the date of promulgation of this decision. Nevertheless,
encouraging illicit or common-law relations that would subvert the sacrament of marriage."49 the Court has also recognized that the constitutional policy of providing full protection to labor is not intended to
oppress or destroy management.62 The Court notes that at the time of Cadiz's indefinite suspension from
Statutory law is replete with legislation protecting labor and promoting equal opportunity in employment. No less employment, Leus was yet to be decided by the Court. Moreover, Brent was acting in good faith and on its honest
than the 1987 Constitution mandates that the "State shall afford full protection to labor, local and overseas, belief that Cadiz's pregnancy out of wedlock constituted immorality. Thus, fairness and equity dictate that the
organized and unorganized, and promote full employment and equality of employment opportunities for all." 50 The award of backwages shall only be equivalent to one (1) year or P109,304.40, computed as follows:
Labor Code of the Philippines, meanwhile, provides:

Art. 136. Stipulation against marriage. It shall be unlawful for an employer to require as a condition of Monthly salary P9,108.70
employment or continuation of employment that a woman employee shall not get married, or to stipulate
expressly or tacitly that upon getting married, a woman employee shall be deemed resigned or separated, multiplied by one year x x
or to actually dismiss, discharge, discriminate or otherwise prejudice a woman employee merely by
reason of her marriage. or 12 months 12

With particular regard to women, Republic Act No. 9710 or the Magna Carta of Women51 protects women against P109,304.40
discrimination in all matters relating to marriage and family relations, including the right to choose freely a
spouse and to enter into marriage only with their free and full consent.52
Finally, with regard to Cadiz's prayer for moral and exemplary damages, the Court finds the same without merit. A
Weighed against these safeguards, it becomes apparent that Brent's condition is coercive, oppressive and finding of illegal dismissal, by itself, does not establish bad faith to entitle an employee to moral damages. 63 Absent
discriminatory. There is no rhyme or reason for it. It forces Cadiz to marry for economic reasons and deprives her of clear and convincing evidence showing that Cadiz's dismissal from Brent's employ had been carried out in an
the freedom to choose her status, which is a privilege that inheres in her as an intangible and inalienable right.53 arbitrary, capricious and malicious manner, moral and exemplary damages cannot be awarded. The Court
While a marriage or no-marriage qualification may be justified as a "bona fide occupational qualification," Brent nevertheless grants the award of attorney's fees in the amount often percent (10%) of the total monetary award,
must prove two factors necessitating its imposition, viz: (1) that the employment qualification is reasonably Cadiz having been forced to litigate in order to seek redress of her grievances. 64
related to the essential operation of the job involved; and (2) that there is a factual basis for believing that all or
substantially all persons meeting the qualification would be unable to properly perform the duties of the job. 54 WHEREFORE, the petition is GRANTED. The Resolutions dated July 22, 2008 and February 24, 2009 of the Court of
Brent has not shown the presence of neither of these factors. Perforce, the Court cannot uphold the validity of said Appeals in CA-G.R. SP No. 02373-M1N are REVERSED and SET ASIDE, and a NEW ONE ENTERED finding
condition. petitioner Christine Joy Capin-Cadiz to have been dismissed without just cause.

Given the foregoing, Cadiz, therefore, is entitled to reinstatement without loss of seniority rights, and payment of Respondent Brent Hospital and Colleges, Inc. is hereby ORDERED TO PAY petitioner Christine Joy Capin-Cadiz:
backwages computed from the time compensation was withheld up to the date of actual reinstatement. Where
reinstatement is no longer viable as an option, separation pay should be awarded as an alternative and as a form of (1) One Hundred Nine Thousand Three Hundred Four Pesos and 40/100 (P109,304.40) as backwages;
financial assistance.55 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 (2) Thirty-Six Thousand Four Hundred Thirty-Four Pesos and 80/100 (P36,434.80) as separation pay;
reinstatement was rendered impossible.56 In this case, the records do not show whether Cadiz already severed and
her employment with Brent or whether she is gainfully employed elsewhere; thus, the computation of separation
pay shall be pegged based on the findings that she was employed on August 16, 2002, on her own admission in her (3) Attorney's fees equivalent to ten percent (10%) of the total award.
complaint that she was dismissed on November 17, 2006, and that she was earning a salary of P9,108.70 per
month,57 which shall then be computed at a rate of one (1) month salary for every year of service, 58 as follows:
The monetary awards 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.
Monthly salary P9,108.70 SO ORDERED

multiplied by number of years x

xxix. Marriage and Bonfide Occupational Qualification – BFOQ
xxx. Dispute involving individual who is both employee, and stockholder and director (Guillermo
in service (Aug 02 to Nov 06) 4
vs. Uson, G.R. No. 198967, March 7, 2016)(PDF)

P36,434.80

The Court also finds that Cadiz is only entitled to limited backwages. Generally, the computation of backwages is
reckoned from the date of illegal dismissal until actual reinstatement. 59 In case separation pay is ordered in lieu of
xxxi. Fixed Period employment does not by itself signify circumvention of Article 280 (Jamias vs.
reinstatement or reinstatement is waived by the employee, backwages is computed from the time of dismissal until
NLRC, G.R. No. 159350, March 9, 2016) (PDF)
the finality of the decision ordering separation pay.60 Jurisprudence further clarified that the period for computing
 xxxx
a. There are loan notes which do not contain the signature of the spouse of the borrower as mandated under Chapter 10
of the Policy Manual. This is true in the loan notes of Monica Oras, and Juliet Kotoken for her loan application sometime
xxxii. Necessity and desirability of the work are not determinant in term employment
on [sic] January 12, 2004;
xxxiii. Choice to discipline is a management prerogative (Tabuk Multipurpose Cooperative, Inc.
(TAMPCO) vs. Duclan, G.R. No. 203005, March 14, 2016)
b. Special loans were still granted even after the setting of the allowable ceiling on June 28, 2003 (BA No. 28) and even
SECOND DIVISION
after the Board of Directors stopped the granting of the Special Investment Loan on October 26, 2003 (BA No. 55);
G.R. No. 203005, March 14, 2016
TABUK MULTI-PURPOSE COOPERATIVE, INC. (TAMPCO), JOSEPHINE DOCTOR, AND WILLIAM BAO-ANGAN,
c. Loans were released even there [sic] were lacking documents. The case of the SIL granted for example to Mrs. Juliet
Petitioners, v. MAGDALENA DUCLAN, Respondent.
Kotoken and Mrs. Brenda Falgui on January 12, 2004 were released even without the required loan note. It was revealed
DECISION
that Mr. Peter Socalo prepared the voucher and Mrs. Aligo did the releasing of the amount upon the conformity of Mrs.
DEL CASTILLO, J.:
Magdalena Duclan. The loan notes were made and executed later after the loans were also released;
An employee's willful and repeated disregard of a resolution issued by a cooperative's board of directors (BOD) declaring
a moratorium on the approval and release of loans, thus placing the resources of the cooperative and ultimately the hard-
d. Checks used to secure or postdated checks intended to pay the Special Investment loans were not presented for
earned savings of its members in a precarious state, constitutes willful disobedience which justifies the penalty of
payment at the time that they fall [sic] due;
dismissal under Article 282 of the Labor Code.
e. Extension of the term of the loan were done through the substitution of the checks without prior approval of the Board
Assailed in this Petition for Review on Certiorari1 are: 1) the September 15, 2011 Decision2 of the Court of Appeals (CA)
of Directors.
in CA-G.R. SP No. 114753, which reversed and set aside the November 25, 2009 Decision3 and April 8, 2010 Resolution4
of the National Labor Relations Commission (NLRC) in NLRC CA-No. 050848-06 (RA-06-09); and 2) the CA's July 11,
All the above findings were not denied and in fact respondents CEO Rev. Ismael Sarmiento admitted the charge against
2012 Resolution5 denying reconsideration of its assailed Decision.
him. "Mea Culpa" x x x he said[,] but at the same time prayed for the Committee's and Board's understanding and
compassion, Magdalena Duclan and Fruto Singwey admitted [their fault under] command responsibility for the action of
Factual Antecedents
their subordinates.
Petitioner Tabuk Multi-Purpose Cooperative, Inc. (TAMPCO) is a duly registered cooperative based in Tabuk City,
All the other respondents invoked that they just [performed] their duties [or be charged with] insubordination x x x.
Kalinga. It is engaged in the business of obtaining investments from its members which are lent out to qualified member-
borrowers. Petitioner Josephine Doctor is TAMPCO Chairperson and member of the cooperative's BOD, while petitioner
To the issue of the missing check which was raised by Mr. Dulawon in the previous Board meetings, the committee heard
William, Bao-Angan is TAMPCO Chief Executive Officer.
again the side of the cashier [who] denied that tine same is missing. Accordingly, the same was changed by Mrs. Brenda
Falgui, or that a substitute check was issued by Mrs. Falgui. She [had a] conflicting statement before the Board when she
Respondent Magdalena Duclan was employed as TAMPCO Cashier on August 15, 1989, In 2002, TAMPCO introduced
stated that the amount belongs to Juliet's account.
Special Investment Loans (SILs) to its members and prospective borrowers. Among those who availed themselves of the
SILs were Brenda Falgui (Falgui) and Juliet Kotoken (Kotoken). 6
CONCLUSION:
In June 2003, the TAMPCO BOD issued Board Action (BA) No. 28 which limited the grant of SILs to P5 million and
There was indeed an error, mistake, negligence or abuse of discretion that transpired in the grant of the special
instructed management to collect outstanding loans and thus reduce the amount of loans granted to allowable levels.
investment loans, x x x [T]here are violations of the policies or Board actions which should be dealt with[.] x x x.
This was prompted by a cooperative report stating that too many SILs were being granted, the highest single individual
borrowing reached a staggering P14 million, which thus adversely affected the cooperative's ability to grant regular loans
RECOMMENDATIONS:
to other members of the cooperative.7 However, despite said board action, SILs were granted to Falgui and Kotoken over
and above the ceiling set. This prompted the BOD to issue, on October 26, 2003, BA No. 55 completely halting the grant of
AS TO THE ACCOUNTABILITY
SILs pending collection of outstanding loans.
xxxx
Despite issuance of BA No. 55, however, additional SILs were granted to Falgui amounting to P6,697,000.00 and to
Kotoken amounting to P3.5 million.8 Eventually, Falgui filed for insolvency while Kotoken failed to pay back her loans.
Mrs. Magdalena Duclan
On February 23, 2004, TAMPCO indefinitely suspended respondent and other cooperative officials pursuant to BA No.
The committee recommended that she will be immediately suspended without pay and for her to collect the SIL she [had]
73-03, and required them to replace the amount of P6 million representing unpaid loans as of February 21, 2004. On
released even without the loan note and for her to account [for] or pay the missing value of the check bearing no.
March 6, 2004, respondent's suspension was fixed at 15 days, and she was ordered to return to work on March 15, 2004.
00115533 in the amount of P1,500,000.00 [by] Dec. 31, 2004.
The TAMPCO BOD then created a fact-finding committee (committee) to investigate the SIL fiasco. 9 Respondent and other
[For failure] to collect or account/pay [by then she] shall be [dismissed] from service with forfeiture of all benefits.
TAMPCO employees were summoned to the proceedings and required to submit their respective answers to the
committee.10
She violated policies and Board actions, specially 28 and 55 in relation to the manual. 13ChanRoblesVirtualawlibrary
Respondent submitted to the committee an October 21, 2004 letter,11 admitting that despite the issuance of BA No. 55, On November 6, 2004. the BOD adopted the report of the committee and ordered that respondent be suspended from
she and her co-respondents approved and released SILs, and that she acknowledged responsibility therefor. November 8 until December 31, 2004; respondent was likewise directed to collect, within the said period, the
unauthorized SIL releases she made, otherwise she would be terminated from employment.14
After conducting hearings, the committee issued its Report on the Special Investment Loans,12 which states as follows:
Unable to collect or account for the P1.5 million as required, respondent was dismissed from employment. Thus, in a SO ORDERED.17ChanRoblesVirtualawlibrary
February 1, 2005 communication,15 TAMPCO wrote:
In ruling that respondent was illegally dismissed, the Labor Arbiter made the following findings: a) respondent's first
chanRoblesvirtualLawlibrary
suspension was for an indefinite period, hence illegal; b) respondent was not accorded the opportunity to explain her
Anent your letter dated January 26, 2005, reiterating your plea for a reconsideration of your suspension for the reason
side before she was meted the penalty of suspension; c) placing respondent on suspension and requiring her to
that you were suspended twice on different days for the commission of the same offense, the following quoted paragraph
personally pay the loan is not the proper way to collect irregularly released loans; d) although respondent's indefinite
was lifted from lines 339 through 350 of the minutes of the regular meeting of the TAMPCO BOD held on November 27,
suspension was eventually reduced to 15 days, by that time respondent was suspended for 20 days already; e)
2004, treating the matter of your concern for your information, to wit:
respondent was deprived of the opportunity to explain her side when she was suspended the second time on November
chanRoblesvirtualLawlibrary
8, 2004 to December 31, 2004; f) the second suspension was illegal because it was beyond 30 days; g) respondent was
"x x x CEO Sarmiento and Cashier Duclan [requested] reconsideration of their suspension pointing out that they are being
suspended twice for the same infraction; h) the February 1, 2005 letter informing respondent of her termination is
suspended twice for the same offense, The Board denied the request, clarifying that the basis for the second suspension is the
redundant since respondent has been deemed constructively dismissed as early as February 23, 2004 when she was
discovery of the release of cash to the SIL recipient without first accomplishing the corresponding loan note and which action
indefinitely suspended; i) as cashier, respondent's signing of the check before its release is merely ministerial; she has no
is. contrary to the established processes. It was mentioned that such violation is punishable by outright dismissal but the
hand in the processing or approval of the loans; j) TAMPCO had previously tolerated the practice of releasing loans ahead
policy was humanized with the imposition only of suspension to the violators to give them ample time to collect the
of the processing of vouchers and board approval and during the prohibited period; and k) petitioners did not terminate
unauthorized disbursement. x x x [The first] suspension was lifted because their services were urgently needed in the
respondent's co-workers who were charged with committing the same infraction.18
distribution of dividends and patronage refunds. The Board decided to stand by its decision based on the recommendation of
the fact-finding committee."
Ruling of the National Labor Relations Commission
[For] failure to comply with the tasks required x x x within the effectivity period of your suspension as set under Office
Orders numbered 001-04 and 002-04, both dated November 6, 2004, the Board, during its January 29, 2005 regular Petitioners filed an appeal before the NLRC, which was docketed as NLRC CA-No. 050848-06 (RA-06-09). On November
meeting, decided to terminate your services xxx effective as of the closing of office hours on February 1, 2005. 25, 2009, the NLRC issued its Decision19 containing the following pronouncement:
Ruling of the Labor Arbiter
Anent respondent's first suspension, the NLRC noted that petitioners already modified the period from being indefinite
to only 15 days and that respondent was properly paid her wages corresponding to said period of suspension. Thus,
On July 12, 2005, respondent filed a complaint for illegal dismissal, with recovery of backwages; unpaid holiday pay;
there was no need to discuss the validity of said suspension. Regarding the second suspension from November 8 to
premium and 13th month pay; moral, exemplary and actual damages; and attorney's fees, against respondents which was
December 31, 2004, the NLRC found the same as illegal considering that it was imposed as a penalty and not as a
docketed in the NLRC RAB, Cordillera Administrative Region, Bagiuo City as NLRC Case No. RAB-CAR-07-Q344-05 (R-11-
preventive suspension pending investigation of her administrative liability. In fact, during her suspension, she was
08).
ordered to collect the loan illegally released. However, as regards her dismissal from service, the NLRC found the same as
valid and for cause. The NLRC opined that respondent was notified of the investigation to be conducted by the Fact-
On April 24, 2009, Labor Arbiter Monroe C, Tabingan issued a Decision16 in the case, decreeing as follows:
Finding Committee; the notice apprised her that she was being charged with: (1) violation of BA No. 55 stopping the
chanRoblesvirtualLawlibrary
giving of SILs; (2) violation of BA No. 28 limiting the individual grant of SIL to P5 million; and (3) violation of lending
WHEREFORE, all premises duly considered, the respondent is hereby found to have illegally suspended, then illegally
policies requiring the consent of spouse in the granting of loans. Respondent was given the opportunity to answer the
dismissed the herein complainant. In view of the fact that this decision was a collective act of the Board of Directors and
charges against her. In fact, she admitted having released SILs despite the board resolution discontinuing the same.
Officers of the respondent, they, as well as the respondent Cooperative, are hereby jointly and severally held liable to pay
Despite this admission, petitioners continued with the investigation and found the following infractions to have been
to the complainant the following:
committed by respondent:
chanRoblesvirtualLawlibrary
1. Her full backwages from the time of her illegal suspension beginning 24 February 2004 to 15 March 1. There were loan notes which did not contain the signature of the borrower's spouse as mandated by the Policy Manual
2004, and her illegal dismissal from 08 November 2004 to the finality of this Decision, with legal of the Cooperative;
rate of interest thereon until fully paid, currently computed at PhP1,188,283.30, subject to re-
computation at the time of the payment of said monetary claim; 2. SILs were still granted even after the BOD passed BR Nos. 28 and 55 which limited the ceiling of SILs to be granted and
even subsequently stopping the grant of the said loan;
xxxx
3. Loans were released even [when] there [were] documents [missing]. The cases of Ms. Kotoken and Falgui were cited
2. Her separation pay in lieu of reinstatement of one (1) month pay for every year of service beginning where their loans were released despite the absence of loan notes;
at the time of her initial date of hiring, to the finality of this decision, with legal rate of interest
thereon until fully paid, currently computed at PhP405,002.40, said interest subject to re- 4. [Post-dated] checks used to secure the SlLs were not presented at the time they fell due; and
computation at the time of the payment;
5. Extension of the term of the loans [was] done through substitution of checks without prior approval of the
xxxx BOD.20ChanRoblesVirtualawlibrary
According to the NLRC, the Fact-Finding Committee discovered that respondent unilaterally altered the terms of the loan
3. Moral damages in the amount of PhP100,000.00 and exemplary damages in the amount of by extending the dates of maturity of checks which secured the loans and that she reported a partial payment, by way of
PhP100,000.00; two (2) checks, of the loan of Kotoken in the amount of P3 million although the subject checks were not yet encashed.
Worse, the checks were later dishonored when presented for payment.
4. Her attorney's fees of not less than ten (10%) per centum of the total monetary award hereto
awarded, currently computed at P159,329.07, subject to re-computation at the time of payment. As observed by the NLRC, respondent failed to refute the above findings. In fact, she admitted having released SILs
despite knowledge of board resolutions discontinuing the grant of SILs and despite the fact that the borrower concerned
had exceeded the allowable ceiling.
 On September 15, 2011, the CA issued the herein assailed Decision, decreeing as follows:
The NLRC did not give credence to respondent's assertion that as a mere cashier, she has no discretion at all on the chanRoblesvirtualLawlibrary
approval of the loans. The NLRC opined that respondent was the custodian of the entire funds of TAMPCO and also an WHEREFORE, premises considered, the Decision of the NLRC dated 25 November 2009 is hereby REVERSED and SET
honorary member of the BOD, advising the latter on financial matters. The NLRC also held that the release of funds is not ASIDE. The Decision of the Labor Arbiter dated 24 April 2009 in NLRC Case No. RAB-CAR-07-0344-05 (R-11-18) is
purely ministerial as respondent was expected to check all the supporting documents and whether pertinent policies hereby REINSTATED.
regarding the loan had been met by the applicant.
SO ORDERED.25ChanRoblesVirtualawlibrary
For the NLRC, respondent's transgressions were deliberate infractions of clear and mandatory policies of TAMPCO
The CA held that respondent's dismissal was illegal; that she was not guilty of violating her duties and responsibilities as
amounting to gross misconduct.
Cashier; that she was under the supervision of the cooperative's Finance and Credit Managers, who are primarily
responsible for the approval of loan applications; that as Cashier, she was a mere co-signatory of check releases and
The dispositive portion of the NLRC Decision reads:
simply acts as a "check and balance on the power and authority of the General Manager;" that she does not exercise
chanRoblesvirtualLawlibrary
discretion on the matter of SILs - specifically the assessment, recommendation, approval and granting thereof; that only
WHEREFORE, premises considered, the appeal of respondents is GRANTED. The Decision of the Labor Arbiter dated April
the Loan Officers, as well as the Credit, Finance, and General Managers, have a direct hand in the evaluation, assessment
24, 2009 is hereby REVERSED AND SET ASIDE, and a new one is hereby rendered DISMISSING the above-entitled
and approval of SEL applications, including their required attachments/documents; that while the questioned SILs were
complaint for lack of merit. Respondent Tabuk Multi-Purpose Cooperative, Inc., is, however, ordered to pay
released without the approval of the BOD, such practice was sanctioned and had been adopted and tolerated within
complainant's wages for the period of November 8 to December 31, 2004.
TAMPCO ever since; that it is unjust to require respondent to pay the amounts released to SEL borrowers but which
could no longer be collected; that it was unfair to condemn and punish respondent for the anomalies, while her co-
SO ORDERED.21ChanRoblesVirtualawlibrary
respondents, particularly the former General Manager, was given a graceful exit, honorably discharged, and was even
Respondent moved to reconsider. However, in a Resolution dated April 8, 2010, the NLRC held its ground. 22 allowed to collect his retirement benefits in full; that respondent's suspension from November 8 to December 31, 2004
was illegal; and that petitioners failed to comply with the twin-notice rule prior to her dismissal.
Ruling of the Court of Appeals
Petitioners filed a Motion for Reconsideration,26 but the CA denied the same in its July 11, 2012 Resolution. Hence, the
In a Petition for Certiorari23 filed with the CA and docketed therein as CA-G.R. SP No. 114753, respondent sought to set present Petition.
aside the NLRC dispositions and reinstate the Labor Arbiter's judgment, arguing that she had no discretion in the release
of the SILs; that she was not an ex-officio member of the cooperative's BOD; that while she committed a violation of the In a November 11, 2013 Resolution,27 this Court resolved to give due course to the Petition.
cooperative's policies, she should be accorded clemency just as her co-respondents were pardoned and allowed to collect
their benefits; that she did not commit gross misconduct, as she was not solely responsible for the prohibited release of On March 19, 2014, petitioners filed an Urgent Motion28 seeking injunctive relief to enjoin the execution of judgment. In a
the SILs to Kotoken and Falgui, since they were previously approved by the loan investigator, the Credit Committee, and March 24, 2014 Resolution,29 the motion was denied.
the General Manager prior to their release; that petitioners did not properly observe the twin-notice rule prior to her
dismissal, as she was not given any notice to present her side - instead, she was dismissed outright when she failed to Issues
collect and return the amount she disbursed via the SILs; that there is no just cause for her dismissal; that her length of
service (15 years) and her unblemished record with the cooperative should merit the setting aside of her dismissal, and Petitioners submit the following issues for resolution:
instead, her previous suspensions should suifice as a penalty for her infraction; that the exoneration of her co- chanRoblesvirtualLawlibrary
respondents - notably the General Manager - who was allowed to retire, given a "graceful exit" from the cooperative, 1. WHETHER THE HONORABLE COURT OF APPEALS ERRED WHEN IT HELD TO REVERSE THE DECISION OF THE
honorably discharged, allowed to collect his benefits in full, and given a certification to the effect that he did not commit HONORABLE NATIONAL LABOR RELATIONS COMMISSION THEREBY AFFIRMING THE DECISION OF THE HONORABLE
any violation of the cooperative's policies, rules, and regulations - constitutes discrimination, favoritism, evident bad LABOR ARBITER.
faith, and a violation of her constitutional right to equal protection; and that the Labor Arbiter's decision is entirely
correct and should be given full credence and respect. 2. WHETHER THE HONORABLE COURT OF APPEALS COMMITTED A GRAVE ERROR WHEN IT DID NOT CONSIDER THE
EVIDENCE OF THE PETITIONERS AS IT RULED THAT THE RESPONDENT WAS REMOVED IN VIOLATION OF THE TWO-
In their Comment24 seeking dismissal of the Petition, petitioners contended that the Petition was filed to cover up for a NOTICE RULE AND THAT THERE IS NO JUST CAUSE FOR HER REMOVAL.
lost appeal; that no reversible error is evident; that contrary to respondent's claim, her position as cashier is the
"lifeblood and very existence of the Cooperative" since she was the "key to the vault and the dispenser of the 3. WHETHER THE HONORABLE COURT OF APPEALS PATENTLY COMMUTED A GRAVE ERROR WHEN IT RULED THAT
Cooperative's fund"; that respondent is responsible and accountable for all disbursements because before the release of THE JOB OF THE RESPONDENT MAGDALENA DUCLAN INCLUDES CHECK AND BALANCE AND YET IT CONCLUDED THAT
the loan proceeds, she must ensure that all the processes and necessary documents are duly complied with and tibere are HER FUNCTION IS MERELY MINISTERIAL. THUS, SHE CANNOT BE HELD ACCOUNTABLE FOR HER [CONDUCT].
no violations of any of the cooperative's policies and rules; that she is likewise responsible for the collection activities of
the cooperative and the coordination thereof, as required under her job description; that respondent was customarily 4. WHETHER THE HONORABLE COURT OF APPEALS ERRED WHEN IT ACTED ON THE PETITION FOR CERTIORARI
appointed by the BOD as its adviser and treasurer - being so, she very well knew of its policies; that as cashier, her (RULE 65) FILED BY THE RESPONDENT DESPITE THE FACT THAT THE PROPER REMEDY SHOULD [HAVE] BEEN X X X A
signature to the checks were required prior to the release thereof to the SIL borrowers - thus, she is liable for signing PETITION FOR REVIEW ON CERTIORARI.30ChanRoblesVirtualawlibrary
these checks and releasing them to the borrowers in disregard of BA No. 55 prohibiting the further release of loans
pending collection of those outstanding; that there is no favoritism or discrimination when the former General Manager Petitioners' Arguments
was allowed a graceful exit while respondent was dismissed, as the decision to allow the former to retire and collect his
benefits is a management prerogative that respondent cannot interfere with; and that ultimately, respondent was Praying that the assailed CA pronouncements be set aside and that the NLRC judgment be reinstated instead, petitioners
dismissed not for her failure to collect the outstanding loans, but for her violation of the cooperative's policies (BA Nos. essentially argue in their Petition and Reply31 that due process was observed in the dismissal of respondent; that there
28 and 55); that in dismissing her, due process was observed. was just and valid cause to dismiss her, as she violated the cooperative's policies and board resolutions limiting and
subsequently prohibiting the grant and release of SILs - which actions jeopardized TAMPCO's financial position; that
respondent's actions constituted serious misconduct and willful disobedience, justifying dismissal under Article 282 of issued BA Nos. 28 and 55, respondent, and the other cooperative officers, willfully and repeatedly defied a necessary,
the Labor Code;32 that while the Credit and General Managers possessed discretion in the evaluation and approval of SIL reasonable and lawful directive of the cooperative's BOD, which directive was made known to them and which they were
applications, respondent as Cashier was still accountable as she was duty-bound to check that the release of the loan expected to know and follow as a necessary consequence of their respective positions in the cooperative. They placed the
amounts was proper and done in accordance with the cooperative's rules and policies; and that there is no basis to resources of the cooperative - the hard-earned savings of its members - in a precarious state as a result of the inability to
suppose that respondent was unfairly treated, since all those found responsible for the SIL fiasco were dismissed from collect the loans owing to the borrowers' insolvency or refusal to honor their obligations, Respondent committed gross
service after their respective cases were individually considered and accordingly treated based on the infractions insubordination which resulted in massive financial losses to the cooperative. Applying Article 282, her dismissal is only
committed. proper.

