labor relations seious misconduct part 2

LABOR RELATIONS

SERIOUS MISCONDUCT PART 2

Republic of the PhilippinesSUPREME COURT

Baguio City

FIRST DIVISION

G.R. No. 192582 April 7, 2014

BLUER THAN BLUE JOINT VENTURES COMPANY/MARY ANN DELA VEGA, Petitioners, vs.GLYZA ESTEBAN, Respondent.

D E C I S I O N

REYES, J.:

"It is not the job title but the actual work that the employee performs that determines whether he or she occupies a position of trust and confidence."1 In this case, while respondent's position was denominated as Sales Clerk, the nature of her work included inventory and cashiering, a function that clearly falls within the sphere of rank-and-file positions imbued with trust and confidence.

Facts of the Case

Respondent Glyza Esteban (Esteban) was employed in January 2004 as Sales Clerk, and assigned at Bluer Than Blue Joint Ventures Company's (petitioner) EGG boutique in SM City Marilao, Bulacan, beginning the year 2006. Part of her primary tasks were attending to all customer needs, ensuring efficient inventory, coordinating orders from clients, cashiering and reporting to the accounting department.

In November 2006, the petitioner received a report that several employees have access to its point-of-sale (POS) system through a universal password given by Elmer Flores (Flores). Upon investigation, it was discovered that it was Esteban who gave Flores the password. The petitioner sent a letter

memorandum to Esteban on November 8, 2006, asking her to explain in writing why she should not be disciplinary dealt with for tampering with the company’s POS system through the use of an unauthorized password. Esteban was also placed under preventive suspension for ten days.

In her explanation, Esteban admitted that she used the universal password three times on the same day in December 2005, after she learned of it from two other employees who she saw browsing through the petitioner’s sales inquiry. She inquired how the employees were able to open the system and she was told that they used the "123456" password.

On November 13, 2006, Esteban’s preventive suspension was lifted, but at the same time, a notice of termination was sent to her, finding her explanation unsatisfactory and terminating her employment immediately on the ground of loss of trust and confidence. Esteban was given her final pay, including benefits and bonuses, less inventory variances incurred by the store amounting to P8,304.93. Esteban signed a quitclaim and release in favor of the petitioner.

On December 6, 2006, Esteban filed a complaint for illegal dismissal, illegal suspension, holiday pay, rest day and separation pay.

In a Decision2 dated September 28, 2007, the Labor Arbiter (LA) ruled in favor of Esteban and found that she was illegally dismissed. The LA also awarded separation pay, backwages, unpaid salary during her preventive suspension and attorney’s fees. The dispositive portion of the LA decision provides:

WHEREFORE, a Decision is hereby rendered declaring [Esteban] to have been illegally dismissed. Corollarily, she is entitled for the payment of separation pay as prayed for at one month salary for every year of service, plus backwages from November 13, 2006 when she was dismissed up to the rendition of this Decision.

Further, as [Esteban] was illegally suspended she is entitled to salaries during her suspension from November 9-13, 2006.

In addition, an attorney’s fees equivalent to ten (10%) percent of the total award is hereby granted, computed as follows:

a) Backwages

11/13/06 - 9/28/07 = 10.50 mos.

[P]350 x 26 x 10.50 = [P]95,550.00

13th Month Pay

1/12 of [P]95,550.00SILP

= 7,962.50

[P]350 x 5/12 x 10.50 = 1,531.25 [P]105,043.75

b) Separation Pay

11/25/03 - 12/6/06 = 3 yrs.

[P]350 x 26 x 3 27,300.00

c) Unpaid Salaries

11/9 - 13/06 = 5 days

[P]350 x 5 = 1,750.00

[P]134,093.75

Ten (10%) Percent Attorney’s Fees 13,409.37

TOTAL [P]147,503.12

SO ORDERED.3

The petitioner filed an appeal with the National Labor Relations Commission (NLRC), and in its Decision4 dated September 23, 2008, the NLRC reversed the decision of the LA and dismissed the case for illegal dismissal. The dispositive portion of the NLRC decision reads:

WHEREFORE, the decision appealed from is hereby reversed and set aside and in its stead a new one is rendered dismissing this case for lack of merit.

[Petitioners] however are ordered to refund to [Esteban] the amount of [P]8,304.93 which was illegally deducted from her salary.

SO ORDERED.5

Thus, Esteban went to the Court of Appeals (CA) on certiorari. In the assailed Decision6 dated November 25, 2009, the CA granted Esteban’s petition and reinstated the LA decision, to wit:

WHEREFORE, premises considered, the petition is hereby GRANTED. The assailed Decision dated September 23, 2008 and Resolution dated November 27, 2008 of public respondent National Labor Relations Commission are ANNULLED and SET ASIDE[.]

Accordingly, the Decision of the Labor Arbiter dated September 28, 2007 is REINSTATED with MODIFICATION, that the award of separation pay is computed from January 2, 2004, and not from November 25, 2003.

SO ORDERED.7

Hence, this petition with the following assignment of errors:

I. THE HONORABLE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION WHEN IT HELD THAT RANK-AND-FILE EMPLOYEES CANNOT BE DISMISSED ON GROUND OF LOSS OF TRUST AND CONFIDENCE.

II. THE HONORABLE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION IN APPLYING THE PRINCIPLE OF REASONABLE PROPORTIONALITY ON THE WRONGFUL ACTS OF RESPONDENT ESTEBAN.

II. THE HONORABLE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION IN HOLDING THAT THE PREVENTIVE SUSPENSION OF RESPONDENT ESTEBAN WAS UNWARRANTED.

IV. THE HONORABLE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION IN HOLDING THAT THE WAGE DEDUCTION FOR THE NEGATIVE VARIANCE AMOUNTING TO [P]8,304.93 IS UNFOUNDED.8

The petitioner argues that it had just cause to terminate the employment of Esteban, that is, loss of trust and confidence. Esteban, the petitioner believes, is a rank-and-file employee whose nature of work is reposed with trust and confidence. Her unauthorized access to the POS system of the company and

her dissemination of the unauthorized password, which Esteban admitted, is a breach of trust and confidence, and justifies her dismissal.9

The petitioner also contends that the CA failed to appreciate the significance of Esteban’s infraction when it ruled that suspension would have sufficed to discipline her. Esteban’s length of service should also not have been considered to mitigate the penalty imposed, as her acts show a lack of concern for her employer. As regards her preventive suspension, the petitioner maintains that it was justified in imposing the same despite that the acts were committed almost a year before the investigation since it did not have any prior knowledge of the infraction.10

Finally, the petitioner contends that the deduction on Esteban’s wages of the negative variances in the sales is allowed by the Labor Code, and such practice has been widely recognized in the retail industry.11

Esteban, on the other hand, avers that the competency clause she signed with the petitioner merely states the following functions: (1) attend to and assist the customer in all their needs; (2) conduct physical inventory; (3) clean and tidy up the merchandise and store; and (4) coordinate with the stockroom for orders. As regards the cashiering function, it merely states "to follow."12 As such, her main task is that of a sales clerk.

Esteban also avers, albeit belatedly, that the notice to explain given to her did not identify the acts or omissions allegedly committed by her. She also contends that it was the company’s fault in not creating a strong password, and that she was forced into signing the quitclaim and waiver, among others.13

Ruling of the Court

The LA and the CA were one in ruling that Esteban was illegally dismissed by the petitioner. It was their finding that the position occupied by Esteban was that of a rank-and-file employee and she is neither a supervisor, manager nor a cashier; thus, she does not hold a position of trust and confidence.14 The CA also affirmed the ruling of the LA that Esteban’s preventive suspension was not warranted.15 The CA also upheld the finding of the NLRC that the deduction of P8,304.93, representing the store’s negative variance, from Esteban’s salary violates Article 113 of the Labor Code, which prohibits wage deduction.16

The NLRC, on the other hand, found that Esteban was dismissed for cause. According to the NLRC, Esteban admitted that she violated the petitioner when she made an unauthorized access to the POS system, and even shared the password to another employee. The NLRC also rejected Esteban’s assertion that her job as sales clerk does not occupy a position of trust, and that her preventive suspension was not warranted. With regard to her waiver and quitclaim, the NLRC upheld its validity as Esteban signed the same with full awareness that she committed a wrong.17

Loss of trust and confidence as avalid ground for dismissal fromemployment

The antecedent facts that gave rise to Esteban’s dismissal from employment are not disputed in this case. The issue is whether Esteban’s acts constitute just cause to terminate her employment with the company on the ground of loss of trust and confidence.

Loss of trust and confidence is premised on the fact that the employee concerned holds a position of responsibility, trust and confidence. The employee must be invested with confidence on delicate matters, such as the custody, handling, care and protection of the employer’s property and funds.18 "[W]ith respect to rank-and-file personnel, loss of trust and confidence as ground for valid dismissal requires proof of involvement in the alleged events in question, and that mere uncorroborated assertions and accusations by the employer will not be sufficient."19

Esteban is, no doubt, a rank-and-file employee. The question now is whether she occupies a position of trust and confidence.

Among the fiduciary rank-and-file employees are cashiers, auditors, property custodians, or those who, in the normal exercise of their functions, regularly handle significant amounts of money or property.20 These employees, though rank-and-file, are routinely charged with the care and custody of the employer’s money or property, and are thus classified as occupying positions of trust and confidence.21

In this case, Esteban was a sales clerk. Her duties, however, were more than that of a sales clerk. Aside from attending to customers and tending to the shop, Esteban also assumed cashiering duties. This, she does not deny; instead, she insists that the competency clause provided that her tasks were

that of a sales clerk and the cashiering function was labelled "to follow."22 A perusal of the competency clause, however, shows that it is merely an attestation on her part that she is competent to "meet the basic requirements needed for the position [she] is applying for x x x". It does not define her actual duties. As consistently ruled by the Court, it is not the job title but the actual work that the employee performs that determines whether he or she occupies a position of trust and confidence.23 In Philippine Plaza Holdings, Inc. v. Episcope,24 the Court ruled that a service attendant, who was tasked to attend to dining guests, handle their bills and receive payments for transmittal to the cashier and was therefore involved in the handling of company funds, is considered an employee occupying a position of trust and confidence. Similarly in Esteban’s case, given that she had in her care and custody the store’s property and funds, she is considered as a rank-and-file employee occupying a position of trust and confidence.

Proceeding from the above conclusion, the pivotal question that must be answered is whether Esteban’s acts constitute just cause to terminate her employment.

Loss of trust and confidence to be a valid cause for dismissal must be work related such as would show the employee concerned to be unfit to continue working for the employer and it must be based on a wilful breach of trust and founded on clearly established facts.25 Such breach is wilful if it is done intentionally, knowingly, and purposely, without justifiable excuse as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently.26 The loss of trust and confidence must spring from the voluntary or wilful act of the employee, or by reason of some blameworthy act or omission on the part of the employee.27

In this case, the Court finds that the acts committed by Esteban do not amount to a wilful breach of trust. She admitted that she accessed the POS system28 with the use of the unauthorized "123456" password. She did so, however, out of curiosity and without any obvious intention of defrauding the petitioner. As professed by Esteban, "she was acting in good faith in verifying what her co-staff told her about the opening of the computer by the use of the "123456" password, x x x. She even told her co-staff not to open again said computer, and that was the first and last time she opened said computer."29 Moreover, the petitioner even admitted that Esteban has her own password to the POS system. If it was her intention to manipulate the store’s inventory and funds, she could have done so long before she had

knowledge of the unauthorized password. But the facts on hand show that she did not. The petitioner also failed to establish a substantial connection between Esteban’s use of the "123456" password and any loss suffered by the petitioner. Indeed, it may be true that, as posited by the petitioner, it is the fact that she used the password that gives cause to the loss of trust and confidence on Esteban. However, as ruled above, such breach must have been done intentionally, knowingly, and purposely, and without any justifiable excuse, and not simply something done carelessly, thoughtlessly, heedlessly or inadvertently. To the Court’s mind, Esteban’s lapse is, at best, a careless act that does not merit the imposition of the penalty of dismissal.

The Court is not saying that Esteban is innocent of any breach of company policy.1âwphi1 That she relayed the password to another employee is likewise demonstrative of her mindless appreciation of her duties as a sales clerk in the petitioner’s employ. But absent any showing that her acts were done with "moral perverseness" that would justify the claimed loss of trust and confidence attendant to her job,30 the Court must sustain the conclusion that Esteban was illegally dismissed. As stated by the CA, "[s]uspension would have sufficed as punishment, considering that the petitioner had already been with the company for more than 2 years, and the petitioner apologized and readily admitted her mistake in her written explanation, and considering that no clear and convincing evidence of loss or prejudice, which was suffered by the [petitioner] from [Esteban’s] supposed infraction."31

Preventive suspension duringinvestigation

Preventive suspension is a measure allowed by law and afforded to the employer if an employee’s continued employment poses a serious and imminent threat to the employer’s life or property or of his co-workers.32 It may be legally imposed against an employee whose alleged violation is the subject of an investigation.33

In this case, the petitioner was acting well within its rights when it imposed a 10-day preventive suspension on Esteban. While it may be that the acts complained of were committed by Esteban almost a year before the investigation was conducted, still, it should be pointed out that Esteban was performing functions that involve handling of the petitioner’s property and

funds, and the petitioner had every right to protect its assets and operations pending Esteban’s investigation.34

Sales negative variances as wagedeductions

The petitioner deducted the amount of P8,304.93 from Esteban’s last salary. According to the petitioner, this represents the store’s negative variance for the year 2005 to 2006. The petitioner justifies the deduction on the basis of alleged trade practice and that it is allowed by the Labor Code.

Article 113 of the Labor Code provides that no employer, in his own behalf or in behalf of any person, shall make any deduction from the wages of his employees, except in cases where the employer is authorized by law or regulations issued by the Secretary of Labor and Employment, among others. The Omnibus Rules Implementing the Labor Code, meanwhile, provides:

SECTION 14. Deduction for loss or damage. – Where the employer is engaged in a trade, occupation or business where the practice of making deductions or requiring deposits is recognized to answer for the reimbursement of loss or damage to tools, materials, or equipment supplied by the employer to the employee, the employer may make wage deductions or require the employees to make deposits from which deductions shall be made, subject to the following conditions:

(a) That the employee concerned is clearly shown to be responsible for the loss or damage;

(b) That the employee is given reasonable opportunity to show cause why deduction should not be made;

(c) That the amount of such deduction is fair and reasonable and shall not exceed the actual loss or damage; and

(d) That the deduction from the wages of the employee does not exceed 20 percent of the employee’s wages in a week.

In this case, the petitioner failed to sufficiently establish that Esteban was responsible for the negative variance it had in its sales for the year 2005 to 2006 and that Esteban was given the opportunity to show cause the

deduction from her last salary should not be made. The Court cannot accept the petitioner’s statement that it is the practice in the retail industry to deduct variances from an employee’s salary, without more. In Niña Jewelry Manufacturing of Metal Arts, Inc. v. Montecillo,35 the Court ruled that:

[T]he petitioners should first establish that the making of deductions from the salaries is authorized by law, or regulations issued by the Secretary of Labor. Further, the posting of cash bonds should be proven as a recognized practice in the jewelry manufacturing business, or alternatively, the petitioners should seek for the determination by the Secretary of Labor through the issuance of appropriate rules and regulations that the policy the former seeks to implement is necessary or desirable in the conduct of business. The petitioners failed in this respect. It bears stressing that without proofs that requiring deposits and effecting deductions are recognized practices, or without securing the Secretary of Labor's determination of the necessity or desirability of the same, the imposition of new policies relative to deductions and deposits can be made subject to abuse by the employers.1âwphi1 This is not what the law intends.36

WHEREFORE, the petition is PARTIALLY GRANTED. The Decision dated November 25, 2009 and Resolution dated June 10, 2010 of the Court of Appeals in CA-G.R. SP No. 107573 insofar as it reinstated with modification the Decision of the Labor Arbiter dated September 28, 2007 are AFFIRMED. Insofar as it affirmed respondent Glyza Esteban's preventive suspension, the same are hereby REVERSED.

The Labor Arbiter is hereby ORDERED to re-compute the monetary award in favor of Glyza Esteban and to exclude the award of backwages during such period of preventive suspension, if any.

SO ORDERED.

THIRD DIVISION

G.R. No. 198620, November 12, 2014

P.J. LHUILLIER, INC. AND MARIO RAMON LUDEÑA, Petitioners, v. FLORDELIZ VELAYO,Respondent.

D E C I S I O N

REYES, J.:

Before this Court is a petition for review on certiorari1 under Rule 45 of the Decision2 dated June 30, 2011 of the Court of Appeals (CA) in CA-G.R. SP No. 03069, affirming the finding of the National Labor Relations Commission (NLRC) that respondent Flordeliz Velayo (respondent) was illegally dismissed. The Resolution3 dated September 14, 2011 denied the motion for reconsideration thereof.ChanRoblesVirtualawlibrary

The Facts

The essential antecedent facts are summarized in the assailed CA decision, to wit:chanroblesvirtuallawlibrary

On June 13, 2003, (herein petitioner) PJ (CEBU) LHUILLIER, INC. (PJ LHUILLIER for brevity) hired FLORDELIZ M. ABATAYO [sic] as Accounting Clerk at the LH-4, Cagayan de Oro City Branch with a basic monthly salary of P9,353.00. On February 9, 2008 appellant (herein private respondent) was served with a Show Cause Memo by MARIO RAMON LUDENA, Area Operations Manager of PJ Lhuillier (herein petitioner), ordering her to explain within 48 hours why no disciplinary action should be taken against her for dishonesty, misappropriation, theft or embezz[le]ment of company funds in violation of Item 11, Rule V of the Company Code of Conduct. Thereafter, (s)he was placed under preventive suspension from February 9 to March 8, 2008 while her case was under investigation.

The charges against the appellant (herein private respondent) were based on the Audit Findings conducted on October 29, 2007, where the overage amount of P540.00 was not reported immediately to the supervisor, not recorded at the end of that day.

On February 11, 2008, complainant (herein private respondent) submitted her reply and admitted that she was not able to report the overage to the supervisor since the latter was on leave on that day and that she was still tracing the overage; and that the omission or failure to report immediately the overage (sic) was just a simple mistake without intent to defraud her employer.

On March 10, 2008, after the conduct of a formal investigation and after finding complainant's (herein private respondent's) [explanations] without

merit, PJ LHUILLIER (herein petitioner) terminated her employment as per Notice of Termination on grounds of serious misconduct and breach of trust.4 (Citation omitted)

On March 14, 2008, the respondent filed a complaint for illegal dismissal, separation pay and other damages against RJ. Lhuillier, Inc. (PJLI) and Mario Ramon Ludena, Area Operations Manager (petitioners). On July 23, 2008, the Labor Arbiter (LA) rendered judgment, the dispositive portion of which reads as follows:chanroblesvirtuallawlibrary

WHEREFORE, in view of all the foregoing, judgment is hereby entered ordering the dismissal of the instant complaint for lack of merit.

SO ORDERED.5chanrobleslaw

The LA found that the respondent's termination was valid and based not on a mere act of simple negligence in the performance of her duties as cashier:chanroblesvirtuallawlibrary

This is not a case of simple negligence as the facts show that complainant, instead of reporting the matter immediately, had set aside the P540.00 for her personal use instead of reporting the overage or recording it in the operating system of the company.

Complainant is not entitled to moral as well as exemplary damages for lack of basis.6chanrobleslaw

On appeal, the NLRC in its Decision dated March 19, 2009 countermanded the LA, holding that the respondent was illegally dismissed since the petitioners failed to prove a just cause of serious misconduct and willful breach of trust:chanroblesvirtuallawlibrary

In fine, the Labor Arbiter a quo utterly disregarded the rule on proportionality that has been observed in a number of cases, that is, "the penalty imposed should be commensurate to the gravity of his offense." x x x

x x x x

In the instant case, PJ LHUILLIER was not able to discharge the burden of proving that the dismissal of the complainant was for valid or just causes of

serious misconduct and willful breach of trust. Thus, We disagree with the Labor Arbiter's findings and conclusion that complainant was validly dismissed from service.

x x x x

... Significantly, the complainant's omission or procedural lapse did not cause any loss or damage to the company.7chanrobleslaw

Nonetheless, finding that the relations between the petitioners and the respondent have become strained, the NLRC did not order the reinstatement of the respondent. Thus:chanroblesvirtuallawlibrary

WHEREFORE, the instant appeal is GRANTED. The assailed decision is hereby SET ASIDE and REVERSED, and a new one entered declaring that complainant was ILLEGALLY DISMISSED. Accordingly, respondent PJ (CEBU) LHUILLIER, INC. is hereby ORDERED:chanroblesvirtuallawlibrary

(a) to pay complainant separation pay equivalent to one (1) month salary for every year of service, a fraction of at least six (6) months being considered as one (1) whole year in lieu of reinstatement due to strained relationship, computed from June 13, 2003 up to the finality of the promulgation of this judgment;cralawlawlibrary

(b) to pay complainant FULL BACKWAGES in accordance with Bustamante vs. NLRC ruling (265 SCRA 061); and

(c) to pay ten percent (10%) of the total money award as attorney's fees.


The NLRC subsequently denied the petitioners' motion for reconsideration thereof. On July 31, 2009, the petitioners filed a petition for certiorari in the CA with prayer for issuance of a temporary restraining order (TRO) and/or writ of preliminary injunction, invoking the following issues:chanroblesvirtuallawlibrary

I

WHETHER OR NOT THE RESPONDENT [NLRC] COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION WHEN IT DEVIATED FROM THE FINDINGS OF FACTS OF THE HONORABLE LABOR ARBITER.ChanRoblesVirtualawlibrary

II

WHETHER OR NOT PETITIONERS ARE ENTITLED TO THE ISSUANCE OF A TEMPORARY RESTRAINING ORDER AND/OR WRIT OF PRELIMINARY INJUNCTION PENDING THE RESOLUTION OF THE INSTANT PETITION.9chanrobleslaw

The respondent filed her comment on August 19, 2009. On October 8, 2009, the petitioners filed an urgent motion to resolve their petition for certiorari and prayer for TRO and/or writ of preliminary injunction. On November 9, 2009, the CA denied the petitioners' prayer for TRO stating that they have not shown that they stood to suffer grave and irreparable injury if the TRO was denied. The remaining issue in the CA, then, was whether the NLRC acted with grave abuse of discretion amounting to lack or excess of jurisdiction when it set aside the factual conclusion and ruling of the LA. The CA ruled in the negative:chanroblesvirtuallawlibrary

We concur with the NLRC in finding for private respondent. Time and again, the Supreme Court has held that it is cruel and unjust to impose the drastic penalty of dismissal if not commensurate to the gravity of the misdeed.

In employee termination disputes, the employer bears the burden of proving that the employee's dismissal was for just and valid cause. In the instant case, the evidence does not support the finding of the Labor Arbiter that private respondent is guilty of serious misconduct.

In this jurisdiction, the Supreme Court has consistently defined misconduct as an improper or wrong conduct, a transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, implies wrongful intent and not mere error of judgment. To be a just cause for termination under Article 282 of the Labor Code of the Philippines, the misconduct must be serious, that is, it must be of such grave

and aggravated character and not merely trivial or unimportant. However serious, such misconduct must nevertheless be in connection with the employee's work; the act complained of must be related to the performance of the employee's duties showing him to be unfit to continue working for the employer.

Private respondent's lapse was not a "serious" one, let alone indicative of serious misconduct. In fact, she (herein private respondent) admitted that she was not able to report the overage to the supervisor since the latter was on leave on that day and that she was still tracing the overage; and that the omission or failure to report immediately the overage was just a simple mistake without intent to defraud her employer. As found by the NLRC, private respondent worked for petitioner for almost six (6) years, and it is not shown that she committed any infraction of company rules during her employment. In fact, private respondent was once awarded by petitioner due to her heroic act of defending her Manager, Ms. Lilibeth Cortez, while resisting a hold-upper.

The settled rule is that when supported by substantial evidence, factual findings made by quasi-judicial and administrative bodies are accorded great respect and even finality by the courts. These findings are not infallible, though; when there is a showing that they were arrived at arbitrarily or in disregard of the evidence on record, they may be examined by the courts. Hence, when factual findings of the Labor Arbiter and the NLRC are contrary to each other, there is a necessity to review the records to determine which conclusions are more conformable to the evidentiary facts. The case before Us shows that the finding of the NLRC is supported by substantive evidence as compared to the finding of the Labor Arbiter with respect to the issue of illegal dismissal. Moreover, in case of doubt, such cases should be resolved in favor of labor, pursuant to the social justice policy of labor laws and the Constitution.

Finally, it is a time-honored principle that although it is the prerogative of management to employ the services of a person and likewise to discharge him, such is not without limitations and restrictions. The dismissal of an employee must be done with just cause and without abuse of discretion. It must not be done in an arbitrary and despotic manner. To hold otherwise would render nugatory the security of tenure clause enshrined in the Constitution.10 (Citations omitted and emphasis ours)

Invoking Article 27911 of the Labor Code, the CA agreed with the NLRC that the respondent should have been reinstated without loss of seniority rights and other privileges, with payment of her full backwages, inclusive of allowances and other benefits or their monetary equivalent computed from the time her compensation was withheld up to the time of actual reinstatement. However, with the parties' relations now strained, the CA conceded that the payment of a separation pay, along with backwages as a separate and distinct relief, is an acceptable alternative to reinstatement. The CA further awarded the respondent attorney's fees since she was forced to litigate and incur expenses to protect her rights and interests by reason of the unjustified acts of the petitioners.ChanRoblesVirtualawlibrary

Petition for Review in the Supreme Court

In this petition, the petitioners raise the following issues:chanroblesvirtuallawlibrary

I. WHETHER OR NOT THE MISAPPROPRIATION BY A PAWNSHOP PERSONNEL IN THE AMOUNT OF [P]540.00, COUPLED WITH SUBSEQUENT DENIALS, AMOUNT TO A SERIOUS MISCONDUCT IN OFFICE?

II. WHETHER OR NOT THE IMPOSITION OF THE PENALTY OF TERMINATION FROM OFFICE [UPON] A PAWNSHOP PERSONNEL WHO MISAPPROPRIATED AN AMOUNT OF P540.00 FROM THE COFFERS OF THE PAWNSHOP, AND WHO MADE SUBSEQUENT DENIALS, IS CRUEL AND UNJUST?12

The appellate court agreed with the NLRC that the respondent's lapse was "just a simple mistake without intent to defraud her employer;"13 that the incident was neither serious nor indicative of serious misconduct; and that her dismissal was disproportionate to her offense. It accepted the respondent's explanation that her failure to report her cash overage of P540.00 on October 29, 2007 to the branch manager, who was her immediate superior, was because the latter was then on leave, and that for days thereafter, she was hard-pressed in trying to trace and determine the cause thereof. The CA noted that the respondent had worked for PJLI for almost six years without any previous infractions of company rules, and that she was once commended for a heroic act of defending her former branch

manager, Ms. Lilibeth Cortez, during a branch holdup.

On the other hand, the petitioners strongly maintain that under Rule V(A)(11) of its Code of Conduct on "Dishonesty, Misappropriation, Theft or Embezzlement of Company Funds or Property," the respondent committed a "First Level Offense" which is punishable by outright dismissal. According to the petitioners, the respondent committed the following acts which constitute dishonesty and serious misconduct:chanroblesvirtuallawlibrary

1. The respondent did not enter the discovered cash overage in the "operating system" (computerized cash ledger) of the branch on October 29, 2007 notwithstanding that she was fully aware of the company's policy that such unexplained receipt should be recorded at the end of the business day;cralawlawlibrary

2. The respondent did not report the cash overage to her immediate superior, Branch Manager Violette Grace Tuling (Tuling), upon the latter's return from a leave of absence on November 3, 2007. Neither did the respondent seek Tuling's help concerning the matter, and just averred that she was afraid to be scolded by Tuling;cralawlawlibrary

3. The respondent deliberately lied about her cash overage after Tuling confronted her on December 17, 2007;cralawlawlibrary

4. Again, the respondent falsely denied the cash overage when the company auditor asked her to explain how it happened; and

5. The respondent concocted a cover-up by claiming that a computer glitch occurred when she was about to post the cash overage in the operating system.14

Ruling of the Court

There is merit in the petition.

It need not be stressed that the nature or extent of the penalty imposed on an erring employee must be commensurate to the gravity of the offense as weighed against the degree of responsibility and trust expected of the employee's position. On the other hand, the respondent is not just charged with a misdeed, but with loss of trust and confidence under Article 282(c) of

the Labor Code, a cause premised on the fact that the employee holds a position whose functions may only be performed by someone who enjoys the trust and confidence of management. Needless to say, such an employee bears a greater burden of trustworthiness than ordinary workers, and the betrayal of the trust reposed is the essence of the loss of trust and confidence which is a ground for the employee's dismissal.15

The respondent's misconduct mustbe viewed in light of the strictly fiduciarynature of her position.

In addition to its pawnshop operations, the PJLI offers its "Pera Padala" cash remittance service whereby, for a fee or "sending charge," a customer may remit money to a consignee through its network of pawnshop branches all over the country. On October 29, 2007, a customer sent P500.00 through its branch in Capistrano, Cagayan de Oro City, and paid a remittance fee of P40.00. Inexplicably, however, no corresponding entry was made to recognize the cash receipt of P540.00 in the computerized accounting system (operating system) of the PJLI. The respondent claimed that she tried very hard but could not trace the source of her unexplained cash surplus of P540.00, but a branch audit conducted sometime in December 2007 showed that it came from a "Pera Padala"customer.

To be sure, no significant financial injury was sustained by the PJLI in the loss of a mere P540.00 in cash, which, according to the respondent she sincerely wanted to account for except that she was pre-empted by fear of what her branch manager might do once she learned of it. But in treating the respondent's misconduct as a simple negligence or a simple mistake, both the CA and the NLRC grossly failed to consider that she held a position of utmost trust and confidence in the company.

There are two classes of corporate positions of trust: on the one hand are the managerialemployees whose primary duty consists of the management of the establishment in which they are employed or of a department or a subdivision thereof, and other officers or members of the managerial staff; on the other hand are the fiduciary rank-and-file employees, such as cashiers, auditors, property custodians, or those who, in the normal exercise of their functions, regularly handle significant amounts of money or property. These employees, though rank-and-file, are routinely charged with the care and custody of the employer's money or property, and are thus

classified as occupying positions of trust and confidence.16

The respondent was first hired by the petitioners as an accounting clerk on June 13, 2003, for which she received a basic monthly salary of P9,353.00. On October 29, 2007, the date of the subject incident, she performed the function of vault custodian and cashier in the petitioners' Branch 4 pawnshop in Capistrano, Cagayan de Oro City. In addition to her custodial duties, it was the respondent who electronically posted the day's transactions in the books of accounts of the branch, a function that is essentially separate from that of cashier or custodian. It is plain to see then that when both functions are assigned to one person to perform, a very risky situation of conflicting interests is created whereby the cashier can purloin the money in her custody and effectively cover her tracks, at least temporarily, by simply not recording in the books the cash receipt she misappropriated. This is commonly referred to as lapping of accounts.17 Only a most trusted clerk would be allowed to perform the two functions, and the respondent enjoyed this trust.

