San Miguel Corporation vs. Pontillas [G.R. No. 155178.

May 7, 2008]
Facts: Pontillas was a company guard. SMC Mandaue implemented the integration of the Materials Management and the Physical
Distribution group into a unified logistics organization. This resulted to transfer of employees. Pontillas refused to obey the transfer order
claiming that it was discriminatory. He was dismissed from service due to his disobedience.
Issues: 1) Was there diminution of benefits? 2) Was the dismissal valid? 3) Was the transfer valid?
Held: 1) SC upheld the decisionof the Labor Arbiter: “SMC did not violate Article 100 of the Labor Code. His claim that giving him a day-off
twice a month resulted to diminution of his monthly take-home pay was an erroneous interpretation of the Labor Code, which even
required employers to give their employees a rest day per week. He was accorded due process before his termination from the service. He
was investigated with the assistance of counsel, and he was able to confront petitioner’s witnesses and present evidence in his favor.” 2)
Dismissal was for a just cause Elements of Willful disobedience: 1) the employee’s assailed conduct must have been willful, that is,
characterized by a wrongful and perverse attitude; and 2) the order violated must have been reasonable, lawful, made known to the
employee, and must pertain to the duties which he had been engaged to discharge. His persistent refusal to obey the lawful transfer order
amounts to willful disobedience. 3) No Discrimination in the transfer; lawful and reasonable The records show that respondent was not
singled out for the transfer. Respondent’s transfer was the effect of the integration of the functions of the MandaueBrewery –Materials
Management and the Physical Distribution group into a unified logistics organization, the VisMin Logistics Operations. The entire Oro Verde
Warehouse, to which unit respondent belonged, was affected by the integration. He was properly informed of the transfer but he refused
to receive the notices on the pretext that he was wary because of his pending case against petitioner. Respondent failed to prove that
petitioner was acting in bad faith in effecting the transfer. There was no demotion involved, or even a diminution of his salary, benefits, and
other privileges.

[G.R. NO. 155178 : May 7, 2008]

SAN MIGUEL CORPORATION, Petitioner, v. ANGEL C. PONTILLAS, Respondent.

DECISION

CARPIO, J.:

The Case

Before the Court is a Petition for Review assailing the 26 March 2002 Decision1 and the 20 August 2002
Resolution2 of the Court of Appeals in CA-G.R. SP No. 50680.

The Antecedent Facts

On 24 October 1980, San Miguel Corporation (petitioner) employed Angel C. Pontillas (respondent) as a daily
wage company guard. In 1984,3 respondent became a monthly-paid employee which entitled him to yearly
increases in salary. Respondent alleged that his yearly salary increases were only a percentage of what the
other security guards received.

On 19 October 1993, respondent filed an action for recovery of damages due to discrimination under Article
1004 of the Labor Code of the Philippines (Labor Code), as amended, as well as for recovery of salary differential
and backwages, against petitioner, Capt. Segundino D. Fortich (Capt. Fortich), Company Security Commander
and head of the Mandaue Security Department, and Director Francisco Manzon, Vice President and Brewery
Director. During the mandatory conference on 23 November 1993, respondent questioned the rate of salary
increase given him by petitioner.

On 6 December 1993, Ricardo F. Elizagaque (Elizagaque), petitioner's Vice President and VisMin Operations
Center Manager, issued a Memorandum ordering, among others, the transfer of responsibility of the Oro Verde
Warehouse to the newly-organized VisMin Logistics Operations effective 1 January 1994. In compliance with
Elizagaque's Memorandum, Capt. Fortich issued a Memorandum dated 7 February 1994 addressed to Comdr.
Danilo C. Flores (Comdr. Flores), VisMin Logistics Operations Manager, effecting the formal transfer of
responsibility of the security personnel and equipment in the Oro Verde Warehouse to Major Teodulo F. Enriquez

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(Major Enriquez), Security Officer of the VisMin Logistics Operations, effective 14 February 1994.
Simultaneously, Capt. Fortich gave the same information to his Supervising Security Guards for them to relay
the information to the company security guards.

Respondent continued to report at Oro Verde Warehouse. He alleged that he was not properly notified of the
transfer and that he did not receive any written order from Capt. Fortich, his immediate superior. Respondent
also alleged that he was wary of the transfer because of his pending case against petitioner. He further claimed
that two other security guards continue to report at Oro Verde Warehouse despite the order to transfer.