Respondent's Arguments Respondent cannot pretend to ignore the clear mandate of BA Nos. 28 and 55 and justify her actions in releasing the loan
proceeds to borrowers by claiming that she had no choice but to release the loan proceeds after the SIL loan applications
In her Comment,33 respondent counters that the Petition fails to present any cogent argument that warrants reversal of were evaluated and approved by the loan investigator, the Credit Committee, and the General Manager. These officers
the assailed CA dispositions; that on the contrary, the CA correctly upheld her rights to security of tenure and due were themselves bound to abide by BA Nos. 28 and 55 - they, just as respondent, are subordinate to the TAMPCO BOD.
process; that there was no valid cause to dismiss her; that as Cashier, she had no power to approve SIL applications, but Pursuant to the Philippine Cooperative Code of 2008, or Republic Act No. 9520, TAMPCO's BOD is entrusted with the
only release the loan amounts after the applications are evaluated and approved by the Credit Manager, and under the management of the affairs of the cooperative (Article 5 [3]); the direction and management of the cooperative's affairs
supervision of the Finance Manager; and that the respective decisions of the CA and the Labor Arbiter are correct on all shall be vested in the said board (Article 37); and it shall be responsible for the strategic planning, direction-setting and
points and must be upheld. policy-formulation activities of the cooperative (Article 38).

Our Ruling Just the same, respondent could have simply refused to release the loan proceeds even if the loan applications were duly
approved. Had she done so, she would have been excluded from the indictments. She would have continued with her
The Court grants the Petition. employment. In this regard, the CA erred completely in declaring that only the Loan Officers, as well as the Credit,
Finance, and General Managers are primarily responsible since only they exercised discretion over SIL applications, and
Under Article 282 of the Labor Code, the employer may terminate the services of its employee for the latter's serious respondent had no choice but to perfunctorily release the loan proceeds upon approval of the applications.
misconduct or willful disobedience of its or its representative's lawful orders. And for willful disobedience to constitute a
ground, it is required that: "(a) the conduct of the employee must be willful or intentional; and (b) the order the The Court likewise finds that in dismissing respondent, petitioners observed the requirements of due process. An
employee violated must have been reasonable, lawful, made known to the employee, and must pertain to the duties that investigation was conducted by a fact-finding committee; respondent and her colleagues were summoned and required
he had been engaged to discharge. Willfulness must be attended by a wrongful and perverse mental attitude rendering to explain - and they did; respondent submitted an October 21, 2004 letter acknowledging and confessing her
the employee's act inconsistent with proper subordination, hi any case, the conduct of the employee that is a valid ground wrongdoing - that despite BA No. 55, she and her colleagues continued to approve and release SILs. After the
for dismissal under the Labor Code constitutes harmful behavior against the business interest or person of his employer. investigation proceedings, the committee prepared a detailed Report of its findings and containing a recommendation to
It is implied that in every act of willful disobedience, the erring employee obtains undue advantage detrimental to the suspend the respondent, require her to restore the amounts she wrongly disbursed - by collecting the credits herself, and
business interest of the employer."34 in the event of failure to restore the said amounts, she would be dismissed from the service. The Report was approved
and adopted by the cooperative's BOD, which resolved to suspend respondent from November 8 until December 31,
The persistent refusal of the employee to obey the employer's lawful order amounts to willful disobedience.35 Indeed, 2004 and ordered her to collect, within the said period, the unauthorized SIL releases she made; otherwise, she would be
"[o]ne of the fundamental duties of an employee is to obey all reasonable rules, orders and instructions of the employer. terminated from employment. When respondent failed to restore the amounts in question, the BOD ordered her
Disobedience, to be a just cause for termination, must be willful or intentional, willfulness being characterized by a dismissal from employment. Respondent was informed of her dismissal in a February 1, 2005 communication addressed
wrongful and perverse mental attitude rendering the employee's act inconsistent with proper subordination. A willful or to her; this is the second of the twin notices required by law. Thus, as to respondent, the cooperative observed the proper
intentional disobedience of such rule, order or instruction justifies dismissal only where such rule, order or instruction is procedure prior to her dismissal.
(1) reasonable and lawful, (2) sufficiently known to the employee, and (3) connected with the duties which the employee In termination proceedings of employees, procedural due process consists of the twin requirements of notice and
has been engaged to discharge."36 hearing. The employer must furnish the employee with two written notices before the termination of employment can be
effected: (1) the first apprises the employee of the particular acts or omissions for which his dismissal is sought; and (2)
As TAMPCO Cashier, respondent was, among her other designated functions and duties, responsible and accountable for the second informs the employee of the employer's decision to dismiss him. x x x39ChanRoblesVirtualawlibrary
all disbursements of cooperative funds and the coordination of delinquency control and collection activities. 37 She was During the proceedings below, respondent questioned the cooperative's decision requiring her to collect the credits from
likewise expected to understand the cooperative's operational procedures, 38 and of course, follow its rules, regulations, Falgui and/or Kotoken, claiming this was illegal and improper. But there is nothing wrong in requiring her to do so; this
and policies. is simply ordering her to restore the amounts she unlawfully released. She may do so in any way she deemed best: either
by paying the amounts from her own funds, or by collecting the same from the borrowers themselves. The cooperative
A year after introducing the SIL program, TAMPCO realized that a considerable amount of the cooperative's loanable could have rephrased its directive to her by simply ordering her to restore the lost amounts. This is pretty much standard
funds was being allocated to SILs, which thus adversely affected its ability to lend under the regular loan program. It procedure in cases of this nature: the accused in malversation cases is required to restore the amount lost, and bank
further discovered that single individual borrowings under the SIL program reached precarious levels, thus placing the tellers or cashiers are told to pay back what the banks lose through their willful or negligent acts.
resources of the cooperative at risk. Thus, in June 2003, the TAMPCO BOD issued BA No. 28, putting a cap on SIL
borrowings at P5 million. In October of the same year, BA No. 55 was issued, completely prohibiting the grant of SILs. There is also nothing irregular in the cooperative's decision to require from respondent and her colleagues the collection
However, despite issuance of BA Nos. 28 and 55, respondent and the other officers of the cooperative including its former or restoration of the amounts that were illegally released, with a threat that in case of failure to do so, they would be
General Manager, continued to approve and release SILs to borrowers, among them Falgui and Kotoken, who received dismissed from employment. Respondent and her colleagues were simply given the opportunity to clear themselves from
millions of pesos in loans in January and December of 2004, and in January 2005. Eventually, Falgui claimed insolvency, the serious infractions they committed; their failure to restore the amounts lost in any manner could not prevent the
and Kotoken failed to pay back her loans. imposition of the ultimate penalty, since their commission of the serious offense has been adequately shown. In fact,
respondent voluntarily confessed her crime. To the mind of the Court, respondent and her colleagues were afforded
The CA failed to consider that in releasing loan proceeds to SIL borrowers like Falgui and Kotoken even after the BOD ample opportunity to clear themselves and thus restore the confidence that was lost, and TAMPCO was not precluded
from testing their resolve. receive the writ, Sheriff Calinawan and respondents still effected a levy on one of petitioner's forklifts, took it
outside the company premises, and deposited it at the municipal hall for safekeeping.11
Finally, while the CA finds that it is unfair for TAMPCO to treat respondent differently from the former General Manager,
who was permitted to retire and collect his benefits in full, the appellate court must nonetheless be reminded that "[t]he Due to the foregoing incidents, petitioner issued a Notice of Offense 12 dated November 18, 2003 to each of the
law protects both the welfare of employees and the prerogatives of management. Courts will not interfere with respondents, requiring them to explain in writing why no disciplinary action should be taken against them.
prerogatives of management on the discipline of employees, as long as they do not violate labor laws, collective Thereafter, or on November 24, 2003, petitioner issued a Notice of Administrative Investigation 13 to each of the
bargaining agreements if any, and general principles of fairness and justice."40 Moreover, management is not precluded respondents, charging them of stealing company property, fraudulent acquisition or release to other persons of
from condoning the infractions of its employees; as with any other legal right, the management prerogative to discipline company property, unauthorized possession/use of company property, unauthorized operation of company
employees and impose punishment may be waived.41 As far as respondent is concerned, the cooperative chose not to equipment, and serious misconduct during official working hours or within company premises. On December 1,
waive its right to discipline and punish her; this is its privilege as the holder of such right. Finally, it cannot be said that 2003, after due investigation, petitioner furnished respondents with a Notice of Dismissal 14 for being found guilty as
respondent was discriminated against or singled out, for among all those indicted, only the former General Manager was charged. This prompted the filing of the instant complaint. 15
accorded leniency; the rest, including respondent, were treated on equal footing. As to why the former General Manager
was allowed to retire, this precisely falls within the realm of management prerogative; what matters, as far as the Court is The LA Ruling
concerned, is that respondent was not singled out and treated unfairly.chanrobleslaw
In a Decision16 dated May 4, 2005, the LA dismissed respondents' complaint for illegal dismissal for lack of merit.
WHEREFORE, the Petition is GRANTED. The assailed September 15, 2011 Decision and July 11, 2012 Resolution of the Nevertheless, the LA ordered petitioner to pay respondents their unpaid salary for November 16 to December 1,
Court of Appeals in CA-G.R. SP No. 114753 are REVERSED and SET ASIDE. The November 25, 2009 Decision of the 2003, 13th month pay, off-milling bonus, Social Amelioration Bonus, and unused vacation/sick leave in the aggregate
National Labor Relations Commission in NLRC CA-No. 050848-06 (RA-06-09) is REINSTATED and AFFIRMED. amount of P175,577.50, broken down as follows: Ablay - P28,940.00; Cadayuna - P32,737.50; Clavecillas -
P26,460.00; Villavicencio - P26,460.00; Cacas -P28,165.00; and Blaza - P32,815.00.17
SO ORDERED.cralawlawlibrary
The LA found that respondents' participation in the execution of the writ by Sheriff Calinawan, while legal, was
xxxiv. Reinstatement without backwages (Universal Robina Sugar Milling Corporation vs. Ablay, tainted with arrogance and lawlessness, considering that the same was effected with the use of force and
G.R. No. 218172, March 16, 2016) intimidation. The LA highlighted the fact that their act of assisting Sheriff Calinawan in an intimidating mob-like
manner to divest the company of its property was inimical to the interest of petitioner company. 18
FIRST DIVISION Aggrieved, both parties appealed19 to the NLRC.

G.R. No. 218172, March 16, 2016 The NLRC Ruling

UNIVERSAL ROBINA SUGAR MILLING CORPORATION, Petitioner, v. ELMER ABLAY, ILDEFONSO CLAVECILLAS,
STANLEY BLAZA, VINCENT VILLAVICENCIO, ROBERTO CACAS, AND ELSA CADAYUNA, IN BEHALF OF HER In a Decision20 dated April 26, 2006, the NLRC affirmed the LA ruling with modification, reducing the monetary
DECEASED HUSBAND, ELEAZAR CADAYUNA, Respondents. awards in favor of respondents to P124,635.25, broken down as follows: Ablay - P25,662.81; Cadayuna -
DECISION P25,035.80; Clavecillas - P16,453.93; Villavicencio - P17,689.14; Cacas - P22,588.37; and Blaza - P17,205.20.21
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the Decision2 dated June 28, 2013 and the Amended Decision3 The NLRC agreed with the LA that the manner in which respondents assisted in the execution of the writ was
dated April 30, 2015 of the Court of Appeals (CA) in CA-G.R. SP No. 02078, which reversed and set aside the arrogant and unlawful and, thus, deemed the legality of their termination as valid. In this relation, it reduced the
Decision4 dated April 26, 2006 and the Resolution5 dated May 30, 2006 of the National Labor Relations Commission monetary awards in favor of the respondents, finding lack of basis to grant respondents' off-milling bonus for their
(NLRC) in NLRC Case No. V-000593-05 and, accordingly, declared respondents Elmer Ablay (Ablay), Ildefonso failure to work during the milling season, aside from the fact that respondents' award of money claims was subject
Clavecillas (Clavecillas), Stanley Blaza (Blaza), Vincent Villavicencio (Villavicencio), Roberto Cacas (Cacas), and to deductions, i.e., withholding taxes and legal obligations.22
Eleazar Cadayuna6 (Cadayuna; collectively, respondents) to have been illegally dismissed by petitioner Universal
Robina Sugar Milling Corporation (petitioner). As such, respondents are entitled to reinstatement - except for Ablay Dissatisfied, both parties moved for reconsideration, 23 but the same were denied in a Resolution24 dated May 30,
who is awarded separation pay in lieu of reinstatement - and backwages. 2006. Undaunted, respondents filed a petition for certiorari25 before the CA.
The Facts
The CA Ruling
The instant case arose from a complaint7 dated June 1, 2004 for illegal dismissal, unfair labor practice, and recovery
of damages filed by respondents, members of the Nagkahiusang Mamumuo sa Ursumco-National Federation of In a Decision26 dated June 28, 2013, the CA reversed and set aside the NLRC ruling by declaring respondents to have
Labor (the Union), against petitioner before the Sub-Regional Arbitration Branch No. VII, Dumaguete City of the been illegally dismissed by petitioner. Accordingly, petitioner was ordered to reinstate respondents and pay them
NLRC. Respondents alleged that sometime in 1997, the Union filed a complaint against petitioner for non- backwages, unpaid salaries, 13th month pay, unused leave pay, and social amelioration pay.27 While the CA agrees
compliance with Wage Order No. 3 issued by the Regional Tripartite Wages and Productivity Board before the with the finding that respondents violated company rules in the manner by which they assisted Sheriff Calinawan in
Department of Labor and Employment (DOLE).8 After due proceedings, the DOLE found petitioner liable to the enforcing the writ of execution, it ruled that dismissal is too severe a penalty for the infraction. Finding that: (a)
members of the Union in the total amount of P210,217.54 and, consequently, issued a Writ of Execution to enforce respondent's act of bringing the forklift out of the company premises was not tantamount to robbery or theft as
the said ruling.9 On September 11, 2003, DOLE Sheriff Ignacio Calinawan (Sheriff Calinawan) went to petitioner's they did not do so with intent to gain, but were merely motivated by their strong desire to collect what is due them
premises to serve the writ to petitioner's Personnel Manager, Jocelyn Teo (Teo), but the latter refused to comply by as a matter of right; (b) they were mere equipment operators, technicians, and electricians, and thus, not occupying
reason of petitioner's pending appeal before the Secretary of Labor.10 Two (2) months later, or on November 12, managerial nor confidential positions; and (c) it was their first offense in their 14-15 years of service, the CA
2003, Sheriff Calinawan went back to petitioner's premises in another attempt to serve the writ of execution, this concluded that the penalty of suspension would have sufficed as a penalty. 28
time, seeking the help of the Union Officers, including respondents, in its enforcement. Despite Teo's refusal to
Dissatisfied, petitioner moved for reconsideration,29 insisting that respondents' act of wresting possession of
company property constitutes a serious infraction which warrants their dismissal. Moreover, petitioner brought to In this case, the following facts are undisputed: (a) the Union, which the respondents are members of, filed a case
the CA's attention Ablay's conviction as an accomplice in the murder of one of its former assistant managers. In view for violation of labor standards against petitioner before the DOLE;35 (b) after due proceedings, the DOLE ruled in
of this, petitioner contended that the relationship between it and Ablay has already been strained and, as such, he favor of the Union and awarded its members the aggregate amount of P210,217.54, and accordingly, a writ of
should neither be reinstated nor granted separation pay and backwages. 30 execution was issued in the Union's favor;36 (c) Sheriff Calinawan failed in his first attempt to enforce the writ of
execution as Teo refused to receive a copy of the same;37 (d) on Sheriff Calinawan's second attempt to enforce the
In an Amended Decision31 dated April 30, 2015, the CA partially granted petitioner's motion by modifying its earlier writ of execution, he sought the assistance of Union members, including respondents, and insisted that Teo comply
ruling, but only insofar as the reinstatement of Ablay is concerned. The CA agreed that Ablay's conviction as an with said writ, but the latter still refused;38 (e) despite Teo's refusal, Sheriff Calinawan and the respondents effected
accomplice to the murder of one of its former assistant managers strained the relationship between him and a levy on one of petitioner's forklifts, took it outside the company premises, and deposited it at the municipal hall
petitioner, and, as such, he should no longer be reinstated to his former position. Nevertheless, the CA pointed out for safekeeping;39 and (f) the taking of the forklift was without authority from petitioner or any of its
that since Ablay's conviction stemmed from a cause entirely different from his participation in the enforcement of officers.40cralawred
the writ of execution, he should still receive the benefits accorded to him by law prior to such conviction, i.e.,
separation pay, backwages, and other benefits.32 Clearly, respondents committed some form of misconduct when they assisted Sheriff Calinawan in effecting the levy
on the forklift and depositing the same to the municipal hall for safekeeping as they operated the forklift and took it
Hence, this petition. out of company premises, all without the authority and consent from petitioner or any of its officers. However, as
correctly pointed out by the CA, respondents did not perform the said acts with intent to gain or with wrongful
The Issues Before the Court intent. Rather, they were impelled by their belief - albeit misplaced - that they were merely facilitating the
enforcement of a favorable decision in a labor standards case in order to finally collect what is due them as a matter
The issues raised for the Court's resolution are whether or not the CA correctly ruled that: (a) respondents were of right, which is the balance of their unpaid benefits. In light of the foregoing, the Court upholds the right of
illegally dismissed as the penalty of suspension would have sufficed; and (b) Ablay is entitled to his benefits prior to petitioner to take the appropriate disciplinary action against respondents, but nevertheless, holds that respondents
his conviction, i.e., separation pay, backwages, and other benefits. should not have been dismissed from service as a less punitive sanction, i.e., suspension, would have sufficed. In
Philippine Long Distance Company v. Teves,41 the Court stressed that while it is the prerogative of the management to
discipline its employees, it should not be indiscriminate in imposing the ultimate penalty of dismissal as it not only
The Court's Ruling
affect the employee concerned, but also those who depend on his livelihood, viz.:
chanRoblesvirtualLawlibrary
The petition is partly meritorious.
While management has the prerogative to discipline its employees and to impose appropriate penalties
Article 297 (formerly Article 282) of the Labor Code, 33 which includes the ground of serious misconduct, provides on erring workers, pursuant to company rules and regulations, however, such management prerogatives
for the just causes where the employee may be validly terminated from employment. It reads in full: must be exercised in good faith for the advancement of the employer's interest and not for the purpose of
chanRoblesvirtualLawlibrary defeating or circumventing the rights of the employees under special laws and valid agreements. The
Court is wont to reiterate that while an employer has its own interest to protect, and pursuant
Article 297 [282]. Termination by Employer. - An employer may terminate an employment for any of the
thereto, it may terminate an employee for a just cause, such prerogative to dismiss or lay off an
following causes:
employee must be exercised without abuse of discretion. Its implementation should be tempered
with compassion and understanding. The employer should bear in mind that, in the execution of said
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his
prerogative, what is at stake is not only the employee's position, but his very livelihood, his very
employer or representative in connection with his work;
breadbasket.
(b) Gross and habitual neglect by the employee of his duties;
Dismissal is the ultimate penalty that can be meted to an employee. Even where a worker has
committed an infraction, a penalty less punitive may suffice, whatever missteps maybe committed
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly
by labor ought not to be visited with a consequence so severe. This is not only the laws concern for
authorized representative;
the workingman. There is, in addition, his or her family to consider. Unemployment brings untold
hardships and sorrows upon those dependent on the wage-earner.42 (Emphases and underscoring
(d) Commission of a crime or offense by the employee against the person of his employer or any supplied)
immediate member of his family or his duly authorized representatives; and
Further, considering the fact that respondents were mere equipment operators, technicians, and electricians, and
(e) Other causes analogous to the foregoing. (Emphasis and underscoring supplied) thus, not occupying managerial nor confidential positions, and that the incident concerning the forklift was only
their first offense in their 14-15 years of service, the Court agrees with the CA that they should have only been
Misconduct is defined as an improper or wrong conduct. It is a transgression of some established and definite rule
meted a penalty that is less severe than dismissal, i.e., suspension. Hence, respondents could not be validly
of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error
dismissed by petitioner.43
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
As a general rule, an illegally dismissed employee is entitled to reinstatement (or separation pay, if reinstatement is
trivial or unimportant. Additionally, the misconduct must be related to the performance of the employee's duties
not viable) and payment of full backwages. In certain cases, however, the Court has carved out an exception to the
showing him to be unfit to continue working for the employer. Further, and equally important and required, the act
foregoing rule and thereby ordered the reinstatement of the employee without backwages on account of the
or conduct must have been performed with wrongful intent. In other words, for serious misconduct to be a just
following: (a) the fact that the dismissal of the employee would be too harsh a penalty; and (b) that the employer
cause for dismissal, the concurrence of the following elements is required: (a) the misconduct must be serious; (b) it
was in good faith in terminating the employee.44 The application of such exception was thoroughly discussed in the
must relate to the performance of the employee's duties showing that the employee has become unfit to continue
case of Pepsi-Cola Products Philippines, Inc. v. Molon,45 to wit:
working for the employer; and (c) it must have been performed with wrongful intent. 34
chanRoblesvirtualLawlibrary
An illegally dismissed employee is entitled to either reinstatement, if viable, or separation pay if Delfin A. Mina (Mina) to have been constructively dismissed by petitioner Divine Word College of Laoag (DWCL)
reinstatement is no longer viable, and backwages. In certain cases, however, the Court has ordered and awarding him backwages, damages and attorney's fees.
the reinstatement of the employee without backwages considering the fact that (1) the dismissal
of the employee would be too harsh a penalty; and (2) the employer was in good faith in
Antecedent Facts
terminating the employee. For instance, in the case of Cruz v. Minister of Labor and Employment the
Court ruled as follows:
chanRoblesvirtualLawlibrary DWCL is a non-stock educational institution offering catholic education to the public. It is run by the Society of
Divine Word (SVD), a congregation of Catholic priests that maintains several other member educational institutions
The Court is convinced that petitioner's guilt was substantially established. Nevertheless, we
throughout the country.4
agree with respondent Minister's order of reinstating petitioner without backwages
instead of dismissal which may be too drastic. Denial of backwages would sufficiently
penalize her for her infractions. The bank officials acted in good faith. They should be On July 1, 1969, the Society of Divine Word Educational Association (DWEA) established a Retirement Plan to
exempt from the burden of paying backwages. The good faith of the employer, when provide retirement benefits for qualified employees of DWEA’s member institutions, offices and congregations.5
clear under the circumstances, may preclude or diminish recovery of backwages. Only The DWEA Retirement Plan6 contains a clause about the portability of benefits, to wit:
employees discriminately dismissed are entitled to backpay. x x x
Likewise, in the case of Itogon-Suyoc Mines, Inc. v. National Labor Relations Commission, the Court When a member who resigns or is separated from employment from one Participating Employer and who is
pronounced that "[t]he ends of social and compassionate justice would therefore be served if employed by another Participating Employer, the member will carry the credit he earned under his former
private respondent is reinstated but without backwages in view of petitioner's good faith." 46 Participating Employer to his new Employer and the length of service in both will be taken into consideration in
(Emphasis and underscoring supplied) determining his total years of continuous service on the following conditions:
To reiterate, respondents were indeed guilty of some form of misconduct and, as such, petitioner was justified in
exercising disciplinary action against them. Absent any evidence to the contrary, petitioner's resort to disciplinary a. The transfer is approved by both the Participating Employer whose service he is leaving and the new
proceedings should be presumed to have been done in good faith.47 Thus, perceiving that petitioner had ample Participating Employer;
ground to proceed with its disciplinary action against respondents, and that the disciplinary proceedings appear to
have been conducted in good faith, the Court finds it proper to apply the exception to the rule on backwages, and b. The Retirement Board is notified of the transfer; and
consequently, direct the deletion of backwages in favor of respondents.48