The series of willful misconduct committed by the respondent in mishandling the unaccounted cash receipt exposes her as unworthy of the utmost trust inherent in herposition as branch cashier and vaultcustodian and bookkeeper.

The respondent insists that she never intended to appropriate the money but was afraid that Tuling would scold her, and that she kept the money for a long time in her drawer and only decided to take it home after her search for the cause of the cash overage had proved futile. Both the CA and the NLRC agreed with her, and held that what she committed was a simple mistake or simple negligence.

The Court disagrees.

Granting arguendo that for some reason not due to her fault, the respondent could not trace the source of the cash surplus, she nonetheless well knew and understood the company's policy that unexplained cash must be treated as miscellaneous income under the account "Other Income," and that the same must be so recognized and recorded at the end of the day in the branch books

or "operating system." No such entry was made by the respondent, resulting in unrecorded cash in her possession of P540.00, which the company learned about only two months thereafter through a branch audit.

Significantly, when Tuling returned on November 3, 2007 from her leave of absence, the respondent did not just withhold from her the fact that she had an unaccounted overage, but she refused to seek her help on what to do about it, despite having had five days to mull over the matter until Tuling's return.

In order that an employer may invoke loss of trust and confidence in terminating an employee under Article 282(c) of the Labor Code, certain requirements must be complied with, namely: (1) the employee must be holding a position of trust and confidence; and (2) there must be an act that would justify the loss of trust and confidence.18 While loss of trust and confidence should be genuine, it does not require proof beyond reasonable doubt,19 it being sufficient that there is some basis to believe that the employee concerned is responsible for the misconduct and that the nature of the employee's participation therein rendered him unworthy of trust and confidence demanded by his position.20

The petitioners are fully justified in claiming loss of trust and confidence in the respondent. While it is natural and understandable that the respondent should feel apprehensive about Tuling's reaction concerning her cash overage, considering that it was their first time to be working together in the same branch, we must keep in mind that the unaccounted cash can only be imputed to the respondent's own negligence in failing to keep track of the transaction from which the money came. A subsequent branch audit revealed that it came from a "Pera Padala" remittance, implying that although the amount had been duly remitted to the consignee, the sending branch failed to record the payment received from the consigning customer. For days following the overage, the respondent tried but failed to reconcile her records, and for this inept handling of a "Pera Padala" remittance, she already deserved to be sanctioned.

Further, as a matter of strict company policy, unexplained cash is recognized at the end of the day as miscellaneous income. Inexplicably, despite being with the company for four years as accounting clerk and cashier, the respondent failed to make the required entry in the branch operating system recognizing miscellaneous income. Such an entry could have been easily

reversed once it became clear how the overage came about. But the respondent obviously thought that by skipping the entry, she could keep Tuling from learning about the overage. Her trustworthiness as branch cashier and bookkeeper has been irreparably tarnished. The respondent's untrustworthiness is further demonstrated when she began to concoct lies concerning the overage: first, by denying its existence to Tuling and again to the company auditor; later, when she falsely claimed that a computer glitch or malfunction had prevented her from posting the amount on October 29, 2007; and finally, when she was forced to admit before the company's investigating panel that she took and spent the money.[21

Mere substantial evidence is sufficient to establish loss of trustand confidence

The respondent's actuations were willful and deliberate. A cashier who, through carelessness, lost a document evidencing a cash receipt, and then wilfully chose not to record the excess cash as miscellaneous income and instead took it home and spent it on herself, and later repeatedly denied or concealed the cash overage when confronted, deserves to be dismissed.

Article 28222 of the Labor Code allows an employer to dismiss an employee for willful breach of trust or loss of confidence. It has been held that a special and unique employment relationship exists between a corporation and its cashier. Truly, more than most key positions, that of a cashier calls for utmost trust and confidence,23 and it is the breach of this trust that results in an employer's loss of confidence in the employee.24 In San Miguel Corporation v. NLRC, et al.,25cralawred the Court held:chanroblesvirtuallawlibrary

As a rule this Court leans over backwards to help workers and employees continue in their employment. We have mitigated penalties imposed by management on erring employees and ordered employers to reinstate workers who have been punished enough through suspension. However, breach of trust and confidence and acts of dishonesty and infidelity inthe handling of funds and properties are an entirely different matter. 26 (Emphasis ours)

It has been held that in dismissing a cashier on the ground of loss of confidence, it is sufficient that there is some basis for the same or that the

employer has a reasonable ground to believe that the employee is responsible for the misconduct, thus making him unworthy of the trust and confidence reposed in him.27 Therefore, if there is sufficient evidence to show that the employer has ample reason to distrust the employee, the labor tribunal cannot justly deny the employer the authority to dismiss him.[28 Indeed, employers are allowed wider latitude in dismissing an employee for loss of trust and confidence, as the Court held in Atlas Fertilizer Corporation v. NLRC:[29

As a general rule, employers are allowed a wider latitude of discretion in terminating the services of employees who perform functions which by their nature require the employer's full trust and confidence. Mere existence of basis for believing that the employee has breached the trust of the employer is sufficient and does not require proof beyond reasonable doubt. Thus, when an employee has been guilty of breach of trust or his employer has ample reason to distrust him, a labor tribunal cannot deny the employer the authority to dismiss him. x x x.30 (Citations omitted)

Furthermore, it must also be stressed that only substantial evidence is required in order to support a finding that an employer's trust and confidence accorded to its employee had been breached. As explained in Lopez v. Alturas Group of Companies:[31

[T]he 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 onsubstantial evidence and not on the employer's whims or caprices or suspicionsotherwise, 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.32 (Emphasis and underscoring in the original)

In holding a position requiring full trust and confidence, the respondent gave up some of the rigid guarantees available to ordinary employees. She insisted that her misconduct was just an "innocent mistake," and maybe it was, had it been committed by other employees. But surely not as to the respondent who precisely because of the special trust and confidence given her by her employer must be penalized with a more severe sanction.33

A cashier's inability to safeguard and account for missing cash is sufficientcause to dismiss her.

The respondent insisted that she never intended to misappropriate the missing fund, but in Santos v. San Miguel Corp.,34 the Court held that misappropriation of company funds, notwithstanding that the shortage has been restituted, is a valid ground to terminate the services of an employee for loss of trust and confidence.35 Also, in Cañeda v. Philippine Airlines, Inc. ,36 the Court held that it is immaterial what the respondent's intent was concerning the missing fund, for the undisputed fact is that cash which she held in trust for the company was missing in her custody. At the very least, she was negligent and failed to meet the degree of care and fidelity demanded of her as cashier. Her excuses and failure to give a satisfactory explanation for the missing cash only gave the petitioners sufficient reason to lose confidence in her.37 As it was held in Metro Drug Corporation v. NLRC:38

It would be most unfair to require an employer to continue employing as its cashier a person whom it reasonably believes is no longer capable of giving full and wholehearted trustworthiness in the stewardship of company funds.39chanrobleslaw

WHEREFORE, premises considered, the petition is hereby GRANTED. The Decision dated June 30, 2011 of the Court of Appeals in CA-G.R. SP No. 03069 is REVERSED and SET ASIDE. The Decision of the Labor Arbiter dated July 23, 2008 is REINSTATED.

SO ORDERED.

SECOND DIVISION WENSHA SPA CENTER, INC. and/or XU ZHI JIE,Petitioners,

- versus -

LORETA T. YUNG,Respondent.

G.R. No. 185122 Present: CARPIO, J., Chairperson,NACHURA,PERALTA,ABAD, andMENDOZA, JJ. Promulgated: August 16, 2010

X -------------------------------------------------------------------------------------- X

D E C I S I O N MENDOZA, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court filed by an employer who was charged before the National Labor Relations Commission (NLRC) for dismissing an employee upon the advice of a Feng Shui master. In this action, the petitioners assail the May 28, 2008 Decision[1] and October 23, 2008 Resolution[2] of the Court of Appeals (CA) in CA-G.R. SP No. 98855 entitled Loreta T. Yung v. National Labor Relations Commission, Wensha Spa Center, Inc. and/or Xu Zhi Jie. THE FACTS:

Wensha Spa Center, Inc. (Wensha) in Quezon City is in the business of sauna bath and massage services. Xu Zhi Jie a.k.a. Pobby Co (Xu) is its

president,[3] respondent Loreta T. Yung (Loreta) was its administrative manager at the time of her termination from employment.

In her position paper,[4] Loreta stated that she used to be employed by Manmen Services Co., Ltd. (Manmen) where Xu was a client. Xu was apparently impressed by Loretas performance. After he established Wensha, he convinced Loreta to transfer and work at Wensha. Loreta was initially reluctant to accept Xus offer because her job at Manmen was stable and she had been with Manmen for seven years. But Xu was persistent and offered her a higher pay. Enticed, Loreta resigned from Manmen and transferred to Wensha. She started working on April 21, 2004 as Xus personal assistant and interpreter at a monthly salary ofP12,000.00.

Loreta introduced positive changes to Wensha which resulted in increased business. This pleased Xu so that on May 18, 2004, she was promoted to the position of Administrative Manager.[5]

Loreta recounted that on August 10, 2004, she was asked to leave her

office because Xu and a Feng Shui master were exploring the premises. Later that day, Xu asked Loreta to go on leave with pay for one month. She did so and returned on September 10, 2004. Upon her return, Xu and his wife asked her to resign from Wensha because, according to the Feng Shui master, her aura did not match that of Xu. Loreta refused but was informed that she could no longer continue working at Wensha. That same afternoon, Loreta went to the NLRC and filed a case for illegal dismissal against Xu and Wensha.

Wensha and Xu denied illegally terminating Loretas employment. They claimed that two months after Loreta was hired, they received various complaints against her from the employees so that on August 10, 2004, they advised her to take a leave of absence for one month while they conducted an investigation on the matter. Based on the results of the investigation, they terminated Loretas employment on August 31, 2004 for loss of trust and confidence.[6]

The Labor Arbiter (LA) Francisco Robles dismissed Loretas complaint for lack of merit. He found it more probable that Loreta was dismissed from her employment due to Wenshas loss of trust and confidence in her. The LAs decision[7] partly reads:

However, this office has found it dubious and hard to

believe the contentions made by the complainant that she was dismissed by the respondents on the sole ground that she is a mismatch in respondents' business as advised by an alleged Feng Shui Master. The complainant herself alleged in her position paper that she has done several improvements in respondents business such as uplifting the morale and efficiency of its employees and increasing respondents clientele, and that respondent Co was very much pleased with the improvements made by the complainant that she was offered twice a promotion but she nevertheless declined. It would be against human experience and contrary to business acumen to let go of someone, who was an asset and has done so much for the company merely on the ground that she is a mismatch to the business. Absent any proof submitted by the complainant, this office finds it more probable that the complainant was dismissed due to loss of trust and confidence.[8]

This ruling was affirmed by the NLRC in its December 29, 2006

Resolution,[9] citing its observation that Wensha was still considering the proper action to take on the day Loreta left Wensha and filed her complaint. The NLRC added that this finding was bolstered by Wenshas September 10, 2004 letter to Loreta asking her to come back to personally clarify some matters, but she declined because she had already filed a case.

Loreta moved for a reconsideration of the NLRCs ruling but her motion was denied. Loreta then went to the CA on a petition for certiorari. The CAreversed the ruling of the NLRC on the ground that it gravely abused its discretion in appreciating the factual bases that led to Loretas dismissal. The CA noted that there were irregularities and inconsistencies in Wenshas position. The CA stated the following:

We, thus, peruse the affidavits and documentary evidence

of the Private Respondents and find the following: First, on the affidavits of their witnesses, it must be noted that the same were mere photocopies. It was held that [T]he purpose of the rule in requiring the production of the best evidence is the prevention of fraud, because if a party is in possession of such evidence and withholds it, and seeks to substitute inferior evidence in its place, the presumption naturally arise[s] that the better evidence is withheld for fraudulent purposes which its production would expose and defeat. Moreover, the affidavits were not executed under oath. The rule is that an affiant must sign the document in the presence of and take his oath before a notary public as evidence that the affidavit was properly made. Guided by these principles, the affidavits cannot be assigned any weighty probative value and are mere scraps of paper the contents of which are hearsay. Second, on the sales report and order slips, which allegedly prove that Yung had been charging her food and drinks to Wensha, the said pieces of evidence do not, however, bear Yungs name thereon or even her signature. In fact, it does not state anyones name, except that of Wensha. Hence, it would simply be capricious to pinpoint, or impute, on Yung as the author in charging such expenses to Wensha on the basis of hearsay evidence. Third, while the affidavit of Wenshas Operations Manager, Princess delos Reyes (delos Reyes), may have been duly executed under oath, she did not, however, specify the alleged infractions that Yung committed. If at all, delos Reyes only made general statements on the alleged complaints against Yung that were not even substantiated by any other piece of evidence. Finally, the daily time records (DTRs) of Yung, which supposedly prove her habitual tardiness, were mere photocopies that are not even signed by Wenshas authorized representative, thus suspect, if not violative of the best evidence rule and, therefore, incompetent evidence. x x x [Emphases appear in the original]

x x x x. Finally, after the Private Respondents filed their position

paper, they alleged mistake on the part of their former counsel

in stating that Yung was dismissed on August 31, 2004. Thus, they subsequently moved for the admission of their rejoinder. Notably, however, the said rejoinder was dated October 4, 2004, earlier than the date when their position paper was filed, which was on November 3, 2004. It is also puzzling that their position paper was datedNovember 25, 2004, much later than its date of filing. The irregularities are simply too glaring to be ignored. Nevertheless, the Private Respondents admission of Yungs termination on August 31, 2004 cannot be retracted. They cannot use the mistake of their counsel as an excuse considering that the position paper was verified by their Operations Manager, delos Reyes, who attested to the truth of the contents therein.[10] [Emphasis supplied]

Hence, the fallo of the CA decision reads:

WHEREFORE, the instant petition is GRANTED.

Wensha Spa Center, Inc. and Xu Zhi Jie are ORDERED to, jointly and severally, pay Loreta T. Yung her full backwages, other privileges, and benefits, or their monetary equivalent, corresponding to the period of her dismissal from September 1, 2004 up to the finality of this decision, and damages in the amounts of fifty thousand pesos (Php50,000.00) as moral damages, twenty five thousand pesos (Php25,000.00) as exemplary damages, and twenty thousand pesos (Php20,000.00) as attorneys fees. No costs.

SO ORDERED.[11]

Wensha and Xu now assail this ruling of the CA in this petition presenting the following:

V. GROUNDS FOR THE ALLOWANCE OF THE PETITION

5.1 The following are the reasons and arguments, which

are purely questions of law and some questions of facts, which

justify the appeal by certiorari under Rule 45 of the 1997 Revised Rules of Civil Procedure, as amended, to this Honorable SUPREME COURT of the assailed Decision and Resolution, to wit:

5.1.1 The Honorable COURT OF APPEALS

gravely erred in reversing that factual findings of the Honorable Labor Arbiter and the Honorable NLRC (Third Division) notwithstanding recognized and established rule in our jurisdiction that findings of facts of quasi-judicial agencies who have gained expertise on their respective subject matters are given respect and finality;


committed grave abuse of discretion and serious errors when it ruled that findings of facts of the Honorable Labor Arbiter and the Honorable NLRC are not supported by substantial evidence despite the fact that the records clearly show that petitioner therein was not dismissed but is under investigation, and that she is guilty of serious infractions that warranted her termination;


grave[ly] erred when it ordered herein petitioner to pay herein respondent her separation pay, in lieu of reinstatement, and full backwages, as well as damages and attorneys fees;


committed grave abuse of discretion and serious errors when it held that petitioner XU ZHI JIE to be solidarily liable with WENSHA, assuming that respondent was illegally dismissed;

5.2 The same need to be corrected as they would work

injustice to the herein petitioner, grave and irreparable damage will be done to him, and would pose dangerous precedent.[12]

THE COURTS RULING:

Loretas security of tenure is guaranteed by the Constitution and the Labor Code. The 1987 Philippine Constitution provides in Section 18, Article II that the State shall protect the rights of workers and promote their welfare. Section 3, Article XIII also provides that all workers shall be entitled to security of tenure.Along that line, Article 3 of the Labor Code mandates that the State shall assure the rights of workers to security of tenure.

Under the security of tenure guarantee, a worker can only be terminated from his employment for cause and after due process. For a valid termination by the employer: (1) the dismissal must be for a valid cause as provided in Article 282, or for any of the authorized causes under Articles 283 and 284 of the Labor Code; and (2) the employee must be afforded an opportunity to be heard and to defend himself. A just and valid cause for an employees dismissal must be supported by substantial evidence, and before the employee can be dismissed, he must be given notice and an adequate opportunity to be heard.[13] In the process, the employer bears the burden of proving that the dismissal of an employee was for a valid cause. Its failure to discharge this burden renders the dismissal unjustified and, therefore, illegal.[14]

As a rule, the factual findings of the court below are conclusive on Us

in a petition for review on certiorari where We review only errors of law. This case, however, is an exception because the CAs factual findings are not congruent with those of the NLRC and the LA.

According to Wensha in its position paper,[15] it dismissed Loreta on August 31, 2004 after investigating the complaints against her. Wensha asserted that her dismissal was a valid exercise of an employers right to terminate a managerial employee for loss of trust and confidence. It claimed

that she caused the resignation of an employee because of gossips initiated by her. It was the reason she was asked to take a leave of absence with pay for one month starting August 10, 2004.[16]

Wensha also alleged that Loreta was sowing intrigues in the company

which was inimical to Wensha. She was also accused of dishonesty, serious breach of trust reposed in her, tardiness, and abuse of authority.[17]

In its Rejoinder, Wensha changed its position claiming that it did not terminate Loretas employment on August 31, 2004. It even sent her a notice requesting her to report back to work. She, however, declined because she had already filed her complaint.[18]

As correctly found by the CA, the cause of Loretas dismissal is

questionable. Loss of trust and confidence to be a valid ground for dismissal must have basis and must be founded on clearly established facts.[19]

The Court finds the LA ruling that states, [a]bsent any proof submitted

by the complainant, this office finds it more probable that the complainant was dismissed due to loss of trust and confidence,[20] to be utterly erroneous as it is contrary to the applicable rules and pertinent jurisprudence. The onus of proving a valid dismissal rests on the employer, not on the employee. [21] It is the employer who bears the burden of proving that its dismissal of the employee is for a valid or authorized cause supported by substantial evidence. [22]

According to the NLRC, [p]erusal of the entire records show that

complainant left the respondents premises when she was confronted with the infractions imputed against her.[23] This information was taken from the affidavit[24] of Princess Delos Reyes (Delos Reyes) which was dated March 21, 2005, not in Wenshas earlier position paper or pleadings submitted to the LA. The affidavits[25] of employees attached to Delos Reyes affidavit were all dated November 19, 2004 indicating that they were not yet executed when the complaints against Loreta were supposedly being investigated in August 2004.

It is also noteworthy that Wenshas position paper related that because

of the gossips perpetrated by Loreta, a certain Oliva Gonzalo (Gonzalo) resigned from Wensha. Because of the incident, Gonzalo, whose father was a policeman, reportedly got angry with complainant and of the management telling her friends at respondent company that she would retaliate thus creating fear among those concerned.[26] As a result, Loreta was advised to take a paid leave of absence for one month while Wensha conducted an investigation.According to Loreta, however, the reason for her termination was her aura did not match that of Xu and the work environment at Wensha. Loreta narrated:

On August 10, 2004 however, complainant was called by respondent Xu and told her to wait at the lounge area while the latter and a Feng Shui Master were doing some analysis of the office. After several hours of waiting, respondent Xu then told complainant that according to the Feng Shui master her Chinese Zodiac sign is a mismatch with that of the respondents; that complainant should not enter the administrative office for a month while an altar was to be placed on the left side where complainant has her table to allegedly correct the mismatch and that it is necessary that offerings and prayers have to be made and said for about a month to correct the alleged jinx. Respondent Xu instructed complainant not to report to the office for a month with assurance of continued and regular salary. She was ordered not to seek employment elsewhere and was told to come back on the 10th of September 2004.[27]

Although she was a little confused, Loreta did as she was instructed

and did not report for work for a month. She returned to work on September 10, 2004.This is how Loreta recounted the events of that day:

On September 10, 2004, in the morning, complainant

reported to the office of respondents. As usual, she punched-in her time card and signed in the logbook of the security guard. When she entered the administrative office, some of its employees immediately contacted respondent Xu. Respondent Xu then contacted complainant thru her mobile phone and told

her to leave the administrative office immediately and instead to wait for him in the dining area.

xxx Complainant waited for respondent Xu in the dining

area. After waiting for about two (2) hours, respondent Xu was nowhere. Instead, it was Jiang Xue Qin a.k.a Annie Co, the Chinese wife of respondent Xu, who arrived and after a short conversation between them, the former frankly told complainant that she has to resign allegedly she is a mismatch to respondent Xu according to the Feng Shui master and therefore she does not fit to work (sic) with the respondents. Surprised and shocked, complainant demanded of Jiang Xue Qin to issue a letter of termination if it were the reason therefor.

Instead of a termination letter issued, Jiang Xue Qin

insisted for the complainant's resignation. But when complainant stood her ground, Jian Xue Qin shouted invectives at her and told to leave the office immediately.

Respondent Xu did not show up but talked to the

complainant over the mobile phone and convinced her likewise to resign from the company since there is no way to retain her because her aura unbalanced the area of employment according to the Feng Shui, the Chinese spiritual art of placement. Hearing this from no lees than respondent Xu, complainant left the office and went straight to this Office and filed the present case on September 10, 2004. xxx[28]

Loreta also alleged that in the afternoon of that day, September 10,

2004, a notice was posted on the Wensha bulletin board that reads:

TO ALL EMPLOYEES OF WENSHA SPA CENTER WE WOULD LIKE TO INFORM YOU THAT MS. LORIE TSE YUNG, FORMER ADMINISTRATIVE OFFICER

OF WENSHA SPA CENTER IS NO LONGERCONNECTED TO THIS COMPANY STARTING TODAY SEPTEMBER 10, 2004.

ANY TRANSACTION MADE BY HER IS NO LONGER A LIABILITY OF THE COMPANY.

(SGD.) THE MANAGEMENT [Italics were in red letters.][29]

The Court finds Loretas complaint credible. There is consistency in

her pleadings and evidence. In contrast, Wenshas pleadings and evidence, taken as a whole, suffer from inconsistency. Moreover, the affidavits of the employees only pertain to petty matters that, to the Courts mind, are not sufficient to support Wenshas alleged loss of trust and confidence. To be a valid cause for termination of employment, the act or acts constituting breach of trust must have been done intentionally, knowingly, and purposely; and they must be founded on clearly established facts.

The CA decision is supported by evidence and logically flows from a review of the records. Loretas narration of the events surrounding her termination from employment was simple and straightforward. Her claims are more credible than the affidavits which were clearly prepared as an afterthought.

More importantly, the records are bereft of evidence that Loreta was duly informed of the charges against her and that she was given the opportunity to respond to those charges prior to her dismissal. If there were indeed charges against Loreta that Wensha had to investigate, then it should have informed her of those charges and required her to explain her side. Wensha should also have kept records of the investigation conducted while Loreta was on leave. The law requires that two notices be given to an employee prior to a valid termination: the first notice is to inform the employee of the charges against her with a warning that she may be terminated from her employment and giving her reasonable opportunity within which to explain her side, and the second notice is the notice to the employee that upon due consideration of all the circumstances, she is being

terminated from her employment.[30] This is a requirement of due process and clearly, Loreta did not receive any of those required notices.

We are in accord with the pronouncement of the CA that the

reinstatement of Loreta to her former position is no longer feasible in the light of the strained relations between the parties. Reinstatement, under the circumstances, would no longer be practical as it would not be in the interest of both parties. Under the law and jurisprudence, an illegally dismissed employee is entitled to two reliefs - backwages and reinstatement, which are separate and distinct. If reinstatement would only exacerbate the tension and further ruin the relations of the employer and the employee, or if their relationship has been unduly strained due to irreconcilable differences, particularly where the illegally dismissed employee held a managerial or key position in the company, it would be prudent to order payment of separation pay instead of reinstatement.[31] In the case of Golden Ace Builders v. Talde,[32] We wrote:

Under the doctrine of strained relations, the payment of separation pay has been considered an acceptable alternative to reinstatement when the latter option is no longer desirable or viable. On the one hand, such payment liberates the employee from what could be a highly oppressive work environment. On the other, the payment releases the employer from the grossly unpalatable obligation of maintaining in its employ a worker it could no longer trust.

In the case at bench, the CA, upon its own assessment, pronounced that the relations between petitioners and the respondent have become strained because of her dismissal anchored on dubious charges. The respondent has not contested the finding. As she is not insisting on being reinstated, she should be paid separation pay equivalent to one (1) month salary for every year of service.[33] The CA, however, failed to decree such award in the dispositive portion. This should be rectified.

Nevertheless, the Court finds merit in the argument of petitioner Xu that the CA erred in ruling that he is solidarily liable with Wensha.

Elementary is the rule that a corporation is invested by law with a personality separate and distinct from those of the persons composing it and from that of any other legal entity to which it may be related. Mere ownership by a single stockholder or by another corporation of all or nearly all of the capital stock of a corporation is not of itself sufficient ground for disregarding the separate corporate personality.[34]

In labor cases, corporate directors and officers may be held solidarily

liable with the corporation for the termination of employment only if done with malice or in bad faith.[35] Bad faith does not connote bad judgment or negligence; it imports a dishonest purpose or some moral obliquity and conscious doing of wrong; it means breach of a known duty through some motive or interest or ill will; it partakes of the nature of fraud.[36]

In the subject decision, the CA concluded that petitioner Xu and

Wensha are jointly and severally liable to Loreta. [37] We have read the decision in its entirety but simply failed to come across any finding of bad faith or malice on the part of Xu. There is, therefore, no justification for such a ruling. To sustain such a finding, there should be an evidence on record that an officer or director acted maliciously or in bad faith in terminating the services of an employee.[38]Moreover, the finding or indication that the dismissal was effected with malice or bad faith should be stated in the decision itself.[39]

WHEREFORE, the petition is PARTIALLY GRANTED. The decretal portion of the May 28, 2008 Decision of the Court of Appeals, in CA-G.R. SP No. 98855, is hereby MODIFIED to read as follows:

WHEREFORE, the petition is GRANTED. Wensha Spa Center, Inc. is hereby ordered to pay Loreta T. Yung her full backwages, other privileges, and benefits, or their monetary equivalent, and separation pay reckoned from the date of her dismissal, September 1, 2004, up to the finality of this decision, plus damages in the amounts of Fifty Thousand (P50,000.00) Pesos, as moral damages; Twenty Five Thousand (P25,000.00)

Pesos as exemplary damages; and Twenty Thousand (P20,000.00) Pesos, as attorneys fees. No costs.

SO ORDERED.


Manila

SECOND DIVISION

G.R. No. 148410 January 17, 2005

VICENTE C. ETCUBAN, JR., petitioner, vs.SULPICIO LINES, INC., respondent.

D E C I S I O N

CALLEJO, SR., J.:

The stakes are high in a position imbued with trust, and for petitioner Vicente C. Etcuban, Jr., the loss of trust in him by his employer cost him his job after 16 years of service. He cries that the penalty was too harsh for an unproved and petty infraction. Upon the other hand, his employer avers that it acted well within its rights in terminating the petitioner’s services after the investigation revealed that the latter failed to live up to the trust and confidence expected of him as Chief Purser. The Labor Arbiter and the National Labor Relations Commission (NLRC) agreed with the petitioner, while the Court of Appeals ruled for the employer.

The Antecedents

Respondent Sulpicio Lines, Inc. is a domestic corporation engaged in the business domestic shipping. Among its fleet of inter-island vessels was the M/V Surigao Princess, plying the Cebu–Cagayan de Oro–Jagna–Bohol route.1

The petitioner was employed by the respondent on January 30, 1978 until his dismissal on June 10, 1994 for loss of trust and confidence.2 At the time

of his dismissal, the petitioner was the Chief Purser of the M/V Surigao Princess receiving a monthly salary of P5,000.00.3 As the Chief Purser, the petitioner handled the funds of the vessel and was the custodian of all the passage tickets and bills of lading.4 It was his responsibility, among other things, to issue passage tickets and to receive payments from the customers of the respondent, as well as to issue the corresponding official receipts therefor.5 He was also tasked to disburse the salaries of the crewmen of the vessel.6

Sometime in the last week of May 1994, the newly designated jefe de viaje7 of the M/V Surigao Princess, in a surprise examination, discovered that several yellow passenger’s duplicate original8 of yet to be sold or unissued passage tickets already contained the amount of P88.00 – the fare for adult passengers for the Cagayan de Oro to Jagna, Bohol route. He noticed that three other original copies which made up the full set did not bear the same impression, although they were supposed to have been prepared at the same time. Acting on what appeared to be a strong evidence of short-changing the company, the jefe de viaje dug deeper on what he uncovered. As expected, he found inordinate amount of ticket issuances for children at half the fare of P44.00 in Voyage 434 of the vessel.9 When word of the anomaly reached the respondent, it waited for the petitioner to return to Cebu City in the hope of shedding more light on the matter.

On May 30, 1994, shortly after disembarking from the M/V Surigao Princess at the port of Cebu, the petitioner received a memorandum of even date from Personnel Officer Artemio F. Añiga relative to the irregularity in the "alleged involvement in anomaly of ticket issuance," instructing him to forthwith report to the main office and to explain in writing why no disciplinary action should be meted on him or to submit himself to an investigation. The memorandum warned the petitioner that his failure to comply with the aforementioned instructions would be construed as a waiver of his right to be heard. It also informed the petitioner of his immediate preventive suspension until further notice.10 The petitioner, however, refused to acknowledge receipt of the memorandum which was personally served on him,11 prompting the respondent to mail the same, and which the petitioner received days later.121awphi1.nét

Meanwhile, upon his arrival at the office, the petitioner was questioned by Mr. Carlo S. Go, Senior Executive Vice-President and General Manager of respondent. Thereafter, petitioner was preliminarily investigated by Mr.

Añiga wherein his statements were taken down.13 After the initial investigation, the petitioner was told to sign its minutes but he adamantly refused, claiming the same to be "self-incriminatory."14 The next day, the petitioner was replaced by Mr. Felix Almonicar as the Chief Purser of the M/V Surigao Princess.15 As a result of his replacement, the petitioner thought he was fired from his job.

