Download - Diosdado de Vera and United Cmc Textile Workers Union

8/10/2019 Diosdado de Vera and United Cmc Textile Workers Union

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DIOSDADO DE VERA AND UNITED CMC TEXTILEWORKERS UNION, Petitioners , v. NATIONAL LABORRELATIONS COMMISSION, CENTRAL TEXTILE MILLS,INC., and/or AGUSTIN CABATINGAN, Respondents .

Romeo C . Lagman, for Petitioners .

Cruz, Durian, Agabin, Atienza, Alday & Tuason forPrivate Respondents .

SYLLABUS

1. LABOR LAW; NATIONAL LABOR RELATIONSCOMMISSION; ITS FINDINGS OF FACTS ARE CONCLUSIVEON THE SUPREME COURT ABSENT A SHOWING OFARBITRARINESS. The findings of fact of the NLRC areconclusive on this Court in the absence of a showing thatthey were arrived at arbitrarily. The petitioner has failed toshow such arbitrariness. We therefore accept, on the basisof the evidence of record, including the petitioners own

admission, that he had indeed committed a violation ofcompany rules by hitting Ocampo on the head. Assumingthe provocation, we nevertheless agree that the attack wasnot justified. It is not correct to say that the company wasnot itself prejudiced, for the peace in its premises wasdisturbed and the discipline of the personnel affected. Theprivate respondent could not close its eyes to the incident atthe risk of further disregard of its rules, which it had a rightto enforce. The fact that Ocampo chose not to prefer

charges did not prevent the company from acting motuproprio to investigate the incident.

2. ID.; LABOR RELATIONS; ALLEGED UNFAIR LABORPRACTICE, NOT SUPPORTED BY EVIDENCE; PENALTY OFDISMISSAL, NOT COMMENSURATE WITH THE OFFENSE;CASE AT BAR. We also sustain the finding that the private


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respondent was not guilty of any unfair labor practice, noevidence having been submitted to support the charge.Going deeper into the record, however, we find that thepenalty of dismissal was not commensurate with the

offense, considering the other circumstances of this case.We note, first of all, that the petitioner had been workingwith the respondent company for fourteen years and wasapparently doing well except for the earlier-mentionedoffenses that had already been sufficiently punished. Thedifferences between De Vera and Ocampo have long sincebeen patched up and the two have decided to forget theincident. To all appearances, the discipline of the companyhas not deteriorated as a result of the quarrel between the

two employees. Given all these facts, we feel that a lighterpenalty than that meted out to De Vera would have beenmore just, if not humane.

3. ID.; ID.; REINSTATEMENT OF THE EMPLOYEE, NOTPRACTICAL IF THE RELATION BETWEEN THE PARTIES HAVEALREADY BEEN STRAINED; SEPARATION PAY MAY BEGRANTED TAKING INTO ACCOUNT THE NATURE ANDDEGREE OF THE OFFENSE COMMITTED. Nevertheless,

since relations between the parties have already beenstrained, we feel it is not practical anymore to reinstate thepetitioner, who is no longer welcome in the company. Weshall therefore sustain the penalty imposed, but withmodification. The modification is that the petitioner shall begranted separation pay at the rate of one month salary forevery year of service, taking into account the nature anddegree of the offense he has committed, which is neitherserious nor depraved. This ruling is conformable to the case

of PLDT v. NLRC, (164 SCRA 671) where the Court said:There should be no question that where it comes to suchvalid but not iniquitous causes of failure to comply with workstandards, the grant of separation pay to the dismissedemployee may be both just and compassionate, particularlyif he has worked for some time with the company. Forexample, a subordinate who has irreconcilable policy or


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personal differences with his employer may be validlydismissed for demonstrated loss of confidence, which is anallowable ground. A working mother who has also to takecare of her child may also be removed because of her poor

attendance, this being another authorized ground. It is notthe employees fault if he does not have the necessaryaptitude for his work but on the other hand the companycannot be required to maintain him just the same at theexpense of the efficiency of its operations. He too may bevalidly replaced. Under these and similar circumstances,however, the award to the employee of separation paywould be sustainable under the social justice policy even ifthe separation is for cause.

D E C I S I O N

CRUZ, J. :

Diosdado de Vera was employed as a mechanic in the

weaving department of the Central Textile Mills, the hereinprivate Respondent . He claims he was active in unionactivities. In the course of his employment, he had beenadministered disciplinary sanctions for various offenses,including not wearing the ID tag in the company premises,leaving his workplace without permission, habitual tardiness,reporting for work under the influence of liquor, anddamaging property in the performance of his duties. The lasttwo offenses were each punished with 5 days suspension

and the others with written or oral warnings. chanroblesvirtualawlibrary chanrobles.com:chanrobles.com.ph

On October 2, 1984, the petitioner had a row with JesusOcampo, a fellow worker, whom he hit in the head with astick. The protagonists were soon pacified. Ocampo saw fitnot to file any charge against De Vera with the company or


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the police. Nevertheless, the private respondent, uponlearning of the incident, called for its investigation by a fact-finding committee. This was composed of a companyrepresentative as chairman and two union representatives.

In the investigation, De Vera claimed he had on the date inquestion asked Ocampo for payment of a P100.00 loan hehad extended him, but the latter resented the dunning andswore at him. That provoked his attack on Ocampo. Ocampohimself never appeared before the investigators. Twomonths later, the committee chairman, allegedly withoutnotice to the two union members, recommended De Verasdismissal for violation of company rules. Acting on this

recommendation, the private respondent dismissed thepetitioner on December 10, 1984.

On October 15, 1985, the president of the CMC TextileWorkers Union filed on its behalf and of the petitioner acomplaint for illegal dismissal against the Central TextileMills, Inc. After hearing, the complaint was dismissed byLabor Arbiter Emerson C. Tumanon in a decision dated May22, 1989. 1 On appeal, the decision was affirmed in toto by

the NLRC in its resolution dated February 28, 1990. 2 Thepetitioner then came to this Court alleging grave abuse ofdiscretion on the part of the public Respondent .

The findings of fact of the NLRC are conclusive on this Courtin the absence of a showing that they were arrived atarbitrarily. The petitioner has failed to show sucharbitrariness. We therefore accept, on the basis of theevidence of record, including the petitioners own admission,

that he had indeed committed a violation of company rulesby hitting Ocampo on the head. chanrobles virtual lawlibrary

Assuming the provocation, we nevertheless agree that theattack was not justified. It is not correct to say that thecompany was not itself prejudiced, for the peace in itspremises was disturbed and the discipline of the personnel


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affected. The private respondent could not close its eyes tothe incident at the risk of further disregard of its rules, whichit had a right to enforce. The fact that Ocampo chose not toprefer charges did not prevent the company from acting

motu proprio to investigate the incident.

We also sustain the finding that the private respondent wasnot guilty of any unfair labor practice, no evidence havingbeen submitted to support the charge.

Going deeper into the record, however, we find that thepenalty of dismissal was not commensurate with theoffense, considering the other circumstances of this case.

We note, first of all, that the petitioner had been workingwith the respondent company for fourteen years and wasapparently doing well except for the earlier-mentionedoffenses that had already been sufficiently punished. Thedifferences between De Vera and Ocampo have long sincebeen patched up and the two have decided to forget theincident. To all appearances, the discipline of the companyhas not deteriorated as a result of the quarrel between thetwo employees.

Given all these facts, we feel that a lighter penalty than thatmeted out to De Vera would have been more just, if nothumane.

Nevertheless, since relations between the parties havealready been strained, we feel it is not practical anymore toreinstate the petitioner, who is no longer welcome in thecompany. We shall therefore sustain the penalty imposed,

but with modification. The modification is that the petitionershall be granted separation pay at the rate of one monthsalary for every year of service, taking into account thenature and degree of the offense he has committed, which isneither serious nor depraved. This ruling is conformable tothe case of PLDT v. NLRC, 3 where the Courtsaid: chanroblesvirtualawlibrary


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There should be no question that where it comes to suchvalid but not iniquitous causes of failure to comply with workstandards, the grant of separation pay to the dismissed

employee may be both just and compassionate, particularlyif he has worked for some time with the company. Forexample, a subordinate who has irreconcilable policy orpersonal differences with his employer may be validlydismissed for demonstrated loss of confidence, which is anallowable ground. A working mother who has also to takecare of her child may also be removed because of her poorattendance, this being another authorized ground. It is notthe employees fault if he does not have the necessary

aptitude for his work but on the other hand the companycannot be required to maintain him just the same at theexpense of the efficiency of its operations. He too may bevalidly replaced. Under these and similar circumstances,however, the award to the employee of separation paywould be sustainable under the social justice policy even ifthe separation is for cause.

