KING OF KINGS TRANSPORT, G.R. No. 166208 INC., CLAIRE DELA FUENTE, and MELISSA LIM, Present: Petitioners, QUISUMBING, J., Chairperson, CARPIO, CARPIO MORALES, - versus - TINGA, and VELASCO, JR., JJ. Promulgated: SANTIAGO O. MAMAC, Respondent. June 29, 2007 x-----------------------------------------------------------------------------------------x D E C I S I O N

VELASCO, JR., J.:

Is a verbal appraisal of the charges against the employee a breach of the procedural due

process? This is the main issue to be resolved in this plea for review under Rule 45 of the September

16, 2004 Decision[1] of the Court of Appeals (CA) in CA-GR SP No. 81961. Said judgment affirmed the

dismissal of bus conductor Santiago O. Mamac from petitioner King of Kings Transport, Inc. (KKTI), but

ordered the bus company to pay full backwages for violation of the twin-notice requirement and 13th-

month pay. Likewise assailed is the December 2, 2004 CA Resolution[2] rejecting KKTIs Motion for

Reconsideration.

The Facts

Petitioner KKTI is a corporation engaged in public transportation and managed by Claire Dela Fuente

and Melissa Lim.

Respondent Mamac was hired as bus conductor of Don Mariano Transit Corporation (DMTC) on April

29, 1999. The DMTC employees including respondent formed theDamayan ng mga Manggagawa,

Tsuper at Conductor-Transport Workers Union and registered it with the Department of Labor and

Employment. Pending the holding of a certification election in DMTC, petitioner KKTI was incorporated

with the Securities and Exchange Commission which acquired new buses. Many DMTC employees

were subsequently transferred to KKTI and excluded from the election.

The KKTI employees later organized the Kaisahan ng mga Kawani sa King of Kings (KKKK) which was

registered with DOLE. Respondent was elected KKKK president.

Respondent was required to accomplish a Conductors Trip Report and submit it to the company

after each trip. As a background, this report indicates the ticket opening and closing for the particular

day of duty. After submission, the company audits the reports. Once an irregularity is discovered, the

company issues an Irregularity Report against the employee, indicating the nature and details of the

irregularity. Thereafter, the concerned employee is asked to explain the incident by making a written

statement or counter-affidavit at the back of the same Irregularity Report. After considering the

explanation of the employee, the company then makes a determination of whether to accept the

explanation or impose upon the employee a penalty for committing an infraction. That decision shall be

stated on said Irregularity Report and will be furnished to the employee.

Upon audit of the October 28, 2001 Conductors Report of respondent, KKTI noted an

irregularity. It discovered that respondent declared several sold tickets as returned tickets causing KKTI

to lose an income of eight hundred and ninety pesos. While no irregularity report was prepared on

the October 28, 2001 incident, KKTI nevertheless asked respondent to explain the discrepancy. In his

letter,[3] respondent said that the erroneous declaration in his October 28, 2001 Trip Report was

unintentional. He explained that during that days trip, the windshield of the bus assigned to them was

smashed; and they had to cut short the trip in order to immediately report the matter to the police. As a

result of the incident, he got confused in making the trip report.

On November 26, 2001, respondent received a letter[4] terminating his employment

effective November 29, 2001. The dismissal letter alleged that the October 28, 2001irregularity was an

act of fraud against the company. KKTI also cited as basis for respondents dismissal the other offenses

he allegedly committed since 1999.

On December 11, 2001, respondent filed a Complaint for illegal dismissal, illegal deductions,

nonpayment of 13th-month pay, service incentive leave, and separation pay.He denied committing any

infraction and alleged that his dismissal was intended to bust union activities. Moreover, he claimed that

his dismissal was effected without due process.

In its April 3, 2002 Position Paper,[5] KKTI contended that respondent was legally dismissed

after his commission of a series of misconducts and misdeeds. It claimed that respondent had violated

the trust and confidence reposed upon him by KKTI. Also, it averred that it had observed due process

in dismissing respondent and maintained that respondent was not entitled to his money claims such as

service incentive leave and 13th-month pay because he was paid on commission or percentage basis.

On September 16, 2002, Labor Arbiter Ramon Valentin C. Reyes rendered judgment dismissing

respondents Complaint for lack of merit.[6]

Aggrieved, respondent appealed to the National Labor Relations Commission (NLRC). On August 29,

2003, the NLRC rendered a Decision, the dispositive portion of which reads: WHEREFORE, the decision dated 16 September 2002 is MODIFIED in that

respondent King of Kings Transport Inc. is hereby ordered to indemnify complainant in

the amount of ten thousand pesos (P10,000) for failure to comply with due process prior to termination.

The other findings are AFFIRMED. SO ORDERED.[7]

Respondent moved for reconsideration but it was denied through the November 14,

2003 Resolution[8] of the NLRC.

Thereafter, respondent filed a Petition for Certiorari before the CA urging the nullification of the

NLRC Decision and Resolution.

The Ruling of the Court of Appeals

Affirming the NLRC, the CA held that there was just cause for respondents dismissal. It ruled that

respondents act in declaring sold tickets as returned tickets x x x constituted fraud or acts of dishonesty

justifying his dismissal.[9]

Also, the appellate court sustained the finding that petitioners failed to comply with the required

procedural due process prior to respondents termination. However, following the doctrine in Serrano v.

NLRC,[10] it modified the award of PhP 10,000 as indemnification by awarding full backwages from the

time respondents employment was terminated until finality of the decision.

Moreover, the CA held that respondent is entitled to the 13th-month pay benefit.

Hence, we have this petition.

The Issues

Petitioner raises the following assignment of errors for our consideration:

Whether the Honorable Court of Appeals erred in awarding in favor of the complainant/private respondent, full back wages, despite the denial of his petition for certiorari. Whether the Honorable Court of Appeals erred in ruling that KKTI did not comply with the requirements of procedural due process before dismissing the services of the complainant/private respondent. Whether the Honorable Court of Appeals rendered an incorrect decision in that [sic] it awarded in favor of the complaint/private respondent, 13th month pay benefits contrary to PD 851.[11]

The Courts Ruling

The petition is partly meritorious.

The disposition of the first assigned error depends on whether petitioner KKTI complied with

the due process requirements in terminating respondents employment; thus, it shall be discussed

secondly.

Non-compliance with the Due Process Requirements

Due process under the Labor Code involves two aspects: first, substantivethe valid and

authorized causes of termination of employment under the Labor Code; andsecond, proceduralthe

manner of dismissal.[12] In the present case, the CA affirmed the findings of the labor arbiter and the

NLRC that the termination of employment of respondent was based on a just cause. This ruling is not

at issue in this case. The question to be determined is whether the procedural requirements were

complied with.

Art. 277 of the Labor Code provides the manner of termination of employment, thus: Art. 277. Miscellaneous Provisions.x x x (b) Subject to the constitutional right of workers to security of tenure and their

right to be protected against dismissal except for a just and authorized cause without prejudice to the requirement of notice under Article 283 of this Code, the employer shall furnish the worker whose employment is sought to be terminated a written notice containing a statement of the causes for termination and shall afford the latter ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires in accordance with company rules and regulations promulgated pursuant to guidelines set by the Department of Labor and Employment. Any decision taken by the employer shall be without prejudice to the right of the worker to contest the validity or legality of his dismissal by filing a complaint with the regional branch of the National Labor Relations Commission. The burden of proving that the termination was for a valid or authorized cause shall rest on the employer.

Accordingly, the implementing rule of the aforesaid provision states: SEC. 2. Standards of due process; requirements of notice.In all cases of

termination of employment, the following standards of due process shall be substantially observed:

I. For termination of employment based on just causes as defined in Article

282 of the Code:

(a) A written notice served on the employee specifying the ground or grounds for termination, and giving said employee reasonable opportunity within which to explain his side.

(b) A hearing or conference during which the employee

concerned, with the assistance of counsel if he so desires is given

opportunity to respond to the charge, present his evidence, or rebut the evidence presented against him.

(c) 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. [13]

In case of termination, the foregoing notices shall be served on the employees

last known address.[14]

To clarify, the following should be considered in terminating the services of employees:

(1) The first written notice to be served on the employees should contain the specific causes or

grounds for termination against them, and a directive that the employees are given the opportunity to

submit their written explanation within a reasonable period. Reasonable opportunity under the Omnibus

Rules means every kind of assistance that management must accord to the employees to enable them

to prepare adequately for their defense.[15] This should be construed as a period of at least five (5)

calendar days from receipt of the notice to give the employees an opportunity to study the accusation

against them, consult a union official or lawyer, gather data and evidence, and decide on the defenses

they will raise against the complaint. Moreover, in order to enable the employees to intelligently prepare

their explanation and defenses, the notice should contain a detailed narration of the facts and

circumstances that will serve as basis for the charge against the employees. A general description of

the charge will not suffice. Lastly, the notice should specifically mention which company rules, if any,

are violated and/or which among the grounds under Art. 282 is being charged against the employees.

(2) After serving the first notice, the employers should schedule and conduct

a hearing or conference wherein the employees will be given the opportunity to: (1) explain and clarify

their defenses to the charge against them; (2) present evidence in support of their defenses; and (3)

rebut the evidence presented against them by the management. During the hearing or conference, the

employees are given the chance to defend themselves personally, with the assistance of a

representative or counsel of their choice. Moreover, this conference or hearing could be used by the

parties as an opportunity to come to an amicable settlement.

(3) After determining that termination of employment is justified, the employers shall serve the

employees a written notice of termination indicating that: (1) all circumstances involving the charge

against the employees have been considered; and (2) grounds have been established to justify the

severance of their employment.

In the instant case, KKTI admits that it had failed to provide respondent with a charge

sheet.[16] However, it maintains that it had substantially complied with the rules, claiming that respondent

would not have issued a written explanation had he not been informed of the charges against him.[17]

We are not convinced.

First, respondent was not issued a written notice charging him of committing an infraction. The

law is clear on the matter. A verbal appraisal of the charges against an employee does not comply with

the first notice requirement. In Pepsi Cola Bottling Co. v. NLRC,[18] the Court held that consultations or

conferences are not a substitute for the actual observance of notice and hearing. Also, in Loadstar

Shipping Co., Inc. v. Mesano,[19] the Court, sanctioning the employer for disregarding the due process

requirements, held that the employees written explanation did not excuse the fact that there was a

complete absence of the first notice.

Second, even assuming that petitioner KKTI was able to furnish respondent an Irregularity

Report notifying him of his offense, such would not comply with the requirements of the law. We observe

from the irregularity reports against respondent for his other offenses that such contained merely a

general description of the charges against him. The reports did not even state a company rule or policy

that the employee had allegedly violated. Likewise, there is no mention of any of the grounds for

termination of employment under Art. 282 of the Labor Code. Thus, KKTIs standard charge sheet is not

sufficient notice to the employee.

Third, no hearing was conducted. Regardless of respondents written explanation, a hearing

was still necessary in order for him to clarify and present evidence in support of his defense. Moreover,

respondent made the letter merely to explain the circumstances relating to the irregularity in his October

28, 2001 Conductors Trip Report. He was unaware that a dismissal proceeding was already being

effected. Thus, he was surprised to receive the November 26, 2001 termination letter indicating as

grounds, not only hisOctober 28, 2001 infraction, but also his previous infractions.

Sanction for Non-compliance with Due Process Requirements

As stated earlier, after a finding that petitioners failed to comply with the due process

requirements, the CA awarded full backwages in favor of respondent in accordance with the doctrine

in Serrano v. NLRC.[20] However, the doctrine in Serrano had already been abandoned in Agabon v.

NLRC by ruling that if the dismissal is done without due process, the employer should indemnify the

employee with nominal damages.[21]

Thus, for non-compliance with the due process requirements in the termination of respondents

employment, petitioner KKTI is sanctioned to pay respondent the amount of thirty thousand pesos (PhP

30,000) as damages.

Thirteenth (13th)-Month Pay

Section 3 of the Rules Implementing Presidential Decree No. 851[22] provides the exceptions in the

coverage of the payment of the 13th-month benefit. The provision states:

SEC. 3. Employers covered.The Decree shall apply to all employers except to: x x x x e) Employers of those who are paid on purely commission, boundary, or task basis, and those who are paid a fixed amount for performing a specific work, irrespective of the time consumed in the performance thereof, except where the workers are paid on piece-rate basis in which case the employer shall be covered by this issuance insofar as such workers are concerned.

Petitioner KKTI maintains that respondent was paid on purely commission basis; thus, the latter

is not entitled to receive the 13th-month pay benefit. However, applying the ruling in Philippine

Agricultural Commercial and Industrial Workers Union v. NLRC,[23] the CA held that respondent is

entitled to the said benefit.

It was erroneous for the CA to apply the case of Philippine Agricultural Commercial and Industrial

Workers Union. Notably in the said case, it was established that the drivers and conductors praying for

13th- month pay were not paid purely on commission. Instead, they were receiving a commission in

addition to a fixed or guaranteed wage or salary.Thus, the Court held that bus drivers and conductors

who are paid a fixed or guaranteed minimum wage in case their commission be less than the statutory

minimum, and commissions only in case where they are over and above the statutory minimum, are

entitled to a 13th-month pay equivalent to one-twelfth of their total earnings during the calendar year.

On the other hand, in his Complaint,[24] respondent admitted that he was paid on commission

only. Moreover, this fact is supported by his pay slips[25] which indicated the varying amount of

commissions he was receiving each trip. Thus, he was excluded from receiving the 13th-month pay

benefit.

WHEREFORE, the petition is PARTLY GRANTED and the September 16, 2004 Decision of the CA

is MODIFIED by deleting the award of backwages and 13th-month pay. Instead, petitioner KKTI is

ordered to indemnify respondent the amount of thirty thousand pesos (PhP 30,000) as nominal

damages for failure to comply with the due process requirements in terminating the employment of

respondent.

No costs.

SO ORDERED.

MAERSK FILIPINAS VS AVESTRUZ NEXT CASE

JENNY M. AGABON and G.R. No. 158693 VIRGILIO C. AGABON, Petitioners, Present:

Davide, Jr., C.J.,

Puno,

Panganiban,

Quisumbing,

Ynares-Santiago,

Sandoval-Gutierrez,

- versus - Carpio,

Austria-Martinez,

Corona,

Carpio-Morales,

Callejo, Sr.,

Azcuna,

Tinga,

Chico-Nazario, and

Garcia, JJ.

NATIONAL LABOR RELATIONS

COMMISSION (NLRC), RIVIERA

HOME IMPROVEMENTS, INC. Promulgated:

and VICENTE ANGELES,

Respondents. November 17, 2004

x ---------------------------------------------------------------------------------------- x DECISION YNARES-SANTIAGO, J.:

This petition for review seeks to reverse the decision[1] of the Court of Appeals dated January 23, 2003,

in CA-G.R. SP No. 63017, modifying the decision of National Labor Relations Commission (NLRC) in

NLRC-NCR Case No. 023442-00.

Private respondent Riviera Home Improvements, Inc. is engaged in the business of selling and installing

ornamental and construction materials. It employed petitioners Virgilio Agabon and Jenny Agabon as

gypsum board and cornice installers on January 2, 1992[2] until February 23, 1999 when they were

dismissed for abandonment of work.

Petitioners then filed a complaint for illegal dismissal and payment of money claims [3] and on

December 28, 1999, the Labor Arbiter rendered a decision declaring the dismissals illegal and ordered

private respondent to pay the monetary claims. The dispositive portion of the decision states:

WHEREFORE, premises considered, We find the termination of the complainants illegal. Accordingly, respondent is hereby ordered to pay them their backwages up to November 29, 1999 in the sum of: 1. Jenny M. Agabon - P56, 231.93 2. Virgilio C. Agabon - 56, 231.93 and, in lieu of reinstatement to pay them their separation pay of one (1) month for every year of service from date of hiring up to November 29, 1999. Respondent is further ordered to pay the complainants their holiday pay and service incentive leave pay for the years 1996, 1997 and 1998 as well as their premium pay for holidays and rest days and Virgilio Agabons 13th month pay differential amounting to TWO THOUSAND ONE HUNDRED FIFTY (P2,150.00) Pesos, or the aggregate amount of ONE HUNDRED TWENTY ONE THOUSAND SIX HUNDRED SEVENTY EIGHT & 93/100 (P121,678.93) Pesos for Jenny Agabon, and ONE HUNDRED TWENTY THREE THOUSAND EIGHT HUNDRED TWENTY EIGHT & 93/100 (P123,828.93) Pesos for Virgilio Agabon, as per attached computation of Julieta C. Nicolas, OIC, Research and Computation Unit, NCR. SO ORDERED.[4]

On appeal, the NLRC reversed the Labor Arbiter because it found that the petitioners had abandoned

their work, and were not entitled to backwages and separation pay. The other money claims awarded

by the Labor Arbiter were also denied for lack of evidence.[5]

Upon denial of their motion for reconsideration, petitioners filed a petition for certiorari with the Court of

Appeals.

The Court of Appeals in turn ruled that the dismissal of the petitioners was not illegal because they had

abandoned their employment but ordered the payment of money claims. The dispositive portion of the

decision reads: WHEREFORE, the decision of the National Labor Relations Commission is REVERSED only insofar as it dismissed petitioners money claims. Private respondents are ordered to pay petitioners holiday pay for four (4) regular holidays in 1996, 1997, and 1998, as well as their service incentive leave pay for said years, and to pay the balance of petitioner Virgilio Agabons 13th month pay for 1998 in the amount of P2,150.00.

SO ORDERED.[6]

Hence, this petition for review on the sole issue of whether petitioners were illegally dismissed.[7]

Petitioners assert that they were dismissed because the private respondent refused to give

them assignments unless they agreed to work on a pakyaw basis when they reported for duty on

February 23, 1999. They did not agree on this arrangement because it would mean losing benefits as

Social Security System (SSS) members. Petitioners also claim that private respondent did not comply

with the twin requirements of notice and hearing.[8]

Private respondent, on the other hand, maintained that petitioners were not dismissed but had

abandoned their work.[9] In fact, private respondent sent two letters to the last known addresses of the

petitioners advising them to report for work. Private respondents manager even talked to petitioner

Virgilio Agabon by telephone sometime in June 1999 to tell him about the new assignment at Pacific

Plaza Towers involving 40,000 square meters of cornice installation work. However, petitioners did not

report for work because they had subcontracted to perform installation work for another company.

Petitioners also demanded for an increase in their wage to P280.00 per day. When this was not granted,

petitioners stopped reporting for work and filed the illegal dismissal case.[10]

It is well-settled that findings of fact of quasi-judicial agencies like the NLRC are accorded not only

respect but even finality if the findings are supported by substantial evidence. This is especially so when

such findings were affirmed by the Court of Appeals.[11] However, if the factual findings of the NLRC

and the Labor Arbiter are conflicting, as in this case, the reviewing court may delve into the records and

examine for itself the questioned findings.[12]

Accordingly, the Court of Appeals, after a careful review of the facts, ruled that petitioners

dismissal was for a just cause. They had abandoned their employment and were already working for

another employer.

To dismiss an employee, the law requires not only the existence of a just and valid cause but also

enjoins the employer to give the employee the opportunity to be heard and to defend himself.[13] Article

282 of the Labor Code enumerates the just causes for termination by the employer: (a) serious

misconduct or willful disobedience by the employee of the lawful orders of his employer or the latters

representative in connection with the employees work; (b) gross and habitual neglect by the employee

of his duties; (c) fraud or willful breach by the employee of the trust reposed in him by his employer or

his duly authorized representative; (d) commission of a crime or offense by the employee against the

person of his employer or any immediate member of his family or his duly authorized representative;

and (e) other causes analogous to the foregoing.

Abandonment is the deliberate and unjustified refusal of an employee to resume his employment.[14] It

is a form of neglect of duty, hence, a just cause for termination of employment by the employer. [15] For

a valid finding of abandonment, these two factors should be present: (1) the failure to report for work or

absence without valid or justifiable reason; and (2) a clear intention to sever employer-employee

relationship, with the second as the more determinative factor which is manifested by overt acts from

which it may be deduced that the employees has no more intention to work. The intent to discontinue

the employment must be shown by clear proof that it was deliberate and unjustified.[16]

In February 1999, petitioners were frequently absent having subcontracted for an installation work for

another company. Subcontracting for another company clearly showed the intention to sever the

employer-employee relationship with private respondent. This was not the first time they did this. In

January 1996, they did not report for work because they were working for another company. Private

respondent at that time warned petitioners that they would be dismissed if this happened again.

Petitioners disregarded the warning and exhibited a clear intention to sever their employer-employee

relationship. The record of an employee is a relevant consideration in determining the penalty that

should be meted out to him.[17]

In Sandoval Shipyard v. Clave,[18] we held that an employee who deliberately absented from work

without leave or permission from his employer, for the purpose of looking for a job elsewhere, is

considered to have abandoned his job. We should apply that rule with more reason here where

petitioners were absent because they were already working in another company.

The law imposes many obligations on the employer such as providing just compensation to workers,

observance of the procedural requirements of notice and hearing in the termination of employment. On

the other hand, the law also recognizes the right of the employer to expect from its workers not only

good performance, adequate work and diligence, but also good conduct[19] and loyalty. The employer

may not be compelled to continue to employ such persons whose continuance in the service will

patently be inimical to his interests.[20]

After establishing that the terminations were for a just and valid cause, we now determine if the

procedures for dismissal were observed.

The procedure for terminating an employee is found in Book VI, Rule I, Section 2(d) of

the Omnibus Rules Implementing the Labor Code: Standards of due process: requirements of notice. In all cases of termination

of employment, the following standards of due process shall be substantially observed: I. For termination of employment based on just causes as defined in Article

282 of the Code: (a) A written notice served on the employee specifying the ground or grounds

for termination, and giving to said employee reasonable opportunity within which to explain his side;

(b) A hearing or conference during which the employee concerned, with the

assistance of counsel if the employee so desires, is given opportunity to respond to the charge, present his evidence or rebut the evidence presented against him; and

(c) 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.

In case of termination, the foregoing notices shall be served on the employees last known address.

Dismissals based on just causes contemplate acts or omissions attributable to the employee

while dismissals based on authorized causes involve grounds under the Labor Code which allow the

employer to terminate employees. A termination for an authorized cause requires payment of separation

pay. When the termination of employment is declared illegal, reinstatement and full backwages are

mandated under Article 279. If reinstatement is no longer possible where the dismissal was unjust,

separation pay may be granted.

Procedurally, (1) if the dismissal is based on a just cause under Article 282, the employer must

give the employee two written notices and a hearing or opportunity to be heard if requested by the

employee before terminating the employment: a notice specifying the grounds for which dismissal is

sought a hearing or an opportunity to be heard and after hearing or opportunity to be heard, a notice of

the decision to dismiss; and (2) if the dismissal is based on authorized causes under Articles 283 and

284, the employer must give the employee and the Department of Labor and Employment written

notices 30 days prior to the effectivity of his separation.

From the foregoing rules four possible situations may be derived: (1) the dismissal is for a just cause

under Article 282 of the Labor Code, for an authorized cause under Article 283, or for health reasons

under Article 284, and due process was observed; (2) the dismissal is without just or authorized cause

but due process was observed; (3) the dismissal is without just or authorized cause and there was no

due process; and (4) the dismissal is for just or authorized cause but due process was not observed.

In the first situation, the dismissal is undoubtedly valid and the employer will not suffer any liability.

In the second and third situations where the dismissals are illegal, Article 279 mandates that

the employee is entitled to reinstatement without loss of seniority rights and other privileges and full

backwages, inclusive of allowances, and other benefits or their monetary equivalent computed from the

time the compensation was not paid up to the time of actual reinstatement.

In the fourth situation, the dismissal should be upheld. While the procedural infirmity cannot be cured,

it should not invalidate the dismissal. However, the employer should be held liable for non-compliance

with the procedural requirements of due process.

The present case squarely falls under the fourth situation. The dismissal should be upheld because it

was established that the petitioners abandoned their jobs to work for another company. Private

respondent, however, did not follow the notice requirements and instead argued that sending notices

to the last known addresses would have been useless because they did not reside there anymore.

Unfortunately for the private respondent, this is not a valid excuse because the law mandates the twin

notice requirements to the employees last known address.[21] Thus, it should be held liable for non-

compliance with the procedural requirements of due process.

A review and re-examination of the relevant legal principles is appropriate and timely to clarify the

various rulings on employment termination in the light of Serrano v. National Labor Relations

Commission.[22]

Prior to 1989, the rule was that a dismissal or termination is illegal if the employee was not given any

notice. In the 1989 case of Wenphil Corp. v. National Labor Relations Commission,[23] we reversed this

long-standing rule and held that the dismissed employee, although not given any notice and hearing,

was not entitled to reinstatement and backwages because the dismissal was for grave misconduct and

insubordination, a just ground for termination under Article 282. The employee had a violent temper and

caused trouble during office hours, defying superiors who tried to pacify him. We concluded that

reinstating the employee and awarding backwages may encourage him to do even worse and will

render a mockery of the rules of discipline that employees are required to observe.[24] We further held

that: Under the circumstances, the dismissal of the private respondent for just cause should be maintained. He has no right to return to his former employment.

However, the petitioner must nevertheless be held to account for failure to extend to private respondent his right to an investigation before causing his dismissal. The rule is explicit as above discussed. The dismissal of an employee must be for just or authorized cause and after due process. Petitioner committed an infraction of the second requirement. Thus, it must be imposed a sanction for its failure to give a formal notice and conduct an investigation as required by law before dismissing petitioner from employment. Considering the circumstances of this case petitioner must indemnify the private respondent the amount of P1,000.00. The measure of this award depends on the facts of each case and the gravity of the omission committed by the employer.[25]

The rule thus evolved: where the employer had a valid reason to dismiss an employee but did

not follow the due process requirement, the dismissal may be upheld but the employer will be penalized

to pay an indemnity to the employee. This became known as the Wenphil or Belated Due Process Rule.

On January 27, 2000, in Serrano, the rule on the extent of the sanction was changed. We held

that the violation by the employer of the notice requirement in termination for just or authorized causes

was not a denial of due process that will nullify the termination. However, the dismissal is ineffectual

and the employer must pay full backwages from the time of termination until it is judicially declared that

the dismissal was for a just or authorized cause.

The rationale for the re-examination of the Wenphil doctrine in Serrano was the significant

number of cases involving dismissals without requisite notices. We concluded that the imposition of

penalty by way of damages for violation of the notice requirement was not serving as a deterrent. Hence,

we now required payment of full backwages from the time of dismissal until the time the Court finds the

dismissal was for a just or authorized cause.

Serrano was confronting the practice of employers to dismiss now and pay later by imposing

full backwages.

We believe, however, that the ruling in Serrano did not consider the full meaning of Article 279

of the Labor Code which states:

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

This means that the termination is illegal only if it is not for any of the justified or authorized

causes provided by law. Payment of backwages and other benefits, including reinstatement, is justified

only if the employee was unjustly dismissed.

The fact that the Serrano ruling can cause unfairness and injustice which elicited strong dissent

has prompted us to revisit the doctrine.

To be sure, the Due Process Clause in Article III, Section 1 of the Constitution embodies a system of

rights based on moral principles so deeply imbedded in the traditions and feelings of our people as to

be deemed fundamental to a civilized society as conceived by our entire history. Due process is that

which comports with the deepest notions of what is fair and right and just.[26] It is a constitutional restraint

on the legislative as well as on the executive and judicial powers of the government provided by the Bill

of Rights.

Due process under the Labor Code, like Constitutional due process, has two aspects:

substantive, i.e., the valid and authorized causes of employment termination under the Labor Code;

and procedural, i.e., the manner of dismissal. Procedural due process requirements for dismissal are

found in the Implementing Rules of P.D. 442, as amended, otherwise known as the Labor Code of the

Philippines in Book VI, Rule I, Sec. 2, as amended by Department Order Nos. 9 and 10.[27] Breaches of

these due processrequirements violate the Labor Code. Therefore statutory due process should be

differentiated from failure to comply with constitutional due process.

Constitutional due process protects the individual from the government and assures him of his

rights in criminal, civil or administrative proceedings; while statutory due process found in the Labor

Code and Implementing Rules protects employees from being unjustly terminated without just cause

after notice and hearing.

In Sebuguero v. National Labor Relations Commission,[28] the dismissal was for a just and valid

cause but the employee was not accorded due process. The dismissal was upheld by the Court but the

employer was sanctioned. The sanction should be in the nature of indemnification or penalty, and

depends on the facts of each case and the gravity of the omission committed by the employer.

In Nath v. National Labor Relations Commission,[29] it was ruled that even if the employee was

not given due process, the failure did not operate to eradicate the just causes for dismissal. The

dismissal being for just cause, albeit without due process, did not entitle the employee to reinstatement,

backwages, damages and attorneys fees.

Mr. Justice Jose C. Vitug, in his separate opinion in MGG Marine Services, Inc. v. National

Labor Relations Commission,[30] which opinion he reiterated in Serrano, stated:

C. Where there is just cause for dismissal but due process has not been

properly observed by an employer, it would not be right to order either the reinstatement

of the dismissed employee or the payment of backwages to him. In failing, however, to

comply with the procedure prescribed by law in terminating the services of the

employee, the employer must be deemed to have opted or, in any case, should be

made liable, for the payment of separation pay. It might be pointed out that the notice

to be given and the hearing to be conducted generally constitute the two-part due

process requirement of law to be accorded to the employee by the employer.

Nevertheless, peculiar circumstances might obtain in certain situations where to

undertake the above steps would be no more than a useless formality and where,

accordingly, it would not be imprudent to apply the res ipsa loquitur rule and award, in

lieu of separation pay, nominal damages to the employee. x x x.[31]

After carefully analyzing the consequences of the divergent doctrines in the law on employment

termination, we believe that in cases involving dismissals for cause but without observance of the twin

requirements of notice and hearing, the better rule is to abandon the Serrano doctrine and to

follow Wenphil by holding that the dismissal was for just cause but imposing sanctions on the employer.

Such sanctions, however, must be stiffer than that imposed in Wenphil. By doing so, this Court would

be able to achieve a fair result by dispensing justice not just to employees, but to employers as well.

The unfairness of declaring illegal or ineffectual dismissals for valid or authorized causes but not

complying with statutory due process may have far-reaching consequences.

This would encourage frivolous suits, where even the most notorious violators of company policy are

rewarded by invoking due process. This also creates absurd situations where there is a just or

authorized cause for dismissal but a procedural infirmity invalidates the termination. Let us take for

example a case where the employee is caught stealing or threatens the lives of his co-employees or

has become a criminal, who has fled and cannot be found, or where serious business losses demand

that operations be ceased in less than a month. Invalidating the dismissal would not serve public

interest. It could also discourage investments that can generate employment in the local economy.

The constitutional policy to provide full protection to labor is not meant to be a sword to oppress

employers. The commitment of this Court to the cause of labor does not prevent us from sustaining the

employer when it is in the right, as in this case.[32] Certainly, an employer should not be compelled to

pay employees for work not actually performed and in fact abandoned.

The employer should not be compelled to continue employing a person who is admittedly guilty of

misfeasance or malfeasance and whose continued employment is patently inimical to the employer.

The law protecting the rights of the laborer authorizes neither oppression nor self-destruction of the

employer.[33]

It must be stressed that in the present case, the petitioners committed a grave offense, i.e.,

abandonment, which, if the requirements of due process were complied with, would undoubtedly result

in a valid dismissal.

An employee who is clearly guilty of conduct violative of Article 282 should not be protected by the

Social Justice Clause of the Constitution. Social justice, as the term suggests, should be used only to

correct an injustice. As the eminent Justice Jose P. Laurel observed, social justice must be founded on

the recognition of the necessity of interdependence among diverse units of a society and of the

protection that should be equally and evenly extended to all groups as a combined force in our

social and economic life, consistent with the fundamental and paramount objective of the state of

promoting the health, comfort, and quiet of all persons, and of bringing about the greatest good to the

greatest number.[34]

This is not to say that the Court was wrong when it ruled the way it did in Wenphil, Serrano and

related cases. Social justice is not based on rigid formulas set in stone. It has to allow for

changing times and circumstances.

Justice Isagani Cruz strongly asserts the need to apply a balanced approach to labor-

management relations and dispense justice with an even hand in every case:

We have repeatedly stressed that social justice or any justice for that matter is for the deserving, whether he be a millionaire in his mansion or a pauper in his hovel. It is true that, in case of reasonable doubt, we are to tilt the balance in favor of the poor to whom the Constitution fittingly extends its sympathy and compassion. But never is it justified to give preference to the poor simply because they are poor, or reject the rich simply because they are rich, for justice must always be served for the poor and the rich alike, according to the mandate of the law.[35]

Justice in every case should only be for the deserving party. It should not be presumed that every case

of illegal dismissal would automatically be decided in favor of labor, as management has rights that

should be fully respected and enforced by this Court. As interdependent and indispensable partners in

nation-building, labor and management need each other to foster productivity and economic growth;

hence, the need to weigh and balance the rights and welfare of both the employee and employer.

Where the dismissal is for a just cause, as in the instant case, the lack of statutory due

process should not nullify the dismissal, or render it illegal, or ineffectual. However, the employer

should indemnify the employee for the violation of his statutory rights, as ruled in Reta v. National

Labor Relations Commission.[36] The indemnity to be imposed should be stiffer to discourage the

abhorrent practice of dismiss now, pay later, which we sought to deter in the Serrano ruling. The

sanction should be in the nature of indemnification or penalty and should depend on the facts of

each case, taking into special consideration the gravity of the due process violation of the employer.

Under the Civil Code, nominal damages is adjudicated in order that a right of the plaintiff, which has

been violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose

of indemnifying the plaintiff for any loss suffered by him.[37]

As enunciated by this Court in Viernes v. National Labor Relations Commissions,[38] an employer is

liable to pay indemnity in the form of nominal damages to an employee who has been dismissed if, in

effecting such dismissal, the employer fails to comply with the requirements of due process. The Court,

after considering the circumstances therein, fixed the indemnity at P2,590.50, which was equivalent to

the employees one month salary. This indemnity is intended not to penalize the employer but to

vindicate or recognize the employees right to statutory due process which was violated by the

employer.[39]

The violation of the petitioners right to statutory due process by the private respondent warrants the

payment of indemnity in the form of nominal damages. The amount of such damages is addressed to

the sound discretion of the court, taking into account the relevant circumstances.[40] Considering the

prevailing circumstances in the case at bar, we deem it proper to fix it at P30,000.00. We believe

this form of damages would serve to deter employers from future violations of the statutory due process

rights of employees. At the very least, it provides a vindication or recognition of this fundamental right

granted to the latter under the Labor Code and its Implementing Rules.

Private respondent claims that the Court of Appeals erred in holding that it failed to pay petitioners

holiday pay, service incentive leave pay and 13th month pay.

We are not persuaded.

We affirm the ruling of the appellate court on petitioners money claims. Private respondent is

liable for petitioners holiday pay, service incentive leave pay and 13th month pay without deductions.

As a general rule, one who pleads payment has the burden of proving it. Even where the employee

must allege non-payment, the general rule is that the burden rests on the employer to prove payment,

rather than on the employee to prove non-payment. The reason for the rule is that the pertinent

personnel files, payrolls, records, remittances and other similar documents which will show that

overtime, differentials, service incentive leave and other claims of workers have been paid are not in

the possession of the worker but in the custody and absolute control of the employer.[41]

In the case at bar, if private respondent indeed paid petitioners holiday pay and service incentive leave

pay, it could have easily presented documentary proofs of such monetary benefits to disprove the claims

of the petitioners. But it did not, except with respect to the 13th month pay wherein it presented cash

vouchers showing payments of the benefit in the years disputed.[42] Allegations by private respondent

that it does not operate during holidays and that it allows its employees 10 days leave with pay, other

than being self-serving, do not constitute proof of payment. Consequently, it failed to discharge the onus

probandi thereby making it liable for such claims to the petitioners.

Anent the deduction of SSS loan and the value of the shoes from petitioner Virgilio Agabons 13th month

pay, we find the same to be unauthorized. The evident intention of Presidential Decree No. 851 is to

grant an additional income in the form of the 13th month pay to employees not already receiving the

same[43] so as to further protect the level of real wages from the ravages of world-wide

inflation.[44] Clearly, as additional income, the 13th month pay is included in the definition of wage under

Article 97(f) of the Labor Code, to wit:

(f) Wage paid to any employee shall mean the remuneration or earnings, however

designated, capable of being expressed in terms of money whether fixed or ascertained

on a time, task, piece , or commission basis, or other method of calculating the same,

which is payable by an employer to an employee under a written or unwritten contract

of employment for work done or to be done, or for services rendered or to be rendered

and includes the fair and reasonable value, as determined by the Secretary of Labor,

of board, lodging, or other facilities customarily furnished by the employer to the

employee

from which an employer is prohibited under Article 113[45] of the same Code from making any deductions

without the employees knowledge and consent. In the instant case, private respondent failed to show

that the deduction of the SSS loan and the value of the shoes from petitioner Virgilio Agabons

13th month pay was authorized by the latter. The lack of authority to deduct is further bolstered by the

fact that petitioner Virgilio Agabon included the same as one of his money claims against private

respondent.

The Court of Appeals properly reinstated the monetary claims awarded by the Labor Arbiter

ordering the private respondent to pay each of the petitioners holiday pay for four regular holidays from

1996 to 1998, in the amount of P6,520.00, service incentive leave pay for the same period in the amount

of P3,255.00 and the balance of Virgilio Agabons thirteenth month pay for 1998 in the amount of

P2,150.00.

WHEREFORE, in view of the foregoing, the petition is DENIED. The decision of the Court of Appeals

dated January 23, 2003, in CA-G.R. SP No. 63017, finding that petitioners Jenny and Virgilio Agabon

abandoned their work, and ordering private respondent to pay each of the petitioners holiday pay for

four regular holidays from 1996 to 1998, in the amount of P6,520.00, service incentive leave pay for the

same period in the amount of P3,255.00 and the balance of Virgilio Agabons thirteenth month pay for

1998 in the amount of P2,150.00 is AFFIRMED with the MODIFICATION that private respondent

Riviera Home Improvements, Inc. is further ORDERED to pay each of the petitioners the amount of

P30,000.00 as nominal damages for non-compliance with statutory due process.

No costs SO ORDERED.

G.R. No. 151378. March 28, 2005

JAKA FOOD PROCESSING CORPORATION, Petitioners, vs. DARWIN PACOT, ROBERT PAROHINOG, DAVID BISNAR, MARLON DOMINGO, RHOEL LESCANO and JONATHAN CAGABCAB, Respondents.

D E C I S I O N

GARCIA, J.:

Assailed and sought to be set aside in this appeal by way of a petition for review on certiorari under rule 45 of the Rules of Court are the following issuances of the Court of Appeals in CA-G.R. SP. No. 59847, to wit:

1. Decision dated 16 November 2001,1 reversing and setting aside an earlier decision of the National Labor Relations Commission (NLRC); and

2. Resolution dated 8 January 2002,2 denying petitioner’s motion for reconsideration.

The material facts may be briefly stated, as follows:

Respondents Darwin Pacot, Robert Parohinog, David Bisnar, Marlon Domingo, Rhoel Lescano and Jonathan Cagabcab were earlier hired by petitioner JAKA Foods Processing Corporation (JAKA, for short) until the latter terminated their employment on August 29, 1997 because the corporation was "in dire financial straits". It is not disputed, however, that the termination was effected without JAKA complying with the requirement under Article 283 of the Labor Code regarding the service of a written notice upon the employees and the Department of Labor and Employment at least one (1) month before the intended date of termination.

In time, respondents separately filed with the regional Arbitration Branch of the National Labor Relations Commission (NLRC) complaints for illegal dismissal, underpayment of wages and nonpayment of service incentive leave and 13th month pay against JAKA and its HRD Manager, Rosana Castelo.

After due proceedings, the Labor Arbiter rendered a decision3 declaring the termination illegal and ordering JAKA and its HRD Manager to reinstate respondents with full backwages, and separation pay if reinstatement is not possible. More specifically the decision dispositively reads:

WHEREFORE, judgment is hereby rendered declaring as illegal the termination of complainants and ordering respondents to reinstate them to their positions with full backwages which as of July 30, 1998 have already amounted to P339,768.00. Respondents are also ordered to pay complainants the amount of P2,775.00 representing the unpaid service incentive leave pay of Parohinog, Lescano and Cagabcab an the amount of P19,239.96 as payment for 1997 13th month pay as alluded in the above computation.

If complainants could not be reinstated, respondents are ordered to pay them separation pay equivalent to one month salary for very (sic) year of service.

SO ORDERED.

Therefrom, JAKA went on appeal to the NLRC, which, in a decision dated August 30, 1999,4 affirmed in toto that of the Labor Arbiter.

JAKA filed a motion for reconsideration. Acting thereon, the NLRC came out with another decision dated January 28, 2000,5 this time modifying its earlier decision, thus:

WHEREFORE, premises considered, the instant motion for reconsideration is hereby GRANTED and the challenged decision of this Commission [dated] 30 August 1999 and the decision of the Labor Arbiter xxx are hereby modified by reversing an setting aside the awards of backwages, service incentive leave

pay. Each of the complainants-appellees shall be entitled to a separation pay equivalent to one month. In addition, respondents-appellants is (sic) ordered to pay each of the complainants-appellees the sum of P2,000.00 as indemnification for its failure to observe due process in effecting the retrenchment.

SO ORDERED.

Their motion for reconsideration having been denied by the NLRC in its resolution of April 28, 2000,6 respondents went to the Court of Appeals via a petition for certiorari, thereat docketed as CA-G.R. SP No. 59847.

As stated at the outset hereof, the Court of Appeals, in a decision dated November 16, 2000, applying the doctrine laid down by this Court in Serrano vs. NLRC,7 reversed and set aside the NLRC’s decision of January 28, 2000, thus:

WHEREFORE, the decision dated January 28, 2000 of the National Labor Relations Commission is REVERSEDand SET ASIDE and another one entered ordering respondent JAKA Foods Processing Corporation to pay petitioners separation pay equivalent to one (1) month salary, the proportionate 13th month pay and, in addition, full backwages from the time their employment was terminated on August 29, 1997 up to the time the Decision herein becomes final.

SO ORDERED.

This time, JAKA moved for a reconsideration but its motion was denied by the appellate court in its resolution of January 8, 2002.

Hence, JAKA’s present recourse, submitting, for our consideration, the following issues:

"I. WHETHER OR NOT THE COURT OF APPEALS CORRECTLY AWARDED ‘FULL BACKWAGES’ TO RESPONDENTS.

II. WHETHER OR NOT THE ASSAILED DECISION CORRECTLY AWARDED SEPARATION PAY TO RESPONDENTS".

As we see it, there is only one question that requires resolution, i.e. what are the legal implications of a situation where an employee is dismissed for cause but such dismissal was effected without the employer’s compliance with the notice requirement under the Labor Code.

This, certainly, is not a case of first impression. In the very recent case of Agabon vs. NLRC,8 we had the opportunity to resolve a similar question. Therein, we found that the employees committed a grave offense, i.e.,abandonment, which is a form of a neglect of duty which, in turn, is one of the just causes enumerated under Article 282 of the Labor Code. In said case, we upheld the validity of the dismissal despite non-compliance with the notice requirement of the Labor Code. However, we required the employer to pay the dismissed employees the amount of P30,000.00, representing nominal damages for non-compliance with statutory due process, thus:

"Where the dismissal is for a just cause, as in the instant case, the lack of statutory due process should not nullify the dismissal, or render it illegal, or ineffectual. However, the employer should indemnify the employee for the violation of his statutory rights, as ruled in Reta vs. National Labor Relations Commission. The indemnity to be imposed should be stiffer to discourage the abhorrent practice of ‘dismiss now, pay later,’ which we sought to deter in the Serrano ruling. The sanction should be in the nature of indemnification or penalty and should depend on the facts of each case, taking into special consideration the gravity of the due process violation of the employer.

xxx xxx xxx

The violation of petitioners’ right to statutory due process by the private respondent warrants the payment of indemnity in the form of nominal damages. The amount of such damages is addressed to

the sound discretion of the court, taking into account the relevant circumstances. Considering the prevailing circumstances in the case at bar, we deem it proper to fix it at P30,000.00. We believe this form of damages would serve to deter employers from future violations of the statutory due process rights of employees. At the very least, it provides a vindication or recognition of this fundamental right granted to the latter under the Labor Code and its Implementing Rules," (Emphasis supplied).

The difference between Agabon and the instant case is that in the former, the dismissal was based on a just cause under Article 282 of the Labor Code while in the present case, respondents were dismissed due to retrenchment, which is one of the authorized causes under Article 283 of the same Code.

At this point, we note that there are divergent implications of a dismissal for just cause under Article 282, on one hand, and a dismissal for authorized cause under Article 283, on the other.

A dismissal for just cause under Article 282 implies that the employee concerned has committed, or is guilty of, some violation against the employer, i.e. the employee has committed some serious misconduct, is guilty of some fraud against the employer, or, as in Agabon, he has neglected his duties. Thus, it can be said that the employee himself initiated the dismissal process.

On another breath, a dismissal for an authorized cause under Article 283 does not necessarily imply delinquency or culpability on the part of the employee. Instead, the dismissal process is initiated by the employer’s exercise of his management prerogative, i.e. when the employer opts to install labor saving devices, when he decides to cease business operations or when, as in this case, he undertakes to implement a retrenchment program.

The clear-cut distinction between a dismissal for just cause under Article 282 and a dismissal for authorized cause under Article 283 is further reinforced by the fact that in the first, payment of separation pay, as a rule, is not required, while in the second, the law requires payment of separation pay.9

For these reasons, there ought to be a difference in treatment when the ground for dismissal is one of the just causes under Article 282, and when based on one of the authorized causes under Article 283.

Accordingly, it is wise to hold that: (1) if the dismissal is based on a just cause under Article 282 but the employer failed to comply with the notice requirement, the sanction to be imposed upon him should be tempered because the dismissal process was, in effect, initiated by an act imputable to the employee; and (2) if the dismissal is based on an authorized cause under Article 283 but the employer failed to comply with the notice requirement, the sanction should be stiffer because the dismissal process was initiated by the employer’s exercise of his management prerogative.

The records before us reveal that, indeed, JAKA was suffering from serious business losses at the time it terminated respondents’ employment. As aptly found by the NLRC:

"A careful study of the evidence presented by the respondent-appellant corporation shows that the audited Financial Statement of the corporation for the periods 1996, 1997 and 1998 were submitted by the respondent-appellant corporation, The Statement of Income and Deficit found in the Audited Financial Statement of the respondent-appellant corporation clearly shows the following in 1996, the deficit of the respondent-appellant corporation was P188,218,419.00 or 94.11% of the stockholder’s [sic] equity which amounts to P200,000,000.00. In 1997 when the retrenchment program of respondent-appellant corporation was undertaken, the deficit ballooned to P247,222,569.00 or 123.61% of the stockholders’ equity, thus a capital deficiency or impairment of equity ensued. In 1998, the deficit grew to P355,794,897.00 or 177% of the stockholders’ equity. From 1996 to 1997, the deficit grew by more that (sic) 31% while in 1998 the deficit grew by more than 47%.

The Statement of Income and Deficit of the respondent-appellant corporation to prove its alleged losses was prepared by an independent auditor, SGV & Co. It convincingly showed that the respondent-appellant corporation was in dire financial straits, which the complainants-appellees failed to dispute. The losses incurred by the respondent-appellant corporation are clearly substantial and sufficiently proven with clear and satisfactory evidence. Losses incurred were adequately shown with respondent-appellant’s audited financial statement. Having established the loss incurred by the respondent-

appellant corporation, it necessarily necessarily (sic) follows that the ground in support of retrenchment existed at the time the complainants-appellees were terminated. We cannot therefore sustain the findings of the Labor Arbiter that the alleged losses of the respondent-appellant was [sic] not well substantiated by substantial proofs. It is therefore logical for the corporation to implement a retrenchment program to prevent further losses."10

Noteworthy it is, moreover, to state that herein respondents did not assail the foregoing finding of the NLRC which, incidentally, was also affirmed by the Court of Appeals.

It is, therefore, established that there was ground for respondents’ dismissal, i.e., retrenchment, which is one of the authorized causes enumerated under Article 283 of the Labor Code. Likewise, it is established that JAKA failed to comply with the notice requirement under the same Article. Considering the factual circumstances in the instant case and the above ratiocination, we, therefore, deem it proper to fix the indemnity at P50,000.00.

We likewise find the Court of Appeals to have been in error when it ordered JAKA to pay respondents separation pay equivalent to one (1) month salary for every year of service. This is because in Reahs Corporation vs. NLRC,11 we made the following declaration:

"The rule, therefore, is that in all cases of business closure or cessation of operation or undertaking of the employer, the affected employee is entitled to separation pay. This is consistent with the state policy of treating labor as a primary social economic force, affording full protection to its rights as well as its welfare. The exception is when the closure of business or cessation of operations is due to serious business losses or financial reverses; duly proved, in which case, the right of affected employees to separation pay is lost for obvious reasons. xxx". (Emphasis supplied)

WHEREFORE, the instant petition is GRANTED. Accordingly, the assailed decision and resolution of the Court of Appeals respectively dated November 16, 2001 and January 8, 2002 are hereby SET ASIDE and a new one entered upholding the legality of the dismissal but ordering petitioner to pay each of the respondents the amount of P50,000.00, representing nominal damages for non-compliance with statutory due process.

SO ORDERED.