Petitioner alleged that respondent was properly notified of the transfer but he refused to receive 14 memoranda
issued by Major Enriquez from 14-27 February 1994. Petitioner also alleged that respondent was given notices
of Guard Detail dated 9 February 1994 and 15 February 1994 but he still refused to report for duty at the VisMin
Logistics Operations.

In a letter dated 28 February 1994, petitioner informed respondent that an administrative investigation would
be conducted on 4 March 1994 relative to his alleged offenses of Insubordination or Willful Disobedience in
Carrying Out Reasonable Instructions of his superior. During the investigation, respondent was given an
opportunity to present his evidence and be assisted by counsel. In a letter dated 7 April 1994, petitioner
informed respondent of its decision to terminate him for violating company rules and regulations, particularly for
Insubordination or Willful Disobedience in Carrying Out Reasonable Instructions of his superior.

On 15 June 1994, respondent filed an amended complaint against petitioner for illegal dismissal and payment of
backwages, termination pay, moral and exemplary damages, and attorney's fees.

The Ruling of the Labor Arbiter

In a Decision dated 25 October 1996,5 the Labor Arbiter dismissed respondent's complaint for lack of merit. The
Labor Arbiter recognized the management prerogative to transfer its employees from one station to another.
The Labor Arbiter found nothing prejudicial, unjust, or unreasonable to petitioner's decision to merge the
functions of the Materials Management of the Mandaue Brewery and the Physical Distribution Group which
resulted to the forming of the VisMin Logistics Operations. The Labor Arbiter ruled that as a consequence of the
merger, the instructions and orders to all security personnel should necessarily come from the security officer of
the new organization. Hence, respondent's allegation that his transfer order should come from Capt. Fortich and
not from Major Enriquez was misleading. The Labor Arbiter ruled that respondent was informed of the
impending merger, verbally and in writing, as early as 6 December 1993.

The Labor Arbiter further ruled that petitioner did not violate Article 100 of the Labor Code. The Labor Arbiter
ruled that respondent's claim that giving him a day-off twice a month resulted to diminution of his monthly
take-home pay was an erroneous interpretation of the Labor Code, which even required employers to give their
employees a rest day per week. The Labor Arbiter also ruled that there was no basis for the allegation that
respondent was discriminated against in the annual salary increases.

The Labor Arbiter ruled that respondent was accorded due process before his termination from the service. He
was investigated with the assistance of counsel, and he was able to confront petitioner's witnesses and present
evidence in his favor.

Respondent appealed from the Labor Arbiter's Decision.

The Ruling of the NLRC

In its 23 May 1997 Decision,6 the National Labor Relations Commission (NLRC) set aside the Labor Arbiter's
Decision. The NLRC ruled that respondent was not informed of his transfer from Oro Verde Warehouse to VisMin
Logistics Operations. The notices allegedly sent to respondent did not indicate any receipt from respondent. The
NLRC also ruled that the notations in the notices stating "Refused to sign" appeared to be written by the same
person on just one occasion. The NLRC found that respondent was waiting for a formal notice from Capt.
Fortich, who only instructed his Supervising Security Guard, Rodrigo T. Yocte, to remind respondent of his

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transfer and new assignment. The NLRC declared that the notices sent by Major Enriquez had no binding effect
because he was not respondent's superior. The NLRC held that it was premature to charge respondent with
insubordination for his failure to comply with the order of someone who was not his department head. The NLRC
stated that respondent had good reason to continue reporting at Oro Verde Warehouse.

The NLRC further ruled that respondent was a victim of discrimination. The NLRC declared that petitioner failed
to justify why respondent was not entitled to the full rate of salary increases enjoyed by other security guards.