But where the cause of the separation is more serious than

mere inefficiency, the generosity of the law must be morediscerning. There is no doubt it is compassionate to giveseparation pay to a salesman if he is dismissed for hisinability to fill his quota but surely he does not deserve suchgenerosity if his offense is misappropriation of the receiptsof his sales. This is no longer mere incompetence but cleardishonesty. A security guard found sleeping on the job isdoubtless subject to dismissal but may be allowedseparation pay since his conduct, while inept, is not

depraved. But if he was in fact not really sleeping butsleeping with a prostitute during his tour of duty and in thecompany premises, the situation is changed completely. Thisis not only inefficiency but immorality and the grant ofseparation pay would be entirely unjustified. ( Emphasissupplied )


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The social justice policy mandates a compassionate attitudetoward the working class in its relations with management.While in calling for the-protection of labor, the Constitutiondoes not condone wrongdoing by the employee, it

nevertheless urges a moderation of the sanctions that maybe applied to him in the light of the many disadvantagesthat weigh heavily on him like an albatross hanging from hisneck. Management must look upon the working class withsympathy, remembering that they are equal partners joinedin a common venture whose success should redound to theirmutual benefit. They should regard each other in a spirit ofamity and trust, not with closed hands but with open arms,that they may endeavor better together.

WHEREFORE, the petition is partly GRANTED, and theprivate respondent is DIRECTED to pay separation pay tothe petitioner as above indicated. It is so ordered. chanroblesvirtual lawlibrary

Narvasa, Gancayco, Grio-Aquino and Medialdea, JJ. ,concur.

LORLENE A. GONZALES, petitioner , vs. NATIONAL LABORRELATIONS COMMISSION, FIFTH DIVISION, CAGAYANDE ORO CITY, and ATENEO DE DAVAO UNIVERSITY,respondents.

D E C I S I O N

BELLOSILLO, J .:

By way of certiorari under Rule 65 of the Rules of Court petitionerseeks the nullification of the Decision of public respondent National LaborRelations Commission, Fifth Division, which reversed and set aside that ofExecutive Labor Arbiter Conchita J. Martinez.

Lorlene Gonzales, petitioner, has been a schoolteacher in theElementary Department of private respondent Ateneo de Davao University(hereafter ATENEO) since 1974 assigned to teach Reading, Mathematics,


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Language and Pilipino in the Grade VI class, while ATENEO is aneducational institution, a corporation duly organized under the laws of thePhilippines, with principal address at Jacinto St., Davao City.

Sometime in 1991 Fr. Oscar Millar, S.J., Ateneo Grade SchoolHeadmaster, sent a letter dated 11 April 1991 informing petitioner LorleneA. Gonzales of the complaints of two (2) parents for alleged use of corporal

punishment on her students. Petitioner claimed that she was not informed ofthe identity of the parents who allegedly complained of the corporal

punishment she purportedly inflicted in school-year 1990-1991. Shelikewise claimed that she was not confronted about it by private respondentATENEO in 1991 and that it was only two (2) years after the complaintswere made that she discovered, through her students and their parents, thatATENEO was soliciting complainants to lodge written complaints against

her.On 31 March 1993 she wrote a letter to Fr. Oscar Millar, S.J.,

demanding that she be formally informed of the complaint and be dulyinvestigated.

On 9 June 1993 petitioner was informed of the composition of aninvestigative committee organized by Fr. Oscar Millar, S.J., to look into thealleged use of corporal punishment by petitioner in disciplining herstudents. It can be gleaned from the records that she was duly furnishedwith the rules of procedure, informed of the schedule of the hearings, andgiven copies of the affidavits executed by the students who testified againsther.

Petitioner refused to take part in the investigation unless the rules of procedure laid down by the Committee be revised, contending that the samewere violative of her right to due process. Petitioner specifically objected tothe provision which stated: x x x 3) Counsel for Ms. Lorlene Gonzales shallnot directly participate in the investigation but will merely advise Ms.Gonzales x x x (par. 3). [1]

But the Committee was steadfast in its resolve to adopt theaforementioned rules. In its letter dated 9 August 1993, private respondentinformed petitioner that the rules of procedure to be applied weresubstantially the same rules that were used in the investigation of a formerAteneo employee and therefore we are under legal advice not to changethese rules." [2] Over the objection of petitioner the Committee commencedwith its investigation without petitioners participation. Out of the twenty -


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two (22) invitations sent out by ATENEO to petitioners students and their parents to shed light on the matter of corporal punishment allegedlyadministered by her, eleven (11) appeared and testified before thecommittee. The eleven (11) witnesses also executed written statementsdenominated as affidavits.

On 10 November 1993 private respondent served a Notice ofTermination on petitioner pursuant to the findings and recommendation ofthe Committee. Thereafter, petitioner received a letter from the president ofATENEO demanding her voluntary resignation a week from receipt of theletter, otherwise, she would be considered resigned from the service.

On 29 November 1993 petitioner filed a complaint before the LaborArbiter for illegal dismissal. After trial, Executive Labor Arbiter Conchita J.Martinez found her dismissal illegal for lack of factual basis and orderedATENEO to award petitioner separation pay, back wages and 13th month

pay. In her decision, the Executive Labor Arbiter opined that although petitioner was afforded procedural due process respondent institution failedto establish substantial evidence as to the guilt of the complainant of theoffense charged" [3] thus -

x x x the complainant was afforded procedural due process. There isconvincing and sufficient evidence x x x showing respondent complied withthe notice and hearing requirement x x x x. [4]

After considering the evidence, arguments and counter-arguments of theparties, this office finds that the respondent failed to establish substantialevidence as to the guilt of complainant of the offense charged x x x x. [5]

Complainant has sufficiently established that she is a very good teacher. Sheis equipped with the appropriate educational qualifications, trainings,seminars and work experiences. Such fact was affirmed by her present andformer students, their parents, colleagues and the former headmaster of thegrade school x x x x [6]

As a matter of fact, six (6) out of the nine (9) students and theirparents/guardians have retracted and withdrawn their statements x x x x [7]

Both parties appealed to the NLRC which on 25 March 1996 reversedthe decision of the Executive Labor Arbiter by declaring petitionersdismissal valid and legal but added that since ATENEO offered petitioner


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her retirement benefits it was but proper that she be extended said benefits. Petitioner now seeks the reversal of the decision; hence, this petition.

The crux of the controversy is whether the NLRC committed graveabuse of discretion in sustaining as valid and legal the dismissal of petitioner

by private respondent ATENEO.

The NLRC, in our view, appears to have skirted several importantissues raised by petitioner foremost of which is the absence of due

process. Upon being notified of her termination, she has the right to demandcompliance with the basic requirements of due process. Compliance entailsthe twin requirements of procedural and substantial due process. Ampleopportunity must be afforded the employee to defend herself either

personally and/or with assistance of a representative; to know the nature ofher offense; and, to cross examine and confront face to face the witnessesagainst her. Likewise, due process requires that the decision must be basedon established facts and on a sound legal foundation.

It is precisely to demand compliance with these requirements that petitioner at the very onset of the investigation demanded the revision of therules laid down by the Investigative Committee. The adamant refusal of theCommittee to accede to this demand resulted in her failure to confront andcross-examine her accusers. This is not harping at technicalities aswrongfully pointed out by the NLRC but a serious violation of petitioner'sstatutory and constitutional right to due process that ultimately vitiated theinvestigation.

Moreover, the failure of ATENEO to refute the contention of petitionerthat the joint affidavits executed by the students and parents were "pre-

prepared" raises serious doubts as to the probative value of thisevidence. As correctly pointed out by the Executive Labor Arbiter, there ismore reason to disregard it especially where the same was challenged andhas remained unexplained. Hearsay evidence, in the strict sense, has no

probative value whether objected to or not.

In the instant case, ATENEO failed to prove by substantial evidencethat petitioner had inflicted corporal punishment on her students. In AngTibay v. CIR , the Court set the measure of evidence to be presented in anadministrative investigation when it said, substantial evidence is more thanmere scintilla. It means such relevant evidence as a reasonable mind mightaccept as adequate to support a conclusion. The evidence of private


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respondent did not measure up to this standard. It relied solely on thewitnesses affidavits with questionable veracity. Moreover, the affidavit ofrecantation executed by some students and their parents all the moreweakened the case of private respondent. Failure in this regard negates thevery existence of the ground for dismissal.

On the other hand, petitioner adequately proved, by means of affidavits,letters of petition and manifesto made by her students and co-teachers, thatshe was a competent and dedicated teacher having spent seventeen (17)years of her life in the service of the very institution which is now seekingher dismissal.

In view of the foregoing, the conclusion of the NLRC isunwarranted. Employment is not merely a contractual relationship; it hasassumed the nature of property right. It may spell the difference whether ornot a family will have food on their table, roof over their heads andeducation for their children. It is for this reason that the State has taken upmeasures to protect employees from unjustified dismissals. It is also

because of this that the right to security of tenure is not only a statutory right but, more so, a constitutional right.