FELIX B. PEREZ and G.R. No. 152048

AMANTE G. DORIA,

Petitioners,

Present:

PUNO, C.J.,

QUISUMBING,

YNARES-SANTIAGO,

CARPIO,

AUSTRIA-MARTINEZ,*

- v e r s u s - CORONA,

CARPIO MORALES,

TINGA,

CHICO-NAZARIO,

VELASCO, JR.,

NACHURA,

LEONARDO-DE CASTRO,

BRION and

PERALTA, JJ.

PHILIPPINE TELEGRAPH AND

TELEPHONE COMPANY and

JOSE LUIS SANTIAGO,

Respondents. Promulgated:

April 7, 2009

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

D E C I S I O N

CORONA, J.:

Petitioners Felix B. Perez and Amante G. Doria were employed by respondent Philippine

Telegraph and Telephone Company (PT&T) as shipping clerk and supervisor, respectively, in PT&Ts

Shipping Section, Materials Management Group.

Acting on an alleged unsigned letter regarding anomalous transactions at the Shipping Section,

respondents formed a special audit team to investigate the matter. It was discovered that the Shipping

Section jacked up the value of the freight costs for goods shipped and that the duplicates of the shipping

documents allegedly showed traces of tampering, alteration and superimposition.

On September 3, 1993, petitioners were placed on preventive suspension for 30 days for their

alleged involvement in the anomaly.[1] Their suspension was extended for 15 days twice: first on

October 3, 1993[2] and second on October 18, 1993.[3]

On October 29, 1993, a memorandum with the following tenor was issued by respondents:

In line with the recommendation of the AVP-Audit as presented in his report of October

15, 1993 (copy attached) and the subsequent filing of criminal charges against the

parties mentioned therein, [Mr. Felix Perez and Mr. Amante Doria are] hereby

dismissed from the service for having falsified company documents.[4] (emphasis

supplied)

On November 9, 1993, petitioners filed a complaint for illegal suspension and illegal

dismissal.[5] They alleged that they were dismissed on November 8, 1993, the date they received the

above-mentioned memorandum.

The labor arbiter found that the 30-day extension of petitioners suspension and their

subsequent dismissal were both illegal. He ordered respondents to pay petitioners their salaries during

their 30-day illegal suspension, as well as to reinstate them with backwages and 13th month pay.

The National Labor Relations Commission (NLRC) reversed the decision of the labor arbiter. It

ruled that petitioners were dismissed for just cause, that they were accorded due process and that they

were illegally suspended for only 15 days (without stating the reason for the reduction of the period of

petitioners illegal suspension).[6]

Petitioners appealed to the Court of Appeals (CA). In its January 29, 2002 decision,[7] the CA

affirmed the NLRC decision insofar as petitioners illegal suspension for 15 days and dismissal for just

cause were concerned. However, it found that petitioners were dismissed without due process.

Petitioners now seek a reversal of the CA decision. They contend that there was no just cause

for their dismissal, that they were not accorded due process and that they were illegally suspended for

30 days.

We rule in favor of petitioners.

RESPONDENTS FAILED TO PROVE JUST

CAUSE AND TO OBSERVE DUE PROCESS

The CA, in upholding the NLRCs decision, reasoned that there was sufficient basis for respondents to

lose their confidence in petitioners[8] for allegedly tampering with the shipping documents. Respondents

emphasized the importance of a shipping order or request, as it was the basis of their liability to a cargo

forwarder.[9]

We disagree.

Without undermining the importance of a shipping order or request, we find respondents

evidence insufficient to clearly and convincingly establish the facts from which the loss of confidence

resulted.[10] Other than their bare allegations and the fact that such documents came into petitioners

hands at some point, respondents should have provided evidence of petitioners functions, the extent of

their duties, the procedure in the handling and approval of shipping requests and the fact that no

personnel other than petitioners were involved. There was, therefore, a patent paucity of proof

connecting petitioners to the alleged tampering of shipping documents.

The alterations on the shipping documents could not reasonably be attributed to petitioners

because it was never proven that petitioners alone had control of or access to these documents. Unless

duly proved or sufficiently substantiated otherwise, impartial tribunals should not rely only on the

statement of the employer that it has lost confidence in its employee.[11]

Willful breach by the employee of the trust reposed in him by his employer or duly authorized

representative is a just cause for termination.[12] However, in General Bank and Trust Co. v. CA,[13] we

said:

[L]oss of confidence should not be simulated. It should not be used as a subterfuge for

causes which are improper, illegal or unjustified. Loss of confidence may not be

arbitrarily asserted in the face of overwhelming evidence to the contrary. It must be

genuine, not a mere afterthought to justify an earlier action taken in bad faith.

The burden of proof rests on the employer to establish that the dismissal is for cause in view of

the security of tenure that employees enjoy under the Constitution and the Labor Code. The employers

evidence must clearly and convincingly show the facts on which the loss of confidence in the employee

may be fairly made to rest.[14] It must be adequately proven by substantial evidence.[15] Respondents

failed to discharge this burden.

Respondents illegal act of dismissing petitioners was aggravated by their failure to observe due

process. To meet the requirements of due process in the dismissal of an employee, an employer must

furnish the worker with two written notices: (1) a written notice specifying the grounds for termination

and giving to said employee a reasonable opportunity to explain his side and (2) another written notice

indicating that, upon due consideration of all circumstances, grounds have been established to justify

the employer's decision to dismiss the employee.[16]

Petitioners were neither apprised of the charges against them nor given a chance to defend

themselves. They were simply and arbitrarily separated from work and served notices of termination in

total disregard of their rights to due process and security of tenure. The labor arbiter and the CA correctly

found that respondents failed to comply with the two-notice requirement for terminating employees.

Petitioners likewise contended that due process was not observed in the absence of

a hearing in which they could have explained their side and refuted the evidence against them.

There is no need for a hearing or conference. We note a marked difference in the standards of

due process to be followed as prescribed in the Labor Code and its implementing rules. The Labor

Code, on one hand, provides that an employer must provide the employee ample opportunity to be

heard and to defend himself with the assistance of his representative if he so desires:

ART. 277. Miscellaneous provisions. x x x

(b) Subject to the constitutional right of workers to security of tenure and their right to

be protected against dismissal except for a just and authorized cause and without

prejudice to the requirement of notice under Article 283 of this Code, the employer shall

furnish the worker whose employment is sought to be terminated a written notice

containing a statement of the causes for termination and shall afford the latter ample

opportunity to be heard and to defend himself with the assistance of his

representative if he so desires in accordance with company rules and regulations

promulgated pursuant to guidelines set by the Department of Labor and Employment.

Any decision taken by the employer shall be without prejudice to the right of the worker

to contest the validity or legality of his dismissal by filing a complaint with the regional

branch of the National Labor Relations Commission. The burden of proving that the

termination was for a valid or authorized cause shall rest on the employer. (emphasis

supplied)

The omnibus rules implementing the Labor Code, on the other hand, require a hearing and

conference during which the employee concerned is given the opportunity to respond to the charge,

present his evidence or rebut the evidence presented against him:[17]

Section 2. Security of Tenure. x x x

(d) In all cases of termination of employment, the following standards of due

process shall be substantially observed:

For termination of employment based on just causes as defined in Article 282

of the Labor Code:

(i) A written notice served on the employee specifying the ground or grounds

for termination, and giving said employee reasonable opportunity within which to

explain his side.

(ii) A hearing or conference during which the employee concerned, with

the assistance of counsel if he so desires, is given opportunity to respond to the

charge, present his evidence or rebut the evidence presented against him.

(iii) 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. (emphasis supplied)

Which one should be followed? Is a hearing (or conference) mandatory in cases involving the

dismissal of an employee? Can the apparent conflict between the law and its IRR be reconciled?

At the outset, we reaffirm the time-honored doctrine that, in case of conflict, the law prevails

over the administrative regulations implementing it.[18] The authority to promulgate implementing rules

proceeds from the law itself. To be valid, a rule or regulation must conform to and be consistent with

the provisions of the enabling statute.[19]As such, it cannot amend the law either by abridging or

expanding its scope.[20]

Article 277(b) of the Labor Code provides that, in cases of termination for a just cause, an

employee must be given ample opportunity to be heard and to defend himself.Thus, the opportunity to

be heard afforded by law to the employee is qualified by the word ample which ordinarily means

considerably more than adequate or sufficient.[21] In this regard, the phrase ample opportunity to be

heard can be reasonably interpreted as extensive enough to cover actual hearing or conference. To

this extent, Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code is in conformity

with Article 277(b).

Nonetheless, Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code

should not be taken to mean that holding an actual hearing or conference is a condition sine qua non for

compliance with the due process requirement in termination of employment. The test for the fair

procedure guaranteed under Article 277(b) cannot be whether there has been a formal pretermination

confrontation between the employer and the employee. The ample opportunity to be heard standard is

neither synonymous nor similar to a formal hearing. To confine the employees right to be heard to a

solitary form narrows down that right. It deprives him of other equally effective forms of adducing

evidence in his defense. Certainly, such an exclusivist and absolutist interpretation is overly

restrictive. The very nature of due process negates any concept of inflexible procedures universally

applicable to every imaginable situation.[22]

The standard for the hearing requirement, ample opportunity, is couched in general language

revealing the legislative intent to give some degree of flexibility or adaptability to meet the peculiarities

of a given situation. To confine it to a single rigid proceeding such as a formal hearing will defeat its

spirit.

Significantly, Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code itself

provides that the so-called standards of due process outlined therein shall be

observed substantially, not strictly. This is a recognition that while a formal hearing or conference is

ideal, it is not an absolute, mandatory or exclusive avenue of due process.

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

Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code should be interpreted in

broad strokes. It is satisfied not only by a formal face to face confrontation but by any meaningful

opportunity to controvert the charges against him and to submit evidence in support thereof.

A hearing means that a party should be given a chance to adduce his evidence to support his

side of the case and that the evidence should be taken into account in the adjudication of the

controversy.[23] To be heard does not mean verbal argumentation alone inasmuch as one may be heard

just as effectively through written explanations, submissions or pleadings.[24] Therefore, while the

phrase ample opportunity to be heard may in fact include an actual hearing, it is not limited to a formal

hearing only. In other words, the existence of an actual, formal trial-type hearing, although preferred, is

not absolutely necessary to satisfy the employees right to be heard.

This Court has consistently ruled that the due process requirement in cases of termination of

employment does not require an actual or formal hearing. Thus, we categorically declared in Skippers

United Pacific, Inc. v. Maguad:[25]

The Labor Code does not, of course, require a formal or trial type proceeding

before an erring employee may be dismissed. (emphasis supplied)

In Autobus Workers Union v. NLRC,[26] we ruled:

The twin requirements of notice and hearing constitute the essential elements

of due process. Due process of law simply means giving opportunity to be heard before

judgment is rendered. In fact, there is no violation of due process even if no hearing

was conducted, where the party was given a chance to explain his side of the

controversy. What is frowned upon is the denial of the opportunity to be heard.

x x x x x x x x x

A formal trial-type hearing is not even essential to due process. It is

enough that the parties are given a fair and reasonable opportunity to explain

their respective sides of the controversy and to present supporting evidence on

which a fair decision can be based. This type of hearing is not even mandatory in

cases of complaints lodged before the Labor Arbiter. (emphasis supplied)

In Solid Development Corporation Workers Association v. Solid Development

Corporation,[27] we had the occasion to state:

[W]ell-settled is the dictum that the twin requirements of notice and hearing constitute

the essential elements of due process in the dismissal of employees. It is a cardinal

rule in our jurisdiction that 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)

the second informs the employee of the employers decision to dismiss him. The

requirement of a hearing, on the other hand, is complied with as long as there

was an opportunity to be heard, and not necessarily that an actual hearing was

conducted.

In separate infraction reports, petitioners were both apprised of the particular

acts or omissions constituting the charges against them. They were also required to

submit their written explanation within 12 hours from receipt of the reports. Yet, neither

of them complied. Had they found the 12-hour period too short, they should have

requested for an extension of time. Further, notices of termination were also sent to

them informing them of the basis of their dismissal. In fine, petitioners were given due

process before they were dismissed. Even if no hearing was conducted, the

requirement of due process had been met since they were accorded a chance to

explain their side of the controversy. (emphasis supplied)

Our holding in National Semiconductor HK Distribution, Ltd. v. NLRC[28] is of similar import:

That the investigations conducted by petitioner may not be

considered formal or recorded hearings or investigations is immaterial. A formal

or trial type hearing is not at all times and in all instances essential to due

process, the requirements of which are satisfied where the parties are afforded fair

and reasonable opportunity to explain their side of the controversy. It is deemed

sufficient for the employer to follow the natural sequence of notice, hearing and

judgment.

The above rulings are a clear recognition that the employer may provide an employee with

ample opportunity to be heard and defend himself with the assistance of a representative or counsel in

ways other than a formal hearing. The employee can be fully afforded a chance to respond to the

charges against him, adduce his evidence or rebut the evidence against him through a wide array of

methods, verbal or written.

After receiving the first notice apprising him of the charges against him, the employee may

submit a written explanation (which may be in the form of a letter, memorandum, affidavit or position

paper) and offer evidence in support thereof, like relevant company records (such as his 201 file and

daily time records) and the sworn statements of his witnesses. For this purpose, he may prepare his

explanation personally or with the assistance of a representative or counsel. He may also ask the

employer to provide him copy of records material to his defense. His written explanation may also

include a request that a formal hearing or conference be held. In such a case, the conduct of a formal

hearing or conference becomes mandatory, just as it is where there exist substantial evidentiary

disputes[29] or where company rules or practice requires an actual hearing as part of employment

pretermination procedure. To this extent, we refine the decisions we have rendered so far on this point

of law.

This interpretation of Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor

Code reasonably implements the ample opportunity to be heard standard under Article 277(b) of the

Labor Code without unduly restricting the language of the law or excessively burdening the employer.

This not only respects the power vested in the Secretary of Labor and Employment to promulgate rules

and regulations that will lay down the guidelines for the implementation of Article 277(b). More

importantly, this is faithful to the mandate of Article 4 of the Labor Code that [a]ll doubts in the

implementation and interpretation of the provisions of [the Labor Code], including its implementing rules

and regulations shall be resolved in favor of labor.

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

dismissal cases:

(a) ample opportunity to be heard means any meaningful opportunity (verbal or written) given

to the employee to answer the charges against him and submit evidence in support of

his defense, whether in a hearing, conference or some other fair, just and reasonable

way.

(b) a formal hearing or conference becomes mandatory only when requested by the employee

in writing or substantial evidentiary disputes exist or a company rule or practice requires

it, or when similar circumstances justify it.

(c) the ample opportunity to be heard standard in the Labor Code prevails over the hearing or

conference requirement in the implementing rules and regulations.

PETITIONERS WERE ILLEGALLY

SUSPENDED FOR 30 DAYS

An employee may be validly suspended by the employer for just cause provided by law. Such

suspension shall only be for a period of 30 days, after which the employee shall either be reinstated or

paid his wages during the extended period.[30]

In this case, petitioners contended that they were not paid during the two 15-day extensions,

or a total of 30 days, of their preventive suspension. Respondents failed to adduce evidence to the

contrary. Thus, we uphold the ruling of the labor arbiter on this point.

Where the dismissal was without just or authorized cause and there was no due process, Article

279 of the Labor Code, as amended, mandates that the employee is entitled to reinstatement without

loss of seniority rights and other privileges and full backwages, inclusive of allowances, and other

benefits or their monetary equivalent computed from the time the compensation was not paid up to the

time of actual reinstatement.[31] In this case, however, reinstatement is no longer possible because of

the length of time that has passed from the date of the incident to final resolution. [32] Fourteen years

have transpired from the time petitioners were wrongfully dismissed. To order reinstatement at this

juncture will no longer serve any prudent or practical purpose.[33]

WHEREFORE, the petition is hereby GRANTED. The decision of the Court of Appeals dated

January 29, 2002 in CA-G.R. SP No. 50536 finding that petitioners Felix B. Perez and Amante G. Doria

were not illegally dismissed but were not accorded due process and were illegally suspended for 15

days, is SET ASIDE. The decision of the labor arbiter dated December 27, 1995 in NLRC NCR CN. 11-

06930-93 is hereby AFFIRMED with the MODIFICATION that petitioners should be paid their

separation pay in lieu of reinstatement.

SO ORDERED.

[G.R. No. 108433. October 15, 1996]

WALLEM MARITIME SERVICES, INC. and WALLEM SHIPMANAGEMENT LTD., petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION and JOSELITO V. MACATUNO, respondents.

D E C I S I O N

ROMERO, J.:

This petition for certiorari seeks to annul and set aside the Resolution[1] of the National Labor Relations Commission (NLRC) affirming the Decision[2] of the Philippine Overseas Employment Administration (POEA) which disposed of POEA Case No. (M)89-09-865 as follows:

WHEREFORE, in view of the foregoing, respondents Wallem Maritime Services, Inc. and Wallem Shipmanagement Ltd. are hereby ordered jointly and severally, to pay complainant the following in Philippine currency at the prevailing rate of exchange at the time of payment:

a) THREE HUNDRED THREE US DOLLARS

(US$303.00) representing salary for the month of June 1989;

b) THREE THOUSAND FIFTY FOUR US DOLLARS

(US$3,054.00) representing salaries for the unexpired portion of the contract (July-December 1989); and

c) ONE HUNDRED SIX & 50/100 US DOLLARS

(US$106.50) or five percent (5%) of the total award as and by way of attorneys fees.

The claim against Prudential Guarantee and Assurance Inc. is dismissed for lack of merit.

SO ORDERED.

Private respondent Joselito V. Macatuno was hired by Wallem Shipmanagement Limited thru its local manning agent, Wallem Maritime Services, Inc., as an able-bodied seaman on board the M/T Fortuna, a vessel of Liberian registry. Pursuant to the contract of employment, private respondent was employed for ten (10) months covering the period February 26, 1989 until December 26, 1989 with a monthly salary of two hundred seventy-six US dollars (US $276); hourly overtime rate of one dollar and seventy-two cents (US $1.72), and a monthly tanker allowance of one hundred twenty-seven dollars and sixty cents (US $127.60), with six (6) days leave with pay for each month.

On June 24, 1989, while the vessel was berthed at the port of Kawasaki, Japan, an altercation took place between private respondent and fellow Filipino crew member, Julius E. Gurimbao, on the one hand, and a cadet/apprentice officer of the same nationality as the captain of the vessel on the other hand. The master entered the incident in the tankers logbook.

As a consequence, private respondent and Gurimbao were repatriated to the Philippines where they lost no time in lodging separate complaints for illegal dismissal with the POEA.[3]According to the affidavit private respondent executed before a POEA administering officer, the following facts led to the filing of the complaint.

At about 5:50 a.m. of June 24, 1989, private respondent was on duty along with Gurimbao, checking the manifold of the vessel and looking for oil leakages, when a cadet/apprentice who was of the same nationality as the vessels captain (Singh), approached them. He ordered Gurimbao to use a

shovel in draining the water which, mixed with oil and dirt, had accumulated at the rear portion of the upper deck of the vessel.

Gurimbao explained to the cadet/apprentice that throwing dirty and oily water overboard was prohibited by the laws of Japan; in fact, port authorities were roaming and checking the sanitary conditions of the port. The cadet/apprentice got mad and, shouting, ordered Gurimbao to get a hose and siphon off the water. To avoid trouble, Gurimbao used a shovel in throwing the dirty water into the sea.

Having finished his job, Gurimbao complained to private respondent about the improper and unauthorized act of the cadet/apprentice. The two went to the cadet/apprentice who was idly standing in a corner. They reminded him that as a mere apprentice and not an officer of the vessel, he had no right whatsoever to order around any member of the crew. However, the cadet/apprentice reacted violently - shouting invectives and gesturing as if challenging the two to a fight. To prevent him from intimidating them, private respondent pushed twice the cadet/apprentices chest while Gurimbao mildly hit his arm. Frantic and shouting, the cadet/apprentice ran to the captain who happened to witness the incident from the cabins window.

The captain summoned private respondent and Gurimbao. With their bosun (head of the deck crew), they went to the captains cabin. The captain told them to pack up their things as their services were being terminated. They would disembark at the next port, the Port of Ube, from where they would be flown home to the Philippines, the repatriation expenses to be shouldered by them. The two attempted to explain their side of the incident but the captain ignored them and firmly told them to go home.

Before disembarking, they were entrusted by the bosun with a letter of their fellow crew members, addressed to Capt. Dio, attesting to their innocence. At the Port of Ube, an agent of the company handed them their plane tickets and accompanied them the following day to the Fukoka Airport where they boarded a Cathay Pacific airplane bound for Manila.

A few days after their arrival in Manila or on July 1, 1989, the two gave the letter to Capt. Dio and conferred with him and Mr. James Nichols. The latter told private respondent that they could not secure a reimbursement of their repatriation expenses nor could they get their salaries for the month of June. Private respondent, in a letter addressed to Capt. Dio, asked for a reconsideration of their dismissal but the latter did not respond. Frustrated, private respondent sought the assistance of a lawyer who wrote Wallem a demand letter dated August 28, 1989but the same was ignored.[4]

Petitioners, defending their position, alleged that the incident was not the first infraction committed by the two. As shown by the logbook, on June 19, 1989, while the vessel was docked in Batangas, they left it during working hours without asking permission. For this offense, they were given a warning. On June 27, 1989 (sic), while the vessel was anchored at the Port of Kawasaki, Japan, they assaulted the officer on watch for the day, Mr. V.S. Sason. The three were mustered and it was found that Sason was attacked with a spanner without provacition (sic). The two were severely warned that they will be dealt according to the rules and regulation of their contact of employment (sic). When the vessel was about to sail that day, the two went ashore inspite of the warning given them. They were arrested by Japanese authorities but the vessels departure was delayed for five (5) hours. The agency in Manila was informed that their wages should be settled after deducting recoveries or fines and air fare. Their dismissal from the service was also recommended.[5]

In his aforementioned decision of September 14, 1990 finding private respondents dismissal to be illegal, POEA Deputy Administrator Manuel G. Imson held:

We find complainants dismissal to be without just and valid cause. We cannot give much weight and credence to the certified true copy of the official logbook (Annex 1, answer) because the alleged entries therein were only handpicked and copied from the official logbook of the vessel M/V Fortuna. There is no way of verifying the truth of these entries and whether they actually appear in the log entries for the specific dates mentioned. The pages in the official logbook where these entries appear should have been the ones reproduced to give the same a taint of credence. Moreover, no documentary evidence was submitted to support the alleged official logbook, like the Masters report and the police report or any report by the Japanese authorities by reason of their arrest. Finally, the copy of the alleged official logbook was not properly authenticated. The authentication is necessary specially so since this document is the only piece of evidence submitted by respondents.

Granting that the entries in the logbook are true, a perusal thereof will readily show that complainant was not afforded due process. The warnings allegedly given to complainant were not submitted in evidence. Likewise, no investigation report was presented to prove that complainant was given the opportunity to air his side of the incident.

It is also noteworthy to mention that complainant was able to describe with particularity the circumstances which led to his misunderstanding with the cadet/apprentice and which we believe is not sufficient to warrant his dismissal.[6]

As stated above, the NLRC affirmed the decision of the POEA, adopting as its own the latters findings and conclusions. Hence, the instant petition contending that both the POEA and the NLRC gravely abused their discretion in finding that private respondent was illegally terminated from his employment.

As with G.R. No. 107865, where herein petitioners likewise questioned the NLRC decision affirming that of POEA Case No. (M) 88-11-1078 finding the dismissal from employment of Gurimbao to be illegal,[7] the Court sees no merit in the instant petition.

An employer may dismiss or lay off an employee only for just and authorized causes enumerated in Articles 282 and 283 of the Labor Code. However, this basic and normal prerogative of an employer is subject to regulation by the State in the exercise of its paramount police power inasmuch as the preservation of lives of citizens, as well as their means of livelihood, is a basic duty of the State more vital them the preservation of corporate profits.[8] Ones employment, profession, trade or calling is a property right within the protection of the constitutional guaranty of due process of law.[9]

We agree with petitioners that the ship captains logbook is a vital evidence as Article 612 of the Code of Commerce requires him to keep a record of the decisions he had adopted as the vessels head. Thus, in Haverton Shipping Ltd. v. NLRC,[10] the Court held that a copy of an official entry in the logbook is legally binding and serves as an exception to the hearsay rule.

However, the Haverton Shipping ruling does not find unqualified application in the case at bar. In said case, an investigation of the incident which led to the seamans dismissal was conducted before he was dismissed.[11] Consequently, the facts appearing in the logbook were supported by the facts gathered at the investigation. In this case, because no investigation was conducted by the ship captain before repatriating private respondent, the contents of the logbook have to be duly identified and authenticated lest an injustice result from a blind adoption of such contents which merely serve as prima facie evidence of the incident in question.[12]

Moreover, what was presented in the Haverton Shipping case was a copy of the official entry from the logbook itself. In this case, petitioners did not submit as evidence to the POEA the logbook itself, or even authenticated copies of pertinent pages thereof, which could have been easily xeroxed or photocopied considering the present technology on reproduction of documents.[13] What was offered in evidence was merely a typewritten collation of excerpts from what could be the logbook[14] because by their format, they could have been lifted from other records kept in the vessel in accordance with Article 612 of the Code of Commerce.[15]

Furthermore, the alleged entry in the logbook states, as regards the June 27, 1989 (sic) incident, as follows:

KAWASAKI KAWASAKI This is to place on record that at the time, date 27.6.89 and place mentioned Mr. J.V. MACATUNO (Sr. No. 147) and

Mr. J.E. GURIMBAO (Sr No. 156) attacked and assaulted apprentice officer Mr. V.S. SASON while on duty. All three were mustered and it was found that Mr. SASON was attacked with a

spanner without provacition (sic). Both the seaman (sic) have been severely warned that they will be dealt according to the rules and regulation of their contract of employment.[16]

Under the Table of Offenses and Corresponding Administrative Penalties appended to the contract of employment entered into by petitioners and private respondent, the offense described by the logbook entry may well fall under insubordination and may constitute assaulting a superior officer with the use of deadly weapon punishable with dismissal[17] if the victim is indeed a superior officer. However, an apprentice officer cannot be considered a superior officer. An apprentice is a person bound in the form of law to a master, to learn from him his art, trade, or business, and to serve him during the time of his apprenticeship.[18] In other words, Mr. V.S. Sason was merely a learner or a trainee and not a regular officer on board M/T Fortuna.

In this regard, it should be clarified that this Court does not tolerate nor sanction assault in any form. Physical violence against anyone at any time and any place is reprehensible.However, in cases such as this, where a persons livelihood is at stake, strict interpretation of the contract of employment in favor of the worker must be observed to affirm the constitutional provision on protection to labor.

Moreover, the aforequoted entry in the logbook is so sketchy that, unsupported by other evidence, it leaves so many questions unanswered. Although private respondent candidly admitted in his affidavit having hit Sason on the chest twice, he did not admit using a spanner. The conflicting versions of the incident rendered it impossible to determine whether it was private respondent or Gurimbao who wielded said tool. In the absence of a more detailed narration in the logbook entry of the circumstances surrounding the alleged assault, the same cannot constitute a valid justification to terminate private respondents employment.[19]

Hence, as the typewritten excerpts from the logbook were the only pieces of evidence presented by petitioners to support the dismissal of private respondent, have no probative value at all, petitioners cause must fail. Their failure to discharge the onus probandi properly may have no other result than a finding that the dismissal of private respondent is unjustified.[20]

Petitioners failure to substantiate the grounds for a valid dismissal was aggravated by the manner by which the employment of private respondent was terminated. It must be borne in mind that the right of an employer to dismiss an employee is to be distinguished from and should not be confused with the manner in which such right is exercised. Dismissal from employment must not be effected abusively and oppressively as it affects ones person and property. Thus, Batas Pambansa Blg. 130, amending paragraph (b) of Article 278 of the Labor Code, imposed as a condition sine qua non that any termination of employment under the grounds provided in Article 283 must be done only after notice and formal investigation have been accorded the supposed errant worker.[21]

That the workers involved in the incident were mustered or convened thereafter by the captain is inconsequential. It is insufficient compliance with the law which requires, as a vital component of due process, observance of the twin requirements of notice and hearing before dismissing an employee. As regards the notice requirement, the Court has stated:

On the issue of due process . . ., the law requires the employer to furnish the worker whose employment is sought to be terminated a written notice containing a statement of the cause or causes for termination and shall afford him ample opportunity to be heard and to defend himself with the assistance of a representative. Specifically, the employer must furnish the worker with two (2) written notices before termination of employment can be legally effected: (a) notice which apprises the employee of the particular acts or omissions for which his dismissal is sought; and (b) the subsequent notice which informs the employee of the employers decision to dismiss him. (Underscoring supplied.)[22]

Neither is the ship captains having witnessed the altercation an excuse for dispensing with the notice and hearing requirements. Serving notice to private respondent under the circumstances cannot be regarded as an absurdity and superfluity.[23]

ON ALL THE FOREGOING CONSIDERATIONS, the petition at bar is DISMISSED and the Resolution of respondent National Labor Relations Commission is hereby AFFIRMED in toto.

SO ORDERED.

QUIRICO LOPEZ, Petitioner, - versus ALTURAS GROUP OF COMPANIES and/or MARLITO UY, Respondents.

G.R. No. 191008 Present:

CARPIO MORALES, Chairperson, J., BRION, BERSAMIN, VILLARAMA, JR., and SERENO, JJ.

Promulgated:

April 11, 2011 x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x D E C I S I O N CARPIO MORALES, J.:

Quirico Lopez (petitioner) was hired by respondent Alturas Group of Companies in 1997 as truck

driver. Ten years later or sometime in November 2007, he was dismissed after he was allegedly caught

by respondents security guard in the act of attempting to smuggle out of the company premises 60 kilos

of scrap iron worth P840 aboard respondents Isuzu Cargo Aluminum Van with Plate Number PHP 271

that was then assigned to him. When questioned, petitioner allegedly admitted to the security guard

that he was taking out the scrap iron consisting of lift springs out of which he would make axes.

Petitioner, in compliance with the Show Cause Notice[1] dated December 5, 2007 issued by

respondent companys Human Resource Department Manager, denied the allegations by a handwritten

explanation written in the Visayan dialect.

Finding petitioners explanation unsatisfactory, respondent company terminated his

employment by Notice of Termination[2] effective December 14, 2007 on the grounds of loss of trust and

confidence, and of violation of company rules and regulations. In issuing the Notice, respondent

company also took into account the result of an investigation showing that petitioner had been

smuggling out its cartons which he had sold, in conspiracy with one Maritess Alaba, for his own benefit

to thus prompt it to file a criminal case for Qualified Theft[3] against him before the Regional Trial Court

(RTC) of Bohol. It had in fact earlier filed another criminal case for Qualified Theft[4] against petitioner

arising from the theft of the scrap iron.

Petitioner thereupon filed a complaint against respondent company for illegal dismissal and

underpayment of wages. He claimed that the smuggling charge against him was fabricated to justify his

illegal dismissal; that the filing of the charge came about after he reported the loss of the original copy

of his pay slip, which report, he went on to claim, respondent company took to mean that he could use

the pay slip as evidence for filing a complaint for violation of labor laws; and that on account of the

immediately stated concern of respondent, it forced him into executing an affidavit that if the pay slip is

eventually found, it could not be used in any proceedings between them.

By Decision[5] of June 30, 2008, the Labor Arbiter, holding that the pendency of the criminal case

involving the scrap iron did not warrant the suspension of the proceedings before him, held that

petitioners dismissal was justified, for he, a truck driver, held a position of trust and confidence, and his

act of stealing company property was a violation of the trust reposed upon him.

Respecting the charge of underpayment of wages, the Labor Arbiter noted that on the basis of

the records, petitioner had been paid the correct wages and benefits mandated by law.

The Labor Arbiter accordingly dismissed petitioners complaint.

On appeal, the National Labor Relations Commissions (NLRC) Fourth Division (Cebu City) set

aside the Labor Arbiters Decision by Decision[6] dated December 22, 2008, finding that respondents

evidence did not suffice to warrant the termination of petitioners services; and that petitioners alleged

admission of taking the scrap iron was belied by his vehement denial, as even the security guard, one

Gerardo Luega, who allegedly witnessed the asportation and before whom the alleged admission was

made, did not even execute an affidavit in support thereof.

Citing Salaw v. NLRC,[7] the NLRC went on to hold that petitioner should have been afforded,

or at least advised of the right to counsel. It thus held that any evaluation which was based only on the

explanation to the show-cause letter and any so-called investigation but without confrontation of the

vital witnesses, do[es] not suffice.

Respondent companys motion for reconsideration was denied by Resolution[8] of April 30,

2009, hence, it appealed to the Court of Appeals.

By Report[9] of December 18, 2009, the appellate court reversed the NLRC ruling. It held that

respondent company was justified in terminating petitioners employment on the ground of loss of trust

and confidence, his alleged act of smuggling out the scrap iron having been sufficiently established

through the affidavits of Patrocinio Borja and Zalde Tare, supervisor and junior supervisor, respectively,

of its Supermarket Motorpool.

The appellate court further held that the evidence supporting the criminal charge, found after

preliminary investigation are [sic] sufficient to show prima facie guilt, which constitutes just cause for

[petitioners dismissal] based on loss of trust and confidence; and that petitioners subsequent acquittal

in the criminal case did not automatically preclude a determination that he is guilty of acts inimical to

the employers interest resulting in loss of trust and confidence.

Albeit the appellate court found that petitioners dismissal was for a just cause, it held that due

process was not observed when respondent company failed to give him a chance to defend his side in

a proper hearing. Following Agabon v. NLRC,[10] the appellate court thus ordered respondent to pay

nominal damages of P30,000.

Thus the appellate court disposed:

WHEREFORE, in view of the foregoing, the Decision of the NLRC dated

December 22, 2008 is hereby MODIFIED. Private respondents dismissal from employment is upheld on the ground of loss of trust and confidence, a just cause for termination. However, for failure to comply fully with the procedural due process, petitioner is ORDERED to pay private respondent the amount of P30,000.00 as nominal damages.[11] (underscoring supplied)

Hence, the present petition for review on certiorari.

Dismissals have two facets: the legality of the act of dismissal, which constitutes substantive

due process, and the legality of the manner of dismissal which constitutes procedural due process.[12]

As to substantive due process, the Court finds that respondent companys loss of trust and

confidence arising from petitioners smuggling out of the scrap iron, conpounded by his past acts of

unauthorized selling cartons belonging to respondent company, constituted just cause for terminating

his services.

Loss of trust and confidence as a ground for dismissal of employees covers employees

occupying a position of trust who are proven to have breached the trust and confidence reposed on

them. Apropos is Cruz v. Court of Appeals[13] which explains the basis and quantum of evidence of loss

of trust and confidence, viz:

In addition, the language of Article 282(c) of the Labor Code states that the loss of trust and confidence must be based on willful breach of the trust reposed in the employee by his employer. Such breach is willful if it is done intentionally, knowingly, and purposely, without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. Moreover, it must be based on substantial evidence and not on the employers whims or caprices or suspicions otherwise, the employee would eternally remain at the mercy of the employer. Loss of confidence must not be indiscriminately used as a shield by the employer against a claim that the dismissal of an employee was arbitrary. And, in order to constitute a just cause for dismissal, the act complained of must be work-related and shows that the employee concerned is unfit to continue working for

the employer. In addition, loss of confidence as a just cause for termination of employment is premised on the fact that the employee concerned holds a position of responsibility, trust and confidence or that the employee concerned is entrusted with confidence with respect to delicate matters, such as the handling or care and protection of the property and assets of the employer. The betrayal of this trust is the essence of the offense for which an employee is penalized. (emphasis and underscoring supplied)

Petitioner, a driver assigned with a specific vehicle, was entrusted with the transportation of respondent

companys goods and property, and consequently with its handling and protection, hence, even if he did

not occupy a managerial position, he can be said to be holding a position of responsibility. As to his

actprincipal ground for his dismissal his attempt to smuggle out the scrap iron belonging to respondent

company, the same is undoubtedly work-related.

Respondent companys charge against petitioner was amply proven by substantial evidence consisting

of the affidavits of various employees of respondent. Contrary to the NLRCs observation, the security

guard who apprehended petitioner, Gerardo Luega, actually executed a statement[14] relative to the

smuggling out of scrap iron, which was attached to, and served as basis for the filing of, the

corresponding complaint for Qualified Theft. Petitioners claim that he was framed up after he allegedly

lost his pay slip to draw respondent company to suspect that he might file a labor complaint for

underpayment does not inspire credence.

It is, however, with respect to the appellate courts finding that petitioner was not afforded

procedural due process that the Court deviates from. Procedural due process has been defined as

giving an opportunity to be heard before judgment is rendered.[15] In termination cases, Perez v.

Philippine Telegraph and Telephone Company,[16] illuminates on the correct proceedings to be followed

therein in order to comply with the due process requirement: The above rulings are a clear recognition that the employer may provide an employee with ample opportunity to be heard and defend himself with the assistance of a representative or counsel in ways other than a formal hearing. The employee can be fully afforded a chance to respond to the charges against him, adduce his evidence or rebut the evidence against him through a wide array of methods, verbal or written. After receiving the first notice apprising him of the charges against him, the employee may submit a written explanation (which may be in the form of a letter, memorandum, affidavit or position paper) and offer evidence in support thereof, like relevant company records (such as his 201 file and daily time records) and the sworn statements of his witnesses. For this purpose, he may prepare his explanation personally or with the assistance of a representative or counsel. He may also ask the employer to provide him copy of records material to his defense. His written explanation may also include a request that a formal hearing or conference be held. In such a case, the conduct of a formal hearing or conference becomes mandatory, just as it is where there exist substantial evidentiary disputes or where company rules or practice requires an actual hearing as part of employment pretermination procedure. (emphasis and underscoring supplied)

Petitioner was given the opportunity to explain his side when he was informed of the charge

against him and required to submit his written explanation with which he complied. That there might

have been no hearing is of no moment, for as Autobus Workers Union v. NLRC[17] holds:

This Court has held that there is no violation of due process even if no hearing was conducted, where the party was given a chance to explain his side of the controversy. What is frowned upon is the denial of the opportunity to be heard. (emphasis supplied)

Parenthetically, the Court finds that it was error for the NLRC to opine that petitioner should

have been afforded counsel or advised of the right to counsel. The right to counsel and the assistance

of one in investigations involving termination cases is neither indispensable nor mandatory, except

when the employee himself requests for one or that he manifests that he wants a formal hearing on the

charges against him. In petitioners case, there is no showing that he requested for a formal hearing to

be conducted or that he be assisted by counsel. Verily, since he was furnished a second notice

informing him of his dismissal and the grounds therefor, the twin-notice requirement had been complied

with to call for a deletion of the appellate courts award of nominal damages to petitioner.

As for the subsequent dismissal of the criminal cases[18] filed against petitioner, criminal and

labor proceedings are distinct and separate from each other. Each requires a different quantum of proof,

arising though they are from the same set of facts or circumstances. As Vergara v. NLRC[19] holds: An employees acquittal in a criminal case does not automatically preclude a determination that he has been guilty of acts inimical to the employers interest resulting in loss of trust and confidence. Corollarily, the ground for the dismissal of an employee does not require proof beyond reasonable doubt; as noted earlier, the quantum of proof required is merely substantial evidence. More importantly, the trial court acquitted petitioner not because he did not commit the offense, but merely because of the failure of the prosecution to prove his guilt beyond reasonable doubt.. In other words, while the evidence presented against petitioner did not satisfy the quantum of proof required for conviction in a criminal case, it substantially proved his culpability which warranted his dismissal from employment. (emphasis supplied)

WHEREFORE, the petition is DENIED. The Report dated December 18, 2009 of the Court of

Appeals dismissing petitioners complaint is AFFIRMED withMODIFICATION in that the award of

nominal damages in the amount of P30,000 is DELETED.

Costs against petitioner.

SO ORDERED.

PHILIPPINE DAILY INQUIRER, INC.,

Petitioner,

- versus -

LEON M. MAGTIBAY, JR. and PHILIPPINE

DAILY INQUIRER

EMPLOYEES UNION (PDIEU),

Respondents.

G.R. No. 164532

Present:

PUNO, C.J., Chairperson,

SANDOVAL-GUTIERREZ,

CORONA,

AZCUNA, and

GARCIA, JJ.

Promulgated:

July 24, 2007

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

D E C I S I O N

GARCIA, J.:

By this petition for review on certiorari under Rule 45 of the Rules of Court, petitioner Philippine

Daily Inquirer, Inc. (PDI) seeks the reversal and setting aside of the decision[1] dated May 25, 2004 of

the Court of Appeals (CA) in CA G.R. SP No. 78963, affirming the resolution dated September 23, 2002

of the National Labor Relations Commission (NLRC) in NLRC Case No. 00-03-01945-96. The affirmed

NLRC resolution reversed an earlier decision dated July 29, 1996 of the Labor Arbiter in NLRC Case

No. 011800-96, which dismissed the complaint for illegal dismissal filed by the herein respondent Leon

Magtibay, Jr. against the petitioner.

The factual antecedents are undisputed:

On February 7, 1995, PDI hired Magtibay, on contractual basis, to assist, for a period of five months

from February 17, 1995, the regular phone operator. Before the expiration of Magtibays contractual

employment, he and PDI agreed to a fifteen-day contract extension, or from July 17, 1995 up to July

31, 1995, under the same conditions as the existing contract.

After the expiration of Magtibays contractual employment, as extended, PDI announced the creation

and availability of a new position for a second telephone operator who would undergo probationary

employment. Apparently, it was PDIs policy to accord regular employees preference for new vacancies

in the company. Thus, Ms. Regina M. Layague, a PDI employee and member of respondent PDI

Employees Union (PDIEU), filed her application for the new position. However, she later withdrew her

application, paving the way for outsiders or non-PDI employees, like Magtibay in this case, to apply.

After the usual interview for the second telephone operator slot, PDI chose to hire Magtibay on a

probationary basis for a period of six (6) months. The signing of a written contract of employment

followed.

On March 13, 1996, or a week before the end the agreed 6-month probationary period, PDI officer

Benita del Rosario handed Magtibay his termination paper, grounded on his alleged failure to meet

company standards. Aggrieved, Magtibay immediately filed a complaint for illegal dismissal and

damages before the Labor Arbiter. PDIEU later joined the fray by filing a supplemental complaint for

unfair labor practice.

Magtibay anchored his case principally on the postulate that he had become a regular employee by

operation of law, considering that he had been employed by and had worked for PDI for a total period

of ten months, i.e., four months more than the maximum six-month period provided for by law on

probationary employment. He also claimed that he was not apprised at the beginning of his employment

of the performance standards of the company, hence, there was no basis for his dismissal. Finally, he

described his dismissal as tainted with bad faith and effected without due process.

PDI, for its part, denied all the factual allegations of Magtibay, adding that his previous contractual

employment was validly terminated upon the expiration of the period stated therein. Pressing the point,

PDI alleged that the period covered by the contractual employment cannot be counted with or tacked

to the period for probation, inasmuch as there is no basis to consider Magtibay a regular employee. PDI

additionally claimed that Magtibay was dismissed for violation of company rules and policies, such as

allowing his lover to enter and linger inside the telephone operators booth and for failure to meet

prescribed company standards which were allegedly made known to him at the start through an

orientation seminar conducted by the company.

After due proceedings, the Labor Arbiter found for PDI and accordingly dismissed Magtibays complaint

for illegal dismissal. The Labor Arbiter premised his holding on the validity of the previous contractual

employment of Magtibay as an independent contract. He also declared as binding the stipulation in the

contract specifying a fixed period of employment. According to the Labor Arbiter, upon termination of

the period stated therein, the contractual employment was also effectively terminated, implying that

Magtibay was merely on a probationary status when his services were terminated inasmuch as the

reckoning period for probation should be from September 21, 1995 up to March 31, 1996as expressly

provided in their probationary employment contract. In fine, it was the Labor Arbiters position that

Magtibays previous contractual employment, as later extended by 15 days, cannot be considered as

part of his subsequent probationary employment.

Apart from the foregoing consideration, the Labor Arbiter further ruled that Magtibays dismissal from

his probationary employment was for a valid reason. Albeit the basis for termination was couched in the

abstract, i.e., you did not meet the standards of the company, there were three specific reasons for

Magtibays termination, to wit: (1) he repeatedly violated the company rule prohibiting unauthorized

persons from entering the telephone operators room; (2) he intentionally omitted to indicate in his

application form his having a dependent child; and (3) he exhibited lack of sense of responsibility by

locking the door of the telephone operators room on March 10, 1996 without switching the proper lines

to the company guards so that incoming calls may be answered by them.

The Labor Arbiter likewise dismissed allegations of denial of due process and the commission by PDI

of unfair labor practice.

PDIEU and Magtibay appealed the decision of the Labor Arbiter to the NLRC. As stated earlier, the

NLRC reversed and set aside said decision, effectively ruling that Magtibay was illegally dismissed.

According to the NLRC, Magtibays probationary employment had ripened into a regular one.

With the NLRCs denial of its motion for reconsideration, PDI went to the CA on a petition for certiorari.

Eventually, the CA denied due course to PDIs petition on the strength of the following observations:

We agree with the findings of respondent NLRC.

Petitioner PDI failed to prove that such rules and regulations were included in

or form part of the standards that were supposed to be made known to respondent

Magtibay at the time of his engagement as telephone operator. Particularly, as regards

the first stated infraction xxx petitioner PDI, contrary to its assertion, stated in its

position paper, motion for reconsideration and in this petition that respondent Magtibay

failed to abide by the rules and regulations of the company issued by Ms. Benita del

Rosario regarding the entry of persons in the operators booth when respondent was

already working for petitioner PDI. Further, nowhere can it be found in the list of Basic

Responsibility and Specific Duties and Responsibilities (Annex D of the petition) of

respondent Magtibay that he has to abide by the duties, rules and regulations that he

has allegedly violated. The infractions considered by petitioner PDI as grounds for the

dismissal of respondent Magtibay may at most be classified as just causes for the

termination of the latters employment. x x x.

x x x x x x x x x

Finally, the three questionable grounds also relied upon by petitioner PDI in

dismissing respondent Magtibay may be considered as just causes. However,

petitioner PDI did not raise the same as an issue in the present petition because the

procedure it adopted in dismissing respondent Magtibay fell short of the minimum

requirements provided by law.

PDI filed a motion for reconsideration but to no avail.

Hence, this recourse by PDI on the following submissions:

I.

THE COURT OF APPEALS COMMITTED GRAVE ERROR IN FINDING THAT A

PROBATIONARY EMPLOYEES FAILURE TO FOLLOW AN EMPLOYERS RULES

AND REGULATIONS CANNOT BE DEEMED FAILURE BY SAID EMPLOYEE TO

MEET THE STANDARDS OF HIS EMPLOYER THUS EMASCULATING

PETITIONERS RIGHT TO CHOOSE ITS EMPLOYEES.

II.

THE COURT OF APPEALS COMMITTED A GRAVE ERROR IN REFUSING TO FIND

THAT PROCEDURAL DUE PROCESS AS LAID DOWN IN SECTION 2, RULE XXIII

OF THE IMPLEMENTING RULES OF THE LABOR CODE HAD BEEN OBSERVED

BY THE PETITIONER.

We GRANT the petition.

This Court, to be sure, has for a reason, consistently tended to be partial in favor of workers or

employees in labor cases whenever social legislations are involved. However, in its quest to strike a

balance between the employers prerogative to choose his employees and the employees right to

security of tenure, the Court remains guided by the gem of a holding in an old but still applicable case

of Pampanga Bus, Co. v. Pambusco Employees Union, Inc.[2] In it, the Court said:

The right of a laborer to sell his labor to such persons as he may choose is, in

its essence, the same as the right of an employer to purchase labor from any person

whom it chooses. The employer and the employee have thus an equality of right

guaranteed by the Constitution. If the employer can compel the employee to work

against the latters will, this is servitude. If the employee can compel the employer to

give him work against the employers will, this is oppression.

Management and labor, or the employer and the employee are more often not situated on the

same level playing field, so to speak. Recognizing this reality, the State has seen fit to adopt measures

envisaged to give those who have less in life more in law. Article 279 of the Labor Code which gives

employees the security of tenure is one playing field leveling measure:

Art. 279. Security of Tenure. ̶ In cases of regular employment, the employer

shall not terminate the services of an employee except for a just cause or when

authorized by this Title. x x x.

But hand in hand with the restraining effect of Section 279, the same Labor Code also gives

the employer a period within which to determine whether a particular employee is fit to work for him or

not. This employers prerogative is spelled out in the following provision:

Art. 281. Probationary employment. ̶ Probationary employment shall not

exceed six (6) months from the date the employee started working, unless it is covered

by an apprenticeship agreement stipulating a longer period. The services of an

employee who has been engaged on a probationary basis may be terminated for a just

cause or when he fails to qualify as a regular employee in accordance with reasonable

standards made known by the employer to the employee at the time of his

engagement. An employee who is allowed to work after a probationary period shall be

considered a regular employee.

In International Catholic Migration Commission v. NLRC,[3] we have elucidated what

probationary employment entails:

x x x. A probationary employee, as understood under Article 282 (now Article

281) of the Labor Code, is one who is on trial by an employer during which the employer

determines whether or not he is qualified for permanent employment. A probationary

appointment is made to afford the employer an opportunity to observe the fitness of a

probationer while at work, and to ascertain whether he will become a proper and

efficient employee. The word probationary, as used to describe the period of

employment, implies the purpose of the term or period but not its length.