Finally, the CA correctly observed that Ablay's conviction as an accomplice to the murder of petitioner's former c. The member is employed by another Participating Employer on the next working day after his resignation.7
assistant manager had strained the relationship between Ablay and petitioner. Hence, Ablay should not be
reinstated in the company and, instead, be paid separation pay, as reinstatement would only create an atmosphere Mina was first employed in 1971 as a high school teacher, and later on a high school principal, at the Academy of St.
of antipathy and antagonism would be generated as to adversely affect his efficiency and productivity.49 In this Joseph (ASJ), a school run by the SVD. On June 1, 1979, he transferred to DWCL and was accorded a permanent
relation, it should be clarified that said strained relation should not affect the grant of benefits in his favor prior to status after a year of probationary status.8 He was subsequently transferred in 2002 to DWCL’s college department
his conviction, as the latter pertains to an offense entirely separate and distinct from the acts constituting as an Associate Professor III. Thereafter, on June 1, 2003, Mina was assigned as the College Laboratory Custodian of
petitioner's charges against him in the case at bar, i.e., taking of the company equipment without authority. the School of Nursing and was divested of his teaching load, effective June 1, 2003 until May 31, 2004, subject to
Petitioner's payment of separation pay to Ablay in lieu of his reinstatement is therefore warranted.chanrobleslaw automatic termination and without need for any further notification.9 He was the only one among several teachers
transferred to the college department who was divested of teaching load.10
WHEREFORE, the petition is PARTLY GRANTED. The Decision dated June 28, 2013 and the Amended Decision
dated April 30, 2015 of the Court of Appeals in CA-G.R. SP No. 02078 are hereby MODIFIED, directing the
DELETION of the award of backwages in favor of respondents Elmer Ablay, Ildefonso Clavecillas, Stanley Blaza, In early June 2004, Mina was offered early retirement by Professor Noreen dela Rosa, Officer-in-Charge of DWCL’s
Vincent Villavicencio, Roberto Cacas, and Eleazar Cadayuna. The rest of the decision STANDS. School of Nursing. He initially declined the offer because of his family’s dependence on him for support. He later
received a Memorandum11 dated July 27, 2004 from the Office of the Dean enumerating specific acts of gross or
habitual negligence, insubordination, and reporting for work under the influence of alcohol. He answered the
allegations against him;12 sensing, however, that it was
xxxv. Transfer that amounted to constructive dismissal (Divine World College of Laoag vs. Mina,
G.R. No. 195155, April 13, 2016) pointless to continue employment with DWCL, he requested that his retirement date be adjusted to September
THIRD DIVISION 2004 to enable him to avail of the 25-year benefits. He also requested for the inclusion of his eight years of service
April 13, 2016 in ASJ, to make his total years of service to 33 years pursuant to the portability clause of the retirement plan, which
G.R. No. 195155 was denied by DWCL. Instead, he was paid ₱275,513.10 as retirement pay.13 It was made to appear that his
DIVINE WORD COLLEGE OF LAOAG, Petitioner, services were terminated by reason of redundancy to avoid any tax implications. Mina was also made to sign a deed
vs. of waiver and quitclaim14 stating that he no longer has any claim against DWCL with respect to any matter arising
SHIRLEY B. MINA, as heir-substitute of the late DELFIN A. MINA, Respondent. from his employment in the school.15
DECISION
REYES, J.:
Assailed in this petition for review1 under Rule 45 of the Rules of Court is the Decision2 dated July 19, 2010 and On September 21, 2004, he filed a case for illegal dismissal and recovery of separation pay and other monetary
Resolution3 dated January 13, 2011 of the Court of Appeals (CA) in CA-G.R. SP No. 107749 declaring respondent claims.16 Pending resolution of his case, Mina passed away on June 18, 2005.17
 Ruling of the Labor Arbiter The NLRC ruled that Mina was constructively dismissed when he was appointed as College Laboratory Custodian
and divested of his teaching load without any justification.22 It also ruled that Mina was not deemed to have waived
all his claims against DWCL as quitclaims cannot bar employees from demanding benefits to which they are legally
On August 26, 2005, the Labor Arbiter (LA) rendered its Decision,18 ruling that the actuation of DWCL is not
entitled.23 The NLRC, however, disregarded Mina’s eight years of service in ASJ in the computation of his
constitutive of constructive dismissal. The LA ratiocinated, however, that the computation of Mina’s retirement pay
retirement pay because of his failure to show compliance with the portability provision.24 The dispositive portion
based on redundancy is illegal; hence, it was modified, and the number of years he worked for ASJ was added to the
of the NLRC
years he worked for DWCL thus making his creditable number of years of service to 33 years. According to the LA,
his length of service in both institutions will be taken into consideration in determining his total years of continuous
service since the DWEA Retirement Plan has a provision on portability, which allows a member to carry the earned Decision dated July 10, 2008 provided:
credit for his number of years of service from his former participating employer to his new employer. Moreover, the
LA held that there is no showing that Mina ceased to be a member of the plan when he left the ASJ as there was not a
WHEREFORE, We grant in partly [sic] the appeals of both [Mina] and [DWCL]. The decision dated August 26, 200[5]
day that he was separated from any school that is the member of the plan. The LA’s computation of Mina’s
is hereby modified to delete the order adding the length of service rendered by [Mina] to the [ASJ] in the
retirement benefits is as follows:
computation of the latter’s retirement pay from the former. Accordingly, [DWCL] is held liable to pay [Mina] full
backwages and separation pay, in lieu of reinstatement and to his full compulsory retirement pay, less the
Monthly salary: P13,006.23 amount already received by him representing his optional retirement.
Date hired: June 1971
Years in service: 33 years SO ORDERED.25 (Emphasis ours)
Birth day: 24 December 1950
DWCL sought reconsideration of the NLRC decision but it was denied in a Resolution26 dated November 28, 2008.
Monthly pay/26.22 x 22.2 x 33 years x 100%
DWCL thus filed a petition for certiorari before the CA, seeking to reverse and set aside the NLRC decision and
P13,006.23/26.23 x 22.2 [x] 33 years x 100% = P363,400.29
resolution.27 DWCL primarily asserted that the NLRC committed grave abuse of discretion in holding that Mina was
Less: Severance benefits received: = P275,513.10 constructively dismissed from work, in holding DWCL liable for moral and exemplary damages, and in ordering the
Deficiency = P 87,887.1919 payment of separation pay as well as retirement pay computed up to the age of 60.28

The LA disposed thus: Ruling of the CA

IN VIEW THEREOF, judgment is hereby rendered with the following dispositions: On July 19, 2010, the CA rendered the assailed Decision, denying the petition but modifying the award. It sustained
the NLRC’s ruling that Mina was indeed constructively dismissed from work. The CA also held that Mina is entitled
to receive backwages, to be computed from the time of hiring on June 1, 1979 until the time of his death on June 18,
1. Finding that [Mina] was underpaid in his retirement benefits pursuant to the DWEA Retirement Plan. 2005, as he was constructively dismissed from work, as follows:
Consequently, [DWCL] must pay the deficiency in his retirement benefits in the amount of P87,887.19.

Monthly Salary Php 13, 006.23

2. Finding that the respondents were harsh on him. Consequently, the DWCL must be adjudged to pay him P50,000 x 26 (1 June 1979 - 18 June 2005)
as moral damages and P50,000 as exemplary damages.
Backwages Php 338,161.9829

3. That his claims for additional separation pay for his future services are denied.
The dispositive portion of the CA decision provided:
4. [DWCL] must pay [Mina] 10% of the total award as attorney’s fees for his having been forced to litigate to protect
his rights as an employee. WHEREFORE, the petition is DENIED, granting to [Mina] substituted by his heirs in addition to the full retirement
benefits at Php275,513.10, the following:
SO ORDERED.20
1. backwages in the amount of Php 338,161.98;
Both DWCL and Mina appealed to the National Labor Relations Commission (NLRC), with DWCL mainly questioning
the LA’s decision making Mina’s creditable years of service 33 years, and awarding moral and exemplary 2. moral and exemplary damages at Php50,000.00; and
damages.21
3. attorney’s fees at ten percent (10%) of the amount due herein.
Ruling of the NLRC
SO ORDERED.30
DWCL’s motion for reconsideration was denied by the CA in its Resolution31 dated January 13, 2011. laboratory custodian, which is a clear relegation from his previous position. Not only that. He was also divested of
his teaching load. His appointment even became contractual in nature and was subject to automatic termination
after one year "without any further notification."44 Aside from this, Mina was the only one among the high school
Hence, the present petition, anchored on the following grounds:
teachers transferred to the college department who was divested of teaching load. More importantly, DWCL failed
to show any reason for Mina’s transfer and that it was not unreasonable, inconvenient, or prejudicial to him.45
I.
Also, the CA correctly ruled that Mina’s appointment as laboratory custodian was a demotion. There is demotion
The Honorable [CA] erred in upholding [NLRC’s] findings that [Mina] was constructively dismissed. when an employee occupying a highly technical position requiring the use of one’s mental faculty is transferred to
another position, where the employee performed mere mechanical work – virtually a transfer from a position of
dignity to a servile or menial job. The assessment whether Mina’s transfer amounted to a demotion must be done in
II.
relation to his previous position, that is, from an associate college professor, he was made a keeper and inventory-
taker of laboratory materials. Clearly, Mina’s new duties as laboratory custodian were merely perfunctory and a far
The Honorable [CA] erred in holding [DWCL] liable for moral and exemplary damages and attorney’s cry from his previous teaching job, which involved the use of his mental faculties. And while there was no proof
fees. adduced showing that his salaries and benefits were diminished, there was clearly a demotion in rank. As was
stated in Blue Dairy Corporation v. NLRC,46 "[i]t was virtually a transfer from a position of dignity to a servile or
menial job."47
III.

Given the finding of constructive dismissal, Mina, therefore, is entitled to reinstatement without loss of seniority
Even assuming, without admitting that [Mina] was constructively dismissed, the Honorable [CA] erred in
rights, and payment of backwages computed from the time compensation was withheld up to the date of actual
ordering the payment of his backwages "computed from the time of hiring, 1 June 1979 until the time of
reinstatement.48 The Court notes that aside from full compulsory retirement pay, the NLRC awarded full
his death 18 June 2005."
backwages and separation pay, in lieu of reinstatement.49 The CA, however, computed the amount to be awarded as
backwages from the time of Mina’s hiring on June 1, 1979 until the time of his death on June 18, 2005, apparently
IV. interchanging backwages and separation pay.50 Aside from this, the CA omitted to include a separate award of
separation pay.
Even assuming, without admitting, that [Mina] was constructively dismissed, the Honorable [CA] has no
legal basis in awarding him full retirement benefits since it invalidated Mina’s retirement for which the The Court has repeatedly stressed that the basis for the payment of backwages is different from that of the award of
retirement benefits were given to him.32 separation pay. "The basis for computing separation pay is usually the length of the employee’s past service, while
that for backwages is the actual period when the employee was unlawfully prevented from working."51 Thus,
the Court explained in Bani Rural Bank, Inc. v. De Guzman52 that:
Ruling of the Court

[U]nder Article 279 of the Labor Code and as held in a catena of cases, an employee who is dismissed without just
In a petition for review on certiorari under Rule 45, only questions of law may be raised. The raison d’être is that the
cause and without due process is entitled to backwages and reinstatement or payment of separation pay in lieu
Court is not a trier of facts.33 The rule, however, admits of certain exceptions, such as when the factual findings of
thereof:
the LA differ from those of the NLRC, as in the instant case, which opens the door to a review by this Court.34

xxxx
The Constitution35 and the Labor Code36 mandate that employees be accorded security of tenure. The right of
employees to security of tenure, however, does not give the employees vested rights to their positions to the extent
of depriving management of its prerogative to change their assignments or to transfer them.37 In cases of transfer The normal consequences of respondents’ illegal dismissal, then, are reinstatement without loss of seniority rights,
of an employee, the employer is charged with the burden of proving that its conduct and action are for valid and and payment of backwages computed from the time compensation was withheld up to the date of actual
legitimate grounds such as genuine business necessity and that the transfer is not unreasonable, inconvenient or reinstatement. Where reinstatement is no longer viable as an option, separation pay equivalent to one (1) month
prejudicial to the employee.38 If the employer cannot overcome this burden of proof, the employee’s transfer shall salary for every year of service should be awarded as an alternative. The payment of separation pay is in addition to
be tantamount to unlawful constructive dismissal.39 payment of backwages.53 (Emphasis and underscoring deleted, and italics ours)

Constructive dismissal is a dismissal in disguise.40 There is cessation of work in constructive dismissal because Thus, the computation of Mina’s backwages should be from the time he was constructively dismissed on June 1,
‘"continued employment is rendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank 2003.
or a diminution in pay’ and other benefits."41 To be considered as such, an act must be a display of utter
discrimination or insensibility on the part of the employer so intense that it becomes unbearable for the employee
Aside from the foregoing, the CA should have also awarded separation pay since reinstatement is no longer viable
to continue with his employment.42 The law recognizes and resolves this situation in favor of employees in order to
due to Mina’s death in 2005. As stated before, the award of separation pay is distinct from the award of backwages.
protect their rights and interests from the coercive acts of the employer.43
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
In this case, Mina’s transfer clearly amounted to a constructive dismissal. For almost 22 years, he was a high school are earned under existing laws, [Collective Bargaining Agreements], employment contracts and company
teacher enjoying a permanent status in DWCL’s high school department. In 2002, he was appointed as an associate policies."54 Separation pay, on the other hand, is that amount which an employee receives at the time of his
professor at the college department but shortly thereafter, or on June 1, 2003, he was appointed as a college severance from employment, designed to provide the employee with the wherewithal during the period that he is
 looking for another employment.55 In the computation of separation pay, the Court stresses that it should not go effective November 28, 2012, by the restaurant's Human Resource Manager, Henry Revilla. The said Memorandum Order
beyond the date an employee was deemed to have been actually separated from employment, or beyond the reads:
date when reinstatement was rendered impossible.56 The period for the computation of separation pay Mina is
entitled to shall therefore begin to run from June 1, 1979, when he was transferred to DWCL from ASJ, until his "TO: MS. JESSICA VDAMULLOG
death on June 18, 2005, or for a period of 26 years. MR. JERWIN CASIÑO
MR. ROSENDO [LOMBOY]
The award of damages was also justified given the CA and NLRC’s finding that DWCL acted in a manner wherein
Mina was not treated with utmost good faith. The intention of the school to erase him out of employment is too FROM: HUMAN RESOURCE MANAGER
apparent.57 The Court upholds the CA’s finding that when DWCL’s act of unceremoniously demoting and giving
Mina contractual employment for one year and citing him for numerous violations of school regulations when he SUBJECT: MEMORANDUM ORDER
rejected the school’s offer to voluntarily retire is constitutive of bad faith.58
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Lastly, the Court affirms the NLRC’s findings that the eight years of service rendered by Mina in ASJ shall not be You are hereby notified that starting tomorrow, November 28, 2012, a preventive suspension will be imposed indefinitely
included in the computation of his retirement benefits.1âwphi1 No adequate proof is shown that he has complied while investigation is still under going on the case filed to you by the Owner, Mr. Sonny S. Agcolicol, Jr. with [regard] to
with the portability clause of the DWEA Retirement Plan. The employee has the burden of proof to show compliance "Qualified Theft" based on the evidences gathered by under cover agents and questionable documents on the inventory and
with the requirements set forth in retirement plans, being in the nature of privileges granted to employees. Failure delivery reports found out by outside auditing group.
to overcome the burden of proof would necessarily result in the employee’s disqualification to receive the benefits.
Your assigned [tasksf will then [cease] and the Management will assign its own personnel to handle your previous job
WHEREFORE, the Decision dated July 19, 2010 and Resolution dated January 13, 2011 of the Court of Appeals in description.
CA-G.R. SP No. 107749 are MODIFIED in that, in addition to the award of attorney’s fees, and moral and exemplary
damages, petitioner Divine Word College of Laoag is ORDERED to pay Shirley B. Mina, as heir-substitute of the late For your reference and strict guidance!
Delfin Mina, the following:
(signed)
HENRY G. REVILLA
(1) backwages, to be computed from June 1, 2003 until June 18, 2005, or ₱13,006.23 x 24 (months) = ₱312,149.52; Human Resource Manager
and
Cc: MR. SONNY S. AGCOLICOL, JR.
(2) separation pay, to be computed from June 1, 1979 until June 18, 2005, or ₱13,006.23 x 26 (years) = ₱338,161.98. Operations Manager "2
Meanwhile, the criminal complaint for qualified theft was later dismissed for lack of basis.
The monetary awards 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. According to respondent, sometime thereafter, he received a letter-dated January 10, 2013 where he was made to explain
why his services should not be terminated.3 Said letter, in its entirety, reads:
SO ORDERED.
January 10, 2013
xxxvi. Constructive dismissal through preventive suspension (Agcolicol, Jr. vs. Casiño, G.R. No.
217732, June 15, 2016) (PDF) ROSENDO LOMBOY
G.R. No. 217732, June 15, 2016 No. 64 Dominican Hill
EMILIO S. AGCOLICOL, JR., Petitioner, v. JERWIN CASIÑO, Respondent. Baguio City
DECISION
VELASCO JR., J.:
The Case Dear Mr. Lomboy

Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, questioning the Resolution1 of We have not heard from you since November 27, 2012. After you have received the subpoena from the office of the City
the Court of Appeals (CA) dated September 30, 2014 in CA-G.R. SP No. 137026 and its Resolution dated March 26, 2015 Prosecutor on the said date you simply walked out of the establishment and have never reported back to work.
which denied reconsideration. The CA Decision dismissed petitioner Emilio S. Agcolicol, Jr.'s appeal and affirmed the Notwithstanding the case filed against you with the said office of the City Prosecutor of Baguio, we have not dropped you
National Labor Relations Commission's (NLRC) April 30, 2014 Resolution in NLRC Case LAC No. 02-000498-14. from the rolls of employees though you are considered as absent without leave (AWOL).
The Facts
We are giving you three (3) days from receipt hereof to explain in writing why you should not be dropped from the rolls
Respondent Jerwin Casiño (Casiño) was hired by petitioner in 2009 as Stock Custodian and Cook in the latter's Kubong of employees for being AWOL. Likewise[,] please include in your written explanation why [you] should not be terminated
Sawali Restaurant. Upon discovery of theft involving company property where respondent was allegedly a conspirator, a for grave misconduct arising from the pilferages committed. We are adopting the complaint before the City Prosecutor as
criminal complaint for qualified theft against him and his co-employees was filed on November 26, 2012 before the Office the charges against you. Failure on your part to do so shall constrain us to act accordingly.
of the City Prosecutor of Baguio City. Additionally, he and his co-employees were preventively suspended indefinitely
pending investigation. He was informed of the suspension through a Memorandum Order dated November 27, 2012, For your compliance.
 HENRY G. REVILLA WHEREFORE, the instant appeal is hereby PARTIALLY GRANTED. The decision of Labor Arbiter Monroe C. Tabingan
Human Resource Manager dated 10 August 2013 is hereby SET ASIDE and a new one entered dismissing the complaint for illegal dismissal.
However, respondent Kubong Sawali Restaurant is hereby ordered to reinstate complainant to his former position but
cc. MR. SONNY S. AGCOLICOL, Jr. without backwages and to pay the complainant Three Thousand Nine Hundred Twenty (Php3,920.00) representing his
Operations Manager4 salaries and benefits for fourteen (14) days - the period he was placed under illegal suspension. Furthermore, respondent
Kubong Sawali Restaurant is ordered to pay complainant the following amounts as awarded by the labor arbiter:
The letter was clearly addressed only to Lornboy but it appears from respondent's allegations in his complaint that he
considered said letter as a directive for him to give said explanation.5
(1) Salary differentials on account of underpaid wages = Php 2,275.00
On May 17, 2013, respondent filed with the NLRC a complaint for illegal dismissal, illegal suspension, and non-payment
of monetary benefits.6 (2) Service incentive leave pay = Php 4,200.00

For his part, petitioner denies having dismissed respondent, arguing that they were prevented from completing the (3) 13th month pay = Php 18,330.00
investigation because respondent stopped reporting for work after Reynante Camba, his co-employee, was arrested. This,
according to petitioner, prevented him from complying with the twin-notice rule. Nevertheless, petitioner insists, TOTAL = Php 24,805.00
respondent was never dismissed from work notwithstanding the audit team's finding that his participation in the scam
was extensive. Furthermore, petitioner contends that respondent's monetary claims were speculative. All other monetary claims are dismissed for lack of merit.

Meanwhile, respondent's co-employee, Rosendo Lomboy, suspected to be involved in the incident, also filed a separate SO ORDERED.13
complaint against petitioner, allegedly based on the same set of facts, before the NLRC. 7 Petitioner sought a consolidation
of the two cases which motion was granted.
The parties no longer questioned the Decision after petitioner's motion for reconsideration was denied.

Decision of the NLRC First Division

Labor Arbiter's Decision14in Casiño's case
in the Lomboy case
As for Casiño, finding merit in his complaint, the Labor Arbiter also held that Casiño was constructively dismissed and
Despite said consolidation, however, Labor Arbiter Monroe C. Tabingan resolved the case involving Lomboy ahead of that
disposed of the case in this wise:
of respondent Casiño, since it was filed first. In said Decision, the Labor Arbiter ruled in favor of Lomboy, holding that the
latter was illegally dismissed.
WHEREFORE, premises all considered, judgment is hereby rendered ordering respondents Emilio Agcolicol, Jr. and
Later, upon elevation of the case to the NLRC, the NLRC First Division partially granted the appeal and reversed the Labor Kubong Sawali Restaurant jointly and severally liable to pay complainant JERWIN CASIÑO the following:
Arbiter's ruling on the illegality of Lomboy's dismissal.

The NLRC disagreed with the Labor Arbiter's finding that respondent was illegally dismissed. There, the Commission (1) Separation pay of one (1) month pay for every year of service in the amount of P280.00 x 26 days x 4 years
held that Lomboy's services were not terminated and that, as a matter of fact, Lomboy was given the opportunity to P29,120.00;
explain his failure to report for work in the January 10, 2013 letter.8 According to the NLRC:
(2) Full backwages from the time he was illegally dismissed up to the finality of the decision, in the amount of
In the instant case, the records would show that [petitioner] did not terminate the services of [Lomboy]. In fact, based on P107,021.10;
the 10 January 2013 letter, respondents gave [Lomboy] an opportunity to explain in writing why he should not be
dropped from the employees' roll for being absent without leave. No termination letter was ever sent to [Lomboy] nor Computation
was there any allegation that he was prevented from reporting back for work. 9
P280.00 x 26 days x 13.5 months = P98,280.00
The NLRC First Division then went on to rule that Lomboy "interpreted the letter of preventive suspension [as]
tantamount to termination to which the Commission does not agree."10 In so ruling, the First Division relied on this 13th Month Pay: P243 x 26 x 13.5/12 = 7,107.75
Court's pronouncement in MZR Industries v. Colambot that "[i]n the absence of any showing of an overt or positive act
proving that petitioners had dismissed respondent, the latter's claim of illegal dismissal cannot be sustained - as the same SILP: P280.00 x 5 days x 1 yr. + 2 months = 1,633.35
would be self-serving, conjectural and of no probative value.11
(3) Salary differentials on account of underpaid wages in the amount of P8,216.00
Thus, according to the NLRC First Division, petitioner's error was that he failed to comply with the provisions of the
Omnibus Rules Implementing the Labor Code, particularly on the 30-day limit in imposing a preventive suspension.12 Computation:
The NLRC accordingly dismissed the complaint for illegal dismissal but affirmed the grant of salary differentials, service
Jan. 1, 2011 -June 17, 2012
incentive leave pay, and 13th month pay, disposing of the case in this manner:

P272.00 - 260 x 26 x 17.5 months = P5,460.00

 cure the illegal dismissal of the complainant arising from his indefinite preventive suspension."18 The NLRC Second
June 18, 2012-Nov. 27, 2012 Division went on to state that petitioner "never directed [respondent] to immediately return to work. If it was actually a
case of [respondent's] absence without leave, [petitioner] should have required [respondent] to report back immediately,
P280.00 - 260 x 26 x 5.3 months = P2,756.00 and failing to do so, then that is the only time that the [petitioner] should have required the [respondent] to explain his
failure to return to work and why he should not be removed from the roll of employees."19
P8,216.00
Because of the alleged conflicting rulings of the two Divisions of the NLRC in the cases of Lomboy and Casiño, petitioner,
(4) Service incentive leave pay in the amount of P280.00 x 5 days x 1 year and 11 months = P2,683.35; via a motion for reconsideration, brought to the NLRC Second Division's attention the ruling of the First Division in the
Lomboy case.
(5) 13th month pay for 2010, 2012 and 2013 in the amount of P 11,700.85; and
Petitioner's motion for reconsideration was, however, denied by the Commission in its July 8, 2014 Resolution. Thus, he
elevated the case to the CA via a Rule 65 Petition.
Computation:
CA Ruling
2010 = P235 x 26 days x 12/12 = P6,110.00
Finding no merit in the petition, the CA affirmed the Labor Arbiter and NLRC's disposition of the constructive dismissal
2012 = P235.00 x 26 x 5.5/12 = 2,800.40 case, holding that: (1) the findings of the Labor Arbiter and the NLRC are supported by substantial evidence; (2) the
Memorandum Order issued by petitioner's human resource manager indeed imposed an indefinite preventive
[2013 = P]243.00x 26x5.3/12= 2,790.45 suspension; (3) this indefinite suspension resulted in Casiño's constructive dismissal; (4) that Casiño was included in the
list of suspended employees, contrary to petitioner's assertion that the memo order, which was addressed to him and his
P11,700.85 co-employee, was only intended for his co-employee since it was not personally served on respondent; (5) anent the
monetary awards, the Labor Arbiter's findings are duly supported by the documentary evidence presented; and (6)
(6) Attorney's fees in the amount of P15,874.13 petitioner failed to attach copies of all relevant and pertinent pleadings and documents to his petition.

The fallo of the assailed Resolution reads:

All other claims are dismissed for lack of merit.
ACCORDINGLY, the petition is DENIED DUE COURSE and DISMISSED for utter lack of merit.
SO ORDERED.15
SO ORDERED.
The Labor Arbiter held that there is no truth to petitioner's defense that respondent abandoned his work thereat since he
was clearly suspended indefinitely following his being charged with the crime of qualified theft which was later proved to His Motion for Reconsideration having been denied,20 petitioner now seeks relief from this Court.
be baseless. Too, petitioner never lifted said suspension and did not reinstate respondent in his job after the dismissal of
the qualified theft case.
Issues

Resolution16 of the NLRC Second With this factual background, petitioner submits the following issues for Our resolution:
Division in Casiño's case

On appeal, the NLRC affirmed the Labor Arbiter's Decision in this manner: I. Whether the CA erred in affirming the Decision of the Second Division of the NLRC and holding that the private
respondent was illegally dismissed;
WHEREFORE, premises considered, the instant Appeal filed by the respondents is hereby DENIED for lack of merit.
II. Whether the CA erred when it did not reconcile the decisions of the First and Second Divisions of the NLRC
The Decision dated January 14, 2014 of Labor Arbiter Monroe C. Tabingan in NLRC RAB Case No. CAR-05-0174-13 is notwithstanding that the said decisions are based on the same set of facts; and
hereby AFFIRMED in toto.
III. Whether the CA and the NLRC erred in not looking beyond the suspension into the cause of the termination
SO ORDERED. after it had held that the suspension was equivalent to illegal dismissal.