WHEREFORE , the assailed Decision of public respondent NationalLabor Relations Commission dated 25 March 1996 is REVERSED and SETASIDE, and the decision of Executive Labor Arbiter Conchita J. Martinezdeclaring the dismissal of complainant Lorlene A. Gonzales illegal for lackof factual basis and ordering respondent Ateneo de Davao University to paycomplainant separation pay, back wages and 13th month pay in the totalamount of TWO HUNDRED SIXTEEN THOUSAND NINE HUNDREDTHIRTY-EIGHT and 70/100 PESOS (P216,938.70) x x x [f]urther, orderingrespondent to pay 10% of the total monetary award as attorney's fees tocounsel for complainant x x x [d]ismissing all other claims for lack ofmerit, is REINSTATED, AFFIRMED and ADOPTED herein as thedecision in the instant case.

SO ORDERED.

Republic of the Philippines SUPREME COURT Manila

EN BANC


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airconditioning unit inside the apartment private respondent sharedwith Saldivar. Under such circumstances, preventive suspension wasthe proper remedial recourse available to the company pendingSalazar's investigation. By itself, preventive suspension does, not

signify that the company has adjudged the employee guilty of thecharges she was asked to answer and explain. Such disciplinarymeasure is resorted to for the protection of the company's propertypending investigation any alleged malfeasance or misfeasancecommitted by the employee. 5

Thus, it is not correct to conclude that petitioner GMCR had violatedSalazar's right to due process when she was promptly suspended. Ifat all, the fault, lay with private respondent when she ignoredpetitioner's memorandum of October 8, 1984 "giving her ample

opportunity to present (her) side to the Management." Instead, shewent directly to the Labor Department and filed her complaint forillegal suspension without giving her employer a chance to evaluateher side of the controversy.

But while we agree with the propriety of Salazar's preventivesuspension, we hold that her eventual separation from employmentwas not for cause.

What is the remedy in law to rectify an unlawful dismissal so as to"make whole" the victim who has not merely lost her job which, undersettled Jurisprudence, is a property right of which a person is not tobe deprived without due process, but also the compensation thatshould have accrued to her during the period when she wasunemployed?

Art. 279 of the Labor Code, as amended, provides:

Security of Tenure . In cases of regular employment, the employershall not terminate the services of an employee except for a justcause or when authorized by this Title. An employee who is unjustlydismissed from work shall be entitled to reinstatement without loss ofseniority rights and other privileges and to his full backwages ,inclusive of allowances, and to his other benefits or their monetaryequivalent computed from the time his compensation was withheldfrom him up to the time of his actual reinstatement. 6 (Emphasis


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supplied)

Corollary thereto are the following provisions of the ImplementingRules and Regulations of the Labor Code:

Sec. 2. Security of Tenure . In cases of regular employments, theemployer shall not terminate the services of an employee except for a

just cause as provided in the Labor Code or when authorized byexisting laws.

Sec. 3. Reinstatement . An employee who is unjustly dismissedfrom work shall by entitled to reinstatement without loss of seniorityrights and to backwages ." 7 (Emphasis supplied)

Before proceeding any furthers, it needs must be recalled that thepresent Constitution has gone further than the 1973 Charter inguaranteeing vital social and economic rights to marginalized groupsof society, including labor. Given the pro-poor orientation of severalarticulate Commissioners of the Constitutional Commission of 1986, itwas not surprising that a whole new Article emerged on SocialJustice and Human Rights designed, among other things, to "protectand enhance the right of all the people to human dignity, reducesocial, economic and political inequalities, and remove culturalinequities by equitably diffusing wealth and political power for thecommon good." 8 Proof of the priority accorded to labor is that itleads the other areas of concern in the Article on Social Justice, viz .,Labor ranks ahead of such topics as Agrarian and Natural ResourcesReform, Urban Land Roform and Housing, Health, Women, Role andRights of Poople's Organizations and Human Rights. 9

The opening paragraphs on Labor states

The State shall afford full protection to labor, local and overseas,organized and unorganized, and promote full employment andequality of employment opportunities for all.

It shall guarantee the rights of all workers to self-organization,collective bargaining and negotiations, and peaceful concertedactivities, including the right to strike in accordance with law. Theyshall be entitled to security of tenure , humane conditions of work, anda living wage. They shall also participate in policy and decision-


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making processes affecting their rights and benefits is may beprovided by law. 10 (Emphasis supplied)

Compare this with the sole.provision on Labor in the 1973Constitution under the Article an Declaration of Principles and StatePolicies that provides:

Sec. 9. The state shall afford protection to labor, promote fullemployment and equality in employment, ensure equal workopportunities regardless of sex, race, or creed, and regulate therelations between workers and employers. The State shall ensure therights of workers to self-organization, collective baegaining, securityof tenure, and just and humane conditions of work. The State mayprovide for compulsory arbitration. 11

To be sure, both Charters recognize "security of tenure" as one of therights of labor which the State is mandated to protect. But there is nogainsaying the fact that the intent of the framers of the presentConstitution was to give primacy to the rights of labor and afford thesector "full protection," at least greater protection than heretoforeaccorded them, regardless of the geographical location of theworkers and whether they are organized or not.

It was then CONCOM Commissioner, now Justice Hilario G. Davide,Jr., who substantially contributed to the present formulation of theprotection to labor provision and proposed that the same beincorporated in the Article on Social Justice and not just in the Articleon Declaration of Principles and State Policies "in the light of thespecial importance that we are giving now to social justice and thenecessity of emphasizing the scope and role of social justice innational development." 12

If we have taken pains to delve into the background of the laborprovisions in our Constitution and the Labor Code, it is but to stressthat the right of an employee not to be dismissed from his job exceptfor a just or authorized cause provided by law has assumed greaterimportance under the 1987 Constitution with the singular prominencelabor enjoys under the article on Social Justice. And this transcendentpolicy has been translated into law in the Labor Code. Under itsterms, where a case of unlawful or unauthorized dismissal has been


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proved by the aggrieved employee, or on the other hand, theemployer whose duty it is to prove the lawfulness or justness of hisact of dismissal has failed to do so, then the remedies provided in

Article 279 should find, application. Consonant with this liberalized

stance vis-a-vis labor, the legislature even went further by enactingRepublic Act No. 6715 which took effect on March 2, 1989 thatamended said Article to remove any possible ambiguity that

jurisprudence may have generated which watered down theconstitutional intent to grant to labor "full protection." 13

To go back to the instant case, there being no evidence to show anauthorized, much less a legal, cause for the dismissal of privaterespondent, she had every right, not only to be entitled toreinstatement, but ay well, to full backwages." 14

The intendment of the law in prescribing the twin remedies ofreinstatement and payment of backwages is, in the former, to restorethe dismissed employee to her status before she lost her job, for thedictionary meaning of the word "reinstate" is "to restore to a state,conditione positions etc. from which one had been removed" 15 and inthe latter, to give her back the income lost during the period ofunemployment. Both remedies, looking to the past, would perforcemake her "whole."

Sadly, the avowed intent of the law has at times been thwarted whenreinstatement has not been forthcoming and the hapless dismissedemployee finds himself on the outside looking in.

Over time, the following reasons have been advanced by the Courtfor denying reinstatement under the facts of the case and the lawapplicable thereto; that reinstatement can no longer be effected inview of the long passage of time (22 years of litigation) or because ofthe realities of the situation; 16 or that it would be "inimical to the

employer's interest; "17

or that reinstatement may no longer befeasible; 18 or, that it will not serve the best interests of the partiesinvolved; 19 or that the company would be prejudiced by the workers'continued employment; 20 or that it will not serve any prudent purposeas when supervening facts have transpired which make execution onthat score unjust or inequitable 21 or, to an increasing extent, due tothe resultant atmosphere of "antipathy and antagonism" or "strained


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relations" or "irretrievable estrangement" between the employer andthe employee. 22

In lieu of reinstatement, the Court has variously ordered the paymentof backwages and separation pay 23 or solely separation pay. 24

In the case at bar, the law is on the side of private respondent. In thefirst place the wording of the Labor Code is clear and unambiguous:"An employee who is unjustly dismissed from work shall be entitled toreinstatement. . . . and to his full backwages. . . ." 25 Under theprinciplesof statutory construction, if a statute is clears plain and freefrom ambiguity, it must be given its literal meaning and appliedwithout attempted interpretation. This plain-meaning rule or verbalegis derived from the maxim index animi sermo est (speech is the

index of intention) rests on the valid presumption that the wordsemployed by, the legislature in a statute correctly express its intent orwill and preclude the court from construing it differently. 26 Thelegislature is presumed to know the meaning of the words, to:haveused words advisedly, and to have expressed its intent by the use ofsuch words as are found in the statute. 27 Verba legis non estrecedendum , or from the words of a statute there should be nodeparture. Neither does the provision admit of any qualification. If inthe wisdom of the Court, there may be a ground or grounds for non-application of the above-cited provision, this should be by way ofexception, such as when the reinstatement may be inadmissible dueto ensuing strained relations between the employer and theemployee.