Being in the nature of a trial period the essence of a probationary period of

employment fundamentally lies in the purpose or objective sought to be attained by

both the employer and the employee during said period. The length of time is

immaterial in determining the correlative rights of

both in dealing with each other during said period. While the employer, as stated

earlier, observes the fitness, propriety and efficiency of a probationer to ascertain

whether he is qualified for permanent employment, the probationer, on the other, seeks

to prove to the employer, that he has the qualifications to meet the reasonable

standards for permanent employment.

It is well settled that the employer has the right or is at liberty to choose who

will be hired and who will be denied employment. In that sense, it is within the exercise

of the right to select his employees that the employer may set or fix a probationary

period within which the latter may test and observe the conduct of the former before

hiring him permanently. x x x.

Within the limited legal six-month probationary period, probationary employees are still entitled

to security of tenure. It is expressly provided in the afore-quoted Article 281 that a probationary

employee may be terminated only on two grounds: (a) for just cause, or (b) when he fails to qualify as

a regular employee in accordance with reasonable standards made known by the employer to the

employee at the time of his engagement.[4]

PDI invokes the second ground under the premises. In claiming that it had adequately apprised

Magtibay of the reasonable standards against which his performance will be gauged for purposes of

permanent employment, PDI cited the one-on-one seminar between Magtibay and its Personnel

Assistant, Ms. Rachel Isip-Cuzio. PDI also pointed to Magtibays direct superior, Benita del Rosario,

who diligently briefed him about his responsibilities in PDI. These factual assertions were never denied

nor controverted by Magtibay. Neither did he belie the existence of a specific rule prohibiting

unauthorized persons from entering the telephone operators booth and that he violated that prohibition.

This notwithstanding, the NLRC and the CA proceeded nonetheless to rule that the records of the case

are bereft of any evidence showing that these rules and regulations form part of the so-called company

standards.

We do not agree with the appellate court when it cleared the NLRC of commission of grave

abuse of discretion despite the latters disregard of clear and convincing evidence that there were

reasonable standards made known by PDI to Magtibay during his probationary employment. It is on

record that Magtibay committed obstinate infractions of company rules and regulations, which in turn

constitute sufficient manifestations of his inadequacy to meet reasonable employment norms. The

suggestion that Magtibay ought to have been made to understand during his briefing and orientation

that he is expected to obey and comply with company rules and regulations strains credulity for

acceptance. The CAs observation that nowhere can it be found in the list of Basic Responsibility and

Specific Duties and Responsibilities of respondent Magtibay that he has to abide by the duties, rules

and regulations that he has allegedly violated is a strained rationalization of an unacceptable conduct

of an employee. Common industry practice and ordinary human experience do not support the CAs

posture. All employees, be they regular or probationary, are expected to comply with company-imposed

rules and regulations, else why establish them in the first place. Probationary employees unwilling to

abide by such rules have no right to expect, much less demand, permanent employment. We, therefore

find sufficient factual and legal basis, duly established by substantial evidence, for PDI to legally

terminate Magtibays probationary employment effective upon the end of the 6-month probationary

period.

It is undisputed that PDI apprised Magtibay of the ground of his termination, i.e., he failed to

qualify as a regular employee in accordance with reasonable standards made known to him at the time

of engagement, only a week before the expiration of the six-month probationary period. Given this

perspective, does this make his termination unlawful for being violative of his right to due process of

law?

It does not.

Unlike under the first ground for the valid termination of probationary employment which is for

just cause, the second ground does not require notice and hearing. Due process of law for this second

ground consists of making the reasonable standards expected of the employee during his probationary

period known to him at the time of his probationary employment. By the very nature of a probationary

employment, the employee knows 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 apprising him of the standards against which his performance shall be continuously assessed

where due process regarding the second ground lies, and not in notice and hearing as in the case of

the first ground.

Even if perhaps he wanted to, Magtibay cannot deny as he has not denied PDIs assertion that

he was duly apprised of the employment standards expected of him at the time of his probationary

employment when he underwent a one-on-one orientation with PDIs personnel assistant, Ms. Rachel

Isip-Cuzio. Neither has he denied nor rebutted PDIsfurther claim that his direct superior, Benita del

Rosario, briefed him regarding his responsibilities in PDI.

Lest it be overlooked, Magtibay had previously worked for PDI as telephone operator

from February 7, 1995 to July 31, 1995 as a contractual employee. Thus, the Court entertains no doubt

that when PDI took him in on September 21, 1995, Magtibay was already very much aware of the level

of competency and professionalism PDI wanted out of him for the entire duration of his probationary

employment.

PDI was only exercising its statutory hiring prerogative when it refused to hire Magtibay on a

permanent basis upon the expiration of the six-month probationary period. This was established during

the proceedings before the labor arbiter and borne out by the records and the pleadings before the

Court. When the NLRC disregarded the substantial evidence establishing the legal termination of

Magtibays probationary employment and rendered judgment grossly and directly contradicting such

clear evidence, the NLRCcommits grave abuse of discretion amounting to lack or excess of

jurisdiction. It was, therefore, reversible error on the part of the appellate court not to annul and set

aside such void judgment of the NLRC.

WHEREFORE, the assailed decision dated May 25, 2004 of the CA in CA G.R. SP No.

78963 is hereby REVERSED and SET ASIDE, and the earlier resolution dated September 23, 2002 of

the NLRC in NLRC Case No. 00-03-01945-96 is declared NULL and VOID. The earlier decision

dated July 29, 1996 of the Labor Arbiter in NLRC Case No. 011800-96, dismissing respondent Leon

Magtibay, Jr.s complaint for alleged illegal dismissal, is REINSTATED.

No pronouncement as to costs.

SO ORDERED.

G.R. No. 192571 April 22, 2014

ABBOTT LABORATORIES, PHILIPPINES, CECILLE A. TERRIBLE, EDWIN D. FEIST, MARIA OLIVIA T. YABUT-MISA, TERESITA C. BERNARDO, AND ALLAN G. ALMAZAR, Petitioners, vs. PEARLIE ANN F. ALCARAZ, Respondent.

R E S O L U T I O N

PERLAS-BERNABE, J.:

For resolution is respondent Pearlie Ann Alcaraz's (Alcaraz) Motion for Reconsideration dated August 23, 2013 of the Court's Decision dated July 23, 2013 (Decision).1

At the outset, there appears to be no substantial argument in the said motion sufficient for the Court to depart from the pronouncements made in the initial ruling. But if only to address Akaraz's novel assertions, and to so placate any doubt or misconception in the resolution of this case, the Court proceeds to shed light on the matters indicated below.

A. Manner of review.

Alcaraz contends that the Court should not have conducted a re-weighing of evidence since a petition for review on certiorari under Rule 45 of the Rules of Court (Rules) is limited to the review of questions of law. She submits that since what was under review was a ruling of the Court of Appeals (CA) rendered via a petition for certiorari under Rule 65 of the Rules, the Court should only determine whether or not the CA properly determined that the National Labor Relations Commission (NLRC) committed a grave abuse of discretion.

The assertion does not justify the reconsideration of the assailed Decision.

A careful perusal of the questioned Decision will reveal that the Court actually resolved the controversy under the above-stated framework of analysis. Essentially, the Court found the CA to have committed an error in holding that no grave abuse of discretion can be ascribed to the NLRC since the latter arbitrarily disregarded the legal implication of the attendant circumstances in this case which should have simply resulted in the finding that Alcaraz was apprised of the performance standards for her regularization and hence, was properly a probationary employee. As the Court observed, an employee’s failure to perform the duties and responsibilities which have been clearly made known to him constitutes a justifiable basis for a probationary employee’s non-regularization. As detailed in the Decision, Alcaraz was well-apprised of her duties and responsibilities as well as the probationary status of her employment:

(a) On June 27, 2004, [Abbott Laboratories, Philippines (Abbott)] caused the publication in a major broadsheet newspaper of its need for a Regulatory Affairs Manager, indicating therein the job description for as well as the duties and responsibilities attendant to the aforesaid 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;

(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;

(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;

(e) Alcaraz was made to undergo a pre-employment orientation where [Allan G. 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 [Kelly Walsh];

(f) Alcaraz was also required to undergo a training program as part of her orientation;

(g) Alcaraz received copies of Abbott’s Code of Conduct and Performance Modules from [Maria Olivia T. Yabut-Misa] who explained to her the procedure for evaluating the performance of probationary employees; she was further notified that Abbott had only one evaluation system for all of its employees; and

(h) Moreover, Alcaraz had previously worked for another pharmaceutical company and had admitted to have an "extensive training and background" to acquire the necessary skills for her job.2

Considering the foregoing incidents which were readily observable from the records, the Court reached the conclusion that the NLRC committed grave abuse of discretion, viz.:

[I]n holding that Alcaraz was illegally dismissed due to her status as a regular and not a probationary employee, the Court finds that the NLRC committed a grave abuse of discretion.

To elucidate, records show that the NLRC based its decision on the premise that Alcaraz’s receipt of her job description and Abbott’s Code of Conduct and Performance Modules was not equivalent to being actually informed of the performance standards upon which she should have been evaluated on. It, however, overlooked the legal implication of the other attendant circumstances as detailed herein which should have warranted a contrary finding that Alcaraz was indeed a probationary and not a regular employee – more particularly the fact that she was well-aware of her duties and responsibilities and that her failure to adequately perform the same would lead to her non-regularization and eventually, her termination.3

Consequently, since the CA found that the NLRC did not commit grave abuse of discretion and denied the certiorari petition before it, the reversal of its ruling was thus in order.

At this juncture, it bears exposition that while NLRC decisions are, by their nature, final and executory4 and, hence, not subject to appellate review,5 the Court is not precluded from considering other questions of law aside from the CA’s finding on the NLRC’s grave abuse of discretion. While the focal point of analysis revolves on this issue, the Court may deal with ancillary issues – such as, in this case, the question of how a probationary employee is deemed to have been informed of the standards of his regularization – if only to determine if the concepts and principles of labor law were correctly applied or misapplied by the NLRC in its decision. In other words, the Court’s analysis of the NLRC’s interpretation of the environmental principles and concepts of labor law is not completely prohibited in – as it is complementary to – a Rule 45 review of labor cases.

Finally, if only to put to rest Alcaraz’s misgivings on the manner in which this case was reviewed, it bears pointing out that no "factual appellate review" was conducted by the Court in the Decision. Rather, the Court proceeded to interpret the relevant rules on probationary employment as applied to settled factual findings. Besides, even on the assumption that a scrutiny of facts was undertaken, the Court is not altogether barred from conducting the same. This was explained in the case of Career Philippines Shipmanagement, Inc. v. Serna6 wherein the Court held as follows:

Accordingly, we do not re-examine conflicting evidence, re-evaluate the credibility of witnesses, or substitute the findings of fact of the NLRC, an administrative body that has expertise in its specialized field. Nor do we substitute our "own judgment for that of the tribunal in determining where the weight of evidence lies or what evidence is credible." The factual findings of the NLRC, when affirmed by the CA, are generally conclusive on this Court.

Nevertheless, there are exceptional cases where we, in the exercise of our discretionary appellate jurisdiction may be urged to look into factual issues raised in a Rule 45 petition. For instance, when the

petitioner persuasively alleges that there is insufficient or insubstantial evidence on record to support the factual findings of the tribunal or court a quo, as Section 5, Rule 133 of the Rules of Court states in express terms that in cases filed before administrative or quasi-judicial bodies, a fact may be deemed established only if supported by substantial evidence.7 (Emphasis supplied)

B. Standards for regularization; conceptual underpinnings.

Alcaraz posits that, contrary to the Court’s Decision, one’s job description cannot by and of itself be treated as a standard for regularization as a standard denotes a measure of quantity or quality. By way of example, Alcaraz cites the case of a probationary salesperson and asks how does such employee achieve regular status if he does not know how much he needs to sell to reach the same.

The argument is untenable.

First off, the Court must correct Alcaraz’s mistaken notion: it is not the probationary employee’s job description but the adequate performance of his duties and responsibilities which constitutes the inherent and implied standard for regularization. To echo the fundamental point of the Decision, if the probationary employee had been fully apprised by his employer of these duties and responsibilities, then basic knowledge and common sense dictate that he must adequately perform the same, else he fails to pass the probationary trial and may therefore be subject to termination.8

The determination of "adequate performance" is not, in all cases, measurable by quantitative specification, such as that of a sales quota in Alcaraz’s example. It is also hinged on the qualitative assessment of the employee’s work; by its nature, this largely rests on the reasonable exercise of the employer’s management prerogative. While in some instances the standards used in measuring the quality of work may be conveyed – such as workers who construct tangible products which follow particular metrics, not all standards of quality measurement may be reducible to hard figures or are readily articulable in specific pre-engagement descriptions. A good example would be the case of probationary employees whose tasks involve the application of discretion and intellect, such as – to name a few – lawyers, artists, and journalists. In these kinds of occupation, the best that the employer can do at the time of engagement is to inform the probationary employee of his duties and responsibilities and to orient him on how to properly proceed with the same. The employer cannot bear out in exacting detail at the beginning of the engagement what he deems as "quality work" especially since the probationary employee has yet to submit the required output. In the ultimate analysis, the communication of performance standards should be perceived within the context of the nature of the probationary employee’s duties and responsibilities.

The same logic applies to a probationary managerial employee who is tasked to supervise a particular department, as Alcaraz in this case.1âwphi1 It is hardly possible for the employer, at the time of the employee’s engagement, to map into technical indicators, or convey in precise detail the quality standards by which the latter should effectively manage the department. Factors which gauge the ability of the managerial employee to either deal with his subordinates (e.g., how to spur their performance, or command respect and obedience from them), or to organize office policies, are hardly conveyable at the outset of the engagement since the employee has yet to be immersed into the work itself. Given that a managerial role essentially connotes an exercise of discretion, the quality of effective management can only be determined through subsequent assessment. While at the time of engagement, reason dictates that the employer can only inform the probationary managerial employee of his duties and responsibilities as such and provide the allowable parameters for the same. Verily, as stated in the Decision, the adequate performance of such duties and responsibilities is, by and of itself, an implied standard of regularization.

In this relation, it bears mentioning that the performance standard contemplated by law should not, in all cases, be contained in a specialized system of feedbacks or evaluation. The Court takes judicial notice of the fact that not all employers, such as simple businesses or small-scale enterprises, have a sophisticated form of human resource management, so much so that the adoption of technical indicators as utilized through "comment cards" or "appraisal" tools should not be treated as a prerequisite for every case of probationary engagement. In fact, even if a system of such kind is employed and the procedures for its implementation are not followed, once an employer determines

that the probationary employee fails to meet the standards required for his regularization, the former is not precluded from dismissing the latter. The rule is that when a valid cause for termination exists, the procedural infirmity attending the termination only warrants the payment of nominal damages. This was the principle laid down in the landmark cases of Agabon v. NLRC9 (Agabon) and Jaka Food Processing Corporation v. Pacot10 (Jaka). In the assailed Decision, the Court actually extended the application of the Agabon and Jaka rulings to breaches of company procedure, notwithstanding the employer’s compliance with the statutory requirements under the Labor Code.11 Hence, although Abbott did not comply with its own termination procedure, its non-compliance thereof would not detract from the finding that there subsists a valid cause to terminate Alcaraz’s employment. Abbott, however, was penalized for its contractual breach and thereby ordered to pay nominal damages.

As a final point, Alcaraz cannot take refuge in Aliling v. Feliciano12 (Aliling) since the same is not squarely applicable to the case at bar. The employee in Aliling, a sales executive, was belatedly informed of his quota requirement. Thus, considering the nature of his position, the fact that he was not informed of his sales quota at the time of his engagement changed the complexion of his employment. Contrarily, the nature of Alcaraz's duties and responsibilities as Regulatory Affairs Manager negates the application of the foregoing. Records show that Alcaraz was terminated because she (a) did not manage her time effectively; (b) failed to gain the trust of her staff and to build an effective rapport with them; (c) failed to train her staff effectively; and (d) was not able to obtain the knowledge and ability to make sound judgments on case processing and article review which were necessary for the proper performance of her duties.13 Due to the nature and variety of these managerial functions, the best that Abbott could have done, at the time of Alcaraz's engagement, was to inform her of her duties and responsibilities, the adequate performance of which, to repeat, is an inherent and implied standard for regularization; this is unlike the circumstance in Aliling where a quantitative regularization standard, in the term of a sales quota, was readily articulable to the employee at the outset. Hence, since the reasonableness of Alcaraz's assessment clearly appears from the records, her termination was justified. Bear in mind that the quantum of proof which the employer must discharge is only substantial evidence which, as defined in case law, means that amount of relevant evidence as a reasonable mind might accept as adequate to support a conclusion, even if other minds, equally reasonable, might conceivably opine otherwise.14 To the Court's mind, this threshold of evidence Abbott amply overcame in this case.

All told, the Court hereby denies the instant motion for reconsideration and thereby upholds the Decision in the main case.

WHEREFORE, the motion for reconsideration dated August 23, 2013 of the Court's Decision dated July 23, 2013 in this case is hereby DENIED.

G.R. No. 192924 November 26, 2014

PHILIPPINE AIRLINES, INC., Petitioner, vs. REYNALDO V. PAZ, Respondent.

D E C I S I O N

REYES, J.:

Before this Court is a petition for review on certiorari1 filed under Rule 45 of the Rules of Court by Philippine Airlines, Inc. (PAL), seeking to annul and set aside the Amended Decision2 dated June 29, 2010 of the Court of Appeals (CA) in CA-G.R. SP No. 75618. Reynaldo V. Paz (respondent) was a former commercial pilot of PAL and a member of the Airlines Pilots Association of the Philippines (ALPAP), the sole and exclusive bargaining representative of all the pilots in PAL.

On December 9, 1997, ALPAP filed a notice of strike with the National Conciliation and Mediation Board of the Department of Labor and Employment (DOLE). Pursuant to Article 263(g) of the Labor Code, the DOLE Secretary assumed jurisdiction over the labor dispute and enjoined the parties from committing acts which will further exacerbate the situation.3

On June 5, 1998, notwithstanding the directive of the DOLE Secretary, the ALPAP officers and members staged a strike and picketed at the PAL’s premises. To control the situation, the DOLE Secretary issued a return-to-work order on June 7, 1998, directing all the striking officers and members of ALPAP to return to work within 24 hours from notice of the order. The said order was served upon the officers of ALPAP on June 8, 1998 by the DOLE Secretary himself. Even then, the striking members of ALPAP did not report for work.4

On June 25, 1998, Atty. Joji Antonio, the counsel for ALPAP, informed the members of the union that she has just received a copy of the return-to-work order and that they have until the following day within which to comply. When the striking members of the ALPAP reported for work on the following day, the security guards of PAL denied them entry.5

On June 13, 1998, the DOLE Secretary issued a resolution on the case from which both parties filed a motion for reconsideration. Pending the resolution of the motions, PAL filed a petition for approval of rehabilitation plan and for appointment of a rehabilitation receiver with the Securities and Exchange Commission (SEC), claiming serious financial distress brought about by the strike. Subsequently, on June 23, 1998, the SEC appointed a rehabilitation receiver for PAL and declared the suspension of all claims against it.6

On June 1, 1999, the DOLE Secretary resolved the motions for reconsideration filed by both parties and declared the strike staged by ALPAP illegal and that the participants thereof are deemed to have lost their employment.7

On June 25, 1999, the respondentfiled a complaint for illegal dismissal against PAL for not accepting him back towork, claiming non-participation in the illegal strike. In his position paper, he alleged that on the day the ALPAP staged a strike onJune 5, 1998, he was off-duty from work and was in Iligan City. However, when he reported back to work on June 12, 1998, after a week-long break, he was no longer allowed to enter PAL’s premises in Nichols, Pasay City.8

The respondent further alleged that on June 25, 1998, he learned that the DOLE Secretary issued a return-to-work order, requiring all the striking pilots to return to work within 24 hours from notice. Notwithstanding his non-participation in the strike, he signed the logbook at the entrance of PAL’s office on the following day. When he tried to report for work, however, he was denied entry by the PAL’s security guards.9

For its part, PAL claimed that the respondent was among the participants of the strike staged by ALPAP on June 5, 1998 who did not heed to the return-to-work order issued on June 7, 1998 by the DOLE

Secretary. The said order directed all the participants of the strike to return to work within 24 hours from notice thereof. However, ALPAP and its counsel unjustifiably refused to receive the copy of the order and was therefore deemed served. The 24-hour deadline for the pilots to return to work expired on June 9, 1998, without the respondent reporting back to work. Subsequently, the DOLE Secretary issued the Resolution dated June 1, 1999, declaring that the striking pilots have lost their employment for defying the return-to-work order. Thus, PAL argued that the respondent’s charge of illegal dismissal is utterly without merit.10

On March 5, 2001, the Labor Arbiter (LA) rendered a Decision, 11 holding that the respondentwas illegally dismissed and ordered that he be reinstated to his former position without loss of seniority rights and other privileges and paid his full backwages inclusive of allowances and other benefits computed from June 12, 1998 up to his actual reinstatement. The dispositive portion of the decision reads, as follows:

WHEREFORE, judgment is hereby rendered:

1. Declaring that this Arbitration Branch has jurisdiction over the causes of action raised by the [respondent] in this case;

2. Declaring that the causes of action raised in the complaint in this case have not been barred by prior judgment of the Secretary of Labor and Employment in his Resolution of June 1, 1999; 3. Declaring that the termination of the services of the [respondent] was not for any just or authorized cause and also without due process and therefore illegal;

4. Ordering Philippine Airlines, Inc. to reinstate immediately upon receipt of this decision [respondent] Reynaldo V. Paz to his former position as commercial pilot without loss of seniority rights and other privileges and to pay him his full backwages inclusive of allowances and other benefits or their monetary equivalent computed from June 12, 1998 up to his actual reinstatement even pending appeal but the respondent has the option to actually reinstate [the respondent] to his former position or to reinstate him merely in payroll. As of September 5, 2000, the full backwages due to the [respondent] total P2,629,420.00;

5. Ordering Philippine Airlines, Inc. to pay the [respondent] the following:

Productivity Pay (P22,383.62 x 27 months…… P604,357.74

Retirement Fund Contribution

(P9,800.00 x 27 months)……. ………….. P264,600.00

PODF (P4,663.25 x 27 months)………………..... 125,907.75

Sick Leave (P3,000.62 x 42 days)……………….. 126,026.04

Vacation Leave (P3,000.62 x 42 days)………….. 125,026.04

Rice Subsidy (P600.00 x 27 months)……………. 16,200.00

13th Month Pay (P93,265.00 x 2 years)………….. 188,030.00

Longevity Pay (P500.00 x 2 years) ……………… 1,000.00

6. Ordering Philippine Airlines, Inc. to pay [the respondent] attorney’s fees equivalent to 10% of the whole monetary award (Art. III, Labor Code);

7. Ordering Philippine Airlines, Inc. to pay [the respondent] moral damages equivalent to Five Hundred Thousand Pesos (P500,00[0].00) and exemplary damages of Five Hundred Thousand

Pesos (P500,000.00)

SO ORDERED.12

Unyielding, PAL appealed the foregoing decision to the National Labor Relations Commission (NLRC). Pending appeal, the respondent filed a motion for partial execution of the reinstatement aspect of the decision. The LA granted the said motion and issued a partial writ of execution on May 25, 2001.

Subsequently, on June 27, 2001, the NLRC rendered a Resolution,13 reversing the LA decision. The NLRC ruled that the pieces of evidence presented by PAL proved that the respondent participated in the strike and defied the return-to-work order of the DOLE Secretary; hence, he is deemed to have lost his employment. The pertinent portions of the decision read:

Indeed, other than [the respondent’s] self-serving assertions, he has failed to substantiate his claim that he was in Iligan City and that he reported for work a week after June5, 1998. [PAL], on the other hand, has presented photographs of the complainant picketing [at the PAL’s] premises on June 15 & 26, 1998. x x x

x x x x In sum, [PAL’s] concrete evidence submitted in the proceedings below should prevail over the self-serving assertions of [the respondent]. Consequently, we are of the view that [PAL] acted within its rights when it refused to accept [the respondent] when he reported for work on June 26, 1998. This is consistent with the finding[s] of the DOLE Secretary when he declared the strikers to have lost their employment status. x x x.

x x x x

WHEREFORE, premises considered, the appeal is hereby GRANTED, and the decision dated March 5, 2001, is REVERSED and SET ASIDE for utter lack of merit.

SO ORDERED.14

Notwithstanding the reversal of the LA decision, the respondent pursued his move for the issuance of a writ of execution, claiming that he was entitled to reinstatement salaries which he supposedly earned during the pendency of the appeal to the NLRC. On August 28, 2001, the LA granted the motion and issued the corresponding writ of execution.15

On September 17, 2001, the LA issued an Order,16 clarifying the respondent’s entitlement to reinstatement salaries. He ratiocinated that the order of reinstatement is immediately executory even pending appeal and that under Article 223 of the Labor Code, the employer has the option to admit the employee back towork or merely reinstate him in the payroll. Considering, however, that there was no physical reinstatement, the respondent, as a matter of right, must be reinstated in the payroll. The accrued salaries may now be the subject of execution despite the NLRC’s reversal of the decision.

PAL appealed the LA Order dated September 17, 2001 to the NLRC, arguing that the writ of execution lackedfactual and legal basis considering that the NLRC reversed and set aside the LA decision and categorically declared the order of reinstatement as totally devoid of merit. It contended that entitlement to salaries pending appeal presupposes a finding that the employee is entitled to reinstatement. Absent such finding, the employee is not entitled to reinstatement salaries and the writ of execution issued pursuant thereto is a complete nullity.17

On June 28, 2002, the NLRC rendered a Resolution,18 sustaining the award of reinstatement salaries to the respondent albeit suspending its execution in view of the fact that PAL was under rehabilitation receivership. PAL filed a motion for reconsideration but the NLRC denied the same in its Resolution19 dated November 22, 2002.

Unperturbed, PAL filed a petition for certiorari with the CA, questioning the NLRC Resolution dated June 28, 2002. Subsequently, in a Decision20 dated January 31, 2005, the CA affirmed with modification the NLRC Resolution dated June 28, 2002, the dispositive portion of which reads, as follows:

WHEREFORE, the NLRC Resolution dated June 28, 2002 is AFFIRMED with the MODIFICATION that, in lieu of reinstatement salaries, petitioner Philippine Airlines, Inc. is ordered to pay respondent Paz separation pay equivalent to one month salary for every year of service, to be computed from the time respondent commenced employment with petitioner PAL until the time the Labor Arbiter issued the writ ordering respondent’s reinstatement, i.e., on May 25, 2001.

SO ORDERED.21

The CA ruled that while the respondent is entitled to reinstatement, the prevailing circumstances rendered the same difficult if not impossible to execute. It noted that at the time the reinstatement was ordered, there was no vacant B747-400 pilot position available for the respondent. Further complicating the situation is the fact that PAL has been under receivership since July 1998. Thus, in lieu of reinstatement salaries, the CA ordered PAL to pay the respondent separation pay equivalent to one (1) month salary for every year of service.22

PAL filed a motion for reconsideration of the CA decision. Subsequently, the CA rendered the assailed Amended Decision23 dated June 29, 2010, holding thus:

Accordingly, compliance with the reinstatement order is not affected by the fact that private respondent’s previous position had been filled-up. In reinstatement pending appeal, payroll reinstatement is an alternative to actual reinstatement. Hence, public respondent did not err when it upheld the Labor Arbiter that private respondent is entitled to reinstatement salaries during the period of appeal.

WHEREFORE, premises considered, the modification contained in Our January 31, 2005 Decision is DELETED and SET ASIDE. The June 28, 2002 Resolution of the National Labor Relations Commission is hereby REINSTATED in toto.

SO ORDERED.24

On August 3, 2010, PAL filed the instant petition with the Court, contending that the CA acted in a manner contrary to law and jurisprudence when it upheld the award of reinstatement salaries to the respondent.25

The petition is meritorious.

The same issue had been raised and addressed by the Court in the case of Garcia v. Philippine Airlines, Inc.26 In the said case, the Court deliberated on the application of Paragraph 3, Article 223 of the Labor Code in light of the apparent divergence in its interpretation, specifically on the contemplation of the reinstatement aspectof the LA decision. The pertinent portion of the provision reads, thus:

In any event, the decision of the Labor Arbiter reinstating a dismissed or separated employee, insofar as the reinstatement aspectis 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 inthe payroll. The posting of a bond by the employer shall not stay the execution for reinstatement provided herein.27 (Emphasis and underscoring in the original)

Briefly, in Garcia, the petitioners were dismissed by their employer, respondent PAL, after they were allegedly caught in the act of sniffing shabu when a team of company security personnel and law enforcers raided the PAL Technical Center’s Toolroom Section. After they filed a complaint for illegal dismissal, respondent PAL was placed under rehabilitation receivership due to serious financial losses. Eventually, the LA resolved the case in favor of the petitioners and ordered their immediate reinstatement. Upon appeal, however, the NLRC reversed the LA decision and dismissed the complaint. Even then, the LA issued a writ of execution, with respect to the reinstatement aspect of the decision,

and issued a notice of garnishment. Respondent PAL filed an urgent petition for injunction with the NLRC but the latter, by way of Resolutions dated November 26, 2001 and January 28, 2002, affirmed the validity of the writ and the notice issued by the LA but suspended and referred the action to the rehabilitation receiver. On appeal, the CA ruled in favor of respondent PAL and nullified the NLRC resolutions, holding that (1) a subsequent finding of a valid dismissal removes the basis for the reinstatement aspect of a LA decision, and (2) the impossibility to comply with the reinstatement order due to corporate rehabilitation justifies respondent PAL’s failure to exercise the options under Article 223 of the Labor Code. When the case was further elevated to this Court, the petition was partially granted and reinstated the NLRC resolutions insofar as it suspended the proceedings. Subsequently, respondent PAL notified the Court that it has exited from the rehabilitation proceedings. The Court then proceeded to determine the main issue of whether the petitioners therein are entitled to collect salaries pertaining to the period when the LA’s order of reinstatement is pending appeal to the NLRC until it was reversed.

The factual milieu of the instant case resembles that of Garcia. The respondent herein obtained a favorable ruling from the LA in the complaint for illegal dismissal case he filed against PAL but the same was reversed on appeal by the NLRC. Also, PAL was under rehabilitation receivership during the entire period that the illegal dismissal case was being heard. A similar question is now being raised, i.e., whether the respondent may collect reinstatement salaries which he is supposed to have received from the time PAL received the LA decision, orderinghis reinstatement, until the same was overturned by the NLRC.

The rule is that the employee is entitled to reinstatement salaries notwithstanding the reversal of the LA decision granting him said relief. In Roquero v. Philippine Airlines,28 the Court underscored that it is obligatory on the part of the employer to reinstate and pay the wages of the dismissed employee during the period of appeal untilreversal by the higher court. This is so because the order of reinstatement is immediately executory. Unless there is a restraining order issued, it is ministerial upon the LA to implement the order of reinstatement. The unjustified refusal of the employer to reinstate a dismissed employee entitles him to payment of his salaries effective from the time the employer failed to reinstate him.29

In Garcia, however, the Court somehow relaxed the rule by taking into consideration the cause of delay in executing the order of reinstatement of the LA. It was declared, thus:

After the labor arbiter’s decision is reversed by a higher tribunal, the employee may be barred from collecting the accrued wages, if it is shown that the delay in enforcing the reinstatement pending appeal was without fault on the part of the employer.

The test is two-fold: (1) there must be actual delay or the fact that the order of reinstatement pending appeal was not executed prior to its reversal; and (2) the delay must not be due to the employer’s unjustified act or omission. If the delay is due to the employer’s unjustified refusal, the employer may still be required to pay the salaries notwithstanding the reversal of the LaborArbiter’s decision.30 (Italics ours and emphasis and underscoring deleted)

It is clear from the records that PAL failed to reinstate the respondent pending appeal of the LA decision to the NLRC.1âwphi1 It can be recalled that the LA rendered the decision ordering the reinstatement of the respondent on March 5, 2001. And, despite the self-executory nature of the order of reinstatement, the respondent nonetheless secured a partial writ of execution on May 25, 2001. Even then, the respondent was not reinstated to his former position or even through payroll.

A scrutiny of the circumstances, however, will show that the delay in reinstating the respondent was not due to the unjustified refusal of PAL to abide by the order but because of the constraints of corporate rehabilitation. It bears noting that a year before the respondent filed his complaint for illegal dismissal on June 25, 1999, PAL filed a petition for approval of rehabilitation plan and for appointment of a rehabilitation receiver with the SEC. On June 23, 1998, the SEC appointed an Interim Rehabilitation Receiver. Thereafter, the SEC issued an Order31 dated July 1, 1998, suspending all claims for payment against PAL.

The inopportune event of PAL’s entering rehabilitation receivership justifies the delay or failure to complywith the reinstatement order of the LA. Thus, in Garcia, the Court held:

It is settled that upon appointment by the SEC of a rehabilitation receiver, all actions for claims beforeany court, tribunal or board against the corporation shall ipso jurebe suspended. As stated early on, during the pendency of petitioners’ complaint before the Labor Arbiter, the SEC placed respondent under an Interim Rehabilitation Receiver. After the Labor Arbiter rendered his decision, the SEC replaced the Interim Rehabilitation Receiver with a Permanent Rehabilitation Receiver.

Case law recognizes that unless there is a restraining order, the implementation of the order of reinstatement is ministerial and mandatory. This injunction or suspension of claimsby legislative fiat partakes of the nature of a restraining order that constitutes a legal justification for respondent's non-compliance with the reinstatement order. Respondent's failure to exercise the alternative options of actual reinstatement and payroll reinstatement was thus justified. Such being the case, respondent's obligation to pay the salaries pending appeal, as the normal effect of the non-exercise of the options, did not attach.32 (Citations omitted)

In light of the fact that PAL's failure to comply with the reinstatement order was justified by the exigencies of corporation rehabilitation, the respondent may no longer claim salaries which he should have received during the period that the LA decision ordering his reinstatement is still pending appeal until it was overturned by the NLRC. Thus, the CA committed a reversible error in recognizing the respondent's right to collect reinstatement salaries albeit suspending its execution while PAL is still under corporate rehabilitation.

WHEREFORE, the petition is GRANTED. The Amended Decision dated June 29, 2010 of the Court of Appeals in CA-G.R. SP No. 75618 is hereby REVERSED and SET ASIDE. Respondent Reynaldo V. Paz is not entitled to the payment of reinstatement salaries.

SO ORDERED.

G.R. No. 188722 February 1, 2012

BANK OF LUBAO, INC., Petitioner, vs. ROMMEL J. MANABAT and the NATIONAL LABOR RELATIONS COMMISSION, Respondents.

D E C I S I O N

REYES, J.:

Nature of the Petition

This is a petition for review on certiorari under Rule 45 of the Rules of Court filed by the Bank of Lubao, Inc. (petitioner) assailing the Decision1 dated April 24, 2009 and Resolution2 dated July 7, 2009 issued by the Court of Appeals (CA) in CA-G.R. SP No. 106419.

The Antecedent Facts

Sometime in 2001, Rommel J. Manabat (respondent) was hired by petitioner Bank of Lubao, a rural bank, as a Market Collector. Subsequently, the respondent was assigned as an encoder at the Bank of Lubao’s Sta. Cruz Extension Office, which he manned together with two other employees, teller Susan P. Lingad (Lingad) and May O. Manasan. As an encoder, the respondent’s primary duty is to encode the clients’ deposits on the bank’s computer after the same are received by Lingad.

In November 2004, an initial audit on the Bank of Lubao’s Sta. Cruz Extension Office conducted by the petitioner revealed that there was a misappropriation of funds in the amount of P3,000,000.00, more or less. Apparently, there were transactions entered and posted in the passbooks of the clients but were not entered in the bank’s book of accounts. Further audit showed that there were various deposits which were entered in the bank’s computer but were subsequently reversed and marked as "error in posting".

On November 17, 2004, the respondent, through a memorandum sent by the petitioner, was asked to explain in writing the discrepancies that were discovered during the audit. On November 19, 2004, the respondent submitted to the petitioner his letter-explanation which, in essence, asserted that there were times when Lingad used the bank’s computer while he was out on errands.

On December 11, 2004, an administrative hearing was conducted by the bank’s investigating committee where the respondent was further made to explain his side. Subsequently, the investigating committee concluded that the respondent conspired with Lingad in making fraudulent entries disguised as error corrections in the bank’s computer.

On August 9, 2005, the petitioner filed several criminal complaints for qualified theft against Lingad and the respondent with the Municipal Trial Court (MTC) of Lubao, Pampanga. Thereafter, citing serious misconduct tantamount to willful breach of trust as ground, it terminated the respondent’s employment effective September 1, 2005.

On September 26, 2005, the respondent filed a Complaint3 for illegal dismissal with the Regional Arbitration Branch of the National Labor Relations Commission (NLRC) in San Fernando City, Pampanga. In the said complaint, the respondent, to bolster his claim that there was no valid ground for his dismissal, averred that the charge against him for qualified theft was dismissed for lack of sufficient basis to conclude that he conspired with Lingad. The respondent sought an award for separation pay, full backwages, 13th month pay for 2004 and moral and exemplary damages.

For its part, the petitioner insists that the dismissal of the respondent is justified, asserting the February 14, 2006 Audit Report which confirmed the participation of the respondent in the alleged misappropriations. Likewise, the petitioner asserted that the dismissal of the qualified theft charge against the respondent is immaterial to the validity of the ground for the latter’s dismissal.

The Labor Arbiter’s Decision

On February 28, 2007, the Labor Arbiter (LA) rendered a decision4 sustaining the respondent’s claim of illegal dismissal thus ordering the petitioner to reinstate the respondent to his former position and awarding the latter backwages in the amount of P111,960.00 and 13th month pay in the amount of P6,220.00. The LA opined that the petitioner failed to adduce substantial evidence that there was a valid ground for the respondent’s dismissal. Further, the February 14, 2006 Audit Report that was adduced by the petitioner in evidence was disregarded by the LA since it was unsigned.

The petitioner appealed the foregoing disposition to the NLRC, submitting a new audit report dated April 30, 2007. Pending appeal, the petitioner sent the respondent a letter5 dated April 30, 2007 requiring him to report for work on May 4, 2007 pursuant to the reinstatement order of the LA. The said letter was served to the respondent on May 3, 2007 but he refused to receive the same.

The NLRC’s Decision

On July 21, 2008, the NLRC rendered a Decision6 affirming the February 28, 2007 Decision of the LA. The NLRC held that it was sufficiently established that only Lingad was the one responsible for the said misappropriations. Further, the NLRC asserted that the February 14, 2006 and April 30, 2007 audit reports presented by the petitioner could not be given evidentiary weight as the same were executed after the respondent had already been dismissed. The petitioner sought reconsideration of the said July 21, 2008 Decision but it was denied by the NLRC in its Resolution7 dated September 22, 2009.

Subsequently, the petitioner filed a Petition for Certiorari8 with the CA alleging that the NLRC and the LA gravely abused their discretion in ruling that the respondent had been illegally dismissed.

The CA Decision

On April 24, 2009, the CA rendered the herein assailed decision9 denying the petition for certiorari filed by the petitioner. However, the CA held that the respondent is entitled to separation pay equivalent to one-month salary for every year of service in lieu of reinstatement and backwages to be computed from the time of his illegal dismissal until the finality of the said decision.

The CA agreed with the LA and the NLRC that the petitioner failed to establish by substantial evidence that there was indeed a valid ground for the respondent’s dismissal. Nevertheless, the CA held that the petitioner should pay the respondent separation pay since the latter did not pray for reinstatement before the LA and that the same would be in the best interest of the parties considering the animosity and antagonism that exist between them. The CA stated the following:

With respect to monetary awards, a finding that an employee has been illegally dismissed ordinarily entitles him to reinstatement to his former position without loss of seniority rights and to the payment of backwages. In this case, however, private respondent did not pray for reinstatement before the Labor Arbiter. This being the case, the employer should pay him separation pay in lieu [of] reinstatement. This is only just and practical because reinstatement of private respondent will no longer be in the best interest of both parties considering the animosity and antagonism that exist between them brought about by the filing of charges in the criminal as well as in the labor proceedings. Consequently, private respondent is entitled to separation pay equivalent to one month pay for every year of service up to the finality of this judgment, as an alternative to reinstatement. With respect to his backwages, where reinstatement is no longer possible, it shall be computed from the time of the employee’s illegal termination up to the finality of this decision, without qualification or deduction.10 (citations omitted)

Hence, the fallo of the CA Decision reads:

WHEREFORE, the petition is DENIED. The assailed Decision and Resolution of the NLRC are AFFIRMED with the MODIFICATION that private respondent is entitled to separation pay equivalent to one month salary for every year of service in lieu of reinstatement and backwages to be computed from the time of his illegal dismissal until the finality of this Decision.

SO ORDERED.11

The petitioner’s Motion for Reconsideration12 was denied by the CA in its Resolution13 dated July 7, 2009.

Undaunted, the petitioner instituted the instant petition for review on certiorari before this Court asserting the following arguments: (1) the CA erred in awarding separation pay in favor of the respondent in lieu of reinstatement considering that the appeal before it only involved the issue of the legality or illegality of the respondent’s dismissal; (2) an award of separation pay to the respondent is not proper in this case considering that, in his complaint, he merely prayed for reinstatement and not payment of separation pay; and (3) the CA erred in awarding backwages in favor of the respondent since it acted in good faith when it terminated the respondent’s employment.

In his Comment,14 the respondent asserted that the CA did not err in ordering the payment of separation pay in his favor in lieu of reinstatement since there is already a strained relationship between him and the petitioner. He intimated that the petitioner had previously filed various criminal charges against him for qualified theft thus effectively rendering his reinstatement to his former position in the Bank of Lubao impracticable.

Issues

In sum, the issues to be resolved by this Court in the instant case are the following: (1) whether the CA erred in ordering the petitioner to pay the respondent separation pay in lieu of reinstatement; and (2) whether the respondent is entitled to payment of backwages.

The Court’s Ruling

This Court notes that the LA, the NLRC and the CA unanimously ruled that the respondent was illegally dismissed. Factual findings of quasi-judicial bodies like the NLRC, if supported by substantial evidence, are accorded respect and even finality by this Court, more so when they coincide with those of the LA. Such factual findings are given more weight when the same are affirmed by the CA. We find no reason to depart from the foregoing rule.

First Issue: Separation Pay in Lieu of Reinstatement

At the outset, it should be stressed that a determination of the applicability of the doctrine of strained relations is essentially a factual question and, thus, not a proper subject in the instant petition.15

The well-entrenched rule in our jurisdiction is that only questions of law may be entertained by this Court in a petition for review on certiorari. This rule, however, is not ironclad and admits certain exceptions, such as when, inter alia, the findings of fact are conflicting.16

Here, in view of the conflicting findings of the NLRC and the CA, this Court is constrained to pass upon the propriety of the application of the doctrine of strained relations to justify the award of separation pay to the respondent in lieu of reinstatement.

The law on reinstatement is provided for under Article 279 of the Labor Code of the Philippines:

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

Under the law and prevailing jurisprudence, an illegally dismissed employee is entitled to reinstatement as a matter of right. However, if reinstatement would only exacerbate the tension and strained relations

between the parties, or where the relationship between the employer and the employee has been unduly strained by reason of their irreconcilable differences, particularly where the illegally dismissed employee held a managerial or key position in the company, it would be more prudent to order payment of separation pay instead of reinstatement.17

Under the doctrine of strained relations, the payment of separation pay is considered an acceptable alternative to reinstatement when the latter option is no longer desirable or viable. On one hand, such payment liberates the employee from what could be a highly oppressive work environment. On the other hand, it releases the employer from the grossly unpalatable obligation of maintaining in its employ a worker it could no longer trust.18

In such cases, it should be proved that the employee concerned occupies a position where he enjoys the trust and confidence of his employer; and that it is likely that if reinstated, an atmosphere of antipathy and antagonism may be generated as to adversely affect the efficiency and productivity of the employee concerned.19

Here, we agree with the CA that the relations between the parties had been already strained thereby justifying the grant of separation pay in lieu of reinstatement in favor of the respondent.

First, it cannot be gainsaid that the petitioner’s reinstatement to his former position would only serve to intensify the atmosphere of antipathy and antagonism between the parties. Undoubtedly, the petitioner’s filing of various criminal complaints against the respondent for qualified theft and the subsequent filing by the latter of the complaint for illegal dismissal against the latter, taken together with the pendency of the instant case for more than six years, had caused strained relations between the parties.

Second, considering that the respondent’s former position as bank encoder involves the handling of accounts of the depositors of the Bank of Lubao, it would not be equitable on the part of the petitioner to be ordered to maintain the former in its employ since it may only inspire vindictiveness on the part of the respondent.

Third, the refusal of the respondent to be re-admitted to work is in itself indicative of the existence of strained relations between him and the petitioner. In the case of Lagniton, Sr. v. National Labor Relations Commission,20the Court held that the refusal of the dismissed employee to be re-admitted is constitutive of strained relations:

It appears that relations between the petitioner and the complainants have been so strained that the complainants are no longer willing to be reinstated. As such reinstatement would only exacerbate the animosities that have developed between the parties, the public respondents were correct in ordering instead the grant of separation pay to the dismissed employees in the interest of industrial peace.21

Time and again, this Court has recognized that strained relations between the employer and employee is an exception to the rule requiring actual reinstatement for illegally dismissed employees for the practical reason that the already existing antagonism will only fester and deteriorate, and will only worsen with possible adverse effects on the parties, if we shall compel reinstatement; thus, the use of a viable substitute that protects the interests of both parties while ensuring that the law is respected.22

Second Issue: Backwages

Anent the second issue, the petitioner claimed that the respondent is not entitled to the payment of backwages considering that there was no bad faith on its part when it terminated the latter’s employment. The petitioner insists that it is within its prerogative to dismiss the respondent on the basis of loss of trust and confidence.

We do not agree.

The arguments raised by the petitioner with regard to the issue of backwages, essentially, attacks the factual findings of the CA, the NLRC and the LA. As stated earlier, subject to well-defined exceptions,

factual questions may not be raised in a petition for review on certiorari under Rule 45 as this Court is not a trier of facts. The petitioner failed to assert any circumstance which would impel this Court to disregard the findings of fact of the lower tribunals on the propriety of the award of backwages in favor of the respondent.

However, the backwages that should be awarded to the respondent should be modified. Employees who are illegally dismissed are entitled to full backwages, inclusive of allowances and other benefits or their monetary equivalent, computed from the time their actual compensation was withheld from them up to the time of their actual reinstatement. But if reinstatement is no longer possible, the backwages shall be computed from the time of their illegal termination up to the finality of the decision.23

Thus, when there is an order of reinstatement, the computation of backwages shall be reckoned from the time of illegal dismissal up to the time that the employee is actually reinstated to his former position.1âwphi1

Pursuant to the order of reinstatement rendered by the LA, the petitioner sent the respondent a letter requiring him to report back to work on May 4, 2007. Notwithstanding the said letter, the respondent opted not to report for work. Thus, it is but fair that the backwages that should be awarded to the respondent be computed from the time that the respondent was illegally dismissed until the time when he was required to report for work, i.e. from September 1, 2005 until May 4, 2007. It is only during the said period that the respondent is deemed to be entitled to the payment of backwages.

The fact that the CA, in its April 4, 2009 decision, ordered the payment of separation pay in lieu of the respondent’s reinstatement would not entitle the latter to backwages. It bears stressing that decisions of the CA, unlike that of the LA, are not immediately executory. Accordingly, the petitioner should only pay the respondent backwages from September 1, 2005, the date when the respondent was illegally dismissed, until May 4, 2007, the date when the petitioner required the former to report to work.1âwphi1

WHEREFORE, in consideration of the foregoing disquisitions, the instant petition is PARTIALLY GRANTED. The Decision dated April 24, 2009 and Resolution dated July 7, 2009 of the Court of Appeals in CA-G.R. SP No. 106419 are hereby AFFIRMED with MODIFICATION. The petitioner is ordered to pay the respondent backwages from September 1, 2005 until May 4, 2007. For this purpose, the case is hereby REMANDED to the Labor Arbiter for the computation of the amounts due the respondent.

SO ORDERED.

INSERT BUSTAMANTE VS NLRC

G.R. No. 201483 August 4, 2014

CONRADO A. LIM, Petitioner, vs. HMR PHILIPPINES, INC., TERESA SANTOS-CASTRO, HENRY BUNAG and NELSON CAMILLER,Respondents.

D E C I S I O N

MENDOZA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the March 30, 20121 Decision of the Court of Appeals (CA) in CA G.R. SP No. 112708, a case involving the computation of the back wages of an illegally dismissed employee. The Facts

On February 8, 200 I, petitioner Conrado A. Lim (Lim) filed a case for illegal dismissal and money claims against respondents, HMR Philippines, Inc. (HMR)and its officers, Teresa G. Santos-Castro, Henry G. Bunag and Nelson S. Camiller. The Labor Arbiter (LA) dismissedthe complaint for lack of merit. On April 11, 2003, the National Labor Relations Commission (NLRC)in NLRC NCR No. 02-00926-01, reversedthe LA and declared Lim to have been illegally dismissed. The dispositive portion of the NLRC decision reads:

WHEREFORE, premises considered, judgment is hereby rendered declaring the appealed Decision REVERSED and SET ASIDE; that the dismissal of herein complainant-appellant was illegal and the respondent-appellee Company is hereby ordered to reinstate immediately the said employee to his former position without loss of seniority rights and other privileges. Furthermore, the respondent-appellee Company is hereby ordered to pay the complainant-appellant his full backwages, reckoned from his dismissal on February 3, 2001 up to the promulgation of this Decision.