Unlike in Lomboy's case, here the NLRC agreed with the Labor Arbiter's finding that Casiño was constructively dismissed.
In so ruling, the NLRC Second Division relied on Pido v. NLRC, et al. where the employee was placed under preventive Petitioner insists that the NLRC made conflicting rulings on exactly the same set of facts, considering that in Lomboy's
suspension for an indefinite period of time pending the investigation of the complaint against him. There, We held that case, it held that Lomboy was not illegally dismissed. He contends that, unlike in the instant case, the 1 st Division of the
the prolonged suspension of the employee, which in said case lasted for nine (9) months before the employee filed the NLRC held that Lomboy's allegation that he was terminated from work was unsubstantiated. He claims that, along with
case for constructive dismissal, owing to the employer's neglect to conclude the investigation, had ripened to Lomboy, Casiño was made to explain his failure to report to work through the January 10, 2013 letter. Furthermore,
constructive dismissal.17 according to him, the theft of company property was sufficient justification for the latter's dismissal, maintaining that an
employer should not be compelled to continue employing a person who is admittedly guilty of misfeasance or
Anent the January 10, 2013 Letter, the NLRC Second Division ruled that it was "more of an afterthought and was meant to malfeasance and whose continued employment is patently inimical to the employer. Lastly, petitioner contends that
assuming that it was indeed constructive dismissal, what he only failed to do was to observe the procedural
requirements of dismissing an employee. On the 30-day limit on the duration of an employee's preventive suspension, We have previously ruled that "when
preventive suspension exceeds the maximum period allowed without reinstating the employee either by actual or payroll
Our Ruling reinstatement or when preventive suspension is for [an] indefinite period, 22 only then will constructive dismissal set
in."23
We resolve to deny the petition.
In Pido, upon which case the NLRC Second Division hinged its ruling in Casiño's case, We considered the employee's
Foremost, while a careful review of the records shows that petitioner, in handling Casiño's case, observed the same "prolonged suspension, owing to [the employer's] neglect to conclude the investigation, had ripened to constructive
procedure used in Lomboy's case where he was exonerated from the illegal dismissal charge, this Court is of the view that dismissal." There, the employee was placed under preventive suspension for an indefinite period of time pending the
the alleged conflict in the NLRC rulings is unnecessary in the resolution of the instant petition. Besides, We cannot fault investigation of a complaint against him. After the imposition of said suspension, however, the employer "merely chose to
the CA for not reconciling the two dispositions considering that res judicata by conelusiveness of judgment is not dawdle with the investigation in absolute disregard of [the employee's] welfare." In that case, the employer did not
applicable in the instant case due to the absence of the element of identity of parties. This is further shown by the fact inform the employee that it was extending its investigation, nor was the latter paid his wages and other benefits after the
that petitioner himself refrained from invoking the principle in arguing that the NLRC ruling in Casiño's case should lapse of the 30-day period of suspension. Neither did the employer issue an order lifting the suspension or any official
follow that in Lomboy's case which already attained finality. communication for the employee to assume his post or another post. Having resulted in the employee's nine (9)-month
preventive suspension, this Court considered such to have ripened into constructive dismissal. 24
Thus, even though We are faced with the absurd situation of two cases having the same set of facts and where the
difference is only on the employee involved, giving rise to two different dispositions from the NLRC, We find it Moreover, in C. Alcantara & Sons, Inc. v. NLRC, We considered the employer's imposition of a preventive suspension
appropriate to simply deal with the issue of whether respondent was indeed constructively dismissed or not considering pending final investigation of the employee's case, coupled with the former's lack of intention to conduct said final
that said matter is the meat of the controversy. Perhaps it is worth mentioning that situations like these can and should investigation, as tantamount to constructive dismissal. 25cralawred
be avoided, especially if the parties did not fall short in informing the quasi-judicial agency or court that a related case is
pending or has been resolved already so as to avoid conflicting rulings or varied appreciation of the same set of facts and In another case, Premiere Development Bank, et al. v. NLRC, We agreed with the NLRC that the employee having been
evidence presented. placed on preventive suspension in excess of the 30-day limit was a predetermined effort of dismissing the latter from
the service in the guise of preventive suspension.26 There, the NLRC found that the prolonged suspension was the result
With that, We now tackle the issue of constructive dismissal through the imposition of an indefinite preventive of the employer's desire to force the employee to submit to an inquiry.
suspension.
Similarly, in Hyatt Taxi Services, Inc. v. Catinoy, this Court held that the employer's actions were tantamount to
An employee is considered to be constructively dismissed from service if an act of clear discrimination, insensibility or constructive dismissal when it failed to recall the employee to work after the expiration of the suspension, taken together
disdain by an employer has become so unbearable to the employee as to leave him or her with no option but to forego with the former's precondition that the employee withdraw the complaints against it. 27 In said case, the employee
with his or her continued employment.21 involved reported for work after the lapse of his suspension but was told that he would not be able to resume his
employment if he will not withdraw the cases that he filed against them.28
From said definition, it can be gathered that various situations, whereby the employee is intentionally placed by the
employer in a situation which will result in the former's being coerced into severing his ties with the latter, can result in In the case at hand, there is no question that what was meted was an indefinite preventive suspension pending
constructive dismissal. One such situation is where an employee is preventively suspended pending investigation for an investigation as clearly stated in the Memorandum Order dated November 27, 2012. This, in itself, is already a clear
indefinite period of time. violation of the proscription against indefinite or prolonged preventive suspensions, making the suspension tantamount
to constructive dismissal as repeatedly held by this Court in a long line of cases.
At this point it is well to note that not all preventive suspensions are tantamount to constructive dismissal. The
employer's right to place an employee under preventive suspension is recognized in Rule XXIII, Implementing Book V of What further strengthens Our finding against petitioner is the fact that after the imposition of the indefinite preventive
the Omnibus Rules Implementing the Labor Code. Section 8 of said Rule provides: suspension on November 28, 2012 and despite the City Prosecutor's dismissal of the case for qualified theft against
respondent on December 28, 2012,29 petitioner never issued a return-to-work order to respondent or any similar
correspondence. The only communication received by respondent after the November 27, 2012 Memorandum Order is
SEC. 8. Preventive suspension. The employer may place the worker concerned under preventive suspension if his
the January 10, 2013 Letter, which letter was addressed to Lomboy.
continued employment poses a serious and imminent threat to the life or property of the employer or of his co-workers.
Additionally, the fact that the Letter was addressed to Lomboy is, to Us, an indication of petitioner's lack of intention to
To be valid, however, not only must the preventive suspension be imposed pursuant to Section 8, it must also follow the obtain an explanation from respondent for his absences. This is so because, obviously, said Letter was intended for
30-day limit exacted under the succeeding Section 9 of the Rule. Thus: Lomboy.

SEC. 9. Period of suspension. No preventive suspension shall last longer than thirty (30) days. The employer shall As in the above-cited cases, petitioner's actuations and omissions after the imposition of the indefinite preventive
thereafter reinstate the worker in his former or in a substantially equivalent position or the employer may extend the suspension, coupled with the contents of the Letter and the circumstances surrounding its issuance, are proof of
period of suspension provided that during the period of extension, he pays the wages and other benefits due to the petitioner's lack of desire to have respondent continue in his employment at Kubong Sawali. It does not cure petitioner's
worker. In such case, the worker shall not be bound to reimburse the amount paid to him during the extension if the violation of the 30-day limit. On the contrary, it strengthens the finding that respondent was indeed constructively
employer decides, alter completion of the healing, to dismiss the worker. dismissed. There is, therefore, no reason for Us to disturb the ruling of the CA affirming that of the NLRC Second Division.

With these, We find no need to tackle the other issues presented.chanrobleslaw

Here, there is no inquiry on the propriety of petitioner's resort to the imposition of a preventive suspension. What is now
in question is the fact that respondent was preventively suspended by petitioner for an indefinite period of time and WHEREFORE, premises considered, the petition is DENIED. The September 30, 2014 and March 26, 2015 Resolutions of
whether the imposition of indefinite preventive suspension is tantamount to constructive dismissal. the Court of Appeals are hereby AFFIRMED.
 xxxvii. Elements of retrenchment (PAL vs. Ligan, G.R. No.203932, June 8, 2016) b) pay respondent BENEDICTO AUXTERO salary differential; backwages from the time of his dismissal until
SPECIAL FIRST DIVISION the finality of this decision; and separation pay, in lieu of reinstatement, equivalent to one (1) month pay for
G.R. No. 203932, June 08, 2016 every year of service until the finality of this decision.
PHILIPPINE AIRLINES, INC., Petitioner, v. ENRIQUE LIGAN, EDUARDO MAGDARAOG, JOLITO OLIVEROS, RICHARD
GONCER, EMELITO SOCO, VIRGILIO P. CAMPOS, JR., LORENZO BUTANAS, RAMEL BERNARDES, NELSON M. DULCE, There being no data from which this Court may determine the monetary liabilities of petitioner, the case is REMANDED
CLEMENTE R. LUMAYNO, ARTHUR M. CAPIN, ALLAN BENTUZAL, AND JEFFREY LLENES, Respondents. to the [LA] solely for that purpose.
RESOLUTION
REYES, J.: SO ORDERED.13 (Emphasis, italics and underscoring in the original)cralawred
This resolves the Motion for Reconsideration1 of the Court's Resolution2 dated November 12, 2012 denying the petition
outright for failure to show reversible error in the Decision3 dated February 15, 2012 and Resolution4 dated September On motion for reconsideration by PAL, the Court on April 30, 2009 modified the above decision, 14 to read as
27, 2012 of the Court of Appeals (CA) in CA-G.R. CEB SP No. 00922, which dismissed the petition for review on certiorari follows:chanRoblesvirtualLawlibrary
of Philippine Airlines, Inc. (PAL) from the Decision5 dated August 27, 2004 and Resolution6 dated April 25, 2005 of the WHEREFORE, the [CA] Decision of September 29, 2000 is AFFIRMED with MODIFICATION.
National Labor Relations Commission (NLRC), 4th Division, Cebu City in NLRC Case No. V-000112-2000.
The Facts [PAL] is ORDERED to recognize respondents ENRIQUE LIGAN, EMELITO SOCO, ALLAN PANQUE, JOLITO OLIVEROS,
RICHARD GONCER, NONILON PILAPIL, AQUILINO YBANEZ, BERNABE SANDOVAL, RUEL GONCER, VIRGILIO P. CAMPOS,
PAL and Synergy Services Corporation (Synergy) entered into a station services agreement and a janitorial services JR., ARTHUR M. CAPIN, RAMEL BERNARDES, LORENZO BUTANAS, BENSON CARISUSA, JEFFREY LLENES, ANTONIO M.
agreement whereby Synergy provided janitors and station attendants to PAL at Mactan airport. Enrique Ligan, Eduardo PAREJA, CLEMENTE R. LUMAYNO, NELSON TAMPUS, ROLANDO TUNACAO, CHERIE ALEGRES, EDUARDO
Magdaraog, Jolito Oliveros, Richard Goncer, Emelito Soco, Virgilio P. Campos, Jr., Lorenzo Butanas, Ramel Bernardes, MAGDADARAUG, NELSON M. DULCE and ALLAN BENTUZAL as its regular employees in their same or substantially
Nelson M. Dulce, Clemente R. Lumayno, Arthur M. Capin, Allan Bentuzal, and Jeffrey Llenes (respondents) were among equivalent positions, and pay the wages and benefits due them as regular employees plus salary differential
the personnel of Synergy posted at PAL to carry out the contracted tasks. Claiming to be performing duties directly corresponding to the difference between the wages and benefits given them and those granted to petitioner's other
desirable and necessary to the business of PAL, the respondents, along with 12 other co-employees, filed complaints in regular employees of the same or substantially equivalent rank, up to June 30. 1998, without prejudice to the resolution
March 1992 against PAL and Synergy in the NLRC Region VII Office in Cebu City for regularization of their status as of the illegal dismissal case.
employees of PAL, underpayment of salaries and non-payment of premium pay for holidays, premium pay for rest days,
service incentive leave pay, 13th month pay and allowances.7ChanRoblesVirtualawlibrary There being no data from which this Court may determine the monetary liabilities of petitioner, the case is REMANDED to
the [LA] solely for that purpose.
In the Decision dated August 29, 1994, the Labor Arbiter (LA) ruled that Synergy was an independent contractor and
dismissed the complaint for regularization, but granted the complainants' money claims. 8 On appeal, the NLRC, 4th SO ORDERED.15 (Emphasis, italics and underscoring in the original)cralawred
Division, Cebu City on January 5, 1996 declared Synergy a labor-only contractor and ordered PAL to accept the
Meanwhile, while the above regularization cases were pending in the CA, PAL terminated its service agreements with
complainants as regular employees and as such, to pay their salaries, allowances and other benefits under the Collective
Synergy effective June 30, 1998, alleging serious business losses. Consequently, Synergy also terminated its employment
Bargaining Agreement subsisting during the period of their employment.9 PAL went to this Court on certiorari, but
contracts with the respondents, who forthwith filed individual complaints 16 for illegal dismissal against PAL. PAL in
pursuant to St. Martin Funeral Home v. NLRC,10 the case was referred to the CA. On September 29, 2000, the CA, in CA-G.R.
turn filed a third-party complaint17 against Synergy.18ChanRoblesVirtualawlibrary
SP No. 52329, affirmed the NLRC in toto.11ChanRoblesVirtualawlibrary
In his Decision19 dated July 27, 1998, Executive LA Reynoso A. Belarmino declared that Synergy was an independent
On petition for review, this Court, on February 29, 2008, affirmed but modified the NLRC decision, 12 as
contractor and the respondents were its regular employees, and therefore Synergy was solely liable for the payment of
follows:chanRoblesvirtualLawlibrary
their separation pay, wage differential, and attorney's fees. In their appeal to the NLRC, docketed as NLRC Case No. V-
WHEREFORE, the [CA] Decision of September 29, 2000 is AFFIRMED with MODIFICATION.
000112-2000, the respondents cited seven previous cases wherein the NLRC also declared that Synergy was a labor-only
contractor. They argued that Synergy and PAL dismissed them without just cause.20ChanRoblesVirtualawlibrary
[PAL] is ORDERED to:
In the Decision21 dated August 27, 2004, the NLRC found that the functions performed by the respondents under
Synergy's service contracts with PAL indicated that they were directly related to PAL's air transport business, that
a) accept respondents ENRIQUE LIGAN, EMELITO SOCO, ALLAN PANQUE, JOLITO OLIVEROS, RICHARD Synergy serviced PAL exclusively and had no other clients, that its activities were carried out within PAL's premises and
GONCER, NONILON PILAPIL, AQUILINO YBANEZ, BERNABE SANDOVAL, RUEL GONCER, VIRGILIO P. CAMPOS, PAL shared supervision and control over the respondents. In declaring that the respondents were regular employees of
JR., ARTHUR M. CAPIN, RAMEL BERNARDES, LORENZO BUTANAS, BENSON CARESUSA, JEFFREY LLENOS, PAL, the NLRC cited a CA case, Philippine Airlines, Inc. v. NLRC, CA-G.R. SP No. 50138, dated April 30, 1999, with similar
ROQUE PILAPIL, ANTONIO M. PAREJA, CLEMENTE R. LUMAYNO, NELSON TAMPUS, ROLANDO TUNACAO, factual findings which also ruled that Synergy was a labor-only contactor and a mere agent of PAL. After ruling that the
CHERRIE ALEGRES, EDUARDO MAGDADARAUG, NELSON M. DULCE and ALLAN BENTUZAL as its regular respondents were dismissed without just cause and without observance of procedural due process, the NLRC ordered
employees in their same or substantially equivalent positions, and pay the wages and benefits due them as PAL to pay them separation pay, backwages, and wage differential. The fallo of NLRC decision
regular employees plus salary differential corresponding to the difference between the wages and benefits reads:chanRoblesvirtualLawlibrary
given them and those granted to petitioner's other regular employees of the same rank; and WHEREFORE, the Decision dated 27 July 1998 of the Executive [LA] is SET ASIDE and a new one is rendered declaring
[PAL] to have illegally dismissed the complainants, and ordering [PAL] to pay to the thirteen (13) complainants the
following:

1. SEPARATION PAY in lieu of reinstatement from the start of their employment until the finality of
this decision, computed as described above;
 2. BACKWAGES from the time compensation is withheld from them until the finality of this decision[; a. Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or
and] representative in connection with his work;

3. Wage differentials of P390.00 for each complainant. b. Gross and habitual neglect by the employee of his duties;

All other claims are dismissed for lack of merit. c. Fraud or willful breach by the employee of the trust reposed in him by his employer or duly
authorized representative;
SO ORDERED.22cralawred
d. Commission of a crime or offense by the employee against the person of his employer or any
PAL moved for reconsideration arguing that as janitors, the respondents were hired under a permissible job-contracting
immediate member of his family or his duly authorized representatives; and
arrangement. In its Resolution dated April 25, 2005 denying the motion for reconsideration,23 the NLRC pointed out that
in fact most of the respondents worked as station attendants or station loaders, not janitors, and that PAL could have
submitted their contracts as janitors, but did not. The NLRC also noted that in all seven previous cases appealed to it e. Other causes analogous to the foregoing.
involving the same parties, it invariably ruled that PAL was the employer of the respondents and Synergy was a labor-
only contractor. According to the CA, PAL failed to show that the respondents were guilty of any of the causes above-mentioned. Neither
was due process observed by PAL in dismissing them, who were merely notified of their termination through a notice
On petition for review on certiorari to the CA, docketed as CA-G.R. CEB SP No.00922,24 PAL's main contention was that sent to them by Synergy, which reads:chanRoblesvirtualLawlibrary
since only this Court's decisions form part of jurisprudence, the NLRC erred in adopting the CA decision in CA-G.R. SP No. PAL has terminated our contract effective June 30, 1998. In view of this contract termination by PAL, our contract with
50138 which held that Synergy was a labor-only contractor, although it was still on review in this Court. employees like you who have been contracted as Station Loader/Station Attendant, will be terminated also on 30 June
1998.
On February 15, 2012, the CA dismissed PAL's petition, 25 and on September 27, 2012, it also denied its motion for
reconsideration.26ChanRoblesVirtualawlibrary Please be guided accordingly.34cralawred
Hence, the instant petition for review on certiorari27 was filed by PAL, raising a sole legal issue, as Moreover, PAL cannot deny that all along it had always known of the ruling in CA-G.R. SP No. 52329, which as PAL itself
follows:chanRoblesvirtualLawlibrary also pointed out, was elevated for review to this Court in G.R. No. 146408. PAL is aware that G.R. No. 146408 was decided
WHETHER OR NOT THE DECISION OF TFIE [NLRC] WHICH WAS ARRIVED AT BY SIMPLY ADOPTING THE SUPPOSED on February 29, 2008, and its motion for reconsideration was resolved on April 30, 2009, whereas the instant petition
"FINDINGS AND CONCLUSION" OF THE [CA] IN A NON-EXISTENT DECISION IS A VALID AND LEGALLY BINDING was filed only on November 6, 2012. As the petitioner in CA-G.R. SP No. 52329, PAL even attached in Annex "E" of this
DECISION.28cralawred petition a copy of the decision in CA-G.R. SP No. 52329.35 PAL has thus always known that the issue therein was whether
Synergy was a labor-only contractor or a legitimate contractor; that the respondents were adjudged as regular
On November 12, 2012, the Court denied the petition outright for failure to show any reversible error committed by the employees of PAL entitled to all the benefits of its regular employees, that Synergy was a labor-only contractor and thus a
CA.29 On January 24, 2013, PAL moved for reconsideration of the denial,30 to which the respondents filed their "Vehement mere agent of PAL.
Opposition with Motion to Sanction the Petitioner for Forum Shopping." 31ChanRoblesVirtualawlibrary
As the petitioner in G.R. No. 146408, PAL certainly cannot pretend ignorance of the Court's decision therein. Moreover,
The motion for reconsideration is denied. on April 28, 2008, the respondents had manifested in CA-G.R. CEB SP No. 00922 that a decision had been rendered in G.R.
No. 146408,36 with a copy thereof attached; on May 26, 2008, PAL itself also manifested that it had filed a motion for
A. reconsideration in G.R. No. 146408, which then prompted the CA to suspend the resolution of CA-G.R. CEB SP No. 00922,
since the regularization cases are intimately connected to the illegal dismissal cases.
In the illegal dismissal cases before the LA, the issue was whether the termination of the respondents' employment by
Synergy in June 1998 was without just cause and observance of due process. In the instant petition, PAL argues in the In Resolution dated April 30, 2009 in G.R. No. 146408, this Court mentioned that PAL had revealed for the first time in its
main that in reversing the LA, the NLRC (in NLRC Case No. V-000112-2000) cited for its factual and legal basis an Motion for Reconsideration the matter of the lay-off of the respondents on June 30, 1998 due to financial woes; 37 that the
inexistent CA decision, docketed as CA-G.R. SP No. 50138. Culling from its own "Compliance" dated April 4, 2006 in CA- respondents likewise disclosed that they were all terminated in June 1998 in the guise of retrenchment. Except for the
G.R. CEB SP No. 00922,32 PAL tells the Court that CA-G.R. SP No. 50138 is actually entitled "Anita Danao, Owner of Wonder employees who had died, they either accepted settlement earlier, or had been declared as employee of
Baker v. NLRC and Eufemio Famis" not "Philippine Airlines, Inc. v. NLRC" as mistakenly mentioned by the NLRC, and that it Synergy.38ChanRoblesVirtualawlibrary
was promulgated on December 31, 1999, not April 30, 1999; that a verification with the CA docket section showed that
another PAL case, CA-G.R. SP No. 50161, is actually dated April 30, 1999 and involved the issue of payment of 13th month The Court further noted that PAL in its motion for reconsideration from the CA's decision in CA-G.R. SP No. 52329 also
pay to PAL employees, but had nothing to do with Synergy or its status as a labor-only contractor; and, that what was invoked its financial difficulties, not by way of defense to a charge of illegal dismissal but to manifest that supervening
actually elevated from the NLRC, 4th Division, to this Court, and then referred to the CA pursuant to St. Martin Funeral events had rendered it impossible to comply with the order to accept the respondents as regular
Home, was CA-G.R. SP No. 52329, decided on September 29, 2000, not CA-G.R. SP No. 50138. employees.39ChanRoblesVirtualawlibrary

In its assailed decision, the CA pointed out that both CA-G.R. SP No. 00922 and CA-G.R. SP No. 52329 involve the same B.
facts and employer, PAL, and the herein respondents were among the complainants in the regularization cases. Noting
that this Court in GR. No. 146408 has ruled that the respondents were regular employees of PAL, the CA ruled that they In G.R. No. 146408, the Court noted that the termination of the respondents in June 1998 was in disregard of a subsisting
cannot be whimsically terminated by PAL but it must show that: (1) their dismissal was for any of the causes authorized temporary restraining order which the Court issued in 1996 to preserve the status quo, before the case was transferred
in Article 282 of the Labor Code; and (2) they were given opportunity to be heard and to defend theirselves.33 Article 282 to the CA in January 1999. The Court also held that PAL failed to establish such economic losses which rendered
of the Labor Code reads:chanRoblesvirtualLawlibrary
ART. 282. Termination by employer. An employer may terminate an employment for any of the following causes:
impossible its compliance with the order to accept the respondent as regular employees. DECISION
Thus:chanRoblesvirtualLawlibrary SERENO, C.J.:
Other than its bare allegations, [PAL] presented nothing to substantiate its impossibility of compliance. In fact, [PAL] This is a Petition1 for Review under Rule 45 of the Rules of Court. The Petition assails the Court of Appeals (CA)
waived this defense by failing to raise it in its Memorandum filed on June 14, 1999 before the [CA]. x x x. 40 (Citation Decision2 dated 17 February 2011 and Resolution3 dated 15 June 2011 in C.A.-G.R. SP No. 02612, nullifying the
omitted)cralawred National Labor Relations Commission (NLRC) Decision4 dated 29 September 2006 and Resolution5 dated 20
December 2006 in NLRC Case No. V-000445-2006. The CA reinstated the labor arbiter's Decision6 dated 16
While retrenchment is a valid exercise of management prerogative, it is well settled that economic losses as a ground for
December 2005 in RAB Case No. VI-04-10274-05.
dismissing an employee is factual in nature, and in order for a retrenchment scheme to be valid, all of the following
elements under Article 283 of the Labor Code must concur or be present, 41 to wit:chanRoblesvirtualLawlibrary
Petitioner argues that the CA committed reversible error in overturning and setting aside the NLRC Decision and
(1) That retrenchment is reasonably necessary and likely to prevent business losses which, if already incurred, are not
Resolution on the sole ground that the supersedeas bond posted was invalid.7 The CA concluded that the bond was
merely de minimis, but substantial, serious, actual and real, or if only expected, are reasonably imminent as perceived
irregular and had no force and effect, because the surety company's authority to transact business as a bonding
objectively and in good faith by the employer;
company refers only to civil cases and does not include labor cases.
(2) That the employer served written notice both to the employees and to the Department of Labor and Employment at
We do not agree with this conclusion.
least one month prior to the intended date of retrenchment;
THE FACTS
(3) That the employer pays the retrenched employees separation pay equivalent to one (1) month pay or at least one-half
Petitioner is a banking institution organized and existing under the laws of the Philippines. 8 Respondent worked for
QA) month pay for every year of service, whichever is higher;
petitioner for seven years in various capacities.9 In 2004, he was assigned to the Bacolod branch as a marketing
officer and was put in command of the loans department.10ChanRoblesVirtualawlibrary
(4) That the employer exercises its prerogative to retrench employees in good faith for the advancement of its interest
and not to defeat or circumvent the employees' right to security of tenure; and,
During a quality assurance review, it was discovered that respondent had allowed a contractual employee to use the
former's user ID for account booking and approval in the bank's Integrated Loans System. 11 The unauthorized
(5) That the employer uses fair and reasonable criteria in ascertaining who would be dismissed and who would be
disclosure of system ID and password was a violation of bank policy.12ChanRoblesVirtualawlibrary
retained among the employees, such as status, efficiency, seniority, physical fitness, age, and financial hardship for
certain workers.cralawred
Respondent admitted that he had disclosed his user ID and password, but only to a Ms. Mary Ann Cacal - a regular
The absence of one element renders the retrenchment scheme an irregular exercise of management prerogative. The employee who had to go on maternity leave.13 He explained that he did so for the continuity of transactions in
employer's obligation to exhaust all other means to avoid further losses without retrenching its employees is a instances when he had to go out of the bank to coordinate with dealers or interview clients. 14 He insisted that he
component of the first element enumerated above. To impart operational meaning to the constitutional policy of was merely following a precedent set by the branch head, Mr. Loubert Sajo. 15ChanRoblesVirtualawlibrary
providing full protection to labor, the employer's prerogative to bring down labor costs by retrenching must be exercised
essentially as a measure of last resort, after less drastic means have been tried and found While the investigation of this matter was pending, the bank discovered another infraction committed by
wanting.42ChanRoblesVirtualawlibrary respondent - the unauthorized issuance of bank certifications.16 The internal audit group found that he, along with
other officers, was involved in lending the account of Spouses Armando and Grace Ong (Sps. Ong) to different
PAL has insisted that the NLRC erroneously relied on an inexistent CA decision, and therefore its decision is void, but the individuals in order to generate bank certifications in favor of the latter.17 Bank policy explicitly stated that "no
CA in its resolution of September 27, 2012 has concluded that "[a] perusal of the Decision of the NLRC shows that it is not account shall be allowed to be opened for certification purposes only."18ChanRoblesVirtualawlibrary
without basis,"43 that the NLRC "made findings of facts, analyzed the legal aspects of the case taking into consideration
the evidence presented and formed conclusions after noting the relevant facts of the case." 44 But more importantly, the As a result of the investigation, it was discovered that a Request for Change was accomplished on 2 June 2004 to
Court cannot lose sight of the settled rule that in illegal dismissal cases, the onus to prove that the employee was not change the account name of Sps. Ong to that of Spouses Orville and Lolita Bautista (Sps. Bautista). The account
dismissed, or if dismissed, that his dismissal was not illegal, rests on the employer, and that its failure to discharge this number remained the same. Respondent was shown to be a signatory to the Certification that there existed a
burden signifies that the dismissal is not justified and therefore illegal.45 Unfortunately, in this petition, PAL has advanced deposit with the bank of a sum of money as of 1 June 2004 in the name of Sps. Bautista. After two days, another
no such justification whatsoever to dismiss or retrench the respondents. The Court is left with no conclusion: PAL's Request for Change was processed to revert the account name to that of Sps. Ong. On 7 June 2004, respondent again
petition is misleading and clearly baseless and dilatory. signed and approved a bank certification in favor of a certain Karen Galoyo using the same account number. 19
Documents showed deficiencies in the signature cards and other requirements for the processing of a request for
WHEREFORE, the motion for reconsideration is DENIED with finality. change of account name.20ChanRoblesVirtualawlibrary

SO ORDERED.chanroblesvirtuallawlibrary On 15 February 2005, an administrative hearing was conducted.21 On 15 March 2005, petitioner served on
respondent a Notice of Termination for grave violation of bank policies, code of conduct, and trust and
confidence.22ChanRoblesVirtualawlibrary
xxxviii. Directive to explain and dismissal in single notice warrants payment of indemnity to On 4 April 2005, respondent filed a Complaint for illegal dismissal.
employees
xxxix. Bond is valid despite the fact that the surety company’s authority to transact business as a
bonding company refers only to civil cases and does not include labor cases. (PHILIPPINE THE RULING OF THE LABOR ARBITER
SAVINGS BANK, Petitioner, vs. MANUEL P. BARRERA G.R. No. 197393, June 15, 2016)
FIRST DIVISION The labor arbiter ruled in favor of respondent and ordered his immediate reinstatement, as well as the payment of
G.R. No. 197393, June 15, 2016 P476,137.39 representing back wages, 13th month pay, moral and exemplary damages, attorney's fees, quarterly
PHILIPPINE SAVINGS BANK, Petitioner, v. MANUEL P. BARRERA, Respondent.
bonus, and refund for travel expenses and other benefits. The labor arbiter found that the alleged infractions were the Decision of the labor arbiter - because "to do so is tantamount to allowing a lost remedy to
never fully substantiated by clear and convincing evidence: prosper."33ChanRoblesVirtualawlibrary

It appeared that complainant's failure to report the alleged bank's irregularities/anomalies was never Petitioner's Motion for Reconsideration was denied.
established since there was no clear irregularities/anomalies to reckon with, nor was he apprised that
failure to do so, if there is any, would constitute valid ground for dismissal. Petitioner attributes grave and reversible error to the CA in granting respondent's Petition for Certiorari based
solely on an erroneous technical ground without adjudicating the case on the merits. Petitioner prays that this Court
As to complainant's unauthorized disclosure of system ID and password to an agency staff who was just reinstate the Decision of the NLRC.
assigned as replacement of an employee who was on leave is, to the mind of this Labor Tribunal, is not
enough ground to constitute serious/grave misconduct to warrant outright dismissal of the complainant In his Comment,34 respondent asserts that the CA properly found that the appeal before the NLRC had not been
xxx In the instant case, this Office finds that complainant was honest enough to admit that although he perfected; hence, the Decision of the labor arbiter has become final and executory.
shared his system ID and password to Ms. Chua, it was done in good faith and with good intention to
insure that booking transactions can be made even if he was out in the field as Marketing Officer. 23 OUR RULING

The Petition is meritorious.