Barely a week after the petitioner’s preventive suspension and pending his administrative investigation, he filed a complaint against the respondent for illegal dismissal, non-payment of overtime pay, 13th month pay and other monetary benefits with the NLRC, Regional Arbitration Branch No. VII, Cebu City. The case was docketed as NLRC No. RAB-VII-06-0607-84. The petitioner alleged that the ground for his dismissal, i.e., loss of trust and confidence, was ill-motivated and without factual basis. He did not deny that the anomalous tickets were in his possession, but denied that he was guilty of any wrongdoing. He dismissed the handwriting on the tickets as his, and claimed that he was singled out for the dismissal. He averred that the "trumped-up" charge was a clever scheme resorted to by his employer so it could avoid paying him monetary benefits, considering that he was with the company for more than sixteen (16) years. He argued that assuming that it was he who wrote those entries in the tickets, the fact remains that they were still unissued; hence, no money went to his pocket and no material prejudice was caused to the respondent. According to the petitioner, he would not jeopardize his livelihood for something as miniscule as P88.00. He prayed not for reinstatement but for separation pay, monetary benefits plus damages.16

On June 9, 1994, the respondent received its summons.17 Short of pre-empting its administrative investigation, coupled with the petitioner’s obstinate refusal to submit to further investigation, the respondent decided to terminate the petitioner’s employment for loss of trust and confidence in connection with passage tickets nos. 636742-636748.18 A copy of the notice of termination19 dated June 10, 1994 was sent by mail to the petitioner.

After hearing on the merits, Labor Arbiter Ernesto F. Carreon rendered his Decision dated March 13, 1995, finding the petitioner’s dismissal illegal. He ruled that the respondent failed to substantiate and prove that the petitioner committed any wrongdoing. He found the evidence of impression on the tickets inadequate, considering that the petitioner was not the only person in the vessel handling or issuing the passage tickets. According to the Labor

Arbiter, the anomalous entries on the unissued tickets could not be attributed entirely to the petitioner; thus, there was no reason for the respondent to lose its trust and confidence on the petitioner.20 The dispositive portion of the decision reads:

WHEREFORE, premises considered, judgment is hereby rendered ordering respondent Sulpicio Lines, Inc., to pay the complainant Vicente C. Etcuban, Jr. the following :

1. Separation pay -------------------------------- P80,480.00

2. Backwages ------------------------------------ 40,703.23

3. Proportionate 13th Month Pay ------------- 2,235.50

P123,418.73vvvvvvvvvvvv

The other claims are dismissed for lack of merit.

SO ORDERED.21

Both parties appealed to the NLRC, 4th Division, Cebu City. In its appeal, the respondent insisted that the dismissal was justified.22 The petitioner, on the other hand, questioned the computation of his backwages, besides reiterating his claim for moral damages.23

On February 21, 1996, a Decision24 was rendered by the NLRC affirming the challenged decision with the modification that the backwages to be paid to the petitioner shall be reckoned from the time of his actual dismissal on June 10, 1994, up to the issuance of the writ of execution on the finality of the decision, but not to exceed five (5) years. In fixing the additional backwages, the NLRC concluded that the respondent has "the open recourse to the Supreme Court" which could "prolong his (petitioner’s) agony." The decretal part of the decision reads:

WHEREFORE, premises considered, the assailed decision is MODIFIED with respect to the monetary awards. The award of backwages shall be computed from the date of the actual dismissal or 10 June 1994 up to the issuance of the Writ of Execution on the finality of the decision in this case but not to exceed five (5) years. The backwages shall include the

corresponding 13th month pay and leave (sick and vacation) benefits for the whole period covered.

SO ORDERED.25

In affirming the decision of the Labor Arbiter, the NLRC ruled as follows –

We do not find the allegedly highly irregular condition of the tickets valid reason to even suspend, much less terminate the complainant-appellant for loss of trust and confidence. It has not been established by clear and competent evidence that the alleged irregular condition of the tickets was attributable to the complainant or to other members of the team of inspectors who have equal access to the tickets. This is vital in view of the complainant’s denial to have committed the same. Moreover, there is no showing at all on record that the respondent suffered damage as a consequence of the existence of these tickets with entry of the rate or cost of transportation from Cagayan de Oro City to Jagna, Bohol, or that the complainant has benefited from the same. To establish loss of confidence, the employer must have reasonable ground to believe that the employee is responsible for the misconduct and his participation therein renders him unworthy of the trust and confidence demanded of his position, and makes him absolutely unfit to continue with his employment.

With more reason, we do not find valid loss of confidence to warrant dismissal the alleged "stabbing the back" by the complainant-appellant of the respondent-appellant by the mere filing of the case. This act of the complainant-appellant is not a misconduct. It is a valid recourse to the instrumentality of the government that can give him ample protection and labor justice especially when he felt that his 16 years of service is being threatened.26

The respondent filed a motion for reconsideration27 which was denied by the NLRC in a Resolution28promulgated on April 15, 1996. It stressed its finding that the petitioner’s alleged breach of trust was not sufficiently established by the evidence on record. It further ruled that the petitioner’s indefinite suspension from work amounted to his constructive dismissal.29

On June 14, 1996, the respondent filed a petition for certiorari30 with this Court, ascribing to the NLRC, among others, grave abuse of discretion when it ruled that the preventive suspension of the petitioner was tantamount to constructive dismissal. Following the pronouncement in St. Martin Funeral

Home v. NLRC ,31 the petition was referred to the Court of Appeals for its appropriate action and disposition.32

On December 28, 2000, the Court of Appeals reversed and set aside the NLRC decision.33 It ruled that there was valid and just cause for the petitioner’s dismissal, as there was sufficient basis for loss of trust and confidence on him. The appellate court amplified that in cases of dismissal for loss of trust and confidence, it is not required that there is proof beyond reasonable doubt. It ratiocinated, thus:

The office of a purser involves a high degree of trust and confidence. Private respondent had access to company funds as it was his sensitive duty to issue tickets and accept payments from the passengers of the vessel. When the passenger copies of unissued tickets in his custody were written with the amount of P88.00 while the other copies were clean, this already constituted culpable tampering of the tickets. This Court is fully aware of the standard operating procedure that tickets should be accomplished only at the time of their issuance and that the duplicate or triplicate copies should contain exact carbon impressions of the entries in the original copies. It was then highly anomalous that the original copies of the tickets were already written with the amount of P88.00 when they were still unissued. More so, because the amount of P88.00 were not duplicated in the other copies of the tickets. There was a clear case of tampering of the unissued tickets in private respondent’s possession. This clearly was intended to facilitate the anomaly of entering in the duplicate copies an amount different if not lower than what is stated in the original copy and remitting to the petitioner the lower amount.

Complainant was the custodian of the tickets with the authority to issue the same. The tampered tickets were in his possession. As such, it was therefore reasonable and logical for petitioner to conclude if not certain a well-grounded moral conviction that private respondent Etcuban committed the tampering. Even if it is allowed that another person committed the tampering, private respondent was still culpable as the tampered tickets were found in his possession and the same could not have been done without his conformity or negligence. His possession of the tickets with unexplained written entries in the passenger copies of the unissued tickets was by itself sufficient basis enough to prove respondent’s culpability.1a\^/phi1.net He was the custodian of the tickets and he should be culpable for any violation of the integrity of the tickets. On this score, this Court agrees with petitioner

that the anomalous entries in the tickets in his custody was sufficient basis for petitioner to lose trust and confidence on private respondent.

In cases of dismissal for loss of trust and confidence, it is not required that there is proof beyond reasonable doubt. It is sufficient that there is sufficient basis for loss of trust and confidence.34

…

In the instant case, this Court holds that there was sufficient basis for petitioner to lose trust and confidence in private respondent so as to justify his termination. It may be pertinent to note that private respondent’s overall conduct is inconsistent with innocence. Private respondent did not wait for the result of petitioner’s investigation and filed a complaint for illegal dismissal despite private respondent’s admission that he was merely placed under preventive suspension. Preventive suspension is allowed under Section 3, Rule XIV of the Implementing Rules of the Labor Code. While it is true that no penalty should be attached to an employee’s recourse to the NLRC, his immediate filing of the case in the light of the discovery of the anomalous tickets only betrays his culpability.

It bears emphasis that private respondent’s position as purser was highly sensitive. As such, he must demonstrate utmost honesty and fidelity to the trust reposed in him. On its part, petitioner was well within its prerogative to require from its purser a high degree of uprightness and probity. Their integrity was impaired by the tampered tickets in his possession. There was sufficient basis for petitioner to lose trust and confidence in private respondent. Having lost its trust and confidence, petitioner cannot be expected to allow private respondent to handle the funds of the corporation. It would be highly unfair to require petitioner to continue employing private respondent in such sensitive post in the absence of full trust and confidence.

The requirement of due process has been fully satisfied in the instant case. Private respondent was served notice for investigation as he himself admitted that he submitted himself to an investigation on May 30, 1994 though he did not signed (sic) the statement as it was self-incriminatory. It is true that when he filed the case, private respondent has not been served notice of termination precisely because he took it upon himself to consider that he was terminated without waiting for the result of the investigation. At

any rate, after petitioner received the summons of the instant case, it subsequently served upon private respondent a notice of termination.35

The petitioner’s motion for reconsideration36 was denied by the Court of Appeals for lack of merit in its Resolution37 dated May 31, 2001.

Aggrieved at the unfortunate turn of events, the petitioner took the present recourse, and now asks the Court to reinstate and uphold the NLRC decision. The petitioner anchors his petition for review on the following grounds:

I

PUBLIC RESPONDENT ACTED IN VIOLATION OF EXISTING LAWS WHEN IT ORDERED THE DISMISSAL OF THE PETITIONER DESPITE HIS LONG YEARS IN THE COMPANY AND THE MINIMAL AMOUNT INVOLVED IN THE CASE.

II

PUBLIC RESPONDENT ACTED IN VIOLATION OF EXISTING LAWS AND JURISPRUDENCE IN ORDERING THE DISMISSAL OF PETITIONER DESPITE THE FACT THAT NO LOSS OR PREJUDICE WAS SUFFERED BY THE COMPANY FROM HIS SUPPOSED INFRACTION.

III

PUBLIC RESPONDENT COMMITTED A SERIOUS LEGAL ERROR IN ORDERING THE DISMISSAL OF THE PETITIONER DESPITE THE FACT THAT OTHER EMPLOYEES COULD HAVE FILLED-UP THE TICKETS IN QUESTION.

IV

PUBLIC RESPONDENT LEGALLY ERRED IN DELETING THE AWARD OF 13th MONTH PAY PREVIOUSLY GRANTED TO PETITIONER.38

The petition is bereft of merit.

The petitioner insists that his dismissal was without factual and legal basis. Echoing the findings of the Labor Arbiter and the NLRC, he maintains that the handwriting on the irregular tickets was not proven to be his. He argues that the reluctance of the respondent to take on his challenge to subject the same tickets to a handwriting expert proved his inculpability.39 Moreover, he points out that the very testimony of the respondent’s Personnel Officer, Mr. Añiga, to the effect that the latter had no idea whose handwriting it was on the questioned tickets, helped clear his innocence.40

Upon the other hand, the respondent counters that there was sufficient basis for its loss of trust and confidence on petitioner; the tampered tickets were found in his possession, and as Chief Purser, he was the custodian of the unissued tickets. The respondent avers that proof beyond reasonable doubt is not necessary to justify loss of trust and confidence, it being sufficient that there is some basis to justify it.41

We agree with the respondent.

Law42 and jurisprudence have long recognized the right of employers to dismiss employees by reason of loss of trust and confidence.43 More so, in the case of supervisors or personnel occupying positions of responsibility, loss of trust justifies termination.44 Loss of confidence as a just cause for termination of employment is premised from the fact that an employee concerned holds a position of trust and confidence. This situation holds where a person is entrusted with confidence on delicate matters, such as the custody, handling, or care and protection of the employer’s property. But, in order to constitute a just cause for dismissal, the act complained of must be "work-related" such as would show the employee concerned to be unfit to continue working for the employer.45

The degree of proof required in labor cases is not as stringent as in other types of cases.46 It must be noted, however, that recent decisions of this Court have distinguished the treatment of managerial employees from that of rank-and-file personnel, insofar as the application of the doctrine of loss of trust and confidence is concerned. Thus, with respect to rank-and-file personnel, loss of trust and confidence as ground for valid dismissal requires proof of involvement in the alleged events in question, and that mere uncorroborated assertions and accusations by the employer will not be sufficient. But as regards a managerial employee, the mere existence of a basis for believing that such employee has breached the trust of his employer

would suffice for his dismissal. Hence, in the case of managerial employees, proof beyond reasonable doubt is not required, it being sufficient that there is some basis for such loss of confidence, such as when the employer has reasonable ground to believe that the employee concerned is responsible for the purported misconduct, and the nature of his participation therein renders him unworthy of the trust and confidence demanded by his position.47

In the present case, the petitioner is not an ordinary rank-and-file employee. The petitioner’s work is of such nature as to require a substantial amount of trust and confidence on the part of the employer. Being the Chief Purser, he occupied a highly sensitive and critical position and may thus be dismissed on the ground of loss of trust and confidence. One of the many duties of the petitioner included the preparation and filling up passage tickets, and indicating the amounts therein before being given to the passengers. More importantly, he handled the personnel funds of the MV Surigao Princess. Clearly, the petitioner’s position involves a high degree of responsibility requiring trust and confidence. The position carried with it the duty to observe proper company procedures in the fulfillment of his job, as it relates closely to the financial interests of the company.

The requirement that there be some basis or reasonable ground to believe that the employee is responsible for the misconduct was sufficiently met in the case at bar. As Chief Purser, the petitioner cannot feign ignorance on the irregularity as he had custody of the tickets when the anomaly was discovered. It would not be amiss to suppose that the petitioner, who would benefit directly or indirectly from the fruits of such fraudulent scheme, was a party to such irregularity. That there were other pursers who could have done the irregularity is of no moment. It bears stressing that the petitioner was the Chief Purser who was tasked to directly supervise each and every purser under him. While, indeed, it was not proved that he was the one who made the irregular entries on the tickets, the fact that he did not lift a finger at all to determine who it was is a sad reflection of his job. In fact, even if the petitioner had no actual and direct participation in the alleged anomalies, his failure to detect any anomaly in the passage tickets amounts to gross negligence and incompetence, which are, likewise, justifiable grounds for his dismissal. Be that as it may, to our mind, it is no longer necessary to prove the petitioner’s direct participation in the irregularity, for what is material is that his actuations were more than sufficient to sow in his employer the seed of mistrust and loss of confidence.

Neither are we impressed with the petitioner’s claim that he was singled out, or that his dismissal was a ploy to obviate payment of his retirement benefits. There is nothing in the records to show that beyond making these allegations, the petitioner did nary of anything to substantiate the same.

Finally, the petitioner theorizes that even assuming that there was evidence to support the charges against him, his dismissal from the service is unwarranted, harsh and is not commensurate to his misdeeds, considering the following: first, his 16 long years of service with the company; second, no loss or damages was suffered by the company since the tickets were unissued; third, he had no previous derogatory record; and, lastly, the amount involved is miniscule.48 Citing jurisprudence,49 he appeals for compassion and requests that he be merely suspended, or at the very least, given separation pay for his length of service.501awphi1.nét

We find no merit in the petitioner’s contention.

We are not unmindful of the foregoing doctrine, but after a careful scrutiny of the cited cases, the Court is convinced that the petitioner’s reliance thereon is misplaced. It must be stressed that in all of the cases cited, the employees involved were all rank-and-file or ordinary workers. As pointed out earlier, the rules on termination of employment, penalties for infractions, insofar as fiduciary employees are concerned, are not necessarily the same as those applicable to the termination of employment of ordinary employees. Employers, generally, are allowed a wider latitude of discretion in terminating the employment of managerial personnel or those of similar rank performing functions which by their nature require the employer’s trust and confidence, than in the case of ordinary rank-and-file employees.51

The fact that the petitioner has worked with the respondent for more than 16 years, if it is to be considered at all, should be taken against him. The infraction that he committed, vis-a-vis his long years of service with the company, reflects a regrettable lack of loyalty. Loyalty that he should have strengthened instead of betrayed. If an employee’s length of service is to be regarded as a justification for moderating the penalty of dismissal, it will actually become a prize for disloyalty, perverting the meaning of social justice and undermining the efforts of labor to cleanse its ranks of all undesirables.52

The argument that the petitioner was not guilty of anything because the tickets were never issued or that he had received nothing from the passengers that he could short-change the company would not mitigate his liability, nor efface the respondent’s loss of trust and confidence in him. Whether or not the respondent was financially prejudiced is immaterial. Also, what matters is not the amount involved, be it paltry or gargantuan; rather the fraudulent scheme in which the petitioner was involved, which constitutes a clear betrayal of trust and confidence. In fact, there are indications that this fraudulent act had been done before, and probably would have continued had it not been discovered.

Moreover, the records show that the petitioner is not as blameless as he claimed to be. In 1979 and 1980, he was suspended by the respondent for several company infractions,53 which the petitioner did not deny. It must also be stressed that when an employee accepts a promotion to a managerial position or to an office requiring full trust and confidence, he gives up some of the rigid guaranties available to an ordinary worker. Infractions which, if committed by others, would be overlooked or condoned or penalties mitigated may be visited with more serious disciplinary action.54

It cannot be over emphasized that there is no substitute for honesty for sensitive positions which call for utmost trust. Fairness dictates that the respondent should not be allowed to continue with the employment of the petitioner who has breached the confidence reposed on him.55 Unlike other just causes for dismissal, trust in an employee, once lost, is difficult, if not impossible, to regain.56 There can be no doubt that the petitioner’s continuance in the extremely sensitive fiduciary position of Chief Purser would be patently inimical to the respondent’s interests. It would be oppressive and unjust to order the respondent to take him back, for the law, in protecting the rights of the employee, authorizes neither oppression nor self-destruction of the employer.57

Anent the petitioner’s request for separation pay, the Court is constrained to deny the same. Well-settled is the rule that separation pay shall be allowed only in those instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character.58 Inasmuch as reason for which the petitioner was validly separated involves his integrity, which is especially required for the position of purser, he is not worthy of compassion as to deserve at least separation pay for his length of service.59

WHEREFORE, the petition is DENIED and the assailed Decision and Resolution of the Court of Appeals are hereby AFFIRMED in toto. No costs.

SO ORDERED.

FIRST DIVISION

JOHN HANCOCK LIFE G.R. No. 169549INSURANCE CORPORATIONand/or MICHAEL PLAXTON,

Petitioners, Present: PUNO, C.J., Chairperson,

CARPIO,- v e r s u s - CORONA,

AZCUNA andLEONARDO-DE CASTRO, JJ.

JOANNA CANTRE DAVIS,

Respondent. Promulgated:September 3, 2009

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

D E C I S I O NCORONA, J.:

Respondent Joanna Cantre Davis was agency administration officer of

petitioner John Hancock Life Insurance Corporation.[1]

On October 18, 2000, Patricia Yuseco, petitioners corporate affairs

manager, discovered that her wallet was missing. She immediately reported

the loss of her credit cards to AIG and BPI Express. To her surprise, she was

informed that Patricia Yuseco had just made substantial purchases using her

credit cards in various stores in the City of Manila. She was also told that a

proposed transaction in Abensons-Robinsons Place was disapproved

because she gave the wrong information upon verification.

Because loss of personal property among its employees had become

rampant in its office, petitioner sought the assistance of the National Bureau

of Investigation (NBI). The NBI, in the course of its investigation, obtained

a security video from Abensons showing the person who used Yusecos

credit cards. Yuseco and other witnesses positively identified the person in

the video as respondent.

Consequently, the NBI and Yuseco filed a complaint for qualified

theft against respondent in the office of the Manila city prosecutor. But

because the affidavits presented by the NBI (identifying respondent as the

culprit) were not properly verified, the city prosecutor dismissed the

complaint due to insufficiency of evidence.

Meanwhile, petitioner placed respondent under preventive suspension

and instructed her to cooperate with its ongoing investigation. Instead of

doing so, however, respondent filed a complaint for illegal

dismissal[2] alleging that petitioner terminated her employment without

cause.

The labor arbiter, in a decision dated May 21, 2002,[3] found that respondent

committed serious misconduct (she was the principal suspect for qualified

theft committed inside petitioners office during work hours). There was a

valid cause for her dismissal. Thus, the complaint was dismissed for lack of

merit.

Respondent appealed[4] the labor arbiters decision to the National Labor

Relations Commission (NLRC) which affirmed the assailed decision on July

31, 2003.[5] Respondent moved for reconsideration but it was denied in a

resolution dated October 30, 2003.[6]

Aggrieved, respondent filed a petition for certiorari[7] in the Court of Appeals

(CA) claiming that the NLRC committed grave abuse of discretion in

affirming the decision of the labor arbiter. She claimed there was no valid

cause for her termination because the city prosecutor of Manila did not find

probable cause for qualified theft against her. The dismissal of the complaint

proved that the charges against her were based on suspicion.

The CA, in its July 4, 2005 decision,[8] found that the labor arbiter and

NLRC merely adopted the findings of the NBI regarding respondents

culpability. Because the affidavits of the witnesses were not verified, they

did not constitute substantial evidence. The labor arbiter and NLRC should

have assessed evidence independently as unsubstantiated suspicions,

accusations and conclusions of employers (did) not provide legal

justification for dismissing an employee. Thus, the CA granted the petition.

Petitioner moved for reconsideration but it was denied.[9] Hence, this

petition.

The issue in this case is whether or not petitioner substantially proved

the presence of valid cause for respondents termination.

Petitioner essentially argues that the ground for an employees dismissal need

only be proven by substantial evidence. Thus, the dropping of charges

against an employee (specially on a technicality such as lack of proper

verification) or his subsequent acquittal does not preclude an employer from

dismissing him due to serious misconduct.

We grant the petition.

Article 282 of the Labor Code provides: Article 282. Termination by Employer. An employer may terminate an employment for any of the following causes:

(a) Serious misconduct or willful disobendience by the employee of the lawful orders of his employer or his representatives in connection with his work;

x x x x x x x x x

(e) Other causes analogous to the foregoing.

Misconduct involves the transgression of some established and

definite rule of action, forbidden act, a dereliction of duty, willful in

character, and implies wrongful intent and not mere error in judgment.[10] For

misconduct to be serious and therefore a valid ground for dismissal, it must

be: 1. of grave and aggravated character and not merely trivial

or unimportant and 2. connected with the work of the employee.[11]

In this case, petitioner dismissed respondent based on the NBIs

finding that the latter stole and used Yusecos credit cards. But since the theft

was not committed against petitioner itself but against one of its employees,

[12] respondents misconduct was not work-related and therefore, she could

not be dismissed for serious misconduct.

Nonetheless, Article 282(e) of the Labor Code talks of other

analogous causes or those which are susceptible of comparison to another in

general or in specific detail.[13] For an employee to be validly dismissed for a

cause analogous to those enumerated in Article 282, the cause must involve

a voluntary and/or willful act or omission of the employee.[14]

A cause analogous to serious misconduct is a voluntary and/or willful

act or omission attesting to an employees moral depravity.[15] Theft

committed by an employee against a person other than his employer, if

proven by substantial evidence, is a cause analogous to serious misconduct.[16]

Did petitioner substantially prove the existence of valid cause for

respondents separation? Yes. The labor arbiter and the NLRC relied not only

on the affidavits of the NBIs witnesses but also on that of respondent. They

likewise considered petitioners own investigative findings. Clearly, they did

not merely adopt the findings of the NBI but independently assessed

evidence presented by the parties. Their conclusion (that there was valid

cause for respondents separation from employment) was therefore supported

by substantial evidence.

All things considered, petitioner validly dismissed respondent for

cause analogous to serious misconduct.

WHEREFORE, the petition is hereby GRANTED. The July 4, 2005

decision and September 1, 2005 resolution of the Court of Appeals in CA-

G.R. SP No. 81515 are REVERSED and SET ASIDE.

The July 31, 2003 decision and October 30, 2003 resolution of the

National Labor Relations Commission in NLRC CA No. 032865-02

affirming the May 21, 2002 decision of the labor arbiter are REINSTATED.

SO ORDERED.


Manila

FIRST DIVISION

G.R. No. 167286 February 5, 2014

INTERNATIONAL SCHOOL MANILA AND/OR BRIAN McCAULEY, Petitioners, vs.INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS (ISAE) AND MEMBERS REPRESENTED BY RAQUEL DAVID CHING, PRESIDENT, EVANGELINE SANTOS, JOSELYN RUCIO AND METHELYN FILLER,Respondents.

D E C I S I O N

LEONARDO-DE CASTRO, J.:

In this petition for review on certiorari,1 petitioners International School Manila (hereafter the School) and Brian McCauley seek to set aside the Decision2 dated November 17, 2004 and the Resolution3 dated February 23, 2005 of the Court of Appeals in CA-G.R. SP No. 79031. The decision of the appellate court upheld the illegality of respondent Evangeline Santos's

http://www.lawphil.net/judjuris/juri2014/feb2014/gr_167286_2014.html#fnt3



termination from employment in the School, while the assailed resolution denied the petitioners' motion for reconsideration.

The complaint filed before the Labor Arbiter involved three individual complainants, aside from the International School Alliance of Educators (ISAE).4 However, the instant petition concerns only the case of Santos as the causes of action of the other complainants, Joselyn Rucio and Methelyn Filler, had since been dismissed by the Labor Arbiter and the Court of Appeals, respectively.

The Material Facts

Santos was first hired by the School in 1978 as a full-time Spanish language teacher. In April 1992, Santos filed for and was granted a leave of absence for the school year 1992-1993. She came back from her leave of absence sometime in August 1993.5 Upon Santos’s return to the School, only one class of Spanish was available for her to teach. Thus, for the school year 1993-1994, Santos agreed to teach one class of Spanish and four other classes of Filipino that were left behind by a retired teacher.6

Since it was Santos’s first time to teach Filipino, the School’s high school administrators observed the way she conducted her classes. The results of the observations on her classes were summarized in Classroom Standards Evaluation Forms accomplished by the designated observers. In accordance with said forms, Santos was evaluated in the areas of Planning, the Teaching Act, Climate, Management and Communication.

On October 26, 1993, Dale Hill, then Assistant Principal, observed Santos’s Filipino II class. In the Classroom Standards Evaluation Form,7 Hill remarked that the lesson plan that Santos provided "was written with little detail given." Santos was also noted as needing improvement in the following criteria: (1) uses effective questioning techniques; (2) is punctual and time efficient; (3) states and enforces academic and classroom behavior expectations in a positive manner; and (4) reinforces appropriate behavior. Hill also stated that Santos’s management of the class left much to be desired. Hill added that "[t]he beginning and the end of the class were poorly structured with students both coming late and leaving early with no apparent expectations to the contrary."

On January 17, 1994, Santos submitted to the Personnel Department of the School a memorandum/form,8 which stated her assignment preference for






the school year 1994-1995. She indicated therein that she planned to return to the School staff for the said school year and she did not prefer a change of teaching assignment.

On March 11, 1994, Hill observed Santos’s Spanish I class. In the Classroom Standards Evaluation Form9 he accomplished, Hill stated that Santos needed improvement on the following areas: (1) uses effective questioning techniques; (2) uses appropriate praise; (3) deals with students in a fair and consistent manner; (4) is punctual and time efficient; (5) states and enforces academic and classroom behavior expectations in a positive manner; (6) reinforces appropriate behavior; (7) organizes the classroom to enhance learning and minimize disruption; and (8) states expectations and ideas clearly.

On May 30, 1994, Hill completed a Summary Evaluation Form10 of Santos’s performance. Hill stated, among others, that Santos should improve on managing the students’ punctuality and time efficiency. Hill added that instructions were not well stated and presented to the class. He said that Santos needed to identify and state positively the expectations she has for the students. In a Professional Standards Form11 accomplished on the same date, Santos was found to be in need of improvement in these areas: (1) has in-depth knowledge of the appropriate subject matter; and (2) clearly defines consequences of inappropriate behavior and is consistent in follow through.

In the meantime, for the school year 1994-1995, Santos agreed to teach five classes of Filipino.12 On November 7, 1994, Santos also informed the School of her assignment preference for the incoming school year 1995-1996. In a memorandum/form13 submitted to the Personnel Department of the School, Santos indicated that she did not prefer a change of teaching assignment. In the school year 1995-1996, Santos again taught five classes of Filipino.14

On February 1, 1996, then Assistant Principal Peter Loy observed a Filipino IBS1 class of Santos. In the Classroom Standards Evaluation Form15 he completed thereafter, Loy noted that Santos needed improvement on the following aspects: (1) has daily lesson plans written out; (2) incorporates a variety of activities, resources and teaching strategies into the lesson; (3) plans for the entire instructional period; (4) provides an instructional sequence which is clear and logical, leading to stated objectives; (5) uses effective questioning techniques; (6) develops rapport with and between students by creating a supportive environment; (7) is punctual and time








efficient; and (8) reinforces appropriate behavior. Loy also observed that Santos did not meet the minimum standards in these areas of concern: (1) has clearly defined lesson objectives that tie into unit objectives as well as into the school curriculum; and (2) states and enforces academic and classroom behavior expectations in a positive manner.

On February 2, 1996, Loy wrote a memo16 to Santos, calling her attention to the deficiencies in her planning, to wit:

Good teaching is not something that happens spontaneously all the time. Good teaching is the result, in part, of hard work and planning. Clearly the planning for your classes, as indicated by the absence of detailed lesson plans, has resulted in below standard instruction. This is simply not acceptable. A review of your planning book shows less-than-skeletal entries with no detail or unification of direction of syllabus. You said that you had other written plans, but these were not visible nor used for reference during class. Relying solely on memory is not always the best approach. Although you are a veteran teacher with three decades of experience, you have been teaching Filipino for only two years during which time there have been important changes in the International Bacc[a]laureate structure. It is crucial that your plans, both medium and long range, be well constructed and written and then utilized. (Emphasis ours.)

In a memo17 dated March 25, 1996, Loy commented on the outline of goals and activities of Santos as follows:

1. You do not address any of the comments made in the Classroom Standards Evaluation Form, nor how you plan to address those concerns. At present, your outline of activities for this semester is sketchy. That is, your general lesson topics are listed, but without any daily substance or sequence. One example, the area of planning, along with objectives and activities, is an area of major concern for us. It is vital to your growth plan that you submit your detailed lesson plans to Mrs. Villajuan daily and discuss these with her before the lesson and after to ensure direction and implementation. Thus, a daily meeting with your department chair is required.

On March 29, 1996, Loy sent another memo18 to Santos, which required her to undergo the remediation phase19of the evaluation process through a Professional Growth Plan. Thus:





Given that planning is one of the areas of major concern, it is all the more disturbing that you have shown virtually no written planning for this quarter.

For the record, please note that we met on February 2, 1996, the day after I observed your class for the second time this school year. At that meeting, you were given a draft of my comments and concerns, along with a two[-] page memo. Since that date, I have received a mere outline of your fourth quarter syllabus which contains virtually no specific plan of activity, action, or means of addressing the concerns. My memo of March 25 reiterates some of the concerns, while elaborating on the shortcomings of the outline you submitted that same day.

x x x x

The impression you are creating is that planning for your classes is not taking place, nor is there any immediate movement towards improvement. This lack of attention on your part only serves to heighten our concern. Please find attached, therefore, my draft of your Growth Plan.