All other claims are hereby DISMISSED for lack of merit.

The Computation and Research Unit (CRU) of this Commission is hereby directed to compute the backwages and the 10% annual increase from 1998 to 2000.

SO ORDERED.2

[Emphases supplied]

Both Lim and HMR filed their respective petitions for certiorari before the CA, docketed as CA-G.R. SP No. 80379 and CA-G.R. SP No. 80630, respectively, which were consolidated. Pending resolution of the petitions, the CA issued the Temporary Restraining Order (TRO)enjoining the execution of the NLRC decision.

On November 15, 2005, the CA affirmed the NLRC decision with modification as follows: WHEREFORE, the Decision of the National Labor Relations Commission is AFFIRMED, with MODIFICATION by awarding moral damages and exemplary damages to Conrado A. Lim in the amount of P50,000.00 and P20,000.00, respectively, as well as attorney’s fees equivalent to 10% of the total amount due him.

SO ORDERED.3

On February 7, 2007, this Court, in G.R. No. 175950-51, dismissed the petition for certiorari4 filed by HMR assailing the November 15, 2005 CA decision. Entry of judgment was ordered on July 27, 2007.5

On September 24, 2007, Lim moved for execution.6 On November 28, 2007, the Computation and Research Unit (CRU) of the NLRC computed the total award to amount to P2,020,053.46,7 which

computed the backwages from February 3, 2001, the date of the illegal dismissal, up to October 31, 2007, the date ofactual reinstatement.

HMR opposed the computation arguing that the backwages should be computed until April 11, 2003 only, the date of promulgation of the NLRC decision, as stated in the dispositive portion of the NLRC decision, which provided that backwages shall be "reckoned from his dismissal on February 3, 2001 up to the promulgation of this Decision." It also noted that the 10% annual increase was computed from 1998 to 2007, instead of only from 1998 to 2000 as decreed.8

In his Comment, Lim argued that the body of the NLRC decision explictly stated that he was entitled tofull backwages from the time he was illegally dismissed until his actual reinstatement, which was also in accord with Article 279 of the Labor Codeand all prevailing jurisprudence.9 Ruling of the LA

On April 21, 2009, the LA issued the order10 granting the motion for execution filed by Lim. Holding thatthe backwages should be reckoned until April 11, 2003 only in accordance with the NLRC decision, the LA disposed:

Accordingly, in computing complainant’s backwages, the following conditions must apply: 1) that the backwages cover the period February 3, 2001 up to April 11, 2003; 2) that the base rate applicable is his salary as of February 3, 2001 inclusive of the ten percent adjustment due at the time, or P12,500.00 plus ten percent (10%) orP13,750.00; 3) that the computation should include his 13th month pay; and 4) 15 days vacation pay in accordance with the personnel policy handbook, in lieu of 5 days service incentive leave pay.

While complainant claims that he is entitled to 15 days sick leave pay, a perusal of the personnel policy handbook on the grant of said benefit shows that sick leave pay is availed of only upon notification of illness and conversion thereof to cash is subject to the discretion of management. Accordingly, complainant’s monetary award, which is the proper subject of enforcement through a writ of execution, in accordance with the Decision of the Commission as modified by the Court of Appeals, is computed as follows:

A. Backwages:

2/3/01 to 4/11/03 = 26.26

P13,750.00 x 26.26 = P361,075.00

13th month pay (P366,575.00/12) = 30,089.58

Vacation Leave (P687.50 x 15 x 26.26/12) = 22,859.37 P414,023.95

B. Moral Damages = 50,000.00

C. Exemplary Damages = 20,000.00

P484,023.95

D. Attorney’s Fees = 48,402.39

P532,426.34

WHEREFORE, complainant’s Motion for Issuance of Writ of Execution is GRANTED. A Writ of Execution is hereby issued for the satisfaction of the judgment award rendered in this case.

SO ORDERED.11

Ruling of the NLRC

Lim filed his "Motion Ad Cautelamfor Reconsideration or Recomputation and Partial Execution of Monetary Award," insisting that his backwages should be computed up to his actual reinstatement.12 On

August 28, 2009, the NLRC treated the motion as an appeal and sustained the computation of the LA, explaining that the dispositive portion was clear, and that it could not alter or amend the amount based on the final decision of the NLRC which was affirmed by both the CA and this Court.13 Aggrieved, petitioner filed a petition for certioraribefore the CA.

Ruling of the CA

In its assailed March 30, 2012 Decision,14 the CA dismissed the petition. It emphasized that the April 11, 2003 NLRC decision had long become final and executory after it was affirmed by the Court and, as such, it may no longer be amended or corrected. While noting that the body of the NLRC decision stated that petitioner was entitled to backwages until his actual reinstatement, the CA ruled that when there was a conflict between the dispositive portion and the body of the decision, the former must prevail as the dispositive portion was the final order, and that it was the dispositive portion which was the subject of execution. It wrote that the fallowas clear and unequivocal and could, therefore, be given effect without going to the body of the decision or further interpretation or construction.

The CA found that although the NLRC had recognized that petitioner was entitled to backwages until actual reinstatement, nonetheless, it expressly limited the computation of backwages to the promulgation date of its decision. It wrote that the issue ofwhether such limitation was lawful or improper could no longer be ventilated due to the finality of the judgment.

Hence, the present petition.

ISSUES AND ARGUMENTS

I

Whether or not the Court of Appeals erred in peremptorily applying the doctrine laid down in PH Credit Corporation v. Court of Appealsand contrary to law as well as the established jurisprudence mandating the payment of backwages until the illegally dismissed employee is actually reinstated.

II

Whether or not the Court of Appeals erred in not affirming the applicability of Eastern Shipping Lines v. Court of Appealsin the computation of interest since the Decision on the illegal termination case had become final and executory on June 6, 2007 inconsistent with existing jurisprudence by its failure to include interest payments.15

Petitioner Lim argues that Article279 of the Labor Code and the prevailing jurisprudence provide that illegally dismissed workers are entitled to an award of backwages from the timeof the illegal dismissal until they are actually reinstated. He states that the body of the NLRC decision was explicit in its intent to award backwages until actual reinstatement, especially when read with its fallo,which ordered his immediate reinstatement. He further avers that it has been held that the dispositive part of a decision must find support from the decision’s ratio decidendi, because, while the opinion of the court is not partof the judgment, it may, in case of uncertainty or ambiguity, be referred tofor the purpose of construing the judgment, where the court may clarify by amendment even after judgment has become final.

Lim also points out that the LA completely failed to include in the computation the unpaid 10% annual increase in his salary from 1998 to 2000, as awarded in the falloof the NLRC decision. He posits that the LA also failed to include the payment of other benefits, such as a 10% increase in salary per annum, 15 days vacation leave and 15 days sick leave per annum, all as part of employee benefitsfound in HMR’s Personnel Policy.

Petitioner Lim also argues that in accordance with the rules laid down in Eastern Shipping Lines v. Court of Appeals,16 the monetary awards should be subject to interest. He prays that the respondents be made to pay, jointly and severally, additional moral and exemplary damages on account of their bad

faith in delaying the payment and reinstatement of the petitioner, which prompted him to file the present petition.

Respondents’ Comment

In their Comment,17 the respondents argue that the August 28, 2009 NLRC Resolution had already becomefinal and executory and could no longer be modified as the petitioner belatedly filed his motion for reconsideration. In the same vein, they argue that the April 21, 2009 LA Order had also become final and executory considering that the petitioner’s motion ad cautelam/appeal was not seasonably filed.

The respondents insist that the "decretal portion of the NLRC decision, dated April 11, 2003 limited the amount of petitioner’s backwages from February 3, 2001 and up to promulgation of such Decision on April 11, 2003 only.18Granting that the body of such decision controls, they aver that the recoverable backwages cannot go beyond December 26, 2007, the date HMR offered to reinstate Lim, who refused to be reinstated and abandoned his job. They add that it was also clearfrom the dispositive portion that the 10% annual salary increase awarded was only for the years 1998 to 2000.

They also point out that the P12,500.00 base pay of Lim was already inclusive of holiday pay, and that the conversion of sick leave to cash was subject to management discretion in accordance with company policy.

They further argue that the claimsfor legal interest and additional moral and exemplary damages are without merit because these were not awarded in the decision and they simply acted in good faith in pursuing the legal remedies available to them.

Petitioner’s Reply

In his Reply,19 Lim counters that his pleadings before the NLRC and the LA were timely filed as the notices of their respective orders had not been received by an authorized representative. As to HMR’s offer of reinstatement, the petitioner explainsthat the respondent company never responded to his reply-letter asking for a meeting to discuss the matter of his compensation upon reinstatement. Lim also argued that holiday pay was not shown by HMR to be included in his salary, and that it is unjust to leave the sick leave conversion to management discretion. Specifically, the Court has to address the following

ISSUES:

1. Whether the petitioner’s motion for reconsideration and motion ad cautelam/appeal were belatedly filed?

2. Whether the computation of backwages should be reckoned until the promulgation of the NLRC Decision on April 11, 2003 or until actual reinstatement?

3. Whether the petitioner is entitled to the unpaid 10% annual salary increase from 1998-2000?

4. Whether the petitioner is entitled to the 10% annual salary increase after the year 2000?

5. Whether the petitioner is entitled to holiday pay?

6. Whether the petitioner is entitled to sick leave pay?

7. Whether the respondents should beheld jointly and severally liable for additional moral and exemplary damages?

8. Whether the interest in accordance with Eastern Shipping should be awarded?

Ruling of The Court

The petition is partly meritorious.

Preliminarily, the Court shall first dispose of the lone procedural issue. The respondents argue thatthe August 28, 2009 NLRC Resolution was already final and executory and could no longer be modified as the petitioner belatedly filed his motion for reconsideration thereto. In the same vein, they aver that the April 21,2009 LA Order was also final and executory considering that petitioner’s motion ad cautelam/appeal was not seasonably filed. The petitioner counters that his pleadings were timely filed because the aforementioned NLRC Resolution and LA Order were not duly received by an authorized representative.

It appears that the respondents raised this issue before the NLRC and the CA. The lower courts, nonetheless, ruled on the merits of the assailed pleadings of the petitioner. The lower courts, thus, gave credence to the petitioner’s argument that the notices were not received by an authorized representative. The Court sees no reason to deviate from their findings. In any case, this issue is a question of fact which is beyond the Court’s ambit of review under Rule 45 of the Rules of Court, considering that a resolution of the issue would require a review of the evidence presented in connection therewith.

The Court now moves on to the substantive issues.

Backwages

It is beyond question that Lim was illegally dismissed by HMR. All that remains to be settled is the exact amount owing to petitioner as an illegally dismissed employee.

Article 279 of the Labor Code is clear in providing that an illegally dismissed employee is entitled to his full backwages computed from the time his compensation was withheld up to the time of his actual reinstatement, to wit:

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

In accordance with this provision, the body of the April 11, 2003 NLRC decision expressly recognizes that Lim is entitled to his full backwages until his actual reinstatement, as follows:

In fine, the act of complainant-appellant herein, do not constitute a serious misconduct as tojustify his dismissal. As such, he is, thus, entitled to reinstatement to his former position as Assistant Technical Manager, unless such position no longer exists, in which case, he shall be given a substantially equivalent position without loss of seniority rights. He is, likewise, entitled to his full backwages from the time he was illegally dismissed until his actual reinstatement.20 [Emphasis and underscoring supplied]

Nowhere in the body of the NLRC decision was there a discussion restricting the award of backwages. Nonetheless, the falloof the said decision limited the computation of the backwages up to its promulgation on April 11, 2003, in this wise:

WHEREFORE, premises considered, judgment is hereby rendered declaring the appealed Decision REVERSED and SET ASIDE; that the dismissal of herein complainant-appellant was illegal and the respondent-appellee Company is hereby ordered to reinstate immediately the said employee to his former position without loss of seniority rights and other privileges. Furthermore, the respondent-appellee Company is hereby ordered to pay the complainant-appellant his full backwages, reckoned from his dismissal on February 3, 2001 up to the promulgation of this Decision.

All other claims are hereby DISMISSED for lack of merit.

The Computation and Research Unit (CRU) of this Commission is hereby directed tocompute the backwages and the 10% annual increase from 1998 to 2000.

SO ORDERED.21

[Emphasis and underscoring supplied]

Considering that the judgmentdecreeing the computation of backwages up to the promulgation of the NLRC decision has long become final and executory, the key question is whether a recomputation of backwages up to the date of the actual reinstatement of Lim would violate the principle of immutability of judgments.

The rule is that it is the dispositive portion that categorically states the rights and obligations of the parties tothe dispute as against each other. Thus, it is the dispositive portion that must be enforced to ensure the validity of the execution. That a judgment should be implemented according to the terms of its dispositive portion is a long and well-established rule. A companion to this rule is the principle of immutability of final judgments. Save for recognized exceptions, a final judgment may no longer be altered, amended or modified, even if the alteration, amendment or modification is meant to correct what is perceived to be an erroneous conclusion of fact or law and regardless of what court renders it. Any attempt to insert, change or add matters not clearly contemplated inthe dispositive portion violates the rule on immutability of judgments.22

The cases of Session Delights Ice Cream and Fast Foods v. Court of Appeals (Session Delights)23 and Nacar v. Gallery Frames (Nacar)24 shed much light on the apparent discrepancy inthe case at hand. As in the present case, both involve labor cases findingthat the employees therein were illegally dismissed. At the LA level,in awarding backwages, a precise computation was provided from the time of illegal dismissal up to the promulgation of the LA decision.25 Additionally, the dispositive portion of the LA decision in Nacaralso made a declaration that separation pay in lieu of reinstatement be "computed only up to promulgation of this decision."26The LA decisions in these cases were affirmed by the NLRC and the CA and subsequently became final and executory. At the execution stage, the computation of backwages came into issue.

Session Delights made clear that a case for illegal dismissal is one that relates to status, where the decision or ruling is essentially declaratory of the status and of the rights, obligations and monetary consequences that flow from the declared status, such as, the payment of separation pay and backwages. In execution, what is primarily implemented is the declaratory finding on the status and the rights and obligations of the parties therein; the arising monetary consequences from the declaration only follow as component of the parties’ rights and obligations.27 The precise amount of backwages should ideally be stated in the final decision; otherwise, the matter is for handling and computation by the LA of origin as the labor official charged with the implementation of decisions before the NLRC.28

The Court’s disquisition in Session Delights, also referenced with approval in Nacar, is enlightening:

A source of misunderstanding in implementing the final decision in this case proceeds from the way the original labor arbiter framed his decision. The decision consists essentially of two parts. The first is that part of the decision that cannot now be disputed because it has been confirmed with finality. This is the finding of the illegality of the dismissal and the awards of separation pay in lieu of reinstatement, backwages, attorney’s fees, and legal interests.

The secondpart is the computation of the awards made. On its face, the computation the labor arbiter made shows that it was time-bound as can be seen from the figures used in the computation. This part, being merely a computation of what the first part of the decision established and declared, can, by its nature, be recomputed. This is the part, too, that the petitioner now posits should no longer be re-computed because the computation is already in the labor arbiter’s decision that the CA had affirmed. The public and private respondents, onthe other hand, posit that a recomputation is necessary because the relief in an illegal dismissal decision goes all the way up to reinstatement if reinstatement is to be made, or up to the finality of the decision, if separation pay is to be given in lieu of reinstatement.

x x x

Clearly implied from this original computation is its currency up to the finality of the labor arbiter’s decision. As we noted above, this implication is apparent from the terms of the computation itself, and no question would have arisen had the parties terminated the case and implemented the decision at that point.

However, the petitioner disagreed with the labor arbiter’s findings on all counts – i.e., on the finding of illegality as well as on all the consequent awards made. Hence, the petitioner appealed the case to the NLRC which, in turn, affirmed the labor arbiter’s decision. By law, the NLRC decision is final, reviewable only by the CA on jurisdictional grounds.

The petitioner appropriately sought to nullify the NLRC decision on jurisdictional grounds through a timely filed Rule 65 petition for certiorari. The CA decision, finding that NLRC exceeded its authority in affirming the payment of 13th month pay and indemnity, lapsed to finalityand was subsequently returned to the labor arbiter of origin for execution.

It was at this point that the present case arose. Focusing on the core illegal dismissal portion of the original labor arbiter’s decision, the implementing labor arbiter ordered the award recomputed; he apparently read the figures originally ordered to be paid to be the computation due had the case been terminated and implemented at the labor arbiter’s level. Thus, the labor arbiter recomputed the award to include the separation pay and the backwages due up to the finality of the CA decision that fully terminated the case on the merits. Unfortunately, the labor arbiter’s approved computation went beyond the finality of the CA decision (July 29, 2003) and included as well the payment for awards the final CA decision had deleted – specifically, the proportionate 13th month pay and the indemnity awards. Hence, the CA issued the decision now questioned in the present petition.

We see no error in the CA decision confirming that a recomputation is necessary as it essentially considered the labor arbiter’s original decision in accordance with its basic component parts as we discussed above. To reiterate, the first part contains the finding of illegality and its monetary consequences; the second part is the computation of the awards or monetary consequences of the illegal dismissal, computed as of the time of the labor arbiter’s original decision.

To illustrate these points, had the case involved a pure money claim for a specific sum (e.g. salary for a specific period) or a specific benefit (e.g. 13th month pay for a specific year) made by a former employee, the labor arbiter’s computation would admittedly have continuing currency because the sum is specific and any variation may only be on the interests that may run from the finality of the decision ordering the payment of the specific sum.

In contrast with a ruling on a specific pure money claim, is a claim that relates to status (as in this case, where the claim is the legality of the termination of the employment relationship). In this type of cases, the decision or ruling is essentially declaratory of the status and of the rights, obligations and monetary consequences that flow from the declared status (in this case, the payment of separation pay and backwages and attorney’s fees when illegal dismissal is found). When this type of decision is executed, what is primarily implemented is the declaratory finding on the status and the rights and obligations of the parties therein; the arising monetary consequences from the declaration only follow as component of the parties’ rights and obligations.

In the present case, the CA confirmed that indeed an illegal dismissal had taken place, so that separation pay in lieu of reinstatement and backwages should be paid. How much that separation pay would be, would ideally be stated in the final CA decision; if not, the matter is for handling and computation by the labor arbiter of origin as the labor official charged with the implementation of decisions before the NLRC.

x x x

Consistent with what we discussed above, we hold that under the terms of the decision under execution, no essential change is made by a re-computation as this step is a necessary consequence that flows

from the nature of the illegality of dismissal declared in that decision. A re-computation (or an original computation, if no previous computation has been made) is a partof the law – specifically, Article 279 of the Labor Code and the established jurisprudence on this provision – that is read into the decision. By the nature of an illegal dismissal case, the reliefs continue toadd on until full satisfaction, as expressed under Article 279 of the Labor Code. The re-computation of the consequences of illegal dismissal upon execution of the decision does not constitute an alteration or amendment of the final decision being implemented. The illegal dismissal ruling stands; only the computation of monetary consequences of this dismissal is affected and this is not a violation of the principle of immutability of final judgments.

x x x

That the amount the petitioner shall now pay has greatly increased is a consequence that it cannot avoid as itis the risk that it ran when it continued to seek recourses against the labor arbiter’s decision.Article 279 provides for the consequences of illegal dismissal in no uncertain terms, qualified only by jurisprudence in its interpretation of when separationpay in lieu of reinstatement is allowed. When that happens, the finality of the illegal dismissal decision becomes the reckoning point instead of the reinstatement that the law decrees. In allowing separation pay, the final decision effectively declares that the employment relationship ended so that separation pay and backwages are to be computed up to that point. x x x29

[Emphases and underscoring supplied]

Although the NLRC decision in the present case did not provide a precise computation, the principles enunciated in Session Delightsstill equally apply. In Session Delights, the computation of the LA was found to be time-bound, which implied the currency of the computation up to the finality of the LA decision. In the present case, the NLRC declared backwages to be reckoned "up to the promulgation" of its decision, which was an express declaration of the currency of the computation up to the finality of the NLRC decision, especially considering that HMR was "ordered to reinstate immediately" petitioner Lim. The decisions in both cases are premised on their immediate execution, in that no question would have arisen had the parties terminated the case and the decision implemented at that point.30

As discussed above, no essential change is being made by a recomputation because such is a necessary consequence which flows from the nature of the illegality of the dismissal. To reiterate, a recomputation, or an original computation, if no previous computation was made, as in the present case, is a part of the law that is read into the decision, namely, Article 279 of the Labor Code and established jurisprudence.31 Article 279 provides for the consequences of illegal dismissal, one of which is the payment of full backwages until actual reinstatement, qualified only by jurisprudence whenseparation pay in lieu of reinstatement is allowed, where the finality of the illegal dismissal decision instead becomes the reckoning point.32

The nature of an illegal dismissal case requires that backwages continue to add on until full satisfaction.The computation required to reflect full satisfaction does not constitute an alteration or amendment of the final decision being implemented as the illegal dismissal ruling stands. Thus, in the present case, a computation of backwages until actual reinstatement is not a violation of the principle of immutability of final judgments.33

The respondents aver that the recoverable backwages cannot go beyond December 26, 2007, the date HMR offered to reinstate Lim, who allegedly refused to be reinstated and abandoned his job.

HMR sent the petitioner a letter,34 dated December 22, 2007, directing him to report for work on December 26,2007, with an offer of separation pay in the amount of P150,000.00 in lieu of reinstatement which he could avail of not later than December26, 2007. Lim replied in a letter,35 dated December 24, 2007, requesting for a meeting in January 2008, considering that his counsel was out of the country; that the NLRC was still in the process of computing the amount of the award which was necessary to consider the offer of separation pay; and that a writ of execution had not yet been issued. HMR never responded to the petitioner’s request, and up to the present, the latter has yet to be reinstated.

From the above, it is apparent that the petitioner cannot be deemed to have refused reinstatement or to have abandoned his job. HMR’s offer of reinstatement appeared superficial and insincere considering that it never replied to the petitioner’s letter. It did not make any further attempt to reinstate the petitioner either. The recoverable backwages, thus, continue to run, and must be reckoned up until the petitioner’s actual reinstatement.

10% annual salary increase

Petitioner Lim argues that the LA completely failed to include in its computation the unpaid 10% annual increase in his salary from 1998 to 2000, as stated in the falloof the NLRC decision, and the 10% salary increase per annumin backwages until actual reinstatement.

The pertinent portion of the falloof the NLRC decision reads:

The Computation and Research Unit (CRU) of this Commission is hereby directed tocompute the backwages and the 10% annual increase from 1998 to 2000.36

In awarding the 10% annual salary increase from 1998 to 2000, the body of the NLRC decision explained:

We see no reason, therefore, why complainant-appellant herein, being a regular employee, should be deprived of what he is entitled to under Company policy. As such, he should be paid his unpaid 10% annual increase for the years 1998, 1999 and 2000.37

[Emphasis and underscoring supplied]

Lim is, thus, entitled to be paid his unpaid 10% annual salary increase for the years 1998-2000. A reading of the assailed order of the LA would reveal that it made the following adjustment in connection to the 10% annual salary increase:

2) that the base rate applicable is his salary as of February 3, 2003 inclusive of the ten percent adjustment due at the time, or P12,500.00 plus ten percent (10%) or P13,750.00;38

This is incorrect on two counts. First, the LA failed to include the actual unpaid 10% annual increase from 1998-2000. The first computation of the LA,39 as well as the suggested computation of respondent HMR itself,40 gave the correct computation ofthe unpaid salary increase from 1998-2000, as follows:

Year Rate (P) Increase Monthly Increase (P)

Annual Increase (P)

1998 12,500.00 10% 1,250.00 15,000.00

1999 13,750.00 10% 1,375.00 16,500.00

2000 15,125.00 10% 1,512.50 18,150.00

Total 49,650.00

Second, based on the above, the applicable base rate for the computation of the petitioner’s backwages from the time he was illegally dismissed on February 3, 2001 should be P15,125.00. Lim cannot, however, insist that the 10% annual salary increase be applied to his backwages past the year 2000 up to his actual reinstatement. In Equitable Banking Corporation v. Sadac,41 the Court held that although Article 279 of the Labor Code mandates that an employee’s full backwages be inclusive of allowances and other benefits, salary increases cannot be interpreted as either an allowance or a benefit, as allowances and benefits are separate from salary, while a salary increase is added to salary as an increment thereto.42 It was further held therein that the base figure to be used in the computation of backwages was pegged at the wage rate at the time of the employee’s dismissal, inclusive of regular allowances that the employee had been receiving such as the emergency living allowances and the

13th month pay mandated by law. The award of salary differentials was not allowed, the rule being that upon reinstatement, illegally dismissed employees were to be paid their backwages without deduction and qualification as to any wage increases orother benefits that might have been received by their co-workerswho were not dismissed.43

It must be noted that the NLRC did not err in awarding the unpaid salary increase for the years 1998-2000 as such did not constitute backwages as a consequence of the petitioner’s illegal dismissal, but was earned and owing to the petitioner before he was illegally terminated.

Holiday pay

The respondents insist that the base pay of Lim is already inclusive of holiday pay. The records, however, are insufficient to determine whether holiday pay is indeed included in the petitioner’s base pay.

Under Article 94 of the Labor Code, every worker shall be paid his regular daily wage during regular holidays. Thus, anemployee must receive his daily wage even if he does not work on a regular holiday. The purpose of holiday pay is to prevent diminution ofthe monthly income of workers on account of work interruptions declared by the State.44

Whether or not holiday pay is included in the monthly salary of an employee, may be gleaned from the divisors used by the company in the computation of overtime pay and employees’ absences. To illustrate, if all nonworking days are paid, the divisor ofthe monthly salary to obtain daily rate should be 365. If nonworking days are not paid, the divisor is 251, which is a result of subtracting all Saturdays, Sundays, and the ten legal holidays.45 Hence, if the petitioner’s base pay does not yet include holiday pay, it must be added tohis monetary award.

This matter is clearly for the LA to determine being the labor official charged with the implementation of decision46and concomitant computations.

Sick leave pay

The LA found that that the petitioner was not entitled to have his sick leaves converted to cash because such was subject to the discretion of management in accordance with company policy. The pertinent provision on sick leave conversion in the Personnel Policy handbook of HMR reads:

d) Accumulated days of unused sick leave may be converted into cash, time-off or vacation allowance at the end of the calendar year, any of these upon the discretion of the General Manager.47

It is clear from the above that the provision does not give HMR the absolute discretion to decide whether ornot to grant sick leave conversion. The discretion of the general manager only pertains to what form the sick leave conversion may take, and not to whether or not sick leave conversion will be granted at all. An HMR employee is, therefore, entitled to conversion of unused sick leave, subject only to the general manager’sdiscretion as to the form it will take, namely – cash,time-off, or vacation allowance. Considering that the conversion optionsof time-off and vacation allowance are no longer feasible because the petitioner was illegally dismissed, he is now entitled to have his unused sick leaves converted to cash.

Additional moral and exemplary damages

Petitioner Lim prays that the respondents be made to pay, jointly and severally, additional moral and exemplary damages on account of their bad faith in delaying the payment and his reinstatement.

There appears, however, no basis to award additional damages considering that the respondents simply availed of the remedies available to them under the law in good faith.

Legal interest

The petitioner argues that legal interest in accordance with the case of Eastern Shippingmust also be awarded, as follows:

1. the unpaid 10% annual increasefrom 1998 to 2000 shall earn a 6% interest annually starting 1998 until October 23, 2003 (Entry of Judgment of the April 11, 2003 NLRC decision); and 12% legal interest per annumthereafter until the same is fully paid; and

2. the backwages, 13th month pay as well asunpaid vacation and sick leaves shall earn a 6% per annuminterest starting at the time of petitioner’s illegal dismissal on February 3, 2001 until October 23, 2003; and 12% legal interest per annumthereafter until the same is fully paid.48

The respondents counter that interest may no longer be added considering that such was not included in the any of the courts’ decisions before the judgment became final and executory.

In both Session Delightsand Nacar, no interest was expressly awarded before the judgments became final and executory, yet in both cases, the Court, nonetheless, awarded legal interest. Session Delightsexplained that the decision had become a judgment for money from which another consequence flowed, namely, the payment of interest in case of delay in accordance with Eastern Shipping Lines v. Court of Appeals. It was held therein that when the judgment of the court awarding a sum of money became final and executory, the rateof legal interest, should be 12% per annumfrom finality until satisfaction.49

The rules on legal interest in Eastern Shippinghave, however, been recently modified by Nacar in accordance with Bangko Sentral ng Pilipinas Monetary Board (BSP-MB) Circular No. 799, which became effective on July 1, 2013. Pertinently, it amended the rate of legal interest in judgments from 12% to 6% per annum, with the qualification that the new rate be applied prospectively. Thus, the 12% per annumlegal interest in judgments under Eastern Shippingshall apply only until June 30, 2013, and the new rate of 6% per annumshall be applied from July 1, 2013 onwards.50

Petitioner also prays that he be awarded interest at a rate of 6% per annumon the amounts awarded from the time they became legally due him until entry of judgment, presumably under the second paragraph in Eastern Shipping (which was not modified by Nacar), which states:

2. When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages awarded may be imposed at the discretion of the courtat the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated claims or damages except when or until the demand can be established with reasonable certainty. Accordingly, where the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code) but when such certainty cannot be so reasonably established at the time the demand is made, the interest shall begin to run only from the date the judgment of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained). The actual base for the computation of legal interest shall, in any case, be on the amount finally adjudged.51

[Emphasis supplied]

It is plain from the above that the interest of 6% per annumfor obligations not constituting a loan or forbearance of money is one that may be imposed at the discretion of the court. This form of interest is not mandatory but discretionary in nature and therefore, not necessarily owing to the petitioner in the present case.

WHEREFORE, the petition is PARTLY GRANTED, the March 30, 2012 Decision of the Court of Appeals, in CA-G.R. SP No. 112708 is REVERSED and SET ASIDE.1awp++i1 Respondent HMR Philippines, Inc. is ORDERED to PAY petitioner Conrado A. Lim:

(1) back wages computed from the time the petitioner was illegally dismissed on February 3, 2001 up to his actual reinstatement, with a monthly base pay in the amount of P15,125.00;

(2) the unpaid 10% annual salary increase from 1998-2000 in the amount of P49,650.00;

(3) 13th monthpay;

(4) vacation pay in accordance with the personnel policy handbook;

(5) the cash value of his unused sick leaves;

(6) holiday pay, provided that the Labor Arbiter finds that such is not yet included in the base pay;

(7) moral damages in the amount of P50,000.00;

(8) exemplary damages in the amount of P20,000.00;

(9) attorney's fees equivalent to 10% of the total amount due to the petitioner; and

(10) legal interest of 12% per annum of the total monetary awards computed from July 27, 2007 to June 30, 2013, and 6% per annum from July 1, 2013 until their full satisfaction.

The Labor Arbiter is ORDERED to compute the total monetary benefits awarded and due the petitioner in accordance with this decision.1âwphi1

SO ORDERED.

[G.R. No. 132837. June 28, 2001]

JO CINEMA CORPORATION and MICHAEL JO, petitioners, vs. LOLITA C. ABELLANA and NATIONAL LABOR RELATIONS COMMISSION, respondents.

D E C I S I O N

BUENA, J.:

The Decision[1] dated November 26, 1997 of respondent National Labor Relations Commission (NLRC) in NLRC Case No. V-0170-97, is being impugned in this present petition for certiorari. The assailed decision affirmed the findings of the Labor Arbiter that private respondent Lolita Abellana was illegally dismissed from the service and ordered petitioner to pay complainant the amount of P115,420.79 representing separation pay and full backwages.

Petitioner is a duly organized corporation engaged in the movie business. Sometime in September 1997, private respondent was employed as theater porter.

On November 11, 1994, petitioner issued a memorandum[2] reminding all ticket sellers not to encash any check from their cash collections and to turn-over all cash collections to the petitioner.

On August 4, 5, 6 and 7, 1995, private respondent encashed, on behalf of her friend Luzviminda Silva, four (4) Banco del Norte Checks[3] amounting to P66,000.00, with Emperatriz Ynrig, ticket seller of petitioner, assigned at Ultra Vistarama and Seven Arts Theater. When the said checks were deposited to the account of the petitioner, they were dishonored for insufficiency of funds.

Consequently, on August 15, 1995, private respondent was sent a show-cause memorandum requiring her to explain why no disciplinary action should be taken against her relative to the checks in question,[4] which she failed to comply. She was likewise placed under preventive suspension for a period of twenty (20) days or until September 4, 1995.[5]

On August 22, 1995, petitioner directed private respondent to appear and present her side at the administrative investigation scheduled on August 26, 1995.[6] Private respondent attended the said investigation where she admitted to have encashed the checks without petitioners permission.[7]

While the case was being deliberated upon by the petitioners, private respondent on September 1, 1995, filed a pro forma complaint[8] for illegal dismissal and non-payment of benefits before the Regional Arbitration Board No. VII of the NLRC, Cebu City, which was docketed as RAB-VII-09-0938-95. Private respondent claims that on the day she was suspended, Atty. Tito Pintor, Jr., original counsel for petitioners, summoned her to his office and was advised to resign and pay the bounced checks amount which respondent vehemently protested. On that very same day she was told that she was dismissed from the service.[9]

Petitioners denied the allegations and argued that private respondent was not dismissed but merely preventively suspended for twenty (20) days. It added that even assuming that private respondent was dismissed, the dismissal was for a valid cause. Private respondent violated a company policy prohibiting the encashment of checks without her employers permission.[10]

On February 15, 1997, Labor Arbiter Dominador A. Almirante rendered judgment in favor of private respondent, the dispositive portion of which reads:

WHEREFORE, premises considered, judgment is hereby rendered ordering respondent Jo Cinema Corporation to pay complainant the total amount of One Hundred Fifteen Thousand Four Hundred Twenty Pesos and 79/100 (P115,420.79) representing separation pay and full backwages, as hereinbelow computed by our Labor Arbitration Associate, to wit:

C O M P U T A T I O N

I.- Separation Pay: Sept. 1979- Aug. 15, 1995

(15 yrs. 11 mos. & 15 days)

P119.60/day x 26 days =

P3,109.60/mo. x 16 yrs.--------------- P49,753.60

II.- Backwages: Aug. 15, 1995- Feb. 15, 1997

(1 yr. & 6 mos.)

a Aug. 15, 1995 to Dec. 31, 1995 = 4 mos. and 15 days

P3,109.60/mo. x 4mos. ---------- P12,438.40

P 119.60/day x 15 days ------ 14,232.40

b Jan. 1/96- June 30/96

P131.00/day x 26 days =

P 3,406.00/mo. x 6 mos. --------- 20,436.00

c July 1/96 Sept. 30/96

P136.00/day x 26 days =

P3,536.00/mo. x 3 mos. ---------- 10,608.00

d Oct. 1/96 Feb. 15, 1997

P141.00/day x 26 =

P3,666.00/mo. x 4 = P14,664.00

P141.00/day x 15/day = 2,115.00 -- 16,779.00

Total Salary (backwages) ----------- P62,055.40

SERVICE INCENTIVE PAY: 1 YEAR

P141.00/day x 5 days ---------- P705.00

13th MONTH PAY: Aug. 15, 1995- Feb. 15, 1997

a Aug. 15/95 Dec. 31/95

(4 mos. & 15 days)

P3,109.60/yr. 12 =

P283.87/mo. x 6 mos. --- 1,036.52

b Jan. 1/96- June 30/96 (6 mos.)

P3,406.00/yr. 12 =

P 259.13/mo. x 4 mos. --------- 1,703.04

c July 1/96 Sept. 30/96

P3,536.00/mo. 12 =

P 294.66/mo. x 3 mos. ---------- 883.98

d Oct. 1/96 Feb. 15, 1997 =

(4 mos. & 15 days)

P3,666.00/yr. 12 =

P305.50/mo. x 4 mos. -------------- P1,222.00

P 11.75/day x 15 days------------- 176.25

P1,398.25

Total 13th month pay -------------------------- 5,021.79

Total Backwages: -------------------------------- P115,420.79

SO ORDERED.[11]

In ruling for the private respondent, the labor arbiter ratiocinated in this wise:

No matter if complainant was not actually told that she was dismissed from the service the environmental circumstances of this case would establish that at the very least complainant was already constructively dismissed at the time she filed her complaint on September 1, 1995. While there may be no outright or open termination from the service of the complainant there is no reason to believe that respondent did not want her to continue in the service anymore. Such is the obiter in Valiant Machinery and Metal Corporation vs. NLRC, G.R. No. 105677, January 25, 1996.

xxx xxx xxx xxx

In the case at bench, the evidence on record shows that respondents were decided on making complainant pay the face value of the four (4) checks of Luzviminda Silva that bounced totaling the amount ofP66,000.00. For the complainant to continue in the service with respondents under the prevailing situation would be impossible, unreasonable and unlikely. Hence, she was compelled to file this case.[12]

On appeal, respondent NLRC affirmed the aforesaid decision notwithstanding its findings that at the time the complaint was instituted, private respondent has no cause of action against petitioner as she was merely placed on preventive suspension.[13] Worse still is its affirmance of the benefits awarded by the Labor Arbiter to private respondent based on obviously erroneous computations. Petitioner moved for a reconsideration but was denied on February12, 1998.[14]

Petitioners now come to this Court arguing that the NLRC committed grave abuse of discretion

I

.IN HOLDING THAT THE RESPONDENT WAS ILLEGALLY DISMISSED DESPITE OF ITS OWN FINDING THAT RESPONDENT WAS ONLY PLACED UNDER PREVENTIVE SUSPENSION;

II

.IN GRANTING FULL SEPARATION PAY AND BACKWAGES TO THE RESPONDENT WHO IS NOT IN ANYWAY FAULTLESS;

III

.IN NOT HOLDING THAT THERE IS SUFFICIENT BASIS FOR THE COMPANY TO LOSE TRUST AND CONFIDENCE WITH THE RESPONDENT ASSUMING THAT THE RESPONDENT WAS DISMISSED;

IV

.IN NOT DEDUCTING FROM THE SEPARATION PAY AND BACKWAGES ASSUMING THAT RESPONDENT IS ENTITLED THERETO, HER OUTSTANDING VALE AND THE AMOUNT SHE FRAUDULENTLY OBTAINED FROM THE COMPANY.

The first issue to which we shall first address ourselves, and which is really the vital point in the case, is whether or not private respondent was illegally dismissed from the service.

Dismissal connotes a permanent severance or complete separation of the worker from the service on the initiative of the employer regardless of the reasons therefor.[15]

Based on the aforesaid definition, it is clear that private respondent was not dismissed from the service but was merely placed under preventive suspension. Her suspension cannot be construed as a dismissal since the cessation from work is only temporary. Moreover, private respondent could not have been dismissed on August 15, 1995 because a formal investigation was still being conducted. In fact, she even attended said investigation on August 26, 1995 where she admitted having encashed the checks. If she was indeed dismissed on said date, as she claims, petitioners would not have continued with the investigation. Undoubtedly, private respondent pre-empted the outcome of the investigation by filing a complaint for illegal dismissal. The observation of respondent NLRC is worth stressing:

x x x (F)rom the foregoing circumstance, We could not readily decipher whether the complainant had pre-empted the respondents dismissing her, among others, or is it the other way around?

It would seem from the foregoing that at the time she filed the complaint, there is (sic) as yet no cause of action against the respondent a she was merely placed on preventive suspension. And, looking at the evidence submitted by the respondents at first glance, the same would be sufficient to establish the just and legal ground for the complainants termination considering that the position paper of the complainant is bereft of any statement of factual circumstances relative to her alleged dismissal.[16] (Underscoring Supplied)

The findings of the labor arbiter that private respondent was constructively dismissed by the petitioner is likewise erroneous.

A constructive discharge is defined as a quitting because continued employment is rendered impossible, unreasonable or unlikely; as an offer involving demotion in rank and a diminution in pay.[17]

Private respondent was not demoted nor suffered any diminution of pay, neither was she prevented from returning for work. As discussed earlier, private respondent was suspended from work for twenty (20) days for violating company rules. Petitioners stance to oblige private respondent to pay the amount of the checks is just fair and reasonable considering that she indorsed the subject checks. As an endorser, private respondent undertook to pay the amount of the dishonored checks.[18] The payment of said amount is not discriminatory, impossible, and unreasonable to foreclose any choice on the part of the private respondent to forego her continued employment. It was private respondent who signified her intention not to report for work when she filed the instant case.

Having thus determined that private respondent was not dismissed from the service, the payment of separation pay and backwages are not in order. It must be emphasized that the right of an employee

to demand for separation pay and backwages is always premised on the fact that the employee was terminated either legally or illegally. The award of backwages belongs to an illegally dismissed employee by direct provision of law and it is awarded on grounds of equity for earnings which a worker or employee has lost due to illegal dismissal. Separation pay, on the other hand, is awarded as an alternative to illegally dismissed employees where reinstatement is no longer possible.[19]

In fine, based on the foregoing discussion, it is clear that respondent NLRC gravely abused its discretion when it affirmed the decision of the labor arbiter.

WHEREFORE, the assailed decision of respondent National Labor Relations Commission is hereby REVERSED and SET ASIDE.

SO ORDERED.

[G.R. No. 143204. June 26, 2001]

HYATT TAXI SERVICES INC., petitioner, vs. RUSTOM M. CATINOY, respondent.

D E C I S I O N

GONZAGA-REYES, J.:

Before us is a petition for review under Rule 45 of the Rules of Court of the Decision[1] of the Court of Appeals dated December 27, 1999 in the case entitled RUSTOM M. CATINOY VS. HYATT TAXI SERVICES INC., HYATT TAXI EMPLOYEE ASSOCIATION AND/OR MR. JAIME DUBLIN that ruled against herein petitioner Hyatt Taxi Services, Inc. (hereafter petitioner) and of the Resolution dated May 11, 2000 denying the Motion for Reconsideration of petitioner.

The assailed Decision held that the preventive suspension of respondent Rustom M. Catinoy (hereafter respondent) by petitioner was without cause and without due process of law, and that petitioner constructively dismissed respondent.

The facts/antecedents of this case as found by the Labor Arbiter, NLRC and Court of Appeals are as follows:

Complainant was hired on October 10, 1992 as a taxi driver by the Respondent Hyatt Taxi Services, Inc.

Complainant is also a member and officer (Secretary) of Respondent, Hyatt Taxi Employees Association, a legitimate labor organization registered with the Department of Labor and Employment and is the exclusive bargaining representative of all taxi drivers of Respondent Hyatt Taxi Service, Inc. Respondent Jaime Dublin is the President and Chairman of the Board of the Respondent association.

As a taxi driver, complainant works every other day for 15 days in a month earning P800.00 more or less a day after remitting to the respondent company his boundary (P650.00/day) during carbarn time 1:00 a.m. Being the Secretary of the Union/association, complainant keeps all the records and documents of the association in the drawer of his desk at the Union Office which is located inside the premises of Respondent company.

On August 21, 1995 at about past 10:00 a.m., complainant went inside the union office and to his surprise found his drawer to have been forcibly opened. Since he saw the acting President of the Union, Mr. Tomas Saturnino inside the office together with two rice suppliers namely Melencio Reyes and Ms. Rosalinda Balahan, complainant asked Saturnino who opened his drawer. Saturnino replied that he was the one who forcibly opened the drawer to retrieve some documents particularly the list of union members. An argument ensued and complainant even reminded Saturnino that he should respect the rights and functions of other officers of the association. Saturnino then approached the complainant and shoved him. Complainant retaliated with fist blow but it failed to hit Saturnino and the latter hit him twice in (sic) the face causing one of his tooth (sic) to fall. The aggression of Saturnino was only interrupted when the Operations Manager of the respondent company (sic) Mr. Caraig (sic) intervened and told him (Saturnino) to stop. Complainant was brought to the hospital by Ms. Balahan and Mr. Reyes due to the bleeding that occurred due to the loss of his tooth. After securing medical treatment, complainant on the same day filed a criminal complaint for physical injuries with the fiscals Office and Saturnino was arrested by the police for investigation (Annex A of complainants position paper).

On August 24, 1995 about 25 union members requested the chairman of the Board of the Association to suspend the complainant and Saturnino for engaging in a fist fight (sic) since both are officers of the union which should be models of discipline for the rank and file (Annex A of Respondent Associations position paper) employees.

On August 25, Jaime Dublin, Chairman of the Board of the Association, acting on the letter of some members of the association, issued a memorandum (Annex E complainant position paper) to the Operation Manager of the Respondent company, Mr. H. Caraig (sic) stating the following:

This is in connection with the fist fighting (sic) incident between Mr. Tomas Saturnino and Mr. Rustom Catinoy, President and Secretary respectively, Hyatt Taxi Drivers Association.

As per initial investigation conducted by the committee itself, both officer (sic) have violated the Companys Rules and Regulations and likewise, the Union Policy constitution and By-Laws, Article 15 Section 1, e.i., Impeachment.

The committee further decided the indefinite suspension of the two officers pending completion of the Committees investigation. The decision was approved by the Executive Board.

So, therefore, the committee is requesting your office to implement our recommendation/decision at the soonest possible time.

On August 26, 1995, the Asst. Vice-President of the Respondent company (sic) Melchor Acosta, Jr. (sic) issued a memorandum preventively suspending for 30 days the services of the complainant and Saturnino pending investigation in response to the recommendation of the Chairman of the Board of the Association.

x x x x x x

Complainant aggrieved by the preventive suspension since he was not the aggressor, filed a complaint for illegal suspension, unpaid wages, and damages against both the association-union and management on August 28, 1995 before the National Labor Relations Commission.

After the lapse of his 30 days preventive suspension, complainant reported for work but he was not allowed to resume his duties as a taxi driver allegedly, since he is pursuing the criminal complainant for physical injuries against Saturnino, the associations President and the complaint for the illegal suspension with the National Labor Relations Commission.

On October 12, 1995, since there was no response from Respondent company, complainant decided to amend his complaint to include constructive dismissal as an additional cause of action since he was not allowed to resume his employment after the lapse of his preventive suspension.[2]

On September 19, 1997, the Labor Arbiter rendered a Decision finding petitioner guilty of illegal preventive suspension, requiring it to pay the wage equivalent of the suspension, and further finding petitioner guilty of illegal constructive dismissal, ordering petitioner to reinstate respondent and to pay him backwages and attorneys fees.

Petitioner and the Union Association then filed a Joint Memorandum of Appeal before the National Labor Relations Commission (NLRC).

On June 26, 1998, the NLRC issued a Decision affirming the decision of the Arbitration Branch. The dispositive portion of the Decision reads:

WHEREFORE, premises considered judgment is hereby rendered:

1. Finding Respondent Hyatt Taxi Services, Inc., guilty of illegal constructive dismissal;

2. Finding Respondents Hyatt Taxi Services, Inc., and Hyatt Taxi Employees Association and/or Jaime Dublin jointly and severally liable for illegal preventive suspension;

2. Ordering Respondents Hyatt Taxi Services, Inc., and Hyatt Taxi Employees Association and/or Jaime Dublin jointly and severally liable to pay a months wage due to complainants illegal preventive suspension in the amount of P12,000.00;

3. Ordering Respondents Hyatt Taxi Services, Inc., to pay complainants full backwages from the time of his dismissal till actual reinstatement in the amount of P276,000.00 (computed till promulgation only);

4. Ordering Respondents Hyatt Taxi Services, Inc. to reinstate complainant to his former position as taxi driver without loss of seniority rights and privileges immediately upon acknowledgment of this resolution;

5. Ordering Respondent Hyatt Taxi Services, Inc. to pay 10% attorneys fees based on the total judgment award on the illegal dismissal aspect;

6. Ordering the Dismissal of the complaint for damages for lack of merit.

SO ORDERED.[3]

Aggrieved, petitioner filed a Motion for Reconsideration urging the NLRC to review the finding of facts of the Arbitration Branch.

On October 30, 1998, the NLRC acting on said Motion for Reconsideration, issued a Decision granting in part the motion. The Decision of the NLRC modified its earlier decision when it deleted the award of backwages on the ground that there was no concrete showing that complainant was constructively dismissed. The dispositive portion of said Decision reads:

WHEREFORE, the Decision rendered on June 26, 1998 is hereby affirmed with modifications by deleting the award of backwages.

Accordingly, respondent is ordered to reinstate complainant without loss of seniority rights. All other aspects are hereby AFFIRMED.

SO ORDERED.[4]

Respondent filed a Partial Motion for Reconsideration of said Decision.

On January 14, 1999, the NLRC issued a Resolution denying respondents Partial Motion for Reconsideration.

On March 30, 1999, respondent filed a Petition for Certiorari with the Court of Appeals that sought the annulment of the NLRC Decision, alleging grave abuse of discretion in the deletion of the award of backwages.

On December 27, 1999, the Court of Appeals issued the now assailed Decision that set aside and annulled the October 30, 1998 Decision of the NLRC and reinstated the earlier decision of the NLRC dated June 25, 1998. The dispositive portion of the Decision reads:

WHEREFORE, judgment is hereby rendered SETTING ASIDE and ANNULLING the Decision of the respondent National Labor Relations Commission dated October 30, 1998 and REINSTATING its Decision dated June 25, 1998.[5]

On January 25, 2000, petitioner filed a Motion for Reconsideration of the Decision of the Court of Appeals.