Petitioner appealed to the NLRC.
The Court was confronted with a similar question in U-Bix Corp. v. Hollero.35 In that case, both the NLRC and the CA
THE RULING OF THE NLRC held that the supersedeas bond posted by petitioners had no force and effect, because a perusal of the bond revealed
that the Certification of Accreditation and Authority issued by the OCA covers an authority to transact surety
Respondent filed a Motion to Dismiss24 on the ground of lack of authority to file appeal memorandum and non- business in relation to "civil/special proceedings cases only" and does not include labor cases filed before the NLRC.
perfection thereof. He pointed out that the supersedeas bond was irregular, because the Certification of The Court therein ruled that the bonds may also be used for labor cases.
Accreditation and Authority issued by the Office of the Court Administrator (OCA) stated that the Philippine Charter
Insurance Corporation (PCIC) was only authorized to issue bonds for civil cases: In the present case, the CA overlooked the fact that it is within the province of the NLRC to accredit surety
companies for cases it hears. The Supreme Court only accredits surety companies for judicial courts:
PHILIPPINE CHARTER INSURANCE CORPORATION
II. ACCREDITATION OF SURETY COMPANIES: In order to preclude spurious and delinquent surety
is hereby granted the authority to transact, through its authorized agents specified herein, surety in relation companies from transacting business with the courts, no surety company or its authorized agents shall be
to CIVIL CASES ONLY filed/pending before the Municipal Trial Courts in Cities of Bacolod City, Cebu City and allowed to transact business involving surety bonds with the Supreme Court, Court of Appeals, the Court
lloilo City. Valid until January 31, 2006, unless otherwise suspended or revoked. of Tax Appeals, the Sandiganbayan, Regional Trial Courts, Shari'a District Courts, Metropolitan Trial
Courts, Municipal Trial Courts in Cities, Municipal Trial Courts, Municipal Circuit Trial Courts, Shari'a
Circuit Courts and other courts which may thereafter be created, unless accredited and authorized by the
Nevertheless, the NLRC gave due course to the appeal and reversed the Decision of the labor arbiter. It found that Office of the Court Administrator.36
the complainant had been dismissed for cause and afforded due process. 25 It went over the evidence presented and
found that petitioner was able to substantiate the validity of complainant's termination.26 The NLRC found that
respondent had violated the bank's Code of Conduct when he disclosed his user ID and password despite the strict This fact explains why labor cases were not enumerated in the Certification of Accreditation and Authority issued to
prohibition on its disclosure.27 With regard to the bank certifications, it did not give credence to his defense that it the PC1C. This is not to say that the certification issued by the OCA is worthless before the NLRC. On the contrary,
was a ministerial duty on the part of the respondent to affix his signature. 28 According to the NLRC, the reasons the 2005 Revised Rules of Procedure of the NLRC expressly provided that bonds issued by a reputable bonding
given by respondent revealed his laxity in protecting the interest of the bank. 29 The management prerogative of the company duly accredited by the Supreme Court are acceptable.37ChanRoblesVirtualawlibrary
bank to institute measures that would curb irregularities was upheld.
In addition, the Court has relaxed the requirement of posting a supersedeas bond for the perfection of an appeal
The NLRC Decision, however, did not address the argument raised in the Motion to Dismiss regarding the when there has been substantial compliance with the rule.38 For example, in Del Rosario v. Philippine Journalists,
irregularity of the appeal bond. Respondent therefore filed a Petition for Certiorari with the CA. Inc.,39 the Court allowed the appeal to proceed despite the subsequent revocation of the authority of a bonding
company, because "technical rules of procedure should not hamper the quest for justice and truth."
THE RULING OF THE CA We find that the purpose of the appeal bond - to ensure, during the period of appeal, against any occurrence that
would defeat or diminish recovery by the aggrieved employees under the judgment if subsequently affirmed 40 - has
The CA held that the NLRC had committed grave abuse of discretion amounting to lack or excess of jurisdiction been met. Records show that as of 22 January 2011, the supersedeas bond in the amount of P476,137.39 was still in
when the latter gave due course to the bank's appeal even if it was apparent that the appeal had not been perfected existence.41ChanRoblesVirtualawlibrary
owing to a defective and irregular appeal bond.30ChanRoblesVirtualawlibrary
We now resolve the prayer to reinstate the NLRC Decision.
The CA observed that the certification and accreditation issued by the OCA did not state that the PCIC was allowed
to issue bonds relative to labor cases filed before the NLRC. 31 The appellate court further held that the appeal should Generally, only errors of law are reviewed by this Court in petitions for review. However, there are well-recognized
not have been given due course because of its non-perfection within the reglementary exceptions42 to this rule, as in this case, when the factual findings of the NLRC contradict those of the labor arbiter.
period.32ChanRoblesVirtualawlibrary
In the interest of judicial economy and efficiency, and given that the records are sufficient to make a determination
The CA did not see the need to resolve the other issue - whether the NLRC gravely abused its discretion in reversing of the validity of respondent's dismissal, the Court has decided to reevaluate and review the factual findings.
 Issuance of false certification shall be dealt with in accordance with the Bank's Officers/Employees Code
We uphold the finding of the NLRC that respondent was validly dismissed. of Ethics and Behavior.

The unauthorized disclosure of

Respondent claimed that he was merely prevailed upon by the branch head to sign the bank certifications, and that
username and password exposed
the signing was ministerial upon the presentation of a letter-request and a printout of the client's name and account
the bank to incalculable losses.
number.47ChanRoblesVirtualawlibrary
The loss of confidence had sufficient basis. As an account and marketing officer, respondent was tasked with the
First, We cannot fault petitioner for dismissing a bank officer who has failed to grasp the significance of bank
approval of loans, which is an element of a core banking function. 43 Without a doubt, he was entrusted with delicate
certifications despite his employment with the bank for seven years. In his reply to petitioner's Memorandum dated
matters, including the custody, handling, care and protection of the bank's assets. Given the sensitive functions of
29 December 2004, respondent explained that he had signed the Bank Certification dated 4 June 2004, because
his position, he was expected to strictly observe and comply with the bank's standard operating procedures.
there were only two bank officers at that time - he and the branch head - and "the client was getting impatient
waiting for his document."48ChanRoblesVirtualawlibrary
This he failed to do.
In Sajo v. Philippine Saving's Bank49 involving the very same branch head and including the very same bank
The bank has an existing policy on user IDs and passwords: BOPD Code 003-01 -04.244 dated 6 August 2002,
certifications referred to in this case, the Court did not find reversible error on the part of the CA in ruling that the
obligating designated branch personnel to keep their passwords confidential at all times. The purpose was to
termination was valid. Indeed, the question of whether the employee received monetary consideration for the
establish accountabilities and limit control over transactions and/or functions.45 Respondent, who was one of those
issuance of fraudulent bank certificates was immaterial; what was reprehensible was that the employee allowed
branch personnel so designated, disclosed his password to another employee, who later disclosed it to a contractual
himself to be a conduit for defrauding persons and/or institutions that relied on the
employee.
certificates.50ChanRoblesVirtualawlibrary
Respondent tried to excuse his action by pointing out that the branch head was also guilty of the same offense.
In Rivera v. Allied Banking Corp.,51 the dismissed employee explained that the arrangement with the client regarding
(After investigation, this allegation proved to be false.) Although respondent later attempted to seek understanding
the opening of joint accounts for her foreign currency check deposits used for rediscounting transactions was
on account of his heavy workload, we cannot force the employer to accept these excuses. We understand that the
merely an accommodation service, which was done in good faith and in accordance with the bank's policies. The
failure of respondent to report irregularities being committed in the branch, coupled with his disregard of the
Court, nonetheless, upheld the validity of his termination.
control procedure, allowed unauthorized access into the bank system. To a great degree, it exposed the bank to
unauthorized transactions that would have been difficult to trace and determine.
Second, respondent was guilty of gross and habitual negligence when he failed to exercise the requisite amount of
care or diligence in signing the bank certifications. Bank policy clearly required that certifications be issued only to
Aside from breaking the trust of his employer, respondent also demonstrated gross and habitual negligence when
clients who had opened their accounts legitimately with the usual identity requirements. Even if it were true that he
he delegated a function that had been specifically reposed in him. His thoughtless disregard of the consequences of
had no access to the information, respondent should have been alerted of the irregularity by the fact that at least
allowing an unauthorized person to have unbridled access to the bank's system and his repeated failure to perform
three requests for change of account name had been submitted in the course of a week. However, respondent
his duties for a period of time justified his dismissal.
proceeded to sign the certifications without question, evincing a thoughtless disregard of the consequences of his
actions.52ChanRoblesVirtualawlibrary
Respondent's complicity in the
issuance of fraudulent bank
Third, respondent cannot hide behind his designation as an account officer in charge of loans to claim ignorance of
certifications justifies the
branch operations. It must be emphasized that he admitted to having been appointed as branch head of PSB-
loss of confidence.
Bacolod from 1 June 1998 to 30 June 2001; and assistant branch head of PSB-Cebu City and PSB-General Santos
from 1 July 2001 to 31 August 2002 and from 1 August 2002 to 30 June 2003, respectively.53 He cannot deny that
On 19 October 2001, the bank released IOL No. OPS 01-02346 regarding the issuance of bank certifications for
for at least five years, he should have had an in-depth knowledge and understanding of bank operations and
deposits and loans, the relevant portions of which state:
policies.

All concerned Department/Branches are hereby reminded to be careful in issuing bank certification by Fourth, respondent had the discretion to refuse to sign the document. Even if he was under compulsion from the
observing necessary procedures such as but not limited to the following: branch head to sign, the act would still have been inexcusable. In fact, the Court has upheld the dismissal of
employees who claimed that they only committed illegal acts upon the instructions of their
1. The branch/department shall restrict the issuance of Bank Certificate to bonafide Bank clients who: superior.54ChanRoblesVirtualawlibrary

- must have opened their accounts legitimately, complete with the usual identity requirements, and Petitioner properly exercised its
management prerogative in
- has written a request for bank certifications on deposits and loans, signed by him, signature verified and terminating the services of respondent.
approved by the concerned Operating/Department Hea.
x x x x. Because of its status as a business affected with public interest, 55 a bank is expected to exercise the highest degree of
diligence in the selection and supervision of its employees. 56ChanRoblesVirtualawlibrary
3. No account shall be allowed to be opened for certification purposes only.
x x x x. We cannot coerce petitioner to retain an employee whom it cannot trust to perform duties of the highest fiduciary
nature.57 As a general rule, employers are allowed wider latitude of discretion in terminating the employment of
managerial employees, as the latter perform functions that require the employers' full trust and
 confidence.58ChanRoblesVirtualawlibrary Consequently, the DOLE issued a Notice of Inspection Result directing petitioner corporation and/or its president,
petitioner Gauvain J. Benzonan (Benzonan), to effect restitution and/or correction of the alleged violations within five (5)
The NLRC correctly ruled: days from notice. Due to petitioners' failure to comply with its directive, the DOLE scheduled on March 3, 2004 a
Summary Investigation at its Regional Office No. XII, Provincial Extension Office, in General Santos City. However,
We cannot prevent respondent in the exercise of its management prerogative to institute measures that petitioners failed to appear despite due notice. Another hearing was scheduled on April 1, 2004 wherein petitioners'
will curb irregularities. Hence, respondent bank cannot be faulted when it scrutinized the violative acts of counsel, Atty. Thomas Jacobo (Atty. Jacobo), failed to attend due to an alleged conflict in schedule. Instead, his secretary,
complainant and considered him unworthy to remain in its employ after affording him ample Nona Gido, appeared on his behalf to request a resetting, which the DOLE Hearing Officer denied. 4 Thus, in an Order
opportunity to defend himself.59cralawred dated May 20, 2004, the DOLE Region-XII OIC Regional Director (DOLE Regional Director) directed petitioners to pay
private respondents the total amount of P759,752, representing private respondents' claim for wage differentials, 13 th
month pay differentials, service incentive leave pay, holiday premium pay, and rest day premium Pay-Therefrom,
The degree of responsibility, care and trustworthiness expected of bank officials and employees is, by the very petitioners appealed to the Secretary of Labor, raising two grounds: (1) denial of due process; and (2) lack of factual and
nature of their work, far greater than that of ordinary officers and employees in other business firms. 60 Hence, no legal basis of the assailed Order.
effort must be spared by banks and their officers and employees to ensure and preserve the trust and confidence of
their clients and the general public, as well as the integrity of bank records.61ChanRoblesVirtualawlibrary The denial of due process was predicated on the refusal of the Hearing Officer to reset the hearing set on April 1, 2004,
which thus allegedly deprived petitioners the opportunity to present their evidence. Likewise, petitioners asserted that
WHEREFORE, the instant petition is GRANTED. The assailed decision and resolution of the Court of Appeals are the Order of the Regional Director does not state that an employer-employee relationship exists between petitioners and
SET ASIDE, and the Decision dated 29 September 2006 of the National Labor Relations Commission in NLRC Case private respondents, which is necessary to confer jurisdiction to the DOLE over the alleged violations.
No. V-000445-2006 is REINSTATED.
In an Order5 dated November 8, 2004, the Secretary of Labor affirmed the findings of the DOLE Regional Director on the
SO ORDERED.chanroblesvirtuallawlibrary postulate that petitioners failed to question, despite notice of hearing, the noted violations or to submit any proof of
compliance therewith. And in view of petitioners' failure to present their evidence before the Regional Director, the
Secretary of Labor adopted the findings of the Labor Inspector and considered the interviews conducted as substantial
evidence. The Secretary of Labor likewise sustained what is considered as the straight computation method adopted by
the Regional Office as regards the monetary claims of private respondents, 6 thus:chanRoblesvirtualLawlibrary
xl. Employee liability for unauthorized disclosure of password; Liability for issuance of WHEREFORE, presmises considered, the appeal by DXCP Radio Station and Engr. Gauvain Benzonan is hereby
fraudulent bank certifications DISMISSED for lack of merit. The Order dated May [20], 2004 of the Regional Director, directing appellants to pay the
xli. Determination of ER-EE relationship in the exercise of visitorial power (SOUTH COTABATO nine (9) appellees the aggregate amount of Seven Hundred Fifty Nine Thousand Seven Hundred Fifty Two Pesos
COMMUNICATIONS CORPORATION AND GAUVAIN J. BENZONAN, Petitioners, v. HON. (Php759,752.00), representing their claims for wage differentials, 13th month pay differentials, service incentive leave
PATRICIA STO. TOMAS, G.R. No. 217575, June 15, 2016) 1. Bombo Radyo decision pay, holiday pay premium and rest day premium, is AFFIRMED.
THIRD DIVISION
G.R. No. 217575, June 15, 2016 SO ORDERED.cralawred
SOUTH COTABATO COMMUNICATIONS CORPORATION AND GAUVAIN J. BENZONAN, Petitioners, v. HON. PATRICIA
STO. TOMAS, SECRETARY OF LABOR AND EMPLOYMENT, ROLANDO FABRIGAR, MERLYN VELARDE, VINCE Petitioners moved for, but was denied, reconsideration of the Secretary of Labor's Order.
LAMBOC, FELIPE GALINDO, LEONARDO MIGUEL, JULIUS RUBIN, EDEL RODEROS, MERLYN COLIAO, AND EDGAR
JOPSON, Respondents. Petitioners elevated the case to the Court of Appeals (CA) via a Petition for Certiorari under Rule 65 of the Rules of Court.
DECISION By a Resolution7 dated July 20, 2005, the CA dismissed the petition owing to procedural infirmities because petitioners
VELASCO JR., J.: failed to attach a Secretary's Certificate evidencing the authority of petitioner Benzonan, as President, to sign the petition.
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, seeking to reverse and set aside the On appeal,8 this Court remanded the case back to the CA for determination on the merits. 9ChanRoblesVirtualawlibrary
Decision1 dated November 28, 2014 and Resolution dated March 5, 2015 of the Court of Appeals (CA) in CA-G.R. SP No.
00179-MIN, affirming the Orders dated November 8, 2004 and February 24, 2005 issued by the Secretary of Labor and Ruling of the Court of Appeals
Employment.
Factual Antecedents In its Decision dated November 28, 2014 in CA-G.R. SP No. 00179-MIN, the CA upheld the Secretary of Labor, holding that
petitioners cannot claim denial of due process, their failure to present evidence being attributed to their negligence.
On January 19, 2004, the Department of Labor and Employment Region-XII (DOLE) conducted a Complaint Inspection2 at
the premises of DXCP Radio Station, which is owned by petitioner South Cotabato Communications Corporation. The Petitioners moved for the reconsideration of the Decision, grounded on similar arguments raised before the Secretary of
inspection yielded a finding of violation of labor standards provisions of the Labor Code involving the nine (9) private Labor, citing in addition, the pronouncement of the National Labor Relations Commission (NLRC) in the related case of
respondents, such as:chanRoblesvirtualLawlibrary NLRC No. MAC-01-010053-2008 entitled Rolando Fabrigar, et. al. v. DXCP Radio Station, et. al. There, the NLRC held that
no employer-employee relationship exists between petitioners and private respondents Rolando Fabrigar (Fabrigar),
Edgar Jopson (Jopson), and Merlyn Velarde (Velarde). For clarity, two separate actions were instituted by private
1. Underpayment of Wages
respondents Fabrigar, Jopson, and Velarde against petitioners: the first, for violation of labor standards provisions with
2. Underpayment of 13th Month Pay
the DOLE; and the second, for illegal dismissal filed with the NLRC. The latter case arose from the three respondents'
3. Non-payment of the five (5) days Service Incentive Leave Pay
claim of constructive dismissal effected by petitioners following the inspection by the DOLE. In ruling for petitioners, the
4. Non-payment of Rest Day Premium Pay
NLRC, in its Resolution10 dated April 30, 2008, declared that there is no employer-employee relationship between the
5. Non-payment of the Holiday Premium Pay
parties, thus negating the notion of constructive dismissal.
6. Non-remittance of SSS Contributions
7. Some employees are paid on commission basis aside from their allowance[s]3
The CA denied petitioners' motion for reconsideration in its Resolution dated March 5, 2014. Hence, this petition.
 That petitioners were given ample opportunity to present their evidence before the Regional Director is indisputable.
Petitioners presently seek the reversal of the CA's Decision and Resolution and ascribe the following errors to the court a They were notified of the summary investigations conducted on March 3, 2004 and April 1, 2004, both of which they
quo:chanRoblesvirtualLawlibrary failed to attend. To justify their non-appearance, petitioners claim they requested a resetting of the April 1, 2004 hearing
due to the unavailability of their counsel.17 However, no such explanation was proffered as to why they failed to attend
the first hearing. At any rate, it behooved the petitioners to ensure that they, as well as their counsel, would be available
I. The [CA] did not completely and properly dispose of the case pending before it as it never resolved
on the dates set for the summary investigation as this would enable them to prove their claim of non-existence of an
all justiciable issues raised x x x, particularly, that the determination of presence or absence of
employer-employee relationship. Clearly, their own negligence did them in. Their lament that they have been deprived of
employer-employee relationship is indispensable in the resolution of this case as jurisdiction is
due process is specious.
dependent upon it.
This thus brings to the fore the issues of whether the Orders of the Regional Director and Secretary of Labor are
II. There is [no] single basis, either factual or legal, for the issuance of the May 20, 2004 Order of the supported by factual and legal basis, and, concomitantly, whether an employer-employee relationship was sufficiently
Regional Director x x x against the petitioners as it was issued relying merely on pure allegations established between petitioners and private respondents as to warrant the exercise by the DOLE of jurisdiction.
and without any substantial proof on the part of the claimants, contrary to law and jurisprudence.
At the outset, the determination as to whether such employer-employee relationship was, indeed, established requires an
III. The [CA] gravely erred in ruling that the Secretary of Labor x x x did not act in a whimsical and examination of facts. It is a well-settled rule that findings of fact of quasi-judicial agencies are accorded great respect,
capricious manner or with grave abuse of discretion tantamount to lack or excess of jurisdiction in even finality, by this Court. This proceeds from the general rule that this Court is not a trier of facts, as questions of fact
affirming the Order of the [Regional Director] despite the glaring fact that no evidence were are contextually for the labor tribunals to resolve, and only errors of law are generally reviewed in petitions for review
submitted by private respondents as to the basis of [their] claim and nature of their employment. on certiorari criticizing the decisions of the CA.18ChanRoblesVirtualawlibrary