In such cases, it should be proved that the employee concernedoccupies a position where he enjoys the trust and confidence of hisemployer; and that it is likely that if reinstated, an atmosphere ofantipathy and antagonism may be generated as to adversely affectthe efficiency and productivity of the employee concerned.

A few examples, will suffice to illustrate the Court's application of theabove principles: where the employee is a Vice-President forMarketing and as such, enjoys the full trust and confidence of topmanagement; 28 or is the Officer-In-Charge of the extension office ofthe bank where he works; 29 or is an organizer of a union who was ina position to sabotage the union's efforts to organize the workers in


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commercial and industrial establishments; 30 or is a warehouseman ofa non-profit organization whose primary purpose is to facilitate andmaximize voluntary gifts. by foreign individuals and organizations tothe Philippines; 31 or is a manager of its Energy Equipment Sales. 32

Obviously, the principle of "strained relations" cannot be appliedindiscriminately. Otherwisey reinstatement can never be possiblesimply because some hostility is invariably engendered between theparties as a result of litigation. That is human nature. 33

Besides, no strained relations should arise from a valid and legal actof asserting one's right; otherwise an employee who shall assert hisright could be easily separated from the service, by merely paying hisseparation pay on the pretext that his relationship with his employer

had already become strained.34

Here, it has not been proved that the position of private respondentas systems analyst is one that may be characterized as a position oftrust and confidence such that if reinstated, it may well lead tostrained relations between employer and employee. Hence, this doesnot constitute an exception to the general rule mandatingreinstatement for an employee who has been unlawfully dismissed.

On the other hand, has she betrayed any confidence reposed in herby engaging in transactions that may have created conflict of interestsituations? Petitioner GMCR points out that as a matter of companypolicy, it prohibits its employees from involving themselves with anycompany that has business dealings with GMCR. Consequently,when private respondent Salazar signed as a witness to thepartnership papers of Concave (a supplier of Ultra which in turn isalso a supplier of GMCR), she was deemed to have placed. herself inan untenable position as far as petitioner was concerned.

However, on close scrutiny, we agree with public respondent thatsuch a circumstance did not create a conflict of interests situation. Asa systems analyst, Salazar was very far removed from operationsinvolving the procurement of supplies. Salazar's duties revolvedaround the development of systems and analysis of designs on acontinuing basis. In other words, Salazar did not occupy a position oftrust relative to the approval and purchase of supplies and company


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assets.

In the instant case, petitioner has predicated its dismissal of Salazaron loss of confidence. As we have held countless times, while loss ofconfidence or breach of trust is a valid ground for terminations it mustrest an some basis which must be convincingly established. 35 Anemployee who not be dismissed on mere presumptions andsuppositions. Petitioner's allegation that since Salazar and Saldivarlived together in the same apartment, it "presumed reasonably thatcomplainant's sympathy would be with Saldivar" and its averment thatSaldivar's investigation although unverified, was probably true, do notpass this Court's test. 36 While we should not condone the acts ofdisloyalty of an employee, neither should we dismiss him on the basisof suspicion derived from speculative inferences.

To rely on the Maramara report as a basis for Salazar's dismissalwould be most inequitous because the bulk of the findings centeredprincipally oh her friend's alleged thievery and anomaloustransactions as technical operations' support manager. Said reportmerely insinuated that in view of Salazar's special relationship withSaldivar, Salazar might have had direct knowledge of Saldivar'squestionable activities. Direct evidence implicating private respondentis wanting from the records.

It is also worth emphasizing that the Maramara report came out afterSaldivar had already resigned from GMCR on May 31, 1984. SinceSaldivar did not have the opportunity to refute management'sfindings, the report remained obviously one-sided. Since the mainevidence obtained by petitioner dealt principally on the allegedculpability of Saldivar, without his having had a chance to voice hisside in view of his prior resignation, stringent examination shouldhave been carried out to ascertain whether or not there existedindependent legal grounds to hold Salatar answerable as well and,

thereby, justify her dismissal. Finding none, from the records, we findher to have been unlawfully dismissed.

WHEREFORE, the assailed resolution of public respondent NationalLabor Relations Commission dated December 29, 1987 is hereby

AFFIRMED. Petitioner GMCR is ordered to REINSTATE privaterespondent Imelda Salazar and to pay her backwages equivalent to


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her salary for a period of two (2) years only.

This decision is immediately executory.

SO ORDERED.

Paras, Bidin, Grio-Aquino, Medialdea, Regalado, Davide, Jr. andNocon, JJ., concur.

Cruz, J., concurs in the result.

Gutierrez, Jr., Feliciano and Padilla, JJ., took no part

Republic of the Philippines SUPREME COURT Manila

EN BANC

G.R. No. 80609 August 23, 1988

PHILIPPINE LONG DISTANCE TELEPHONE COMPANY,petitioner,vs. THE NATIONAL LABOR RELATIONS COMMISSION and

MARILYN ABUCAY,respondents.

Nicanor G. Nuevas for petitioner.

CRUZ, J.:

The only issue presented in the case at bar is the legality of theaward of financial assistance to an employee who had beendismissed for cause as found by the public respondent.

Marilyn Abucay, a traffic operator of the Philippine Long DistanceTelephone Company, was accused by two complainants of havingdemanded and received from them the total amount of P3,800.00 inconsideration of her promise to facilitate approval of their applicationsfor telephone installation. 1 Investigated and heard, she was foundguilty as charged and accordingly separated from the service. 2 Shewent to the Ministry of Labor and Employment claiming she had beenillegally removed. After consideration of the evidence and arguments


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of the parties, the company was sustained and the complaint wasdismissed for lack of merit. Nevertheless, the dispositive portion oflabor arbiter's decision declared:

WHEREFORE, the instant complaint is dismissed for lack of merit.

Considering that Dr. Helen Bangayan and Mrs. Consolacion Martinezare not totally blameless in the light of the fact that the deal happenedouthide the premises of respondent company and that their act ofgiving P3,800.00 without any receipt is tantamount to corruption ofpublic officers, complainant must be given one month pay for everyyear of service as financial assistance. 3

Both the petitioner and the private respondent appealed to the

National Labor Relations Board, which upheld the said decision intoto and dismissed the appeals. 4 The private respondent took nofurther action, thereby impliedly accepting the validity of herdismissal. The petitioner, however, is now before us to question theaffirmance of the abovequoted award as having been made withgrave abuse of discretion.

In its challenged resolution of September 22, 1987, the NLRC said:

... Anent the award of separation pay as financial assistance in

complainant's favor, We find the same to be equitable, taking intoconsideration her long years of service to the company whereby shehad undoubtedly contributed to the success of respondent. While wedo not in any way approve of complainants (private respondent) malfeasance, for which she is to suffer the penalty of dismissal, it is forreasons of equity and compassion that we resolve to uphold theaward of financial assistance in her favor. 5

The position of the petitioner is simply stated: It is conceded that anemployee illegally dismissed is entitled to reinstatement andbackwages as required by the labor laws. However, an employeedismissed for cause is entitled to neither reinstatement norbackwages and is not allowed any relief at all because his dismissalis in accordance with law. In the case of the private respondent, shehas been awarded financial assistance equivalent to ten months paycorresponding to her 10 year service in the company despite herremoval for cause. She is, therefore, in effect rewarded rather than


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punished for her dishonesty, and without any legal authorization or justification. The award is made on the ground of equity andcompassion, which cannot be a substitute for law. Moreover, suchaward puts a premium on dishonesty and encourages instead of

deterring corruption.For its part, the public respondent claims that the employee issufficiently punished with her dismissal. The grant of financialassistance is not intended as a reward for her offense but merely tohelp her for the loss of her employment after working faithfully withthe company for ten years. In support of this position, the SolicitorGeneral cites the cases of Firestone Tire and Rubber Company of thePhilippines v. Lariosa 6 and Soco v. Mercantile Corporation of Davao,7 where the employees were dismissed for cause but were

nevertheless allowed separation pay on grounds of social andcompassionate justice. As the Court put it in the Firestone case:

In view of the foregoing, We rule that Firestone had valid grounds todispense with the services of Lariosa and that the NLRC acted withgrave abuse of discretion in ordering his reinstatement. However,considering that Lariosa had worked with the company for elevenyears with no known previous bad record, the ends of social andcompassionate justice would be served if he is paid full separationpay but not reinstatement without backwages by the NLRC.