On May 11, 2000, the Court of Appeals issued the Resolution denying petitioners motion.

Hence, this petition for review that raises these issues:

I

THE COURT OF APPEALS ERRED GREVIOUSLY (sic) WHEN IT ANNULED (sic) AND SET ASIDE THE DECISION OF THE NLRC DISREGARDING THE WELL-ENTRENCHED MAXIM THAT THE FINDINGS OF FACTS OF THE NLRC ARE ACCORDED NOT ONLY WITH RESPECT BUT WITH FINALITY.

II

THE COURT OF APPEALS GREVIOUSLY (sic) ERRED IN NOT CONSIDERING THAT THERE WAS NO ILLEGAL DISMISSAL DISREGARDING THE JURISPRUDENCE APPLICABLE ON SUCH ISSUE.

III

THE COURT OF APPEALS GREVIOUSLY (sic) ERRED WHEN IT INSISTED THAT CATINOY WAS CONSTRUCTIVELY DISMISSED WHEN THE NLRC HAD ALREADY RULED THAT THERE WAS NO CONCRETE SHOWING OF ILLEGAL DISMISSAL.[6]

The main contention of petitioner is that the Court of Appeals should not have disregarded the factual findings of the NLRC to the effect that there was no concrete showing that petitioner had constructively dismissed respondent. Petitioner maintains that while the second decision of the NLRC modified its first decision, it cannot be considered that the NLRC had contradicted itself because a second review is the essence of a motion for reconsideration. A court or quasi-judicial agency like the NLRC, according to petitioner, should be given leeway to correct its findings or decisions via motions for reconsideration. Petitioner then argues that since a second review is the final interoperation of the issues in the case, such decision should be respected and given finality. Petitioner also insists that there was no constructive dismissal in this case because as employer, it did not render impossible, unreasonable or unlikely the continuation of respondents employment. Petitioner points out that even respondent had not alleged any overt act or conduct on the part of petitioner manifesting refusal to admit him back to its employ.

The petition is without merit.

We uphold the ruling of the Court of Appeals that there is no justification for the NLRCs modification of its earlier decision when it deleted the award of backwages that it had previously awarded to respondent. In abandoning its original stance that there was constructive dismissal that would entitle respondent to backwages, the NLRC reasoned that:

Upon second review of the case records and after due consideration of the instant motion, we still maintain the ruling rendered in the case but we are inclined to make certain modifications relative to the issue of constructive dismissal. We have to make clarifications on this aspect by following the jurisprudence on constructive dismissal whereby the Supreme Court held that constructive dismissal consists in the act of quitting because continued employment is rendered impossible, unreasonable or unlikely as in the case of an offer involving demotion in rank and a diminution in pay. Applying the same in the case at bar, complainant did not resign or quit. On the contrary, he pursued his employment when he returned to the respondents officer after his 30 days suspension. Hence, we cannot sustain the respondents claim that complainant abandoned his job. To constitute abandonment of work, it must be accompanied by overt acts unerringly pointing to the fact that the employee does not want to work anymore.

We note that respondent expressed willingness to take back complainant manifesting that the latter was one of those desirable drivers and it has no reason to terminate him. Seemingly there was no meeting of the minds between management and complainant due to the conflict that arose regarding the latters suspension. In view thereof, reinstatement is proper taking into consideration the positions of the management and complainant but we are deleting the award for payment of backwages as there was no concrete showing that complainant was constructively dismissed.[7]

The foregoing rationale of the NLRC is without basis. First, the evidence on record runs counter to the ruling of the NLRC that there was no concrete showing that respondent was constructively dismissed. The factual findings of the Labor Arbiter, which the NLRC initially adopted, show that respondent was not taken back by petitioner after the 30-day suspension period that petitioner imposed on respondent had lapsed. The Labor Arbiter appreciated the following events as badges of constructive dismissal:

Records show that complainant reported for work on September 25, 1995, after the lapse of his suspension but was not able to talk with the operation manager and this was confirmed by the Respondents in their position paper (sic)) On the following day complainant reported again for work but was allegedly told by Mr. Caraig (Operation Manager) that if he will not drop the criminal complainant for physical injuries he filed against Tomas Saturnino and his complaint for illegal suspension with the National Labor Relations Commission he will not be able to resume his employment. In fact, complainant on September 28, 1995 wrote a letter addressed to Respondents Vice-President, pleading that he be allowed to resume his work (see Annex G Complainants position paper). There being no response or reaction complainant amended his complaint to include constructive dismissal.[8]

Clearly, constructive dismissal had already set in when the suspension went beyond the maximum period allowed by law. Section 4, Rule XIV, Book V of the Omnibus Rules provides that preventive suspension cannot be more than the maximum period of 30 days. Hence, we have ruled that after the 30-day period of suspension, the employee must be reinstated to his former position because suspension beyond this maximum period amounts to constructive dismissal.[9]

Petitioner denies that it constructively dismissed respondent and alleges that it was respondent who went AWOL and who refused to resume his work because he could not account for union funds. Both the Labor Arbiter and the NLRC rejected petitioners claims. We affirm the rejection. It bears stressing that in illegal dismissal cases, it is the employer who has the burden of proof.[10] Since petitioner claims that respondent abandoned his work, petitioner has to establish the concurrence of the following: (1) the employees intention to abandon employment and (2) overt acts from which such intention may be inferredas when the employee shows no desire to resume work.[11] Petitioner failed to make out its case of abandonment. Even the NLRC in its modified decision confirmed that there were no overt acts unerringly pointing to the fact that respondent had no intention of returning to work anymore. Also, the fact that respondent filed a complaint against his employer within a reasonable period of time belies abandonment.[12]

Petitioner implores this Court to respect the modified decision of the NLRC. While it is true that the essence of a motion for reconsideration is a second review of the facts, this theory does not apply in the case at bar. As correctly pointed out by the Court of Appeals, the motion for reconsideration of petitioner before the NLRC contained no factual basis that could support the NLRCs change of heart. The evidence as it stands shows that after the lapse of the 30-day suspension period, respondent reported for work but he was not allowed to resume his duties as a taxi driver. To reiterate, from the time that the 30-day suspension period had expired, respondent can be already deemed as constructively dismissed.

Second, the strict adherence by the NLRC to the definition of constructive dismissal is erroneous. Apparently, the NLRC ruled out constructive dismissal in this case mainly because according to it constructive dismissal consists in the act of quitting because continued employment is rendered impossible, unreasonable or unlikely as in the case of an offer involving demotion in rank and a diminution in pay.[13] Based on this definition, the NLRC concluded that since respondent neither resigned nor abandoned his job and the fact that respondent pursued his reinstatement negate constructive dismissal. What makes this conclusion tenuous is the fact that constructive dismissal does not always involve forthright dismissal or diminution in rank, compensation, benefit and privileges.[14] There may be constructive dismissal if an act of clear discrimination, insensibility, or disdain by an employer becomes so unbearable on the part of the employee that it could foreclose any choice by him except to forego his continued employment.[15]

Here, what made it impossible or unacceptable for respondent to resume work was petitioners insistence that respondent first desist from filing his criminal complaint against the acting president of the union and to withdraw his complaint for illegal suspension against petitioner before he could be allowed to return to work. Respondent refused and amended his complaint to include constructive dismissal.Respondents refusal to yield to petitioners conditioned offer to take him back is understandable for respondent has every right not to bargain away his right to prosecute his complaints in exchange for the employment to which he was in the first place rightfully entitled.

In acting on the motion for reconsideration of petitioner, the NLRC gave credence to petitioners contention that petitioners failure to reinstate respondent to his job was merely a result of a miscommunication between the two parties since petitioner was willing to take back respondent as its employee.

We disagree. Instead, we are in full accord with the Court of Appeals that the predicament respondent faced was not just a product of miscommunication, an argument that the NLRC had in fact branded in its earlier decision as a mere afterthought. Respondent had written the assistant vice president of petitioner to complain about his non-reinstatement after the lapse of his preventive suspension. Petitioner failed to reply, and it is actually from petitioners inaction where the supposed miscommunication sprung.

Moreover, from the time that petitioner failed to recall respondent to work after the expiration of the suspension period, taken together with petitioners precondition that respondent withdraw the complaints against the acting president of the union and against petitioner itself, respondents security of tenure was already undermined by petitioner. Petitioners actions undoubtedly constitute constructive dismissal.

WHEREFORE, the Decision of the Court of Appeals dated December 27, 1999 is hereby AFFIRMED.

SO ODERED.

G.R. No. 150488 July 28, 2008

SIEMENS PHILIPPINES, INC. and MR. ERNST H. BEHRENS, Petitioners, vs. ENRICO A. DOMINGO, Respondent.

D E C I S I O N

NACHURA, J.:

On appeal via petition for review on certiorari under Rule 45 of the Rules of Court are the Decision1 and Resolution2 of the Court of Appeals dated March 12, 2001 and October 18, 2001, respectively, in CA-G.R. SP No. 58512 entitled Enrico A. Domingo versus National Labor Relations Commission (First Division) and Siemens Philippines, Inc., and/or Mr. E. H. Behrens.

This is an offshoot of an illegal dismissal case filed by Enrico A. Domingo (Domingo) against Siemens Philippines, Inc., Manila (Siemens Philippines) in July 1995 wherein Domingo got a favorable decision from the Labor Arbiter (LA). On appeal, however, the National Labor Relations Commission (NLRC) reversed the decision of the LA and dismissed the case. Aggrieved, Domingo filed a petition for review on certiorari3 with the Court of Appeals (CA). Finding merit in his petition, the CA reversed the judgment of the NLRC and reinstated the decision of the LA.

The Facts

On March 16, 1987, Domingo signed an Employment Contract with Maschinen & Technik, Inc. (MATEC) as a consultant, with a compensation package of Php8,000.00/month salary and an allowance of Php400.00/month. MATEC is a subsidiary of Siemens Philippines.4 Thereafter, Domingo was given additional work by MATEC, in which he was paid DM1,800.00/month on top of his original salary. The extra work was the result of a contract entered into by MATEC and Siemens Aktiengesellschaft5 (Siemens Germany), whereby MATEC, at the request of Siemens Germany, hired Domingo to handle the operation of OEN OEV TD.6 Siemens Germany is a German company which has an investment in Siemens Philippines.7

On January 28, 1992, Electronic Telephone System Industries, Inc. (ETSI) availed of Domingo’s services as assistant manager. ETSI, like MATEC is a subsidiary of Siemens Philippines.8 The Contract of Employment9 of Domingo with ETSI provides that the latter shall have the right to assign the said contract in favor of Siemens Philippines, which is a corporation to be incorporated under the laws of the Philippines.10

On March 16, 1992, while still an assistant manager of ETSI, Domingo was hired as a consultant by Siemens Germany in the field of text and data networks for a period of twelve (12) months.11 As compensation, he received DM20,000.00, payable once for every twelve-month period.12

On March 31, 1992, Siemens Germany sent a letter to ETSI guaranteeing the consultancy agreement between Siemens Germany and Domingo. The pertinent portion of the letter reads:

Under Item 7.1, the consultancy agreement is valid for 12 months. To give Mr. R. Domingo the necessary security, we guarantee you that we will extend the Consultancy Agreement with Mr. R. Domingo for as long as he has an employment relationship with you.

Please tell him that you (ETSI) will ensure that the [sic] Siemens AG will extend the Consultancy Agreement for as long as an employment relationship exists between ETSI and Mr. R. Domingo.13

On June 1, 1992, Domingo signed a Contract of Employment with Siemens Philippines. The relevant portions of the contract read:

WITNESSETH : That

WHEREAS, the COMPANY, is taking over the greater part of the business activities, of ELECTRONIC TELEPHONE SYSTEMS INDUSTRIES, INC. (ETSI),

WHEREAS, the COMPANY has offered to engage the services of the EMPLOYEE as Assistant Manager and the EMPLOYEE has agreed to accept such employment under the terms and conditions mutually acceptable to both parties.

NOW THEREFORE, for and in consideration of the foregoing premises and the mutual covenants hereinafter contained, the parties hereto have agreed as follows:

1. The COMPANY hereby engages the services of the EMPLOYEE as Assistant Manager – Public Communications Systems and the EMPLOYEE hereby accepts such employment, as a regular employee of the COMPANY in accordance with the terms and conditions of this contract. The term of the EMPLOYEE’s employment shall begin on 01 June 1992. The EMPLOYEE shall cease from this date to be an employee of ETSI and the EMPLOYEE’s contract of employment with ETSI is thereby deemed terminated and superseded by this Contract.

x x x x

3. The EMPLOYEE shall suffer no diminution in salary, benefits and privileges that he enjoyed as a former employee of ETSI. It is hereby agreed that the EMPLOYEE’s length of service with ETSI shall be credited and recognized by the COMPANY. For this purpose, the COMPANY acknowledges that the EMPLOYEE’s hiring date with ETSI is 01 January 1992.

x x x x

6. The COMPANY shall pay the EMPLOYEE a salary of Twenty-Four Thousand One Hundred Fifty Pesos (P24,150.00) per month. The payments will be made [during] the 15th and 30th of each month.

7. During the period of his employment, the EMPLOYEE shall not be connected in any other work capacity or employments, nor be otherwise involved, directly or indirectly, with any other business or concern whatsoever without first having obtained the written consent of the COMPANY. It is the COMPANY’s intention that the EMPLOYEE devote[s] all of his efforts towards the fulfillment of his obligations under this contract.14

On March 11, 1993, while Domingo was already in the employ of Siemens Philippines, Siemens Germany extended the consultancy agreement with Domingo for another twelve (12) months. Again, on March 16, 1994, Siemens Germany renewed the consultancy agreement with Domingo for another six (6) months.15 Domingo’s consultancy contract expired in September 1994.16 Complacent that the consultancy agreement would be renewed in accordance with the guarantee letter, Domingo continued to render service as a consultant despite the absence of a formal notice of renewal.17 He had every reason to feel secure because, in January 1995, without his contract being renewed, he was even made to accompany to Hong Kong the General Manager of Siemens Germany and the Division Manager of Siemens Philippines to seal an agreement between Siemens Philippines and Philippine Long Distance Telephone Company involving a US$1.09M Packet Switching Contract.18

Earlier, on October 31, 1994, Siemens Philippines sent a letter19 to Domingo proposing a new incentive scheme. The letter was signed by Sepp E. Tietze, General Manager, VS Regional Manager Singapore; and by Ernst H. Behrens (Behrens), President and Chief Operating Officer of Siemens Philippines Inc., Manila. The relevant portions of the letter read:

We refer to your special arrangement with VS Munich (formally OEN VD) which expired September 1994.

It is the VS policy to let all sales-related employees contribute on the success of the group.

Consequently, an incentive scheme will shortly be introduced for all VS Divisions in South East (sic) Asia. As already discussed with you and agreed upon[,] you will receive a new contract incorporating the incentive scheme adapted to the conditions within the Philippines.20

The incentive scheme was, in effect, a replacement of his consultancy contract with Siemens Germany. Under the scheme, Domingo would receive a sales compensation package of 20% of his peso salary, or a maximum of about Php70,000.00 per annum, whereas under the consultancy agreement, he was receiving a fixed salary of Php370,000.00 (DM20,000.00) per annum. Feeling humiliated by the diminution of his salary, Domingo was forced to resign. On February 27, 1995, Domingo tendered his Resignation Letter21 to Siemens Philippines, the pertinent portion of which reads:

Under the present circumstances and with the result of our discussions with Mr. Tietze and Mr. Behrens, I am tendering my resignation effective close of office on March 31, 1995. I regret that I have to make this decision but I hope you will understand that I am forced to do it. I wish you good luck in the VS Division and hope to see you again in the future.

On July 6, 1995, Domingo filed a complaint for illegal dismissal and prayed for the payment of salaries, 13th month pay, backwages, damages, separation pay and attorney’s fees.22 Domingo alleged that he was forced to resign because of the act of Siemens Philippines of not renewing the consultancy agreement.23 Siemens Philippines countered that Domingo’s resignation was voluntary and that they were not privy to the consultancy agreement between Domingo and Siemens Germany.24

On May 28, 1997, the Labor Arbiter rendered a Decision,25 disposing, as follows:

WHEREFORE, judgment is hereby rendered finding complainant [Domingo] to have been illegally dismissed and the respondent[s] are ordered, jointly and severally, to pay complainant his backwages and other benefits from April 1, 1995 up to October 5, 1995, consultancy fees of DM20,000.00 from October 1, 1994 to October 5, 1995 but rounded up to one year, or its peso equivalent at the time [of] payment, moral damages of Five Hundred Thousand Pesos (P500,000.00); exemplary damages of Five Hundred Thousand Pesos P500,000.00, separation pay equivalent to two months pay per year of service and attorney’s fees of 10% of whatever amount complainant will recover in this case. Complainant’s consultancy fee shall be included in the computation of his separation pay using the following formula: DM20,000.00 over 12 multiplied by 2 and the product multiplied by 3.

SO ORDERED.26

On appeal, the NLRC reversed the ruling of the LA in a Decision27 dated August 25, 1999, and declared that Domingo was not illegally terminated. The fallo of the said Decision reads:

WHEREFORE, the appealed decision is set aside. The complaint below is dismissed for being without merit.

SO ORDERED.

Domingo filed a Motion for Reconsideration, but the same was denied by the NLRC in an Order28 dated January 26, 2000.

Hard pressed, Domingo filed a petition for certiorari29 before the CA assailing the NLRC for grave abuse of discretion in declaring that Domingo was not forced to resign, and for its erroneous appreciation of the evidence on record that resulted in the reversal of the Decision of the LA.30

On March 12, 2001, the CA rendered a Decision31 declaring that Domingo was constructively dismissed. His resignation was adjudged to be involuntary, the substantial decrease in compensation having made Domingo’s employment with Siemens Philippines unbearable. The decretal portion of the Decision reads:

WHEREFORE, premises considered, the petition is granted. The appealed decisions of the NLRC are hereby REVERSED and SET

ASIDE. In lieu thereof, the decision of the Labor Arbiter is hereby reinstated.

SO ORDERED.32

A motion for reconsideration was filed by Siemens Philippines and Behrens, but the same was denied in a Resolution33 dated October 18, 2001.

On December 13, 2001, Siemens Philippines and Behrens filed the present petition for review on certiorari. They raise the following arguments:

Siemens, Inc. was not a party to the consultancy agreement, hence, it could not guarantee its extension/renewal.

The non-extension/renewal of respondent’s consultancy agreement with Siemens AG may not be taken as a circumstance leaving respondent with no alternative but to resign.

Since respondent’s resignation was purely voluntary, Siemens, Inc. did not commit illegal dismissal. Hence, there is absolutely no basis in holding petitioners liable to respondent for backwages, consultancy fee, separation pay, damages and attorney’s fees.34

The Issue

The crucial issue in this case is whether there was constructive dismissal that would entitle Domingo to his monetary claims.

The Ruling of the Court

I. On Illegal Dismissal

We believe, and so hold, that Domingo was constructively dismissed from employment.

A diminution of pay is prejudicial to the employee and amounts to constructive dismissal.35 The gauge for constructive dismissal is whether a reasonable person in the employee’s position would feel compelled to give up his employment under the prevailing circumstances. Constructive dismissal is defined as quitting when continued employment is rendered impossible, unreasonable or unlikely as the offer of employment involves a demotion in rank or diminution in pay.36 It exists when the resignation on the part of the employee was involuntary due to the harsh, hostile and unfavorable conditions set by the employer. It is brought about by the clear discrimination, insensibility or disdain shown by an employer which becomes unbearable to the employee. An employee who is forced to surrender his position through the employer’s unfair or unreasonable acts is deemed to have been illegally terminated and such termination is deemed to be involuntary.37

We have, under the law’s mandate, consistently resolved this situation in favor of the employee in order to protect his rights and interests from the coercive acts of the employer.

In the instant case, Domingo’s resignation was brought about by the decision of the management of Siemens Philippines not to renew ― or work for the renewal of ― his consultancy contract with Siemens Germany which clearly resulted in the substantial diminution of his salary. The situation brought about the feeling of oppression which compelled Domingo to resign. The diminution in pay created an adverse working environment that rendered it impossible for Domingo to continue working for Siemens Philippines. His resignation from the company was in reality not his choice but a situation created by the company, thereby amounting to constructive dismissal.

The argument of Siemens Philippines that it is not privy to the consultancy agreement between Domingo and Siemens Germany is unacceptable. By virtue of its employment contract with Domingo, Siemens Philippines stepped into the shoes of ETSI as Domingo’s employer. The stipulation in the contract that Domingo shall suffer no diminution in salary, benefits and privileges that he enjoyed as employee of ETSI is, in effect, assumption by Siemens Philippines of ETSI’s obligations and commitments. This included the guarantee that Domingo’s consultancy contract with Siemens Germany would be renewed. After all, there was a commitment by Siemens Germany that the consultancy contract would continue as long as Domingo remained an employee of ETSI; and Domingo’s employment with Siemens Philippines was merely a continuation of his employment with ETSI.

While admittedly, Siemens Philippines is not a party to the arrangement between Siemens Germany, ETSI and Domingo, knowledge of and acquiescence to – if not actual concurrence in – the arrangement can be imputed to Siemens Philippines as to bind it to the arrangement. This conclusion finds support in the following:

First, based on the findings of facts of the LA, NLRC and CA ― MATEC, ETSI, Siemens Philippines and Siemens Germany are related companies, the first three being subsidiaries of the parent company, and the fourth, Siemens Germany, having an investment in Siemens Philippines. Short of piercing the veil of corporate fiction, we note the intimate corporate relationship of Siemens Germany and Siemens Philippines, including the practice of the two companies of integrating their workforce.

Second, in Domingo’s contract of employment with Siemens Philippines, it is provided that Domingo shall not be connected in any other work capacity or employment or be otherwise involved, directly or indirectly, with any other business or concern without first having obtained the written consent of the company. Yet, Siemens Philippines never questioned the continued consultancy work of Domingo with Siemens Germany, not even when the consultancy agreement was renewed twice during the lifetime of Domingo’s contract of employment with Siemens Philippines.

Third, the guarantee letter issued by Siemens Germany in favor of Domingo was never questioned, much less revoked by Siemens Philippines when it assumed the employment of Domingo. The Guarantee Letter was a security given to Domingo by Siemens Germany assuring Domingo that Siemens Philippines would ensure that Siemens Germany would extend the consultancy agreement as long as Domingo was under its employ.

Fourth, the consultancy agreement was a form of benefit or privilege given to Domingo by ETSI, a privilege that was allowed by Siemens Philippines to continue when it took over the majority of the business activities of ETSI and, consequently, became Domingo’s employer. The outright removal of the privilege contravenes the law, because it resulted in the effective diminution of Domingo’s salary.

II. On Domingo’s Monetary Claims

As stated above, Domingo’s work as a consultant for Siemens Germany was a privilege or benefit, if not actually granted, at least acquiesced in by Siemens Philippines. However, this does not mean that the latter corporation also assumes the responsibility of compensating Domingo for his work as a consultant, even if, by stepping into the shoes of ETSI, it effectively sealed the guarantee of Siemens Germany for the renewal of Domingo’s consultancy contract. In other words, what Siemens Philippines granted to Domingo was only the privilege to work in another corporation, but it did not undertake to compensate him for such work.

Before a corporation can be held accountable for the corporate liabilities of another, the veil of corporate fiction must first be pierced. Thus, before Siemens Philippines can be held answerable for the obligations of Siemens Germany to its employees, it must be sufficiently established that the two companies are actually a single corporate entity, such that the liability of one is the liability of the other. On this aspect, Domingo has failed to present the proof necessary to pierce the corporate veil between the two companies.

Ordinarily, when there is constructive dismissal, which is a form of illegal dismissal, the employer is liable for the full amount of backwages, if reinstatement is no longer possible, and separation pay. In

the case at bar, we cannot hold Siemens Philippines liable for the monetary obligations of Siemens Germany. The circumstances surrounding this case necessitate a different treatment in the award of backwages and separation pay, since the companies involved are separate and distinct from each other. However, by Siemens Philippines’ failure to work for the renewal of Domingo’s consultancy contract with Siemens Germany, Siemens Philippines may be held answerable in damages to Domingo.1avvphi1

Consequently, Domingo’s constructive dismissal entitles him to his monetary claims, subject to the following modifications:

First, we are not in accord with the Decision of the LA finding Behrens, the President and Chief Executive Officer of Siemens Philippines, solidarily liable with the company. A corporation, being a juridical entity, may act only through its directors, officers and employees. Obligations incurred by them, while acting as corporate agents, are not their personal liability but the direct accountability of the corporation they represent. As a rule, they are only solidarily liable with the corporation for the termination of employees if they acted with malice or bad faith.38 In the case at bar, malice or bad faith on the part of Behrens in the constructive dismissal of Domingo was not sufficiently proven to justify a ruling holding him solidarily liable with Siemens Philippines.

Second, an illegally or constructively dismissed employee is entitled to: (1) either reinstatement, if viable, or separation pay if reinstatement is no longer viable; and (2) backwages. These two reliefs are separate and distinct from each other and are awarded conjunctively.39

As a rule, separation pay is awarded to an illegally dismissed employee, computed at the rate of one month pay per year of service. Accordingly, the LA decision granting separation pay equivalent to two months salary per year of service must be modified. There is nothing on record that even remotely suggests that it is the company policy of Siemens Philippines to grant its employees separation pay of two months’ salary for every year of service. Thus, in consonance with our previous rulings,40 Domingo shall be awarded separation pay in the amount of one month pay for every year of service, but consultancy fees shall not be included in the computation of his separation pay. As discussed above, the evidence presented by Domingo is not sufficient to pierce the veil of corporate fiction between Siemens Philippines and Siemens AG, which would make Siemens Philippines liable for the monetary obligations of Siemens AG.

Third, the backwages that should be awarded to Domingo shall be reckoned from the time his constructive dismissal took effect until the finality of this decision. This is in conformity with Article 279 of the Labor Code which provides that an employee who is unjustly dismissed from work shall be entitled to full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent, computed from the time his compensation was withheld from him up to the time of his actual reinstatement. Since reinstatement of Domingo is no longer possible due to his strained relations with the management of Siemens Philippines, and considering the position he held in the company, he is lawfully entitled to receive backwages. For the same reason cited above, consultancy fees shall be excluded in the computation of Domingo’s backwages.

Finally, moral damages may be recovered when the dismissal of the employee was tainted by bad faith or fraud; or when it constituted an act oppressive to labor or done in a manner contrary to morals, good customs or public policy. Exemplary damages are recoverable if the dismissal was done in a wanton, oppressive, or malevolent manner.41 In this case, we have found that there was bad faith in the failure or refusal of Siemens Philippines to work for the renewal of Domingo’s consultancy contract with Siemens Germany. But while we affirm Domingo’s entitlement to these damages, they are not intended to enrich the dismissed employee. Consequently, we find the amount of P50,000.00 for moral damages and P50,000.00 for exemplary damages sufficient to allay the sufferings experienced by Domingo and by way of example or correction for public good, respectively.

WHEREFORE, the Decision of the Court of Appeals, dated March 12, 2001, is hereby AFFIRMED WITH THE MODIFICATION that petitioner Siemens Philippines, Inc. is hereby ordered to pay respondent Enrico A. Domingo the following:

(1) separation pay equivalent to one month pay per year of service;

(2) full backwages and other benefits from the date of his constructive dismissal up to the finality of this Decision;

(3) moral damages of fifty thousand pesos (P50,000.00);

(4) exemplary damages of fifty thousand pesos (P50,000.00); and

(5) attorney’s fees.

This case is REMANDED to the Labor Arbiter for computation of the separation pay, backwages, and other monetary awards due respondent.

SO ORDERED.

FEDERITO B. PIDO, Petitioner,

- versus - NATIONAL LABOR RELATIONS COMMISSION, CHERUBIM SECURITY AND GENERAL SERVICES, INC., AND ROSARIO K. BALAIS, Respondents.

G.R. No. 169812 Present: QUISUMBING, J., Chairperson, CARPIO, CARPIO MORALES, TINGA, and VELASCO, JR., JJ. Promulgated: February 23, 2007

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x D E C I S I O N CARPIO MORALES, J.:

Federito B. Pido (petitioner) was hired on October 1, 1995 by Cherubim Security and General

Services, Inc. (respondent) as a security guard. He was assigned at the AyalaMuseum, but was later

transferred on December 1, 1995 to the Tower and Exchange Plaza of Ayala Center where he worked

as a computer operator at the Console Room, responsible for observing occurrences that transpire

inside elevators and other areas in buildings which are recorded by surveillance cameras and relayed

to monitors.[1]

Like the other guards deployed by respondent at the Ayala Center, petitioner was under the

operational control and supervision of the Ayala Security Force (ASF) of the Ayala Group of

Companies.[2]

On January 21, 2000, petitioner had an altercation with Richard Alcantara (Alcantara) of the

ASF, arising from a statement of Alcantara that petitioners security license for his .38 caliber revolver

service firearm and duty detail order had already expired. On even date, Alcantara filed a complaint[3] for

Gross Misconduct, claiming that when he directed petitioner to present his security license, petitioner

angrily and on top of his voice questioned his authority. And Alcantara recommended that petitioner be

relieved from his post, and that immediate disciplinary action against him be taken.[4]

On January 23, 2000, petitioner reported for work at the Ayala Center but he was not allowed

to stay in the premises, a Recall Order[5] having been issued by respondent through its Operations

Manager. Petitioner thus filed an information report[6] wherein he narrated that Alcantara confronted

him on January 21, 2000 about his right to carry a firearm and afterwards tried to grab it from its holster,

resulting in a heated argument between them.

Respondent thus conducted an investigation on January 25, 2000 during which petitioner

echoed his tale in his January 21, 2000 information report.[7]

Petitioner was later to claim that he was suspended by respondent following his argument

with Alcantara.

As more than nine months had elapsed since the investigation was conducted by respondent

with no categorical findings thereon made, petitioner filed on October 23, 2000 a complaint[8] for illegal

constructive dismissal, illegal suspension, and non-payment and underpayment of salaries, holiday pay,

rest day, service incentive leave, 13th month pay, meal and travel allowance and night shift differential

against respondent, along with its employee Rosario K. Balais (Rosario) who was allegedly responsible

for running the day to day affairs of respondents business.[9] Petitioner likewise prayed for reinstatement

and payment of full backwages, attorneys fees and other money claims.

In its position paper, respondent denied that it dismissed petitioner from the service, it claiming that while

it was still in the process of investigating the January 21, 2000 incident, it offered petitioner another

assignment which he declined, saying pahinga muna ako [I will in the meantime take a rest].[10]

By Decision[11] of January 30, 2003, the Labor Arbiter ruled that petitioners suspension for more than

nine months had ripened into constructive termination, on account of which he ordered the payment of

separation pay equivalent to one month salary of P8,000 for every year of service, or for the total amount

of P32,000. The Arbiter, however, found that there was insufficient evidence to support petitioners

assertion that he was entitled to his money claims. Thus the Arbiter disposed:

WHEREFORE, premises considered, decision is hereby rendered declaring

complainant to have been constructively terminated. Respondents Cherubim Security and General Services and/or Ms. Rosario K. Balais are hereby ordered to pay his separation in the computed amount of P32,000.00.

All other claims are dismissed. SO ORDERED.[12] (Underscoring supplied)

Both parties appealed to the National Labor Relations Commission (NLRC).

In its memorandum on partial appeal, respondent maintained that petitioner was not

dismissed. It proffered that after refusing another assignment following his relief from his post

at Ayala Center, petitioner abandoned his work; and that there was no reason to

hold Rosario personally liable as she was merely an officer of respondent.[13]

Petitioner, on the other hand, claimed in his appeal memorandum that the Labor Arbiter erred

in awarding separation pay, instead of reinstatement and backwages.[14]

By Decision of October 30, 2003, the NLRC modified the decision of the Labor Arbiter. While it

found that petitioner was indeed constructively dismissed, it set aside the award of separation pay,

given respondents willingness to assign petitioner to another post which he declined. On the same

ground, the NLRC denied petitioners claim forbackwages. It merely ordered his reinstatement:

WHEREFORE, the appeal filed by respondents is partially granted and the

Decision of the Labor Arbiter dated 30 January 2003 is REVERSED and SET ASIDE. In lieu thereof, a new order is hereby issued directing respondents to reinstate complainant and cause his immediate assignment or posting to work. Complainants claim for backwages is DENIED for lack of merit.[15] (Underscoring supplied)

Petitioners motion for reconsideration having been denied by the NLRC by Resolution dated February

24, 2004, he filed a petition for certiorari[16] with the Court of Appeals, maintaining that his suspension

for more than nine months amounted to constructive dismissal to entitle him to separation pay and

backwages.

By Decision[17] dated March 10, 2005, the appellate court upheld the NLRC decision and accordingly

dismissed petitioners appeal. Petitioners motion for reconsideration having been denied, he filed the

present petition for review on certiorari, faulting the appellate court as follows:

. . . IN AFFIRMING THE ERRONEUS DECISION OF PUBLIC RESPONDENT NATIONAL LABOR RELATIONS COMMISSION HOLDING THAT THE PETITIONER WAS NOT CONSTRUCTIVELY DISMISSED FROM EMPLOYMENT . . . IN RULING THAT PETITIONER IS NOT ENTITLED TO THE PAYMENT OF HIS BACKWAGES AND IN ORDERING REINSTATEMENT INSTEAD OF PAYMENT OF SEPARATION PAY,[18]

and submitting the following issues:

I WHETHER THE PETITIONERS NINE-MONTH SUSPENSION IS TANTAMOUNT TO CONSTRUCTIVE DISMISSAL. II WHETHER THE PETITIONER SHOULD BE PAID HIS BACKWAGES ASIDE FROM HIS SEPARATION PAY. III WHETHER THE PAYMENT OF SEPARATION PAY IS MORE VIABLE THAN THE ORDER OF REINSTATEMENT.[19]

In dismissing petitioners appeal, the appellate court sustained the findings of the Labor Arbiter

and the NLRC that while a security guard, like petitioner, may be lawfully placed on a floating status,

the same should continue only for six months, otherwise the security agency could be liable for

constructive dismissal under Article 286 of the Labor Code, viz:

ART. 286. When employment not deemed terminated. - The bona fide suspension of the operation of a business or undertaking for a period not exceeding six (6) months, or the fulfillment of the employee of a military or civic duty shall not terminate employment. In all such cases, the employer shall reinstate the employee to his former position without loss of seniority rights if he indicates his desire to resume his work not later than one (1) month from the resumption of operations of his employer or from his relief from the military or civic duty.

This Court finds that, indeed, petitioner was constructively dismissed, but not on the grounds

advanced by the appellate court, which echoed those of the NLRC and the Labor Arbiter.

In Philippine Industrial Security Agency Corporation v. Dapiton,[20] this Court, explaining the

application of Article 286 to security guards, held:

We stress that Article 286 applies only when there is a bona fide suspension

of the employer's operation of a business or undertaking for a period not exceeding six (6) months. In such a case, there is no termination of employment but only a temporary displacement of employees, albeit the displacement should not exceed six (6) months. The paramount consideration should be the dire exigency of the business of the employer that compels it to put some of its employees temporarily out of work. In security services, the temporary "off-detail" of guards takes place when the security agency's clients decide not to renew their contracts with the security agency, resulting in a situation where the available posts under its existing contracts are less than the number of guards in its roster.[21] (Italics in the original; emphasis and underscoring supplied)

Verily, a floating status requires the dire exigency of the employer's bona fide suspension of

operation of a business or undertaking. In security services, this happens when the security agencys

clients which do not renew their contracts are more than those that do and the new ones that the agency

gets.[22] Also, in instances when contracts for security services stipulate that the client may request the

agency for the replacement of the guards assigned to it even for want of cause, the replaced security

guard may be placed on temporary off-detail if there are no available posts under respondents existing

contracts.[23]

When a security guard is placed on a floating status, he does not receive any salary or financial

benefit provided by law.[24] Due to the grim economic consequences to the employee, the employer

should bear the burden of proving that there are no posts available to which the employee temporarily

out of work can be assigned. This, respondent failed to discharge.

From the January 23, 2000 Recall Order issued by respondent reading:

1. You are hereby instructed to report to Cherubim Office tomorrow, 24 January

2000 for investigation and effective to date, your duty at Tower One Console is [t]emporarily suspended.

2. The outright suspension is due to the argumentation (sic) [that] happened

between you and ASF Alcantara last 21 January 2000, 0900 Hrs.

3. In this regard, report to Mr. Marcelino N. Tolod, the Operation[s] Manager, after your investigation for further instruction,[25] (Underscoring supplied),

it is gathered that respondent intended to put petitioner under preventive suspension for an indefinite

period of time pending the investigation of the complaint against him. The allowable period of suspension

in such a case is not six months but only 30 days, following Sections 8 and 9 of Rule XXIII, Book V of

the Omnibus Rules Implementing the Labor Code (Implementing Rules), viz:

SEC. 8. Preventive suspension. - The employer may place the worker concerned under preventive suspension if his continued employment poses a serious and imminent threat to the life or property of the employer or of his co-workers. SEC. 9. Period of suspension. - No preventive suspension shall last longer than thirty (30) days. The employer shall thereafter reinstate the worker in his former or in a substantially equivalent position or the employer may extend the period of suspension provided that during the period of extension, he pays the wages and other benefits due to the worker. In such case, the worker shall not be bound to reimburse the amount paid to him during the extension if the employer decides, after completion of the hearing, to dismiss the worker. (Emphasis, italics, and underscoring supplied)

As above-quoted Section 9 of the said Implementing Rules expressly provides, in the event the

employer chooses to extend the period of suspension, he is required to pay the wages and other benefits

due the worker and the worker is not bound to reimburse the amount paid to him during the extended

period of suspension even if, after the completion of the hearing or investigation, the employer decides

to dismiss him.

Respondent did not inform petitioner that it was extending its investigation, nor did it pay him

his wages and other benefits after the lapse of the 30-day period of suspension. Neither did respondent

issue an order lifting petitioners suspension, or any official assignment, memorandum or detail order for

him to assume his post or another post. Respondent merely chose to dawdle with the investigation, in

absolute disregard of petitioners welfare.

At the time petitioner filed the complaint for illegal suspension and/or constructive dismissal

on October 23, 2000, petitioner had already been placed under preventive suspension for nine

months. To date, there is no showing or information that, if at all, respondent still intends to conclude

its investigation.

This Court thus rules that petitioners prolonged suspension, owing to respondents neglect to

conclude the investigation, had ripened to constructive dismissal.[26]

As for respondents claim that petitioner abandoned his work, and that it even verbally offered

him a post but that he declined as he, so it claims, wanted to, in the meantime, rest, this Court is not

persuaded. No proof in support of such claim was proffered. Upon the other hand, petitioners filing of a

complaint for constructive dismissal, along with a prayer for reinstatement, clearly indicates that he did

not abandon his work.

Following then Article 279 of the Labor Code, viz:

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

petitioner, who is a regular employee of respondent, is entitled to reinstatement without loss of seniority

and payment of backwages from the time his compensation was withheld up to the time of his actual

reinstatement.

The appellate court thus did not commit grave abuse of discretion when, as the following portion

of its decision reflects, it sustained the NLRC order for petitioners reinstatement, instead of awarding

him separation pay:

x x x In this case, the position of petitioner PIDO is not characterized as a position of trust and confidence[.] The second limitation of determining if the antagonism affects efficiency in the company does not also come to play here because it is still possible for petitioner PIDO to be assigned to a different post with the same (seniority) rights, compensation, and benefits, without disturbing the efficiency of the organization. Hence, there exists no exception to the general rule that award of separation pay would be proper in lieu of reinstatement.[27]

A word on respondent Rosarios liability. This Court notes that the only reason why she

was impleaded as a respondent in this case was because she runs the day to day affairs of respondents

business. Well settled is the rule that corporate officers and/or agents are not personally liable for

money claims of discharged employees absent any showing, as in Rosarios case, that they acted with

evident malice and bad faith in terminating their employment.[28]

WHEREFORE, in light of the foregoing discussions, the assailed issuances of the Court of

Appeals are AFFIRMED with MODIFICATION in that respondent, CHERUBIM SECURITY AND

GENERAL SERVICES, INC., is further ordered to reinstate petitioner, FEDERITO B. PIDO, and pay

him backwages.

This case is thus REMANDED to the Labor Arbiter for the computation, within 30 days from

receipt hereof, of the backwages, inclusive of allowances and other benefits due to petitioner, computed

from the time his compensation was withheld up to the time of his actual reinstatement.

SO ORDERED.

THIRD DIVISION

G.R. No. 198538, September 29, 2014

EXOCET SECURITY AND ALLIED SERVICES CORPORATION AND/OR MA. TERESA MARCELO,

Petitioner, v. ARMANDO D. SERRANO, Respondent.

D E C I S I O N

VELASCO JR., J.:

Nature of the Case

This is a Petition for Review on Certiorari under Rule 45 seeking to reverse and set aside the March

31, 2011 Decision1 and September 7, 2011 Resolution of the Court of Appeals (CA) in CA-G.R. SP No.

113251, which ordered petitioner to pay respondent separation pay and backwages for having been

illegally dismissed from employment.

The Antecedent Facts

Petitioner Exocet Security and Allied Services Corporation (Exocet) is engaged in the provision of

security personnel to its various clients or principals. By virtue of its contract with JG Summit Holdings

Inc. (JG Summit), Exocet assigned respondent Armando D. Serrano (Serrano) on September 24, 1994

as “close-in”security personnel for one of JG Summit’s corporate officers, Johnson Robert L. Go.2 After

eight years, Serrano was re-assigned as close-in security for Lance Gokongwei, and then to his wife,

Mary Joyce Gokongwei.3 As close-in security, records show that Serrano was receiving a monthly

salary of P11,274.30.4cralawlawlibrary

On August 15, 2006, Serrano was relieved by JG Summit from his duties. For more than six months

after he reported back to Exocet, Serrano was without any reassignment. On March 15, 2007, Serrano

filed a complaint for illegal dismissal against Exocet with the National Labor Relations Commission

(NLRC).5cralawlawlibrary

For its defense, Exocet denied dismissing Serrano alleging that, after August 15, 2006, Serrano no

longer reported for duty assignment as VIP security for JG Summit, and that on September 2006, he

was demanding for VIP Security detail to another client. However, since, at that time, Exocet did not

have clients in need of VIP security assignment, Serrano was temporarily assigned to general security

service.6 Exocet maintained that it was Serrano who declined the assignment on the ground that he is

not used to being a regular security guard. Serrano, Exocet added, even refused to report for immediate

duty, as he was not given a VIP security assignment.7cralawlawlibrary

Considering the parties’ respective allegations, the Labor Arbiter ruled that Serrano was illegally

dismissed. In its June 30, 2008 Decision, the Labor Arbiter found that Serrano, while not actually

dismissed, was placed on a floating status for more than six months and so, was deemed constructively

dismissed. Thus, the Labor Arbiter ordered Exocet to pay Serrano separation pay,8

viz:chanRoblesvirtualLawlibrary

Since complainant prayed for separation pay in lieu of reinstatement, he is entitled to the same,

computed below as follows:chanRoblesvirtualLawlibrary

“SEPARATION PAY: September 24, 1994 –August 15, 2006 = 12 years.P300.00 x 13 x 12 years =

P46,800.00”

WHEREFORE, premises considered, respondent corporation is hereby directed to pay complainant’s

monetary awards as computed above.

SO ORDERED.9chanrobleslaw

Not satisfied with the award, Serrano appealed the Labor Arbiter’s Decision to the NLRC. In its March

5, 2009 Resolution, the NLRC initially affirmed the ruling of the Labor Arbiter, but modified the monetary

award to include the payment of backwages for six months that Serrano was not given a security

assignment. The dispositive portion of the March 5, 2009 Resolution reads:chanRoblesvirtualLawlibrary

ACCORDINGLY, premises considered, the decision appealed from is hereby modified. The

respondents are hereby ordered to pay complainant separation pay plus backwages computed from

[the] date he effectively became dismissed from service which is after the lapse of the 6 month period

up to the issuance of this decision, the computation of which is attached as Annex A.

All others are hereby affirmed.10

Acting on Exocet’s motion for reconsideration, however, the NLRC, in its September 2, 2009 Resolution,

further modified its earlier decision by removing the award for backwages.11 The NLRC deviated from

its earlier findings and ruled that Serrano was not constructively dismissed, as his termination was due

to his own fault, stubborn refusal, and deliberate failure to accept a re-assignment.12 Nevertheless, the

NLRC proceeded to affirm in toto the decision of the Labor Arbiter on the ground that Exocet did not

interpose the appeal. The fallo of the NLRC’s September 2, 2009 Resolution

reads:chanRoblesvirtualLawlibrary

WHEREFORE, the motion is GRANTED and the assailed decision is RECONSIDERED and SET

ASIDE. Consequently, the decision of the Labor Arbiter is hereby upheld in toto.

SO ORDERED.13chanrobleslaw

On January 22, 2010, the NLRC issued another Resolution denying Serrano’s motion for

reconsideration.14 Hence, not satisfied with the NLRC’s ruling, Serrano filed a petition for certiorari with

the CA assailing the September 2, 2009 Resolution of the NLRC. Serrano insisted that he was

constructively dismissed and, thus, is entitled to reinstatement without loss of seniority rights and to full

backwages from the time of the alleged dismissal up to the time of the finality of the Decision.

On March 31, 2011, the appellate court rendered a Decision in Serrano’s favor, reversing and setting

aside the NLRC’s September 2, 2009 Resolution and ordering Exocet to pay Serrano separation pay

and backwages.15 In so ruling, the CA found that Serrano was constructively dismissed, as Exocet

failed to re-assign him within six months after placing him on “floating status.”16 The appellate court

disposed of Serrano’s appeal as follows:chanRoblesvirtualLawlibrary

WHEREFORE, the assailed Resolutions promulgated on September 2, 2009 and January 22, 2010

issued by the NLRC LAC No. 09-003163-08 (NLRC NCR No. 00-03-02423-07) are REVERSED and

SET ASIDE, and in lieu thereof, a new judgment is ENTERED ordering respondent company to pay

petitioner his separation pay and backwages.

Upon finality of this decision, the Research and Computation Unit of public respondent NLRC is

DIRECTED to recompute the monetary benefits due to petitioner in accordance with this decision.

SO ORDERED.

Petitioner Exocet’s Motion for Reconsideration was denied by the appellate court in its September 7,

2011 Resolution.17 Hence, Exocet filed this petition.

The Issue

The sole issue for resolution is whether or not Serrano was constructively dismissed.

The Court’s Ruling

The petition has merit.

The crux of the controversy lies on the consequence of the lapse of the six-month period, during which

respondent Serrano was placed on a “floating status” and petitioner Exocet could not assign him to a

position he wants. The appellate court was of the view that Serrano was constructively dismissed. The

Court maintains otherwise.

While there is no specific provision in the Labor Code which governs the “floating status” or temporary

“off-detail” of security guards employed by private security agencies, this situation was considered by

this Court in several cases as a form of temporary retrenchment or lay-off.18 The concept has been

defined as that period of time when security guards are in between assignments or when they are made

to wait after being relieved from a previous post until they are transferred to a new one.19 As pointed

out by the CA, it takes place when the security agency’s clients decide not to renew their contracts with

the agency, resulting in a situation where the available posts under its existing contracts are less than

the number of guards in its roster. It also happens in instances where contracts for security services

stipulate that the client may request the agency for the replacement of the guards assigned to it, even

for want of cause, such that the replaced security guard may be placed on temporary “off-detail” if there

are no available posts under the agency’s existing contracts.20cralawlawlibrary

As the circumstance is generally outside the control of the security agency or the employer, the Court

has ruled that when a security guard is placed on a “floating status,” he or she does not receive any

salary or financial benefit provided by law. Pido v. National Labor Relations Commission21 explains

why:chanRoblesvirtualLawlibrary

Verily, a floating status requires the dire exigency of the employer’s bona fide suspension of operation

of a business or undertaking. In security services, this happens when the security agency’s clients

which do not renew their contracts are more than those that do and the new ones that the agency gets.

Also, in instances when contracts for security services stipulate that the client may request the agency

for the replacement of the guards assigned to it even for want of cause, the replaced security guard

may be placed on temporary “off-detail” if there are no available posts under respondent’s existing

contracts.

When a security guard is placed on a “floating status,” he does not receive any salary or financial benefit

provided by law. Due to the grim economic consequences to the employee, the employer should bear

the burden of proving that there are no posts available to which the employee temporarily out of work

can be assigned.” (emphasis supplied)

It must be emphasized, however, that although placing a security guard on “floating status” or a

temporary “off-detail” is considered a temporary retrenchment measure, there is similarly no provision

in the Labor Code which treats of a temporary retrenchment or lay-off. Neither is there any provision

which provides for its requisites or its duration.22 Nevertheless, since an employee cannot be laid-off

indefinitely, the Court has applied Article 292 (previously Article 286) of the Labor Code by analogy to

set the specific period of temporary lay-off to a maximum of six (6) months. The said provision

states:chanRoblesvirtualLawlibrary

ART. 292. When employment not deemed terminated. - The bona-fide suspension of the operation of

a business or undertaking for a period not exceeding six (6) months, or the fulfillment by the employee

of a military or civic duty shall not terminate employment. In all such cases, the employer shall reinstate

the employee to his former position without loss of seniority rights if he indicates his desire to resume

his work not later than one (1) month from the resumption of operations of his employer or from his

relief from the military or civic duty.