The March 29, 1996 Professional Growth Plan20 of Santos, which she signed with then Principal Jeffrey Hammett, Assistant Principal Peter Loy, and Modern Languages Department Chair Normelita Villajuan, reads:

Goals:

Improve classroom instruction through the implementation of the areas marked as "does not meet minimum standards," "needs improvement," or "not observed" in classroom observations from October 1993 through February 1996, as well as concerns noted in your Summary Evaluation of May 30, 1994. These areas include PLANNING, THE TEACHING ACT, CLIMATE, MANAGEMENT as specified and dated below.

Initial focus for the first part of this GROWTH PLAN, namely the fourth quarter of SY 1995-96 will be on PLANNING. By focusing on planning first, other issues relative to climate and management may also be assisted. This Growth Plan will be reviewed and revised as necessary for SY 1996-97.

Actions:

1. Write daily lesson plans (2/96)


2. Have clearly defined lesson objectives that tie into unit objectives as well as into the school curriculum (2/96)

3. Incorporate a variety of activities, resources and teaching strategies into the lesson (2/96)

4. Plan for the entire instructional period (2/96)

5. Provide an instructional sequence which is clear and logical, leading to stated objectives (2/96)

6. Use effective questioning techniques (2/96, 3/94, 10/93)

7. Provide sufficient guided practice and modeling to ensure success, particularly homework assignments (11/95)

8. Develop rapport with and between students by creating a supportive environment (2/96, 11/95)

9. Be punctual and time efficient (2/96, 3/94, 10/93)

10. State and enforce academic and classroom behavior expectations in a positive manner (2/96, 3/94, 10/93)

11. Reinforce appropriate behavior (2/96, 3/94, 10/93)

12. Organize the classroom to enhance learning and minimize disruption (11/95, 3/94)

In the memo21 to Santos dated April 18, 1996, Loy commented that since the implementation of Santos’s Professional Growth Plan, it was observed that there was noticeable improvement in the writing of her lesson plans and the same had a clearer sense of direction for her classes.

Likewise, in the memo22 dated April 26, 1996, Loy noted that Santos was observed to be taking steps to address the concerns in her Professional Growth Plan. In the succeeding memos to Santos dated May 10, 199623 and May 16, 1996,24 Loy expressed his gladness at the progress of Santos and the positive effect of the Professional Growth Plan on her performance.





Accordingly, in a memo25 dated May 24, 1996, Loy advised Santos that her Professional Growth Plan had been revised as a result of her efforts and improvements.

The May 24, 1996 Revised Professional Growth Plan26 of Santos states:

Goals:

Improve classroom instruction through the implementation of the areas marked as "does not meet minimum standards," "needs improvement," or "not observed" in classroom observations from October 1993 through February 1996, as well as concerns noted in your Summary Evaluation of May 30, 1994. These areas include PLANNING, THE TEACHING ACT, CLIMATE, MANAGEMENT as specified and dated below.

Initial focus for the first part of this GROWTH PLAN was on PLANNING. Ms. Santos has shown improvement in areas #1-4 under Short Term Planning during the fourth quarter of SY 1995-1996. Having focused on planning first, other issues relative to climate and management may also have assisted and can now be directly addressed in the 1996-97 school year.

Actions:

I. Continue the following, which was an area of focus in SY 1995-96:

A. Short Term Planning

1. Write daily lesson plans (2/96)

2. Have clearly defined lesson objectives that tie into unit objectives as well as into the school curriculum (2/96)

3. Incorporate a variety of activities, resources and teaching strategies into the lesson (2/96)

4. Plan for the entire instructional period (2/96)

II. Focus on the following areas in need of improvement:



(Note: these items have been grouped by topic area in this revised growth plan and therefore re-numbered from the listing in the original growth plan)

B. Medium and Long Range Planning

5. Provide an instructional sequence which is clear and logical, leading to stated objectives (2/96)

6. Be punctual and time efficient (2/96, 3/94, 10/93)

C. Classroom Climate and Management

7. Develop rapport with and between students by creating a supportive environment (2/96, 11/95)

8. State and enforce academic and classroom behavior expectations in a positive manner (2/96, 3/94, 10/93)

9. Reinforce appropriate behavior (2/96, 3/94, 10/93)

10. Organize the classroom to enhance learning and minimize disruption (11/95, 3/94)

D. Teaching Techniques

11. Use effective questioning techniques (2/96, 3/94, 10/93)

12. Provide sufficient guided practice and modeling to ensure success, particularly homework assignments (11/95)

For the school year 1996-1997, Santos again taught five classes of Filipino.27

In a memo28 dated September 6, 1996, Loy reminded Santos that, to support her planning and instruction, they agreed, among others, that she "would keep detailed daily lesson plans, medium and long range plans and syllabi, and copies of instructional materials used." Subsequently, in a memo29 dated September 19, 1996, Loy noted that there seemed to be progress as regards




the instruction that Santos would keep detailed lesson plans. Santos was then advised to continue and improve her focus on medium and long range plans.

Thereafter, it seemed that the positive reviews of Santos’s performance were gradually replaced by renewed concerns on her planning. In a memo30 dated October 4, 1996, Loy stated that:

[Santos] submitted a plan for the semester using a form from Anne Marie that will be used by the department to review the curriculum. A review of the plan submitted by [Santos] indicates that the plan is vague; it needs additional thought and revision with regards to detail and timelines. The vagueness of this plan is of concern because proper planning is one of the key areas in Santos’s] Professional Growth Plan. Proper planning was also noted in Mr. Hammett’s observation comments x x x. [Santos] needs to revise this semestral plan for our next meeting. (Emphasis ours.)

In the following memo31 dated October 18, 1996, Loy noted that Santos revised her plan for the semester, but the same could use another revision. Santos was directed to add more details to her plan.

On October 29, 1996, Loy observed the Conversational Filipino class of Santos. In the Classroom Standards Evaluation Form32 he accomplished for that day, Loy observed that Santos needed improvement on the following areas: (1) has daily lesson plans written out; (2) has clearly defined lesson objectives that tie into unit objectives as well as into the school curriculum; and (3) reinforces appropriate behavior. Loy also remarked to Santos that:

[T]here is still noted deficiency in the planning of your classes overall. Although your lesson plans for Conversational Filipino and Filipino III are better organized than previously, they are still vague, lack detail and are not clear as to how they fit into a well-sequenced unit. They are still stand-alone lessons. In addition, your last written lesson plan for Filipino I was for October 24 -- two class meetings ago. For Filipino A IBS2, there was only one written lesson plan -- for October 17, the first day of the quarter. (Emphases ours.)

Thereafter, Loy’s memo33 dated November 14, 1996 sternly told Santos the following words:

Vangie, you stated that you had not revised your lesson plans, yet there was no reason. In light of my observation of your class on October 29 which





followed, planning remains a major concern. I voiced concern that, given the draft of my October 29 observation which had three notations which did not meet expectations, you had not responded to my request for a follow-up conference. x x x

Vangie, you need to plan thematic units and daily lessons for each class which are well sequenced and relevant to the unit. This is one of the major areas of concern in your Professional Growth Plan. For you not to address this issue from our previous meetings, and to have a planning book that does not reflect proper planning, does not address the concerns of that Growth Plan; instead the concerns not only persist, they become more problematic. Vangie, to quote you, you "play it by ear." Flexibility only works when you are flexible within a clear plan. Otherwise, "playing it by ear" is synonymous with "winging it day-by-day." You must plan, and you need to begin your second semester outlines now. To this end, I am asking that you present a draft of your second semester syllabi and plans at our next meeting."

The memo34 of Loy on November 15, 1996, further stated:

Thank you for coming to speak with me as follow-up to our meeting yesterday and to share your impressions. You stated that you feel I am being too hard on you. However, when we reviewed your lesson planning book which you brought with you we noted the following:

- For your Filipino 1 classes, there were lesson plans for November 6, 7 and 13, but no lesson plans for November 11 and 12.

- For your Conversational Filipino and Filipino 3 classes, there were at least three "lesson plans" with no activities listed.

- For your Filipino A1/S2, you had gone back to write, using a pen with a slightly different colored ink to fill in parts of the lesson plan which I noted as deficient in my observation report of October 29.

- There are no lesson plans for any class beyond today’s date.

Clearly, this indicates a lack of planning. With this as your planning guide, I cannot agree that I am "being too hard on you." As I have stated, your daily planning is often vague at best; your long term planning does not exist in


writing. A review of your planning book today only supports this. (Emphases ours.)

In the memo35 dated December 6, 1996, Loy disclosed to Santos that:

Concern was expressed by both Mr. Hammett and myself that, after eight months working with your Professional Growth Plan, we are still focused on but one of the four major areas of concern. Still to be addressed, following Planning, are concerns under the Teaching Act, Climate and Management. The third quarter is a crucial one for you, Vangie. We need to move beyond the initial concern in the Growth Plan to work in the other areas as well.

On January 22, 1997, Loy observed the Filipino 3 class of Santos. The Classroom Standards Evaluation Form36he accomplished stated that Santos still needed improvement on the following aspects: (1) has daily lesson plans written out; (2) incorporates a variety of activities, resources and teaching strategies into the lesson; (3) provides an instructional sequence which is clear and logical, leading to stated objectives; and (4) states and enforces academic and classroom behavior expectations in a positive manner. Loy also remarked that Santos’s "lesson plans do not give a clear sense of direction towards a specified goal other than to reach the end of the chapter and the book."

In his memo37 dated January 24, 1997, Loy made known his apparent frustration at Santos’s performance in this manner:

As I said today, Vangie, I find myself continuing to use the phrases "vague" and "lacking specifics" in reviewing your daily, unit, or semestral plans. Moreover, suggestions and contributions made in our meetings to address those concerns do not seem to affect your planning. In your lesson plans, your objectives are basic and elementary; your activities, vacuous. Objectives such as "enrich vocabulary," "identify the theme of the chapter," and "participate actively in discussion" (for a class of 7) are not fitting of a high school lesson plan, much less a pre-International Baccalaureate course. Your activities do not specify the format, criteria, analytical features, or relationship to the day’s/course’s objectives.

While you claim that you are doing much more than what you have in your lesson plans, my contention is then, that the plans do not accurately reflect the lesson. As it is, I entered a question mark next to "plans for the entire instructional period" because your plan gave so little direction about what




you were planning that day. If you know what the specific objectives are, based on assessment goals, and you plan to include an activity as part of the lesson, include it in the plan and be specific about what it is, what the criteria are, and why it is important. (Emphasis ours.)

Since then, Loy continued to voice his concerns on the planning process of Santos. He noted on his memo38dated February 7, 1997 that the objectives in Santos’s daily lesson plans were very generic and the activities listed were elementary and very basic. Judging from the lesson plans, Loy concluded that Santos’s planning is still substandard. On February 28, 1997, Loy sent another memo39 to Santos, which informed her in no uncertain terms that the growth they see was insufficient. Other than the substandard lessons, Loy commented that there was virtually no written work nor adequate direction in her syllabus. Loy also warned her that "continuance in this manner without marked improvement cannot be tolerated."

In a memo40 dated March 14, 1997, Loy called Santos’s attention about a problem they discovered in one of her classes. Loy said:

With regards to IBS2 Filipino, three of the eight students did not submit world literature papers as required by the International Baccalaureate syllabus. Why? You have had these students for the past two years and know the syllabus of the course. This required component should have been part of the planning of the course throughout. Although these students are not IB diploma candidates, the paper should have been drafted, revised, reviewed and polished throughout the course of the past two years. As you admitted, you did not know until the day the papers were due that these students were not submitting a paper.

With regards to your lesson planning, there is still a marked absence of writing activities in all your classes. x x x

Vangie, I hear that you feel you are doing a good job. What worries me, then, is your perception of how problematic this situation is. You are now one year into a Professional Growth Plan with incremental movement in just one of several areas of concern. I am disappointed that you believe that I do not want to have you continue as a member of our faculty. I have worked with you for the past twelve months on this growth plan, meeting with you no fewer [than] fifteen times since August 1996. Throughout this time, I have offered observations on the areas of deficiency and suggestions for




ways to improve. Ms. Butt and Mr. Hammett have also been supportive of your stated desire to improve. We want you to be a successful teacher in the area you teach for the sake of our students. If, as you have confided, Filipino is not the language you would choose to teach, what are the options? Mr. Hammett said again for the record that he did try to schedule a section of Spanish this year, but was unable to do so. That situation may also exist next year as we already have four other teachers teaching Spanish. Knowing all this, it may be difficult to consider your placement next year.

I look forward to continued discussions with you, Vangie, as we search for ways to assist your improvement toward success as a teacher. I think we all realize, however, that we are running out of time.

On April 2, 1997, Jeffrey Hammett sent a memo41 to Santos, likewise expressing his disappointment with the latter’s performance. Hammett stated:

Vangie, we have been focusing on your planning for just over one year now, and this is just the first of four areas we wanted to address in your growth plan of last March. We have met with you more than thirty times this past year to check-on, discuss, and help improve your planning processes. Your planning has become our number one concern. Still, as I look at the three-day plan you presented me today for this pre-IB Filipino 3 class (see attached) – note that this "plan" covers last Monday (31 March), today (2 April), and this coming Friday (4 April) - this one-page planning sheet is less than half complete. In fact, the "objectives" section contains nothing more than an unfinished sentence. You list no activities, no student outcomes. What’s more, I found nothing but blank pages for any future class sessions.

In all honesty, Vangie, this illustrates to me even more explicitly than ever before how justified we are in focusing our concerns on your planning. You cannot keep the daily objectives, activities, and expected student outcomes only "in your head" and "wing it" as you did today. Frankly speaking, you know how concerned we are with your planning, and you also know that you and I have had informal conversations relative to your continued employment with us. I would have hoped and expected, therefore, to see the complete plans for this quarter in your folder, or at the very least, a thoroughly planned unit on Noli Me Tangere, the material being presented


and covered this week. Your "plan" shows me very little, and what I do see is completely unacceptable!

For me, the reality of this unacceptable lesson plan only reinforces the concerns being expressed by Mr. Loy. You do not plan in any written and complete way for the success of your students, and this lack of planning is now, has been, and always will be unacceptable in our school and in our profession. (Emphasis ours.)

Subsequently, on April 10, 1997, McCauley sent a letter42 to Santos directing her to explain in writing why her employment from the School should not be terminated because of her failure to meet the criteria for improvement set out in her Professional Growth Plan and her substandard performance as a teacher.

In her reply letter43 dated April 14, 1997, Santos blamed the School for her predicament. She said that, in the last few years, she had been forced to teach Filipino, a subject which she had no preparation for. The School allegedly made this happen against her objections and despite the fact that she had no training in Filipino linguistics and literature. Santos also asked for clarification on why she was being asked to explain and the reasons therefor.

On April 21, 1997, McCauley wrote a letter44 to Santos informing her that the School considered her letter dated April 14, 1997 as her explanation. The School also set a formal administrative investigation on April 23, 1997 in order to further clarify matters and accord Santos the opportunity to explain her side. Santos was given the choice of bringing a representative or counsel to assist her.

According to the Minutes of the Administrative Investigation45 conducted on April 23, 1997, Santos was accompanied by Raquel David Ching, the President of the ISAE. Ching first sought clarification as regards the specific charge against Santos. McCauley referred to the letter dated April 10, 1997, which asked Santos to explain why her employment should not be terminated by reason of her performance that fell below the acceptable standards of the School. The charge against Santos was gross inefficiency or negligence in the performance of her assigned work. After the parties made known their positions, the investigating committee informed Santos and





Ching that they would consider the views presented and they would advise Santos of the School’s action on her case.

In a letter46 dated May 29, 1997, McCauley informed Santos that he was adopting the recommendation of the investigation committee that Santos’s employment from the School cannot be continued. According to McCauley, the committee found that the numerous consultations of Santos with her supervisors for the last three school years did not result in any appreciable improvement on her part. McCauley pointed out that Santos categorically indicated that she preferred to continue teaching Filipino for the school years 1994-1995 and 1995-1996. Given that Santos was duly licensed to teach Filipino, McCauley stated that the committee could not accept her claim that she was ill-equipped to teach the language. McCauley then told Santos that her employment with the School would cease effective June 7, 1997.

On June 26, 1997, the ISAE filed a complaint47 against the petitioners, alleging the following causes of action: (1) unfair labor practice; (2) illegal dismissal; (3) moral and exemplary damages; (4) violation and refusal to comply with grievance procedures in the CBA; and (5) unresolved grievance matter. The reliefs prayed for included reinstatement and the payment of backwages and damages. The complaint was docketed as NLRC-NCR Case No. 00-06-04491-97. The complaint was subsequently amended48 to include as complainants Evangeline Santos, Joselyn Rucio and Methelyn Filler.49

The Ruling of the Labor Arbiter

On April 3, 2001, the Labor Arbiter rendered a Decision50 finding, among others, that Santos was illegally terminated from her employment. The relevant portions of the ruling state that:

The law is clear that for an employee to be validly dismissed, it must be shown that the inefficiency or incompetency of the employee must be "gross or serious" and "habitual." What is gathered from the submission made by the respondent is the fact that complainant Santos does not have the skill and competency to teach Filipino as she was observed by her superior and peers to be lacking in "preparation" of her lesson plan; she was not in control of her classes as observed since students come in late; and, she has not communicated well with her students what the expectations and objectives of the class were.






Based on the above arguments, it is this Office’s finding, that if she was measured against them, the complainant could not be considered as grossly or seriously inefficient or incompetent and therefore her dismissal is unwarranted. It is unwarranted since her being caught once for not preparing her lesson plan for the day is not and could not be, by itself as "gross or serious" as defined by law. Likewise, the observations made by her superior and peers could not be the basis for concluding or finding that she is grossly incompetent or inefficient.

The attendance of students to a greater extent is outside the control of the teacher. To hold her grossly incompetent on account of the late coming of students under her class is erroneous application of the intent of the law.

x x x x

This Office observed first hand (sic) the strained relations that developed and at times consumed the parties, making reinstatement a not prudent disposition of the case, for it will only inflame so far the subdued and subsiding emotions.

This Office was witness to the long and emotional and loud arguments that transpire every hearing. This Office had to step in most of the times to control flying tempers and emotions. Thus, in lieu of reinstatement, the respondent is directed to pay complainant separation pay equivalent to one-half (1/2) month salary for every year of service.

Full backwages will not be awarded as well considering the fact that complainant is not without fault. Partly, she contributed to the problem she found herself in only that, it is not "serious" or "gross" to make a finding of legality of her termination. She is, therefore, awarded a limited backwages not to exceed a year and a half in backwages as a form of penalty.

x x x x

WHEREFORE, judgment is hereby rendered as follows:

1. The complaint for unfair labor practice is dismissed for lack of merit;

2. The complaint of Rucio is dismissed for lack of merit;

3. The dismissal of Santos is declared unwarranted, and in view thereof, she is ordered paid separation pay in lieu of reinstatement in the amount of Seven Hundred Fifty-Six Thousand Five Hundred Thirty-Six and 55/100 (P756,536.55) Pesos, and, she is likewise ordered [paid] a limited backwages equivalent to one and a half (1 1/2) year in the amount of One Million One Hundred Fifty-Two Thousand Eight Hundred Seventeen and 60/100 (P1,152,817.60) Pesos (please see computation Annex "A");

4. Ms. Filler is declared a regular employee. She is ordered paid backwages and benefits due a regular employee covering the period from July 25, 1994 to the time of the rendition of this decision in the total amount of One Million Thirty[-]Three Thousand Three Hundred Seventy Five and 80/100 (P1,033,375.80) Pesos (please see computation Annex "A").

All other claims are denied for lack of merit.51 (Emphasis ours.)

Both parties appealed the Labor Arbiter’s Decision to the National Labor Relations Commission (NLRC).52 The appeals were docketed as NLRC CA No. 028558-01.

The Judgment of the NLRC

On February 28, 2003, the NLRC issued a Resolution,53 which affirmed the decision of the Labor Arbiter in this wise:

WHEREFORE, premises considered, the appeal is dismissed for lack of merit and the Decision appealed from is affirmed en toto.

The NLRC upheld the ruling of the Labor Arbiter that Santos’s dismissal from employment was not warranted given that "her being caught once for not preparing her lesson plan for the day is not and could not be, by itself, as gross or serious as defined by law. Likewise, the observations made by her superior and peers could not be the basis for concluding or finding that she is grossly incompetent or inefficient."54 The NLRC found the conclusion of the Labor Arbiter to be supported by substantial evidence.

Petitioners moved for a reconsideration55 of the NLRC Resolution but the same was denied in a Resolution56dated June 30, 2003. Petitioners then filed a petition for certiorari57 before the Court of Appeals.








The Decision of the Court of Appeals

On November 17, 2004, the Court of Appeals promulgated the assailed decision the decretal portion of which provides:

UPON THE VIEW WE TAKE OF THIS CASE, THUS, the instant petition is PARTLY GRANTED. The Resolution of public respondent National Labor Relations Commission dated February 28, 2003, in NLRC CA No. 028558-01, and its Resolution of June 30, 2003 on the partial motion for reconsideration are AFFIRMED subject to the MODIFICATION that the award to private respondent METHELYN FILLER of backwages and benefits due a regular employee from July 25, 1994 until the rendition of the Labor Arbiter’s decision on April 3, 2001 is hereby DELETED. Without costs.58

Brushing aside the argument that Santos did not exercise slight care or diligence in the performance of her duties, the Court of Appeals pointed out that Santos did exert efforts to improve her performance, which led to a revision of her original Professional Growth Plan. Echoing the findings of the Labor Arbiter and the NLRC, the Court of Appeals agreed that Santos could not be said to be habitually neglectful of her duties after she was "caught once with an inadequately prepared lesson plan in 1997."59 Although the Court of Appeals acknowledged that Santos’s performance as a teacher was not at all satisfactory, it ruled that the same did not warrant the penalty of dismissal. To the appellate court, a penalty of suspension from work was more equitable under the circumstances. As a matter of right, Santos was adjudged to be entitled to reinstatement and backwages. However, given the deep antagonism between her and the petitioners, the Court of Appeals ordered the award of separation pay in lieu of reinstatement.

Both parties filed their respective motions for reconsideration60 of the above decision of the Court of Appeals, but the same were denied in the assailed Resolution dated February 23, 2005.

The Petitioners’ Arguments

In challenging the assailed decision of the appellate court, petitioners raise for our consideration the following issues:




a) WHETHER OR NOT THE COURT OF APPEALS ERRED IN FINDING THAT RESPONDENT EVANGELINE SANTOS WAS ILLEGALLY DISMISSED; and

b) WHETHER OR NOT RESPONDENT EVANGELINE SANTOS IS ENTITLED TO REINSTATEMENT OR SEPARATION PAY WITH BACKWAGES.61

Petitioners argue that Santos’s repeated failure to maintain the standards of quality teaching expected from every faculty member of the School illustrates her gross and habitual neglect of her duties, which is a just cause for dismissal under Article 282 of the Labor Code. Petitioners lament the fact that the Court of Appeals allegedly substituted its own judgment with the reasonable standards of teaching set by the School. Petitioners point out that there was neither a finding that such standards were arbitrary, nor was the evaluation process biased or that the School or any of its personnel was motivated by ill will against Santos. Petitioners stress that Santos was not dismissed solely on the ground that she failed to prepare her lesson plan for one particular day. On the contrary, petitioners assert that Santos was dismissed from employment because she repeatedly failed to meet the standards required by the school from 1993 to 1997. According to petitioners, this repeated failure, especially after the one-year remediation period wherein school administrators met with Santos no less than thirty (30) times to check on her, clarify and discuss her planning process, and help her improve her performance, was clearly overlooked by the Court of Appeals.

Despite the application of the Professional Growth Plan, petitioners insist that Santos was still repeatedly found to be lacking in preparation and planning. Petitioners claim that Santos’s failure to improve, most especially in the planning area of her teaching, justified the School’s decision to terminate her services. Otherwise, to retain her in the roster of faculty would be tantamount to sacrificing the welfare of the School’s very own students. At the very least, petitioners aver that Santos was guilty of gross inefficiency in the performance of her teaching duties. Petitioners further state that the School observed procedural due process before dismissing Santos. Since her employment was lawfully terminated, petitioners posit that an award of separation pay with backwages is not proper.

The Respondents’ Arguments


Respondents argue that the Court cannot examine anymore the factual findings of an administrative tribunal, such as the Labor Arbiter, which has already gained expertise in its field. This holds truer if the factual findings had been affirmed upon review by the NLRC and the Court of Appeals. According to the respondents, it cannot be said that Santos did not exercise slight care or diligence in the performance of her duties as she did exert efforts to make the necessary adjustments. That Santos was shown to have inadequately prepared a lesson plan in 1997 did not necessarily show that she was habitually neglectful of her duties. For the said reasons, respondents also rejected the charge of gross inefficiency. Respondents aver that the administrative superiors of Santos found that she had greatly improved on her preparations and she was never found wanting in the other areas of her teaching. Respondents also stress that petitioners only brought up the claim of gross inefficiency in the petition for certiorari before the Court of Appeals. Although respondents admit that Santos did indeed perform her duties unsatisfactorily, they argue that the same does not warrant dismissal. Considering that she had worked with the School for 17 long years with no known previous bad record, they allege that the ends of social and compassionate justice would be better served if she was merely suspended from work rather than terminated.

The Judgment of the Court

The Court finds the appeal meritorious.

Generally, on appeal, the findings of fact of an administrative agency like the NLRC are accorded not only respect but also finality if the findings are supported by substantial evidence. Such rule, however, is by no means absolute. As held in San Miguel Corporation v. Aballa,62 "when the findings of fact of the labor arbiter and the NLRC are not supported by substantial evidence or their judgment was based on a misapprehension of facts, the appellate court may make an independent evaluation of the facts of the case." The Court finds the said exceptions extant in this case.

In Janssen Pharmaceutica v. Silayro,63 we stated that "[t]o constitute a valid dismissal from employment, two requisites must concur: (1) the dismissal must be for any of the causes provided in Article 282 of the Labor Code; and, (2) the employee must be given an opportunity to be heard and to defend himself."



In the collective bargaining agreement (CBA) between the School and ISAE for the years 1992-1995, Section 13 of Appendix A thereof expressly states that "[t]ermination of employment shall be in accordance with the laws of the Philippines as presented in the LABOR CODE (Book VI, Art. 282)."64

Article 28265 of the Labor Code provides:

ART. 282. Termination by employer. – An employer may terminate an employment for any of the following causes:

(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his 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 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.

In all cases involving termination of employment, the burden of proving the existence of the above just causes rests upon the employer.66 The quantum of proof required in these cases is substantial evidence, that is, such relevant evidence that a reasonable mind might accept as adequate to support a conclusion, even if other equally reasonable minds might conceivably opine otherwise.67

The Court had occasion to explain in Century Iron Works, Inc. v. Bañas68 the concept of gross and habitual neglect of duties. Thus:

Gross negligence connotes want or absence of or failure to exercise slight care or diligence, or the entire absence of care. It evinces a thoughtless disregard of consequences without exerting any effort to avoid them. Fraud and willful neglect of duties imply bad faith of the employee in failing to perform his job, to the detriment of the employer and the latter’s business. Habitual neglect, on the other hand, implies repeated failure to perform





one’s duties for a period of time, depending upon the circumstances. (Citations omitted, emphasis supplied.)

We also reiterated in Union Motor Corporation v. National Labor Relations Commission69 that in dismissing an employee for gross and habitual neglect of duties, the negligence should not merely be gross, it should also be habitual.

On gross inefficiency, we ruled in Lim v. National Labor Relations Commission70 that:

[G]ross inefficiency falls within the purview of "other causes analogous to the foregoing," and constitutes, therefore, just cause to terminate an employee under Article 282 of the Labor Code. One is analogous to another if it is susceptible of comparison with the latter either in general or in some specific detail; or has a close relationship with the latter. "Gross inefficiency" is closely related to "gross neglect," for both involve specific acts of omission on the part of the employee resulting in damage to the employer or to his business. In Buiser vs. Leogardo, this Court ruled that failure to observe prescribed standards of work, or to fulfill reasonable work assignments due to inefficiency may constitute just cause for dismissal. (Emphases ours; citations omitted.)

Viewed in light of the above doctrines, the Court is not convinced that the actuations of Santos complained of by the petitioners constituted gross and habitual neglect of her duties.

From the very beginning of her tenure as a teacher of the Filipino language, the recurring problem observed of Santos was that her lesson plans lacked details and coherent correlation to each other, to the course, and to the curriculum, which in turn affected how lessons and instructions were conveyed to the students.71 After Santos was placed in a Professional Growth Plan on March 29, 1996, petitioners observed a noticeable improvement on her part. In his memo72 dated May 24, 1996, then Assistant Principal Loy even stated that Santos’s improvement was a result of her positive attitude in approaching her growth plan. Unfortunately, though, Santos could not sustain this progress. Not long after, the School administrators were again admonishing Santos for her vague lesson plans that lacked specifics.

What can be gathered from a thorough review of the records of this case is that the inadequacies of Santos as a teacher did not stem from a reckless





disregard of the welfare of her students or of the issues raised by the School regarding her teaching. Far from being tainted with bad faith, Santos’s failings appeared to have resulted from her lack of necessary skills, in-depth knowledge, and expertise to teach the Filipino language at the standards required of her by the School.

Be that as it may, we find that the petitioners had sufficiently proved the charge of gross inefficiency, which warranted the dismissal of Santos from the School.

The Court enunciated in Peña v. National Labor Relations Commission73 that "it is the prerogative of the school to set high standards of efficiency for its teachers since quality education is a mandate of the Constitution. As long as the standards fixed are reasonable and not arbitrary, courts are not at liberty to set them aside." Moreover, the prerogative of a school to provide standards for its teachers and to determine whether these standards have been met is in accordance with academic freedom, which gives the educational institution the right to choose who should teach.74

The CBA between ISAE and the School for the years 1992-1995 also recognized the exclusive right of the School to "hire and appoint qualified faculty subject to such reasonable rules and regulations as it may prescribe,"75 as well as the right of the School to discipline its faculty and determine reasonable levels of performance.76 Section 8 of Appendix A77 of the CBA also states that "[a]ll faculty members must meet the high standard of performance expected by the SCHOOL and abide by all its policies, procedures and contractual terms."

Contrary to the ruling of the Labor Arbiter, it is not accurate to state that Santos was dismissed by the School for inefficiency on account of the fact that she was caught only once without a lesson plan. The documentary evidence submitted by petitioners, the contents of which we laid down in detail in our statement of facts, pointed to the numerous instances when Santos failed to observe the prescribed standards of performance set by the School in several areas of concern, not the least of which was her lack of adequate planning for her Filipino classes. Said evidence established that the School administrators informed Santos of her inadequacies as soon as they became apparent; that they provided constructive criticism of her planning process and teaching performance; and that regular conferences were held between Santos and the administrators in order to address the latter’s






concerns. In view of her slow progress, the School required her to undergo the remediation phase of the evaluation process through a Professional Growth Plan. Despite the efforts of the School administrators, Santos failed to show any substantial improvement in her planning process. Having failed to exit the remediation process successfully, the School was left with no choice but to terminate her employment.