IV. The [CA] erred in ruling that the Secretary of Labor x x x did not deny [petitioners their] right to due The findings of fact should, however, be supported by substantial evidence from which the said tribunals can make their
process in affirming the x x x Order of [the] Regional Director x x x notwithstanding [the evidence] own independent evaluation of the facts. In labor cases, as in other administrative and quasi-judicial proceedings, the
submitted before her [that there] exist no employer- employee relation [ship] among the parties quantum of proof necessary is substantial evidence, or such amount of relevant evidence which a reasonable mind might
and that the [DOLE] has no jurisdiction over the case. 11 accept as adequate to justify a conclusion.19 Although no particular form of evidence is required to prove the existence of
an employer-employee relationship, and any competent and relevant evidence to prove the relationship may be
admitted,20 a finding that the relationship exists must nonetheless rest on substantial
In the matter of denial of due process, petitioners maintain that they were prevented from presenting evidence to prove evidence.21ChanRoblesVirtualawlibrary
that private respondents are not their employees when the Regional Director submitted the case for resolution without
affording them an opportunity to ventilate their case or rebut the findings of the inspection. In addition, petitioners assail In addition, the findings of fact tainted with grave abuse of discretion will not be upheld. This Court will not hesitate to
the Order of the Regional Director for want of factual and legal basis, particularly the lack of categorical finding on the set aside the labor tribunal's findings of fact when it is clearly shown that they were arrived at arbitrarily or in disregard
existence of an employer-employee relationship between the parties—an element which petitioners insist is a of the evidence on record or when there is showing of fraud or error of law. 22ChanRoblesVirtualawlibrary
prerequisite for the exercise of the DOLE'S jurisdiction,12 following People's Broadcasting (Bombo Radyo, Phils., Inc.) v. The
Secretary of Labor and Employment, et al.13 Petitioners likewise note that the November 8, 2004 Order of the DOLE This case clearly falls under the exception. After a careful review of this case, the Court finds that the DOLE failed to
Secretary denying petitioner's appeal, as well as the Decision of the CA, is silent on the employer-employee relationship establish its jurisdiction over the case.
issue, which further suggests that no real and proper determination of the existence of such relationship was ever made
by these tribunals. The assailed May 20, 2004 Order of the Regional Director and November 8, 2004 Order of the Secretary of Labor were
issued pursuant to Article 128 of the Labor Code, to wit:chanRoblesvirtualLawlibrary
In its Comment, the DOLE counters that the results of the interviews conducted in the premises of DXCP in the course of ART. 128. Visitorial and enforcement power. - (a) The Secretary of Labor and Employment or his duly authorized
its inspection constitute substantial evidence that served as basis for the monetary awards to private representatives, including labor regulation officers, shall have access to employer's records and premises at any time of
respondents.14ChanRoblesVirtualawlibrary the day or night whenever work is being undertaken therein, and the right to copy therefrom, to question any employee
and investigate any fact, condition or matter which may be necessary to determine violations or which may aid in the
From the foregoing, the issue for the resolution can be reduced into the question of whether the CA erred in upholding enforcement of this Code and of any labor law, wage order or rules and regulations issued pursuant thereto.
the November 8, 2004 Order of the Secretary of Labor, which in turn affirmed the May 20, 2004 Order of the Regional
Director. Inextricably linked to the resolution of the said issue is a determination of whether an employer-employee (b) Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and in cases where the
relationship had sufficiently been established between the parties as to warrant the assumption of jurisdiction by the relationship of employer-employee still exists, the Secretary of Labor and Employment or his duly authorized
DOLE and issuance of the said May 20, 2004 and November 8, 2004 Orders. representatives shall have the power to issue compliance orders to give effect to the labor standards provisions of this
Code and other labor legislation based on the findings of labor employment and enforcement officers or industrial safety
The Court's Ruling engineers made in the course of inspection. The Secretary or his duly authorized representatives shall issue writs of
execution to the appropriate authority for the enforcement of their orders, except in cases where the employer contests
Petitioners were not denied due process the findings of the labor employment and enforcement officer and raises issues supported by documentary proofs which
were not considered in the course of inspection. (As amended by Republic Act No. 7730, June 2, 1994). x x xcralawred
Petitioners' claim of denial of due process deserves scant consideration. The essence of due process, jurisprudence
Under the aforequoted provision, the Secretary of Labor, or any of his or her authorized representatives, is granted
teaches, is simply an opportunity to be heard, or, as applied to administrative proceedings, an opportunity to explain
visitorial and enforcement powers for the purpose of determining violations of, and enforcing, the Labor Code and any
one's side or an opportunity to seek a reconsideration of the action or ruling complained of. 15 As long as the parties are,
labor law, wage order, or rules and regulations issued pursuant thereto. Indispensable to the DOLE'S exercise of such
in fine, given the opportunity to be heard before judgment is rendered, the demands of due process are sufficiently
power is the existence of an actual employer-employee relationship between the parties.
met.16ChanRoblesVirtualawlibrary
The power of the DOLE to determine the existence of an employer-employee relationship between petitioners and 1. Underpayment of Wages
private respondents in order to carry out its mandate under Article 128 has been established beyond cavil in Bombo 2. Underpayment of 13th Month Pay
Radyo,23 thus:chanRoblesvirtualLawlibrary 3. Non-payment of the five (5) days Service Incentive Leave Pay
It can be assumed that the DOLE in the exercise of its visitorial and enforcement power somehow has to make a 4. Non-payment of Rest Day Premium Pay
determination of the existence of an employer-employee relationship. Such prerogatival determination, however, 5. Non-payment of the Holiday Premium Pay
cannot be coextensive with the visitorial and enforcement power itself. Indeed, such determination is merely 6. Non-remittance of SSS Contributions
preliminary, incidental and collateral to the DOLE'S primary function of enforcing labor standards provisions. The 7. Some employees are paid on commission basis aside from their allowance[s]cralawred
determination of the existence of employer-employee relationship is still primarily lodged with the NLRC. This is the
Proceeding from the conduct of such inspection was the issuance of the Notice of Inspection Result requiring the
meaning of the clause "in cases where the relationship of employer-employee still exists" in Art. 128 (b).
respondent DXCP Radio Station and/or Engr. Gauvain Benzonan, President, to effect restitution and/or correction of the
noted violations at the plant/company level within five (5) calendar days from notice thereof. But, Engr. Gauvain
Thus, before the DOLE may exercise its powers under Article 128, two important questions must be resolved: (1) Does
Benzonan failed to do so.
the employer-employee relationship still exist, or alternatively, was there ever an employer-employee relationship to
speak of; and (2) Are there violations of the Labor Code or of any labor law?
On March 3, 2004, a summary investigation was conducted at the [DOLE], Regional Office No. XII, Provincial Extension
Office, General Santos City. In that scheduled Summary Investigation, only complainants appeared, assisted by Mr. Fred
The existence of an employer-employee relationship is a statutory prerequisite to and a limitation on the power
Huervana, National President of the Philippine Organization of Labor Unions, x x x while respondent failed to appear
of the Secretary of Labor, one which the legislative branch is entitled to impose. The rationale underlying this
despite due notice.
limitation is to eliminate the prospect of competing conclusions of the Secretary of Labor and the NLR.C, on a matter
fraught with questions of fact and law, which is best resolved by the quasi-judicial body, which is the NRLC, rather than
On April 1, 2004, another Summary Investigation was conducted x x x [There] complainants appeared, x x x while
an administrative official of the executive branch of the government. If the Secretary of Labor proceeds to exercise his
respondent was represented by Ms. Nona Gido, Secretary of Atty. Thomas Jacobo, counsel for the respondent. During the
visitorial and enforcement powers absent the first requisite, as the dissent proposes, his office confers jurisdiction on
deliberation, Ms. Nona Gido manifested that her presence in that scheduled summary investigation was to request for the
itself which it cannot otherwise acquire. (emphasis ours)cralawred
re-scheduling of such hearing, however, such request was denied. Mr. Fred Huervana declared that as he gleaned from
The foregoing ruling was further reiterated and clarified in the resolution of the reconsideration of the same case, the Notice of Inspection Result issued by the labor inspector, the Non-payment of the Provisional Emergency Relief
wherein the jurisdiction of the DOLE was delineated vis-a-vis the NLRC where the employer-employee relationship Allowance (PERA) was not included from among the discovered violations, hence he requested that it should be included
between the parties is at issue:chanRoblesvirtualLawlibrary in the computation. Such request was denied x x x. Further, Mr. Fred Huervana, declared that this case be submitted for
No limitation in the law was placed upon the power of the DOLE to determine the existence of an employer-employee decision based on the merit of the case.
relationship. No procedure was laid down where the DOLE would only make a preliminary finding, that the power was
primarily held by the NLRC. The law did not say that the DOLE would first seek the NLRC's determination of the existence Failure of the parties to reach a final settlement prompted this Office to compute the entitlements of the seven (7)
of an employer-employee relationship, or that should the existence of the employer-employee relationship be disputed, affected workers for their salary differential, underpayment of 13th month pay, non-payment of the five (5) days service
the DOLE would refer the matter to the NLRC. The DOLE must have the power to determine whether or not an incentive leave pay, non-payment of holiday premium pay and non-payment of rest day premium pay in the total amount
employer-employee relationship exists, and from there to decide whether or not to issue compliance orders in of SEVEN HUNDRED FIFTY NINE THOUSAND SEVEN HUNDRED FIFTY TWO PESOS (P759,752.00) x x x. 25cralawred
accordance with Art. 128(b) of the Labor Code, as amended by RA 7730.
In determining the existence of an employer-employee relationship, Bombo Radyo specifies the guidelines or indicators
used by courts, i.e. (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of
The DOLE, in determining the existence of an employer-employee relationship, has a ready set of guidelines to
dismissal; and (4) the employer's power to control the employee's conduct. The DOLE Secretary, or his or her
follow, the same guide the courts themselves use. The elements to determine the existence of an employment
representatives, can utilize the same test, even in the course of inspection, making use of the same evidence that would
relationship are: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of
have been presented before the NLRC.26ChanRoblesVirtualawlibrary
dismissal; (4) the employer's power to control the employee's conduct. The use of this test is not solely limited to
the NLRC. The DOLE Secretary, or his or her representatives, can utilize the same test, even in the course of inspection,
As can be gleaned from the above-quoted Order, the Regional Director merely noted the discovery of violations of labor
making use of the same evidence that would have been presented before the NLRC. (emphasis ours)cralawred
standards provisions in the course of inspection of the DXCP premises. No such categorical determination was made on
Like the NLRC, the DOLE has the authority to rule on the existence of an employer-employee relationship between the the existence of an employer-employee relationship utilizing any of the guidelines set forth. In a word, the Regional
parties, considering that the existence of an employer-employee relationship is a condition sine qua non for the exercise Director had presumed, not demonstrated, the existence of the relationship. Of particular note is the DOLE'S failure to
of its visitorial power. Nevertheless, it must be emphasized that without an employer-employee relationship, or if one show that petitioners, thus, exercised control over private respondents' conduct in the workplace. The power of the
has already been terminated, the Secretary of Labor is without jurisdiction to determine if violations of labor standards employee to control the work of the employee, or the control test, is considered the most significant determinant of the
provision had in fact been committed,24 and to direct employers to comply with their alleged violations of labor existence of an employer-employee relationship.27ChanRoblesVirtualawlibrary
standards.
Neither did the Orders of the Regional Director and Secretary of Labor state nor make reference to any concrete evidence
The Orders of the Regional Director and the Secretary of Labor do not contain clear and distinct factual basis to support a finding of an employer-employee relationship and justify the monetary awards to private respondents.
necessary to establish the jurisdiction of the DOLE and to justify the monetary awards to private respondents Substantial evidence, such as proofs of employment, clear exercise of control, and the power to dismiss that prove such
relationship and that petitioners committed the labor laws violations they were adjudged to have committed, are grossly
For expediency, the May 20, 2004 Order of the Regional Director is pertinently reproduced absent in this case. Furthermore, the Orders dated May 20, 2004 and November 8, 2004 do not even allude to the
hereunder:chanRoblesvirtualLawlibrary substance of the interviews during the inspection that became the basis of the finding of an employer-employee
ORDER relationship.

This refers to the Complaint Inspection conducted at DXCP Radio Station and/or Engr. Gauvain Benzonan, President, The Secretary of Labor adverts to private respondents' allegation in their Reply28 to justify their status as employees of
located at NH Lagao Road, General Santos City on January 19, 2004 pursuant to Inspection Authority No. R1201-0401-CI- petitioners. The proffered justification falls below the quantum of proof necessary to establish such fact as allegations can
052 which resulted to the discovery of the Labor Standards violations, namely:chanRoblesvirtualLawlibrary easily be concocted and manufactured. Private respondents' allegations are inadequate to support a conclusion absent
other concrete proof that would support or corroborate the same. Mere allegation, without more, is not evidence and is findings of fact made by the NLRC, as it is a settled rule that such findings are entitled to great respect and even finality
not equivalent to proof.29 Hence, private respondents' allegations, essentially self-serving statements as they are and when supported by substantial evidence; otherwise, they shall be struck down for being whimsical and capricious and
devoid under the premises of any evidentiary weight, can hardly be taken as the substantial evidence contemplated for arrived at with grave abuse of discretion. It is a requirement of due process and fair play that the parties to a litigation be
the DOLE'S conclusion that they are employees of petitioners. informed of how it was decided, with an explanation of the factual and legal reasons that led to the conclusions of the
court. A decision that does not clearly and distinctly state the facts and the law on which it is based leaves the parties in
In a similar vein, the use of the straight computation method in awarding the sum of P759,752 to private respondents, the dark as to how it was reached and is especially prejudicial to the losing party, who is unable to pinpoint the possible
without reference to any other evidence other than the interviews conducted during the inspection, is highly telling that errors of the court for review by a higher tribunal. x x xcralawred
the DOLE failed to consider evidence in arriving at its award and leads this Court to conclude that such amount was
To this end, University of the Philippines v. Hon. Dizon35 instructs that the Constitution and the Rules of Court require not
arrived at arbitrarily.
only that a decision should state the ultimate facts but also that it should specify the supporting evidentiary facts, for they
are what are called the findings of fact. A decision that does not clearly and distinctly state the facts and the law on which
It is quite implausible for the nine (9) private respondents to be entitled to uniform amounts of Service Incentive Leave
it is based leaves the parties in the dark as to how it was reached and is especially prejudicial to the losing party, who is
(SIL) pay, holiday pay premium, and rest day premium pay for three (3) years, without any disparity in the amounts due
unable to pinpoint the possible errors of the court (or quasi-judicial body) for review by a higher
them since entitlement to said benefits would largely depend on the actual rest days and holidays worked and amount of
tribunal.36ChanRoblesVirtualawlibrary
remaining leave credits in a year. Whoever claims entitlement to the benefits provided by law should establish his or her
right thereto.30 The burden of proving entitlement to overtime pay and premium pay for holidays and rest days lies with
Accordingly, this Court will not hesitate to strike down decisions rendered not hewing to the Constitutional directive, as
the employee because these are not incurred in the normal course of business.31 In the case at bar, evidence pointing not
it did to a Decision rendered by the NLRC in Anino, et al. v. Hinatuan Mining Corporation37 for non-observance of the said
only to the existence of an employer-employee relationship between the petitioners and private respondents but also to
requirement:chanRoblesvirtualLawlibrary
the latter's entitlement to these benefits are miserably lacking.
In the present case, the NLRC was definitely wanting in the observance of the aforesaid constitutional requirement. Its
assailed five-page Decision consisted of about three pages of quotation from the labor arbiter's decision, including the
It may be that petitioners have failed to refute the allegation that private respondents were employees of DXCP.
dispositive portion, and barely a page (two short paragraphs of two sentences each) of its own discussion of its reasons
Nevertheless, it was incumbent upon private respondents to prove their allegation that they were, indeed, under
for reversing the arbiter's findings. It merely raised a doubt on the motive of the complaining employees and took
petitioners' employ and that the latter violated their labor rights. A person who alleges a fact has the onus of proving it
"judicial notice that in one area of Mindanao, the mining industry suffered economic difficulties." In affirming
and the proof should be clear, positive and convincing.32 Regrettably, private respondents failed to discharge this burden.
peremptorily the validity of private respondents' retrenchment program, it surmised that "[i]f small mining cooperatives
The pronouncement in Bombyo Radyo that the determination by the DOLE of the existence of an employer-employee
experienced the same fate, what more with those highly mechanized establishments."cralawred
relationship must be respected should not be construed so as to dispense with the evidentiary requirement when called
for. The Court is not unmindful of the State's policy to zealously safeguard the rights of our workers, as no less than the
Constitution itself mandates the State to afford full protection to labor. Nevertheless, it is equally true that the law, in
It cannot be stressed enough that the existence of an employer-employee relationship between the parties is essential to protecting the rights of the laborer, authorizes neither oppression nor self-destruction of the employer.38 The
confer jurisdiction of the case to the DOLE. Without such express finding, the DOLE cannot assume to have jurisdiction to constitutional policy to provide full protection to labor is not meant to be a sword to oppress employers. 39 Certainly, an
resolve the complaints of private respondents as jurisdiction in that instance lies with the employer cannot be made to answer for claims that have neither been sufficiently proved nor substantiated.
NLRC.33ChanRoblesVirtualawlibrary
WHEREFORE, the petition is GRANTED. The Decision dated November 28, 2014 and Resolution dated March 5, 2015 of
The Orders of the Regional Director and Secretary of Labor do not comply with Article VIII, Section 16 of the the Court of Appeals in CA-G.R. SP No. 00179-MIN are accordingly REVERSED and SET ASIDE. The Order of the then
Constitution Secretary of Labor and Employment dated November 8, 2004 denying petitioners' appeal and the Order of the Regional
Director, DOLE Regional Office No. XII, dated May 20, 2004, are ANNULLED, without prejudice to whatever right or cause
As a necessary corollary to the foregoing considerations, another well-grounded reason exists to set aside the May 20, of action private respondents may have against petitioners.
2004 Order of the Regional Director and November 8, 2004 Order of the Secretary of Labor. The said Orders contravene
Article VIII, Section 14 of the Constitution, which requires courts to express clearly and distinctly the facts and law on SO ORDERED.chanroblesvirtuallawlibrary
which decisions are based, to wit:chanRoblesvirtualLawlibrary
Section 14. No decision shall be rendered by any court without expressing therein clearly and distinctly the facts and the
law on which it is based.

No petition for review or motion for reconsideration of a decision of the court shall be refused due course or denied xlii. Legal standing of employees to demand declaration for regularization of employees of
without stating the legal basis therefor.cralawred contractor (Cagayan Electric Power & Light Company, Inc. (CELPALCO), et al. Vs. CEPALCO
Employee’s Labor Union-Associated Labor Unions-Trade Union Congress of the Philippines
As stressed by this Court in San Jose v. NLRC,34 faithful compliance by the courts and quasi-judicial bodies, such as the
(TUCP) G.R. No. 211015/G.R. No. 213835. June 20, 2016) PDF
DOLE, with Art. VIII, Sec. 14 is a vital element of due process as it enables the parties to know how decisions are arrived
at as well as the legal reasoning behind them. Thus:chanRoblesvirtualLawlibrary
This Court has previously held that judges and arbiters should draw up their decisions and resolutions with due care, and
make certain that they truly and accurately reflect their conclusions and their final dispositions. A decision should
faithfully comply with Section 14, Article VIII of the Constitution which provides that no decision shall be rendered by
xliii. Unfair Labor Practice (ULP) in relation to Labor-Only Contracting (LOC)
any court without expressing therein clearly and distinctly the facts of the case and the law on which it is based. If such
xliv. Definition and concept of immorality (Zaida R. Inocente Vs. St. Vincent Foundation for
decision had to be completely overturned or set aside, upon the modified decision, such resolution or decision should
Children and Aging, Inc./Veronica Manguito (G.R. No. 202621. June 22, 2016) PDF
likewise state the factual and legal foundation relied upon. The reason for this is obvious: aside from being required by
the Constitution, the court should be able to justify such a sudden change of course; it must be able to convincingly
explain the taking back of its solemn conclusions and pronouncements in the earl indecision. The same thing goes for the
 xlv. To discourage vs. to prohibit in company policy entitled to all the rights and privileges granted to your new position under the company's benefit policies subject to
xlvi. Specification of acts allegedly committed existing rules and regulations. This appointment is subject to confirmation by your immediate superior based on your
xlvii. Reduction of workweek as basis of claim for constructive dismissal (Intec Cebu Inc., et al. Vs. performance during the next six months. x x x For record purposes, please take note that your regular status is
Hon. Court of Appeals, et al., G.R. No. 189951. June 22, 2016) PDF retroactive to July 1, 2001. This date will be used for the computation of your service credits, retirement and other
company benefits allowed under company policy.13cralawred
Pursuant to the instructions in the appointment letter, Buenviaje affixed her signature to the letter, signifying that she
has read and understood its contents.14ChanRoblesVirtualawlibrary
xlviii. Violation of duty to bargain is ULP (Ren Transport Corp. vs. National Labor Relations
In line with PNOC-EDCs policies, Buenviaje was subjected to a performance appraisal during the first week of May
Commission, G.R. No. 188020/G.R. No. 188252. June 27, 2016) PDF
2004.15 She received a satisfactory grade of three (3).16 In her subsequent performance appraisal covering the period of
May 1, 2004 to June 30, 2004, she received an unsatisfactory grade of four (4). 17 Thus, Ester Guerzon (Guerzon), Vice
President for Corporate Affairs of PNOC-EDC, informed Buenviaje that she did not qualify for regular employment.18
PNOC-EDC, through Guerzon, communicated in writing to Buenviaje her non-confirmation of appointment as well as her
separation from the company effective July 31, 2004.19 On July 2, 2004, Buenviaje gave her written comments on the
xlix. Employer’s right to impose productivity standards (Quintanar, et al. Vs. Coca-Cola Bottlers,
results of her second performance appraisal.20 In reply, PNOC-EDC sent her two (2) more letters reiterating her non-
Philippines, Inc.)PDF
confirmation and separation from the company.21 Aquino also issued a Memorandum to Buenviaje instructing her to
l. Effect when ground in notice of dismissal is different from the notice to explain
prepare a turnover report before her physical move-out.22ChanRoblesVirtualawlibrary
li. When employment status in appointment letter is ambiguous (Philippine National Oil
Company-Energy Development Corporation vs. Buenviaje, G.R. Nos. 183200-01/G.R. Nos.
Buenviaje responded by filing a complaint before the Labor Arbiter for illegal dismissal, unpaid 13 th month pay, illegal
183253 & 183257. June 29, 2016)
deduction with claim for moral as well as exemplary damages, including attorney's fees and
THIRD DIVISION
backwages.23ChanRoblesVirtualawlibrary
G.R. Nos. 183200-01, June 29, 2016
PHILIPPINE NATIONAL OIL COMPANY-ENERGY DEVELOPMENT CORPORATION AND/OR PAUL AQUINO AND
ESTER R. GUERZON, Petitioners, v. AMELYN A. BUENVIAJE, Respondent. The Ruling of the Labor Arbiter

G.R. Nos. 183253 & 183257 The Labor Arbiter rendered a decision in favor of Buenviaje, the dispositive portion of which
states:chanRoblesvirtualLawlibrary
AMELYN A. BUENVIAJE, Petitioner, v. PHILIPPINE NATIONAL OIL COMPANY-ENERGY DEVELOPMENT WHEREFORE, premises considered, judgment is hereby rendered declaring complainant a regular employee. As a
CORPORATION, PAUL A. AQUINO AND ESTER R. GUERZON, Respondents. consequence thereof, her dismissal without any basis is hereby deemed illegal. Respondents PNOC-Energy Development
DECISION Corporation, and/or Paul Aquino and Ester R. Guerzon are hereby ordered to reinstate complainant to her former
JARDELEZA, J.: position without loss of seniority rights and other benefits and with full backwages reckoned from August 1, 2004 up to
Before us are consolidated petitions for review on certiorari1 of the Decision2 dated October 31, 2007 and Resolution3 her actual or payroll reinstatement, which as of this date is in the amount of P718,260.40.
dated June 3, 2008 of the Court of Appeals (CA) in CA-G.R. S.P. Nos. 94359 and 94458. The CA partially modified the
Resolutions4 of the National Labor Relations Commission (NLRC) dated September 27, 2005 and January 31, 2006, which Further, for having acted with manifest bad faith and given the extent of the damage done to complainant who occupies a
in turn partially modified the Decision5 of the Labor Arbiter dated December 10, 2004. high managerial position, respondents are jointly and severally ordered to pay complainant moral damages in the
The Facts amount of P1,000,000.00 and exemplary damages in the amount of P500,000.00.

Philippine National Oil Company-Energy Development Corporation (PNOC-EDC) hired Amelyn Buenviaje (Buenviaje) as Finally, respondents are hereby ordered to return to complainant the amount of P51,692.72, which they illegally
Assistant to the then Chairman/President and Chief Executive Officer Sergio A.F. Apostol (Apostol), her father. deducted from her last salary and to pay the sum equivalent to ten percent of the judgment award as and by way of
Buenviaje's employment contract provided that she will serve until June 30, 2004 or co-terminous with the tenure of attorney's fees.
Apostol, whichever comes first.6ChanRoblesVirtualawlibrary
SO ORDERED.24 (Emphasis in the original.)cralawred
On August 4, 2003, Apostol approved the creation of PNOC-EDC's new Marketing Division composed of thirty (30) The Labor Arbiter held that Buenviaje was a regular employee because her appointment letter clearly says so. Any doubt
positions. Seven (7) of these thirty (30) positions were also newly created, 7 one of which was that of a Marketing Division caused by the statement in the appointment letter that Buenviaje's appointment was subject to confirmation must be
Manager.8 Buenviaje assumed this position as early as the time of the creation of the Marketing resolved against PNOC-EDC. In addition, PNOC-EDC failed to prove that reasonable standards were explained to
Division.9ChanRoblesVirtualawlibrary Buenviaje at the time of her engagement, thusly negating PNOC-EDC's claim that she was merely a probationary
employee. The Labor Arbiter noted that PNOC-EDC even admitted that the alleged standards were only set and discussed
On January 5, 2004, Apostol filed his Certificate of Candidacy as Governor for the province of Leyte, yet continued to with Buenviaje more than a month after her actual appointment.25ChanRoblesVirtualawlibrary
discharge his functions as President in PNOC-EDC.10 Buenviaje also continued to perform her duties as Assistant to the
Chairman/President and Marketing Division Manager in PNOC-EDC.11ChanRoblesVirtualawlibrary The Labor Arbiter further ruled that PNOC-EDC also failed to explain why Buenviaje was allowed to enjoy benefits that
were supposed to be exclusive for regular employees. As a regular employee, therefore, Buenviaje could only be
On February 2, 2004, Paul Aquino (Aquino), the new President of PNOC-EDC, appointed Buenviaje to the position of dismissed for any of the just or authorized causes under Articles 282 and 28326 of the Labor Code. Since the cause for
Senior Manager for Marketing Division effective February 1, 2004. 12 The appointment letter partly Buenviaje's dismissal was not included in any of the grounds enumerated in either Article, she was considered illegally
provides:chanRoblesvirtualLawlibrary dismissed. The Labor Arbiter found Guerzon and Aquino to have acted in bad faith due to their failure to explain the
By copy of this letter, HRMD [Human Resources Management Division] is instructed to amend your present employment standards to Buenviaje, as well as why the evaluation form for regular employees was used in her evaluation. They also
status from your present position as Assistant to the President (co-terminus) to regular status and as such you will be
failed to respond to Buenviaje's allegation that the second evaluation was done in bad faith to serve as an excuse in The CA found no reason to disturb the findings of both the Labor Arbiter and the NLRC that Buenviaje was a regular
dismissing her. The Labor Arbiter noted that the second evaluation appeared irregular because it did not bear the employee of PNOC-EDC. However, it disagreed with the NLRC's ruling that Buenviaje failed to acquire security of tenure.
signature and approval of Aquino. Consequently, for lack of the required approval, the second evaluation could not serve The CA stated that where an employee has been engaged to perform activities which are usually necessary or desirable in
as a valid basis to remove Buenviaje.27ChanRoblesVirtualawlibrary the usual business of the employer, such employee is deemed a regular employee and is entitled to security of tenure
notwithstanding the contrary provisions of his contract of employment.39 As a regular employee, Buenviaje may only be
Both parties appealed to the NLRC. dismissed if there are just or authorized causes. Thus, PNOC-EDC's reasoning that she failed to qualify for the position
cannot be countenanced as a valid basis for her dismissal.40ChanRoblesVirtualawlibrary
The Ruling of the National Labor Relations Commission
Both parties filed their respective motions for reconsideration, which the CA denied. Hence, these consolidated petitions,
In its Resolution28 dated September 27, 2005, the NLRC ruled:chanRoblesvirtualLawlibrary which present the following issues:chanRoblesvirtualLawlibrary
WHEREFORE, premises considered, the appeal is partly GRANTED and the Decision dated 10 December 2004 is hereby
MODIFIED ordering respondent-appellant PNOC-Energy Development Corporation to pay complainant-appellee I. Whether Buenviaje was a permanent employee;
financial assistance in the amount of P229,681.35 only and her accrued wages in the amount of P1,224,967.28 for the
period covering December 2004, the date of the decision ordering her reinstatement until the date of this Resolution. The
II. Whether Buenviaje was illegally dismissed;
order to return to complainant-appellee the amount of P51,692.72, which represents deduction from her salary and not
raised on appeal, STANDS. Finally, the award of moral and exemplary damages and attorney's fees, as well as the joint
and solidarily (sic) liability of individual respondents Paul A. Aquino and Ester R. Guerzon are hereby DELETED. III. Whether Buenviaje is entitled to moral and exemplary damages as well as attorney's fees;