Thus, this Court has held, citing Sebuguero v. NLRC,23 that the placement of the employee on a floating

status should not last for more than six months. After six months, the employee should be recalled for

work, or for a new assignment; otherwise, he is deemed terminated.

There is no specific provision of law which treats of a temporary retrenchment or lay-off and provides

for the requisites in effecting it or a period or duration therefor. These employees cannot forever be

temporarily laid-off. To remedy this situation or fill the hiatus, Article 286 [now 292] may be applied but

only by analogy to set a specific period that employees may remain temporarily laid-off or in floating

status. Six months is the period set by law that the operation of a business or undertaking may be

suspended thereby suspending the employment of the employees concerned. The temporary lay-off

wherein the employees likewise cease to work should also not last longer than six months. After six

months, the employees should either be recalled to work or permanently retrenched following the

requirements of the law, and that failing to comply with this would be tantamount to dismissing the

employees and the employer would thus be liable for such dismissal.

In accordance with the aforementioned ruling,the Department of Labor and Employment (DOLE) issued

Department Order No. 14, Series of 2001 (DO 14-01), entitled “Guidelines Governing the Employment

and Working Conditions of Security Guards and Similar Personnel in the Private Security

Industry,”Section 6.5,in relation to Sec. 9.3, of which states that the lack of service assignment for a

continuous period of six (6) months is an authorized cause for the termination of the employee, who is

then entitled to a separation pay equivalent to half month pay for every year of service,

viz:chanRoblesvirtualLawlibrary

6.5 Other Mandatory Benefits. In appropriate cases, security guards/similar personnel are entitled to

the mandatory benefits as listed below, although the same may not be included in the monthly cost

distribution in the contracts, except the required premiums form their coverage:

Maternity benefit as provided under SS Law;

Separation pay if the termination of employment is for authorized cause as provided by law and as

enumerated below:chanRoblesvirtualLawlibrary

Half-Month Pay Per Year of Service, but in no case less than One Month Pay if separation pay is due

to:chanRoblesvirtualLawlibrary

Retrenchment or reduction of personnel effected by management to prevent serious losses;

Closure or cessation of operation of an establishment not due to serious losses or financial reverses;

Illness or disease not curable within a period of 6 months and continued employment is prohibited by

law or prejudicial to the employee’s health or that of co-employees;

Lack of service assignment for a continuous period of 6 months.

x x x x

9.3 Reserved Status – A security guard or similar personnel may be placed in a work pool or on reserved

status due to lack of service assignments after the expiration or termination of the service contract with

the principal where he/she or assigned or due to temporary suspension of agency operations.

No security guard or personnel can be placed in a work pool or on reserved status in any of the following

situations: a) after expiration of a service contract if there are other principals where he/she can be

assigned; b) as a measure to constructively dismiss the security guard; and c) as an act of retaliation

for filing complaints against the employer on violations of labor laws, among others.

If after the period of 6 months, the security agency/employer cannot provide work or give assignment

to the reserved security guard, the latter can be dismissed from service and shall be entitled to

separation pay as described in subsection 6.5.

Security guards on reserved status who accept employment in other security agencies or employers

before the end of the above six-month period may not be given separation pay.(emphasis supplied)

In Reyes v. RP Guardians Security Agency, Inc.,24 the Court explained the application of DO 14-01 to

security agencies and their security guards, and the procedural requirements with which the security

agencies must comply:chanRoblesvirtualLawlibrary

Furthermore, the entitlement of the dismissed employee to separation pay of one month for every year

of service should not be confused with Section 6.5 (4) of DOLE D.O. No. 14 which grants a separation

pay of one half month for every year service xxx.

x x x x

The said provision contemplates a situation where a security guard is removed for authorized causes

such as when the security agency experiences a surplus of security guards brought about by lack of

clients. In such a case, the security agency has the option to resort to retrenchment upon compliance

with the procedural requirements of “two-notice rule” set forth in the Labor Code. (emphasis supplied)

Thus, to validly terminate a security guard for lack of service assignment for a continuous period of six

months under Secs. 6.5 and 9.3 of DO 14-01, the security agency must comply with the provisions of

Article 289 (previously Art. 283) of the Labor Code,25 which mandates that a written notice should be

served on the employee on temporary off-detail or floating status and to the DOLE one (1) month before

the intended date of termination. This is also clear in Sec. 9.2 of DO 14-01 which

provides:chanRoblesvirtualLawlibrary

9.2 Notice of Termination - In case of termination of employment due to authorized causes provided in

Article 283 and 284 of the Labor Code and in the succeeding subsection, the employer shall serve a

written notice on the security guard/personnel and the DOLE at least one (1) month before the intended

date thereof.

In every case, the Court has declared that the burden of proving that there are no posts available to

which the security guard may be assigned rests on the employer. We ruled in Nationwide Security and

Allied Services Inc. v. Valderama:26cralawlawlibrary

In cases involving security guards, a relief and transfer order in itself does not sever employment

relationship between a security guard and his agency. An employee has the right to security of tenure,

but this does not give him a vested right to his position as would deprive the company of its prerogative

to change his assignment or transfer him where his service, as security guard, will be most beneficial

to the client. Temporary “off-detail” or the period of time security guards are made to wait until they are

transferred or assigned to a new post or client does not constitute constructive dismissal, so long as

such status does not continue beyond six months.

The onus of proving that there is no post available to which the security guard can be assigned rests

on the employer x x x. (emphasis supplied)

It cannot, therefore, be gainsaid that the right of security guards to security of tenure is safeguarded by

administrative issuances and jurisprudence, in parallel with the mandate of the Labor Code and the

Constitution to protect labor and the working people. Nonetheless, while the Court has recognized the

security guards’ right to security of tenure under the “floating status” rule, the Court has similarly

acknowledged the management prerogative of security agencies to transfer security guards when

necessary in conducting its business, provided it is done in good faith. In Megaforce Security and Allied

Services, Inc. v. Lactao,27 the Court explained:chanRoblesvirtualLawlibrary

In cases involving security guards, a relief and transfer order in itself does not sever employment

relationship between a security guard and his agency. An employee has the right to security of tenure,

but this does not give him such a vested right in his position as would deprive the company of its

prerogative to change his assignment or transfer him where his service, as security guard, will be most

beneficial to the client. Temporary “off-detail” or the period of time security guards are made to wait until

they are transferred or assigned to a new post or client does not constitute constructive dismissal as

their assignments primarily depend on the contracts entered into by the security agencies with third

parties. Indeed, the Court has repeatedly recognized that “off-detailing” is not equivalent to dismissal,

so long as such status does not continue beyond a reasonable time; when such a “floating status” lasts

for more than six months, the employee may be considered to have been constructively dismissed.

(emphasis supplied)

In the controversy now before the Court, there is no question that the security guard, Serrano, was

placed on floating status after his relief from his post as a VIP security by his security agency’s client.

Yet, there is no showing that his security agency, petitioner Exocet, acted in bad faith when it placed

Serrano on such floating status. What is more, the present case is not a situation where Exocet did not

recall Serrano to work within the six-month period as required by law and jurisprudence. Exocet did, in

fact, make an offer to Serrano to go back to work. It is just that the assignment—although it does not

involve a demotion in rank or diminution in salary, pay, benefits or privileges—was not the security detail

desired by Serrano.

Clearly,Serrano’s lack of assignment for more than six months cannot be attributed to petitioner Exocet.

On the contrary, records show that, as early as September 2006, or one month after Serrano was

relieved as a VIP security, Exocet had already offered Serrano a position in the general security service

because there were no available clients requiring positions for VIP security. Notably, even though the

new assignment does not involve a demotion in rank or diminution in salary, pay, or benefits, Serrano

declined the position because it was not the post that suited his preference, as he insisted on being a

VIP Security.

In fact, even during the meeting with the Labor Arbiter, Exocet offered a position in the general security

only to be rebuffed by Serrano.28 It was as if Serrano obliged Exocet to look for a client in need of a

VIP security—the availability of which is obviously not within Exocet’s control,and by nature, difficult to

procure as these contracts depend on the trust and confidence of the client or principal on the security

guard. As aptly found by the NLRC:chanRoblesvirtualLawlibrary

Anent the client’s action, respondent agency had no recourse but to assign complainant to a new

posting. However, complainant, having had a taste of VIP detail and perhaps the perks that come with

such kind of assignment, vaingloriously assumed that he can only be assigned to VIP close-in posting

and that he would accept nothing less. In fact, after his relief and tardy appearance at respondent’s

office, he was offered re-assignment albeit to general security services which he refused. Respondents

clearly made known to him that as of the moment no VIP detail was vacant or sought by other clients

but complainant was adamant in his refusal. Complainant even had the nerve to assert that he just be

informed if there is already a VIP detail available for him and that he will just report for re-assignment

by then. It is also well to note that to these allegations, complainant made no denial.29 (emphasis

supplied)

To repeat for emphasis, the security guard’s right to security of tenure does not give him a vested right

to the position as would deprive the company of its prerogative to change the assignment of, or transfer

the security guard to, a station where his services would be most beneficial to the client. Indeed, an

employer has the right to transfer or assign its employees from one office or area of operation to another,

or in pursuit of its legitimate business interest, provided there is no demotion in rank or diminution of

salary, benefits, and other privileges, and the transfer is not motivated by discrimination or bad faith, or

effected as a form of punishment or demotion without sufficient cause.30cralawlawlibrary

Thus, it is manifestly unfair and unacceptable to immediately declare the mere lapse of the six-month

period of floating status as a case of constructive dismissal, without looking into the peculiar

circumstances that resulted in the security guard’s failure to assume another post. This is especially

true in the present case where the security guard’s own refusal to accept a non-VIP detail was the

reason that he was not given an assignment within the six-month period. The security agency, Exocet,

should not then be held liable.

Indeed, from the facts presented, Serrano was guilty of wilful disobedience to a lawful order of his

employer in connection with his work, which is a just cause for his termination under Art.288 (previously

Art. 282)of the Labor Code.31 Nonetheless, Exocet did not take Serrano’s wilful disobedience against

him. Hence, Exocet is considered to have waived its right to terminate Serrano on such ground.

In this factual milieu, since respondent Serrano was not actually or constructively dismissed from his

employment by petitioner Exocet, it is best that petitioner Exocet direct him to report for work, if any

security assignment is still available to him. If respondent Serrano still refuses to be assigned to any

available guard position, he shall be deemed to have abandoned his employment with petitioner.

If no security assignment is available for respondent, petitioner Exocet should comply with the

requirements of DO 14-01, in relation to Art. 289 of the Labor Code, and serve a written notice on

Serrano and the DOLE one (1) month before the intended date of termination, and pay Serrano

separation pay equivalent to half month pay for every year of his actual service.

As a final note, the Court reiterates that it stands to promote the welfare of employees and continue to

apply the mantle of protectionism in their favor. Thus, employees, like security guards, should not be

laid-off for an indefinite period of time. However, We hold that a similar protection should be given to

employers who, in good faith, have exerted efforts to comply with the requirements of the law by offering

reasonable work and appropriate assignments during the six-month period. After all, the constitutional

policy of providing full protection to labor is not intended to oppress or destroy management, and the

commitment of this Court to the cause of labor does not prevent Us from sustaining the employer when

it is in the right, as in this case.32cralawlawlibrary

IN VIEW OF THE FOREGOING, the instant petition is GRANTED. The March 31, 2011 Decision and

September 7, 2011 Resolution of the Court of Appeals in CA-G.R. SP No. 113251 are hereby

REVERSED and SET ASIDE. Moreover, the March 5, 2009 and September 2, 2009 Resolutions of the

National Labor Relations Commission in NLRC LAC No. 09-003163-08 (NLRC NCR No. 00-03-02423-

07), as well as the June 30, 2008 Decision of the Labor Arbiter in NLRC-NCR-00-03-02423-07, are also

REVERSED and SET ASIDE.

Petitioner Exocet Security and Allied Services Corporation is neither guilty of illegal dismissal nor

constructive dismissal. Petitioner is hereby ORDERED to look for a security assignment for respondent

within a period of thirty (30) days from finality of judgment. If one is available, petitioner is ordered to

notify respondent Armando D. Serrano to report to such available guard position within ten (10) days

from notice. If respondent fails to report for work within said time period, he shall be deemed to have

abandoned his employment with petitioner.In such case, respondent Serrano is not entitled to any

backwages, separation pay, or similar benefits.

If no security assignment is available for respondent within a period of thirty (30) days from finality of

judgment, petitioner Exocet should comply with the requirements of DOLE Department Order No. 14,

Series of 2001, in relation to Art. 289 of the Labor Code, and serve a written notice on respondent

Serrano and the DOLE one (1) month before the intended date of termination; and pay Serrano

separation pay equivalent to half month pay for every year of his service.

SO ORDERED.

G.R. No. 206942 February 25, 2015

VICENTE C. TATEL, Petitioner, vs. JLFP INVESTIGATION SECURITY AGENCY, INC., JOSE LUIS F. PAMINTUAN, and/or PAOLO C. TURNO,Respondents.

D E C I S I O N

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari1 are the Decision2 dated November 14, 2012 and the Resolution3dated April 22, 2013 rendered by the Court of Appeals (CA) in CA-G.R. SP No. 119997 which reversed and set aside the Decision4 dated February 9, 2011 and the Resolution5 dated March 31, 2011 of the National Labor Relations Commission (NLRC) in NLRC LAC No. 10-002496-10 and instead, reinstated the Decision6 dated September 20, 2010 of the Labor Arbiter (LA) in NLRC NCR Case No. 05-06196-10, dismissing petitioner Vicente C. Tatel's (Tatel) labor complaint for lack of merit.

The Facts

On March 14, 1998, respondent JLFP Investigation Security Agency, Inc. (JLFP), a business engaged as a security agency, hired Tatel as one of its security guards.7

Tatel alleged that he was last posted at BaggerWerken Decloedt En Zoon (BaggerWerken) located at the Port Area in Manila.8 He was required to work twelve (12) hours everyday from Mondays through Sundays and received only Pl2,400.00 as monthly salary.9 On October 14, 2009, Tatel filed a complaint10 before the NLRC against JLFP and its officer, respondent Jose Luis F. Pamintuan11 (Pamintuan), as well as SKI Group of Companies (SKI) and its officer, Joselito Dueñas,12 for underpayment of salaries and wages, non-payment of other benefits, 13th month pay, and attorney's fees (underpayment case).13

On October 24, 2009, Tatel was placed on "floating status";14 thus, on May 4, 2010, or after the lapse of six (6) months therefrom, without having been given any assignments, he filed another complaint15 against JLFP and its officers, respondent Paolo C. Turno16 (Turno) and Jose Luis Fabella,17 for illegal dismissal, reinstatement, backwages, refund of cash bond deposit amounting to P25,400.00, attorney's fees, and other money claims (illegal dismissal case).18

In their defense,19 respondents JLFP, Pamintuan, and Turno (respondents) denied that Tatel was dismissed and averred that they removed the latter from his post at BaggerWerken on August 24, 2009 because of several infractions he committed while on duty. Thereafter, he was reassigned at SKI from September 16, 2009 to October 12, 2009, and last posted at IPVG20 from October 21to23, 2009.21

Notwithstanding the pendency of the underpayment case, respondents sent a Memorandum22 dated November 26, 2009 (November 26, 2009 Memorandum) directing Tatel to report back to work, noting that the latter last reported to the office on October 26, 2009. However, despite receipt of the said memorandum, respondents averred that Tatel ignored the same and failed to appear; hence, he was deemed to have abandoned his work.23Moreover, respondents pointed out that Tatel made inconsistent statements when he declared in the underpayment case that he was employed in March 1997 with a salary of Pl2,400.00 per month and dismissed on October 13, 2009, while declaring in the illegal dismissal case that his date of employment was March 14, 1998, with a salary of P6,200.00 per month, and that he was dismissed on October 24, 2009.24

In his reply,25 Tatel admitted having received on December 11, 2009 the November 26, 2009 Memorandum directing him to report back to work for reassignment. However, when he went to the JLFP office, he was merely advised to "wait for possible posting."26 He repeatedly went back to the office for reassignment, but to no avail. He likewise refuted respondents' claim that he abandoned his work, insisting that after working for JLFP for more than eleven (11) years, it was illogical for him to

refuse any assignments, more so, to abandon his work and security of tenure without justifiable reasons.27

The LA Ruling

In a Decision28 dated September 20, 2010, the LA dismissed Tatel's illegal dismissal complaint for lack of merit.29The LA did not give credence to Tatel' s allegation of dismissal in light of the inconsistent statements he made under oath in the two (2) labor complaints he had filed against the respondents. The LA noted that said inconsistent statements "relate not only to the dates that he was hired and supposedly fired but, more glaringly, to the amount of his monthly salaries."30 It also observed that Tatel failed to explain said inconsistencies. Aggrieved, Tatel appealed31 to the NLRC.

The NLRC Ruling

In a Decision32 dated February 9, 2011, the NLRC reversed and set aside the LA's Decision and found Tatel to have been illegally dismissed. Consequently, it directed respondents to reinstate him to his last position without loss of seniority or diminution of salary and other benefits, as well as to pay him the following: (a) backwages from the time of his illegal dismissal on August 24, 2009 until finality of the Decision; (b) underpaid wages computed for a period of three (3) years prior to the filing of the complaint until finality; (c) cash bond deposit refund amounting to P25,400.00; and (d) attorney's fees equivalent to ten percent (10%) of the total award. It likewise ruled that if reinstatement was no longer viable due to the strained relationship between the parties, respondents are liable for separation pay equivalent to one (1) month's salary for every year of service computed from the time of Tatel's employment on March 14, 1998 until finality of the Decision. All other claims were denied for lack of merit.33

In so ruling, the NLRC rejected respondents' defense that Tatel abandoned his work, finding no rational explanation as to why an employee, who had worked for more than ten (10) years for his employer, would just abandon his work and forego whatever benefits were due him for the length of his service.34 Similarly, it debunked the claim of abandonment for failure of respondents to prove by substantial evidence the elements thereof, i.e., (a) that the employee must have failed to report for work or must have been absent without valid or justifiable reason, and ( b) there must have been a clear intention to sever the employer-employee relationship as manifested by overt acts.35

Moreover, the NLRC ruled that Tatel's dismissal was not constructive but actual, and considered his being pulled out from his post on August 24, 2009 as the operative act of his dismissal. It likewise found no just and valid ground for Tatel's dismissal; neither was procedural due process complied with to effectuate the same.36

Respondents' motion for reconsideration37 was denied in a Resolution38 dated March 31, 2011. Dissatisfied, they elevated the case to the CA via petition for certiorari39 on June 10, 2011. Meanwhile, pre-execution conferences were held at the NLRC,40 and on July 29, 2011, respondents filed a Motion for Computation,41 alleging that Tatel failed to report back to work despite the Return-to-Work Order42 dated February 22, 2011, claiming "strained relations" with respondents and manifesting that he was already employed with another company at the time he received the aforesaid order.43

The CA Ruling

In a Decision44 dated November 14, 2012, the CA reversed and set aside the NLRC's February 9, 2011 Decision and reinstated the LA's September 20, 2010 Decision dismissing the illegal dismissal complaint filed by Tatel.45Finding grave abuse of discretion on the part of the NLRC in rendering its assailed Decision, the CA instead concurred with the stance of the LA that Tatel' s inconsistent statements cannot be given weight vis-a-vis the evidence presented by the respondents.46 In this regard, the CA declared that if Tatel could not be truthful about the most basic information or explain such inconsistencies, the same may hold true for his claim for illegal dismissal.47

Further, the CA rejected the NLRC's finding that the operative act of Tatel's dismissal was the act of pulling him out from his assignment on August 24, 2009 when in the complaint sheets of both the illegal dismissal case and the underpayment case, Tatel claimed that he was dismissed on October 13, 2009

and October 24, 2009, respectively.48 It noted that the NLRC failed to consider that Tatel was subsequently reassigned to SKI from September 16, 2009 to October 12, 2009, and thereafter, to IPVG from October 21 to 23, 2009, which Tatel never disputed nor denied.49

Corollary thereto, the CA found that Tatel ignored the November 26, 2009 Memorandum directing him to report to work for possible reassignment signifying that he abandoned his work and that, consequently, there was no dismissal to begin with.50 That he was given subsequent postings clearly manifest that there was no intention to dismiss him, hence, he could not have been illegally dismissed.51

Tatel moved for reconsideration,52 which was denied in a Resolution53 dated April 22, 2013; hence, this petition.

T he Issue Before The Court

The sole issue for the Court's resolution is whether or not the CA erred in ruling that the NLRC gravely abused its discretion in finding Tatel to have been illegally dismissed.

The Court's Ruling

The petition is meritorious.

It is a well-settled rule in this jurisdiction that only questions of law may be raised in a petition for review on certiorari under Rule 45 of the Rules of Court, this Court being bound by the findings of fact made by the appellate court.54 The Court's jurisdiction is limited to reviewing errors of law that may have been committed by the lower court.55 The rule, however, is not without exception. In New City Builders, Inc. v. NLRC,56 the Court recognized the following exceptions to the general rule, to wit: ( 1) when the findings are grounded entirely on speculation, surmises or conjectures; (2) when the inference made is manifestly mistaken, absurd or impossible; (3) when there is grave abuse of discretion; (4) when the judgment is based on a misapprehension of facts; (5) when the findings of facts are conflicting; (6) when in making its findings the CA went beyond the issues of the case, or its findings are contrary to the admissions of both the appellant and the appellee; (7) when the findings are contrary to the trial court; (8) when the findings are conclusions without citation of specific evidence on which they are based; (9) when the facts set forth in the petition, as well as in the petitioner's main and reply briefs, are not disputed by the respondent; (10) when the findings of fact are premised on the supposed absence of evidence and contradicted by the evidence on record; and (11) when the CA manifestly overlooked certain relevant facts not disputed by the parties, which, if properly considered, would justify a different conclusion.57

The exception, rather than the general rule, applies in the present case.1âwphi1 When the findings of fact of the CA are contrary to those of the NLRC, whose findings also diverge from those of the LA, the Court retains its authority to pass upon the evidence and, perforce, make its own factual findings based thereon.58

At the core of this petition is Tatel' s insistence that he was illegally dismissed when, after he was put on "floating status" on October 24, 2009, respondents no longer gave him assignments or postings, and the period therefor had lasted for more than six ( 6) months. On the other hand, respondents maintained that Tatel abandoned his work, and that his inconsistent statements before the labor tribunals regarding his work details rendered his claim of illegal dismissal suspect.

After a judicious perusal of the records, the Court is convinced that Tatel was constructively, not actually, dismissed after having been placed on "floating status" for more than six ( 6) months, reckoned from October 24, 2009, the day following his removal from his last assignment with IPVG on October 23, 2009, and not on August 24, 2009 as erroneously held by the NLRC.

In Superstar Security Agency, Inc. and/or Col. Andrada v. NLRC,59 the Court ruled that placing an employee on temporary "off-detail" is not equivalent to dismissal provided that such temporary inactivity should continue only for a period of six (6) months.60 In security agency parlance, being placed "off-detail" or on "floating status" means "waiting to be posted."61 In Salvaloza v. NLRC,62 the Court further

explained the nature of the "floating status," to wit: Temporary "off-detail" or "floating status" is the period of time when security guards are in between assignments or when they are made to wait after being relieved from a previous post until they are transferred to a new one. It takes place when the security agency's clients decide not to renew their contracts with the agency, resulting in a situation where the available posts under its existing contracts are less than the number of guards in its roster. It also happens in instances where contracts for security services stipulate that the client may request the agency for the replacement of the guards assigned to it even for want of cause, such that the replaced security guard may be placed on temporary "off-detail" if there are no available posts under the agency's existing contracts. During such time, the security guard does not receive any salary or any financial assistance provided by law. It does not constitute a dismissal, as the assignments primarily depend on the contracts entered into by the security agencies with third parties, so long as such status does not continue beyond a reasonable time. When such a "floating status" lasts for more than six (6) months, the employee may be considered to have been constructively dismissed.63 (Emphasis supplied)

Relative thereto, constructive dismissal exists when an act of clear discrimination, insensibility, or disdain, on the part of the employer has become so unbearable as to leave an employee with no choice but to forego continued employment,64 or when there is cessation of work because continued employment is rendered impossible, unreasonable, or unlikely, as an offer involving a demotion in rank and a diminution in pay.65

In this case, respondents themselves claimed that after having removed Tatel from his post at BaggerWerken on August 24, 2009 due to several infractions committed thereat, they subsequently reassigned him to SKI from September 16, 2009 to October 12, 2009 and then to IPVG from October 21 to 23, 2009. Thereafter, and until Tatel filed the instant complaint for illegal dismissal six (6) months later, or on May 4, 2010, he was not given any other postings or assignments. While it may be true that respondents summoned him back to work through the November 26, 2009 Memorandum, which Tatel acknowledged to have received on December 11, 2009, records are bereft of evidence to show that he was given another detail or assignment. As the "off-detail" period had already lasted for more than six ( 6) months, Tatel is therefore deemed to have been constructively dismissed.

In this regard, the Court concurs with the finding of the NLRC that respondents failed to establish that Tatel abandoned his work. To constitute abandonment, two elements must concur: (a) the failure to report for work or absence without valid or justifiable reason, and (b) a clear intention to sever the employer-employee relationship, with the second element as the more determinative factor and being manifested by some overt acts. Mere absence is not sufficient. The employer has the burden of proof to show a deliberate and unjustified refusal of the employee to resume his employment without any intention of returning.66 Abandonment is incompatible with constructive dismissal.67

The charge of abandonment in this case is belied by the high improbability of Tatel intentionally abandoning his work, taking into consideration his length of service and, concomitantly, his security of tenure with JLFP. As the NLRC had opined, no rational explanation exists as to why an employee who had worked for his employer for more than ten (10) years would just abandon his work and forego whatever benefits he may be entitled to as a consequence thereof.68 As such, respondents failed to sufficiently establish a deliberate and unjustified refusal on the part of Tatel to resume his employment, which therefore leads to the logical conclusion that the latter had no such intention to abandon his work.

Moreover, Tatel refuted respondents' allegation that he did not heed their directive to return to work following his receipt of the November 26, 2009 Memorandum. The Court finds no compelling reason not to give credence to such rebuff, especially in light of the filing of the instant complaint for illegal dismissal. An employee who forthwith takes steps to protest his layoff cannot, as a general rule, be said to have abandoned his work, and the filing of the complaint is proof enough of his desire to return to work, thus negating any suggestion of abandonment.69 As the Court sees it, it is simply incongruent for Tatel to refuse any offer of an assignment and thereafter, seek redress by filing a case for illegal dismissal.

That Tatel made inconsistent statements pertaining to his work details in the underpayment case and the instant illegal dismissal case does not affect the Court's conclusion that he was constructively dismissed. In his petition, he explained that he was hired by JLFP in March 1997 but became a regular

employee on March 14, 1998.70 In this regard, respondents themselves have stated that they hired Tatel on March 14, 1998,71 which effectively puts the issue to rest.

Similarly, Tatel clarified the discrepancy in his declared salaries, stating that Pl2,400.00 was the amount of his monthly salary, which therefore translates to P6,200.00 every fifteen (15) days. Such explanation is reasonable and is not far-fetched; hence, the Court accepts the same. Likewise, Tatel explained that he was constructively dismissed on October 13, 2009, after he had filed the underpayment case against respondents on October 11, 2009, and believed that he was actually dismissed on October 24, 2009. On this score, the Court finds that he was constructively dismissed on October 24, 2009, as adverted to elsewhere, considering that he was still given a last detail at the IPVG from October 21 to 23, 2009. In any case, six (6) months have already lapsed since Tatel was last given any assignment, hence, he is deemed to have already been constructively dismissed when he filed the instant case.

For all the foregoing reasons, the CA therefore erred in ascribing grave abuse of discretion on the part of the NLRC which, in fact, correctly found Tatel to have been illegally dismissed. Verily, an act of a court or tribunal can only be considered to be tainted with grave abuse of discretion when such act is done in a capricious or whimsical exercise of judgment as is equivalent to lack of jurisdiction;72 this is clearly not the case with respect to the pronouncement of the NLRC here. In consequence of the foregoing, Tatel is entitled to reinstatement and back wages. However, as reinstatement is no longer feasible in this case because of the strained relations between the parties and the fact that Tatel had since been employed with another company, separation pay is awarded in lieu of reinstatement.73 On the matter of the computation of the monetary awards, the Court delegates and defers the same to the NLRC, being a matter falling within its expertise.74

WHEREFORE, the petition is GRANTED. The Decision dated November 14, 2012 and the Resolution dated April 22, 2013 rendered by the Court of Appeals in CA-G.R. SP No. 119997 are hereby REVERSED and SET ASIDE. The Decision dated February 9, 2011 and the Resolution dated March 31, 2011 of the National Labor Relations Commission (NLRC) are REINSTATED with MODIFICATION reckoning the computation of back wages from the date of petitioner's constructive dismissal on October 24, 2009 until finality hereof, computed at P12,400.00 per month. The rest of the NLRC Decision stands.

SO ORDERED.

G.R. No. 177845 August 20, 2014

GRACE CHRISTIAN HIGH SCHOOL, represented by its Principal, DR. JAMES TAN, Petitioner, vs. FILIPINAS A. LAVANDERA, Respondent.

D E C I S I O N

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari1 is the Decision2 dated April 30, 2007 of the Court of Appeals (CA) in CA-G.R. SP. No. 75958 which affirmed with modification the Decision3 dated August 30, 2002 of the National Labor Relations Commission (NLRC) in NLRC CA No. 031739-02, applying the 22.5-day multiplier in computing respondent Filipinas A. Lavandera' s (Filipinas) retirement benefits differential, with legal interest reckoned from the filing date of the latter's illegal dismissal complaint.

The Facts

Filipinas was employed by petitioner Grace Christian High School (GCHS) as high school teacher since June1977, with a monthly salary of 18,662.00 as of May 31, 2001.4

On August 30, 2001,5 Filipinas filed a complaint for illegal (constructive) dismissal, non-payment of service incentive leave (SIL) pay, separation pay, service allowance, damages, and attorney’s fees against GCHS6 and/or its principal,7 Dr. James Tan. She alleged that on May 11, 2001, she was informed that her serviceswere to be terminated effective May 31, 2001, pursuant to GCHS’ retirement plan which gives the school the option to retire a teacher who has rendered at least 20 years of service, regardless of age, with a retirement pay of one-half (½) month for every year of service. At that time, Filipinas was only 58 years old and still physically fit to work. She pleaded with GCHS toallow her to continue teaching but her services were terminated,8 contrary to the provisions of Republic Act No. (RA) 7641,9 otherwise known as the "Retirement Pay Law."

For their part, GCHS denied that they illegally dismissed Filipinas. They asserted that the latter was considered retired on May 31, 1997 after having rendered 20 years of service pursuant to GCHS’ retirement plan and that she was duly advised that her retirement benefits in the amount of 136,210.00 based on her salary atthe time of retirement, i.e., 13,621.00, had been deposited to the trustee-bank in her name. Nonetheless, her services were retained on a yearly basis until May 11, 2001 when she was informed that her year-to-year contract would no longer be renewed.10

The LA Ruling

In a Decision11 dated March 26, 2002, the Labor Arbiter (LA) dismissed the illegal dismissal complaint for lack of merit.

The LA found that GCHS has a retirement plan for its faculty and non-faculty members which pertinently provides:

ARTICLE X RETIREMENT DATES12

Section 1. Normal Retirement Date– For qualified members of the Plans, the normal retirement date shall be the last day of the month during which he attains age sixty (60) regardless of length of service or upon completion of 20 years of service unless extended at the option of the School. Such extension is subject tothe approval of the School on a case to case and year to year basis. The School reserves the right to require an employee before it approveshis application for an extension of service beyond the normal retirement date, to have a licensed physician appointed by the School, certify that the employee concerned has no physical and/or mental impediments which will prevent the employee from performing the duties in the School.13 (Emphasis supplied)

Consequently, the LA ruled that Filipinas was not terminated from employment but was considered retired14 as of May 31, 1997 after rendering 20 years of service15 and was only allowed by GCHS to continue teaching on a year-to-year basis (until May 31, 2001)in the exercise of its option to do so under the aforementioned retirement plan until she was informed that her contract would not be renewed.16

Nonetheless, the LA found the retirement benefits payable under GCHS retirement plan to be deficient vis-à-vis those provided under RA 7641,17 and, accordingly, awarded Filipinas retirement pay differentials based on her latest salaryas follows:

P18,662.00/30 = P622.06/day

P622.06 x 22.5 = P13,996.35 x 20 = P279,927.00 - P136,210.00

P143,717.00

18

The LA, however, denied Filipinas’claims for service allowance, salary increase, and damages for lack of sufficient bases, but awarded her attorney’s fees equivalent to five percent (5%) of the total award, or the amount ofP7,185.85.19

Dissatisfied, GCHS filed an appeal before the NLRC.

The NLRC Ruling

In a Decision20 dated August 30, 2002 (August 30, 2002 Decision), the NLRC set aside the LA’s award, and ruled that Filipinas’ retirement pay should be computed based on her monthly salary at the time of her retirementon May 31, 1997, i.e., 13,621.00. Moreover, it held that under Article 287 of the Labor Code, as amended by RA 7641, the retirement package consists of 15 days salary, plus 13th month pay and SIL pay pro-rated to their one-twelfth (1/12) equivalent.21

In view of the foregoing, the NLRC awarded Filipinas retirement pay differentials in the amount of 27,057.20consisting of one-twelfth (1/12) of the 13th month pay and SIL pay based on her salary at the time of her retirement on May 31, 1997, or 13,621.00 multiplied by 20 years. It, however, deleted the award of attorney’s fees for failure of Filipinas to show that GCHS had unreasonably and in bad faith refused to pay her retirement benefits.22

Aggrieved, Filipinas filed a petition for certioraribefore the CA.

The CA Ruling

In a Decision23 dated April 30, 2007, the CA affirmed with modification the NLRC’s Decision. It held that the Court, in the case of Capitol Wireless, Inc.v. Sec. Confesor,24 has simplified the computation of "one-half month salary" by equating it to"22.5 days" which is "arrived at after adding 15 days plus 2.5 days representing one-twelfth of the 13th month pay, plus 5 days of [SIL]."25 Accordingly, it computed Filipinas’ retirement benefits differential as follows:

1âwphi1

Monthly salary P13,624.00 26

÷ 30 days ÷ 30 days

Daily rate P454.13 27

x 22.5 days x 22.5 days

1/2 month salary28

P10,218.00

x 20 years x 20 years

Total amount of retirement benefits P204,360.00

- Amount deposited in trust P136,210.00

Retirement benefits differential P68,150.00 29

The CA further imposed legal interestat the rate of six percent (6%) per annum on the award reckoned from the date of the filing of the illegal dismissal complaint until actual payment30 pursuant to the Court’s Decision in Manuel L. Quezon University v. NLRC(MLQU v. NLRC).31 Unperturbed, GCHS filed the instant petition.

The Issue before the Court

The essential issue in this case is whether or not the CA committed reversible error in using the multiplier "22.5 days" in computing the retirement pay differentials of Filipinas.

The Court’s Ruling

The petition is bereft of merit.

RA 7641, which was enacted on December 9, 1992, amended Article 287 of the Labor Code, providing for the rules on retirement pay to qualified private sector employees in the absence of any retirement plan in the establishment. The said law32 states that "an employee’s retirement benefits under any collective bargaining [agreement (CBA)] and other agreements shall not be less than those provided" under the same – that is, at least onehalf (1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one whole year – and that "[u]nless the parties provide for broader inclusions, the term one-half (1/2) month salary shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of service incentive leaves."

The foregoing provision is applicable where (a) there is no CBA or other applicable agreement providing for retirement benefits to employees, or (b) there is a CBA or other applicableagreement providing for retirement benefits but it is below the requirement set by law.33 Verily, the determining factor in choosing which retirement scheme to apply is still superiority in terms of benefits provided.34

In the present case, GCHS has a retirement plan for its faculty and non-faculty members, which gives it the option to retire a teacher who has rendered at least 20 years of service, regardless of age, with a retirement pay of one-half (1/2) month for every year ofservice. Considering, however, that GCHS computed Filipinas’ retirement pay without including one-twelfth (1/12) of her 13th month pay and the cash equivalent of her five (5) days SIL, both the NLRC and the CA correctly ruled that Filipinas’ retirement benefits should be computed in accordance withArticle 287 of the Labor Code, as amended by RA 7641, being the more beneficent retirement scheme. They differ, however, in the resulting benefit differentials due to divergent interpretations of the term "one-half (1/2) month salary" as used under the law.

The Court, in the case of Elegir v. Philippine Airlines,Inc.,35 has recently affirmed that "one-half (1/2) month salary means 22.5 days: 15 days plus 2.5 days representingone-twelfth (1/12) of the 13th month pay and the remaining 5 days for [SIL]."36 The Court sees no reason to depart from this interpretation. GCHS’ argument37 therefore that the 5 days SIL should be likewise pro-rated to their 1/12 equivalent must fail.1âwphi1

Section 5.2, Rule II38 of the Implementing Rules of Book VI of the Labor Code, as amended, promulgated to implement RA 7641, further clarifies what comprises the "½ month salary" due a retiring employee, to wit:

RULE II Retirement Benefits

x x x x

SEC. 5. Retirement Benefits.

x x x x

5.2 Components of One-half (1/2) Month Salary.— For the purpose of determining the minimum retirement pay due an employee under this Rule, the term "one-half month salary" shall include all the following:

(a) Fifteen (15) days salary of the employee based on his latest salary rate. As used herein, the term "salary" includes all remunerations paid by an employer to his employees for services rendered during normal working days and hours, whether such payments are fixed or ascertained on a time, task, piece or commission basis, or other method of calculating the same, and includes the fair and reasonable value, as determined by the Secretary of Labor and Employment, of food, lodging or other facilities customarily furnished by the employer to his employees. The term does not include cost of living allowance,profit-sharing payments and other monetary benefits which are not considered as part of or integrated into the regular salary of the employees.

(b) The cash equivalent of not more than five (5) days of service incentive leave;

(c) One-twelfth of the 13th month paydue the employee.

(d) All other benefits that the employer and employee may agree upon that should be included in the computation of the employee’s retirement pay.

x x x x (Emphases supplied)

The foregoing rules are, thus, clear that the whole 5 days of SIL are included in the computation of a retiring employees’ pay,39 as correctly ruled by the CA.1âwphi1

Nonetheless, the Court finds that the award of legal interest at the rate of 6% per annum on the amount ofP68,150.00 representing the retirement pay differentials due Filipinas should be reckoned from the rendition of the LA's Decision on March 26, 2002 and not from the filing of the illegal dismissal complaint as ordered by the CA,40 in accordance with the ruling in Eastern Shipping Lines, Inc. v. CA41 (Eastern Shipping). Unlike in MLQU v. NLRC, where the retired teachers sued for the payment of the deficiency in their retirement benefits, Filipinas' complaint was for illegal (constructive) dismissal, and the obligation to provide retirement pay was only determined upon the rendition of the LA's Decision, which also found the same to be deficient vis-a-vis those provided under RA 7641. As such, it is only from the date of the LA's Decision that GCHS' obligation to pay Filipinas her retirement pay differentials may be deemed to have been reasonably ascertained and its payment legally adjudged to be due, although the actual base for the computation of legal interest shall be on the amount finally adjudged. As held in the Eastern Shipping case:42

When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated claims or damages except when or until the demand can be established with reasonable certainty. Accordingly, where the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code) but when such certainty cannot be so reasonably established at the time the demand is made, the interest shall begin to run only from the date the judgment of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained). The actual base for the computation of legal interest shall, in any case, be on the amount finally adjudged. (Emphases supplied)

WHEREFORE, the petition is DENIED. The Decision dated April 30, 2007 of the Court of Appeals in CA-G.R. SP. No. 75958 is hereby AFFIRMED with MODIFICATION that the legal interest at the rate of six percent (6%) per annum on the amount of P68,150.00 representing the retirement pay differentials payable by petitioner Grace Christian High School to respondent Filipinas A. Lavandera shall be reckoned from the promulgation of the Labor Arbiter's Decision on March 26, 2002 until full payment.

SO ORDERED.

G.R. No. 156644 July 28, 2008

UNIVERSAL ROBINA SUGAR MILLING CORPORATION (URSUMCO) and/or RENATO CABATI, as Manager,Petitioners, vs. AGRIPINO CABALLEDA and ALEJANDRO CADALIN, Respondents.

D E C I S I O N

NACHURA, J.:

Before this Court is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Civil Procedure seeking the reversal of the Court of Appeals (CA) Decision2 dated September 11, 2002 which modified the Decision3 of the National Labor Relations Commission (NLRC) dated January 27, 2000.

The Facts

Petitioner Universal Robina Sugar Milling Corporation (URSUMCO) is a domestic corporation engaged in the sugar milling business and petitioner Renato Cabati4 is URSUMCO's manager.

Respondent Agripino Caballeda (Agripino) worked as welder for URSUMCO from March 1989 until June 23, 1997 with a salary of P124.00 per day, while respondent Alejandro Cadalin (Alejandro) worked for URSUMCO as crane operator from 1976 up to June 15, 1997 with a salary of P209.30 per day.

On April 24, 1991, John Gokongwei, Jr., President of URSUMCO, issued a Memorandum5 establishing the company policy on "Compulsory Retirement" (Memorandum) of its employees. The memorandum provides:

All employees corporate-wide who attain 60 years of age on or before April 30, 1991 shall be considered retired on May 31, 1991.

Henceforth, any employee shall be considered retired 30 days after he attains age 60.

Personnel department shall prepare the retirement notices to be co-signed and served by respective Department managers to employees concerned. The notices must be served as least 30 days before the designated retirement date. Reports of retiring/retired employees shall be submitted by the Personnel Department every end of the month to the President, copy furnished the Senior Vice-Presidents.

Employees who are retiring on May 11, 1991 shall continue reporting to work up to the middle of May. Thereafter, they may make use of their remaining vacation leave credits. Similarly, employees considered retired 30 days after attainment of age 60 shall continue reporting for work during the first hall of the 30-day period, then make use of available VL credits.

Vacation and sick leave credits remaining unused by the employee’s designated retirement date shall be converted into cash (VL at 100%, SL at 50% or per CBA) and be included with the Final Accountability/Retirement Benefits. Accountability clearance shall be per SOP.

Engaging the services of any retiree after his retirement must first be cleared with the President or the Senior Vice-President concerned especially the terms and condition of such engagement. Retirees can be re-engaged only under a Retainer or Consultancy arrangement and only for a limited period of time.

Subsequently, on December 9, 1992, Republic Act (RA) No. 76416 was enacted into law, and it took effect on January 7, 1993,7 amending Article 287 of the Labor Code, to read:

Art. 287. Retirement. — Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract.

In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned under existing laws and any collective bargaining agreement and other agreements: Provided, however, That an employee's retirement benefits under any collective bargaining and other agreements shall not be less than those provided herein.

In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age, who has served at least five (5) years in the said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one whole year.

Unless the parties provide for broader inclusions, the term one-half (1/2) month salary shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of service incentive leaves.

xxxx

Retail, service and agricultural establishments or operations employing not more than (10) employees or workers are exempted from the coverage of this provision.

Violation of this provision is hereby declared unlawful and subject to the penal provisions provided under Article 288 of this Code.

On April 29, 1993, URSUMCO and the National Federation of Labor (NFL), a legitimate labor organization and the recognized sole and exclusive bargaining representative of all the monthly and daily paid employees of URSUMCO, of which Alejandro was a member, entered into a Collective Bargaining Agreement (CBA).8 Article XV of the said CBA particularly provided that the retirement benefits of the members of the collective bargaining unit shall be in accordance with law.9

Agripino and Alejandro (respondents), having reached the age of 60, were allegedly forced to retire by URSUMCO. Agripino averred that URSUMCO illegally dismissed him from employment on June 24, 1997 when he was forced to retire upon reaching the age of sixty (60) years old. Upon the termination of his employment, he accepted his separation pay and applied for retirement benefits with the Social Security System (SSS). Earlier, on April 15, 1997, Alejandro turned 60 years old. On May 28, 1997, he filed his application for retirement with URSUMCO, attaching his birth and baptismal certificates. On July 23, 1997, he accepted his retirement benefits and executed a quitclaim in favor of URSUMCO.

Thereafter, on August 6, 1997, Agripino filed a Complaint10 for illegal dismissal, damages and attorney’s fees before the Labor Arbiter (LA) of Dumaguete City. He alleged that his compulsory retirement was in violation of the provisions of Republic Act (R.A.) 7641 and, was in effect, a form of illegal dismissal.

On August 26, 1997, Alejandro likewise filed a Complaint11 for illegal dismissal, underpayment of retirement benefits, damages and attorney’s fees before the LA, alleging that he was given only 15 days per year of service by way of retirement benefits and further assails that his compulsory

retirement was discriminatory considering that there were other workers over sixty (60) years of age who were allowed to continuously report for work.

The LA's Ruling

On September 30, 1998, the LA rendered a Decision,12 the dispositive portion of which reads:

WHEREFORE, premises considered, judgment is hereby rendered declaring the respondent guilty of illegal dismissal and thus ordered to pay complainants: Agripino Caballeda and Alejandro Cadalin their respective backwages from: June 23, 1997 and from June 15, 1997 up to the promulgation of this

Decision. Also, the respondent is hereby ordered to reinstate the complainants to their former or equivalent positions without loss of seniority rights and privileges appurtenant thereto.

The computation of complainants’ awards is shown below and forms as integral part of this Decision.

1. AGRIPINO CABALLEDA June 23, 1997 – Sept. 30, 1998

= 1 year and 3 months

= 15 months

= P124.00 x 26 days x 15 months . . . . P48,360.00

2. ALEJANDRO CADALIN June 15, 1997 – Sept. 30, 1998

= 1 year and 3 months

= 15 months

= P209.00 x 26 x 15 months . . . . . P 81,627.00

TOTAL . . . . . . . . . . . P129,987.00

A ten percent (10%) attorney’s fees is also adjudicated from the aggregate award. All other claims are Dismissed for lack of merit.

SO ORDERED.

The NLRC's Ruling

Petitioners appealed to the NLRC. On January 27, 2000, the NLRC held that Alejandro voluntarily retired because he freely submitted his application for retirement together with his birth and baptismal certificates. Moreover, he had his clearance processed and he received the amount of P33,476.77 as retirement benefit. Nevertheless, the NLRC found that since Alejandro's retirement benefit was based merely on fifteen (15) days salary for every year of service, such benefit should be recomputed to conform to the provisions of Art. 287 of the Labor Code as amended. With respect to Agripino, the NLRC held that URSUMCO's claim that Agripino was a mere casual employee was obviously designed to avoid paying Agripino his retirement benefit. Thus, the NLRC ruled:

WHEREFORE, premises considered, the decision of the Labor Arbiter is hereby SET ASIDE and VACATED and a new one entered DISMISSING the complaint for illegal dismissal. Respondents are hereby ordered to pay complainants their retirement benefits computed as follows:

1. Alejandro Cadalin: Jan. 13/88 to June 15/97 = 9 years, 5 months & 3 days

a) P209.58/day x 15 days = P3,143.70

b) 1/12 of 13th Month Pay = 523.95

c) 5 days SILP = 1,047.90

P4,715.55

P4,715.55/year of service x 9 years = P42,439.95

Less:Retirement proceeds received (p. 107, records) 28,293.30 Retirement differential of Alejandro Cadalin = P 14,146.65

2. Agripino Caballeda: March 1989 to June 23/97 = 8 years, 3 months & 3 days

a) 124.00/day x 15 days = 1,860.00

b) 1/12 of 13th Month Pay = 310.00

c) 5 days SILP = 620.00

P2,790.00

P2,790.00/year of service x 8 years = Retirement benefits of Agripino Caballeda P 22,320.00

SO ORDERED.13

Respondents filed their Motion for Reconsideration14 which the NLRC denied in its Resolution15 dated May 22, 2000, on the ground that it was the respondents who voluntarily applied for retirement upon reaching the age of 60 pursuant to the CBA and established company policy.

Aggrieved, respondents went to the CA via a Petition for Certiorari. 16

The CA's Ruling

The CA declared that URSUMCO illegally dismissed the respondents since the Memorandum unilaterally imposed upon the respondents compulsory retirement at the age of 60. The CA found that there is no existing CBA or employment contract between the parties that provides for early compulsory retirement. Hence, the CA held:

It is beyond doubt that [petitioner] violated the rights of the [respondents] [insofar] as the latter were not given the prerogative to choose for themselves to retire early or wait for the compulsory retirement age which is sixty[-five] (65) years. "If the intention to retire is not clearly established or if the retirement is involuntary, it is to be treated as discharge" (San Miguel Corporation vs. National Labor Relations Commission, 293 SCRA 13, 21[,] citing the case of De Leon vs. NLRC, 100 SCRA 691 [1980]). Corollary, such involuntary retirement on the part of [respondents] was in effect an illegal dismissal.17

However, the CA held that the NLRC properly computed the retirement benefits of the respondents. Thus:

WHEREFORE, premises considered, the assailed Decision dated January 27, 2000 of the National Labor Relations Commission, Fourth Division, Cebu City is hereby AMENDED as follows:

1. The respondents are hereby ordered to pay the petitioners their retirement benefits computed as follows:

(1) Alejandro Cadalin Jan. 13/88 to June 15/97 = 9 years, 5 months & 3 days

a.) P209.58/days x 15 days = 3,143.70

b.) 1/12 of 13th Month Pay = 523.95

c.) 5 days SILP = 1,047.90

P4,715.55

P4,715.55/year of service x 9 years = P42,439.95

Less: Retirement proceeds received (p. 107, records) 28,293.30 Retirement differential of Alejandro Cadalin P14,146.65

(2) Agripino Caballeda March 1989 to June 23/97 = 8 years, 3 months & 3 days

a.) P124.00/day x 15 days = 1,860.00

b.) 1/12 of 13th Month Pay 310.00

c.) 5 days SILP 620.00

P2,790.00

P2,790/year of service x 8 years Retirement benefits of Agripino Caballeda P22,320.00

2. The respondents are further ordered to pay the petitioners their backwages computed from June 1997 up to 2002.

SO ORDERED.18

On October 7, 2002, petitioners filed a Motion for Reconsideration19 which the CA denied in its Resolution20dated January 8, 2003 for lack of merit.