The dispositive portion of the NLRC's Decision reads:

WHEREFORE, the decision of the Executive Labor Arbiter is hereby VACATED and SET ASIDE and judgment is
hereby rendered:

1. Declaring the dismissal of complainant to be without any just cause and, therefore, illegal;

2. Ordering respondent San Miguel Corporation to reinstate the complainant to his former position without loss
of seniority rights and other privileges and with full backwages, inclusive of allowances and other benefits or
their monetary equivalent, computed from April 8, 1994 up to his actual reinstatement. However, should
reinstatement be no longer feasible, respondent San Miguel Corporation shall pay to complainant, in addition to
his full backwages, separation pay of one (1) month pay for every year of service, a period of six (6) months to
be considered as one (1) whole year;

3. Ordering respondent San Miguel Corporation to pay to complainant moral damages of P50,000.00 and
exemplary damages of P20,000.00; andcralawlibrary

4. Ordering respondent San Miguel Corporation to pay to complainant the sum equivalent to ten percent (10%)
of the total monetary award, for and as attorney's fees.

SO ORDERED.7

Petitioner filed a motion for reconsideration. In its 27 February 1998 Resolution,8 the NLRC partially granted the
motion by deleting the award of moral and exemplary damages. The NLRC ruled that there was no showing on
record that the discrimination against respondent was tainted with bad faith. Thus:

WHEREFORE, in view of all the foregoing, the instant motion for reconsideration is hereby PARTIALLY GRANTED
only with respect to the award of moral and exemplary damages which are hereby deleted.

SO ORDERED.9

Petitioner filed a petition for certiorari before the Court of Appeals.

The Ruling of the Court of Appeals

In its 26 March 2002 Decision, the Court of Appeals affirmed with modification the NLRC's Decision.

The Court of Appeals ruled that under Article 282(a) of the Labor Code, as amended, an employer may
terminate an employment for serious misconduct or willful disobedience by the employee of the lawful orders of
his employer or his representative in connection with his work. However, disobedience requires the concurrence
of at least two requisites: (1) the employee's assailed conduct must have been willful or intentional, and the
willfulness must be characterized by a wrongful and perverse attitude; and (2) the order violated must have
been reasonable, lawful, made known to the employee and must pertain to the duties which he had been
engaged to discharge.

The Court of Appeals ruled that there was no sufficient evidence that would show that respondent's failure to
report to his new superior was willful and characterized by a perverse and wrongful attitude. The Court of

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Appeals ruled that respondent was waiting for his former superior to formally inform him of his new assignment.
The Court of Appeals further ruled that respondent was suspicious of petitioner's intention to transfer him in
view of the pendency of the case he filed against petitioner. The Court of Appeals ruled that there was a clear
indication that respondent was a victim of retaliatory measures from petitioner.

The dispositive portion of the Court of Appeals' Decision reads:

IN VIEW OF THE FOREGOING, the assailed decision and resolution of public respondent NLRC are hereby
AFFIRMED with the modification that, in lieu of reinstatement, private respondent should be paid separation
pay, equivalent to one (1) month salary for every year of service. No pronouncement as to costs.

SO ORDERED.10

Petitioner filed a motion for reconsideration. In its 20 August 2002 Resolution, the Court of Appeals denied the
motion.

Hence, the petition before this Court.

The Issue

The issue in this case is the legality of respondent's dismissal from employment.

The Ruling of this Court

The petition has merit.

Validity of Notice of Appeal

We first discuss a side issue which petitioner raises before the Court. Petitioner alleges that there was no valid
substitution of respondent's counsel. Petitioner alleges that Atty. Vigilius M. Santiago (Atty. Santiago) filed a
notice of entry of appearance as respondent's counsel of record and filed an appeal from the Labor Arbiter's
Decision without complying with Section 26, Rule 138 of the Rules of Court. Since there was no valid
substitution of counsel, the appeal filed by Atty. Santiago was ineffective. Petitioner alleges that since Atty.
Ricardo Cipriano (Atty. Cipriano), the counsel of record, did not appeal from the Labor Arbiter's Decision, the
Decision became final and executory.

The contention has no merit.

A party may have two or more lawyers working in collaboration in a given litigation.11 Substitution of counsel
should not be presumed from the mere filing of a notice of appearance of a new lawyer.12 The fact that a second
attorney enters his appearance for the same party does not necessarily raise the presumption that the authority
of the first attorney has been withdrawn.13 The entry of appearearance of Atty. Santiago should not give rise to
the presumption that Atty. Cipriano withdrew his appearance as counsel in the absence of a formal withdrawal
of appearance. Atty. Santiago should only be treated as collaborating counsel despite his appearance as "the
new counsel of record." Petitioner even observed that the NLRC's Decision was not sent to Atty. Santiago but to
Atty. Cipriano. Even in its petition before the Court, petitioner sent copies of the petition not only to Atty.
Santiago but also to Atty. Cipriano, thus acknowledging that Atty. Cipriano remains as respondent's counsel.