The Court finds that, not only did the petitioners’ documentary evidence sufficiently prove Santos’s inefficient performance of duties, but the same also remained unrebutted by respondents’ own evidence. On the contrary, Santos admits in her pleadings that her performance as a teacher of Filipino had not been satisfactory but she prays for leniency on account of her prior good record as a Spanish teacher at the School. Indeed, even the Labor Arbiter, the NLRC and the Court of Appeals agreed that Santos was not without fault but the lower tribunals deemed that termination was too harsh a penalty.

Nonetheless, the Court finds that petitioners had satisfactorily discharged the burden of proving the existence of gross inefficiency on the part of Santos, warranting her separation from the school.

Anent the conclusion of the Labor Arbiter that "the observations made by [Santos’s] superior and peers could not be the basis for concluding or finding that she is grossly incompetent or inefficient,"78 the Court finds the same utterly baseless. Far from being random and unstructured exercises, said observations were borne out of the evaluation procedures set up by the School in order to assist the members of its faculty to improve their performance. In their petition before this Court, petitioners attached a copy of their Reply/Position Paper79 before the Labor Arbiter. Annexed to said pleading is the School’s Position Paper Regarding Professional Growth, Supervision and Evaluation of Faculty,80 which expressly states that:

It is the policy of the International School Manila to assist teachers in the improvement of classroom instruction at all levels in order to provide the highest quality educational program at ISM. To that end, procedures have been established which include 1) the promotion of on-going professional growth, 2) on-going supervision including regular monitoring, improvement of instructional practices and evaluation for continuing employment or tenure, and 3) evaluation (performance assessment, directed assistance, remediation and, if necessary, termination of employment).81





Included in the supervision and evaluation process are formal and informal observations of a faculty member’s performance in his/her classes. Thus, 2.1 Formal observations will take several forms. Some will be total [sic] unannounced, with or without a pre-observation conference.

Others will be scheduled in advance, possibly including a pre-observation conference, and with a post observation conference. One component of the formal observation will always be a written commentary by the supervisor or colleague making the observation.

x x x x

2.3 Drop-in, informal observations, will be a part of the supervision and evaluation process. Drop-ins may be of any length, from a few minutes to an hour or more. A note from the observer confirming his or her impressions will be helpful to the teacher observed.82

From the foregoing, it is clear that the Labor Arbiter erred in not giving weight to the observations made by Santos’s superiors and peers in determining whether she was grossly inefficient or not.

In view of the acts and omissions of Santos that constituted gross inefficiency, the Court finds that the School was justified in not keeping her in its employ. At this point, the Court needs to stress that Santos voluntarily agreed to teach the Filipino classes given to her when she came back from her leave of absence. Said classes were not forced upon her by the School. This much she admitted in the hearing of the case before the Labor Arbiter. She stated therein that for the school year 1993-1994, she was given the option to teach only one Spanish class and not have any Filipino teaching loads. She, however, said that if she took that option she would have been underpaid and her salary would not have been the same.83 Moreover, for the school years 1994-1995 and 1995-1996, she made known to the School that she did not prefer a change in teaching assignment. Thus, when she consented to take on the Filipino classes, it was Santos’s responsibility to teach them well within the standards of teaching required by the School, as she had done previously as a teacher of Spanish. Failing in this, she must answer for the consequences.

As held in Agabon v. National Labor Relations Commission84:




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 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. (citations omitted.)

As regards the requirements of procedural due process, Section 2(d) of Rule 1 of The Implementing Rules of Book VI states that:

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. (Emphases ours.)

In this case, the School complied with the above requirements. After a thorough evaluation of Santos’s performance, the School held a series of conferences and meetings with Santos, in order to improve her performance. On March 29, 1996, the School required Santos to undertake a Professional Growth Plan. Thereafter, when the intervention of the School failed to yield any considerable improvement on Santos, McCauley wrote her a letter on April 10, 1997, which required her to explain in writing within forty-eight (48) hours why her employment should not be terminated in view of her failure to meet the standards of the School on very specific areas of concern. On April 16, 1997, Santos responded to McCauley’s letter, asking why she was being required to explain. On April 21, 1997, McCauley wrote Santos a letter informing her that an administrative investigation would be conducted

on April 23, 1997 where she would be given the opportunity to be heard. On April 23, 1997, an administrative investigation was conducted. Santos appeared therein with the assistance of ISAE President Ching. In a letter dated May 29, 1997, the School informed Santos of its decision to terminate her employment on the ground of her failure to meet the standards of the School, which as discussed was tantamount to gross inefficiency.

In view of the finding that Santos was validly dismissed from employment, she would not ordinarily be entitled to separation pay.85 An exception to this rule is when the court finds justification in applying the principle of social justice according to the equities of the case. The Court explained in Philippine Long Distance Telephone Co. (PLDT) v. National Labor Relations Commission86 that:

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

x x x x

The policy of social justice is not intended to countenance wrongdoing simply because it is committed by the underprivileged. At best it may mitigate the penalty but it certainly will not condone the offense. Compassion for the poor is an imperative of every humane society but only when the recipient is not a rascal claiming an undeserved privilege. Social justice cannot be permitted to be refuge of scoundrels any more than can equity be an impediment to the punishment of the guilty. Those who invoke social justice may do so only if their hands are clean and their motives blameless and not simply because they happen to be poor. This great policy of our Constitution is not meant for the protection of those who have proved they are not worthy of it, like the workers who have tainted the cause of labor with the blemishes of their own character.



In Toyota Motor Phils. Corp. Workers Association v. National Labor Relations Commission,87 we modified our ruling in PLDT in this wise:

In all of the foregoing situations, the Court declined to grant termination pay because the causes for dismissal recognized under Art. 282 of the Labor Code were serious or grave in nature and attended by willful or wrongful intent or they reflected adversely on the moral character of the employees. We therefore find that in addition to serious misconduct, in dismissals based on other grounds under Art. 282 like willful disobedience, gross and habitual neglect of duty, fraud or willful breach of trust, and commission of a crime against the employer or his family, separation pay should not be conceded to the dismissed employee.

In analogous causes for termination like inefficiency, drug use, and others, the NLRC or the courts may opt to grant separation pay anchored on social justice in consideration of the length of service of the employee, the amount involved, whether the act is the first offense, the performance of the employee and the like, using the guideposts enunciated in PLDT on the propriety of the award of separation pay.1âwphi1 (Emphasis ours.)

In the instant case, the Court finds equitable and proper the award of separation pay in favor of Santos in view of the length of her service with the School prior to the events that led to the termination of her employment. To recall, Santos was first employed by the School in 1978 as a Spanish language teacher. During this time, the records of this case are silent as to the fact of any infraction that she committed and/or any other administrative case against her that was filed by the School. Thus, an award of separation pay equivalent to one-half (1/2) month pay for every year of service is awarded in favor of Santos on grounds of equity and social justice.88

WHEREFORE, the instant petition is GRANTED. The assailed Decision and the Resolution of the Court of Appeals in CA-G.R. SP No. 79031 are hereby REVERSED and a new one is entered ordering the dismissal of the complaint of Evangeline Santos in NLRC-NCR Case No. 00-06-04491-97. Petitioner International School Manila is ORDERED to pay respondent Evangeline Santos separation pay equivalent to one-half (1/2) month pay for every year of service. No costs.

SO ORDERED.



SECOND DIVISION

NEW SUNRISE METAL CONSTRUCTION, FRANK WONG & ERLINDA WONG,

Petitioners,

- versus - VICTOR PIA, ILDEFONSO SACARE, RENEBOY SUA, ALLAN SACARE, CELSO MOROJO, ISMAEL ALINAPON, JOHNNY SIRINGAN, TIRSO JUAN, ROLANDO RABAGO, RUDING ABORDO, JACKSON ORTEGA, POLITO MANEJA, CARLOS ZIPAGAN and LABORALLIANCE FOR NATIONAL DEVELOPMENT (LAND),

Respondents.

G.R. No. 171131 Present: QUISUMBING,* J., Chairperson,CARPIO,**

CARPIO MORALES,TINGA, and

VELASCO, JR., JJ. Promulgated: July 10, 2007

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D E C I S I O N

CARPIO MORALES, J.: Respondent Johnny Siringan was an employee of Queen Tower Manpower Services (Queen Tower). He was assigned to work for petitioner New Sunrise Metal Construction which is owned by its co-petitioners Frank Wong and Erlinda Wong on March 1999. He was later recalled by his employer Queen Tower effectiveApril 8, 2000.[1]

http://sc.judiciary.gov.ph/jurisprudence/2007/july2007/171131.htm#_ftn3



The 12 other individual respondents were hired by petitioners under separate 6-month contracts denominated Contract of Hire,[2] but their services were terminated even prior to the expiration thereof as the table below shows:

Respondents subsequently filed a complaint for illegal dismissal as

well as for non-payment of benefits against petitioners, claiming that they were dismissed without just cause and in violation of their right to due process; and that they were underpaid of their wages and were not paid their overtime pay, 13th month pay, legal holiday pay and 5 days incentive leave. They thus prayed for reinstatement and payment of their monetary claims. Petitioners, denying respondents allegations, claimed that documentary evidence shows that respondents were paid their wages and other benefits in

Date Hired Date Dismissed1. Victor Pia December 11, 1999 May 15, 20002. Ildefenso Sacare November 11, 1999 April 8, 20003. Reneboy Sua December 13, 1999 May 13, 20004. Allan Sacare December 13, 1999 May 13, 20005. Celso Morojo, Jr. December 13, 1999 May 12, 20006. Ismael Alinapon November 8, 1999 April 8, 20007. Tirso Juan February 10, 2000 April 8, 20008. Rolando Rabago January 18, 2000 April 8, 20009. Ruding Abordo November 8, 1999 April 8, 200010. Jackson Ortega January 26, 2000 April 8, 200011. Polito Maneja January 24, 2000 April 8, 200012. Carlos Zipagan February 5, 2000 April 8, 2000


accordance with law; and that respondents were terminated from the service for inefficiency ─ performance below par. By Decision[3] of March 19, 2001, the labor arbiter to which the case was assigned found for respondents except with respect to Siringan, thus:

Complainant Johnny Siringan was not illegally dismissed . He was recalled by his real employer Queen T[ower] Manpower Services or QTMS. These facts are evidenced by his and others recall order dated April 8, 2000. The fact that his employer is QTMS is evidenced by the payrolls exhibited by [petitioners in] their Position Paper. The rest who were signed Contract of Hire for a duration of no more than six (6) months after which it is deemed terminated, but were dismissed before the 6 th month of their contract, without proof of valid cause were illegally terminated. . . . [4] (Emphasis and underscoring supplied)

Thus, the labor arbiter disposed: WHEREFORE, premises considered, Respondents are hereby

declared to have illegally preterminated Complainants Contracts of Hire, and have failed to pay them their proportionate 13th month pay for year 2000. Respondents therefore are hereby Ordered to pay Complainants their salaries for the period Complainants should have worked under the unexpired contracts, and their proportionate 13th month pay, per computation prepared by the NLRC-NCR Computation Unit and is attached as part of this decision in the total amount of P184,208.70.

The other claims of Complainants are hereby DISMISSED for lack of

merit (service incentive leave pay) or for lack of basis (overtime



pay, holiday work, and premium pay).[5](Emphasis in the original) Petitioners appealed the labor arbiters decision to the National Labor

Relations Commission (NLRC), arguing that the labor arbiter failed to examine paragraph (4) of the individual contracts of the 12 respondents which reads:

(4) SUNRISE reserves the right to terminate this contract even

prior to the expiry thereof, and for any cause or reason it may deem proper. Contract Worker hereby waives any prior notice on that account and shall hold SUNRISE free and harmless from any and all liability arising from, or on account of, the operation of this contract.[6](Underscoring supplied)

Petitioners thus prayed that the NLRC delete the portion awarding payment of wages for the unexpired portion of the contract and to retain the portion awarding the proportionate 13th month pay. By Resolution[7] dated September 18, 2002, the NLRC dismissed petitioners appeal.

The NLRC, by Resolution of April 11, 2003, reversed its September 18, 2002 Resolution, however, upon petitioners motion for reconsideration[8] to which copies of the monthly production reports[9] describing the performance of respondents were appended. The NLRC thus dismissed the complaint filed by respondents, ratiocinating as follows:

In their Motion for Reconsideration, the [petitioners] reiterated that complainants were dismissed due to their poor performance. And in support thereto, [petitioners] submitted the various production reports of the complainants for the period covering January 2000 to April 2000. The [petitioners] inadvertently failed to attach the production






reports in its position paper which showed that during their first four months of employment, complainants miserably failed to meet the required quota. Their poor performance was due to their being slow workers (mabagal magtrabaho) and telling stories while working (nagkukwentuhan). Despite ample opportunity given by the [petitioners], complainants did not even try to improve their performance and output. Complainants work which consisted of either fil[l]ing up bottles or sealing the same, requires an average or accomplishment of at least 1,500 bottles per day. However, complainants output average only about 1,000 or 1,200 bottles per day. Their output is certainly below the expected quota of at least 1,500 bottles a day.

x x x x

Complainants actuation of disregarding compliance with their quota commitment does not speak well of their work attitude. Thus, [petitioners] could not be faulted if after evaluation of the complainants work performance, they decided to terminate their employment within the probationary period stated in their employment contract. It would be unfair and unjust for the [petitioners] to be required to keep complainants under their employ despite their not-so-interested work attitude.

x x x x[10] (Emphasis supplied)

Respondents thereupon filed a petition for certiorari before the Court of Appeals, arguing that the NLRC committed grave abuse of discretion amounting to lack or in excess of jurisdiction in dismissing their complaint for lack of merit, in violation of respondents right to security of tenure and to their monetary claims.[11]

By Decision[12] dated September 28, 2005, the appellate court set aside the April 11, 2003 Resolution of the NLRC and reinstated the March 19, 2001 decision of the labor arbiter, it holding that the evidence supports the findings and conclusion of the labor arbiter.




Hence, the present petition for review on certiorari, positing, in the main, that contrary to the findings of the appellate court, the NLRC correctly found that there was clearly a valid cause to terminate the employment of respondents due to their incompetence and their poor performance. The Court finds that, as held by the labor arbiter, respondent Siringan cannot be considered to have been illegally dismissed by petitioners. For Siringans real employer is Queen Tower. When he ceased to render services for petitioners, it was not because he was dismissed by them but because he was recalled by QueenTower.

That Queen Tower is Siringans employer is confirmed by its payroll showing him to be its employee.

Respecting the other respondents, their employment being one with a fixed period as shown by the contracts they signed, it only terminates by its own term at the end of six months[13] unless they are dismissed with just cause.[14]

Petitioners insist, however, that the 12 respondents were

dismissed prior to the expiration of the 6-month period for just cause ─ inefficiency, their performance being below par as shown by the monthly production reports.

Assuming that what is reflected in the monthly production reports is an accurate account of each of the 12 respondents performance, petitioners failed to establish that they were informed, at the time of hiring, of the standards they were expected to meet, i.e., that they were supposed to reach certain quotas.[15] This is not to mention that petitioners failed to present proof that respondents were apprised of their poor or below average performance after each evaluation period to at least give them the opportunity to improve their performance.

At all events, unsatisfactory performance cannot be considered a just cause for dismissal under the Labor Code if it does not amount to gross and habitual neglect of duties.[16] On this score, petitioners failed to prove that the





alleged inefficiency of the 12 respondents amounted to gross and habitual neglect of duties. Petitioners having failed to substantiate their claim that the 12 respondents were dismissed for just cause, the decision of the labor arbiter directing them to pay respondents their salaries corresponding to the unexpired period of their respective contracts,[17] plus the proportionate 13th month pay to which they are entitled, is in order.

WHEREFORE, the petition is DENIED. The Court of Appeals

assailed decision reinstating the labor arbiters decision dated March 19, 2001 isAFFIRMED, with the MODIFICATION that the award in favor of respondent Johnny Siringan is deleted. Costs against petitioners.

SO ORDERED.Republic of the Philippines

Supreme CourtManila

THIRD DIVISION

ARMANDO G. YRASUEGUI, G.R. No. 168081Petitioner,Present:YNARES-SANTIAGO, J.,

Chairperson,- versus - AUSTRIA-MARTINEZ,

CHICO-NAZARIO,NACHURA, andREYES, JJ.

Promulgated:


PHILIPPINE AIRLINES, INC.,Respondent. October 17, 2008

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D E C I S I O N REYES, R.T., J.:

THIS case portrays the peculiar story of an international flight steward who was dismissed because of his failure to adhere to the weight standards of the airline company.

He is now before this Court via a petition for review on certiorari claiming that he was illegally dismissed. To buttress his stance, he argues that (1) his dismissal does not fall under 282(e) of the Labor Code; (2) continuing adherence to the weight standards of the company is not a bona fide occupational qualification; and (3) he was discriminated against

because other overweight employees were promoted instead of being disciplined. After a meticulous consideration of all arguments pro and con, We uphold the legality of dismissal. Separation pay, however, should be awarded in favor of the employee as an act of social justice or based on equity. This is so because his dismissal is not for serious misconduct. Neither is it reflective of his moral character.

The Facts

Petitioner Armando G. Yrasuegui was a former international flight steward of Philippine Airlines, Inc. (PAL). He stands five feet and eight inches (58) with a large body frame. The proper weight for a man of his height and body structure is from 147 to 166 pounds, the ideal weight being 166 pounds, as mandated by the Cabin and Crew Administration Manual[1] of PAL.

The weight problem of petitioner dates back to 1984. Back then, PAL advised him to go on an extended vacation leave from December 29, 1984 to March 4, 1985 to address his weight concerns. Apparently, petitioner failed to meet the companys weight standards, prompting another leave without pay from March 5, 1985 to November 1985.

After meeting the required weight, petitioner was allowed to return to work. But petitioners weight problem recurred. He again went on leave without pay from October 17, 1988 to February 1989.

On April 26, 1989, petitioner weighed 209 pounds, 43 pounds over his ideal weight. In line with company policy, he was removed from flight duty effective May 6, 1989 to July 3, 1989. He was formally requested to trim down to his ideal weight and report for weight checks on several dates. He was also toldthat he may avail of the services of the company physician should he wish to do so. He was advised that his case will be evaluated on July 3, 1989.[2]

On February 25, 1989, petitioner underwent weight check. It was

discovered that he gained, instead of losing, weight. He was overweight at 215 pounds, which is 49 pounds beyond the limit. Consequently, his off-duty status was retained.

On October 17, 1989, PAL Line Administrator Gloria Dizon personally visited petitioner at his residence to check on the progress of his effort to lose weight. Petitioner weighed 217 pounds, gaining 2 pounds from his previous weight. After the visit, petitioner made a commitment[3] to reduce weight in a letter addressed to Cabin Crew Group Manager Augusto Barrios. The letter, in full, reads:

Dear Sir: I would like to guaranty my commitment towards a

weight loss from 217 pounds to 200 pounds from today until 31 Dec. 1989.

From thereon, I promise to continue reducing at a

reasonable percentage until such time that my ideal weight is achieved.

Likewise, I promise to personally report to your office at

the designated time schedule you will set for my weight check.

Respectfully Yours,F/S Armando Yrasuegui[4]

Despite the lapse of a ninety-day period given him to reach his ideal

weight, petitioner remained overweight. On January 3, 1990, he was informed of thePAL decision for him to remain grounded until such time that he satisfactorily complies with the weight standards. Again, he was directed to report every two weeks for weight checks.

Petitioner failed to report for weight checks. Despite that, he was

given one more month to comply with the weight requirement. As usual, he was asked to report for weight check on different dates. He was reminded that his grounding would continue pending satisfactory compliance with the weight standards.[5]

Again, petitioner failed to report for weight checks, although he was

seen submitting his passport for processing at the PAL Staff Service Division.

On April 17, 1990, petitioner was formally warned that a repeated refusal to report for weight check would be dealt with accordingly. He was given another set of weight check dates.[6] Again, petitioner ignored the directive and did not report for weight checks. On June 26, 1990, petitioner was required to explain his refusal to undergo weight checks.[7]

When petitioner tipped the scale on July 30, 1990, he weighed at 212

pounds. Clearly, he was still way over his ideal weight of 166 pounds.

From then on, nothing was heard from petitioner until he followed up his case requesting for leniency on the latter part of 1992. He weighed at 219 poundson August 20, 1992 and 205 pounds on November 5, 1992.

On November 13, 1992, PAL finally served petitioner a Notice of Administrative Charge for violation of company standards on weight requirements. He was given ten (10) days from receipt of the charge within which to file his answer and submit controverting evidence.[8]

On December 7, 1992, petitioner submitted his Answer.[9] Notably, he did not deny being overweight. What he claimed, instead, is that his violation, ifany, had already been condoned by PAL since no action has been taken by the company regarding his case since 1988. He also claimed that PAL discriminated against him because the company has not been fair in treating the cabin crew members who are similarly situated.

On December 8, 1992, a clarificatory hearing was held where

petitioner manifested that he was undergoing a weight reduction program to lose at least two (2) pounds per week so as to attain his ideal weight.[10]

On June 15, 1993, petitioner was formally informed by PAL that due

to his inability to attain his ideal weight, and considering the utmost leniency extended to him which spanned a period covering a total of almost five (5) years, his services were considered terminated effective immediately.[11]

His motion for reconsideration having been denied,[12] petitioner filed

a complaint for illegal dismissal against PAL.

Labor Arbiter, NLRC and CA Dispositions

On November 18, 1998, Labor Arbiter Valentin C. Reyes ruled[13] that petitioner was illegally dismissed. The dispositive part of the Arbiter ruling runs as follows:

WHEREFORE, in view of the foregoing, judgment is hereby rendered, declaring the complainants dismissal illegal, and ordering the respondent to reinstate him to his former position or substantially equivalent one, and to pay him:

a. Backwages of Php10,500.00 per month from his

dismissal on June 15, 1993 until reinstated, which for purposes of appeal is hereby set from June 15, 1993 up toAugust 15, 1998 at P651,000.00;

b. Attorneys fees of five percent (5%) of the total award. SO ORDERED.[14]

The Labor Arbiter held that the weight standards of PAL are

reasonable in view of the nature of the job of petitioner. [15] However, the weight standards need not be complied with under pain of dismissal since

his weight did not hamper the performance of his duties.[16] Assuming that it did, petitioner could be transferred to other positions where his weight would not be a negative factor.[17] Notably, other overweight employees, i.e., Mr. Palacios, Mr. Cui, and Mr. Barrios, were promoted instead of being disciplined.[18]

Both parties appealed to the National Labor Relations Commission

(NLRC).[19]

On October 8, 1999, the Labor Arbiter issued a writ of execution

directing the reinstatement of petitioner without loss of seniority rights and other benefits.[20]

On February 1, 2000, the Labor Arbiter denied[21] the Motion to Quash

Writ of Execution[22] of PAL.

On March 6, 2000, PAL appealed the denial of its motion to quash to the NLRC.[23]

On June 23, 2000, the NLRC rendered judgment[24] in the following tenor:

WHEREFORE, premises considered[,] the Decision of the Arbiter dated 18 November 1998 as modified by our findings herein, is hereby AFFIRMED and that part of the dispositive portion of said decision concerning complainants entitlement to backwages shall be deemed to refer to complainants entitlement to his full backwages,inclusive of allowances and to his other benefits or their monetary equivalent instead of simply backwages, from date of dismissal until his actual reinstatement or finality hereof. Respondent is enjoined to manifests (sic) its choice of the form of the reinstatement of complainant, whether physical or through payroll within ten (10) days from notice failing which, the same shall be deemed as complainants reinstatement through payroll and execution in case of non-payment shall accordingly be

issued by the Arbiter. Both appeals of respondent thus, are DISMISSED for utter lack of merit.[25]

According to the NLRC, obesity, or the tendency to gain weight

uncontrollably regardless of the amount of food intake, is a disease in itself.[26] As a consequence, there can be no intentional defiance or serious misconduct by petitioner to the lawful order of PAL for him to lose weight.[27]

Like the Labor Arbiter, the NLRC found the weight standards

of PAL to be reasonable. However, it found as unnecessary the Labor Arbiter holding that petitioner was not remiss in the performance of his duties as flight steward despite being overweight. According to the NLRC, the Labor Arbiter should have limited himself to the issue of whether the failure of petitioner to attain his ideal weight constituted willful defiance of the weight standards of PAL.[28]

PAL moved for reconsideration to no avail.[29] Thus, PAL elevated the matter to the Court of Appeals (CA) via a petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure.[30]

By Decision dated August 31, 2004, the CA reversed[31] the NLRC:

WHEREFORE, premises considered, we hereby GRANT

the petition. The assailed NLRC decision is declared NULL and VOID and is hereby SET ASIDE. The private respondents complaint is hereby DISMISSED. No costs.

SO ORDERED.[32]

The CA opined that there was grave abuse of discretion on the part of

the NLRC because it looked at wrong and irrelevant considerations [33] in

evaluating the evidence of the parties. Contrary to the NLRC ruling, the weight standards of PAL are meant to be a continuing qualification for an employees position.[34]The failure to adhere to the weight standards is an analogous cause for the dismissal of an employee under Article 282(e) of the Labor Code in relation to Article 282(a). It is not willful disobedience as the NLRC seemed to suggest.[35] Said the CA, the element of willfulness that the NLRC decision cites is an irrelevant consideration in arriving at a conclusion on whether the dismissal is legally proper.[36] In other words, the relevant question to ask is not one of willfulness but one of reasonableness of the standard and whether or not the employee qualifies or continues to qualify under this standard.[37]

Just like the Labor Arbiter and the NLRC, the CA held that the weight standards of PAL are reasonable.[38] Thus, petitioner was legally dismissed because he repeatedly failed to meet the prescribed weight standards. [39] It is obvious that the issue of discrimination was only invoked by petitioner for purposes of escaping the result of his dismissal for being overweight.[40]

On May 10, 2005, the CA denied petitioners motion for

reconsideration.[41] Elaborating on its earlier ruling, the CA held that the weight standards of PALare a bona fide occupational qualification which, in case of violation, justifies an employees separation from the service.[42]

Issues

In this Rule 45 petition for review, the following issues are posed for resolution:

I.WHETHER OR NOT THE COURT OF APPEALS

GRAVELY ERRED IN HOLDING THAT PETITIONERS OBESITY CAN BE A GROUND FOR DISMISSAL UNDER PARAGRAPH (e) OF ARTICLE 282 OF THE LABOR CODE OF THE PHILIPPINES ;

II.

WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT PETITIONERS DISMISSAL FOR OBESITY CAN BE PREDICATED ON THE BONA FIDE OCCUPATIONAL QUALIFICATION (BFOQ) DEFENSE;

III.

WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT PETITIONER WAS NOT UNDULY DISCRIMINATED AGAINST WHEN HE WAS DISMISSED WHILE OTHER OVERWEIGHT CABIN ATTENDANTS WERE EITHER GIVEN FLYING DUTIES OR PROMOTED;

IV.WHETHER OR NOT THE COURT OF APPEALS

GRAVELY ERRED WHEN IT BRUSHED ASIDE PETITIONERS CLAIMS FOR REINSTATEMENT [AND] WAGES ALLEGEDLY FOR BEING MOOT AND ACADEMIC .[43] (Underscoring supplied)

Our Ruling

I. The obesity of petitioner is a ground for dismissal under Article

282(e) [44] of the Labor Code. A reading of the weight standards of PAL would lead to no other conclusion than that they constitute a continuing qualification of an employee in order to keep the job. Tersely put, an employee may be dismissed the moment he is unable to comply with his ideal weight as prescribed by the weight standards. The dismissal of the employee would thus fall under Article 282(e) of the Labor Code. As explained by the CA:

x x x [T]he standards violated in this case were not mere orders of the employer; they were the prescribed weights that a cabin crew must maintain in order to qualify for and keep his or her

position in the company. In other words, they were standards that establish continuing qualifications for an employees position. In this sense, the failure to maintain these standards does not fall under Article 282(a) whose express terms require the element of willfulness in order to be a ground for dismissal. The failure to meet the employers qualifying standards is in fact a ground that does not squarely fall under grounds (a) to (d) and is therefore one that falls under Article 282(e) the other causes analogous to the foregoing. By its nature, these qualifying standards are norms that apply prior to and after an employee is hired. They apply prior to employment because these are the standards a job applicant must initially meet in order to be hired. They apply after hiring because an employee must continue to meet these standards while on the job in order to keep his job. Under this perspective, a violation is not one of the faults for which an employee can be dismissed pursuant to pars. (a) to (d) of Article 282; the employee can be dismissed simply because he no longer qualifies for his job irrespective of whether or not the failure to qualify was willful or intentional. x x x[45]

Petitioner, though, advances a very interesting argument. He claims that obesity is a physical abnormality and/or illness.[46] Relying on Nadura v. BenguetConsolidated, Inc.,[47] he says his dismissal is illegal:

Conscious of the fact that Naduras case cannot be made to fall squarely within the specific causes enumerated in subparagraphs 1(a) to (e), Benguet invokes the provisions of subparagraph 1(f) and says that Naduras illness occasional attacks of asthma is a cause analogous to them. Even a cursory reading of the legal provision under consideration is sufficient to convince anyone that, as the trial court said, illness cannot be included as an analogous cause by any stretch of imagination. It is clear that, except the just cause mentioned in sub-paragraph 1(a), all the others expressly enumerated in the law

are due to the voluntary and/or willful act of the employee. How Naduras illness could be considered as analogous to any of them is beyond our understanding, there being no claim or pretense that the same was contracted through his own voluntary act.[48]

The reliance on Nadura is off-tangent. The factual milieu in Nadura is substantially different from the case at bar. First, Nadura was not decided under the Labor Code. The law applied in that case was Republic Act (RA) No. 1787. Second, the issue of flight safety is absent in Nadura, thus, the rationale there cannot apply here. Third, in Nadura, the employee who was a miner, was laid off from work because of illness, i.e., asthma. Here, petitioner was dismissed for his failure to meet the weight standards of PAL. He was not dismissed due to illness. Fourth, the issue in Nadura is whether or not the dismissed employee is entitled to separation pay and damages. Here, the issue centers on the propriety of the dismissal of petitioner for his failure to meet the weight standards of PAL. Fifth, inNadura, the employee was not accorded due process. Here, petitioner was accorded utmost leniency. He was given more than four (4) years to comply with the weight standards of PAL.

In the case at bar, the evidence on record militates against petitioners claims that obesity is a disease. That he was able to reduce his weight from 1984 to 1992 clearly shows that it is possible for him to lose weight given the proper attitude, determination, and self-discipline. Indeed, during the clarificatory hearing on December 8, 1992, petitioner himself claimed that [t]he issue is could I bring my weight down to ideal weight which is 172, then the answer is yes. I can do it now.[49]

True, petitioner claims that reducing weight is costing him a lot of

expenses.[50] However, petitioner has only himself to blame. He could have easily availed the assistance of the company physician, per the advice of PAL.[51] He chose to ignore the suggestion. In fact, he repeatedly failed to report when required to undergo weight checks, without offering a valid

explanation. Thus, his fluctuating weight indicates absence of willpower rather than an illness.