In the said case, the employee was validly dismissed for theft but theNLRC nevertheless awarded him full separation pay for his 11 yearsof service with the company. In Soco, the employee was also legallyseparated for unauthorized use of a company vehicle and refusal toattend the grievance proceedings but he was just the same grantedone-half month separation pay for every year of his 18-year service.

Similar action was taken in Filipro, Inc. v. NLRC, 8 where the

employee was validly dismissed for preferring certain dealers inviolation of company policy but was allowed separation pay for his 2years of service. In Metro Drug Corporation v. NLRC, 9 the employeewas validly removed for loss of confidence because of her failure toaccount for certain funds but she was awarded separation payequivalent to one-half month's salary for every year of her service of15 years. In Engineering Equipment, Inc. v. NLRC, 10 the dismissal of


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the employee was justified because he had instigated labor unrestamong the workers and had serious differences with them, amongother grounds, but he was still granted three months separation paycorresponding to his 3-year service. In New Frontier Mines, Inc. v.

NLRC,11

the employee's 3- year service was held validly terminatedfor lack of confidence and abandonment of work but he wasnonetheless granted three months separation pay. And in San MiguelCorporation v. Deputy Minister of Labor and Employment, et al ., 12 full separation pay for 6, 10, and 16 years service, respectively, wasalso allowed three employees who had been dismissed after theywere found guilty of misappropriating company funds.

The rule embodied in the Labor Code is that a person dismissed forcause as defined therein is not entitled to separation pay. 13 Thecases above cited constitute the exception, based uponconsiderations of equity. Equity has been defined as justice outsidelaw, 14 being ethical rather than jural and belonging to the sphere ofmorals than of law. 15 It is grounded on the precepts of conscienceand not on any sanction of positive law. 16 Hence, it cannot prevailagainst the expressed provision of the labor laws allowing dismissalof employees for cause and without any provision for separation pay.

Strictly speaking, however, it is not correct to say that there is noexpress justification for the grant of separation pay to lawfullydismissed employees other than the abstract consideration of equity.The reason is that our Constitution is replete with positive commandsfor the promotion of social justice, and particularly the protection ofthe rights of the workers. The enhancement of their welfare is one ofthe primary concerns of the present charter. In fact, instead ofconfining itself to the general commitment to the cause of labor in

Article II on the Declaration of Principles of State Policies, the newConstitution contains a separate article devoted to the promotion ofsocial justice and human rights with a separate sub- topic for labor.

Article XIII expressly recognizes the vital role of labor, hand in handwith management, in the advancement of the national economy andthe welfare of the people in general. The categorical mandates in theConstitution for the improvement of the lot of the workers are morethan sufficient basis to justify the award of separation pay in propercases even if the dismissal be for cause.


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The Court notes, however, that where the exception has beenapplied, the decisions have not been consistent as to the justificationfor the grant of separation pay and the amount or rate of such award.Thus, the employees dismissed for theft in the Firestone case and for

animosities with fellow workers in the Engineering Equipment casewere both awarded separation pay notnvithstanding that the firstcause was certainly more serious than the second. No less curiously,the employee in the Soco case was allowed only one-half month payfor every year of his 18 years of service, but in Filipro the award wastwo months separation pay for 2 years service. In Firestone, theemplovee was allowed full separation pay corresponding to his 11years of service, but in Metro, the employee was granted only one-half month separation pay for every year of her 15year service. Itwould seem then that length of service is not necessarily a criterionfor the grant of separation pay and neither apparently is the reasonfor the dismissal.

The Court feels that distinctions are in order. We note that heretoforethe separation pay, when it was considered warranted, was requiredregardless of the nature or degree of the ground proved, be it mereinefficiency or something graver like immorality or dishonesty. Thebenediction of compassion was made to cover a multitude of sins, asit were, and to justify the helping hand to the validly dismissedemployee whatever the reason for his dismissal. This policy shouldbe re-examined. It is time we rationalized the exception, to make itfair to both labor and management, especially to labor.

There should be no question that where it comes to such valid but notiniquitous causes as failure to comply with work standards, the grantof separation pay to the dismissed employee may be both just andcompassionate, particularly if he has worked for some time with thecompany. For example, a subordinate who has irreconcilable policyor personal differences with his employer may be validly dismissed

for demonstrated loss of confidence, which is an allowable ground. Aworking mother who has to be frequently absent because she hasalso to take care of her child may also be removed because of herpoor attendance, this being another authorized ground. It is not theemployee's fault if he does not have the necessary aptitude for hiswork but on the other hand the company cannot be required tomaintain him just the same at the expense of the efficiency of its


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operations. He too may be validly replaced. Under these and similarcircumstances, however, the award to the employee of separationpay would be sustainable under the social justice policy even if theseparation is for cause.

But where the cause of the separation is more serious than mereinefficiency, the generosity of the law must be more discerning. Thereis no doubt it is compassionate to give separation pay to a salesmanif he is dismissed for his inability to fill his quota but surely he doesnot deserve such generosity if his offense is misappropriation of thereceipts of his sales. This is no longer mere incompetence but cleardishonesty. A security guard found sleeping on the job is doubtlesssubject to dismissal but may be allowed separation pay since hisconduct, while inept, is not depraved. But if he was in fact not really

sleeping but sleeping with a prostitute during his tour of duty and inthe company premises, the situation is changed completely. This isnot only inefficiency but immorality and the grant of separation paywould be entirely unjustified.

We hold that henceforth separation pay shall be allowed as ameasure of social justice only in those instances where the employeeis validly dismissed for causes other than serious misconduct orthose reflecting on his moral character. Where the reason for thevalid dismissal is, for example, habitual intoxication or an offenseinvolving moral turpitude, like theft or illicit sexual relations with afellow worker, the employer may not be required to give thedismissed employee separation pay, or financial assistance, orwhatever other name it is called, on the ground of social justice.

A contrary rule would, as the petitioner correctly argues, have theeffect, of rewarding rather than punishing the erring employee for hisoffense. And we do not agree that the punishment is his dismissalonly and that the separation pay has nothing to do with the wrong he

has committed. Of course it has. Indeed, if the employee who stealsfrom the company is granted separation pay even as he is validlydismissed, it is not unlikely that he will commit a similar offense in hisnext employment because he thinks he can expect a like leniency ifhe is again found out. This kind of misplaced compassion is not goingto do labor in general any good as it will encourage the infiltration ofits ranks by those who do not deserve the protection and concern of


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the Constitution.

The policy of social justice is not intended to countenancewrongdoing simply because it is committed by the underprivileged. Atbest it may mitigate the penalty but it certainly will not condone theoffense. Compassion for the poor is an imperative of every humanesociety but only when the recipient is not a rascal claiming anundeserved privilege. Social justice cannot be permitted to be refugeof scoundrels any more than can equity be an impediment to thepunishment of the guilty. Those who invoke social justice may do soonly if their hands are clean and their motives blameless and notsimply because they happen to be poor. This great policy of ourConstitution is not meant for the protection of those who have provedthey are not worthy of it, like the workers who have tainted the cause

of labor with the blemishes of their own character.

Applying the above considerations, we hold that the grant ofseparation pay in the case at bar is unjustified. The privaterespondent has been dismissed for dishonesty, as found by the laborarbiter and affirmed by the NLRC and as she herself has impliedlyadmitted. The fact that she has worked with the PLDT for more than adecade, if it is to be considered at all, should be taken against her asit reflects a regrettable lack of loyalty that she should havestrengthened instead of betraying during all of her 10 years of servicewith the company. If regarded as a justification for moderating thepenalty of dismissal, it will actually become a prize for disloyalty,perverting the meaning of social justice and undermining the efforts oflabor to cleanse its ranks of all undesirables.

The Court also rules that the separation pay, if found due under thecircumstances of each case, should be computed at the rate of onemonth salary for every year of service, assuming the length of suchservice is deemed material. This is without prejudice to the

application of special agreements between the employer and theemployee stipulating a higher rate of computation and providing formore benefits to the discharged employee. 17

WHEREFORE, the petition is GRANTED. The challenged resolutionof September 22,1987, is AFFIRMED in toto except for the grant ofseparation pay in the form of financial assistance, which is hereby


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I concur in the decision penned by Mr. Justice Cruz when it disallowsseparation pay, as financial assistance, to the private respondent,since the ground for termination of employment is dishonesty in theperformance of her duties.