Hence, this Petition raising the following issues:

I. WHETHER OR NOT THE RESPONDENTS AGRIPINO CABALLEDA AND ALEJANDRO CADALIN VOLUNTARILY RETIRED FROM THE SERVICE.

II WHETHER OR NOT THE NEW RETIREMENT LAW CAN BE GIVEN RETROACTIVE EFFECT UNDER PAIN OF VI[O]LATING THE NON-IMPAIRMENT CLAUSE ENSHRINED IN THE BILL OF RIGHTS OF THE PHILIPPINE CONSTITUTION.

III. WHETHER OR NOT CABALLEDA IS A SEASONAL WORKER IN THE SUGAR INDUSTRY, AND NOT A CASUAL WORKER AS ERRONEOUSLY TERMED BY THE COURT OF APPEALS.

IV. WHETHER OR NOT THE FINDING OF THE COURT OF APPEALS THAT THE RESPONDENTS ARE ENTITLED TO RETIREMENT DIFFERENTIAL IS CONTRARY TO LAW AND JURISPRUDENCE.21

Petitioners submit that there is a need to review the records and evidence in this case since the factual findings of the LA and the CA are in conflict with those of the NLRC; that petitioners stand by the factual findings of the NLRC that Alejandro voluntarily retired from the service and as proof, he executed a valid quitclaim in favor of petitioners; that R.A. 7641 cannot be given retroactive effect since there is an existing CBA that covers the retirement benefits of the employees; that the Memorandum was no longer being implemented at the time of respondents' retirement since R.A. 7641 was already in effect at the time, thus, the CA erred when it ruled that respondents were forced to retire pursuant to said Memorandum; that the CBA entered into by URSUMCO and the NFL of which Alejandro is a member, is proof that URSUMCO stopped implementing the Memorandum and that, assuming the said Memorandum was still implemented despite the advent of R.A. 7641 and the CBA, retirement notices should have been served to the respondents as directed by the Memorandum or, at most, a collective

action should have been taken against URSUMCO by NFL. With respect to Agripino, petitioners claim that he is merely a seasonal or project worker and not a casual worker since the sugar milling business is seasonal in nature; that as such, Agripino was not forced to retire, rather the termination of his employment was essentially based on the fact that the period stated in his contract with URSUMCO had already lapsed; and that assuming Agripino is not a project employee, his retirement pay should be reduced proportionately by the number of months per year that his services were not engaged by URSUMCO since the milling season covers only six months within a year.22

On the other hand, respondents aver that petitioners’ plea for this Court to review the facts and pieces of evidence presented below is contrary to the rule that the issues in cases brought before this Court via a petition for review under Rule 45 are limited only to questions of law; that respondents were forced to retire at the age of 60 by virtue of the Memorandum which the employees did not ratify or freely agree upon, hence, respondents' dismissal from work was without valid cause and due process, amounting to illegal dismissal; that the Memorandum which unilaterally directed the compulsory retirement of employees reaching the age of 60 is contrary to the security of tenure guaranteed in the Constitution, Art. 287 of the Labor Code as amended by R.A. 7641, pertinent Labor and Civil Code provisions, public policy and good customs; and that the respondents were merely compelled to sign the prepared retirement forms and comply with the other retirement requirements because they were no longer given any work assignment and they could only receive their retirement benefits if they sever their employment relations with URSUMCO and comply with the latter's directives. Respondents submit that they were given no option but to follow URSUMCO's orders regarding their retirement, hence, the same was not voluntary.23

Based on the foregoing, this Court is called upon to resolve three ultimate issues, as follows:

1. Whether R.A.7641 can be given retroactive effect;

2. Whether Agripino is a seasonal or project employee; and

3. Whether respondents were illegally terminated on account of compulsory retirement or the same voluntarily retired.

The Court's Ruling

The Petition lacks merit.

First. The issue of the retroactive effect of R.A. 7641 on prior existing employment contracts has long been settled. In Enriquez Security Services, Inc. v. Cabotaje,24 we held:

RA 7641 is undoubtedly a social legislation. The law has been enacted as a labor protection measure and as a curative statute that — absent a retirement plan devised by, an agreement with, or a voluntary grant from, an employer — can respond, in part at least, to the financial well-being of workers during their twilight years soon following their life of labor. There should be little doubt about the fact that the law can apply to labor contracts still existing at the time the statute has taken effect, and that its benefits can be reckoned not only from the date of the law's enactment but retroactively to the time said employment contracts have started.

This doctrine has been repeatedly upheld and clarified in several cases.25 Pursuant thereto, this Court imposed two (2) essential requisites in order that R.A. 7641 may be given retroactive effect: (1) the claimant for retirement benefits was still in the employ of the employer at the time the statute took effect; and (2) the claimant had complied with the requirements for eligibility for such retirement benefits under the statute.

It is evident from the records that when respondents were compulsorily retired from the service, R.A. 7641 was already in full force and effect. The petitioners failed to prove that the respondents did not comply with the requirements for eligibility under the law for such retirement benefits. In sum, the aforementioned requisites were adequately satisfied, thus, warranting the retroactive application of R.A. 7641 in this case.

Second. It is a well-established rule that a petition for review on certiorari under Rule 45 of the Rules of Court should raise only questions of law, subject to certain exceptions.26 Whether or not Agripino was a seasonal/project employee or a regular employee is a question of fact.27 As such, this Court is not at liberty to review the said factual issue because our jurisdiction is generally limited to reviewing errors of law that the CA may have committed. Time and again, we have held that this Court is not a trier of facts, and it is not for us to re-examine and re-evaluate the probative value of evidence presented before the LA, the NLRC and the CA, which formed the basis of the assailed decision. Indeed, when their findings are in absolute agreement, the same are accorded not only respect but even finality as long as they are amply supported by substantial evidence.28

In this case, it is noteworthy that the LA, the NLRC and the CA are one in ruling that Agripino was not a casual employee much less a seasonal or project employee. In their findings, Agripino was considered a regular employee of URSUMCO. Consequently, such uniform finding of the LA, the NLRC, and the CA binds this Court. We find no cogent reason to depart from this ruling.

Third. Retirement is the result of a bilateral act of the parties, a voluntary agreement between the employer and the employee whereby the latter, after reaching a certain age, agrees to sever his or her employment with the former.29 The age of retirement is primarily determined by the existing agreement between the employer and the employees. However, in the absence of such agreement, the retirement age shall be fixed by law. Under Art. 287 of the Labor Code as amended, the legally mandated age for compulsory retirement is 65 years, while the set minimum age for optional retirement is 60 years.301avvphi1

In this case, it may be stressed that the CBA does not per se specifically provide for the compulsory retirement age nor does it provide for an optional retirement plan. It merely provides that the retirement benefits accorded to an employee shall be in accordance with law. Thus, we must apply Art. 287 of the Labor Code which provides for two types of retirement: (a) compulsory and (b) optional. The first takes place at age 65, while the second is primarily determined by the collective bargaining agreement or other employment contract or employer's retirement plan. In the absence of any provision on optional retirement in a collective bargaining agreement, other employment contract, or employer's retirement plan, an employee may optionally retire upon reaching the age of 60 years or more, but not beyond 65 years, provided he has served at least five years in the establishment concerned. That prerogative is exclusively lodged in the employee.31

Indubitably, the voluntariness of the respondents' retirement is the meat of the instant controversy. Petitioners postulate that respondents voluntarily retired particularly when Alejandro filed his application for retirement, submitted all the documentary requirements, accepted the retirement benefits and executed a quitclaim in favor of URSUMCO. Respondents claim otherwise, contending that they were merely forced to comply as they were no longer given any work assignment and considering

that the severance of their employment with URSUMCO is a condition precedent for them to receive their retirement benefits.

We rule in favor of respondents.

Generally, the law looks with disfavor on quitclaims and releases by employees who have been inveigled or pressured into signing them by unscrupulous employers seeking to evade their legal responsibilities and frustrate just claims of employees.32 They are frowned upon as contrary to public policy. A quitclaim is ineffective in barring recovery of the full measure of a worker's rights, and the acceptance of benefits therefrom does not amount to estoppel.33

The reason is laid down in Lopez Sugar Corporation v. Federation of Free Workers:34

The reason is plain. Employer and employee, obviously, do not stand on the same footing. The employer drove the employee to the wall. The latter must have to get hold of money. Because, out of the job, he had to face harsh necessities of life. He thus found himself in no position to resist money proferred. His, then, is a case of adherence, not of choice. One thing sure, however, is that petitioners

did not relent their claim. They pressed it. They are deemed not to have waived any of their rights. Renuntiatio non praesumitur.

In exceptional cases, the Court has accepted the validity of quitclaims executed by employees if the employer is able to prove the following requisites: (1) the employee executes a deed of quitclaim voluntarily; (2) there is no fraud or deceit on the part of any of the parties; (3) the consideration of the quitclaim is credible and reasonable; and (4) the contract is not contrary to law, public order, public policy, morals or good customs or prejudicial to a third person with a right recognized by law.35 In this case, petitioners failed to establish all the foregoing requisites.

To be precise, only Alejandro was able to claim a partial amount of his retirement benefit. Thus, it is clear from the decisions of the LA, NLRC and CA that petitioners are still liable to pay Alejandro the differential on his retirement benefits. On the other hand, Agripino was actually and totally deprived of his retirement benefit.

Moreover, the petitioners, not the respondents, have the burden of proving that the quitclaim was voluntarily entered into.36 In previous cases, we have considered, among others, the educational attainment of the employees concerned in upholding the validity of the quitclaims which

they have executed in favor of their employers.37 However, in Becton Dickinson Phils., Inc. v. National Labor Relations Commission,38 we held:

There is no nexus between intelligence, or even the position which the employee held in the company when it concerns the pressure which the employer may exert upon the free will of the employee who is asked to sign a release and quitclaim. A lowly employee or a sales manager, as in the present case, who is confronted with the same dilemma of whether signing a release and quitclaim and accept what the company offers them, or refusing to sign and walk out without receiving anything, may do succumb to the same pressure, being very well aware that it is going to take quite a while before he can recover whatever he is entitled to, because it is only after a protracted legal battle starting from the labor arbiter level, all the way to this Court, can he receive anything at all. The Court understands that such a risk of not receiving anything whatsoever, coupled with the probability of not immediately getting any gainful employment or means of livelihood in the meantime, constitutes enough pressure upon anyone who is asked to sign a release and quitclaim in exchange of some amount of money which may be way below what he may be entitled to based on company practice and policy or by law.

It is worth mentioning that the respondents are rank-and-file employees. They are simple folks who rely on their work for the daily sustenance of their respective families. Absent any convincing proof of voluntariness in the submission of the documentary requirements and in the execution of the quitclaim, we cannot simply assume that respondents were not subjected to the very same pressure mentioned in Becton. Furthermore, the fact that respondents filed a complaint for illegal dismissal against petitioners completely negates their claim that respondents voluntarily retired. To note, respondents vigorously pursued this case against petitioners, all the way up to this Court. Without doubt, this is a manifestation that respondents had no intention of relinquishing their employment, wholly incompatible to petitioners' assertion that respondents voluntarily retired.39

We find no reversible error and, thus, sustain the ruling of the CA that respondents did not voluntarily retire but were rather forced to retire, tantamount to illegal dismissal.

WHEREFORE, the instant Petition is DENIED. The Decision dated September 11, 2002 and the Resolution dated January 8, 2003 of the Court of Appeals in CA-G.R. SP No. 59552 are hereby AFFIRMED. Costs against the petitioners.

SO ORDERED.

CAINTA CATHOLIC SCHOOL G.R. No. 151021

and MSGR. MARIANO

T. BALBAGO,

Petitioners, Present:

QUISUMBING, J.,

Chairperson,

- versus - CARPIO,

CARPIO-MORALES,

TINGA, and

VELASCO, JR., JJ.

CAINTA CATHOLIC SCHOOL

EMPLOYEES UNION Promulgated:

(CCSEU),

Respondent. May 4, 2006

x------------------------------------------------------------------------------------x

D E C I S I O N

TINGA, J.:

The main issue for resolution hinges on the validity of a stipulation in a Collective Bargaining Agreement

(CBA) that allows management to retire an employee in its employ for a predetermined lengthy period

but who has not yet reached the minimum compulsory retirement age provided in the Labor Code.

Jurisprudence has answered the question in the affirmative a number of times and our duty calls for the

application of the principle of stare decisis. As a consequence, we grant the petition and reverse the

Court of Appeals.

Before us is a petition for review on certiorari under Rule 45 of the Rules of Court, assailing the

Decision[1] dated 20 August 2001 of the Court of Appeals in CA-G.R. SP No. 50851, which reversed the

Resolutions dated 31 January 1997,[2] and 30 April 1997[3] of the National Labor Relations Commission

(NLRC), Third Division in NLRC NCR CC No. L-000028-93 (NLRC RAB-IV-7-6827-94-R), as well as

the Resolution[4] dated 6 December 2001.

The antecedent facts follow:

On 6 March 1986, a Collective Bargaining Agreement (CBA) was entered into

between Cainta Catholic School (School) and the Cainta Catholic School Employees Union (Union)

effective 1 January 1986 to 31 May 1989. This CBA provided, among others, that:

ARTICLE IX

DURATION OF AGREEMENT

This Collective Bargaining Agreement shall become effective and binding

upon the parties from January 1, 1986 up to May 31, 1989. At least sixty (60) days

before the expiration of this Agreement, the parties hereto shall submit written

proposals which shall be made the basis of negotiations for the execution of a new

agreement.

If no new agreement is reached by the parties at the expiration of this

agreement, all the provisions of this Agreement shall remain full force and in effect, up

to the time a new Agreement shall be executed.[5]

Msgr. Mariano Balbago (Balbago) was appointed School Director in April 1987. From this time,

the Union became inactive.

It was only in 10 September 1993 that the Union held an election of officers, with Mrs. Rosalina Llagas

(Llagas) being elected as President; Paz Javier (Javier), Vice-President; Fe Villegas (Villegas),

Treasurer; and Maria Luisa Santos (Santos), Secretary. Llagas was then the Dean of the Student Affairs

while Villegas and Santos were Year-Level Chairmen. The other elected officers were Rizalina

Fernandez, Ester Amigo, secretaries; Nena Marvilla, treasurer; Gilda Galange and Jimmy del Rosario,

auditors; Filomeno Dacanay and Adelina Andres, P.R.O.s; and Danilo Amigo and Arturo Guevarra,

business managers.[6]

On 15 October 1993, the School retired Llagas and Javier, who had rendered more than twenty (20)

years of continuous service, pursuant to Section 2, Article X of the CBA, to wit:

An employee may be retired, either upon application by the employee himself

or by the decision of the Director of the School, upon reaching the age of sixty (60)

or after having rendered at least twenty (20) years of service to the School the last

three (3) years of which must be continuous.[7]

Three (3) days later, the Union filed a notice of strike with the National Conciliation and Mediation Board

(NCMB) docketed as NCMB-RB-12-NS-10-124-93.

On 8 November 1993, the Union struck and picketed the Schools entrances.

On 11 November 1993, then Secretary of Labor Ma. Nieves R. Confesor issued an Order certifying the

labor dispute to the National Labor Relations Commission (NLRC). The dispositive portion reads:

WHEREFORE, PREMISES CONSIDERED, this Office hereby certifies the

labor dispute at the Cainta Catholic School to the National Labor Relations

Commission for compulsory arbitration, pursuant to Article 263(g) of the Labor Code

as amended.

Accordingly, all striking teachers and employees are directed to return to work

within 24 hours from receipt of this Order and the School Administrator to accept all

returning employees under the same terms and conditions prevailing prior to the strike.

Furthermore, the effects of the termination of Ms. Rosalinda Llagas and Paz

A. Javier are hereby suspended. In line with this Order, the School Administration is

ordered to reinstate them to their former positions without loss of seniority rights and

privileges pending determination of the validity of their dismissal.

Both parties are further directed to cease and desist from committing any acts

that might aggravate the situation.

SO ORDERED.[8]

On 20 December 1993, the School filed a petition directly with the NLRC to declare the strike

illegal.

On 27 July 1994, the Union filed a complaint[9] for unfair labor practice before the NLRC

docketed as NLRC Case No. RAB-IV-7-6827-94-R, entitled, Cainta Catholic School Employees Union

v. Cainta Catholic School, et. al., before Arbitration Branch IV. Upon motion, then Labor Arbiter Oswald

Lorenzo ordered the consolidation of this unfair labor practice case with the above-certified case.

On 31 January 1997, the NLRC rendered a Resolution favoring the School.

Three (3) issues were passed upon by the NLRC, namely: (1) whether the retirement of Llagas

and Javier is legal; (2) whether the School is guilty of unfair labor practice; and (3) whether the strike is

legal.

The NLRC ruled that the retirement of Llagas and Javier is legal as the School was merely

exercising an option given to it under the CBA.[10] The NLRC dismissed the unfair labor practice charge

against the School for insufficiency of evidence. Furthermore, it was found that the strike declared by

the Union from 8 to 12 November 1993 is illegal, thereby declaring all union officers to have lost their

employment status.[11]

The Union moved for reconsideration but it was denied in a Resolution dated 30 April 1997.

Hence, on 9 July 1997, the Union filed a petition for certiorari before this Court docketed as

G.R. No. 129548. The Court issued a temporary restraining order (TRO) against the enforcement of the

subject resolutions effective as of 23 July 1997. The School, however, filed a motion for clarification

considering that it had already enforced the31 January 1997 NLRC Resolution.

On 28 July 1997, ten (10) regular teachers, who were declared to have lost their employment

status under the aforesaid NLRC Resolution reported back to work but the School refused to accept

them by reason of its pending motion for clarification. This prompted the Union to file a petition for

contempt against Balbago and his agents before this Court, docketed as G.R. No. 130004, which was

later on consolidated with G.R. No. 129548.

Pursuant to the ruling of this Court in St. Martin Funeral Homes v. NLRC,[12] the case was

referred to the Court of Appeals and re-docketed as CA-G.R. SP No. 50851.

On 20 August 2001, the Court of Appeals rendered a decision giving due course and granting

the petition to annul and set aside the 31 January 1997 and 30 April 1997 Resolutions of the NLRC;

while dismissing the petition for contempt for lack of merit. The decretal portion of the decision reads:

WHEREFORE, premises considered, the petition to annul and set aside

the 31 January 1997 and the 30 April 1997 resolutions of the National Labor Relations

Commission isGRANTED. Judgment is hereby RENDERED directing private

respondents: 1) to REINSTATE the terminated union officers, except Rosalinda

Llagas, Paz Javier, Gilda Galange and Ester Amigo, to their former positions without

loss of seniority rights and other privileges with full backwages, inclusive of allowances

and other benefits or their monetary equivalent from 9 June 1997 up to the time of their

actual reinstatement; 2) to pay Rosalinda Llagas: a) separation pay equivalent to one

(1) month pay for every year of service, in lieu of reinstatement, with full backwages,

inclusive of allowances and other benefits or their monetary equivalent from 9 June

1997 up to the time of the finality of this decision; b) moral and exemplary damages in

the amount of ten thousand pesos (P10,000.00) and five thousand (P5,000.00),

respectively; 3) to pay Paz Javier, or her heirs: a) unpaid salaries, inclusive of

allowances and other benefits, including death benefits, or their monetary equivalent

from the time her compensation was withheld from her up to the time of her death; b)

separation pay equivalent to one (1) months salary for every year of service; and c)

moral and exemplary damages in the amount of ten thousand pesos (P10,000.00) and

five thousand pesos (P5,000.00), respectively.

Private respondents are also ordered to pay petitioner union attorneys fees

equivalent to five percent (5%) of the total judgment award.

The petition for contempt, however, is DISMISSED for lack of merit.

No pronouncement as to costs.

SO ORDERED.[13]

In reversing the decision of the NLRC, the Court of Appeals construed the retirement of Llagas

and Javier as an act amounting to unfair labor practice when viewed against the backdrop of the relevant

circumstances obtaining in the case. The appellate court pointed out, thus:

The two happened to be the most vocal, dynamic and influential of all union

officers and members and they held considerable suasion over the other

employees. Rosalinda Llagas objected to the signing of the prepared form distributed

by the school, as a consequence of which, no one accomplished the form, and opposed

the formation of the high school faculty club as the teachers already had sufficient

representation through the union. Paz Javier, on the other hand, demanded that she

be given the floor during the faculty club organizational meeting and went on to win the

presidency of the faculty club, conclusively showing that she enjoyed the support of the

high school teachers. They were therefore a new and different breed of union leaders

assertive, militant and independent the exact opposite of former union president Victor

Javier who seemed to be passive, cooperative and pacific. The school saw the two as

threats which it could not control, and faced with a very uncomfortable situation of

having to contend with an aggressive union which just dominated the high school

faculty club (except for Joel Javeniar, all of the faculty clubs officers were union

members; Rollo, p. 418), the school decided to nip in the bud the reactivated union by

retiring its most prominent leaders.

x x x x

It is not difficult to see the anti-union bias of the school. One of the first acts of

private respondent Msgr. Balbago immediately after his assumption of office as school

director was to ask for a moratorium on all union activities. With the union in inactive

status, the school felt secure and comfortable but when the union reactivated, the

school became apprehensive and reacted by retiring the unions two topmost officers

by invoking the provisions of the CBA. When the union furnished the school, through

counsel, a copy of a proposed CBA on 3 November 1993, the school in a cavalier

fashion ignored it on the pretext that the union no longer enjoyed the majority status

among the employees x x x[14]

The appellate court concluded that the retirement of the two (2) union officers was clearly to

bust the reactivated union.

Having established that the School committed unfair labor practice, the Court of Appeals declared that

the no-strike, no-lockout clause in the CBA was not violated when the union members staged a strike

from 8 to 12 November 1993.[15] It further held that minor disorders or isolated incidents of perceived

coercion attending the strike do not categorize it as illegal:

We studied carefully the available records and found that the existence of force

during the strike was certainly not pervasive and widespread, or consistently and

deliberately resorted to as a matter of policy, so as to stamp the strike with illegality,

or to cause the loss of employment of the guilty party x x x [16]

The motion for reconsideration subsequently filed by the School was denied in a Resolution dated 6

December 2001, save in case of some union officers where the appellate court modified its ruling

granting them separation pay instead of reinstatement because of their retirement or death.[17]

Thereafter, petitioners filed this petition for review on certiorari raising three main issues, summarized

as: (1) whether the Schools decision to retire Llagas and Javier constitutes unfair labor practice; (2)

whether the strike was legal; and (3) whether some union officers ordered dismissed are entitled to

backwages.[18]

The School avers that the retirement of Llagas and Javier was clearly in accordance with a

specific right granted under the CBA. The School justifies its actions by invoking our rulings

in Pantranco North Express, Inc. v. NLRC[19] and Bulletin Publishing Corporation v. Sanchez[20] that no

unfair labor practice is committed by management if the retirement was made in accord with

management prerogative or in case of voluntary retirement, upon approval of management.

The Union, relying on the findings made by the Court of Appeals,[21] argues that the retirement

of the two union officers is a mere subterfuge to bust the union.[22]

The NLRC, however, gave another justification to sustain the validity of the two union officers forcible

retirement, viz:

The retirement of Rosalinda Llagas has become inevitable because, being a

managerial employee by reason of her position as Dean of Student Affairs, she

accepted the Union presidency. She lost the trust and confidence on her by the

SCHOOL as she occupied a managerial position as Dean of Student Affairs. . . Being

also the union president, she has allowed her loyalties to be divided between the

administration and the union.

As to Paz Javier, her retirement was decided upon after an evaluation shows

that she was not performing well as her students were complaining about her brusque

attitude and bad language, aside from being habitually absent and late. [23]

At the outset, only questions of law are entertained by this Court through a petition for review on

certiorari. There are, however, well-recognized exceptions such as in this case when the factual findings

of the NLRC and the Court of Appeals are contradictory.[24] A re-evaluation of the records of this case

is necessary for its proper resolution.

The key issue remains whether the forced retirement of Llagas and Javier was a valid exercise of

management prerogative. Undoubtedly, the retirement of the two (2) union officers triggered the

declaration of strike by the Union, and the ruling on whether the strike was legal is highly dependent on

whether the retirement was valid.

We are impelled to reverse the Court of Appeals and affirm the validity of the termination of employment

of Llagas and Javier, arising as it did from a management prerogative granted by the mutually-

negotiated CBA between the School and the Union.

Pursuant to the existing CBA,[25] the School has the option to retire an employee upon reaching

the age limit of sixty (60) or after having rendered at least twenty (20) years of service to the School,

the last three (3) years of which must be continuous. Retirement is a different specie of termination of

employment from dismissal for just or authorized causes under Articles 282 and 283 of the Labor Code.

While in all three cases, the employee to be terminated may be unwilling to part from service, there are

eminently higher standards to be met by the employer validly exercising the prerogative to dismiss for

just or authorized causes. In those two instances, it is indispensable that the employer establish the

existence of just or authorized causes for dismissal as spelled out in the Labor Code. Retirement, on

the other hand, is the result of a bilateral act of the parties, a voluntary agreement between the employer

and the employee whereby the latter after reaching a certain age agrees and/or consents to sever his

employment with the former.[26]

Article 287 of the Labor Code, as amended, governs retirement of employees, stating:

ART. 287. Retirement.

Any employee may be retired upon reaching the retirement age established in

the collective bargaining agreement or other applicable employment contract.

In case of retirement, the employee shall be entitled to receive such retirement

benefits as he may have earned under existing laws and any collective bargaining

agreement and other agreements: Provided, however, That an employees retirement

benefits under any collective bargaining agreement and other agreements shall not be

less than those provided herein.

In the absence of a retirement plan or agreement providing for retirement

benefits of employees in the establishment, an employee upon reaching the age of

sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared

the compulsory retirement age, who has served at least five (5) years in the said

establishment, may retire and shall be entitled to retirement pay equivalent to at least

one-half (1/2) month salary for every year of service, a fraction of at least six (6) months

being considered as one whole year.

The CBA in the case at bar established 60 as the compulsory retirement age. However, it is not

alleged that either Javier or Llagas had reached the compulsory retirement age of 60 years, but instead

that they had rendered at least 20 years of service in the School, the last three (3) years continuous.

Clearly, the CBA provision allows the employee to be retired by the School even before reaching the

age of 60, provided that he/she had rendered 20 years of service. Would such a stipulation be valid?

Jurisprudence affirms the position of the School.

Pantranco North Express, Inc. v. NLRC, cited by petitioners, finds direct application in this case.

The CBA involved in Pantranco allowed the employee to be compulsorily retired upon reaching the age

of 60 or upon completing [25] years of service to [Pantranco]. On the basis of the CBA, private

respondent was compulsorily retired by Pantranco at the age of 52, after 25 years of service.

Interpreting Article 287, the Court ruled that the Labor Code permitted employers and employees to fix

the applicable retirement age at below 60 years of age. Moreover, the Court also held that there was

no illegal dismissal since it was the CBA itself that incorporated the agreement reached between the

employer and the bargaining agent with respect to the terms and conditions of employment; hence,

when the private respondent ratified the CBA with his union, he concurrently agreed to conform to and

abide by its provisions. Thus, the Court asserted, [p]roviding in a CBA for compulsory retirement of

employees after twenty-five (25) years of service is legal and enforceable so long as the parties agree

to be governed by such CBA.[27]

A similar set of facts informed our decision in Progressive Development Corporation v.

NLRC.[28] The CBA therein stipulated that an employee with [20] years of service, regardless of age,

may be retired at his option or at the option of the company. The stipulation was used by management

to compulsorily retire two employees with more than 20 years of service, at the ages of 45 and 38. The

Court affirmed the validity of the stipulation on retirement as consistent with Article 287 of the Labor

Code.

Philippine Airlines, Inc. v. Airline Pilots Association of the Phils.[29] further bolsters the Schools

position. At contention therein was a provision of the PAL-ALPAP Retirement Plan, the Plan having

subsequently been misquoted in the CBA mutually negotiated by the parties. The Plan authorized PAL

to exercise the option of retirement over pilots who had chosen not to retire after completing 20 years

of service or logging over 20,000 hours for PAL. After PAL exercised such option over a pilot, ALPAP

charged PAL with illegal dismissal and union-busting. While the Secretary of Labor upheld the unilateral

retirement, it nonetheless ruled that PAL should first consult with the pilot to be retired before it could

exercise such option. The Court struck down that proviso, ruling that the requirement to consult the

pilots prior to their retirement defeats the exercise by management of its option to retire the said

employees, [giving] the pilot concerned an undue prerogative to assail the decision of management.

By their acceptance of the CBA, the Union and its members are obliged to abide by the

commitments and limitations they had agreed to cede to management. The questioned retirement

provisions cannot be deemed as an imposition foisted on the Union, which very well had the right to

have refused to agree to allowing management to retireretire employees with at least 20 years of

service.

It should not be taken to mean that retirement provisions agreed upon in the CBA are absolutely

beyond the ambit of judicial review and nullification. A CBA, as a labor contract, is not merely contractual

in nature but impressed with public interest. If the retirement provisions in the CBA run contrary to law,

public morals, or public policy, such provisions may very well be voided. Certainly, a CBA provision or

employment contract that would allow management to subvert security of tenure and allow it to

unilaterally retire employees after one month of service cannot be upheld. Neither will the Court sustain

a retirement clause that entitles the retiring employee to benefits less than what is guaranteed under

Article 287 of the Labor Code, pursuant to the provisions express proviso thereto in the provision.

Yet the CBA in the case at bar contains no such infirmities which must be stricken down. There

is no essential difference between the CBA provision in this case and those we affirmed

in Pantranco and Progressive. Twenty years is a more than ideal length of service an employee can

render to one employer. Under ordinary contemplation, a CBA provision entitling an employee to retire

after 20 years of service and accordingly collect retirement benefits is reward for services rendered

since it enables an employee to reap the fruits of his labor particularly retirement benefits, whether

lump-sum or otherwise at an earlier age, when said employee, in presumably better physical and mental

condition, can enjoy them better and longer.[30]

We affirm the continued validity of Pantranco and its kindred cases, and thus reiterate that

under Article 287 of the Labor Code, a CBA may validly accord management the prerogative to

optionally retire an employee under the terms and conditions mutually agreed upon by management

and the bargaining union, even if such agreement allows for retirement at an age lower than the optional

retirement age or the compulsory retirement age. The Court of Appeals gravely erred in refusing to

consider this case from the perspective of Pantranco, or from the settled doctrine enunciated therein.

What the Court of Appeals did instead was to favorably consider the claim of the Union that the

real purpose behind the retirement of Llagas and Javier was to bust the union, they being its president

and vice-president, respectively. To that end, the appellate

court favorably adopted the citation by the Union of the American case of NLRB v. Ace Comb,

Co.,[31] which in turn was taken from a popular local labor law textbook. The citation stated that [f]or the

purpose of determining whether or not a discharge is discriminatory, it is necessary that the underlying

reason for the discharge be established. The fact that a lawful cause for discharge is available is not a

defense where the employee is actually discharged because of his union activities.[32]

Reliance on NLRB v. Ace Comb, Co. was grossly inapropos. The case did not involve an

employee sought to be retired, but one who cited for termination from employment for cause, particularly

for violating Section 8(a)(3) of the National Labor Relations Act, or for insubordination. Moreover, the

United States Court of Appeals Eighth Circuit, which decided the case, ultimately concluded that here

the evidence abounds that there was a justifiable cause for [the employees] discharge,[33] his union

activities notwithstanding. Certainly, the Union and the Court of Appeals would have been better off

citing a case wherein the decision actually concluded that the employee was invalidly dismissed for

union activities despite the ostensible existence of a valid cause for termination.

Nonetheless, the premise warrants considering whether management may be precluded

from retiring an employee whom it is entitled to retire upon a determination that the true cause for

compulsory retirement is the employees union activities.

The law and this Court frowns upon unfair labor practices by management, including so-called

union-busting. Such illegal practices will not be sustained by the Court, even if guised under ostensibly

legal premises. But with respect to an active unionized employee who claims having lost his/her job for

union activities, there are different considerations presented if the termination is justified under just or

authorized cause under the Labor Code; and if separation from service is effected through the exercise

of a duly accorded management prerogative to retire an employee. There is perhaps a greater

imperative to recognize the management prerogative on retirement than the prerogative to dismiss

employees for just or authorized causes. For one, there is a greater subjectivity, not to mention factual

dispute, attached to the concepts of just or authorized cause than retirement which normally

contemplates merely the attainment of a certain age or a certain number of years in the service. It would

be easier for management desirous to eliminate pesky union members to abuse the prerogative of

termination for such purpose since the determination of just or authorized cause is rarely a simplistic

question, but involves facts highly prone to dispute and subjective interpretation.

On the other hand, the exercise by management of its retirement prerogative is less susceptible

to dubitability as to the question whether an employee could be validly retired. The only factual matter

to consider then is whether the employee concerned had attained the requisite age or number of years

in service pursuant to the CBA or employment agreement, or if none, pursuant to Article 287 of the

Labor Code. In fact, the question of the amount of retirement benefits is more likely to be questioned

than the retirement itself. Evidently, it more clearly emerges in the case of retirement that management

would anyway have the right to retire an employee, no matter the degree of involvement of said

employee in union activities.

There is another point that militates against the Union. A ruling in its favor is tantamount to a

concession that a validly drawn management prerogative to retire its employees can be judicially

interfered on a showing that the employee in question is highly valuable to the union. Such a rule would

be a source of mischief, even if narrowly carved out by the Court, for it would imply that an active union

member or officer may be, by reason of his/her importance to the union, somehow exempted from the

normal standards of retirement applicable to the other, perhaps less vital members of the union. Indeed,

our laws protection of the right to organize labor does not translate into perpetual job security for union

leaders by reason of their leadership role alone. Should we entertain such a notion, the detriment is

ultimately to the union itself, promoting as it would a stagnating entrenched leadership.

We can thus can comfortably uphold the principle, as reiterated in Philippine Airlines,[34] that

the exercise by the employer of a valid and duly established prerogative to retire an employee does not

constitute unfair labor practice.

There are other arguments raised by petitioners. We need to discuss them only in brief, as they

are no longer central to the resolution of this case.

The School insisted that Llagas and Javier were actually managerial employees, and it was

illegal for the Union to have called a strike on behalf of two employees who were not legally qualified to

be members of the Union in the first place.[35] The Union, on the other hand, maintains that they are

rank-and-file employees.

Article 212(m) of the Labor Code defines a managerial employee as "one who is vested with

powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend,

lay-off, recall, discharge, assign or discipline employees, or to effectively recommend such managerial

actions." The functions of the Dean of Student Affairs, as occupied by Llagas, are enumerated in the

Faculty Manual. The salient portions are hereby enumerated:

a. Manages the High School Department with the Registrar and Guidance

Counselors (acting as a COLLEGIAL BODY) in the absence of the Director or

Principal.

b. Enforces the school rules and regulations governing students to

maintain discipline.

x x x x

g. Plans with the Guidance Counselors student leadership training programs

to encourage dynamic and responsible leadership among the students and submits

the same for the approval of the Principal/Director.

x x x x

i. Studies proposals on extra-curricular or co-curricular activities and projects

proposed by teachers and students and recommends to the Principal/Director the

necessary approval.

j. Implements and supervises activities and projects approved by the

Principal/Director so that the activities and projects follow faithfully the conditions set

forth by the Principal/Director in the approval.

k. Assists in the planning, supervising and evaluating of programs of co-

curricular activities in line with the philosophy and objectives of the School for the total

development of the students.

l. Recommends to the Principal policies and rules to serve as guides to

effective implementation of the student activity program.[36]

x x x x

It is fairly obvious from a perusal of the list that the Dean of Student Affairs exercises managerial

functions, thereby classifying Llagas as a managerial employee.

Javier was occupying the position of Subject Area Coordinator. Her duties and responsibilities include:

1. Recommends to the principals consideration the appointment of

faculty members in the department, their promotion, discipline and even termination;

2. Recommends advisory responsibilities of faculty members;

3. Recommends to the principal curricular changes, purchase the

books and periodicals, supplies and equipment for the growth of the school;

4. Recommends his/her colleagues and serves as channel

between teachers in the department the principal and/or director.[37]

Supervisory employees, as defined in Article 212(m) are those who, in the interest of the

employer, effectively recommend such managerial actions if the exercise of such authority is not merely

routinary or clerical in nature but requires the use of independent judgment.

In the same vein, a reading of the above functions leads us to conclude that Javier was a

supervisory employee. Verily, Javier made recommendations as to what actions to take in hiring,

termination, disciplinary actions, and management policies, among others.

We can concede, as the Court of Appeals noted, that such job descriptions or appellations are

meaningless should it be established that the actual duties performed by the employees concerned are

neither managerial nor supervisory in nature. Yet on this point, we defer to the factual finding of the

NLRC, the proximate trier of facts, that Llagas and Javier were indeed managerial and supervisory

employees, respectively.

Having established that Llagas is a managerial employee, she is proscribed from joining a labor

union,[38] more so being elected as union officer. In the case of Javier, a supervisory employee, she

may join a labor union composed only of supervisory employees.[39] Finding both union officers to be

employees not belonging to the rank-and-file, their membership in the Union has become questionable,

rendering the Union inutile to represent their cause.

Since the strike has been declared as illegal based on the foregoing discussion, we need not

dwell on its legality with respect to the means employed by the Union.

Finally, there is neither legal nor factual justification in awarding backwages to some union

officers who have lost their employment status, in light of our finding that the strike is illegal. The ruling

of the NLRC is thus upheld on this point. We are also satisfied with the disposition of the NLRC that

mandates that Llagas and Javier (or her heirs) receive their retirement benefits.

WHEREFORE, the petition is GRANTED. The Resolution dated 31 January 1997 of the National Labor

Relations Commission in NLRC NCR CC No. L-000028-93 is REINSTATED.

SO ORDERED.

RODOLFO J. SERRANO, Petitioner, - versus - SEVERINO SANTOS TRANSIT and/or SEVERINO SANTOS, Respondents.

G.R. No. 187698 Present: CARPIO MORALES, J., Chairperson, BRION, BERSAMIN, ABAD,* and VILLARAMA, JR., JJ.

Promulgated: August 9, 2010

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x D E C I S I O N

CARPIO MORALES, J.:

Petitioner Rodolfo J. Serrano was hired on September 28, 1992 as bus conductor by

respondent Severino Santos Transit, a bus company owned and operated by its co-respondent

Severino Santos.

After 14 years of service or on July 14, 2006, petitioner applied for optional retirement from the

company whose representative advised him that he must first sign the already prepared Quitclaim

before his retirement pay could be released. As petitioners request to first go over the computation of

his retirement pay was denied, he signed the Quitclaim on which he wrote U.P. (under protest) after his

signature, indicating his protest to the amount of P75,277.45 which he received, computed by the

company at 15 days per year of service.

Petitioner soon after filed a complaint[1] before the Labor Arbiter, alleging that the company

erred in its computation since under Republic Act No. 7641, otherwise known as the Retirement Pay

Law, his retirement pay should have been computed at 22.5 days per year of service to include the

cash equivalent of the 5-day service incentive leave (SIL) and 1/12 of the 13th month pay which the

company did not.

The company maintained, however, that the Quitclaim signed by petitioner barred his claim

and, in any event, its computation was correct since petitioner was not entitled to the 5-day SIL and

pro-rated 13th month pay for, as a bus conductor, he was paid on commission basis. Respondents,

noting that the retirement differential pay amounted to only P1,431.15, explained that in the computation

of petitioners retirement pay, five months were inadvertently not included because some index cards

containing his records had been lost.

By Decision[2] of February 15, 2007, Labor Arbiter Cresencio Ramos, Jr. ruled in favor of

petitioner, awarding him P116,135.45 as retirement pay differential, and 10% of the total monetary

award as attorneys fees. In arriving at such computation, the Labor Arbiter ratiocinated:

In the same Labor Advisory on Retirement Pay Law, it was likewise decisively made clear that the law expanded the concept of one-half month salary from the usual one-month salary divided by two, to wit:

B. COMPUTATION OF RETIREMENT PAY A covered employee who retires pursuant to RA 7641 shall be

entitled to retirement pay equivalent to at least one-half (1/12) month salary for every year of service, a fraction of at least six (6) months being considered as one whole year.

The law is explicit that one-half month salary shall mean fifteen

(15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days service incentive leaves unless the parties provide for broader inclusions. Evidently, the law expanded the concept of one-half month salary from the usual one-month salary divided by two.

The retirement pay is equal to half-months pay per year of service. But half-

months pay is expanded because it means not just the salary for 15 days but also one-twelfth of the 13th-month pay and the cash value of five-day service incentive leave. THIS IS THE MINIMUM. The retirement pay package can be improved upon by voluntary company policy, or particular agreement with the employee, or through a collective bargaining agreement. (The Labor Code with Comments and Cases, C.A. Azcunea, Vol. II, page 765, Fifth Edition 2004).

Thus, having established that 22.5 days pay per year of service is the correct

formula in arriving at the complete retirement pay of complainant and inasmuch as complainants daily earning is based on commission earned in a day, which varies each day, the next critical issue that needs discernment is the determination of what is a fair and rational amount of daily earning of complainant to be used in the computation of his retirement pay.

While complainant endeavored to substantiate his claim that he earned

average daily commission of P700.00, however, the documents he presented are not complete, simply representative copies, therefore unreliable. On the other haNd, while respondents question complainants use of P700.00 (daily income) as basis in determining the latters correct retirement pay, however it does not help their defense that they did not present a single Conductors Trip Report to contradict the claim of complainant. Instead, respondents adduced a handwritten summary of complainants monthly income from 1993 until June 2006. It must be noted also that complainant did not contest the amounts stated on the summary of his monthly income as reported by respondents. Given the above considerations, and most importantly that complainant did not dispute the figures stated in that document, we find it logical, just and equitable for both parties to rely on the summary of monthly income provided by respondent, thus, we added complainants monthly income from June 2005 until June 2006 or the last twelve months and we arrived atP189,591.30) and we divided it by twelve (12) to arrive at complainants average monthly earning of P15,799.28. Thereafter, the average monthly of P15,799.28 is divided by twenty-six (26) days, the factor commonly used in determining the regular working days in a month, to arrive at his average daily income of P607.66. Finally, P607.66 (average daily income) x 22.5 days =P13,672.35 x 14 (length of service) = P191,412.90 (COMPLETE RETIREMENT PAY). However, inasmuch as complainant already received P75,277.45, the retirement differential pay

due him is P116,135.45 (P191,412.90 P75,277.45). (underscoring partly in the original and partly supplied)

The National Labor Relations Commission (NLRC) to which respondents

appealed reversed the Labor Arbiters ruling and dismissed petitioners complaint by Decision[3]dated

April 23, 2008. It, however, ordered respondents to pay retirement differential in the amount

of P2,365.35.

Citing R & E Transport, Inc. v. Latag,[4] the NLRC held that since petitioner was paid on purely

commission basis, he was excluded from the coverage of the laws on 13thmonth pay and SIL pay,

hence, the 1/12 of the 13th month pay and the 5-day SIL should not be factored in the computation of his

retirement pay.

Petitioners motion for reconsideration having been denied by Resolution[5] of June 27, 2008,

he appealed to the Court of Appeals.

By the assailed Decision[6] of February 11, 2009, the appellate court affirmed the NLRCs ruling,

it merely holding that it was based on substantial evidence, hence, should be respected.

Petitioners motion for reconsideration was denied, hence, the present petition for review on

certiorari.

The petition is meritorious.

Republic Act No. 7641 which was enacted on December 9, 1992 amended Article 287 of the

Labor Code by providing for retirement pay to qualified private sector employees in the absence of any

retirement plan in the establishment. The pertinent provision of said law reads:

Section 1. Article 287 of Presidential Decree No. 442, as amended, otherwise known as the Labor Code of the Philippines, is hereby amended to read as follows: x x x x

In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age, who has served at least five (5) years in the said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one whole year. Unless the parties provide for broader inclusions, the term one-

half (1/2) month salary shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of service incentive leaves. Retail, service and agricultural establishments or operations employing not more than (10) employees or workers are exempted from the coverage of this provision. x x x x (emphasis and underscoring supplied)

Further, the Implementing Rules of said law provide:

RULE II Retirement Benefits SECTION 1. General Statement on Coverage. This Rule shall apply to all employees in the private sector, regardless of their position, designation or status and irrespective of the method by which their wages are paid, except to those specifically exempted under Section 2 hereof. As used herein, the term Act shall refer to Republic Act No. 7641 which took effect on January 7, 1993. SECTION 2 Exemptions. This Rule shall not apply to the following employees: 2.1 Employees of the National Government and its political subdivisions, including Government-owned and/or controlled corporations, if they are covered by the Civil Service Law and its regulations. 2.2 Domestic helpers and persons in the personal service of another. 2.3 Employees of retail, service and agricultural establishment or operations regularly employing not more than ten (10) employees. As used in this sub-section; x x x x SECTION 5 Retirement Benefits. 5.1 In the absence of an applicable agreement or retirement plan, an employee who retires pursuant to the Act shall be entitled to retirement pay equivalent to at least one-half (―) month salary for every year of service, a fraction of at least six (6) months being considered as one whole year. 5.2 Components of One-half (―) Month Salary. For the purpose of determining the minimum retirement pay due an employee under this Rule, the term one-half month salary shall include all of the following:

(a) Fifteen (15) days salary of the employee based on his latest salary rate. As used herein, the term salary includes all remunerations paid by an employer to his employees for services rendered during normal working days and hours, whether such payments are fixed or ascertained on a time, task, piece of commission basis, or other method of calculating the same, and includes the fair and reasonable value, as determined by the Secretary of Labor and Employment, of food, lodging or other facilities customarily furnished by the employer to his employees. The term does not include cost of living allowances, profit-sharing payments and other monetary benefits which are not considered as part of or integrated into the regular salary of the employees.

(b) The cash equivalent of not more than five (5) days of service incentive leave;

(c) One-twelfth of the 13th month pay due the employee. (d) All other benefits that the employer and employee may agree upon that

should be included in the computation of the employees retirement pay.

x x x x (emphasis supplied)

Admittedly, petitioner worked for 14 years for the bus company which did not adopt any

retirement scheme. Even if petitioner as bus conductor was paid on commission basis then, he falls

within the coverage of R.A. 7641 and its implementing rules. As thus correctly ruled by the Labor Arbiter,

petitioners retirement pay should include the cash equivalent of the 5-day SIL and 1/12 of the 13th month

pay.

The affirmance by the appellate court of the reliance by the NLRC on R & E Transport, Inc. is

erroneous. In said case, the Court held that a taxi

driver paid according tothe boundary system is not entitled to the 13th month and the SIL pay, hence,

his retirement pay should be computed on the sole basis of his salary.

For purposes, however, of applying the law on SIL, as well as on retirement, the Court notes

that there is a difference between drivers paid under the boundary system and conductors who are paid

on commission basis.

In practice, taxi drivers do not receive fixed wages. They retain only those sums in excess of

the boundary or fee they pay to the owners or operators of the vehicles.[7]Conductors, on the other

hand, are paid a certain percentage of the bus earnings for the day.

It bears emphasis that under P.D. 851 or the SIL Law, the exclusion from its coverage of

workers who are paid on a purely commission basis is only with respect to field personnel. The more

recent case of Auto Bus Transport Systems, Inc., v. Bautista[8] clarifies that an employee who is paid

on purely commission basis is entitled to SIL:

A careful perusal of said provisions of law will result in the conclusion that the grant of service incentive leave has been delimited by the Implementing Rules and Regulations of the Labor Code to apply only to those employees not explicitly excluded by Section 1 of Rule V. According to the Implementing Rules, Service Incentive Leave shall not apply to employees classified as field personnel. The phrase other employees whose performance is unsupervised by the employer must not be understood as a separate classification of employees to which service incentive leave shall not be granted. Rather, it serves as an amplification of the interpretation of the definition of field personnel under the Labor Code as those whose actual hours of work in the field cannot be determined with reasonable certainty.