Petitioner cites Bonnie Cook v. State of Rhode Island, Department of Mental Health, Retardation and Hospitals,[52] decided by the United States Court of Appeals (First Circuit). In that case, Cook worked from 1978 to 1980 and from 1981 to 1986 as an institutional attendant for the mentally retarded at the Ladd Center that was being operated by respondent. She twice resigned voluntarily with an unblemished record. Even respondent admitted that her performance met the Centers legitimate expectations. In 1988, Cook re-applied for a similar position. At that time, she stood 52 tall and weighed over 320 pounds. Respondent claimed that the morbid obesity of plaintiff compromised her ability to evacuate patients in case of emergency and it also put her at greater risk of serious diseases.

Cook contended that the action of respondent amounted to discrimination on the basis of a handicap. This was in direct violation of Section 504(a) of the Rehabilitation Act of 1973,[53] which incorporates the remedies contained in Title VI of the Civil Rights Act of 1964. Respondent claimed, however, that morbid obesity could never constitute a handicap within the purview of the Rehabilitation Act. Among others, obesity is a mutable condition, thus plaintiff could simply lose weight and rid herself of concomitant disability.

The appellate Court disagreed and held that morbid obesity is a disability under the Rehabilitation Act and that respondent discriminated against Cook based on perceived disability. The evidence included expert testimony that morbid obesity is a physiological disorder. It involves a dysfunction of both the metabolic system and the neurological appetite suppressing signal system, which is capable of causing adverse effects within the musculoskeletal, respiratory, and cardiovascular systems. Notably, the Court stated that mutability is relevant only in determining the substantiality of the limitation flowing from a given impairment, thus mutability only precludes those conditions that an individual can easily and quickly reverse by behavioral alteration.

Unlike Cook, however, petitioner is not morbidly obese. In the words

of the District Court for the District of Rhode Island, Cook was sometime before 1978 at least one hundred pounds more than what is considered appropriate of her height. According to the Circuit Judge, Cook weighed over 320 pounds in 1988. Clearly, that is not the case here. At his heaviest, petitioner was only less than 50 pounds over his ideal weight.

In fine, We hold that the obesity of petitioner, when placed in the context of his work as flight attendant, becomes an analogous cause under Article 282(e) of the Labor Code that justifies his dismissal from the service. His obesity may not be unintended, but is nonetheless voluntary. As the CA correctly puts it, [v]oluntariness basically means that the just cause is solely attributable to the employee without any external force influencing or controlling his actions. This element runs through all just causes under Article 282, whether they be in the nature of a wrongful action or omission. Gross and habitual neglect, a recognized just cause, is considered voluntary although it lacks the element of intent found in Article 282(a), (c), and (d).[54]

II. The dismissal of petitioner can be predicated on the bona fide

occupational qualification defense. Employment in particular jobs may not be limited to persons of a particular sex, religion, or national origin unless the employer can show that sex, religion, or national origin is an actual qualification for performing the job. The qualification is called a bona fide occupational qualification (BFOQ).[55] In the United States, there are a few federal and many state job discrimination laws that contain an exception allowing an employer to engage in an otherwise unlawful form of prohibited discrimination when the action is based on a BFOQ necessary to the normal operation of a business or enterprise.[56]

Petitioner contends that BFOQ is a statutory defense. It does not exist if there is no statute providing for it.[57] Further, there is no existing BFOQ statute that could justify his dismissal.[58]

Both arguments must fail.

First, the Constitution,[59] the Labor Code,[60] and RA No. 7277[61] or the Magna Carta for Disabled Persons[62] contain provisions similar to BFOQ. Second, in British Columbia Public Service Employee Commission (BSPSERC) v. The British Columbia Government and Service Employees Union (BCGSEU),[63] the Supreme Court of Canada adopted the so-called Meiorin Test in determining whether an employment policy is justified. Under this test, (1) the employer must show that it adopted the standard for a purpose rationally connected to the performance of the job;[64] (2) the employer must establish that the standard is reasonably necessary[65] to the accomplishment of that work-related purpose; and (3) the employer must establish that the standard is reasonably necessary in order to accomplish the legitimate work-related purpose. Similarly, in Star Paper Corporation v. Simbol,[66] this Court held that in order to justify a BFOQ, the employer must prove that (1) the employment qualification is reasonably related to the essential operation of the job involved; and (2) that there is factual basis for believing that all or substantially all persons meeting the qualification would be unable to properly perform the duties of the job.[67]

In short, the test of reasonableness of the company policy is used

because it is parallel to BFOQ.[68] BFOQ is valid provided it reflects an inherent quality reasonably necessary for satisfactory job performance.[69]

In Duncan Association of Detailman-PTGWTO

v. Glaxo Wellcome Philippines, Inc.,[70] the Court did not hesitate to pass upon the validity of a company policy which prohibits its employees from marrying employees of a rival company. It was held that the company policy is reasonable considering that its purpose is the protection of the interests of the company against possible competitor infiltration on its trade secrets and procedures.

Verily, there is no merit to the argument that BFOQ cannot be applied if it has no supporting statute. Too, the Labor Arbiter,[71] NLRC,[72] and

CA[73]are one in holding that the weight standards of PAL are reasonable. A common carrier, from the nature of its business and for reasons of public policy, is bound to observe extraordinary diligence for the safety of the passengers it transports.[74] It is bound to carry its passengers safely as far as human care and foresightcan provide, using the utmost diligence of very cautious persons, with due regard for all the circumstances.[75]

The law leaves no room for mistake or oversight on the part of a

common carrier. Thus, it is only logical to hold that the weight standards of PAL show its effort to comply with the exacting obligations imposed upon it by law by virtue of being a common carrier.

The business of PAL is air transportation. As such, it has committed itself to safely transport its passengers. In order to achieve this, it must necessarily rely on its employees, most particularly the cabin flight deck crew who are on board the aircraft. The weight standards of PAL should be viewed as imposing strict norms of discipline upon its employees.

In other words, the primary objective of PAL in the imposition of the weight standards for cabin crew is flight safety. It cannot be gainsaid that cabin attendants must maintain agility at all times in order to inspire passenger confidence on their ability to care for the passengers when something goes wrong. It is not farfetched to say that airline companies, just like all common carriers, thrive due to public confidence on their safety records. People, especially the riding public, expect no less than that airline companies transport their passengers to their respective destinations safely and soundly. A lesser performance is unacceptable.

The task of a cabin crew or flight attendant is not limited to serving meals or attending to the whims and caprices of the passengers. The most important activity of the cabin crew is to care for the safety of passengers and the evacuation of the aircraft when an emergency occurs. Passenger safety goes to the core of the job of a cabin attendant. Truly, airlines need cabin attendants who have the necessary strength to open emergency doors, the agility to attend to passengers in cramped working conditions, and the stamina to withstand grueling flight schedules.

On board an aircraft, the body weight and size of a cabin attendant are important factors to consider in case of emergency. Aircrafts have constricted cabin space, and narrow aisles and exit doors. Thus, the arguments of respondent that [w]hether the airlines flight attendants are overweight or not has no direct relation to its mission of transporting passengers to their destination; and that the weight standards has nothing to do with airworthiness of respondents airlines, must fail.

The rationale in Western Air Lines v. Criswell[76] relied upon by petitioner cannot apply to his case. What was involved there were two (2) airline pilots who were denied reassignment as flight engineers upon reaching the age of 60, and a flight engineer who was forced to retire at age 60. They sued the airline company, alleging that the age-60 retirement for flight engineers violated the Age Discrimination in Employment Act of 1967. Age-based BFOQ and being overweight are not the same. The case of overweight cabin attendants is another matter. Given the cramped cabin space and narrow aisles and emergency exit doors of the airplane, any overweight cabin attendant would certainly have difficulty navigating the cramped cabin area.

In short, there is no need to individually evaluate their ability to perform their task. That an obese cabin attendant occupies more space than a slim one is an unquestionable fact which courts can judicially recognize without introduction of evidence.[77] It would also be absurd to require airline companies to reconfigure the aircraft in order to widen the aisles and exit doors just to accommodate overweight cabin attendants like petitioner.

The biggest problem with an overweight cabin attendant is the possibility of impeding passengers from evacuating the aircraft, should the occasion call for it. The job of a cabin attendant during emergencies is to speedily get the passengers out of the aircraft safely. Being overweight necessarily impedes mobility.Indeed, in an emergency situation, seconds are what cabin attendants are dealing with, not minutes. Three lost seconds can translate into three lost lives.Evacuation might slow down just because a wide-bodied cabin attendant is blocking the narrow aisles. These possibilities are not remote.

Petitioner is also in estoppel. He does not dispute that the weight standards of PAL were made known to him prior to his employment. He is presumed to know the weight limit that he must maintain at all times.[78] In fact, never did he question the authority of PAL when he was repeatedly asked to trim down his weight. Bona fides exigit ut quod convenit fiat. Good faith demands that what is agreed upon shall be done. Kung ang tao ay tapat kanyang tutuparin angnapagkasunduan.

Too, the weight standards of PAL provide for separate weight limitations based on height and body frame for both male and female cabin attendants. A progressive discipline is imposed to allow non-compliant cabin attendants sufficient opportunity to meet the weight standards. Thus, the clear-cut rules obviate any possibility for the commission of abuse or arbitrary action on the part of PAL.

III. Petitioner failed to substantiate his claim that he was discriminated against by PAL.

Petitioner next claims that PAL is using passenger safety as a convenient excuse to discriminate against him.[79] We are constrained, however, to hold otherwise. We agree with the CA that [t]he element of discrimination came into play in this case as a secondary position for the private respondent in order to escape the consequence of dismissal that being overweight entailed. It is a confession-and-avoidance position that impliedly admitted the cause of dismissal, including the reasonableness of the applicable standard and the private respondents failure to comply.[80] It is a basic rule in evidence that each party must prove his affirmative allegation.[81]

Since the burden of evidence lies with the party who asserts an affirmative allegation, petitioner has to prove his allegation with particularity. There is nothing on the records which could support the finding of discriminatory treatment. Petitioner cannot establish discrimination by simply naming the supposed cabin attendants who are

allegedly similarly situated with him. Substantial proof must be shown as to how and why they are similarly situated and the differential treatment petitioner got from PAL despite the similarity of his situation with other employees. Indeed, except for pointing out the names of the supposed overweight cabin attendants, petitioner miserably failed to indicate their respective ideal weights; weights over their ideal weights; the periods they were allowed to fly despite their being overweight; the particular flights assigned to them; the discriminating treatment they got from PAL; and other relevant data that could have adequately established a case of discriminatory treatment by PAL. In the words of the CA,PAL really had no substantial case of discrimination to meet.[82]

We are not unmindful that findings of facts of administrative

agencies, like the Labor Arbiter and the NLRC, are accorded respect, even finality.[83] The reason is simple: administrative agencies are experts in matters within their specific and specialized jurisdiction.[84] But the principle is not a hard and fast rule.It only applies if the findings of facts are duly supported by substantial evidence. If it can be shown that administrative bodies grossly misappreciated evidence of such nature so as to compel a conclusion to the contrary, their findings of facts must necessarily be reversed. Factual findings of administrative agencies do not have infallibility and must be set aside when they fail the test of arbitrariness.[85]

Here, the Labor Arbiter and the NLRC

inexplicably misappreciated evidence. We thus annul their findings.

To make his claim more believable, petitioner invokes the equal protection clause guaranty[86] of the Constitution. However, in the absence of governmental interference, the liberties guaranteed by the Constitution cannot be invoked.[87] Put differently, the Bill of Rights is not meant to be invoked against acts of private individuals.[88] Indeed, the United States Supreme Court, in interpreting the Fourteenth Amendment,[89] which is the source of our equal protection guarantee, is consistent in saying that the equal protection erects no shield against private conduct, however

discriminatory or wrongful.[90] Private actions, no matter how egregious, cannot violate the equal protection guarantee.[91]

IV. The claims of petitioner for reinstatement and wages are moot. As his last contention, petitioner avers that his claims for reinstatement and wages have not been mooted. He is entitled to reinstatement and his full backwages, from the time he was illegally dismissed up to the time that the NLRC was reversed by the CA.[92]

At this point, Article 223 of the Labor Code finds relevance:

In any event, the decision of the Labor Arbiter reinstating a dismissed or separated employee, insofar as the reinstatement aspect is concerned, shall immediately be executory, even pending appeal. The employee shall either be admitted back to work under the same terms and conditions prevailing prior to his dismissal or separation or, at the option of the employer, merely reinstated in the payroll. The posting of a bond by the employer shall not stay the execution for reinstatement provided herein.

The law is very clear. Although an award or order of reinstatement is

self-executory and does not require a writ of execution,[93] the option to exercise actual reinstatement or payroll reinstatement belongs to the employer. It does not belong to the employee, to the labor tribunals, or even to the courts.

Contrary to the allegation of petitioner that PAL did everything under the sun to frustrate his immediate return to his previous position,[94] there is evidence that PAL opted to physically reinstate him to a substantially equivalent position in accordance with the order of the Labor

Arbiter.[95] In fact, petitioner duly received the return to work notice on February 23, 2001, as shown by his signature.[96]

Petitioner cannot take refuge in the pronouncements of the Court in a

case[97] that [t]he unjustified refusal of the employer to reinstate the dismissed employee entitles him to payment of his salaries effective from the time the employer failed to reinstate him despite the issuance of a writ of execution[98] and even if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the part of the employer to reinstate and pay the wages of the employee during the period of appeal until reversal by the higher court.[99] He failed to prove that he complied with the return to work order of PAL. Neither does it appear on record that he actually rendered services for PAL from the moment he was dismissed, in order to insist on the payment of his full backwages.

In insisting that he be reinstated to his actual position despite being overweight, petitioner in effect wants to render the issues in the present case moot. He asks PAL to comply with the impossible. Time and again, the Court ruled that the law does not exact compliance with the impossible.[100]

V. Petitioner is entitled to separation pay.

Be that as it may, all is not lost for petitioner.

Normally, a legally dismissed employee is not entitled to separation pay. This may be deduced from the language of Article 279 of the Labor Code that [a]n employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his fullbackwages, 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. Luckily for petitioner, this is not an ironclad rule.

Exceptionally, separation pay is granted to a legally dismissed employee as an act social justice,[101] or based on equity.[102] In both

instances, it is required that the dismissal (1) was not for serious misconduct; and (2) does not reflect on the moral character of the employee.[103]

Here, We grant petitioner separation pay equivalent to one-half (1/2)

months pay for every year of service.[104] It should include regular allowances which he might have been receiving.[105] We are not blind to the fact that he was not dismissed for any serious misconduct or to any act which would reflect on his moral character. We also recognize that his employment with PAL lasted for more or less a decade.

WHEREFORE, the appealed Decision of the Court of Appeals is AFFIRMED but MODIFIED in that petitioner Armando G. Yrasuegui is entitled to separation pay in an amount equivalent to one-half (1/2) months pay for every year of service, which should include his regular allowances.

SO ORDERED.Republic of the Philippines

SUPREME COURTManila

SECOND DIVISION

ALABANG COUNTRY CLUB, INC., G.R. No. 170287Petitioner,Present:- versus -QUISUMBING, J., Chairperson,

CARPIO MORALES,NATIONAL LABOR RELATIONS AZCUNA,*

COMMISSION, ALABANG TINGA, andCOUNTRY CLUB INDEPENDENT VELASCO, JR., JJ.EMPLOYEES UNION,CHRISTOPHER PIZARRO,MICHAEL BRAZA, and Promulgated:NOLASCO CASTUERAS,

Respondents. February 14, 2008

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

D E C I S I O N

VELASCO, JR., J.: Petitioner Alabang Country Club, Inc. (Club) is a domestic non-profit corporation with principal office at Country Club Drive, Ayala Alabang, Muntinlupa City. Respondent Alabang Country Club Independent Employees Union (Union) is the exclusive bargaining agent of the Clubs rank-and-file employees. In April 1996, respondents Christopher Pizarro, Michael Braza, and Nolasco Castueras were elected Union President, Vice-President, and Treasurer, respectively. On June 21, 1999, the Club and the Union entered into a Collective Bargaining Agreement (CBA), which provided for a Union shop and maintenance of membership shop.

The pertinent parts of the CBA included in Article II on Union Security read, as follows:

ARTICLE IIUNION SECURITY

SECTION 1. CONDITION OF EMPLOYMENT. All

regular rank-and-file employees, who are members or subsequently become members of the UNION shall maintain their membership in good standing as a condition for their continued employment by the CLUB during the lifetime of this Agreement or any extension thereof.

SECTION 2. [COMPULSORY] UNION

MEMBERSHIP FOR NEW REGULAR RANK-AND-FILE EMPLOYEES a) New regular rank-and-file employees of the Club shall

join the UNION within five (5) days from the date of their appointment as regular employees as a condition for their continued employment during the lifetime of this

Agreement, otherwise, their failure to do so shall be a ground for dismissal from the CLUB upon demand by theUNION.

b) The Club agrees to furnish the UNION the names of all new probationary and regular employees covered by this Agreement not later than three (3) days from the date of regular appointment showing the positions and dates of hiring.

x x x x SECTION 4. TERMINATION UPON UNION

DEMAND. Upon written demand of the UNION and after observing due process, the Club shall dismiss a regular rank-and-file employee on any of the following grounds:

(a) Failure to join the UNION within five (5)

days from the time of regularization;(b) Resignation from the UNION, except within

the period allowed by law;(c) Conviction of a crime involving moral

turpitude;(d) Non-payment of UNION dues, fees, and

assessments;(e) Joining another UNION except within the

period allowed by law;(f) Malversation of union funds;(g) Actively campaigning to discourage

membership in the UNION; and(h) Inflicting harm or injury to any member or

officer of the UNION. It is understood that the UNION shall hold the CLUB

free and harmless [sic] from any liability or damage whatsoever which may be imposed upon it by any competent judicial or quasi-judicial authority as a result of such dismissal and the UNION shall reimburse the CLUB for any and all liability or damage it may be adjudged.[1] (Emphasis supplied.)

Subsequently, in July 2001, an election was held and a new set of officers was elected. Soon thereafter, the new officers conducted an audit of the Union funds. They discovered some irregularly recorded entries, unaccounted expenses and disbursements, and uncollected loans from the Union funds. The Union notified respondents Pizarro, Braza, and Castueras of the audit results and asked them to explain the discrepancies in writing.[2]

Thereafter, on October 6, 2001, in a meeting called by the Union,

respondents Pizarro, Braza, and Castueras explained their side. Braza denied any wrongdoing and instead asked that the investigation be addressed to Castueras, who was the Union Treasurer at that time. With regard to his unpaid loans, Braza claimed he had been paying through monthly salary deductions and said the Union could continue to deduct from his salary until full payment of his loans, provided he would be reimbursed should the result of the initial audit be proven wrong by a licensed auditor. With regard to the Union expenses which were without receipts, Braza explained that these were legitimate expenses for which receipts were not issued, e.g. transportation fares, food purchases from small eateries, and food and transportation allowances given to Union members with pending complaints with the Department of Labor and Employment, the National Labor Relations Commission (NLRC), and the fiscals office. He explained that though there were no receipts for these expenses, these were supported by vouchers and itemized as expenses. Regarding his unpaid and unliquidated cash advances amounting to almost PhP 20,000, Braza explained that these were not actual cash advances but payments to a certain Ricardo Ricafrente who had loaned PhP 200,000 to the Union.[3]

Pizarro, for his part, blamed Castueras for his unpaid and uncollected

loan and cash advances. He claimed his salaries were regularly deducted to pay his loan and he did not know why these remained unpaid in the records. Nonetheless, he likewise agreed to continuous salary deductions until all his accountabilities were paid.[4]

Castueras also denied any wrongdoing and claimed that the irregular

entries in the records were unintentional and were due to inadvertence because of his voluminous work load. He offered that his unpaid personal

loan of PhP 27,500 also be deducted from his salary until the loans were fully paid. Without admitting any fault on his part, Castueras suggested that his salary be deducted until the unaccounted difference between the loans and the amount collected amounting to a total of PhP 22,000 is paid.[5]

Despite their explanations, respondents Pizarro, Braza, and Castueras

were expelled from the Union, and, on October 16, 2001, were furnished individual letters of expulsion for malversation of Union funds.[6] Attached to the letters were copies of the Panawagan ng mga Opisyales ng Unyon signed by 37 out of 63 Union members and officers, and a Board of Directors Resolution[7] expelling them from the Union.In a letter dated October 18, 2001, the Union, invoking the Security Clause of the CBA, demanded that the Club dismiss respondents Pizarro, Braza, and Castueras in view of their expulsion from the Union.[8] The Club required the three respondents to show cause in writing within 48 hours from notice why they should not be dismissed. Pizarro and Castueras submitted their respective written explanations on October 20, 2001, while Braza submitted his explanation the following day. During the last week of October 2001, the Clubs general manager called respondents Pizarro, Braza, and Castueras for an informal conference inquiring about the charges against them. Said respondents gave their explanation and asserted that the Union funds allegedly malversed by them were even over the total amount collected during their tenure as Union officersPhP 120,000 for Braza, PhP 57,000 for Castueras, and PhP 10,840 for Pizarro, as against the total collection from April 1996 to December 2001 of only PhP 102,000. They claimed the charges are baseless. The general manager announced he would conduct a formal investigation. Nonetheless, after weighing the verbal and written explanations of the three respondents, the Club concluded that said respondents failed to refute the validity of their expulsion from the Union. Thus, it was constrained to terminate the employment of said respondents. On December 26, 2001, said respondents received their notices of termination from the Club.[9]

Respondents Pizarro, Braza, and Castueras challenged their dismissal from the Club in an illegal dismissal complaint docketed as NLRC-NCR Case No. 30-01-00130-02 filed with the NLRC, National Capital Region Arbitration Branch. In his January 27, 2003 Decision,[10] the Labor Arbiter ruled in favor of the Club,and found that there was justifiable cause in terminating said respondents. He dismissed the complaint for lack of merit. On February 21, 2003, respondents Pizarro, Braza, and Castueras filed an Appeal docketed as NLRC NCR CA No. 034601-03 with the NLRC.

On February 26, 2004, the NLRC rendered a Decision[11] granting the

appeal, the fallo of which reads: WHEREFORE, finding merit in the Appeal, judgment is hereby rendered declaring the dismissal of the complainants illegal. x x x Alabang Country Club, Inc. and Alabang Country Club Independent Union are hereby ordered to reinstate complainants Christopher Pizarro, Nolasco Castueras and Michael Braza to their former positions without loss of seniority rights and other privileges with full backwages from the time they were dismissed up to their actual reinstatement. SO ORDERED.

The NLRC ruled that there was no justifiable cause for the termination of respondents Pizarro, Braza, and Castueras. The commissioners relied heavily on Section 2, Rule XVIII of the Rules Implementing Book V of the Labor Code. Sec. 2 provides:

SEC. 2. Actions arising from Article 241 of the Code.

Any action arising from the administration or accounting of union funds shall be filed and disposed of as an intra-union dispute in accordance with Rule XIV of this Book.

In case of violation, the Regional or Bureau Director

shall order the responsible officer to render an accounting of

funds before the general membership and may, where circumstances warrant, mete the appropriate penalty to the erring officer/s, including suspension or expulsion from the union.[12]

According to the NLRC, said respondents expulsion from the Union was illegal since the DOLE had not yet made any definitive ruling on their liability regarding the administration of the Unions funds. The Club then filed a motion for reconsideration which the NLRC denied in its June 20, 2004 Resolution.[13]

Aggrieved by the Decision and Resolution of the NLRC, the Club filed a Petition for Certiorari which was docketed as CA-G.R. SP No. 86171 with the Court of Appeals (CA).

The CA Upheld the NLRC Rulingthat the Three Respondents were Deprived Due Process

On July 5, 2005, the appellate court rendered a Decision,[14] denying the petition and upholding the Decision of the NLRC. The CAs Decision focused mainly on the Clubs perceived failure to afford due process to the three respondents. It found that said respondents were not given the opportunity to be heard in a separate hearing as required by Sec. 2(b), Rule XXIII, Book V of the Omnibus Rules Implementing the Labor Code, as follows:

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: For termination of employment based on just causes as defined in Article 282 of the Code: x x x x (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.

The CA also said the dismissal of the three respondents was contrary to the doctrine laid down in Malayang Samahan ng mga Manggagawa sa M. Greenfield v. Ramos (Malayang Samahan), where this Court ruled that even on the assumption that the union had valid grounds to expel the local union officers, due process requires that the union officers be accorded a separate hearing by the employer company.[15]

In a Resolution[16] dated October 20, 2005, the CA denied the Clubs motion for reconsideration. The Club now comes before this Court with these issues for our resolution, summarized as follows:

1. Whether there was just cause to dismiss private respondents, and whether they were afforded due process in accordance with the standards provided for by the Labor Code and its Implementing Rules.

2. Whether or not the CA erred in not finding that the NLRC committed grave abuse of discretion amounting to lack or excess of jurisdiction when it ruled that respondents Pizarro, Braza, and Castueras were illegally expelled from the Union.

3. Whether the case of Agabon vs. NLRC[17] should be applied to this case.

4. Whether that in the absence of bad faith and

malice on the part of the Club, the Union is solely liable for the termination from employment of said respondents.

The main issue is whether the three respondents were illegally dismissed and whether they were afforded due process.

The Club avers that the dismissal of the three respondents was in accordance with the Union security provisions in their CBA. The Club also claims that the three respondents were afforded due process, since the Club conducted an investigation separate and independent from that conducted by the Union. Respondents Pizarro, Braza, and Castueras, on the other hand, contend that the Club failed to conduct a separate hearing as prescribed by Sec. 2(b), Rule XXIII, Book V of the implementing rules of the Code. First, we resolve the legality of the three respondents dismissal from the Club.

Valid Grounds for Termination

Under the Labor Code, an employee may be validly terminated on the following grounds: (1) just causes under Art. 282; (2) authorized causes under Art. 283; (3) termination due to disease under Art. 284; and (4) termination by the employee or resignation under Art. 285.

Another cause for termination is dismissal from employment due to the enforcement of the union security clause in the CBA. Here, Art. II of the CBA on Union security contains the provisions on the Union shop and maintenance of membership shop. There is union shop when all new regular employees are required to join the union within a certain period as a condition for their continued employment. There is maintenance of membership shop when employees who are union members as of the effective date of the agreement, or who thereafter become members, must maintain union membership as a condition for continued employment until they are promoted or transferred out of the bargaining unit or the agreement is terminated.[18] Termination of employment by virtue of a union security clause embodied in a CBA is recognized and accepted in our jurisdiction.[19] This practice strengthens the union and prevents disunity in the bargaining unit within the duration of the CBA. By preventing member disaffiliation with the threat of expulsion from the union and the consequent

termination of employment, the authorized bargaining representative gains more numbers and strengthens its position as against other unions which may want to claim majority representation.

In terminating the employment of an employee by enforcing the union

security clause, the employer needs only to determine and prove that: (1) the union security clause is applicable; (2) the union is requesting for the enforcement of the union security provision in the CBA; and (3) there is sufficient evidence to support the unions decision to expel the employee from the union. These requisites constitute just cause for terminating an employee based on the CBAs union security provision.

The language of Art. II of the CBA that the Union members must

maintain their membership in good standing as a condition sine qua non for their continued employment with the Club is unequivocal. It is also clear that upon demand by the Union and after due process, the Club shall terminate the employment of a regular rank-and-file employee who may be found liable for a number of offenses, one of which is malversation of Union funds.[20]

Below is the letter sent to respondents Pizarro, Braza, and Castueras,

informing them of their termination:

On October 18, 2001, the Club received a letter from the Board of Directors of the Alabang Country Club Independent Employees Union (Union) demanding your dismissal from service by reason of your alleged commission of act of dishonesty, specifically malversation of union funds. In support thereof, the Club was furnished copies of the following documents:

1. A letter under the subject Result of Audit dated

September 14, 2001 (receipt of which was duly acknowledged from your end), which required you to explain in writing the charges against you (copy attached);

2. The Unions Board of Directors Resolution dated October 2, 2001, which explained that the Union afforded you an opportunity to explain your side to the charges;

3. Minutes of the meeting of the Unions Board of

Directors wherein an administrative investigation of the case was conducted last October 6, 2001; and

4. The Unions Board of Directors Resolution dated

October 15, 2001 which resolved your expulsion from the Union for acts of dishonesty and malversation of union funds, which was duly approved by the general membership.

After a careful evaluation of the evidence on hand vis--vis a thorough assessment of your defenses presented in your letter-explanation dated October 6, 2001 of which you also expressed that you waived your right to be present during the administrative investigation conducted by the Unions Board of Directors on October 6, 2001, Management has reached the conclusion that there are overwhelming reasons to consider that you have violated Section 4(f) of the CBA, particularly on the grounds of malversation of union funds. The Club has determined that you were sufficiently afforded due process under the circumstances. Inasmuch as the Club is duty-bound to comply with its obligation under Section 4(f) of the CBA, it is unfortunate that Management is left with no other recourse but to consider your termination from service effective upon your receipt thereof. We wish to thank you for your services during your employment with the Company. It would be more prudent that we just move on independently if only to maintain industrial peace in the workplace. Be guided accordingly.[21]

Gleaned from the above, the three respondents were expelled from and by the Union after due investigation for acts of dishonesty and malversation of Union funds. In accordance with the CBA, the Union properly requested the Club, through the October 18, 2001 letter[22] signed by Mario Orense, the Union President, and addressed to Cynthia Figueroa, the Clubs HRD Manager, to enforce the Union security provision in their CBA and terminate said respondents.Then, in compliance with the Unions request, the Club reviewed the documents submitted by the Union, requested said respondents to submit written explanations, and thereafter afforded them reasonable opportunity to present their side. After it had determined that there was sufficient evidence that said respondents malversed Union funds, the Club dismissed them from their employment conformably with Sec. 4(f) of the CBA. Considering the foregoing circumstances, we are constrained to rule that there is sufficient cause for the three respondents termination from employment. Were respondents Pizarro, Braza, and Castueras accorded due process before their employments were terminated?

We rule that the Club substantially complied with the due process requirements before it dismissed the three respondents.

The three respondents aver that the Club violated their rights to due

process as enunciated in Malayang Samahan,[23] when it failed to conduct an independent and separate hearing before they were dismissed from service. The CA, in dismissing the Clubs petition and affirming the Decision of the NLRC, also relied on the same case. We explained in Malayang Samahan:

x x x Although this Court has ruled that union security

clauses embodied in the collective bargaining agreement may be validly enforced and that dismissals pursuant thereto may likewise be valid, this does not erode the fundamental requirements of due process. The reason behind the

enforcement of union security clauses which is the sanctity and inviolability of contracts cannot override ones right to due process.[24]

In the above case, we pronounced that while the company, under a maintenance of membership provision of the CBA, is bound to dismiss any employee expelled by the union for disloyalty upon its written request, this undertaking should not be done hastily and summarily. The company acts in bad faith in dismissing a worker without giving him the benefit of a hearing.[25] We cautioned in the same case that the power to dismiss is a normal prerogative of the employer; however, this power has a limitation. The employer is bound to exercise caution in terminating the services of the employees especially so when it is made upon the request of a labor union pursuant to the CBA. Dismissals must not be arbitrary and capricious. Due process must be observed in dismissing employees because the dismissal affects not only their positions but also their means of livelihood. Employers should respect and protect the rights of their employees, which include the right to labor.[26]

The CA and the three respondents err in relying on Malayang

Samahan, as its ruling has no application to this case. In Malayang Samahan, the union members were expelled from the union and were immediately dismissed from the company without any semblance of due process. Both the union and the company did not conduct administrative hearings to give the employees a chance to explain themselves. In the present case, the Club has substantially complied with due process. The three respondents were notified that their dismissal was being requested by the Union, and their explanations were heard. Then, the Club, through its President, conferred with said respondents during the last week of October 2001. The three respondents were dismissed only after the Club reviewed and considered the documents submitted by the Union vis--vis the written explanations submitted by said respondents. Under these circumstances, we find that the Club had afforded the three respondents a reasonable opportunity to be heard and defend themselves.