SO ORDERED.29 (Emphasis in the original.)cralawred IV. Whether Buenviaje should be given separation pay in lieu of reinstatement; and
The NLRC agreed with the Labor Arbiter that Buenviaje was a regular employee of PNOC-EDC, noting that the terms of
her appointment expressly grants a regular status of employment. 30 The NLRC also found that PNOC-EDC admitted that V. Whether Aquino and Guerzon should be held jointly and severally liable to Buenviaje.
Buenviaje has been performing the functions of a Marketing Division Manager for more than six (6) months before she
was formally appointed to the said position.31 Nevertheless, the NLRC ruled that she was not illegally dismissed because Our Ruling
she did not enjoy security of tenure.32 The NLRC noted that the condition in Buenviaje's appointment letter, which
provided that her appointment is subject to confirmation by her immediate superior based on her performance during Buenviaje was a permanent employee
the next six (6) months, was clear and understood by her when she affixed her signature to the appointment letter. 33 The
NLRC concluded that only upon confirmation of her appointment will Buenviaje enjoy the right to security of tenure. 34 As Buenviaje was hired as a Marketing Division Manager, a position that performs activities that are usually necessary and
it was, PNOC-EDC found her performance unsatisfactory and Buenviaje failed to disprove these findings. Therefore, desirable to the business of PNOC-EDC and is thusly, regular. As an employer, PNOC-EDC has an exclusive management
Buenviaje failed to complete her appointment as a regular employee and her non-confirmation cannot be considered as prerogative to hire someone for the position, either on a permanent status right from the start or place him first on
an illegal dismissal.35ChanRoblesVirtualawlibrary probation. In either case, the employee's right to security of tenure immediately attaches at the time of hiring.41 As a
permanent employee, he may only be validly dismissed for a just 42 or authorized43 cause. As a probationary employee, he
With respect to Buenviaje's prayer for moral and exemplary damages, and attorney's fees, the NLRC found no basis to may also be validly dismissed for a just or authorized cause, or when he fails to qualify as a regular employee in
grant the same. The NLRC also found no basis for the solidary liability of Aquino and accordance with reasonable standards made known to him by the employer at the time of his engagement. 44 Apart from
Guerzon.36ChanRoblesVirtualawlibrary the protection this last ground in the dismissal of a probationary employee affords the employee, it is also in line with the
right or privilege of the employer to choose who will be accorded with regular or permanent status and who will be
Both parties asked the NLRC to reconsider its Resolution, but the NLRC denied their motions. Thus, both parties filed denied employment after the period of probation. It is within the exercise of this right that the employers may set or fix a
their petitions for certiorari with the CA. probationary period within which it may test and observe the employee's conduct before hiring him
permanently.45ChanRoblesVirtualawlibrary
The Ruling of the Court of Appeals
Here, PNOC-EDC exercised its prerogative to hire Buenviaje as a permanent employee right from the start or on February
The CA partially modified the Resolution of the NLRC. The dispositive portion of the CA Decision 37 dated October 31, 1, 2004, the effectivity date of her appointment. In her appointment letter, PNOC-EDC's President expressly instructed
2007 reads:chanRoblesvirtualLawlibrary the HRMD to amend Buenviaje's status from co-terminous to regular. He also informed her that her regular status shall
WHEREFORE, in view of all the foregoing, the September 27, 2005 and January 31, 2006 Resolutions of the NLRC are be retroactive to July 1, 2001. Nowhere in the appointment letter did PNOC-EDC say that Buenviaje was being hired on
MODIFIED as follows: probationary status. Upon evaluation on two (2) occasions, PNOC-EDC used a performance appraisal form intended for
permanent managerial employees, even if the company had a form for probationary employees. The intention, therefore,
For having been illegally dismissed, petitioner Amelyn Buenviaje is entitled to receive a separation pay equivalent to 1/2 all along was to grant Buenviaje regular or permanent employment. As correctly observed by the
month pay for every year of service (with a fraction of at least 6 months considered one whole year) in lieu of CA:chanRoblesvirtualLawlibrary
reinstatement. In addition she is also to receive full backwages inclusive of allowances and other benefits or their Accordingly, at the time of her formal appointment to the position on February 2, 2004, Amelyn Buenviaje has been
monetary equivalent, computed from the time the compensation was withheld up to the finality of this decision. performing the functions of a Senior Manager of the Marketing Division for almost six months. After having had the
opportunity to observe her performance for almost six months as Senior Marketing Manager, PNOC should not have
The other awards in the NLRC decision as well as the deletion of the joint and solidary liabilities of Paul A. Aquino and formally appointed her if she appeared to have been unqualified for the position. But as it is, Amelyn Buenviaje was
Ester R. Guerzon are hereby AFFIRMED. formally appointed and given a regular status. x x x46cralawred
This intention was clear notwithstanding the clause in the appointment letter saying that Buenviaje's appointment was
SO ORDERED.38 (Emphasis in the original.)cralawred
subject to confirmation by her immediate superior based on her performance during the next six (6) months. This clause
did not make her regularization conditional, but rather, effectively informed Buenviaje that her work performance will be evaluation system for all of its employees; and
evaluated later on. PNOC-EDC, on the other hand, insists that this clause demonstrates that Buenviaje was merely a
probationary employee. Consequently, when she failed to meet the standards set by PNOC-EDC, the latter was well (h) Moreover, Alcaraz had previously worked for another pharmaceutical company and had admitted to have an
within its rights not to confirm her appointment and to dismiss her. "extensive training and background" to acquire the necessary skills for her job. 59cralawred
We concluded that "[c]onsidering the totality of the above-stated circumstances, it cannot, therefore, be doubted that
We are not persuaded.
Alcaraz was well-aware that her regularization would depend on her ability and capacity to fulfill the requirements of her
position as Regulatory Affairs Manager and that her failure to perform such would give Abbott a valid cause to terminate
Firstly, if the clause in the appointment letter did cause an ambiguity in the employment status of Buenviaje, we hold that
her probationary employment."60ChanRoblesVirtualawlibrary
the ambiguity should be resolved in her favor. This is in line with the policy under our Labor Code to afford protection to
labor and to construe doubts in favor of labor. 47 We upheld this policy in De Castro v. Liberty Broadcasting Network, Inc.,48
We stress here that the receipt by Buenviaje of her job description does not make this case on all fours with Abbott. The
ruling that between a laborer and his employer, doubts reasonably arising from the evidence or interpretation of
receipt of job description and the company's code of conduct in that case was just one of the attendant circumstances
agreements and writing should be resolved in the former's favor.49 Hence, what would be more favorable to Buenviaje
which we found equivalent to being actually informed of the performance standards upon which a probationary
would be to accord her a permanent status.
employee should be evaluated. What was significant in that case was that both the offer sheet and the employment
contract specifically stated that respondent was being employed on a probationary status. Thus, the intention of Abbott
But more importantly, apart from the express intention in her appointment letter, there is substantial evidence to prove
was to hire Alcaraz as a probationary employee. This circumstance is not obtaining in this case and the opposite, as we
that Buenviaje was a permanent employee and not a probationary one.
have already discussed, is true.
A probationary employee is defined as one who is on trial by an employer during which the employer determines whether
Of equal significance, the job description attached to Buenviaje's appointment letter merely answers the question: "what
or not he is qualified for permanent employment. 50 In general, probationary employment cannot exceed six (6) months,
duties and responsibilities does the position entail?", but fails to provide the answer/s to the question: "how would the
otherwise the employee concerned shall be considered a regular employee.51 It is also indispensable in probationary
employer gauge the performance of the probationary employee?". The job description merely contains her job
employment that the employer informs the employee of the reasonable standards that will be used as a basis for his or
identification, her immediate superior and subordinates, a list of her job objectives, duties and responsibilities, and the
her regularization at the time of his or her engagement.52 If the employer fails to comply with this, then the employee is
qualification guidelines required of her position (i.e., minimum education, minimum experience, and special skills). There
considered a regular employee.53ChanRoblesVirtualawlibrary
is no question that performance of duties and responsibilities is a necessary standard for qualifying for regular
employment. It does not stop on mere performance, however. There must be a measure as to how poor, fair, satisfactory,
In their reply to Buenviaje dated July 28, 2004, PNOC-EDC reminded Buenviaje that the standards "were thoroughly
or excellent the performance has been. PNOC-EDC, in fact, used an appraisal form when it evaluated the performance of
discussed with [her] separately soon alter [she] signed [her] contract, as well as that which was contained in the job
Buenviaje twice. A copy of this appraisal form, unlike in Abbot, was not given to Buenviaje at any time prior to, during the
description attached thereto."54 PNOC-EDC maintained this position in its appeal memorandum,55 asserting that
time of her engagement, and the incipient stages of her employment. A comparison of the job description and the
Buenviaje was apprised of the reasonable standards for regularization by virtue of the job description attached to her
standards in the appraisal form reveals that they are distinct. The job description is just that, an enumeration of the
appointment.56 They also alleged that the standards were discussed with Buenviaje prior to her first and second
duties and responsibilities of Buenviaje. To better illustrate, the job objectives, duties and responsibilities of Buenviaje
appraisals.57 We, however, do not find these circumstances sufficient to categorize Buenviaje as a probationary employee.
are set out below:chanRoblesvirtualLawlibrary
III. JOB OBJECTIVE
In Abbott Laboratories, Philippines v. Alcaraz,58 we were confronted with the similar question of whether Alcaraz was
sufficiently informed of the reasonable standards that would qualify her as a regular employee. In affirming that she was,
we enumerated the details and circumstances prior to, during the time of her engagement, and the incipient stages of her 1. To set the overall marketing objectives and directions of EDC, in coordination with EDC Operations,
employment that show she was well-apprised of her employer's expectations that would, in turn, determine her through the Department Managers and Corporate Services units.
regularization. These were:chanRoblesvirtualLawlibrary
(a) On June 27, 2004, Abbott caused the publication in a major broadsheet newspaper of its need for a Regulatory Affairs 2. To initiate the preparation of detailed/specific short (annual) and medium to long term (2-5 years)
Manager, indicating therein the job description for as well as the duties and responsibilities attendant to the aforesaid marketing plans and programs.
position; this prompted Alcaraz to submit her application to Abbott on October 4, 2004;

(b) In Abbott's December 7, 2004 offer sheet, it was stated that Alcaraz was to be employed on a probationary status; 3. To monitor the implementation of the work performance and execution of the plans and programs
of Public & Marketing Relations, Power & Energy Services, and Market Development.
(c) On February 12, 2005, Alcaraz signed an employment contract which specifically stated, inter alia, that she was to be
placed on probation for a period of six (6) months beginning February 15, 2005 to August 14, 2005; 4. To manage the functional and administrative requirements of the managers for Public & Marketing
Relations, Power & Energy Services, and Market Development.
(d) On the day Alcaraz accepted Abbott's employment offer, Bernardo sent her copies of Abbott's organizational
structure and her job description through e-mail; IV. DUTIES AND RESPONSIBILITIES
(e) Alcaraz was made to undergo a pre-employment orientation where Almazar informed her that she had to implement
Abbott's Code of Conduct and office policies on human resources and finance and that she would be reporting directly to 1. Ensures that a survey of potential markets and customers in relation to newly developed or soon-to-
Walsh; be- completed power projects are regularly initiated.

(f) Alcaraz was also required to undergo a training program as part of her orientation; 2. Develops marketing plans and strategies with Managers and staff, relevant to new and/or
uncommitted power and/or resources for both contracted and through the Wholesale Electricity
(g) Alcaraz received copies of Abbott's Code of Conduct and Performance Modules from Misa who explained to her the Spot Market (WESM).
procedure for evaluating the performance of probationary employees; she was further notified that Abbott had only one
 3. Develops marketing plans and strategies with managers on new opportunities for Energy Services she has ensured that a survey of potential markets and customers in relation to newly developed or soon-to-be-
(Drilling, Geoscientific, Design and Engineering, etc.). completed power projects are regularly initiated?".

4. Ensures and oversees the development of a business networking system and database. On the other hand, the appraisal form appraises the elements of performance, which are categorized into results-based
factors, individual effectiveness and co-worker effectiveness.62 Pertinently, the results-based factors, which are broken
down into output indicators of: 1.) quality, 2.) quantity, 3.) timeliness, 4.) cost effectiveness, 5.)
5. Establishes business contacts (domestic and overseas) and oversees market development and
safety/housekeeping/environmental consciousness, and 6.) profit objectives, are rated according to expected outputs or
opportunities through the subordinate managers.
key result areas, performance standards, and actual accomplishments. Clearly, the form specifies the performance
standards PNOC-EDC will use, which demonstrates that PNOC-EDC expected a certain manner, level, or extent by which
6. Ensures and oversees the development of an effective advertising program, annually and as needed she should perform her job. PNOC-EDC knew the job description and the performance appraisal form are not one and the
(print, publication, etc.), to propagate and enhance EDC's public image and awareness of its same, having specifically used the latter when it evaluated Buenviaje and not the job description attached to the
marketable products and services. appointment letter. The fact, therefore, that PNOC-EDC used a performance appraisal form with standards expected from
Buenviaje further negates any assumption that these standards were of basic knowledge and common sense, 63 or that
7. Develops new marketable products and services, in coordination with Operations and Corporate Buenviaje's position was self-descriptive such that there was no need to spell out the standards at the time of her
Services. engagement.64ChanRoblesVirtualawlibrary

8. Represents Top Management in various fora, conventions, etc. for business/marketing Buenviaje was illegally dismissed
opportunities domestically and internationally.
The foregoing discussion proves Buenviaje was hired as a permanent employee on February 1, 2004. As a permanent
employee, she may only be dismissed by PNOC-EDC after observing the following substantive and procedural
9. Ensures that an effective system of customer after-sales and service monitoring is in place. requirements:chanRoblesvirtualLawlibrary

10. Approves all expense disbursements, contracts, and other corporate documents in accordance with
1. The dismissal must be for a just or authorized cause;
the approval limits specified in the EDC Approvals Policy.

2. The employer must furnish the employee with two (2) written notices before termination of
11. Issues instructions on marketing matters to the subordinate managers in accordance with decisions
employment can be legally effected. The first notice states the particular acts or omissions for which
from Top Management/Board and/or as coordinated with Operations and Corporate Services.
dismissal is sought while the second notice states the employer's decision to dismiss the employee;
and
12. Initiates and conducts check-up meetings and conferences with the subordinate managers and their
staff.
3. The employee must be given an opportunity to be heard. 65

13. Functions as budget administrator of the Senior Manager's Office.

PNOC-EDC failed to observe these requirements because it operated on the wrong premise that Buenviaje was a
probationary employee. But even if we were to assume that she was, she would still be illegally dismissed in light of
14. Oversees the preparation of the consolidated annual capital and operating expense budget for the
PNOC-EDC's violation of the provisions of the Labor Code in dismissing a probationary employee.
division.
A probationary employee also enjoys security of tenure, although it is not on the same plane as that of a permanent
15. Lixecutes EDC's marketing/contracts, in accordance with approvals policy. employee.66 This is so because aside from just and authorized causes, a probationary employee may also be dismissed
due to failure to qualify in accordance with the standards of the employer made known to him at the time of his
16. Oversees the preparation and consolidation of all the personnel performance appraisals of the engagement.67 PNOC-EDC dismissed Buenviaje on this latter ground; that is, Buenviaje allegedly failed to meet the
division and effectively administers the forced-ranking program, consistent with company standards set by the company. In dismissing probationary employees on this ground, there is no need for a notice and
guidelines. hearing.68 The employer, however, must still observe due process of law in the form of: 1) informing the employee of the
reasonable standards expected of him during his probationary period at the time of his engagement;69 and 2) serving the
17. Administers the personnel performance appraisal of office staff and managers. employee with a written notice within a reasonable time from the effective date of termination. 70 By the very nature of a
probationary employment, the employee needs to know from the very start that he will be under close observation and
his performance of his assigned duties and functions would be under continuous scrutiny by his superiors. It is in
18. Oversees the preparation of the training requirements of the subordinate managers and their staff. apprising him of the standards against which his performance shall be continuously assessed where due process lies. 71
Likewise, probationary employees are entitled to know the reason for their failure to qualify as regular
19. Performs other duties which may be assigned from time to time.61 employees.72ChanRoblesVirtualawlibrary

The foregoing, however, invite the question as to what are the specific qualitative and/or quantitative standards of As we have previously settled, PNOC-EDC failed to inform Buenviaje of the reasonable standards for her regularization at
PNOC-EDC. With respect to the first job objective listed above, for instance, one may ask: "how will PNOC-EDC measure the time of her engagement. The unfairness of this failure became apparent with the results of Buenviaje's appraisals. In
the performance of Buenviaje as to whether she has adequately set the overall marketing objectives and directions of her first appraisal covering a three-month period from February 1, 2004 to April 30, 2004, Buenviaje received a
PNOC-EDC, in coordination with PNOC-EDC Operations, through the Department Managers and Corporate Service satisfactory rating. It was in her second appraisal covering a two-month period from May 1, 2004 to June 30, 2004 where
units?". The same is true with the first duty: "how will PNOC-EDC measure the performance of Buenviaje as to whether she received an unsatisfactory rating that led to her dismissal. There was no proof, however, that per PNOC-EDC's
standards, receiving an unsatisfactory rating of four (4) from a satisfactory rating of three (3) will result to failure to informs the employee of the particular acts or omissions for which his or her dismissal is sought, and a second written
qualify for regularization. notice which informs the employee of the employer's decision to dismiss him. In considering whether the charge in the
first notice is sufficient to warrant dismissal under the second notice, the employer must afford the employee ample
Neither would PNOC-EDC's reason for dismissing Buenviaje qualify as a just cause. Under Article 297 of the Labor Code, opportunity to be heard.81 Although Buenviaje indeed received two (2) letters from PNOC-EDC regarding her
an unsatisfactory rating can be a just cause for dismissal only if it amounts to gross and habitual neglect of duties. 73 termination, these letters fall short of the two (2) notices required under the law. The first letter sent to Buenviaje failed
Analogous to this ground, an unsatisfactory performance may also mean gross inefficiency. "Gross inefficiency" is closely to apprise her of the particular acts or omissions on which her dismissal was based. It was merely a bare statement that
related to "gross neglect," for both involve specific acts of omission on the part of the employee resulting in damage to the Buenviaje's performance failed to meet PNOC-EDC's minimum requirements. True, Buenviaje replied to the first letter,
employer or to his business.74 Failure to observe prescribed standards of work or to fulfill reasonable work assignments but considering that it did not specify the acts or omissions warranting her dismissal but only served to inform her of her
due to inefficiency may constitute just cause for dismissal. Such inefficiency is understood to mean failure to attain work termination, Buenviaje was not afforded a reasonable and meaningful opportunity to explain her side.
goals or work quotas, either by failing to complete the same within the allotted reasonable period, or by producing
unsatisfactory results. This management prerogative of requiring standards may be availed of so long as they are Buenviaje is entitled to separation pay and attorney's fees
exercised in good faith for the advancement of the employer's interest.75ChanRoblesVirtualawlibrary
An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and
The fact that an employee's performance is found to be poor or unsatisfactory does not necessarily mean that the other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent
employee is grossly and habitually negligent of or inefficient in his duties. 76 Buenviaje's performance, poor as it might computed from the time his compensation was withheld from him up to the time of his actual reinstatement. 82 However,
have been, did not amount to gross and habitual neglect of duties or gross inefficiency. The markedly different results of there are instances when reinstatement is no longer feasible, such as when the employer-employee relationship has
several factors in the appraisals in a span of five (5) months prove this. To illustrate:chanRoblesvirtualLawlibrary become strained. In these cases, separation pay may be granted in lieu of reinstatement, the payment of which favors
both parties. As we have previously stated in Bank of Lubao, Inc. v. Manabat:83
February 1, 2004 - April 30, 2004 May 1, 2004 - June 30, 2004 x x x On one hand, such payment [of separation pay] 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
Quantity — x x x Completed the public relations Quantity — While several marketing programs have employ a worker it could no longer trust.84cralawred
programs scheduled within the period including those been undertaken, no submissions were made on the
Separation pay or financial assistance may also be granted to a legally terminated employee as an act of social justice and
directed on special assignment basis like the Dr. Alcaraz projects required by immediate superior x x x.
equity when the circumstances so warrant.85 In awarding financial assistance, the interests of both the employer and the
lounge.
employee must be tempered, if only to approximate what Justice Laurel calls justice in its secular sense. 86 As the term
suggests, its objective is to enable an employee to get by after he has been stripped of his source of income from which he
Timeliness — Timely submission of reports and Timeliness — Mas not met organizational needs as the relies mainly, if not, solely.87ChanRoblesVirtualawlibrary
processed invoices. PR programs were responsive to required projects on Tongonan I and Bacman deemed
company's call. important for the formulation of strategies have not We agree with the CA that the reinstatement of Buenviaje is no longer viable given the irreconcilable differences and
been submitted. x x x Priorities have not been set so as strained relations between her and PNOC-EDC. In light of this, separation pay with full backwages, in lieu of Buenviaje's
to be responsive to company needs. reinstatement, is warranted.

Cost Effectiveness — Observed in general the proper use Cost Effectiveness — Some recommendations tended to Moreover, it is a well-settled rule that in actions for recovery of wages, or where an employee was forced to litigate and,
of operating and capital budgets. be expensive and demonstrated non-optimization of thus, incur expenses to protect his rights and interests, attorney's fees may be granted pursuant to Article 111 of the
funds, methods and manpower. Labor Code.88 Considering, therefore, that she was forced to litigate in order to assert her rights, 89 Buenviaje is entitled to
attorney's fees in the amount often percent (10%) of the total award of backwages. 90ChanRoblesVirtualawlibrary
Judgment — Able to come up with good decisions but Judgment — Needed to come up with more sound
has to arrive at more complete and conclusive decisions. Examples: x x x Buenviaje is entitled to moral and exemplary damages
recommendations. Examples: x x x
The claim for moral damages cannot be justified solely upon the premise that the employer fired his employee without
Leadership — She has a strong personality and able to Leadership — x x x Not much supervision and direction just cause or due process. Additional facts must be pleaded and proven to warrant the grant of moral damages under the
influence others specially the subordinates to is given to her various departments as can be gleaned Civil Code, these being, that the act of dismissal was attended by bad faith or fraud, or was oppressive to labor, or done in
accomplish their tasks diligently.77 from the quality of work produced particularly in a manner contrary to morals, good customs, or public policy; and, of course, that social humiliation, wounded feelings,
Market Development where results are mere grave anxiety, etc., resulted therefrom.91 Bad faith "implies a conscious and intentional design to do a wrongful act for a
researchers (sic) without firm recommendations where dishonest purpose or moral obliquity."92 Bad faith must be proven through clear and convincing evidence. This is because
applicable.78 bad faith and fraud are serious accusations that can be so conveniently and casually invoked, and that is why they are
never presumed. They amount to mere slogans or mudslinging unless convincingly substantiated by whoever is alleging
Gross negligence implies a want or absence of or failure to exercise slight care or diligence, or the entire absence of care. them.93ChanRoblesVirtualawlibrary
It evinces a thoughtless disregard of consequences without exerting any effort to avoid them. 79 As a just cause, it also has
to be habitual, which implies repeated failure to perform one's duties for a period of time, depending upon the Exemplary damages, on the other hand, may be granted when the dismissal of the employee was done in a wanton,
circumstances. A single or isolated act of negligence, as was shown here, does not constitute a just cause for the dismissal oppressive or malevolent manner.94ChanRoblesVirtualawlibrary
of the employee.80ChanRoblesVirtualawlibrary
Buenviaje argues that she is entitled to an award of these damages because PNOC-EDC, Aquino, and Guerzon acted in bad
PNOC-EDC would also be in violation of procedural due process if Buenviaje were dismissed on the purported ground of faith.95 To Buenviaje's mind, the following acts of PNOC-EDC, Aquino, and Guerzon prove that they acted in bad
gross negligence or inefficiency. For termination of employees based on just causes, the employer must furnish the faith:chanRoblesvirtualLawlibrary
employee with two (2) written notices before termination of employment can be effected: a first written notice that
 1. They used the evaluation form for regular employees in evaluating Buenviaje;
While the position paper of Buenviaje alleges that the respondents acted in bad faith and that Aquino and Guerzon, in
2. Buenviaje was evaluated using the standards for regular employees; particular, conspired with each other to terminate her illegally, we find these allegations were not clearly and
convincingly proved. To our mind, there was insufficient evidence that Aquino and Guerzon were personally motivated
by ill-will in dismissing Buenviaje.105ChanRoblesVirtualawlibrary
3. Unlike the first evaluation, Aquino did not sign the second evaluation; and
WHEREFORE, the petition in G.R. Nos. 183200-01 is DENIED while the petition in G.R. Nos. 183253 and 183257 is
4. The second evaluation was conducted without Buenviaje's knowledge. 96 PARTIALLY GRANTED. The October 31, 2007 Decision and June 3, 2008 Resolution of the CA in CA-G.R. S.P. Nos. 94359
and 94458 are AFFIRMED with the MODIFICATION that PNOC-EDC is ordered to pay Amelyn Buenviaje moral damages
We agree that there was manifest bad faith when Buenviaje was evaluated using the standards and performance in the amount of P30,000, exemplary damages in the amount of P25,000, and attorney's fees equivalent to ten percent
appraisal form for regular employees, yet, in dismissing her, she was treated as a probationary employee. To reiterate, (10%) of the total award of backwages.
the clear intention of PNOC-EDC from the start was to grant Buenviaje a permanent status. She was evaluated in a short
span of five (5) months, in which her previous satisfactory outputs turned unsatisfactory. There were also factors or SO ORDERED.chanroblesvirtuallawlibrary
variables that showed PNOC-EDC initially found as her strengths but were now inexplicably viewed as negative. For
example, PNOC-EDC found Buenviaje's political connections helpful in pushing for marketing programs; yet, PNOC-EDC
criticized her for flaunting her strong political connections as an instrument in achieving the company's
objectives.97ChanRoblesVirtualawlibrary
lii. Who are field personnel (Hilario Dasco, et al. Vs. Philtranco Service Enterprises Inc., G.R. No.
With regard to the third and fourth acts, though, we find no malice or bad faith against PNOC-EDC. PNOC-EDC was able to 211141. June 29, 2016)
refute the allegation that Aquino did not sign the second evaluation by annexing a signed one in its appeal liii. Validity of contract provision forfeiting commission (Century Properties, Inc. Vs. Edwin J.
memorandum.98 As to the allegation that her second evaluation was conducted without her knowledge, we find the same Babiano and Emma B. Concepcion, G.R. No. 220978. July 5, 2016)
inconsequential. To repeat, Buenviaje's appointment letter apprised her of performance evaluations in the horizon for
the next six (6) months. Even if it weren't expressly communicated to her, it would have certainly been reasonable for
Buenviaje to expect that her performance would be gauged and appraised at any given time. b. Review of important 2015 Decisions

Thus, the Labor Arbiter's award of moral and exemplary damages is proper. We are wont, however, to reduce the
amounts he fixed by reason alone of the "extent of the damage done to [Buenviaje] who occupies a high managerial liv. Illegal dismissal in relation to strike
position."99 We find his award excessive in the absence of evidence to prove the degree of moral suffering or injury that lv. Bond requirement; McBurnie ruling; Provisional Bond; Judicial courtesy precept;
Buenviaje suffered.100 In line with our ruling in Magsaysay Maritime Corporation v. Chin, Jr.,101 we hold that an award of Compromise agreement; Appeal is not a natural right
P30,000 as moral damages and P25,000 as exemplary damages is more fair and reasonable. We lvi. Two classes of positions of trust; “fiduciary rank and file employees”; confidential employees
explained:chanRoblesvirtualLawlibrary hold positions of trust and confidence; disqualification from union of confidential employees
x x x It has been held that in order to arrive at a judicious approximation of emotional or moral injury, competent and due to potential conflict of interests; Article 248 (a) covers only interference with the right to
substantial proof of the suffering experienced must be laid before the court. It is worthy to stress that moral damages are self-organization of bona fide members of the bargaining unit; payment of wages of
awarded as compensation for actual injury suffered and not as a penalty. The Court believes that an award of P30,000.00 dismissed employees during the period of appeal until reversal (Garcia vs. PAL)
as moral damages is commensurate to the anxiety and inconvenience that Chin suffered.