Since a lawyer is presumed to be properly authorized to represent any cause in which he appears,14 Atty.
Santiago is presumed to be acting within his authority as collaborating counsel when he filed the appeal from
the Labor Arbiter's Decision. For as long as Atty. Santiago filed the notice of appeal within the reglementary
period, reckoned from the time Atty. Cipriano received the Labor Arbiter's Decision, the NLRC did not abuse its
discretion in entertaining the appeal.

Validity of Dismissal from Employment

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Respondent was dismissed for a just cause.

An employer may terminate an employment for serious misconduct or willful disobedience by the employee of
the lawful orders of his employer or representative in connection with his work.15 Willful disobedience requires
the concurrence of two elements: (1) the employee's assailed conduct must have been willful, that is,
characterized by a wrongful and perverse attitude; and (2) the order violated must have been reasonable,
lawful, made known to the employee, and must pertain to the duties which he had been engaged to discharge.16

The records show that respondent was not singled out for the transfer. Respondent's transfer was the effect of
the integration of the functions of the Mandaue Brewery - Materials Management and the Physical Distribution
group into a unified logistics organization, the VisMin Logistics Operations. The 6 December 1993 Memorandum
of Elizagaque showed the transfer to the VisMin Logistics Operations of the following functions:

1. Bottle Yard Operations (including direct loading of route/overland truck and Remuco forklift operations);
andcralawlibrary

2. Transporation Management (car/service pick-ups, dump trucks, flatbed and firetruck)17

The Memorandum also showed that the following assets were also transferred to the new VisMin Logistics
Operations:

1. Oro Verde Warehouse

2. Raw Sugar Warehouse

3. ARMS Bldg. & Training Center

4. Malt Bagging Plant

5. Weigh Bridge

6. Planters' Warehouse, Wharf & Offices

7. Cars/Service Pick-ups

8. Dump Trucks

9. Flat Bed

10. Fire Truck

11. Gas Station

12. B. Yeast Tanker18

In other words, the entire Oro Verde Warehouse, to which unit respondent belonged, was affected by the
integration.

We do not agree that respondent was not formally notified of the transfer. The Memorandum dated 7 February
1994 of Capt. Fortich to Comdr. Flores states:

2. This is to formalize the transfer of security operations and control of all security personnel and equipment at
subject warehouses, effective 14 Feb 94.

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3. Security personnel involved will be verbally informed of the transfer for smooth transition and proper
coordination will be made to the Secutiy Officer of VISMIN Logistics Operations.19

As early as 9 February 1994, Major Enriquez, the head of the VisMin Logistics Operations and thus, respondent's
new superior, issued a guard detail for 14-20 February 1994.20 All agency guards signed the detail, except
respondent who refused to sign.21 On 15 February 1994, Major Enriquez again issued a guard detail for 21-27
February 1994.22 Again, all security guards concerned signed the detail except respondent who refused to sign.
Major Enriquez issued successive memoranda23 to respondent officially informing him of his transfer to the
VisMin Logistics Operations but respondent refused to sign all the notices.

The employer exercises the prerogative to transfer an employee for valid reasons and according to the
requirements of its business, provided the transfer does not result in demotion in rank or diminution of the
employee's salary, benefits, and other privileges.24 In this case, we found that the order of transfer was
reasonable and lawful considering the integration of Oro Verde Warehouse with VisMin Logistics Operations.
Respondent was properly informed of the transfer but he refused to receive the notices on the pretext that he
was wary because of his pending case against petitioner. Respondent failed to prove that petitioner was acting
in bad faith in effecting the transfer. There was no demotion involved, or even a diminution of his salary,
benefits, and other privileges. Respondent's persistent refusal to obey petitioner's lawful order amounts to
willful disobedience under Article 282 of the Labor Code.

WHEREFORE, we GRANT the petition. We SET ASIDE the 26 March 2002 Decision and the 20 August 2002
Resolution of the Court of Appeals in CA-G.R. SP No. 50680. We REINSTATE the 25 October 1996 Decision of
the Labor Arbiter.

SO ORDERED.