I do not, however, subscribe to the view that "the separation pay, iffound due under the circumstances of each case, should becomputed at the rate of one month salary for every year of service,assuming the length of such service is deemed material." (p.11,Decision). It is my considered view that, except for terminationsbased on dishonesty and serious misconduct involving moralturpitude-where no separation pay should be allowed--in other cases,the grant of separation pay, i.e. the amount thereof, as financialassistance to the terminated employee, should be left to the judgment

of the administrative agency concemed which is the NLRC. It is insuch cases- where the termination of employment is for a valid causewithout, however, involving dishonesty or serious misconductinvolving moral turpitude-that the Constitutional policy of affordingprotection to labor should be allowed full play; and this is achieved byleaving to the NLRC the primary jurisdiction and judgment todetermine the amount of separation pay that should be awarded tothe terminated employee in accordance with the "environmentalfacts" of each case.

It is further my view that the Court should not, as a rule, disturb oralter the amount of separation pay awarded by the NLRC in suchcases of valid termination of employment but with the financialassistance, in the absence of a demonstrated grave abuse ofdiscretion on the part of the NLRC.

GRIO AQUINO,J., dissent:

We should not rationalize compassion. I vote to affirm the grant of

financial assistance.

Separate Opinions


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FERNAN,C.J., dissenting:

The majority opinion itself declares that the reason for grantingseparation pay to lawfully dismissed employees is that "ourConstitution is replete with positive commands for the promotion ofsocial justice, and particularly the protection of the rights of theworkers." 1

It is my firm belief that providing a rigid mathematical formula fordetermining the amounts of such separation pay will not be inkeeping with these constitutional directives. By computing theallowable financial assistance on the formula suggested, we shall beclosing our eyes to the spirit underlying these constitutional mandatesthat "those who have less in life should have more in law." It cannot

be denied that a low salaried employee who is separated from workwould suffer more hardship than a well-compensated one. Yet, if wefollow the formula suggested, we would in effect be favoring the latterinstead of the former, as it would be the low- salaried employee whowould encounter difficulty finding another job.

I am in accord with the opinion of Justice Sarmiento that we shouldnot rationalize compassion and that of Justice Padilla that the awardsof financial assistance should be left to the discretion of the NationalLabor Relations Commission as may be warranted by the"environmental facts" of the case.

PADILIA,J., separate opinion

I concur in the decision penned by Mr. Justice Cruz when it disallowsseparation pay, as financial assistance, to the private respondent,since the ground for termination of employment is dishonesty in theperformance of her duties.

I do not, however, subscribe to the view that "the separation pay, iffound due under the circumstances of each case, should becomputed at the rate of one month salary for every year of service,assuming the length of such service is deemed material." (p.11,Decision). It is my considered view that, except for terminationsbased on dishonesty and serious misconduct involving moralturpitude-where no separation pay should be allowed--in other cases,the grant of separation pay, i.e. the amount thereof, as financial


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assistance to the terminated employee, should be left to the judgmentof the administrative agency concemed which is the NLRC. It is insuch cases- where the termination of employment is for a valid causewithout, however, involving dishonesty or serious misconduct

involving moral turpitude-that the Constitutional policy of affordingprotection to labor should be allowed full play; and this is achieved byleaving to the NLRC the primary jurisdiction and judgment todetermine the amount of separation pay that should be awarded tothe terminated employee in accordance with the "environmentalfacts" of each case.

It is further my view that the Court should not, as a rule, disturb oralter the amount of separation pay awarded by the NLRC in suchcases of valid termination of employment but with the financial

assistance, in the absence of a demonstrated grave abuse ofdiscretion on the part of the NLRC.

GRIO AQUINO,J., dissent:

We should not rationalize compassion. I vote to affirm the grant offinancial assistance.

OSMALIK S. BUSTAMANTE, PAULINO A. BANTAYAN,FERNANDO L. BUSTAMANTE, MARIO D. SUMONOD, andSABU J. LAMARAN, petitioners, vs . NATIONAL LABORRELATIONS COMMISSION, FIFTH DIVISIONand EVERGREEN FARMS, INC.,respondents.

R E S O L U T I O N

PADILLA, J .:

On 15 March 1996, the Court (First Division) promulgated adecision in this case, the dispositive part of which states:

"WHEREFORE, the resolution of the National Labor RelationsCommission dated 3 May 1993 is modified in that its deletion ofthe award for backwages in favor of petitioners, is SETASIDE. The decision of the Labor Arbiter dated 26 April 1991 isAFFIRMED with the modification that backwages shall be paid topetitioners from the time of their illegal dismissal on 25 June 1990


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up to the date of their reinstatement. If reinstatement s no longerfeasible, a one-month salary shall be paid the petitioners as orderedin the labor arbiter's decision, in addition to the adjudgedbackwages.

Private respondent now moves to reconsider the decision ongrounds that (a) petitioners are not entitled to recover backwagesbecause they were not actually dismissed but their probationaryemployment was not converted to permanent employment; and (b)assuming that petitioners are entitled to backwages, computationthereof should not start from cessation of work up to actualreinstatement, and that salary earned elsewhere (during the period ofillegal dismissal) should be deducted from the award of suchbackwages.

There is no compelling reason to reconsider the decision of theCourt (First Division) dated 15 March 1996. However, we here clarifythe computation of backwages due an employee on account of hisillegal dismissal from employment.

This court has, over the years, applied different methods in thecomputation of backwages. The first labor relations law governing theaward of backwages was Republic Act No. 875, the Industrial Peace

Act, approved on 17 June 1953. Sections 5 and 15 thereof providedthus:

"Sec. 5. Unfair Labor Practice Cases.- (c) x x x. If, after investigation, the Court shall be of the opinionthat any person named in the complaint has engaged in or isengaging in any unfair labor practice, then the Court shall state itsfindings of fact and shall issue and cause to be served on suchperson an order requiring such person to cease and desist fromsuch unfair labor practice and take such affirmative action as willeffectuate the policies of this Act, including (but not limited to)reinstatement of employees with or without back-pay andincluding rights of the employees prior to dismissal includingseniority. x x x (underscoring supplied)

Sec. 15. Violation of Duty to Bargain Collectively. - x x x. Anyemployee whose work has stopped as a consequence of suchlockout shall be entitled to back-pay. (underscoring supplied)"


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In accordance with these provisions, backpay (the same asbackwages) could be awarded where, in the opinion of the Court ofIndustrial Relations (CIR) such was necessary to effectuate thepolicies of the Industrial Peace Act. [1] Only in one case was backpay

a matter of right, and that was, when an employer had declared alockout without having first bargained collectively with his employeesin accordance with the provisions of the Act.

As the CIR was given wide discretion to grant or disallowpayment of backpay (backwages) to an employee, it also had theimplied power of mitigating (reducing) the backpay where backpaywas allowed. [2] Thus, in the exercise of its jurisdiction, the CIRincreased or diminished the award of backpay, depending on severalcircumstances, among them, the good faith of the employer, [3] the

employee's employment in other establishments during the period ofillegal dismissal, or the probability that the employee could haverealized net earnings from outside employment if he had exerciseddue diligence to search for outside employment. [4] In labor casesdecided during the effectivity of R.A. No. 875, this Courtacknowledged and upheld the CIR's authority to deduct any amountfrom the employee's backwages, [5] including the discretion to reducesuch award of backwages by whatever earnings were obtained by theemployee elsewhere during the period of his illegal dismissal. [6] Inthe case of Itogon-Suyoc Mines, Inc. v. Sagilo-Itogon Workers'Union ,[7] this Court restated the guidelines for deternination of totalbackwages, thus:

"First . To be deducted from the backwages accruing to each of thelaborers to be reinstated is the total amount of earnings obtained byhim from other employment(s) from the date of dismissal to thedate of reinstatement. Should the laborer decide that it ispreferable not to return to work, the deduction should be made upto the time judgment becomes final. And these, for the reason thatemployees should not be permitted to enrich themselves at theexpense of their employer. Besides, there is the 'law's abhorrencefor the double competition'.

Second . Likewise, in mitigation of the damages that the dismissedrespondents are entitled to, account should be taken of whether inthe exercise of due diligence respondents might have obtainedincome from suitable remunerative employment. We are prompted


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to give out this last reminder because it is really unjust that adischarged employee should, with folded arms, remain inactive inthe expectation that a windfall would come to him. A countraryview would breed idleness; it is conductive to lack of initiative onthe part of a laborer. Both bear the stamp of underdesirability."