On the applicability of Agabon, the Club points out that the CA ruled that the three respondents were illegally dismissed primarily because they were not afforded due process. We are not unaware of the doctrine enunciated in Agabon that when there is just cause for the dismissal of an employee, the lack of statutory due process should not nullify the dismissal, or render it illegal or ineffectual, and the employer should indemnify the employee for the violation of his statutory rights.[27] However, we find that we could not apply Agabon to this case as we have found that the three respondents were validly dismissed and were actually afforded due process.

Finally, the issue that since there was no bad faith on the part of the

Club, the Union is solely liable for the termination from employment of the three respondents, has been mooted by our finding that their dismissal is valid.

WHEREFORE, premises considered, the Decision dated July 5,

2005 of the CA and the Decision dated February 26, 2004 of the NLRC are herebyREVERSED and SET ASIDE. The Decision dated January 27, 2003 of the Labor Arbiter in NLRC-NCR Case No. 30-01-00130-02 is hereby REINSTATED.

No costs. SO ORDERED.


Manila

THIRD DIVISION

G.R. No. 148132 January 28, 2008

SMART COMMUNICATIONS, INC., petitioner, vs.REGINA M. ASTORGA, respondent.

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

G.R. No. 151079 January 28, 2008

SMART COMMUNICATIONS, INC., petitioner, vs.REGINA M. ASTORGA, respondent.

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

G.R. No. 151372 January 28, 2008

REGINA M. ASTORGA, petitioner, vs.SMART COMMUNICATIONS, INC. and ANN MARGARET V. SANTIAGO, respondents.

D E C I S I O N

NACHURA, J.:

For the resolution of the Court are three consolidated petitions for review on certiorari under Rule 45 of the Rules of Court. G.R. No. 148132 assails the February 28, 2000 Decision1 and the May 7, 2001 Resolution2 of the Court of Appeals (CA) in CA-G.R. SP. No. 53831. G.R. Nos. 151079 and 151372 question the June 11, 2001 Decision3and the December 18, 2001 Resolution4 in CA-G.R. SP. No. 57065.

Regina M. Astorga (Astorga) was employed by respondent Smart Communications, Incorporated (SMART) on May 8, 1997 as District Sales Manager of the Corporate Sales Marketing Group/ Fixed Services Division (CSMG/FSD). She was receiving a monthly salary of P33,650.00. As District Sales Manager, Astorga enjoyed additional benefits, namely, annual performance incentive equivalent to 30% of her annual gross salary, a group life and hospitalization insurance coverage, and a car plan in the amount of P455,000.00.5

In February 1998, SMART launched an organizational realignment to achieve more efficient operations. This was made known to the employees on February 27, 1998.6 Part of the reorganization was the outsourcing of the marketing and sales force. Thus, SMART entered into a joint venture agreement with NTT of Japan, and formed SMART-NTT Multimedia,

Incorporated (SNMI). Since SNMI was formed to do the sales and marketing work, SMART abolished the CSMG/FSD, Astorga’s division.

To soften the blow of the realignment, SNMI agreed to absorb the CSMG personnel who would be recommended by SMART. SMART then conducted a performance evaluation of CSMG personnel and those who garnered the highest ratings were favorably recommended to SNMI. Astorga landed last in the performance evaluation, thus, she was not recommended by SMART. SMART, nonetheless, offered her a supervisory position in the Customer Care Department, but she refused the offer because the position carried lower salary rank and rate.

Despite the abolition of the CSMG/FSD, Astorga continued reporting for work. But on March 3, 1998, SMART issued a memorandum advising Astorga of the termination of her employment on ground of redundancy, effective April 3, 1998. Astorga received it on March 16, 1998.7

The termination of her employment prompted Astorga to file a Complaint8 for illegal dismissal, non-payment of salaries and other benefits with prayer for moral and exemplary damages against SMART and Ann Margaret V. Santiago (Santiago). She claimed that abolishing CSMG and, consequently, terminating her employment was illegal for it violated her right to security of tenure. She also posited that it was illegal for an employer, like SMART, to contract out services which will displace the employees, especially if the contractor is an in-house agency.9

SMART responded that there was valid termination. It argued that Astorga was dismissed by reason of redundancy, which is an authorized cause for termination of employment, and the dismissal was effected in accordance with the requirements of the Labor Code. The redundancy of Astorga’s position was the result of the abolition of CSMG and the creation of a specialized and more technically equipped SNMI, which is a valid and legitimate exercise of management prerogative.10

In the meantime, on May 18, 1998, SMART sent a letter to Astorga demanding that she pay the current market value of the Honda Civic Sedan which was given to her under the company’s car plan program, or to surrender the same to the company for proper disposition.11 Astorga, however, failed and refused to do either, thus prompting SMART to file a suit for replevin with the Regional Trial Court of Makati (RTC) on August

10, 1998. The case was docketed as Civil Case No. 98-1936 and was raffled to Branch 57.12

Astorga moved to dismiss the complaint on grounds of (i) lack of jurisdiction; (ii) failure to state a cause of action; (iii) litis pendentia; and (iv) forum-shopping. Astorga posited that the regular courts have no jurisdiction over the complaint because the subject thereof pertains to a benefit arising from an employment contract; hence, jurisdiction over the same is vested in the labor tribunal and not in regular courts.13

Pending resolution of Astorga’s motion to dismiss the replevin case, the Labor Arbiter rendered a Decision14dated August 20, 1998, declaring Astorga’s dismissal from employment illegal. While recognizing SMART’s right to abolish any of its departments, the Labor Arbiter held that such right should be exercised in good faith and for causes beyond its control. The Arbiter found the abolition of CSMG done neither in good faith nor for causes beyond the control of SMART, but a ploy to terminate Astorga’s employment. The Arbiter also ruled that contracting out the functions performed by Astorga to an in-house agency like SNMI was illegal, citing Section 7(e), Rule VIII-A of the Rules Implementing the Labor Code.

Accordingly, the Labor Arbiter ordered:

WHEREFORE, judgment is hereby rendered declaring the dismissal of [Astorga] to be illegal and unjust. [SMART and Santiago] are hereby ordered to:

1. Reinstate [Astorga] to [her] former position or to a substantially equivalent position, without loss of seniority rights and other privileges, with full backwages, inclusive of allowances and other benefits from the time of [her] dismissal to the date of reinstatement, which computed as of this date, are as follows:

(a) Astorga

BACKWAGES; (P33,650.00 x 4 months)

= P134,600.00

UNPAID SALARIES (February 15, 1998-April 3, 1998

February 15-28, 1998 = P 16,823.00

March 1-31, [1998] = P 33,650.00

April 1-3, 1998 = P 3,882.69

CAR MAINTENANCE ALLOWANCE(P2,000.00 x 4)

= P 8,000.00

FUEL ALLOWANCE (300 liters/mo. x 4 mos. at P12.04/liter)

= P 14,457.83

TOTAL = P211,415.52

x x x x

3. Jointly and severally pay moral damages in the amount of P500,000.00 x x x and exemplary damages in the amount of P300,000.00. x x x

4. Jointly and severally pay 10% of the amount due as attorney’s fees.

SO ORDERED.15

Subsequently, on March 29, 1999, the RTC issued an Order16 denying Astorga’s motion to dismiss the replevin case. In so ruling, the RTC ratiocinated that:

Assessing the [submission] of the parties, the Court finds no merit in the motion to dismiss.

As correctly pointed out, this case is to enforce a right of possession over a company car assigned to the defendant under a car plan privilege arrangement. The car is registered in the name of the plaintiff. Recovery thereof via replevin suit is allowed by Rule 60 of the 1997 Rules of Civil Procedure, which is undoubtedly within the jurisdiction of the Regional Trial Court.

In the Complaint, plaintiff claims to be the owner of the company car and despite demand, defendant refused to return said car. This is clearly sufficient statement of plaintiff’s cause of action.

Neither is there forum shopping. The element of litis penden[t]ia does not appear to exist because the judgment in the labor dispute will not constitute res judicata to bar the filing of this case.

WHEREFORE, the Motion to Dismiss is hereby denied for lack of merit.

SO ORDERED.17

Astorga filed a motion for reconsideration, but the RTC denied it on June 18, 1999.18

Astorga elevated the denial of her motion via certiorari to the CA, which, in its February 28, 2000 Decision,19reversed the RTC ruling. Granting the petition and, consequently, dismissing the replevin case, the CA held that the case is intertwined with Astorga’s complaint for illegal dismissal; thus, it is the labor tribunal that has rightful jurisdiction over the complaint. SMART’s motion for reconsideration having been denied,20 it elevated the case to this Court, now docketed as G.R. No. 148132.

Meanwhile, SMART also appealed the unfavorable ruling of the Labor Arbiter in the illegal dismissal case to the National Labor Relations Commission (NLRC). In its September 27, 1999 Decision,21 the NLRC sustained Astorga’s dismissal. Reversing the Labor Arbiter, the NLRC declared the abolition of CSMG and the creation of SNMI to do the sales and marketing services for SMART a valid organizational action. It overruled the Labor Arbiter’s ruling that SNMI is an in-house agency, holding that it lacked legal basis. It also declared that contracting, subcontracting and streamlining of operations for the purpose of increasing efficiency are allowed under the law. The NLRC further found erroneous the Labor Arbiter’s disquisition that redundancy to be valid must be impelled by economic reasons, and upheld the redundancy measures undertaken by SMART.

The NLRC disposed, thus:

WHEREFORE, the Decision of the Labor Arbiter is hereby reversed and set aside. [Astorga] is further ordered to immediately return the company vehicle assigned to her. [Smart and Santiago] are hereby ordered to pay the final wages of [Astorga] after [she] had submitted the required supporting papers therefor.

SO ORDERED.22

Astorga filed a motion for reconsideration, but the NLRC denied it on December 21, 1999.23

Astorga then went to the CA via certiorari. On June 11, 2001, the CA rendered a Decision24 affirming with modification the resolutions of the NLRC. In gist, the CA agreed with the NLRC that the reorganization undertaken by SMART resulting in the abolition of CSMG was a legitimate exercise of management prerogative. It rejected Astorga’s posturing that her non-absorption into SNMI was tainted with bad faith. However, the CA found that SMART failed to comply with the mandatory one-month notice prior to the intended termination. Accordingly, the CA imposed a penalty equivalent to Astorga’s one-month salary for this non-compliance. The CA also set aside the NLRC’s order for the return of the company vehicle holding that this issue is not essentially a labor concern, but is civil in nature, and thus, within the competence of the regular court to decide. It added that the matter had not been fully ventilated before the NLRC, but in the regular court.

Astorga filed a motion for reconsideration, while SMART sought partial reconsideration, of the Decision. On December 18, 2001, the CA resolved the motions, viz.:

WHEREFORE, [Astorga’s] motion for reconsideration is hereby PARTIALLY GRANTED. [Smart] is hereby ordered to pay [Astorga] her backwages from 15 February 1998 to 06 November 1998. [Smart’s] motion for reconsideration is outrightly DENIED.

SO ORDERED.25

Astorga and SMART came to us with their respective petitions for review assailing the CA ruling, docketed as G.R Nos. 151079 and 151372. On February 27, 2002, this Court ordered the consolidation of these petitions with G.R. No. 148132.26

In her Memorandum, Astorga argues:

I

THE COURT OF APPEALS ERRED IN UPHOLDING THE VALIDITY OF ASTORGA’S DISMISSAL DESPITE THE FACT THAT HER DISMISSAL WAS EFFECTED IN CLEAR VIOLATION OF THE CONSTITUTIONAL RIGHT TO SECURITY OF TENURE, CONSIDERING THAT THERE WAS NO GENUINE GROUND FOR HER DISMISSAL.

II

SMART’S REFUSAL TO REINSTATE ASTORGA DURING THE PENDENCY OF THE APPEAL AS REQUIRED BY ARTICLE 223 OF THE LABOR CODE, ENTITLES ASTORGA TO HER SALARIES DURING THE PENDENCY OF THE APPEAL.

III

THE COURT OF APPEALS WAS CORRECT IN HOLDING THAT THE REGIONAL TRIAL COURT HAS NO JURISDICTION OVER THE COMPLAINT FOR RECOVERY OF A CAR WHICH ASTORGA ACQUIRED AS PART OF HER EMPLOYEE (sic) BENEFIT.27

On the other hand, Smart in its Memoranda raises the following issues:

I

WHETHER THE HONORABLE COURT OF APPEALS HAS DECIDED A QUESTION OF SUBSTANCE IN A WAY PROBABLY NOT IN ACCORD WITH LAW OR WITH APPLICABLE DECISION OF THE HONORABLE SUPREME COURT AND HAS SO FAR DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS AS TO CALL FOR AN EXERCISE OF THE POWER OF SUPERVISION WHEN IT RULED THAT SMART DID NOT COMPLY WITH THE NOTICE REQUIREMENTS PRIOR TO TERMINATING ASTORGA ON THE GROUND OF REDUNDANCY.

II

WHETHER THE NOTICES GIVEN BY SMART TO ASTORGA AND THE DEPARTMENT OF LABOR AND EMPLOYMENT

ARE SUBSTANTIAL COMPLIANCE WITH THE NOTICE REQUIREMENTS BEFORE TERMINATION.

III

WHETHER THE RULE ENUNCIATED IN SERRANO VS. NATIONAL LABOR RELATIONS COMMISSION FINDS APPLICATION IN THE CASE AT BAR CONSIDERING THAT IN THE SERRANO CASE THERE WAS ABSOLUTELY NO NOTICE AT ALL.28

IV

WHETHER THE HONORABLE COURT OF APPEALS HAS DECIDED A QUESTION OF SUBSTANCE IN A WAY PROBABLY NOT IN ACCORD WITH LAW OR WITH APPLICABLE DECISION[S] OF THE HONORABLE SUPREME COURT AND HAS SO FAR DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS AS TO CALL FOR AN EXERCISE OF THE POWER OF SUPERVISION WHEN IT RULED THAT THE REGIONAL TRIAL COURT DOES NOT HAVE JURISDICTION OVER THE COMPLAINT FOR REPLEVIN FILED BY SMART TO RECOVER ITS OWN COMPANY VEHICLE FROM A FORMER EMPLOYEE WHO WAS LEGALLY DISMISSED.

V

WHETHER THE HONORABLE COURT OF APPEALS HAS FAILED TO APPRECIATE THAT THE SUBJECT OF THE REPLEVIN CASE IS NOT THE ENFORCEMENT OF A CAR PLAN PRIVILEGE BUT SIMPLY THE RECOVERY OF A COMPANY CAR.

VI

WHETHER THE HONORABLE COURT OF APPEALS HAS FAILED TO APPRECIATE THAT ASTORGA CAN NO LONGER BE CONSIDERED AS AN EMPLOYEE OF SMART UNDER THE LABOR CODE.29

The Court shall first deal with the propriety of dismissing the replevin case filed with the RTC of Makati City allegedly for lack of jurisdiction, which is the issue raised in G.R. No. 148132.

Replevin is an action whereby the owner or person entitled to repossession of goods or chattels may recover those goods or chattels from one who has wrongfully distrained or taken, or who wrongfully detains such goods or chattels. It is designed to permit one having right to possession to recover property in specie from one who has wrongfully taken or detained the property.30 The term may refer either to the action itself, for the recovery of personalty, or to the provisional remedy traditionally associated with it, by which possession of the property may be obtained by the plaintiff and retained during the pendency of the action.31

That the action commenced by SMART against Astorga in the RTC of Makati City was one for replevin hardly admits of doubt.

In reversing the RTC ruling and consequently dismissing the case for lack of jurisdiction, the CA made the following disquisition, viz.:

[I]t is plain to see that the vehicle was issued to [Astorga] by [Smart] as part of the employment package. We doubt that [SMART] would extend [to Astorga] the same car plan privilege were it not for her employment as district sales manager of the company. Furthermore, there is no civil contract for a loan between [Astorga] and [Smart]. Consequently, We find that the car plan privilege is a benefit arising out of employer-employee relationship. Thus, the claim for such falls squarely within the original and exclusive jurisdiction of the labor arbiters and the NLRC.32

We do not agree. Contrary to the CA’s ratiocination, the RTC rightfully assumed jurisdiction over the suit and acted well within its discretion in denying Astorga’s motion to dismiss. SMART’s demand for payment of the market value of the car or, in the alternative, the surrender of the car, is not a labor, but a civil, dispute. It involves the relationship of debtor and creditor rather than employee-employer relations.33 As such, the dispute falls within the jurisdiction of the regular courts.

In Basaya, Jr. v. Militante,34 this Court, in upholding the jurisdiction of the RTC over the replevin suit, explained:

Replevin is a possessory action, the gist of which is the right of possession in the plaintiff. The primary relief sought therein is the return of the property in specie wrongfully detained by another person. It is an ordinary statutory proceeding to adjudicate rights to the title or possession of personal property. The question of whether or not a party has the right of possession over the property involved and if so, whether or not the adverse party has wrongfully taken and detained said property as to require its return to plaintiff, is outside the pale of competence of a labor tribunal and beyond the field of specialization of Labor Arbiters.

x x x x

The labor dispute involved is not intertwined with the issue in the Replevin Case. The respective issues raised in each forum can be resolved independently on the other. In fact in 18 November 1986, the NLRC in the case before it had issued an Injunctive Writ enjoining the petitioners from blocking the free ingress and egress to the Vessel and ordering the petitioners to disembark and vacate. That aspect of the controversy is properly settled under the Labor Code. So also with petitioners’ right to picket. But the determination of the question of who has the better right to take possession of the Vessel and whether petitioners can deprive the Charterer, as the legal possessor of the Vessel, of that right to possess in addressed to the competence of Civil Courts.

In thus ruling, this Court is not sanctioning split jurisdiction but defining avenues of jurisdiction as laid down by pertinent laws.

The CA, therefore, committed reversible error when it overturned the RTC ruling and ordered the dismissal of the replevin case for lack of jurisdiction.

Having resolved that issue, we proceed to rule on the validity of Astorga’s dismissal.

Astorga was terminated due to redundancy, which is one of the authorized causes for the dismissal of an employee. The nature of redundancy as an authorized cause for dismissal is explained in the leading case ofWiltshire File Co., Inc. v. National Labor Relations Commission,35 viz:

x x x redundancy in an employer’s personnel force necessarily or even ordinarily refers to duplication of work. That no other person was holding the same position that private respondent held prior to termination of his services does not show that his position had not become redundant. Indeed, in any well organized business enterprise, it would be surprising to find duplication of work and two (2) or more people doing the work of one person. We believe that redundancy, for purposes of the Labor Code, exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise. Succinctly put, a position is redundant where it is superfluous, and superfluity of a position or positions may be the outcome of a number of factors, such as overhiring of workers, decreased volume of business, or dropping of a particular product line or service activity previously manufactured or undertaken by the enterprise.

The characterization of an employee’s services as superfluous or no longer necessary and, therefore, properly terminable, is an exercise of business judgment on the part of the employer. The wisdom and soundness of such characterization or decision is not subject to discretionary review provided, of course, that a violation of law or arbitrary or malicious action is not shown.36

Astorga claims that the termination of her employment was illegal and tainted with bad faith. She asserts that the reorganization was done in order to get rid of her. But except for her barefaced allegation, no convincing evidence was offered to prove it. This Court finds it extremely difficult to believe that SMART would enter into a joint venture agreement with NTT, form SNMI and abolish CSMG/FSD simply for the sole purpose of easing out a particular employee, such as Astorga. Moreover, Astorga never denied that SMART offered her a supervisory position in the Customer Care Department, but she refused the offer because the position carried a lower salary rank and rate. If indeed SMART simply wanted to get rid of her, it would not have offered her a position in any department in the enterprise.

Astorga also states that the justification advanced by SMART is not true because there was no compelling economic reason for redundancy. But contrary to her claim, an employer is not precluded from adopting a new policy conducive to a more economical and effective management even if it is not experiencing economic reverses. Neither does the law require that the

employer should suffer financial losses before he can terminate the services of the employee on the ground of redundancy. 37

We agree with the CA that the organizational realignment introduced by SMART, which culminated in the abolition of CSMG/FSD and termination of Astorga’s employment was an honest effort to make SMART’s sales and marketing departments more efficient and competitive. As the CA had taken pains to elucidate:

x x x a careful and assiduous review of the records will yield no other conclusion than that the reorganization undertaken by SMART is for no purpose other than its declared objective – as a labor and cost savings device. Indeed, this Court finds no fault in SMART’s decision to outsource the corporate sales market to SNMI in order to attain greater productivity. [Astorga] belonged to the Sales Marketing Group under the Fixed Services Division (CSMG/FSD), a distinct sales force of SMART in charge of selling SMART’s telecommunications services to the corporate market. SMART, to ensure it can respond quickly, efficiently and flexibly to its customer’s requirement, abolished CSMG/FSD and shortly thereafter assigned its functions to newly-created SNMI Multimedia Incorporated, a joint venture company of SMART and NTT of Japan, for the reason that CSMG/FSD does not have the necessary technical expertise required for the value added services. By transferring the duties of CSMG/FSD to SNMI, SMART has created a more competent and specialized organization to perform the work required for corporate accounts. It is also relieved SMART of all administrative costs – management, time and money-needed in maintaining the CSMG/FSD. The determination to outsource the duties of the CSMG/FSD to SNMI was, to Our mind, a sound business judgment based on relevant criteria and is therefore a legitimate exercise of management prerogative.

Indeed, out of our concern for those lesser circumstanced in life, this Court has inclined towards the worker and upheld his cause in most of his conflicts with his employer. This favored treatment is consonant with the social justice policy of the Constitution. But while tilting the scales of justice in favor of workers, the fundamental law also guarantees the right of the employer to reasonable returns for his investment.38 In this light, we must acknowledge the prerogative of the employer to adopt such measures as will promote greater efficiency, reduce overhead costs and enhance prospects of

economic gains, albeit always within the framework of existing laws. Accordingly, we sustain the reorganization and redundancy program undertaken by SMART.

However, as aptly found by the CA, SMART failed to comply with the mandated one (1) month notice prior to termination. The record is clear that Astorga received the notice of termination only on March 16, 199839 or less than a month prior to its effectivity on April 3, 1998. Likewise, the Department of Labor and Employment was notified of the redundancy program only on March 6, 1998.40

Article 283 of the Labor Code clearly provides:

Art. 283. Closure of establishment and reduction of personnel. — The employer may also terminate the employment of any employee due to the installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof x x x.

SMART’s assertion that Astorga cannot complain of lack of notice because the organizational realignment was made known to all the employees as early as February 1998 fails to persuade. Astorga’s actual knowledge of the reorganization cannot replace the formal and written notice required by the law. In the written notice, the employees are informed of the specific date of the termination, at least a month prior to the effectivity of such termination, to give them sufficient time to find other suitable employment or to make whatever arrangements are needed to cushion the impact of termination. In this case, notwithstanding Astorga’s knowledge of the reorganization, she remained uncertain about the status of her employment until SMART gave her formal notice of termination. But such notice was received by Astorga barely two (2) weeks before the effective date of termination, a period very much shorter than that required by law.

Be that as it may, this procedural infirmity would not render the termination of Astorga’s employment illegal. The validity of termination can exist independently of the procedural infirmity of the dismissal.41 In DAP Corporation v. CA,42 we found the dismissal of the employees therein valid

and for authorized cause even if the employer failed to comply with the notice requirement under Article 283 of the Labor Code. This Court upheld the dismissal, but held the employer liable for non-compliance with the procedural requirements.

The CA, therefore, committed no reversible error in sustaining Astorga’s dismissal and at the same time, awarding indemnity for violation of Astorga's statutory rights.

However, we find the need to modify, by increasing, the indemnity awarded by the CA to Astorga, as a sanction on SMART for non-compliance with the one-month mandatory notice requirement, in light of our ruling in Jaka Food Processing Corporation v. Pacot,43 viz.:

[I]f 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.

We deem it proper to increase the amount of the penalty on SMART to P50,000.00.

As provided in Article 283 of the Labor Code, Astorga is, likewise, entitled to separation pay equivalent to at least one (1) month salary or to at least one (1) month’s pay for every year of service, whichever is higher. The records show that Astorga’s length of service is less than a year. She is, therefore, also entitled to separation pay equivalent to one (1) month pay.

Finally, we note that Astorga claimed non-payment of wages from February 15, 1998. This assertion was never rebutted by SMART in the proceedings a quo. No proof of payment was presented by SMART to disprove the allegation. It is settled that in labor cases, the burden of proving payment of monetary claims rests on the employer.44 SMART failed to discharge the onus probandi. Accordingly, it must be held liable for Astorga’s salary from February 15, 1998 until the effective date of her termination, on April 3, 1998.

However, the award of backwages to Astorga by the CA should be deleted for lack of basis. Backwages is a relief given to an illegally dismissed employee. Thus, before backwages may be granted, there must be a finding of unjust or illegal dismissal from work.45 The Labor Arbiter ruled that Astorga was illegally dismissed. But on appeal, the NLRC reversed the Labor Arbiter’s ruling and categorically declared Astorga’s dismissal valid. This ruling was affirmed by the CA in its assailed Decision. Since Astorga’s dismissal is for an authorized cause, she is not entitled to backwages. The CA’s award of backwages is totally inconsistent with its finding of valid dismissal.

WHEREFORE, the petition of SMART docketed as G.R. No. 148132 is GRANTED. The February 28, 2000 Decision and the May 7, 2001 Resolution of the Court of Appeals in CA-G.R. SP. No. 53831 are SET ASIDE. The Regional Trial Court of Makati City, Branch 57 is DIRECTED to proceed with the trial of Civil Case No. 98-1936 and render its Decision with reasonable dispatch.

On the other hand, the petitions of SMART and Astorga docketed as G.R. Nos. 151079 and 151372 are DENIED. The June 11, 2001 Decision and the December 18, 2001 Resolution in CA-G.R. SP. No. 57065, are AFFIRMEDwith MODIFICATION. Astorga is declared validly dismissed. However, SMART is ordered to pay AstorgaP50,000.00 as indemnity for its non-compliance with procedural due process, her separation pay equivalent to one (1) month pay, and her salary from February 15, 1998 until the effective date of her termination on April 3, 1998. The award of backwages is DELETED for lack of basis.

SO ORDERED.

Republic of the PhilippinesSupreme Court

ManilaFIRST DIVISION

NELSON A. CULILI, G.R. No. 165381

Petitioner,

- versus -

EASTERN TELECOMMUNICATIONS PHILIPPINES, INC., SALVADOR HIZON (President and Chief Executive Officer), EMILIANO JURADO (Chairman of the Board), VIRGILIO GARCIA (Vice President) and STELLA GARCIA (Assistant Vice President),

Respondents.

Present:

CORONA, C.J.,

Chairperson,

VELASCO, JR.,

LEONARDO-DE CASTRO,

DEL CASTILLO, and

PEREZ, JJ.

Promulgated:

February 9, 2011

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

D E C I S I O N

LEONARDO-DE CASTRO, J.:

Before Us is a petition for review on certiorari[1] of the February 5, 2004 Decision[2] and September 13, 2004 Resolution[3] of the Court of

http://sc.judiciary.gov.ph/jurisprudence/2011/february2011/165381.htm#_ftn3



Appeals inCA-G.R. SP No. 75001, wherein the Court of Appeals set aside the March 1, 2002 Decision[4] and September 24, 2002 Resolution[5] of the National Labor Relations Commission (NLRC), which affirmed the Labor Arbiters Decision[6] dated April 30, 2001.

Respondent Eastern Telecommunications Philippines, Inc. (ETPI) is a telecommunications company engaged mainly in the business of establishing commercial telecommunications systems and leasing of international datalines or circuits that pass through the international gateway facility (IGF).[7] The other respondents are ETPIs officers: Salvador Hizon, President and Chief Executive Officer; Emiliano Jurado, Chairman of the Board; Virgilio Garcia, Vice President; and Stella Garcia, Assistant Vice President.

Petitioner Nelson A. Culili (Culili) was employed by ETPI as a Technician in its Field Operations Department on January 27, 1981. On December 12, 1996, Culili was promoted to Senior Technician in the Customer Premises Equipment Management Unit of the Service Quality Department and his basic salary was increased.[8]

As a telecommunications company and an authorized IGF operator, ETPI was required, under Republic Act. No. 7925 and Executive Order No. 109, to establish landlines in Metro Manila and certain provinces.[9] However, due to interconnection problems with the Philippine Long Distance Telephone Company (PLDT), poor subscription and cancellation of subscriptions, and other business difficulties, ETPI was forced to halt its roll out of one hundred twenty-nine thousand (129,000) landlines already allocated to a number of its employees.[10]

In 1998, due to business troubles and losses, ETPI was compelled to implement a Right-Sizing Program which consisted of two phases: the first








phaseinvolved the reduction of ETPIs workforce to only those employees that were necessary and which ETPI could sustain; the second phase entailed a company-wide reorganization which would result in the transfer, merger, absorption or abolition of certain departments of ETPI.[11]

As part of the first phase, ETPI, on December 10, 1998, offered to its employees who had rendered at least fifteen years of service, the Special Retirement Program, which consisted of the option to voluntarily retire at an earlier age and a retirement package equivalent to two and a half (2) months salary for every year of service.[12] This offer was initially rejected by the Eastern Telecommunications Employees Union (ETEU), ETPIs duly recognized bargaining agent, which threatened to stage a strike. ETPI explained to ETEU the exact details of the Right-Sizing Program and the Special Retirement Program and after consultations with ETEUs members, ETEU agreed to the implementation of both programs.[13] Thus, on February 8, 1999, ETPI re-offered the Special Retirement Program and the corresponding retirement package to the one hundred two (102) employees who qualified for the program.[14] Of all the employees who qualified to avail of the program, only Culili rejected the offer.[15]

After the successful implementation of the first phase of the Right-Sizing Program, ETPI, on March 1, 1999 proceeded with the second phase which necessitated the abolition, transfer and merger of a number of ETPIs departments.[16]

Among the departments abolished was the Service Quality Department. The functions of the Customer Premises Equipment Management Unit, Culilis unit, were absorbed by the Business and Consumer Accounts Department. The abolition of the Service Quality Department rendered the specialized functions of a Senior Technician unnecessary. As a result, Culilis position was abolished due to redundancy







and his functions were absorbed by Andre Andrada, another employee already with the Business and Consumer Accounts Department.[17]

On March 5, 1999, Culili discovered that his name was omitted in ETPIs New Table of Organization. Culili, along with three of his co-employees who were similarly situated, wrote their union president to protest such omission.[18]

In a letter dated March 8, 1999, ETPI, through its Assistant Vice President Stella Garcia, informed Culili of his termination from employment effective April 8, 1999. The letter reads:

March 8, 1999

To: N. Culili

Thru: S. Dobbin/G. Ebue

From: AVP-HRD

------------------------------------------------------------------------------------------

As you are aware, the current economic crisis has adversely affected our operations and undermined our earlier plans to put in place major work programs and activities.Because of this, we have to implement a Rightsizing Program in order to cut administrative/operating costs and to avoid losses. In line with this program, your employment with the company shall terminate effective at the close of business hours on April 08, 1999. However, to give you ample time to look for other



employment, provided you have amply turned over your pending work and settled your accountabilities, you are no longer required to report to work starting tomorrow. You will be considered on paid leave until April 08, 1999.