As for exemplary damages, the award of P25,000.00 is already sufficient to discourage petitioner Magsaysay from
entering into iniquitous agreements with its employees that violate their right to collect the amounts to which they are
entitled under the law. Exemplary damages are imposed not to enrich one party or impoverish another but to serve as a
deterrent against or as a negative incentive to curb socially deleterious actions.102 (Citations omitted.)cralawred
However, the extent of liability of the respondents should not be solidary. JUANITO GARCIA VS. PAL G.R. NO. 164856, JANUARY 20, 2009

A corporation, as a juridical entity, may act only through its directors, officers and employees. Obligations incurred as a Petitioners Juanito A. Garcia and Alberto J. Dumago assail the December 5, 2003 Decision and April 16, 2004
result of the directors' and officers' acts as corporate agents, are not their personal liability but the direct responsibility Resolution of the Court of Appeals1[1] in CA-G.R. SP No. 69540 which granted the petition for certiorari of respondent,
of the corporation they represent. As a rule, they are only solidarity liable with the corporation for the illegal termination
of services of employees if they acted with malice or bad faith.103ChanRoblesVirtualawlibrary Philippine Airlines, Inc. (PAL), and denied petitioners Motion for Reconsideration, respectively. The dispositive portion of
the assailed Decision reads:
To hold a director or officer personally liable for corporate obligations, two (2) requisites must concur: (1) it must be
alleged in the complaint that the director or officer assented to patently unlawful acts of the corporation or that the
officer was guilty of gross negligence or bad faith; and (2) there must be proof that the officer acted in bad WHEREFORE, premises considered and in view of the foregoing, the instant petition is
faith.104ChanRoblesVirtualawlibrary hereby GIVEN DUE COURSE. The assailed November 26, 2001 Resolution as well as the January 28,
 2002 Resolution of public respondent National Labor Relations Commission [NLRC] is hereby Respondent thereupon moved to quash the Writ and to lift the Notice while petitioners moved to release the garnished
ANNULLED and SET ASIDE for having been issued with grave abuse of discretion amounting to lack or
amount.
excess of jurisdiction. Consequently, the Writ of Execution and the Notice of Garnishment issued by the
Labor Arbiter are hereby likewise ANNULLED and SET ASIDE.
In a related move, respondent filed an Urgent Petition for Injunction with the NLRC which, by Resolutions of
SO ORDERED.2[2]
November 26, 2001 and January 28, 2002, affirmed the validity of the Writ and the Notice issued by the Labor Arbiter but
The case stemmed from the administrative charge filed by PAL against its employees-herein petitioners3[3] after
suspended and referred the action to the Rehabilitation Receiver for appropriate action.
they were allegedly caught in the act of sniffing shabu when a team of company security personnel and law enforcers raided
the PAL Technical Centers Toolroom Section on July 24, 1995.
Respondent elevated the matter to the appellate court which issued the herein challenged Decision and
After due notice, PAL dismissed petitioners on October 9, 1995 for transgressing the PAL Code of Discipline,4[4]
Resolution nullifying the NLRC Resolutions on two grounds, essentially espousing that: (1) a subsequent finding of a valid
prompting them to file a complaint for illegal dismissal and damages which was, by Decision of January 11, 1999,5[5]
dismissal removes the basis for implementing the reinstatement aspect of a labor arbiters decision (the first ground), and
resolved by the Labor Arbiter in their favor, thus ordering PAL to, inter alia, immediately comply with the reinstatement
(2) the impossibility to comply with the reinstatement order due to corporate rehabilitation provides a reasonable
aspect of the decision.
justification for the failure to exercise the options under Article 223 of the Labor Code (the second ground).

Prior to the promulgation of the Labor Arbiters decision, the Securities and Exchange Commission (SEC) placed By Decision of August 29, 2007, this Court PARTIALLY GRANTED the present petition and effectively reinstated
PAL (hereafter referred to as respondent), which was suffering from severe financial losses, under an Interim the NLRC Resolutions insofar as it suspended the proceedings, viz:
Rehabilitation Receiver, who was subsequently replaced by a Permanent Rehabilitation Receiver on June 7, 1999.
Since petitioners claim against PAL is a money claim for their wages during the pendency of
PALs appeal to the NLRC, the same should have been suspended pending the rehabilitation
From the Labor Arbiters decision, respondent appealed to the NLRC which, by Resolution of January 31, 2000, proceedings. The Labor Arbiter, the NLRC, as well as the Court of Appeals should have abstained from
resolving petitioners case for illegal dismissal and should instead have directed them to lodge their
reversed said decision and dismissed petitioners complaint for lack of merit.6[6]
claim before PALs receiver.

However, to still require petitioners at this time to re-file their labor claim against PAL
Petitioners Motion for Reconsideration was denied by Resolution of April 28, 2000 and Entry of Judgment was
under peculiar circumstances of the case that their dismissal was eventually held valid with only the
issued on July 13, 2000.7[7] matter of reinstatement pending appeal being the issue this Court deems it legally expedient to
suspend the proceedings in this case.

Subsequently or on October 5, 2000, the Labor Arbiter issued a Writ of Execution (Writ) respecting the WHEREFORE, the instant petition is PARTIALLY GRANTED in that the instant proceedings
herein are SUSPENDED until further notice from this Court. Accordingly, respondent Philippine
reinstatement aspect of his January 11, 1999 Decision, and on October 25, 2000, he issued a Notice of Garnishment (Notice).
Airlines, Inc. is hereby DIRECTED to quarterly update the Court as to the status of its ongoing
rehabilitation. No costs.
 SO ORDERED.8[8] (Italics in the original; underscoring supplied)
The view as maintained in a number of cases is that:

By Manifestation and Compliance of October 30, 2007, respondent informed the Court that the SEC, by Order of
x x x [E]ven if the order of reinstatement of the Labor Arbiter is reversed on appeal, it
September 28, 2007, granted its request to exit from rehabilitation proceedings.9[9]
is obligatory on the part of the employer to reinstate and pay the wages of the dismissed
employee during the period of appeal until reversal by the higher court. On the other hand, if the
employee has been reinstated during the appeal period and such reinstatement order is reversed with
In view of the termination of the rehabilitation proceedings, the Court now proceeds to resolve the remaining
finality, the employee is not required to reimburse whatever salary he received for he is entitled to
issue for consideration, which is whether petitioners may collect their wages during the period between the Labor such, more so if he actually rendered services during the period.12[12] (Emphasis in the original;
italics and underscoring supplied)
Arbiters order of reinstatement pending appeal and the NLRC decision overturning that of the Labor Arbiter, now
that respondent has exited from rehabilitation proceedings.
In other words, a dismissed employee whose case was favorably decided by the Labor Arbiter is entitled to receive wages
pending appeal upon reinstatement, which is immediately executory. Unless there is a restraining order, it is ministerial
upon the Labor Arbiter to implement the order of reinstatement and it is mandatory on the employer to comply
Amplification of the First Ground
therewith.13[13]

The appellate court counted on as its first ground the view that a subsequent finding of a valid dismissal removes
the basis for implementing the reinstatement aspect of a labor arbiters decision. The opposite view is articulated in Genuino which states:

On this score, the Courts attention is drawn to seemingly divergent decisions concerning reinstatement pending If the decision of the labor arbiter is later reversed on appeal upon the finding that the
ground for dismissal is valid, then the employer has the right to require the dismissed employee
appeal or, particularly, the option of payroll reinstatement. On the one hand is the jurisprudential trend as expounded
on payroll reinstatement to refund the salaries s/he received while the case was pending appeal,
in a line of cases including Air Philippines Corp. v. Zamora,10[10] while on the other is the recent case of Genuino v. National or it can be deducted from the accrued benefits that the dismissed employee was entitled to receive
from his/her employer under existing laws, collective bargaining agreement provisions, and company
Labor Relations Commission.11[11] At the core of the seeming divergence is the application of paragraph 3 of Article 223
practices. However, if the employee was reinstated to work during the pendency of the appeal, then
of the Labor Code which reads: the employee is entitled to the compensation received for actual services rendered without need of
refund.
Considering that Genuino was not reinstated to work or placed on payroll reinstatement,
In any event, the decision of the Labor Arbiter reinstating a dismissed or separated
and her dismissal is based on a just cause, then she is not entitled to be paid the salaries stated in item
employee, insofar as the reinstatement aspect is concerned, shall immediately be executory,
pending appeal. The employee shall either be admitted back to work under the same terms and
conditions prevailing prior to his dismissal or separation or, at the option of the employer, merely
reinstated in the payroll. The posting of a bond by the employer shall not stay the execution for
reinstatement provided herein. (Emphasis and underscoring supplied)
 no. 3 of the fallo of the September 3, 1994 NLRC Decision.14[14] (Emphasis, italics and underscoring
supplied) The social justice principles of labor law outweigh or render inapplicable the civil law doctrine of unjust
enrichment espoused by Justice Presbitero Velasco, Jr. in his Separate Opinion. The constitutional and statutory precepts
portray the otherwise unjust situation as a condition affording full protection to labor.
It has thus been advanced that there is no point in releasing the wages to petitioners since their dismissal was
found to be valid, and to do so would constitute unjust enrichment.
Even outside the theoretical trappings of the discussion and into the mundane realities of human experience,
the refund doctrine easily demonstrates how a favorable decision by the Labor Arbiter could harm, more than help, a
Prior to Genuino, there had been no known similar case containing a dispositive portion where the employee
dismissed employee. The employee, to make both ends meet, would necessarily have to use up the salaries received during
was required to refund the salaries received on payroll reinstatement. In fact, in a catena of cases,15[15] the Court did not
the pendency of the appeal, only to end up having to refund the sum in case of a final unfavorable decision. It is mirage of
order the refund of salaries garnished or received by payroll-reinstated employees despite a subsequent reversal of the
a stop-gap leading the employee to a risky cliff of insolvency.
reinstatement order.

The dearth of authority supporting Genuino is not difficult to fathom for it would otherwise render inutile the Advisably, the sum is better left unspent. It becomes more logical and practical for the employee to refuse payroll
rationale of reinstatement pending appeal. reinstatement and simply find work elsewhere in the interim, if any is available. Notably, the option of payroll
reinstatement belongs to the employer, even if the employee is able and raring to return to work. Prior to Genuino, it is
x x x [T]he law itself has laid down a compassionate policy which, once more, vivifies and
unthinkable for one to refuse payroll reinstatement. In the face of the grim possibilities, the rise of concerned employees
enhances the provisions of the 1987 Constitution on labor and the working man.
declining payroll reinstatement is on the horizon.
xxxx

These duties and responsibilities of the State are imposed not so much to express sympathy Further, the Genuino ruling not only disregards the social justice principles behind the rule, but also institutes a
for the workingman as to forcefully and meaningfully underscore labor as a primary social and
scheme unduly favorable to management. Under such scheme, the salaries dispensed pendente lite merely serve as a bond
economic force, which the Constitution also expressly affirms with equal intensity. Labor is an
indispensable partner for the nation's progress and stability. posted in installment by the employer. For in the event of a reversal of the Labor Arbiters decision ordering reinstatement,
the employer gets back the same amount without having to spend ordinarily for bond premiums. This circumvents, if not
xxxx
directly contradicts, the proscription that the posting of a bond [even a cash bond] by the employer shall not stay the
x x x In short, with respect to decisions reinstating employees, the law itself has determined
execution for reinstatement.17[17]
a sufficiently overwhelming reason for its execution pending appeal.
In playing down the stray posture in Genuino requiring the dismissed employee on payroll reinstatement to
xxxx
refund the salaries in case a final decision upholds the validity of the dismissal, the Court realigns the proper course of the
x x x Then, by and pursuant to the same power (police power), the State may authorize an prevailing doctrine on reinstatement pending appeal vis--vis the effect of a reversal on appeal.
immediate implementation, pending appeal, of a decision reinstating a dismissed or separated
employee since that saving act is designed to stop, although temporarily since the appeal may be
decided in favor of the appellant, a continuing threat or danger to the survival or even the life of the Respondent insists that with the reversal of the Labor Arbiters Decision, there is no more basis to enforce the
dismissed or separated employee and his family.16[16]
reinstatement aspect of the said decision. In his Separate Opinion, Justice Presbitero Velasco, Jr. supports this argument
and finds the prevailing doctrine in Air Philippines and allied cases inapplicable because, unlike the present case, the writ The Court reaffirms the prevailing principle that even if the order of reinstatement of the Labor Arbiter is
of execution therein was secured prior to the reversal of the Labor Arbiters decision. reversed on appeal, it is obligatory on the part of the employer to reinstate and pay the wages of the dismissed employee
during the period of appeal until reversal by the higher court.21[21] It settles the view that the Labor Arbiter's order of
The proposition is tenuous. First, the matter is treated as a mere race against time. The discussion stopped there reinstatement is immediately executory and the employer has to either re-admit them to work under the same terms and
without considering the cause of the delay. Second, it requires the issuance of a writ of execution despite the immediately conditions prevailing prior to their dismissal, or to reinstate them in the payroll, and that failing to exercise the options in
executory nature of the reinstatement aspect of the decision. In Pioneer Texturing Corp. v. NLRC,18[18] which was cited in the alternative, employer must pay the employees salaries.22[22]
Panuncillo v. CAP Philippines, Inc.,19[19] the Court observed:

x x x The provision of Article 223 is clear that an award [by the Labor Arbiter] for reinstatement shall
Amplification of the Second Ground
be immediately executory even pending appeal and the posting of a bond by the employer shall not stay
the execution for reinstatement. The legislative intent is quite obvious, i.e., to make an award of
reinstatement immediately enforceable, even pending appeal. To require the application for and
The remaining issue, nonetheless, is resolved in the negative on the strength of the second ground relied upon
issuance of a writ of execution as prerequisites for the execution of a reinstatement award would
certainly betray and run counter to the very object and intent of Article 223, i.e., the immediate by the appellate court in the assailed issuances. The Court sustains the appellate courts finding that the peculiar
execution of a reinstatement order. The reason is simple. An application for a writ of execution and its
predicament of a corporate rehabilitation rendered it impossible for respondent to exercise its option under the
issuance could be delayed for numerous reasons. A mere continuance or postponement of a scheduled
hearing, for instance, or an inaction on the part of the Labor Arbiter or the NLRC could easily delay the circumstances.
issuance of the writ thereby setting at naught the strict mandate and noble purpose envisioned by
Article 223. In other words, if the requirements of Article 224 [including the issuance of a writ of
execution] were to govern, as we so declared in Maranaw, then the executory nature of a reinstatement The spirit of the rule on reinstatement pending appeal animates the proceedings once the Labor Arbiter issues
order or award contemplated by Article 223 will be unduly circumscribed and rendered ineffectual. In
the decision containing an order of reinstatement. The immediacy of its execution needs no further elaboration.
enacting the law, the legislature is presumed to have ordained a valid and sensible law, one which
operates no further than may be necessary to achieve its specific purpose. Statutes, as a rule, are to be Reinstatement pending appeal necessitates its immediate execution during the pendency of the appeal, if the law is to serve
construed in the light of the purpose to be achieved and the evil sought to be remedied. x x x In
its noble purpose. At the same time, any attempt on the part of the employer to evade or delay its execution, as observed
introducing a new rule on the reinstatement aspect of a labor decision under Republic Act No. 6715,
Congress should not be considered to be indulging in mere semantic exercise. x x x20[20] (Italics in in Panuncillo and as what actually transpired in Kimberly,23[23] Composite,24[24] Air Philippines,25[25] and
the original; emphasis and underscoring supplied)
Roquero,26[26] should not be countenanced.
 The new NLRC Rules of Procedure, which took effect on January 7, 2006, now require the employer to submit a
After the labor arbiters decision is reversed by a higher tribunal, the employee may be barred from
report of compliance within 10 calendar days from receipt of the Labor Arbiters decision,29[29] disobedience to which
collecting the accrued wages, if it is shown that the delay in enforcing the reinstatement pending appeal was
clearly denotes a refusal to reinstate. The employee need not file a motion for the issuance of the writ of execution since
without fault on the part of the employer.
the Labor Arbiter shall thereafter motu proprio issue the writ. With the new rules in place, there is hardly any difficulty
in determining the employers intransigence in immediately complying with the order.
The test is two-fold: (1) there must be actual delay or the fact that the order of reinstatement pending appeal
In the case at bar, petitioners exerted efforts30[30] to execute the Labor Arbiters order of reinstatement until
was not executed prior to its reversal; and (2) the delay must not be due to the employers unjustified act or omission. If
they were able to secure a writ of execution, albeit issued on October 5, 2000 after the reversal by the NLRC of the Labor
the delay is due to the employers unjustified refusal, the employer may still be required to pay the salaries notwithstanding
Arbiters decision. Technically, there was still actual delay which brings to the question of whether the delay was due to
the reversal of the Labor Arbiters decision.
respondents unjustified act or omission.

In Genuino, there was no showing that the employer refused to reinstate the employee, who was the Treasury
It is apparent that there was inaction on the part of respondent to reinstate them, but whether such omission
Sales Division Head, during the short span of four months or from the promulgation on May 2, 1994 of the Labor Arbiters
was justified depends on the onset of the exigency of corporate rehabilitation.
Decision up to the promulgation on September 3, 1994 of the NLRC Decision. Notably, the former NLRC Rules of Procedure
did not lay down a mechanism to promptly effectuate the self-executory order of reinstatement, making it difficult to
It is settled that upon appointment by the SEC of a rehabilitation receiver, all actions for claims before any court,
establish that the employer actually refused to comply.
tribunal or board against the corporation shall ipso jure be suspended.31[31] As stated early on, during the pendency of
petitioners complaint before the Labor Arbiter, the SEC placed respondent under an Interim Rehabilitation Receiver. After
In a situation like that in International Container Terminal Services, Inc. v. NLRC27[27] where it was alleged that
the Labor Arbiter rendered his decision, the SEC replaced the Interim Rehabilitation Receiver with a Permanent
the employer was willing to comply with the order and that the employee opted not to pursue the execution of the order,
Rehabilitation Receiver.
the Court upheld the self-executory nature of the reinstatement order and ruled that the salary automatically accrued from
notice of the Labor Arbiter's order of reinstatement until its ultimate reversal by the NLRC. It was later discovered that the
Case law recognizes that unless there is a restraining order, the implementation of the order of reinstatement is
employee indeed moved for the issuance of a writ but was not acted upon by the Labor Arbiter. In that scenario where the
ministerial and mandatory.32[32] This injunction or suspension of claims by legislative fiat33[33] partakes of the nature
delay was caused by the Labor Arbiter, it was ruled that the inaction of the Labor Arbiter who failed to act upon the
of a restraining order that constitutes a legal justification for respondents non-compliance with the reinstatement order.
employees motion for the issuance of a writ of execution may no longer adversely affect the cause of the dismissed
Respondents failure to exercise the alternative options of actual reinstatement and payroll reinstatement was thus
employee in view of the self-executory nature of the order of reinstatement.28[28]
justified. Such being the case, respondents obligation to pay the salaries pending appeal, as the normal effect of the non- lx. Project employment in BPO company
lxi. Application of Labor Arbiter’s jurisdiction to employer’s claim; Clearance as basis to
exercise of the options, did not attach.
withhold wages; Meaning of Accountability; Labor Arbiter’s preliminary determination of
property rights in relation to labor dispute
lxii. Absence of claims for retirement pay is not included in the award of “other benefits”
While reinstatement pending appeal aims to avert the continuing threat or danger to the survival or even the
lxiii. Redundancy; Requisites – criteria; Failure to notify DOLE renders dismissal illegal;
life of the dismissed employee and his family, it does not contemplate the period when the employer-corporation itself is lxiv. Self-serving email cannot prove validity of dismissal
lxv. Regular seasonal employees; One year service rule applies only to casual employment;
similarly in a judicially monitored state of being resuscitated in order to survive.
involuntary retirement is treated as discharge; interpretation of “fraction of at least 6
months”
lxvi. Contractual provisions allowing termination with or without cause is invalid; Mere four (4)
The parallelism between a judicial order of corporation rehabilitation as a justification for the non-exercise of
weeks written notice agreed upon will not justify dismissal
its options, on the one hand, and a claim of actual and imminent substantial losses as ground for retrenchment, on the other lxvii. Illegal demotion; payment of salary differential in illegal demotion
lxviii. Labor-only contracting (LOC); Presumption as LOC; Permissiblecontracting; name of
hand, stops at the red line on the financial statements. Beyond the analogous condition of financial gloom, as discussed by
principal appearing in the payslips
Justice Leonardo Quisumbing in his Separate Opinion, are more salient distinctions. Unlike the ground of substantial losses lxix. Waiver of rights; “General waiver;
lxx. Project employment; report of termination as indicator of project employment; repeated and
contemplated in a retrenchment case, the state of corporate rehabilitation was judicially pre-determined by a competent
successive rehiring of project employees does not qualify them as regular employees; length
court and not formulated for the first time in this case by respondent. of service through rehiring
lxxi. Effect of offer to resign vs. administrative investigation; resignation

More importantly, there are legal effects arising from a judicial order placing a corporation under rehabilitation.
Respondent was, during the period material to the case, effectively deprived of the alternative choices under Article 223 of
the Labor Code, not only by virtue of the statutory injunction but also in view of the interim relinquishment of management II. RELEVANT CHANGES IN THE LABOR CODE
control to give way to the full exercise of the powers of the rehabilitation receiver. Had there been no need to rehabilitate,
a. Renumbering of the Labor Code of the Philippines, as Amended
respondent may have opted for actual physical reinstatement pending appeal to optimize the utilization of resources. Then
again, though the management may think this wise, the rehabilitation receiver may decide otherwise, not to mention the
i. Repeal of Article 130 on Nightwork Prohibitions
subsistence of the injunction on claims. ii. Repeal of Article 131
iii. Insertion: Chapter V – Employment of Night Workers
1. Coverage
In sum, the obligation to pay the employees salaries upon the employers failure to exercise the alternative 2. Health Assessment
3. Mandatory Facilities
options under Article 223 of the Labor Code is not a hard and fast rule, considering the inherent constraints of corporate
4. Transfer
rehabilitation. 5. Women Night Workers
6. Compensation
7. Social Services
WHEREFORE, the petition is PARTIALLY DENIED. Insofar as the Court of Appeals Decision of December 5, 2003 8. Nightwork Schedules
iv. Changes effected by RA 10396 on Article 228
and Resolution of April 16, 2004 annulling the NLRC Resolutions affirming the validity of the Writ of Execution and the
v. Changes effected by RA 10395 on Article 275
Notice of Garnishment are concerned, the Court finds no reversible error. III. SELECTED 2016 ISSUANCES OF THE DEPARTMENT OF LABOR AND EMPLOYMENT (DOLE)
a. Payment of Wages for Special (Non-Working) Days (Labor Advisory No. 01-2016)
b. Payment of Wages for the Regular Holiday
c. Salient points of Department Order No. 150-16 Revised Guidelines Governing the
Employment and Working Conditions of Security Guards and other Private Security
lvii. Employer-employee relationship; Control; Relationship cannot be negated by expressly Personnel in the Private Security Industry
repudiating in a contract; Truck driver as independent contractor; Fixed-term employment d. Salient points of Department Order No. 151-16 Implementing Rules and Regulations of RA
(employee should be in a position to make demands on account of special skills or market No. 10396, or "An Act Strengthening Conciliation-Mediation as a Voluntary Mode of Dispute
forces/needs less protection); Serious misconduct; Dismissal not commensurate penalty; Settlement for All Labor Case
Release, waiver and quitclaim; receipt of separation pay not bar to contest legality of e. Highlights of Department Order No. 147-15 Amending the Implementing Rules and
dismissal; Regulations of Book VI of the Labor Code of the Philippines, as Amended
lviii. Burden of proof in illegal dismissal cases; Relief from assignment due to work rotation f. Important provisions of Department Order No. 131-B-16 Revised Rules on Labor Laws
policy; Rotation policy is a management prerogative Compliance System
lix. Dismissal due to pregnancy out of wedlock; immorality; secular vs. religious morality
 g. Implications of Department Order No. 162-2016 Suspending Registration of New Applicants
as Contractors or Subcontractors under DO No. 18-A
h. Labor Advisory No. 10-2016 Prohibition against Labor-Only Contracting
IV. Wage Order No. NCR-20
V. REMEDIES