From this ruling came the burden of disposing of an illegaldismissal case on its merits of determining whether or not thecomputation of the award of backwages is correct. In order not tounduly delay the disposition of illegal dismissal cases, this Courtfound occasion in the case of Mercury Drug Co., Inc., et al. v. CIR, etal .[8] to rule that a fixed amount of backwages without furtherqualifications should be awarded to an illegally dismissed employee(hereinafter the Mercury Drug rule). This ruling was grounded upon

considerations of expediency in the execution ofthe decision. Former Justice Claudio Teehankee approved of thisformula expressing that such method of computation is a "realistic,reasonable and mutually beneficial solution" and "thus obviates thetwin evils of idleness on the part of the employees and attrition andundue delay in satisfying the award on the part of the employer". [9] However, Justice Teehankee dissented from the majority view thatthe employee in said case should be awarded backwages only for aperiod of 1 year, 11 months and 15 days which represented theremainder of the prescriptive period after deducting the periodcorresponding to the delay incurred by the employee in filing thecomplaint for unfair labor practice and reinstatement. JusticeTeehankee opined that:

" an award of back wages equivalent to three years (where thecase is not terminated sooner) should serve as the base figure forsuch awards without deduction, subject to deduction where thereare mitigating circumstances in favor of the employer but subjectto increase by way of exemplary damages where there areaggravating circumstances (e.g. oppression or dilatory appeals) onthe employer's part." [10]

The proposal on the three-year backwages was subsequentlyadopted in later cases, among them, Feati University Club (PAFLU)v. Feati University (No. L-31503, 15 August 1974, 58 SCRA 395),Luzon Stevedoring Corporation v. CIR (No. L-34300, 22 November1974, 61 SCRA 154), Danao Development Corporation v. NLRC


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(Nos. L-40706 and L-40707, 16 February 1978, 81 SCRA 487), Associated Anglo-American Tobacco Corporation v. Lazaro (No.63779, 27 October 1983, 125 SCRA (463), Philippine National OilCompany - Energy Development Corporation v. Leogardo (G.R.No. 58494, 5 July 1989, 175 SCRA 26).

Then came Presidential Decree No. 442 (the Labor Code of thePhilippines) which was signed into law on 1 May 1974 and which tookeffect on 1 November 1974. Its posture on the award of backwages,as amended, was expressed as follows:

"ART. 279. Security of tenure . - In cases of regular employment,the employer shall not terminate the services of an employeeexcept for a just cause or when authorized by this Title. Anemployee who is unjustly dismissed from work shall be entitled toreinstatement without loss of seniority rights and to his back wagescomputed from the time his compensation was was withheld fromhim up to the time of his reinstatement. (underscoring supplied)."

Under the abovequoted provision, it became mandatory to awardbackwages to illegally dismissed regular employees. The lawspecifically declared that the award of backwages was to becomputed from the time compensation was withheld from theemployee up to the time of his reinstatement. This nothwithstanding,the rule generally applied by the Court after the promulgation of theMercury Drug case ,[11] and during the effectivity of P.D. No.442 was still the Mercury Drug rule. A survey of cases from1974 until 1989, when the amendatory law to P.D. No. 442, namely,R.A. No. 6715 took effect, supports this conclusion.

In the case of New Manila Candy Workers Union (Naconwa-Paflu) v. CIR (1978), [12] or after the Labor Code (P.D. No. 442) hadtaken effect, the Court still followed the Mercury Drug rule to avoidthe necessity of a hearing on earnings obtained elsewhere by theemployee during the period of illegal dismissal. In an even later case(1987) [13] the Court declared that the general principle is that anemployee is entitled to receive as backwages all the amounts he mayhave received from the date of his dismissal up to the time of hisreinstatement. However, in compliance with the jurisprudential policyof fixing the amount of backwages to a just and reasonable level, theaward of backwages equivalent to three (3) years, without


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Pines City Educational Center case, by now holding that conformablywith the evident legislative intent as expressed in Rep. Act No. 6715,above-quoted, backwages to be awarded to an illegally dismissedemployee, should not, as a general rule, be diminished or reduced by

the earnings derived by him elsewhere during the period of his illegaldismissal. The underlying reason for this ruling is that the employee,while litigating the legality (illegality) of his dismissal, must still earn aliving to support himself and family, while full backwages have to bepaid by the employer as part of the price or penalty he has to pay forillegally dismissing his employee. The clear legislative intent of theamendment in Rep. Act No. 6715 is to give more benefits to workersthan was previously given them under the Mercury Drug rule or the"deduction of earnings elsewhere" rule. Thus, a closer adherence tothe legislative policy behind Rep. Act No. 6715 points to "fullbackwages" as meaning exactly that, i.e., without deducting frombackwages the earnings derived elsewhere by the concernedemployee during the period of his illegal dismissal. [16] In other words,the provision calling for "full backwages" to illegally dismissedemployees is clear, plain and free from ambiguity and, therefore,must be applied without attempted or strained interpretation. Indexanimi sermo est .[17]

Therefore, in accordance with R.A No. 6715, petitioners areentitled to their full backwages, inclusive of allowances and otherbenefits or their monetary equivalent, from the time their actualcompensation was with held from them up to the time of their actualreinstatement.

As to reinstatement of petitioners, this Court has already ruledthat since reinstatement is no longer feasible, because the companywould be unjustly prejudiced by the continued employment ofpetitioners who at present are overage, a separation pay equal toone-month salary granted to them in the Labor Arbiter's decision wasin order and, therefore, affirmed in the Court's decision of 15 March1996. Furthermore, since reinstatement in this case is no longerfeasible, the amount of backwages shall be computed from the timeof their illegal termination on 25 June 1990 up to the time of finality ofthis decision. [18]

ACCORDINGLY, private respondent's Motion forReconsideration, dated 10 April 1996, is DENIED.


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SO ORDERED.

JAIME D. VIERNES, CARLOS R. GARCIA, BERNARD BUSTILLO,DANILO C. BALANAG, FERDINAND DELLA, EDWARD A.

ABELLERA, ALEXANDER ABANAG, DOMINGO ASIA,FRANCISCO BAYUGA, ARTHUR M. ORIBELLO,BUENAVENTURA DE GUZMAN, JR., ROBERT A.ORDOO, BERNARD V. JULARBAL, IGNACIO C.ALINGBAS and LEODEL N. SORIANO, petitioners, vs.NATIONAL LABOR RELATIONS COMMISSION (THIRDDIVISION), and BENGUET ELECTRIC COOPERATIVE,INC. (BENECO)respondents .

D E C I S I O N

AUSTRIA-MARTINEZ,J .:

Before us is a petition for certiorari seeking to annul the decisionpromulgated by the National Labor Relations Commission (NLRC) onJuly 2, 1992 in NLRC CA No. L-000384-92, [1] and its resolutiondated September 24, 1992 denying petitioners motion forreconsideration.

The factual background of this case, as summarized by theLabor Arbiter, is as follows:

Fifteen (15) in all, these are consolidated cases for illegal dismissal,underpayment of wages and claim for indemnity pay against a commonrespondent, the Benguet Electric Cooperative, Inc., (BENECO for short)represented by its Acting General Manager, Gerardo P. Versoza.

Complainants services as meter readers were contracted for hardly amonths duration, or from October 8 to 31, 1990. Their employmentcontracts, couched in identical terms, read:

You are hereby appointed as METER READER (APPRENTICE) underBENECO-NEA Management with compensation at the rate of SIXTY-SIXPESOS AND SEVENTY-FIVE CENTAVOS (P66.75) per day fromOctober 08 to 31, 1990.

x x x. (Annex B, Complainants Joint Position Paper)


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The said term notwithstanding, the complainants were allowed to workbeyond October 31, 1990, or until January 2, 1991. On January 3, 1991,they were each served their identical notices of termination dated December29, 1990. The same read:

Please be informed that effective at the close of office hours of December31, 1990, your services with the BENECO will be terminated. Yourtermination has nothing to do with your performance. Rather, it is becausewe have to retrench on personnel as we are already overstaffed.

x x x. (Annex C, CJPP)

On the same date, the complainants filed separate complaints for illegaldismissal. And following the amendment of said complaints, they submitted

their joint position paper on April 4, 1991. Respondent filed its positionpaper on April 2, 1991.

It is the contention of the complainants that they were not apprentices butregular employees whose services were illegally and unjustly terminated in amanner that was whimsical and capricious. On the other hand, therespondent invokes Article 283 of the Labor Code in defense of thequestioned dismissal. [2]

On October 18, 1991, the Labor Arbiter rendered a decision, thedispositive portion of which reads as follows:

WHEREFORE, judgment is hereby rendered:

1. Dismissing the complaints for illegal dismissal filed by thecomplainants for lack of merit. However in view of the offer of therespondent to enter into another temporary employment contract with thecomplainants, the respondent is directed to so extend such contract to eachcomplainant, with the exception of Jaime Viernes, and to pay each the

amount of P2,590.50, which represents a months salary, as indemnity for itsfailure to give complainants the 30-day notice mandated under Article 283of the Labor Code; or, at the option of the complainants, to pay eachfinancial assistance in the amount of P5,000.00 and the P2,590.50 above-mentioned.

2. Respondent is also ordered:


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Hence, complainants filed herein petition.