The same is true with respect to the phrase those who are engaged on task or contract basis, purely commission basis. Said phrase should be related with field personnel, applying the rule on ejusdem generis that general and unlimited terms are restrained and limited by the particular terms that they follow. Hence, employees engaged on task or contract basis or paid on purely commission basis are not automatically exempted from the grant of service incentive leave, unless, they fall under the classification of field personnel.

x x x x

According to Article 82 of the Labor Code, field personnel shall refer to non-agricultural employees who regularly perform their duties away from the principal place of business or branch office of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty. This definition is further elaborated in the Bureau of Working Conditions (BWC), Advisory Opinion to Philippine Technical-Clerical Commercial Employees Association which states that:

As a general rule, [field personnel] are those whose performance of their job/service is not supervised by the employer or his representative, the workplace being away from the principal office and whose hours and days of work cannot be determined with reasonable certainty; hence, they are paid specific amount for rendering specific service or performing specific work. If required to be at specific places at specific times, employees including drivers cannot be said to be field personnel despite the fact that they are performing work away from the principal office of the employee.

x x x x (emphasis, italics and underscoring supplied)

WHEREFORE, the petition is GRANTED. The Court of Appeals Decision of February 11, 2009 and

Resolution of April 28, 2009 are REVERSED and SET ASIDE and the Labor Arbiters Decision

dated February 15, 2007 is REINSTATED.

SO ORDERED.

AMELIA R. OBUSAN, Petitioner,

- versus - PHILIPPINE NATIONAL BANK,

Respondent.

G.R. No. 181178 Present: CARPIO, J., Chairperson, NACHURA, PERALTA, ABAD, and MENDOZA, JJ. Promulgated: July 26, 2010

x------------------------------------------------------------------------------------x DECISION NACHURA, J.:

This petition for review on certiorari[1] under Rule 45 of the Rules of Court seeks to annul and

set aside the Decision[2] dated September 21, 2007 and the Resolution[3]dated January 8, 2008 of the

Court of Appeals (CA) in CA-G.R. SP No. 96918.

The antecedents that spawned this controversy are as follows

Back in 1979, respondent Philippine National Bank (PNB) hired petitioner Amelia R. Obusan

(Obusan), who eventually became the Manager of the PNB Medical Office.At that time, PNB was a

government-owned or controlled corporation, whose retirement program for its employees was

administered by the Government Service Insurance System (GSIS), pursuant to the Revised

Government Service Insurance Act of 1977 (Presidential Decree No. 1146).

On May 27, 1996, PNB was privatized. Section 6 of the Revised Charter of the PNB (Executive

Order No. 80, December 3, 1986), with respect to the effect of privatization of PNB, provides

Change in Ownership of the Majority of the Voting Equity of the Bank. When

the ownership of the majority of the issued common voting shares passes to private investors, the stockholders shall cause the adoption and registration with the Securities and Exchange Commission of the appropriate Articles of Incorporation and revised by-laws within three (3) months from such transfer of ownership. Upon the issuance of the certificate of incorporation under the provisions of the Corporation Code, this Charter shall cease to have force and effect, and shall be deemed repealed. Any special privileges granted to the Bank such as the authority to act as official government

depository, or restrictions imposed upon the Bank, shall be withdrawn, and the Bank shall thereafter be considered a privately organized bank subject to the laws and regulations generally applicable to private banks. The bank shall likewise cease to be a government owned or controlled corporation subject to the coverage of service-wide agencies such as the Commission on Audit and the Civil Service Commission. (Emphasis supplied.)

Consequent to the privatization, all PNB employees, including Obusan, were deemed retired

from the government service. The GSIS, in its letter[4] dated February 3, 1997, confirmed Obusans

retirement from the government service, and accordingly paid her retirement gratuity in the net amount

of P390,633.76. Thereafter, Obusan continued to be an employee of PNB.

Later, the PNB Board of Directors, through Resolution No. 30 dated December 22, 2000, as

amended, approved the PNB Regular Retirement Plan[5] (PNB-RRP). Section 1, Article VI of which

provides

Normal Retirement. The normal retirement date of a Member shall be the day he attains sixty (60) years of age, regardless of length of service or has rendered thirty (30) years of service, regardless of age, whichever of the said conditions comes first. A Member who has reached the normal retirement date shall have to compulsor[il]y retire and shall be entitled to receive the retirement benefits under the Plan.[6]

In a Memorandum[7] dated February 21, 2001, PNB informed its officers and employees of the terms

and conditions of the PNB-RRP, along with its implementing guidelines.

Subsequently, the PNB-RRP was registered with the Bureau of Internal Revenue, per its

letter[8] dated June 27, 2001. Later, the Philnabank Employees Association, the union of PNB rank-and-

file employees, recognized the PNB-RRP in the Collective Bargaining Agreement (CBA) it entered with

PNB.[9]

In a Memorandum[10] dated February 11, 2002, PNB informed Obusan that her last day of

employment would be on March 3, 2002, as she would reach the mandatory retirement age of 60 years

on March 4, 2002. In her counsels letter[11] dated February 26, 2002, Obusan questioned her

compulsory retirement and even threatened to take legal action against PNB for illegal dismissal and

unfair labor practice in the form of union busting, Obusan being then the President of the PNB

Supervisors and Officers Association.

In a letter[12] dated March 1, 2002, PNB replied to Obusan, explaining that compulsory

retirement under the PNB-RRP is not contrary to law and does not constitute union busting. Dissatisfied

with PNBs explanation, Obusan filed before the Labor Arbiter a complaint for illegal dismissal and unfair

labor practice, claiming that PNB could not compulsorily retire her at the age of 60 years, with her having

a vested right to be retired only at 65 years old pursuant to civil service regulations.

On April 25, 2003, the Labor Arbiter rendered a decision,[13] dismissing Obusans complaint as

he upheld the validity of the PNB-RRP and its provisions on compulsory retirement upon reaching the

age of 60 years. The Labor Arbiter found

Complainant posits that she has a vested right to be retired at 65 years since

this was the retirement age at the time she was hired. However, there is neither jurisprudence nor law which supports this contention. Undisputed is the fact that, when complainant was hired, PNB was still a government owned and controlled corporation. Accordingly, the Revised Government Service Insurance Act [RGSI] of 1977 (Presidential Decree No. 1146), which established that the compulsory retirement age for government employees to be 65 years governs the employment of PNB employees. The PNB then did not have any participation in establishing the compulsory retirement age but the RGSI Act which is the law itself. But the same may apply only as long as PNB remains a government owned and controlled corporation. From the time PNB ceased to be such, it cannot be said that [the] RGSI Act of 1977 still applies. Thus negating the claim of complainant to retire at age 65 under the said law.

When PNB ceased to be a government owned or controlled corporation, the law now applicable to the Bank is the Labor Code which allows PNB to establish its own retirement plan. As such, PNB is empowered to formulate its Regular Retirement Plan provided it is within the bounds of the Labor Code. We find no cogent reason to invalidate the Regular Retirement Plan as it is in accord with the law.

Indeed, this Office cannot see how complainant can assert that her right to be

retired at the age of 65 years has been vested at the time of her hiring when, in fact, such right can only be vested at the time of her retirement. Necessarily, complainant can only avail a retirement plan that is in effect at the time of her retirement. In this case, the retirement plan she insists on applying is no longer existent and instead it was replaced by the PNB Regular Retirement Plan which, by its terms, complies with the pertinent provisions of the Labor Code on retirement plans.[14]

Obusan then appealed to the National Labor Relations Commission (NLRC). In a

resolution[15] dated May 31, 2004, the NLRC dismissed Obusans appeal, and affirmed the assailed

decision in toto. Obusans motion for reconsideration of this resolution was later denied in an NLRC

resolution[16] dated August 28, 2006. The NLRC held

Movant invokes the ruling of the Supreme Court in Razon, Jr. v. NLRC (185

SCRA 44), where the Supreme Court held:

We believe that upon acceptance of employment, a contractual relationship was established giving private respondent an enforceable vested interest in the retirement fund. Verily, the retirement scheme became an integral part of his employment package and the benefits to be derived therefrom constituted as it were a continuing consideration for services rendered, as well as an effective inducement for remaining with the firm.

It is clear that the contractual relationship established between the employer and employee upon the latters acceptance of employment was an enforceable vested

interest in the retirement fund.The Supreme Court did not hold that the private respondent has a vested right to his retirement age. x x x.

x x x A vested right or a vested interest may be held to mean some right or interest in property that has become fixed or established, and is no longer open to doubt or controversy.Retirement age is not a property. It cannot be also fixed or permanent. Laws, contracts, and collective bargaining agreements may amend or alter the retirement age of an employee.Complainant may have had a vested right to the retirement funds under the old retirement plan of the bank, but as held in Razon, this right could be withheld upon a clear showing of good and compelling reasons. The privatization of PNB and the consequent severance of its employees from government service is the reason why complainant lost her right to the government retirement plan. These are causes which are persuasive and compelling.[17]

Undaunted, Obusan filed a petition for certiorari before the CA, ascribing grave abuse of

discretion to the NLRC when it affirmed the decision of the Labor Arbiter. The CA, however, dismissed

the petition in its assailed Decision dated September 21, 2007, ratiocinating that the PNB-RRPs

lowering the compulsory retirement age to 60 years is not violative of Article 287 of the Labor Code of

the Philippines, as amended, despite the issuance of the plan years after Obusan was hired. Obusans

motion for reconsideration of this Decision was subsequently denied by the CA in its Resolution dated

January 8, 2008.

Hence, this petition anchored on the argument that PNB cannot unilaterally lower the

compulsory retirement age to 60 years without violating Article 287 of the Labor Code and Obusans

alleged right to retire at the age of 65 years.

According to Obusan, the PNB-RRP should only apply to employees hired on and after

February 21, 2001, the date of its adoption. She insists that if the lowering of the compulsory retirement

age to 60 years under the PNB-RRP was the product of an agreement between PNB and its employees,

she would definitely accede to be bound by it. She points out that the questioned provision on retirement

age was a unilateral act of PNB, to which she did not give her consent. In her Supplement to Petition

for Review onCertiorari,[18] Obusan invoked Jaculbe v. Silliman University,[19] where this Court held

Retirement is the result of a bilateral act of the parties, a voluntary agreement

between the employer and the employee whereby the latter, after reaching a certain age agrees to sever his or her employment with the former. In Pantranco North Express, Inc. v. NLRC, to which both the CA and respondent refer, the imposition of a retirement age below the compulsory age of 65 was deemed acceptable because this was part of the CBA between the employer and the employees. The consent of the employees, as represented by their bargaining unit, to be retired even before the statutory retirement age of 65 was laid out clearly in black and white and was therefore in accord with Article 287.

In this case, neither the CA nor the respondent cited any agreement, collective

or otherwise, to justify the latters imposition of the early retirement age in its retirement plan, opting instead to harp on petitioners alleged voluntary contributions to the plan, which was simply untrue. The truth was that petitioner had no choice but to participate in the plan, given that the only way she could refrain from doing so was to resign or

lose her job. It is axiomatic that employer and employee do not stand on equal footing, a situation which often causes an employee to act out of need instead of any genuine acquiescence to the employer. This was clearly just such an instance.

x x x x As already stated, an employer is free to impose a retirement age less than 65

for as long as it has the employees consent. Stated conversely, employees are free to accept the employers offer to lower the retirement age if they feel they can get a better deal with the retirement plan presented by the employer. Thus, having terminated petitioner solely on the basis of a provision of a retirement plan which was not freely assented to by her, respondent was guilty of illegal dismissal.[20]

Put differently, Obusan posits that the severance of her employment from PNB constituted illegal dismissal. She claims that the PNB-RRP, which compulsorily retired her at the age of 60 years without her consent, runs afoul of her right to security of tenure as guaranteed by the Constitution. She further argues that since PNB-RRP cannot be made to apply to her, Article 287 of the Labor Code should prevail, giving her the right to compulsorily retire at the age of 65 years.

We disagree.

The pertinent law on this matter, Article 287 of the Labor Code, as amended by Republic Act No. 7641,

which took effect on January 7, 1993, provides ART. 287. Retirement. Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract. In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned under existing laws and any collective bargaining agreement and other agreements: Provided, however, That an employees retirement benefits under any collective bargaining agreement and other agreements shall not be less than those provided herein.

In the absence of a retirement plan or agreement providing for retirement

benefits of employees in the establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age, who has served at least five (5) years in the said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one whole year.

Unless the parties provide for broader inclusions, the term one-half (1/2) month

salary shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of service incentive leaves.

Undoubtedly, under this provision, the retirement age is primarily determined by the existing

agreement or employment contract. Absent such an agreement, the retirement age shall be fixed by

law. The above-cited law mandates that the compulsory retirement age is at 65 years, while the

minimum age for optional retirement is set at 60 years.Moreover, Article 287 of the Labor Code, as

amended, applies only to a situation where (1) there is no CBA or other applicable employment contract

providing for retirement benefits for an employee; or (2) there is a collective bargaining agreement or

other applicable employment contract providing for retirement benefits for an employee, but it is below

the requirement set by law. The rationale for the first situation is to prevent the absurd situation where

an employee, deserving to receive retirement benefits, is denied them through the nefarious scheme of

employers to deprive employees of the benefits due them under existing labor laws. The rationale for

the second situation is to prevent private contracts from derogating from the public law.[21]

In this case, Obusan was initially hired in 1979 as a government employee, PNB then being a

government-owned and controlled corporation. As such, she was governed by civil service laws, and

the compulsory retirement age, as imposed by law, was at 65 years. Peculiar to her situation, however,

was that the corporate entity that hired her ceased to be government-owned and controlled when it was

privatized in 1996. As a result of the privatization of PNB, all of its officers and employees were deemed

retired from the government service. Consequently, many of them, Obusan included, received their

respective retirement gratuities.

It cannot be said that the PNB-RRP is a retirement plan providing retirement benefits less than

what the law requires. In fact, in the computation of the employees retirement pay, the plan factored

what Article 287 requires. Thus the plan provides:

3. For service rendered after privatization, a Member, regardless whether or not he

received GSIS Retirement Gratuity Benefits, shall be entitled to one hundred twelve (112%) percent of his Latest Monthly Plan Salary[22] for every year of service rendered, a fraction of at least six (6) months being considered as one (1) whole year.

The vesting multiple of one hundred twelve (112%) percent that is applied to the Latest Monthly Plan Salary is derived as the sum of fifteen (15) days of the Latest Daily Plan Salary plus five (5) days of the service incentive leave (based on Latest Daily Plan Salary) plus one-twelfth (1/12) of the Latest Monthly Plan Salary. The Daily Plan Salary used is computed as Latest Monthly Plan Salary multiplied by thirteen (13) months and divided by two hundred fifty-one (251) days.[23]

Moreover, the PNB-RRP also considered the effects of PNBs privatization, as it also provided for

additional benefits to those employees who were not qualified to receive the GSIS Retirement Gratuity

Benefits, viz.

2. A Member who failed to qualify to receive GSIS Retirement Gratuity Benefits shall

be entitled [to] one Month Basic Salary (as of May 26, 1996) for every year of service rendered before privatization.[24]

Retirement plans allowing employers to retire employees who have not yet reached the

compulsory retirement age of 65 years are not per se repugnant to the constitutional guaranty of

security of tenure. By its express language, the Labor Code permits employers and employees to fix

the applicable retirement age at 60 years or below, provided that the employees retirement benefits

under any CBA and other agreements shall not be less than those provided therein.[25] By this yardstick,

the PNB-RRP complies.

However, company retirement plans must not only comply with the standards set by existing

labor laws, but they should also be accepted by the employees to be commensurate to their faithful

service to the employer within the requisite period.[26]

To our mind, Obusans invocation of Jaculbe on account of her lack of consent to the PNB-RRP,

particularly as regards the provision on compulsory retirement age, is rather misplaced.

It is true that her membership in the PNB-RRP was made automatic, to wit

Section 1. Membership. Membership in the Plan shall be automatic for all full-time regular and permanent officers and employees of the Bank as of the effectivity date of the Plan. For employees hired after the effectivity of this Plan, their membership shall be effective on Date Entered Bank.[27]

The records show that the PNB Board of Directors approved the PNB-RRP on December 22, 2000. On

February 21, 2001, PNB informed all of its officers and employees about it, complete with its terms and

conditions and the guidelines for its implementation. Then, the PNB-RRP was registered with the BIR

and, later, was recognized by the Philnabank Employees Association in the CBA it entered with PNB.

With the information properly disseminated to all of PNBs officers and employees, the PNB-RRP was

then opened for scrutiny. The employees had every opportunity to question the plan if, indeed, it would

not be beneficial to the employees, as compared to what was mandated by Article 287 of the Labor

Code. Consequently, the union of PNBs rank-and-file employees recognized it as a legally-compliant

and reasonable retirement plan by the act of incorporating it in their CBA with PNB.

With respect to Obusan and the PNB Supervisors and Officers Association, of which she was the

President when she was compulsorily retired, there is nothing on record to show that they expressed

their dissent to the PNB-RRP. This deafening silence eloquently speaks of their lack of disagreement

with its provisions. It was only at the time that she was to be compulsorily retired that Obusan questioned

the PNB-RRPs provision on compulsory retirement age.

Besides, we already had the occasion to strike down the added requirement that an employer must first

consult its employee prior to retiring him, as this requirement unduly constricts the exercise by

management of its option to retire the said employee. Due process only requires that notice of the

employers decision to retire an employee be given to the employee.[28]

Finally, it is also worthy to mention that, unlike in Jaculbe, the PNB-RRP is solely and exclusively funded

by PNB,[29] and no financial burden is imposed on the employees for their retirement benefits.

All told, we hold that the PNB-RRP is a valid exercise of PNBs prerogative to provide a retirement plan

for all its employees.

WHEREFORE, the petition is DENIED. The assailed Decision dated September 21, 2007 and the

Resolution dated January 8, 2008 of the Court of Appeals in CA-G.R. SP No. 96918 are AFFIRMED. No

costs.

SO ORDERED.

G.R. No. 185449 November 12, 2014

GOODYEAR PHILIPPINES, INC. and REMEGIO M. RAMOS, Petitioners, vs. MARINA L. ANGUS, Respondent.

D E C I S I O N

DEL CASTILLO, J.:

In the absence of an express or implied prohibition against it, collection of both retirement benefits and separation pay upon severance from employment is allowed. This is grounded on the social justice policy that doubts should always be resolved in favor of labor rights.1

By this Petition for Review on Certiorari with Prayer for Injunctive Relief,2 petitioners Goodyear Philippines, Inc. (Goodyear) and Remigio M. Ramos (Ramos) assail the May 13, 2008 Decision3 and November 17, 2008 Resolution4 of the Court of Appeals (CA) in CA-G.R. SP No. 98418. The CA partly granted the Petition for Certiorari filed there with by modifying the September 30, 2005 Decision5 of the National Labor Relations Commission (NLRC) in that it ordered p etitioners to pay respondent Marina L. Angus (Angus) separation pay, attorney's fees equivalent to 10% of the separation pay, and moral damages.

Factual Antecedents

Angus was employed by Goodyear on November 16, 1966 and occupied the position of Secretary to the Manager of Quality and Technology.

In order to maintain the viability of its operations in the midst of economic reversals, Goodyear implemented cost-saving measures which included the streamlining of its workforce. Consequently, on September 19, 2001, Angus received from Ramos, the Human Resources Director of Goodyear, a letter which reads as follows:

September 18, 2001

x x x x

Dear Ms. Angus:

Please be advised that, based on a thorough study made by Management, the position of Secretary to the Manager of Quality & Technology is already redundant or is no longer necessary for its effective operation and is to be abolished effective today, September 18, 2001.

In view of the above, we regret to inform you that your services, as Secretary to the Manager of Quality & Technology, will be terminated effective October 18, 2001. Your last day of work, however, will be effective today, September 18, 2001, to give you a month's time to look for another employment.

As Company practice, termination due to redundancy or retrenclunent is paid at 45 days' pay per year of service. Considering, that you have rendered 34.92 years of service to the Company as of October 18, 2001, and have reached the required minimum age of 55 to qualify for early retirement, Management has decided to grant you early retirement benefit at 47 days' per year of service.

The Company will pay you the following termination benefits on October 18, 2001: 47 days' gay per year of service (which will come from the Pension Fund), fractions of 13th and 14th months pay, longevity pay, emergency leave and any earned and unused vacation and/or sick leave. The refund of your contributions to the Goodyear Savings Plan, as well as the Company's share will be handled separately by Security Bank Corporation, the Administrator of said Plan.

Should the Company find in the future that your services are again needed, it shall inform you of the opportunity so you can apply. The Company will try to assist you find new work elsewhere, and you may use Goodyear as a reference, if needed.

We thank you for your 34.92 years of loyal service with Goodyear Philippines, and we wish you success in your future endeavours.

Very truly yours,

GOODYEAR PHILIPPINES INC.

(signed) LUIS J. ISON Manager-Quality & Technology

(signed) REMIGIO M. RAMOS Hwnan Resources Director6

Upon receipt, Angus responded through a letter of even date, viz:

Dear Sirs:

With reference to the attached letter dated September 18, 2001, I accept Management decision to avail early retirement benefit. However, I do not agree on the terms stated therein. I suggest I be given a premiwn of additional 3 days for every year of service which is only 6.3% or a total of 50 days. I gathered it is Philippine industry's practice to give premiwn to encourage employees to avail of the early retirement benefit.

Acceptance of this proposal will make my separation from Goodyear pleasant.

Very truly yours,

(signed) MARINA L. ANGUS7

Meanwhile and in connection with the retrenchment of Angus, an Establishment Termination Report8 was filed by Goodyear with the Department of Labor and Employment (DOLE).

On November 20, 2001, Angus accepted the checks which covered payment of her retirement benefits computed at 4 7 days' pay per year of service and other company benefits. However, she put the following annotation in the acknowledgement receipt thereof:

Received under protest - amount is not acceptable. Acceptance is on condition that I will be given a premiwn of additional 3 days for every year of service.

Since my service was tenninated due to redundancy, I now claim my separation pay as mandated by law. This is a separate claim from my early retirement benefit.

(Signed)

Marina L. Angus

11-20-019

Allegedly because of the above-quoted annotation, and also of Angus' refusal to sign a Release and Quitclaim, petitioners took back the checks.10

In response to Angus' protest, Ramos wrote her a letter11 dated November 29, 2001 explaining that the company has already offered her the most favorable separation benefits due to redundancy, that is, 47 days' pay per year of service instead of the applicable rate of 45 days' pay per year of service. And based on the Retirement Plan under the Collective Bargaining Agreement (CBA) and the parties' Employment Contract, Angus is entitled to only one of the following kinds of separation pay: (1) normal retirement which is payable at 47 days' pay per year of service; (2) early retirement at a maximum of 47 days' pay per year of service; (3) retrenchment, redundancy, closure of establishment at 45 days' pay per year of service; (4) medical disability at 45 days' pay per year of service; or (5) resignation at 20 days' pay per year of service. Because of these, Ramos informed Angus that the company cannot anymore entertain any of her additional claims.

In reply,12 Angus reiterated her claim for both termination pay and early retirement benefits. She also demanded that she be given a copy of the Notice of Redundancy filed with the DOLE and a copy of the specific provisions in the Retirement Plan, CBA and Employment Contract which could justify the prohibition against the grant of both to a separated employee as asserted by petitioners. However, Ramos merely reminded Angus to claim her checks and brushed aside her demands in a letter13 dated December 19, 2001.

On January 17, 2002, Angus finally accepted a check in the amount of P1,958,927.89 purportedly inclusive of all termination benefits computed at 47 days' pay per year of service. She likewise executed a Release and Quitclaim14 in favor of Goodyear.

On February 5, 2002, Angus fil.ed with the Labor Arbiter a complaint for illegal dismissal with claims for separation pay, damages and attorney's fees against petitioners.

In her Position Paper,15 Angus claimed that her termination by reason of redundancy was effected in violation of the Labor Code for it was not timely reported to the DOLE and no separation pay was given to her; that the separation pay to which she is entitled by law is entirely different from the retirement benefits that she received; that nothing in the company's Retirement Plan under the CBA, the CBA itself or the Employment Contract prohibits the grant of more than one kind of separation pay; and, that she was only forced to sign a quitclaim after accepting her retirement benefits.

On the other hand, petitioners asseverated in their Position Paper16 that Angus was validly dismissed for an authorized cause; that she voluntarily accepted her termination benefits and freely executed the corresponding quitclaim; that her receipt of early retirement benefits equivalent to 4 7 days' pay for every year of service, which amount is higher than the regular separation pay, had effectively barred her from recovering separation pay due to redundancy; and, that the following Section 1, Article XI of the last company CBA supports the grant of only one benefit:

It is hereby understood that the availment of the retirement benefits herein provided for shall exclude entitlement to any separation pay, termination pay, redundancy pay, retrenchment pay or any other severance pay.

The parties finally agree that an employee shall be entitled to only one (1) benefit, whichever is higher.17

In her Rejoinder,18 Angus disputed the existence of the aforesaid provision in the company's CBA. She presented a copy of the latest CBA19 between Goodyear and Unyon ng mga Manggagawa sa Goma sa Goodyear Phils., Inc. effective for the period July 25, 2001 to July 24, 2004, to show that the provisions alluded to by the petitioners do not exist. In contrast, she pointed to Section 5, Article VIII of the latest CBA which she claimed to be the one applicable to her case, viz:

SECTION 5. Retirement Plan.

At normal retirement age of 60 years, a worker shall be entitled to a lump sum retirement benefit in an amount equivalent to his daily rate (base rate x 8) multiplied by 4 7 days, and further multiplied by his years of service.

A worker who is at least 50 years old and with at least 15 years of service, and who has been recommended by the President of the UNION for early retirement and duly approved by the Human Resources Director, shall be paid a lump sum retirement benefit as follows:

Years of Service Rendered

Retirement Benefit Equivalent to

15 - less than 21 34 days pay per year of service

21 - less than 26 35 days pay per year of service

26 - less than 31 36 days pay per year of service

31 and up 47 days pay per year of service20

Ruling of the Labor Arbiter

In a Decision21 dated January 23, 2004, the Labor Arbiter upheld the validity of Angus' termination from employment. It likewise declared that the amount she received from the company was actually payment of separation pay due to redundancy, only that it was computed under the CBA's retirement plan since the same was more advantageous to her. Anent her claim for both separation pay and retirement benefits, the Labor Arbiter held that the grant of both is not allowed under the Retirement Plan/CBA. Moreover, it was held that her claim of vitiated consent in signing the quitclaim is unworthy of credence considering that she fairly negotiated the matter with the management and that the consideration for its execution is higher than what she is mandated to receive.

Hence, the dispositive portion of the Labor Arbiter's Decision, viz:

WHEREFORE, premises considered, the instant complaint is hereby dismissed for lack of merit.

SO ORDERED.22

Ruling of the National Labor Relations Commission

Angus appealed to the NLRC, but was unsuccessful as it rendered a Decision23 dated September 30, 2005 affirming the ruling of the Labor Arbiter. Thus:

WHEREFORE, finding no cogent reason to modify, alter, much less reverse the decision appealed from, the same is AFFIRMED and the instant appeal is DISMISSED for lack of merit. SO ORDERED.24

Angus filed a motion for reconsideration, but was denied by the NLRC in a Resolution25 dated January 9, 2007.

Ruling of the Court of Appeals

Still undeterred, Angus filed a Petition for Certiorari26 with the CA. She attributed grave abuse of discretion amounting to lack of or in excess of jurisdiction on the part of the NLRC in sustaining the ruling of the Labor Arbiter.

On May 13, 2008, the CA rendered a Decision27 partially granting Angus' Petition. While it found her dismissal valid in both substance and procedural aspects, it declared Angus entitled to separation pay in addition to the retirement pay she already received. Citing Croz v. Philippine Global Communications, Inc.,28 the CA ruled that Angus is entitled to the payment of both retirement benefit and separation pay

in view of the absence of any provision in the CBA prohibiting the payment of both. It also concluded that Angus did not voluntarily sign the release and quitclaim as under its terms, she would receive less than what she is legally entitled to. Further, Angus was granted attorney's fees as she was forced to litigate to protect her rights and interest, as well as moral damages for the anxiety and distress that she suffered because of the pressure exerted on her to avail of early retirement and accept her retirement pay.

The dispositive portion of the CA Decision reads:

WHEREFORE, premises considered, the petition for certiorari is hereby partially GRANTED. The NLRC Decision dated September 30, 2005 is modified by ordering Goodyear to pay Angus: (1) separation pay pursuant to Article 283 of the Labor Code, (2) attorney's fees equivalent to ten percent (10%) of her separation pay, and (3) moral damages in the amount of five thousand pesos (P5,000.00).

SO ORDERED.29

Petitioners filed a Partial Motion for Reconsideration30 vehemently questioning the awards for separation pay, attorney's fees and moral damages. This was, however, denied by the CA in its Resolution31 dated November 17, 2008.

Hence, the present Petition.

Issues

Petitioners raise the following grounds for this Court's review:

I.

THE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW WHEN IT ORDERED THE PAYMENT OF SEPARATION PAY TO RESPONDENT ON TOP OF THE RETIREMENT PAY DESPITE THE FACT THAT IT IS VERY CLEAR IN THE COLLECTIVE BARGAINING AGREEMENT THAT RESPONDENT IS ENTITLED TO ONLY ONE TYPE OF BENEFIT, EITHER SEPARATION PAY OR RETIREMENT BENEFIT, WHICHEVER IS HIGHER.

II.

THE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW WHEN IT ORDERED GOODYEAR TO PAY AGAIN SEPARATION PAY TO RESPONDENT DESPITE THE FACT THAT RESPONDENT EXECUTED A VALID AND BINDING QUITCLAIM, THE CONSEQUENCES AND EFFECTS OF WHICH SHE FULLY UNDERSTOOD, AND WHICH SHE CANNOT NOW UNILATERALLY REVOKE.

III.

THE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW WHEN IT ORDERED THE PAYMENT OF MORAL DAMAGES AND ATTORNEY'S FEES NOTWITHSTANDING THAT THE COMPLAINT FOR ILLEGAL DISMISSAL AND MONEY CLAIMS LACKED MERIT.32 Petitioners argue that the CA erred in ordering them to still pay Angus separation pay as she was already paid the same at the rate used for computing early retirement benefits. They insist that Angus is entitled to only one kind of pay as the recovery of both retirement benefits and separation pay is proscribed by the company's CBA. Petitioners further contend that the CA has no basis in disregarding the quitclaim since it was knowingly and voluntarily executed by Angus. And such voluntary execution, coupled with her acceptance of separation pay computed at early retirement rate, had effectively barred Angus from demanding for more.

Our Ruling

The Petition is devoid of merit.

Angus is entitled to both separation pay and early retirement benefit due to the absence of a specific provision in the CEA prohibiting recovery of both.

In Aquino v. National Labor Relations Commission,33 citing Batangas Laguna Tayabas Bus Company v. Court of Appeals34 and University of the East v. Hon. Minister of Labor,35 the Court held that an employee is entitled to recover both separation pay and retirement benefits in the absence of a specific prohibition in the Retirement Plan or CBA. Concomitantly, the Court ruled that an employee's right to receive separation pay in addition to retirement benefits depends upon the provisions of the company's Retirement Plan and/or CBA.36

Here, petitioners allege that there is a provision in the last CBA against the recovery of both retirement benefits and separation pay.1âwphi1 To support their claim, petitioners submitted a copy of what appears to be a portion of the company CBA entitled "Retirement Plan, Life Insurance, Physical Disability Pay and Resignation Pay." Section 1, Article XI thereof provides that the availment of retirement benefits precludes entitlement to any separation pay. The same, however, can hardly be considered as substantial evidence because it does not appear to be an integral part of Goodyear's CBA. Even assuming that it is, it would still not suffice as there is no showing if the CBA under which the said provision is found was the one in force at the time material to this case. On the other hand, Angus presented the parties' 2001-2004 CBA and upon examination of the same, the Court agrees with her that it does not contain any restriction on the availment of benefits under the company's Retirement Plan and of separation pay. Indeed, the Labor Arbiter and the NLRC erred in ignoring this material piece of evidence which is decisive of the issue presented before them. The CA, thus, committed no error in reversing the Decisions of the labor tribunals when it ruled in favor of Angus' entitlement to both retirement benefits and separation pay.

Moreover, the Court agrees with the CA that the amount Angus received from petitioners represented only her retirement pay and not separation pay. A cursory reading of petitioners' September 18, 2001 letter notifying Angus of her termination from employment shows that they granted her early retirement benefits pegged at 4 7 days' pay per year of service. This rate was arrived at after petitioners considered respondent's length of service with the company, as well as her age which qualified her for early retirement. In fact, petitioners were even explicit in stating in the said letter that the amount she was to receive would come from the company's Pension Fund, which, as correctly asserted by Angus, was created to cover retirement benefit payment of employees. In addition, the document37 showing a detailed account of Angus' termination benefits speaks for itself as the same is entitled "Sununary of Retirement Pay and other Company Benefits." In view therefore of the clear showing that what petitioners decided to grant Angus was her early retirement benefits, they cannot now be permitted to deny having paid such benefit.

Petitioners further argue that Angus is not entitled to retirement pay because she does not meet the requirements enumerated in the Retirement Plan provision of the CBA. The Court disagrees. While it is obvious that Angus is not entitled to compulsory retirement as she has not yet reached the age of 60, there is no denying, however, that she is qualified for early retirement. Under the provision of the Retirement Plan of the CBA as earlier quoted, a worker who is at least 50 years old and with at least 15 years of service, and who has been recommended by the President of the Union for early retirement and duly approved by the Human Resources Director, shall be entitled to lump sum retirement benefits. At the time of her tennination, Angus was already 57 years of age and had been in the service for more than 34 years. The exchange of correspondence between Angus and Ramos also shows that the latter, as Goodyear's Human Resources Director, offered, recommended and approved the grant of early retirement in favor of the former. Clearly, all the requirements for Angus' availment of early retirement under the Retirement Plan of CBA were substantially complied with.

It is worthy to mention at this point that retirement benefits and separation pay are not mutually exclusive.38Retirement benefits are a form of reward for an employee's loyalty and service to an employer39 and are earned under existing laws, CBAs, employment contracts and company policies.40 On the other hand, separation pay is that amount which an employee receives at the time of his severance from employment, designed to provide the employee with the wherewithal during the period that he is looking for another employment and is recoverable only in instances enumerated under

Articles 283 and 284 of the Labor Code or in illegal dismissal cases when reinstatement is not feasible.41 In the case at bar, Article 28342 clearly entitles Angus to separation pay apart from the retirement benefits she received from petitioners.

Release and Quitclaim signed by Angus is invalid

The release and quitclaim signed by Angus cannot be used by petitioners to legalize the denial of Angus' rightful claims. As aptly observed by the CA, the terms of the quitclaim authorizes Angus to receive less than what she is legally entitled to. "Under prevailing jurisprudence, x x x a quitclaim cannot bar an employee from demanding benefits to which he is legally entitled."43 It was held to be "ineffective in barring claims for the full measure of the worker's rights and the acceptance of benefits therefrom does not amount to estoppel".44 Moreover, release and quitclaims are often looked upon with disfavor when the waiver was not done voluntarily by employees who were pressured into signing them by unscrupulous employers seeking to evade their obligations.45

Angus is entitled to moral damages and attorney's fees.

The Court likewise finds no cogent reason to overturn the CA's award of moral damages in the amount ofP5,000.00 and attorney's fees. Moral damages is awarded when fraud and bad faith have been established,46 as in this case. Petitioners' false contention over what has been paid to Angus suggests an attempt to feign compliance with their legal obligation to grant their employee all the benefits provided for by agreement and law. Their bad faith is evident in the intent to circumvent this legal mandate. And as Angus was then forced to litigate her just claims when petitioners refused to heed her demands for the payment of separation pay, the award of attorney’s fees equivalent to 10% of the amount of separation pay is also in order.47

WHEREFORE, the Petition is DENIED. The May 13, 2008 Decision and November 17, 2008 Resolution of the Court of Appeals in CA-G.R. SP No. 98418, are AFFIRMED.

SO ORDERED.

G.R. No. 190828, March 16, 2015

ONOFRE V. MONTERO, EDGARDO N. ESTRAÑERO, RENING P. PADRE, GABRIEL A. MADERA, HERMINIO T. TACLA, NELSON C. VILORIA, DEMETRIO Q. PAJARILLO, ALFREDO R. AGANON, REYNALDO AVILA, ALBERT T. RUIZ, NESTOR Y. YAGO, HARTY M. TUPASI, AGUSTIN R. AVILA, JR. OR MARCOS R. AVILA, BONIFACIO B. GAANO, JOSELITO D. CUENTA, JONAS P. ESTILONG, DOMINADOR C. CANARIA, GENARO C. RONDARIS, HERARDO M. DULAY, FRANKLIN A. RAVINA, JR., AND RUBEN C. CABELLO, Petitioners, v. TIMES TRANSPORTATION CO., INC., AND SANTIAGO RONDARIS, MENCORP TRANSPORT SYSTEMS, INC., VIRGINIA R. MENDOZA AND REYNALDO MENDOZA, Respondents.

D E C I S I O N

REYES, J.

This appeal by petition for review1 seeks to annul and set aside the Decision2 dated August 28, 2009 and Resolution3 dated December 11, 2009 of the Court of Appeals (CA) in CA-G.R. SP No. 106260, which affirmed the Decision4dated March 31, 2008 of the National Labor Relations Commission (NLRC) in NLRC CA No. 046325-05 (08), and its Resolution5 dated September 5, 2008, denying the petitioner’s Motion for Reconsideration. The NLRC decision vacated and set aside the Decision6 dated June 29, 2005 of the Labor Arbiter (LA) on the ground that the consolidated complaints for illegal dismissal, unfair labor practice and money claims have already prescribed.

The Facts

Respondent Times Transportation Co., Inc., (TTCI) is a company engaged in the business of land transportation for passengers and goods serving the Ilocos Region to Metro Manila route. TTCI employed the herein 21 petitioners as bus drivers, conductors, mechanics, welders, security guards and utility personnel, namely: Onofre V. Montero (Montero), Edgardo N. Estrañero (Estrañero), Rening P. Padre (Padre), Gabriel A. Madera (Madera), Herminio T. Tacla, Nelson C. Viloria, Demetrio Q. Pajarillo (Pajarillo), Alfredo R. Aganon (Aganon), Reynaldo Avila (Avila), Albert T. Ruiz, Nestor Y. Yago (Yago), Harty M. Tupasi (Tupasi), Agustin R. Avila, Jr. (Avila, Jr.), Bonifacio B. Gaano (Gaano), Joselito D. Cuenta (Cuenta), Jonas P. Estilong (Estilong), Dominador C. Canaria (Canaria), Genaro C. Rondaris (Genaro), Herardo M. Dulay (Dulay), Franklin A. Ravina, Jr. (Ravina), and Ruben C. Cabello (Cabello) (petitioners).7chanroblesvirtuallawlibrary

Sometime in 1995, the rank-and-file employees of TTCI formed a union named as Times Employees Union (TEU) which was later certified as the sole and exclusive bargaining unit within TTCI.8chanroblesvirtuallawlibrary

In March 1997, members of TEU went on strike; but when former Labor Secretary Leonardo A. Quisimbing assumed jurisdiction over the labor dispute and certified the same for compulsory arbitration, a return-to-work Order dated March 10, 1997 was issued which ended the strike and enjoined the parties from committing any other act that may intensify the situation.9chanroblesvirtuallawlibrary

On August 23, 1997, TTCI Board of Directors approved a resolution confirming the authority given to respondent Santiago Rondaris (Santiago), TTCI President and Chairman of the Board of Directors, to gradually dispose the assets of the TTCI as a result of its unabated increase of the cost of operations and losses for the last two years. TTCI also adopted a company-wide retrenchment program, which will take effect on October 1, 1997, where Santiago was given the authority to determine the number of excess employees who would be the subject of retrenchment.10chanroblesvirtuallawlibrary

The sale of 25 buses of TTCI, as well as the Certificates of Public Convenience for the operation of the buses, were likewise approved and subsequently transferred to respondent Mencorp Transport Systems, Inc., (MENCORP) by virtue of a Deed of Sale dated December 12, 1997. Thereafter, several union members received notices that they were being retrenched effective 30 days from September 16, 1997.11chanroblesvirtuallawlibrary

For a second time, on October 17, 1997, TEU declared a strike against TTCI, but the latter merely reiterated the earlier return-to-work order of the Labor Secretary. For disregarding the said return-to-work order, Santiago issued two notices of termination dated October 26, 199712 terminating some 106 workers and a revised list dated November 24, 199713 increasing the number of dismissed employees to 119, for participating in the illegal strike.14chanroblesvirtuallawlibrary

On December 4, 1997, Santiago served to the Department of Labor and Employment Regional Office I a notice that TTCI would be closing its operations due to heavy business losses.15chanroblesvirtuallawlibrary

On May 14, 1998, petitioners Estrañero, Pajarillo, Padre, Avila, Avila, Jr., Tupasi, Cuenta, Dulay, Yago, and Aganon filed several complaints against TTCI and MENCORP before the NLRC. The complaints were thereafter consolidated under the case entitled “Malana v. TTCI” docketed as NLRC RAB-I-01-1007.16 However, this case was withdrawn on March 4, 1999 upon motion by the TEU’s counsel which was given due course on March 22, 1999.17chanroblesvirtuallawlibrary

Four years later, several complaints for unfair labor practice, illegal dismissal with money claims, damages and attorney’s fees were filed against TTCI, Santiago, MENCORP and its General Manager Virginia Mendoza, including the latter’s husband Reynaldo Mendoza (collectively called the respondents), before the LA from June to July 2002.18 Accordingly, these complaints were consolidated.

In response, TTCI asserted that the petitioners’ cause of action had already been barred by prescription because the complaints were filed only in June 2002 or after almost five years from the date of their dismissal. MENCORP, on the other hand, raised the defense of lack of employer-employee relationship since it never engaged the services of the petitioners when TTCI sold to them its buses and the Certificates of Public Convenience.19chanroblesvirtuallawlibrary

On June 9, 2005, the LA rendered a Decision dismissing the petitioners’ claim for unfair labor practice and money claims on the ground of prescription. However, with regard to the issue of illegal dismissal, only the complaints of Montero, Ravina, Cabello, Genaro, Madera, Gaano, Arsenio Donato and Estilong were dismissed for having been barred by prescription.20chanroblesvirtuallawlibrary

The LA found that petitioners Estrañero, Pajarillo, Aganon, Padre, Dulay, Cuenta, Canaria, Yago, Avila and Avila, Jr. were illegally dismissed and were awarded their separation pay and backwages. According to the LA, the complaints of these 10 petitioners were timely filed in June 2002 because the eight-month period during which their cases were pending should be excluded from the four-year prescriptive period.21chanroblesvirtuallawlibrary

Disagreeing with the LA decision, all parties interposed an appeal before the NLRC. However, said appeals have both been denied for non-perfection, particularly for failure of the petitioners to verify their appeal, and for failure of the respondent to post the required cash or surety bond. In a Decision22 dated March 31, 2008, the NLRC vacated and set aside the findings of the LA, upon finding that the petitioners’ complaints had already been barred by prescription. The dispositive part of which reads:chanRoblesvirtualLawlibrary

WHEREFORE, IN VIEW OF THE FOREGOING, the decision appealed from is hereby VACATED and SET ASIDE, and the complaints dismissed on ground of prescription.

SO ORDERED.23

The NLRC observed that the LA had ignored the rule on prescription, and chose to be selective in awarding relief to the 10 complainants by stating in his decision that the period during which the labor cases were pending should be deducted from the period of prescription. According to the NLRC:chanRoblesvirtualLawlibrary

We have thoroughly examined the records and find no justification for the [LA] to rule that the pendency of the cases has worked in favor of the complainants to whom he awarded separation pay and backwages. The [LA] has not at all indicated in his decision when the eight (8)[-]month period of pendency he alluded to commenced and when it ended. As a matter of fact, these cases took almost three (3) years from filing of the complaints to the rendition of the appealed decision.24

The NLRC added that the application of the principle of prescription should not be done on a selective basis, especially when the dates of accrual of the causes of action and the filing of the complaints readily show that prescription has set in.25chanroblesvirtuallawlibrary

The petitioners filed a motion for reconsideration26 dated May 16, 2008, but it was denied.27 Hence, they filed a petition for certiorari28 before the CA.

On August 28, 2009, the CA Decision dismissed the petition.29 In sustaining the NLRC decision, the appellate court ratiocinated:chanRoblesvirtualLawlibrary

Here, the illegal dismissal case was filed only in June 2002 or for more than four (4) years and seven (7) months from the time petitioners received the notices of their dismissal in November and October 1997. Clearly, the four-year prescriptive period has already elapsed.

Moreover, there is likewise no merit in petitioners’ contention that the period when they filed a complaint on May 14, 1998 but withdrawn on March 30, 1998 should be excluded from the computation of the four-year prescriptive [period] for illegal dismissal cases. The prescriptive period continues even after the withdrawal of the case as though no action has been filed at all. This was clarified in the case of Intercontinental Broadcasting Corporation vs. Panganiban, where the Supreme Court held that although the commencement of an action stops the running of the statute of prescription or limitations, its dismissal or voluntary abandonment by plaintiff leaves the parties in exactly the same position as though no action had been commenced at all. x x x.30

Aggrieved by the foregoing disquisition, the petitioners moved for reconsideration31 but it was denied by the CA.32 Hence, the present petition for review on certiorari.33chanroblesvirtuallawlibrary

The Issue

The main issue in this case is whether or not the petitioners’ complaints for illegal dismissal have already prescribed.

Ruling of the Court

The petition is bereft of merit.

“It should be emphasized at the outset that as a rule, this Court is not a trier of facts and this applies with greater force in labor cases. Hence, factual findings of quasi-judicial bodies like the NLRC, particularly when they coincide with those of the [LA] and if supported by substantial evidence, are accorded respect and even finality by this Court. But where the findings of the NLRC and the [LA] are contradictory, as in the present case, this Court may delve into the records and examine for itself the questioned findings.”34chanroblesvirtuallawlibrary

Nevertheless, the Court has thoroughly reviewed the records in this case and finds that the NLRC did not commit any grave abuse of its discretion amounting to lack or in excess of jurisdiction in rendering its decision in favor of the respondents. The CA acted in accord with the evidence on record and case law when it dismissed the petition and affirmed the assailed decision and resolution of the NLRC.

In the case at bar, October 26, 1997 and November 24, 1997 appear on record to be the dates when the petitioners’ employment were terminated by TTCI. The antecedent facts that gave rise to the petitioners’ dismissal from employment are not disputed in this case. There is no question about the fact that the petitioners’ complaints for unfair labor practice and money claims have already prescribed. The petitioners however argue that their complaints for illegal dismissal were duly filed within the four-year prescriptive period since the period during which their cases were pending should be deducted from the period of prescription. On the other hand, the respondents insist that said complaints have already prescribed. Hence, the pivotal question in resolving the issues hinges on the resolution of whether the period during which the petitioners’ cases were pending should be excluded from the period of prescription.

Settled is the rule that when one is arbitrarily and unjustly deprived of his job or means of livelihood, the action instituted to contest the legality of one’s dismissal from employment constitutes, in essence, an action predicated upon an injury to the rights of the plaintiff, as contemplated under Article 114635 of the New Civil Code, which must be brought within four years.36chanroblesvirtuallawlibrary

The petitioners contend that the period when they filed a labor case on May 14, 1998 but withdrawn on March 22, 1999 should be excluded from the computation of the four-year prescriptive period for illegal dismissal cases. However, the Court had already ruled that the prescriptive period continues even after the withdrawal of the case as though no action has been filed at all. The applicability of Article 115537of the Civil Code in labor cases was upheld in the case of Intercontinental Broadcasting Corporation v. Panganiban38 where the Court held that “although the commencement of a civil action stops the running of the statute of prescription or limitations, its dismissal or voluntary abandonment by plaintiff leaves the parties in exactly the same position as though no action had been commenced at all.”39chanroblesvirtuallawlibrary

In like manner, while the filing of the complaint for illegal dismissal before the LA interrupted the running of the prescriptive period, its voluntary withdrawal left the petitioners in exactly the same position as though no complaint had been filed at all. The withdrawal of their complaint effectively erased the tolling of the reglementary period.

A prudent review of the antecedents of the claim reveals that it has in fact prescribed due to the petitioners’ withdrawal of their labor case docketed as NLRC RAB-I-01-1007.40 Hence, while the filing of the said case could have interrupted the running of the four-year prescriptive period, the voluntary withdrawal of the petitioners effectively cancelled the tolling of the prescriptive period within which to file their illegal dismissal case, leaving them in exactly the same position as though no labor case had been filed at all. The running of the four-year prescriptive period not having been interrupted by the filing of NLRC RAB-I-01-1007, the petitioners’ cause of action had already prescribed in four years after their cessation of employment on October 26, 1997 and November 24, 1997. Consequently, when the petitioners filed their complaint for illegal dismissal, separation pay, retirement benefits, and damages in 2002, their claim, clearly, had already been barred by prescription.41chanroblesvirtuallawlibrary

Sadly, the petitioners have no one but themselves to blame for their own predicament. By their own allegations in their respective complaints, they have barred their remedy and extinguished their right of action. Although the Constitution is committed to the policy of social justice and the protection of the working class, it does not necessary follow that every labor dispute will be automatically decided in favor of labor. The management also has its own rights. Out of concern for the less privileged in life, this Court, has more often than not inclined, to uphold the cause of the worker in his conflict with the employer. Such leaning, however, does not blind the Court 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.42chanroblesvirtuallawlibrary

WHEREFORE, the Decision dated August 28, 2009 and Resolution dated December 11, 2009 of the Court of Appeals in CA-G.R. SP No. 106260 are AFFIRMED. SO ORDERED.