Private respondent BENECO filed its Comment; the Office of theSolicitor General (OSG) filed a Manifestation and Motion in Lieu ofComment; public respondent NLRC filed its own Comment; andpetitioners filed their Manifestation and Motion In Lieu ofConsolidated Reply. Public respondent NLRC, herein petitioners,and private respondent filed their respective memoranda, and theOSG, its Manifestation in 1994.

Pursuant to our ruling in Rural Bank of Alaminos EmployeesUnion vs. NLRC ,[7] to wit:

in the decision in the case of St. Martin Funeral Homes vs. National LaborRelations Commission, G.R. No. 130866, promulgated on September 16,

1998, this Court pronounced that petitions for certiorari relating to NLRCdecisions must be filed directly with the Court of Appeals, and labor casespending before this Court should be referred to the appellate court for properdisposition. However, in cases where the Memoranda of both parties havebeen filed with this Court prior to the promulgation of the St. Martindecision, the Court generally opts to take the case itself for its finaldisposition. [8]

and considering that the parties have filed their respectivememoranda as of 1994, we opt to resolve the issues raised in thepresent petition.

The parties raised the following issues:

1. Whether the respondent NLRC committed grave abuse of discretion inordering the reinstatement of petitioners to their former position as meterreaders on probationary status in spite of its finding that they are regularemployees under Article 280 of the Labor Code.

2. Whether the respondent NLRC committed grave abuse of discretion in

limiting the backwages of petitioners to one year only in spite of its findingthat they were illegally dismissed, which is contrary to the mandate of fullbackwages until actual reinstatement but not to exceed three years.

3. Whether the respondent NLRC committed grave abuse of discretion indeleting the award of indemnity pay which had become final because it wasnot appealed and in deleting the award of attorneys fees because of the


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absence of a trial-type hearing.

4. Whether the mandate of immediately executory on the reinstatementaspect even pending appeal as provided in the decision of Labor Arbitersequally applies in the decision of the National Labor Relations Commissioneven pending appeal, by means of a motion for reconsideration of the orderreinstating a dismissed employee or pending appeal because the case iselevated on certiorari before the Supreme Court. [9]

We find the petition partly meritorious.

As to the first issue: We sustain petitioners claim that theyshould be reinstated to their former position as meter readers, not ona probationary status, but as regular employees.

Reinstatement means restoration to a state or condition fromwhich one had been removed or separated. [10] In case ofprobationary employment, Article 281 of the Labor Code requires theemployer to make known to his employee at the time of the lattersengagement of the reasonable standards under which he may qualifyas a regular employee.

A review of the records shows that petitioners have never beenprobationary employees. There is nothing in the letter ofappointment, to indicate that their employment as meter readers wason a probationary basis. It was not shown that petitioners wereinformed by the private respondent, at the time of the lattersemployment, of the reasonable standards under which they couldqualify as regular employees. Instead, petitioners were initiallyengaged to perform their job for a limited duration, their employmentbeing fixed for a definite period, from October 8 to 31, 1990.

Private respondents reliance on the case of Brent School, Inc.vs. Zamora, [11] wherein we held as follows:

Accordingly, and since the entire purpose behind the development oflegislation culminating in the present Article 280 of the Labor Code clearlyappears to have been, as already observed, to prevent circumvention of theemployees right to be secure in his tenure, the clause in said articleindiscriminately and completely ruling out all written or oral agreementsconflicting with the concept of regular employment as defined thereinshould be construed to refer to the substantive evil that the Code itself has


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singled out: agreements entered into precisely to circumvent security oftenure. It should have no application to instances where a fixed period ofemployment was agreed upon knowingly and voluntarily by the parties,without any force, duress or improper pressure being brought to bear uponthe employee and absent any other circumstances vitiating his consent, orwhere it satisfactorily appears that the employer and employee dealt witheach other on more or less equal terms with no moral dominance whateverbeing exercised by the former over the latter. [12]

is misplaced.

The principle we have enunciated in Brent applies only withrespect to fixed term employments. While it is true that petitionerswere initially employed on a fixed term basis as their employment

contracts were only for October 8 to 31, 1990, after October 31, 1990,they were allowed to continue working in the same capacity as meterreaders without the benefit of a new contract or agreement or withoutthe term of their employment being fixed anew. After October 31,1990, the employment of petitioners is no longer on a fixed termbasis. The complexion of the employment relationship of petitionersand private respondent is thereby totally changed. Petitioners haveattained the status of regular employees.

Under Article 280 of the Labor Code, a regular employee is one

who is engaged to perform activities which are necessary or desirablein the usual business or trade of the employer, or a casual employeewho has rendered at least one year of service, whether continuous orbroken, with respect to the activity in which he is employed.

In De Leon vs. NLRC, [13] and Abasolo vs. NLRC ,[14] we laiddown the test in determining regular employment, to wit:

The primary standard, therefore, of determining regular employment is thereasonable connection between the particular activity performed by theemployee in relation to the usual trade or business of the employer. The testis whether the former is usually necessary or desirable in the usual businessor trade of the employer. The connection can be determined by consideringthe nature of the work performed and its relation to the scheme of theparticular business or trade in its entirety. Also if the employee has beenperforming the job for at least a year, even if the performance is notcontinuous and merely intermittent, the law deems repeated and continuing


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need for its performance as sufficient evidence of the necessity if notindispensability of that activity to the business. Hence, the employment isconsidered regular, but only with respect to such activity and while suchactivity exists. [15]

Clearly therefrom, there are two separate instances whereby itcan be determined that an employment is regular: (1) The particularactivity performed by the employee is necessary or desirable in theusual business or trade of the employer; or (2) if the employee hasbeen performing the job for at least a year.

Herein petitioners fall under the first category. They wereengaged to perform activities that are necessary to the usualbusiness of private respondent. We agree with the labor arbiters

pronouncement that the job of a meter reader is necessary to thebusiness of private respondent because unless a meter readerrecords the electric consumption of the subscribing public, therecould not be a valid basis for billing the customers of privaterespondent. The fact that the petitioners were allowed to continueworking after the expiration of their employment contract is evidenceof the necessity and desirability of their service to privaterespondents business. In addition, during the preliminary hearing ofthe case on February 4, 1991, private respondent even offered toenter into another temporary employment contract withpetitioners. This only proves private respondents need for theservices of herein petitioners. With the continuation of theiremployment beyond the original term, petitioners have become full-fledged regular employees. The fact alone that petitioners haverendered service for a period of less than six months does not maketheir employment status as probationary.

Since petitioners are already regular employees at the time oftheir illegal dismissal from employment, they are entitled to bereinstated to their former position as regular employees, not merelyprobationary.

As to the second issue, Article 279 of the Labor Code, asamended by R.A. No. 6715, which took effect on March 21, 1989,provides that an illegally dismissed employee is entitled to fullbackwages, inclusive of allowances, and to his other benefits or theirmonetary equivalent computed from the time his compensation was


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P1,000.00 to P10,000.00 depending on the particular circumstancesof each case. In the present case, the amount of indemnity awardedby the labor arbiter is P2,590.50, which is equivalent to petitionersone-month salary. We find no cogent reason to modify said award,for being just and reasonable.

As to the award of attorneys fees, the same is justified by theprovisions of Article 111 of the Labor Code, to wit:

Art. 111. Attorneys fees (a) In cases of unlawful withholding of wages theculpable party may be assessed attorneys fees equivalent to ten percent ofthe amount of wages recovered.

(b) It shall be unlawful for any person to demand or accept, in any judicialor administrative proceedings for the recovery of the wages, attorneys feeswhich exceed ten percent of the amount of wages recovered.

As to the last issue, Article 223 of the Labor Code is plain andclear that the decision of the NLRC shall be final and executory afterten (10) calendar days from receipt thereof by the parties. Inaddition, Section 2(b), Rule VIII of the New Rules of Procedure of theNLRC provides that should there be a motion for reconsiderationentertained pursuant to Section 14, Rule VII of these Rules, thedecision shall be executory after ten calendar days from receipt of the

resolution on such motion.We find nothing inconsistent or contradictory between Article 223

of the Labor Code and Section 2(b), Rule VIII, of the NLRC Rules ofProcedure. The aforecited provision of the NLRC Rules of Proceduremerely provides for situations where a motion for reconsideration isfiled. Since the Rules allow the filing of a motion for reconsiderationof a decision of the NLRC, it simply follows that the ten-day periodprovided under Article 223 of the Labor Code should be reckonedfrom the date of receipt by the parties of the resolution on such

motion. In the case at bar, petitioners received the resolution of theNLRC denying their motion for reconsideration on October 22,1992. Hence, it is on November 2, 1992 that the questioned decisionbecame executory.

WHEREFORE, the petition is partially GRANTED. The decisionof the National Labor Relations Commission dated July 2, 1992 isMODIFIED. Private respondent Benguet Electric Cooperative, Inc

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