You will likewise be paid separation pay in compliance with legal requirements (see attached), as well as other benefits accruing to you under the law, and the CBA. We take this opportunity to thank you for your services and wish you well in your future endeavors.

(Signed)

Stella J. Garcia[19]

This letter was similar to the memo shown to Culili by the union president weeks before Culili was dismissed. The memo was dated December 7, 1998, and was advising him of his dismissal effective January 4, 1999 due to the Right-Sizing Program ETPI was going to implement to cut costs and avoid losses.[20]

Culili alleged that neither he nor the Department of Labor and Employment (DOLE) were formally notified of his termination. Culili claimed that he only found out about it sometime in March 1999 when Vice President Virgilio Garcia handed him a copy of the March 8, 1999 letter, after he was barred from entering ETPIs premises by its armed security personnel when he tried to report for work.[21] Culili believed that ETPI had already decided to dismiss him even prior to the March 8, 1999 letter as evidenced by the December 7, 1998 version of that letter. Moreover, Culili asserted that ETPI had contracted out the services he used to perform to a labor-only contractor which not only proved that his functions had not




become unnecessary, but which also violated their Collective Bargaining Agreement (CBA) and the Labor Code. Aside from these, Culili also alleged that he was discriminated against when ETPI offered some of his co-employees an additional benefit in the form of motorcycles to induce them to avail of the Special Retirement Program, while he was not.[22]

ETPI denied singling Culili out for termination. ETPI claimed that while it is true that they offered the Special Retirement Package to reduce their workforce to a sustainable level, this was only the first phase of the Right-Sizing Program to which ETEU agreed. The second phase intended to simplify and streamline the functions of the departments and employees of ETPI. The abolition of Culilis department - the Service Quality Department - and the absorption of its functions by the Business and Consumer Accounts Department were in line with the programs goals as the Business and Consumer Accounts Department was more economical and versatile and it was flexible enough to handle the limited functions of the Service Quality Department. ETPI averred that since Culili did not avail of the Special Retirement Program and his position was subsequently declared redundant, it had no choice but to terminate Culili.[23] Culili, however, continued to report for work. ETPI said that because there was no more work for Culili, it was constrained to serve a final notice of termination[24] to Culili, which Culili ignored. ETPI alleged that Culili informed his superiors that he would agree to his termination if ETPI would give him certain special work tools in addition to the benefits he was already offered. ETPI claimed that Culilis counter-offer was unacceptable as the work tools Culili wanted were worth almost a million pesos. Thus, on March 26, 1999, ETPI tendered to Culili his final pay check of Eight Hundred Fifty-Nine Thousand Thirty-Three and 99/100 Pesos (P859,033.99) consisting of his basic salary, leaves, 13th month pay and separation pay.[25] ETPI claimed that Culili refused to accept his termination and continued to report for work.[26] ETPI denied hiring outside contractors to perform Culilis work and denied offering added incentives to its employees to induce them to retire early. ETPI also explained that the December 7, 1998 letter was never given to Culili in an official capacity. ETPI claimed that it really needed to reduce its workforce at that






time and that it had to prepare several letters in advance in the event that none of the employees avail of the Special Retirement Program. However, ETPI decided to wait for a favorable response from its employees regarding the Special Retirement Program instead of terminating them.[27]

On February 8, 2000, Culili filed a complaint against ETPI and its officers for illegal dismissal, unfair labor practice, and money claims before the Labor Arbiter.

On April 30, 2001, the Labor Arbiter rendered a decision finding ETPI guilty of illegal dismissal and unfair labor practice, to wit:

WHEREFORE, decision is hereby rendered declaring the dismissal of complainant Nelson A. Culili illegal for having been made through an arbitrary and malicious declaration of redundancy of his position and for having been done without due process for failure of the respondent to give complainant and the DOLE written notice of such termination prior to the effectivity thereof.

In view of the foregoing, respondents Eastern Telecommunications Philippines and the individual respondents are hereby found guilty of unfair labor practice/discrimination and illegal dismissal and ordered to pay complainant backwages and such other benefits due him if he were not illegally dismissed, including moral and exemplary damages and 10% attorneys fees. Complainant likewise is to be reinstated to his former position or to a substantially equivalent position in accordance with the pertinent provisions of the Labor Code as interpreted in the case of Pioneer texturing [Pioneer Texturizing Corp. v. National Labor Relations Commission], G.R. No. 11865[1], 16 October 1997.Hence,


Complainant must be paid the total amount of TWO MILLION SEVEN HUNDRED FORTY[-]FOUR THOUSAND THREE [HUNDRED] SEVENTY[-] NINE and 41/100 (P2,744,379.41), computed as follows:

I. Backwages (from 16 March 1999 to 16 March 2001)

a. Basic Salary (P29,030 x 24 mos.) P696,720.96

b. 13th Month Pay (P692,720.96/12) 58,060.88

c. Leave Benefits

1. Vacation Leave (30 days/annum)

P1,116.54 x 60 days 66,992.40

2. Sick Leave (30 days/annum)

P1,116.54 x 60 days 66,992.40

3. Birthday Leave (1 day/annum)

P1,116.54 x 2 days 2,233.08

d. Rice and Meal Subsidy

16 March 31 July 1999

(P1,750 x 4.5 mos. = P7,875.00)

01 August 1991 31 July 2000

(P1,850 x 12 mos. = P22,200.00)

01 August 2000 16 March 2001

(P1,950 x 7.5 mos. = P14,625.00) 44,700.00

e. Uniform Allowance

P7,000/annum x 2 years __14,000.00

P949,699.72

II. Damages

a. MoralP500,000.00

b. ExemplaryP250,000.00

III. Attorneys Fees (10% of award) __94,969.97

GRAND TOTAL: P 2,744,379.41 [28]

The Labor Arbiter believed Culilis claim that ETPI intended to dismiss him even before his position was declared redundant. He found the December 7, 1998 letter to be a telling sign of this intention. The Labor Arbiter held that a reading of the termination letter shows that the ground


ETPI was actually invoking was retrenchment and not redundancy, but ETPI stuck to redundancy because it was easier to prove than retrenchment. He also did not believe that Culilis functions were as limited as ETPI made it appear to be, and held that ETPI failed to present any reasonable criteria to justify the declaration of Culilis position as redundant. On the issue of unfair labor practice, the Labor Arbiter agreed that the contracting out of Culilis functions to non-union members violated Culilis rights as a union member. Moreover, the Labor Arbiter said that ETPI was not able to dispute Culilis claims of discrimination and subcontracting, hence, ETPI was guilty of unfair labor practice.

On appeal, the NLRC affirmed the Labor Arbiters decision but modified the amount of moral and exemplary damages awarded, viz:

WHEREFORE, the Decision appealed from is AFFIRMED granting complainant the money claims prayed for including full backwages, allowances and other benefits or their monetary equivalent computed from the time of his illegal dismissal on 16 March 1999 up to his actual reinstatement except the award of moral and exemplary damages which is modified to P200,000.00 for moral and P100,000.00 for exemplary damages. For this purpose, this case is REMANDED to the Labor Arbiter for computation of backwages and other monetary awards to complainant.[29]

ETPI filed a Petition for Certiorari under Rule 65 of the Rules of Civil Procedure before the Court of Appeals on the ground of grave abuse of discretion. ETPI prayed that a Temporary Restraining Order be issued against the NLRC from implementing its decision and that the NLRC decision and resolution be set aside.


The Court of Appeals, on February 5, 2004, partially granted ETPIs petition. The dispositive portion of the decision reads as follows:

WHEREFORE, all the foregoing considered, the petition is PARTIALLY GRANTED. The assailed Decision of public respondent National Labor Relations Commission isMODIFIED in that petitioner Eastern Telecommunications Philippines Inc. (ETPI) is hereby ORDERED to pay respondent Nelson Culili full backwages from the time his salaries were not paid until the finality of this Decision plus separation pay in an amount equivalent to one (1) month salary for every year of service. The awards for moral and exemplary damages are DELETED. The Writ of Execution issued by the Labor Arbiter dated September 8, 2003 is DISSOLVED.[30]

The Court of Appeals found that Culilis position was validly abolished due to redundancy. The Court of Appeals said that ETPI had been very candid with its employees in implementing its Right-Sizing Program, and that it was highly unlikely that ETPI would effect a company-wide reorganization simply for the purpose of getting rid of Culili. The Court of Appeals also held that ETPI cannot be held guilty of unfair labor practice as mere contracting out of services being performed by union members does not per se amount to unfair labor practice unless it interferes with the employees right to self-organization. The Court of Appeals further held that ETPIs officers cannot be held liable absent a showing of bad faith or malice. However, the Court of Appeals found that ETPI failed to observe the standards of due process as required by our laws when it failed to properly notify both Culili and the DOLE of Culilis termination. The Court of Appeals maintained its position in its September 13, 2004 Resolution when it denied Culilis Motion for Reconsideration and Urgent Motion to Reinstate


the Writ of Execution issued by the Labor Arbiter, and ETPIs Motion for Partial Reconsideration.

Culili is now before this Court praying for the reversal of the Court of Appeals decision and the reinstatement of the NLRCs decision based on the following grounds:

I

THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE NOT IN ACCORD WITH THE APPLICABLE LAW AND JURISPRUDENCE WHEN IT REVERSED THE DECISIONS OF THE NLRC AND THE LABOR ARBITER HOLDING THE DISMISSAL OF PETITIONER ILLEGAL IN THAT:

A. CONTRARY TO THE FINDINGS OF THE COURT OF APPEALS, RESPONDENTS CHARACTERIZATION OF PETITIONERS POSITION AS REDUNDANT WAS TAINTED BY BAD FAITH.

B. THERE WAS NO ADEQUATE JUSTIFICATION TO DECLARE PETITIONERS POSITION AS REDUNDANT.

IITHE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE NOT IN ACCORD WITH LAW AND JURISPRUDENCE IN FINDING THAT NO UNFAIR LABOR PRACTICE ACTS WERE COMMITTED AGAINST THE PETITIONER.

III

THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE NOT IN ACCORD WITH LAW AND JURISPRUDENCE IN DELETING THE AWARD OF MORAL AND EXEMPLARY DAMAGES AND ATTORNEYS FEES IN FAVOR OF PETITIONER AND IN DISSOLVING THE WRIT OF EXECUTION DATED 8 SEPTEMBER 2003 ISSUED BY THE LABOR ARBITER.

IV

THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE NOT IN ACCORD WITH LAW AND JURISPRUDENCE IN ABSOLVING THE INDIVIDUAL RESPONDENTS OF PERSONAL LIABILITY.

V

CONTRARY TO APPLICABLE LAW AND JURISPRUDENCE, THE COURT OF APPEALS, IN A CERTIORARI PROCEEDING, REVIEWED THE FACTUAL FINDINGS OF THE NLRC WHICH AFFIRMED THAT OF THE LABOR ARBITER AND, THEREAFTER, ISSUED A WRIT OF CERTIORARI REVERSING THE DECISIONS OF THE NLRC AND THE LABOR ARBITER EVEN IN THE ABSENCE OF GRAVE ABUSE OF DISCRETION.[31]

Procedural Issue: Court of Appeals

Power to Review Facts in a Petition

For Certiorari under Rule 65

Culili argued that the Court of Appeals acted in contravention of applicable law and jurisprudence when it reexamined the facts in this case and reversed the factual findings of the Labor Arbiter and the NLRC in a special civil action for certiorari.

This Court has already confirmed the power of the Court of Appeals, even on a Petition for Certiorari under Rule 65,[32] to review the evidence on record, when necessary, to resolve factual issues:

The power of the Court of Appeals to review NLRC decisions via Rule 65 or Petition for Certiorari has been settled as early as in our decision in St. Martin Funeral Home v. National Labor



Relations Commission. This Court held that the proper vehicle for such review was a Special Civil Action for Certiorari under Rule 65 of the Rules of Court, and that this action should be filed in the Court of Appeals in strict observance of the doctrine of the hierarchy of courts. Moreover, it is already settled that under Section 9 of Batas Pambansa Blg. 129, as amended by Republic Act No. 7902[10] (An Act Expanding the Jurisdiction of the Court of Appeals, amending for the purpose of Section Nine of Batas Pambansa Blg. 129 as amended, known as the Judiciary Reorganization Act of 1980), the Court of Appeals pursuant to the exercise of its original jurisdiction over Petitions for Certiorari is specifically given the power to pass upon the evidence, if and when necessary, to resolve factual issues.[33]

While it is true that factual findings made by quasi-judicial and administrative tribunals, if supported by substantial evidence, are accorded great respect and even finality by the courts, this general rule admits of exceptions. When there is a showing that a palpable and demonstrable mistake that needs rectification has been committed[34] or when the factual findings were arrived at arbitrarily or in disregard of the evidence on record, these findings may be examined by the courts.[35]

In the case at bench, the Court of Appeals found itself unable to completely sustain the findings of the NLRC thus, it was compelled to review the facts and evidence and not limit itself to the issue of grave abuse of discretion.




With the conflicting findings of facts by the tribunals below now before us, it behooves this Court to make an independent evaluation of the facts in this case.

Main Issue: Legality of Dismissal

Culili asserted that he was illegally dismissed because there was no valid cause to terminate his employment. He claimed that ETPI failed to prove that his position had become redundant and that ETPI was indeed incurring losses. Culili further alleged that his functions as a Senior Technician could not be considered a superfluity because his tasks were crucial and critical to ETPIs business.

Under our laws, an employee may be terminated for reasons

involving measures taken by the employer due to business

necessities. Article 283 of the Labor Code provides:

Art. 283. Closure of establishment and reduction of

personnel. - The employer may also terminate the employment of any employee due to the installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Department of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or

undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year.

There is redundancy when the service capability of the workforce is greater than what is reasonably required to meet the demands of the business enterprise. A position becomes redundant when it is rendered superfluous by any number of factors such as over-hiring of workers, decrease in volume of business, or dropping a particular product line or service activity previously manufactured or undertaken by the enterprise.[36]

This Court has been consistent in holding that the determination of whether or not an employees services are still needed or sustainable properly belongs to the employer. Provided there is no violation of law or a showing that the employer was prompted by an arbitrary or malicious act, the soundness or wisdom of this exercise of business judgment is not subject to the discretionary review of the Labor Arbiter and the NLRC.[37]

However, an employer cannot simply declare that it has become overmanned and dismiss its employees without producing adequate proof to sustain its claim of redundancy.[38] Among the requisites of a valid redundancy program are: (1) the good faith of the employer in abolishing the redundant position; and (2) fair and reasonable criteria in ascertaining what positions are to be declared redundant,[39] such as but not limited to: preferred status, efficiency, and seniority.[40]






This Court also held that the following evidence may be proffered to substantiate redundancy: the new staffing pattern, feasibility studies/ proposal on the viability of the newly created positions, job description and the approval by the management of the restructuring.[41]

In the case at bar, ETPI was upfront with its employees about its plan to implement a Right-Sizing Program. Even in the face of initial opposition from and rejection of the said program by ETEU, ETPI patiently negotiated with ETEUs officers to make them understand ETPIs business dilemma and its need to reduce its workforce and streamline its organization. This evidently rules out bad faith on the part of ETPI.

In deciding which positions to retain and which to abolish, ETPI chose on the basis of efficiency, economy, versatility and flexibility. It needed to reduce its workforce to a sustainable level while maintaining functions necessary to keep it operating. The records show that ETPI had sufficiently established not only its need to reduce its workforce and streamline its organization, but also the existence of redundancy in the position of a Senior Technician. ETPI explained how it failed to meet its business targets and the factors that caused this, and how this necessitated it to reduce its workforce and streamline its organization. ETPI also submitted its old and new tables of organization and sufficiently described how limited the functions of the abolished position of a Senior Technician were and how it decided on whom to absorb these functions.

In his affidavit dated April 10, 2000,[42] Mr. Arnel D. Reyel, the Head of both the Business Services Department and the Finance Department of ETPI, described how ETPI went about in reorganizing its departments. Mr. Reyel said that in the course of ETPIs reorganization, new departments were created, some were transferred, and two were abolished. Among the departments abolished was the Service Quality Department. Mr. Reyel said that ETPI felt that the functions of the Service Quality Department, which catered to both corporate and small and medium-sized clients, overlapped and were too large for a single department, thus, the functions of this



department were split and simplified into two smaller but more focused and efficient departments. In arriving at the decision to abolish the position of Senior Technician, Mr. Reyel explained:

11.3. Thus, in accordance with the reorganization of the different departments of ETPI, the Service Quality Department was abolished and its functions were absorbed by the Business and Consumer Accounts Department and the Corporate and Major Accounts Department.

11.4. With the abolition and resulting simplification of the Service Quality Department, one of the units thereunder, the Customer Premises Equipment Maintenance (CPEM) unit was transferred to the Business and Consumer Accounts Department. Since the Business and Consumer Accounts Department had to remain economical and focused yet versatile enough to meet all the needs of its small and medium sized clients, it was decided that, in the judgment of ETPI management, the specialized functions of a Senior Technician in the CPEM unit whose sole function was essentially the repair and servicing of ETPIs telecommunications equipment was no longer needed since the Business and Consumer [Accounts] Department had to remain economical and focused yet versatile enough to meet all the multifarious needs of its small and medium sized clients.

11.5. The business reason for the abolition of the position of Senior Technician was because in ETPIs judgment, what was needed in the Business and Consumer Accounts Department was a versatile, yet economical position with functions which were not limited to the mere repair and servicing of telecommunications equipment. It was determined that what was called for was a position that could also perform varying

functions such as the actual installation of telecommunications products for medium and small scale clients, handle telecommunications equipment inventory monitoring, evaluation of telecommunications equipment purchased and the preparation of reports on the daily and monthly activation of telecommunications equipment by these small and medium scale clients.

11.6. Thus, for the foregoing reasons, ETPI decided that the position of Senior Technician was to be abolished due to redundancy. The functions of a Senior Technician was to be abolished due to redundancy. The functions of a Senior Technician would then be absorbed by an employee assigned to the Business and Consumer Accounts Department who was already performing the functions of actual installation of telecommunications products in the field and handling telecommunications equipment inventory monitoring, evaluation of telecommunications equipment purchased and the preparation of reports on the daily and monthly activation of telecommunications equipment. This employee would then simply add to his many other functions the duty of repairing and servicing telecommunications equipment which had been previously performed by a Senior Technician.[43]

In the new table of organization that the management approved, one hundred twelve (112) employees were redeployed and nine (9) positions were declared redundant.[44] It is inconceivable that ETPI would effect a company-wide reorganization of this scale for the mere purpose of singling out Culili and terminating him. If Culilis position were indeed indispensable to ETPI, then it would be absurd for ETPI, which was then trying to save its operations, to abolish that one position which it needed the most. Contrary to Culilis assertions that ETPI could not do away with his functions as long as it is in the telecommunications industry, ETPI did not abolish the functions



performed by Culili as a Senior Technician. What ETPI did was to abolish the position itself for being too specialized and limited. The functions of that position were then added to another employee whose functions were broad enough to absorb the tasks of a Senior Technician.

Culili maintains that ETPI had already decided to dismiss him even before the second phase of the Right-Sizing Program was implemented as evidenced by the December 7, 1998 letter.

The December 7, 1998 termination letter signed by ETPIs AVP Stella Garcia hardly suffices to prove bad faith on the part of the company. The fact remains that the said letter was never officially transmitted and Culili was not terminated at the end of the first phase of ETPIs Right-Sizing Program. ETPI had given an adequate explanation for the existence of the letter and considering that it had been transparent with its employees, through their union ETEU, so much so that ETPI even gave ETEU this unofficial letter, there is no reason to speculate and attach malice to such act. That Culili would be subsequently terminated during the second phase of the Right-Sizing Program is not evidence of undue discrimination or singling out since not only Culilis position, but his entire unit was abolished and absorbed by another department.

Unfair Labor Practice

Culili also alleged that ETPI is guilty of unfair labor practice for

violating Article 248(c) and (e) of the Labor Code, to wit:

Art. 248. Unfair labor practices of employers. - It shall be unlawful for an employer to commit any of the following unfair labor practice:

x x x x

c. To contract out services or functions being performed by union members when such will interfere with, restrain or coerce employees in the exercise of their rights to self-organization;

x x x x

e. To discriminate in regard to wages, hours of work, and other terms and conditions of employment in order to encourage or discourage membership in any labor organization. Nothing in this Code or in any other law shall stop the parties from requiring membership in a recognized collective bargaining agent as a condition for employment, except those employees who are already members of another union at the time of the signing of the collective bargaining agreement. Employees of an appropriate collective bargaining unit who are not members of the recognized collective bargaining agent may be assessed a reasonable fee equivalent to the dues and other fees paid by members of the recognized collective bargaining agent, if such non-union members accept the benefits under the collective agreement: Provided, that the individual authorization required under Article 242, paragraph (o) of this Code shall not apply to the non-members of the recognized collective bargaining agent.

Culili asserted that ETPI is guilty of unfair labor practice because

his functions were sourced out to labor-only contractors and he was

discriminated against when his co-employees were treated differently

when they were each offered an additional motorcycle to induce them to

avail of the Special Retirement Program. ETPI denied hiring outside

contractors and averred that the motorcycles were not given to his co-

employees but were purchased by them pursuant to their Collective

Bargaining Agreement, which allowed a retiring employee to purchase

the motorcycle he was assigned during his employment.

The concept of unfair labor practice is provided in Article 247 of the Labor Code which states:

Article 247. Concept of unfair labor practice and procedure for prosecution thereof. -- Unfair labor practices violate the constitutional right of workers and employees to self-organization, are inimical to the legitimate interest of both labor and management, including their right to bargain collectively and otherwise deal with each other in an atmosphere of freedom and mutual respect, disrupt industrial peace and hinder the promotion of healthy and stable labor-management relations.

In the past, we have ruled that unfair labor practice refers to acts that violate the workers' right to organize. The prohibited acts are related to the workers' right to self-organization and to the observance of a CBA. [45] We have likewise declared that there should be no dispute that all the prohibited acts constituting unfair labor practice in essence relate to the workers' right to self-organization.[46] Thus, an employer may only be held liable for unfair



labor practice if it can be shown that his acts affect in whatever manner the right of his employees to self-organize.[47]

There is no showing that ETPI, in implementing its Right-Sizing Program, was motivated by ill will, bad faith or malice, or that it was aimed at interfering with its employees right to self-organize. In fact, ETPI negotiated and consulted with ETEU before implementing its Right-Sizing Program.

Both the Labor Arbiter and the NLRC found ETPI guilty of unfair

labor practice because of its failure to dispute Culilis allegations.

According to jurisprudence, basic is the principle that good faith is presumed and he who alleges bad faith has the duty to prove the same.[48] By imputing bad faith to the actuations of ETPI, Culili has the burden of proof to present substantial evidence to support the allegation of unfair labor practice. Culili failed to discharge this burden and his bare allegations deserve no credit.

Observance of Procedural Due Process

Although the Court finds Culilis dismissal was for a lawful cause and not an act of unfair labor practice, ETPI, however, was remiss in its duty to observe procedural due process in effecting the termination of Culili.

We have previously held that there are two aspects which characterize the concept of due process under the Labor Code: one is substantive whether the termination of employment was based on the provision of the Labor Code or in accordance with the prevailing jurisprudence; the other is procedural the manner in which the dismissal was effected.[49]




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

(d) In all cases of termination of employment, the following standards of due process shall be substantially observed:

x x x x

For termination of employment as defined in Article 283 of the Labor Code, the requirement of due process shall be deemed complied with upon service of a written notice to the employee and the appropriate Regional Office of the Department of Labor and Employment at least thirty days before effectivity of the termination, specifying the ground or grounds for termination.

In Mayon Hotel & Restaurant v. Adana,[50] we observed:

The requirement of law mandating the giving of notices was intended not only to enable the employees to look for another employment and therefore ease the impact of the loss of their jobs and the corresponding income, but more importantly, to give the Department of Labor and Employment (DOLE) the opportunity to ascertain the verity of the alleged authorized cause of termination.[51]



ETPI does not deny its failure to provide DOLE with a written notice regarding Culilis termination. It, however, insists that it has complied with the requirement to serve a written notice to Culili as evidenced by his admission of having received it and forwarding it to his union president.

In Serrano v. National Labor Relations Commission,[52] we noted that a job is more than the salary that it carries. There is a psychological effect or a stigma in immediately finding ones self laid off from work.[53] This is exactly why our labor laws have provided for mandating procedural due process clauses. Our laws, while recognizing the right of employers to terminate employees it cannot sustain, also recognize the employees right to be properly informed of the impending severance of his ties with the company he is working for. In the case at bar, ETPI, in effecting Culilis termination, simply asked one of its guards to serve the required written notice on Culili. Culili, on one hand, claims in his petition that this was handed to him by ETPIs vice president, but previously testified before the Labor Arbiter that this was left on his table.[54] Regardless of how this notice was served on Culili, this Court believes that ETPI failed to properly notify Culili about his termination. Aside from the manner the written notice was served, a reading of that notice shows that ETPI failed to properly inform Culili of the grounds for his termination.

The Court of Appeals, in finding that Culili was not afforded procedural due process, held that Culilis dismissal was ineffectual, and required ETPI to pay Culili full backwages in accordance with our decision in Serrano v. National Labor Relations Commission.[55] Over the years, this Court has had the opportunity to reexamine the sanctions imposed upon employers who fail to comply with the procedural due process requirements in terminating its employees. In Agabon v. National Labor Relations Commission,[56] this Court reverted back to the doctrine in Wenphil Corporation v. National






Labor Relations Commission[57] and held that where the dismissal is due to a just or authorized cause, but without observance of the due process requirements, the dismissal may be upheld but the employer must pay an indemnity to the employee. The sanctions to be imposed however, must be stiffer than those imposed in Wenphil to achieve a result fair to both the employers and the employees.[58]

In Jaka Food Processing Corporation v. Pacot,[59] this Court, taking a cue from Agabon, held that since there is a clear-cut distinction between a dismissal due to a just cause and a dismissal due to an authorized cause, the legal implications for employers who fail to comply with the notice requirements must also be treated differently:

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.[60]

Hence, since it has been established that Culilis termination was due to an authorized cause and cannot be considered unfair labor practice on the part of ETPI, his dismissal is valid. However, in view of ETPIs failure to comply with the notice requirements under the Labor Code, Culili is entitled to nominal damages in addition to his separation pay.





Personal Liability of ETPIs Officers

And Award of Damages

Culili asserts that the individual respondents, Salvador Hizon, Emiliano Jurado, Virgilio Garcia, and Stella Garcia, as ETPIs officers, should be held personally liable for the acts of ETPI which were tainted with bad faith and arbitrariness. Furthermore, Culili insists that he is entitled to damages because of the sufferings he had to endure and the malicious manner he was terminated.

As a general rule, a corporate officer cannot be held liable for acts done in his official capacity because a corporation, by legal fiction, has a personality separate and distinct from its officers, stockholders, and members. To pierce this fictional veil, it must be shown that the corporate personality was used to perpetuate fraud or an illegal act, or to evade an existing obligation, or to confuse a legitimate issue. In illegal dismissal cases, corporate officers may be held solidarily liable with the corporation if the termination was done with malice or bad faith. [61]

In illegal dismissal cases, moral damages are awarded only where the dismissal was attended by bad faith or fraud, or constituted an act oppressive to labor, or was done in a manner contrary to morals, good customs or public policy.[62] Exemplary damages may avail if the dismissal was effected in a wanton, oppressive or malevolent manner to warrant an award for exemplary damages.[63]

It is our considered view that Culili has failed to prove that his dismissal was orchestrated by the individual respondents herein for the mere purpose of getting rid of him. In fact, most of them have not even dealt with Culili personally. Moreover, it has been established that his termination was




for an authorized cause, and that there was no bad faith on the part of ETPI in implementing its Right-Sizing Program, which involved abolishing certain positions and departments for redundancy. It is not enough that ETPI failed to comply with the due process requirements to warrant an award of damages, there being no showing that the companys and its officers acts were attended with bad faith or were done oppressively.

WHEREFORE, the instant petition is DENIED and the assailed February 5, 2004 Decision and September 13, 2004 Resolution of the Court of Appeals in CA-G.R. SP No. 75001 are AFFIRMED with the MODIFICATION that petitioner Nelson A. Culilis dismissal is declared valid but respondent Eastern Telecommunications Philippines, Inc. is ordered to pay petitioner Nelson A. Culili the amount of Fifty Thousand Pesos (P50,000.00) representing nominal damages for non-compliance with statutory due process, in addition to the mandatory separation pay required under Article 283 of the Labor Code.

SO ORDERED.


Manila

FIRST DIVISION

G.R. No. 181738 January 30, 2013

GENERAL MILLING CORPORATION, Petitioner, vs.VIOLETA L. VIAJAR, Respondent.

D E C I S I O N

REYES, J.:

This is a Petition1 for Review on Certiorari under Rule 45 of the Rules of Court filed by petitioner General Milling Corporation (GMC), asking the Court to set aside the Decision2 dated September 21, 2007 and the Resolution3dated January 30, 2008 of the Court of Appeals (CA) in CA-G.R. SP No. 01734; and to reinstate the Decision4dated October 28, 2005 and Resolution5 dated January 31, 2006 of the National Labor Relations Commission (NLRC) in NLRC Case No. V-000416-05.

The antecedent facts are as follows:

GMC is a domestic corporation with principal office in Makati City and a manufacturing plant in Lapu-Lapu City.

In October 2003, GMC terminated the services of thirteen (13) employees for redundancy, including herein respondent, Violeta Viajar (Viajar). GMC alleged that it has been gradually downsizing its Vismin (Visayas-Mindanao) Operations in Cebu where a sizeable number of positions became redundant over a period of time.6

On December 2, 2003, Viajar filed a Complaint7 for Illegal Dismissal with damages against GMC, its Human Resource Department (HRD) Manager, Johnny T. Almocera (Almocera), and Purchasing Manager, Joel Paulino before the Regional Arbitration Branch (RAB) No. VII, NLRC, Cebu City.

In her Position Paper,8 Viajar alleged that she was employed by GMC on August 6, 1979 as Invoicing Clerk. Through the years, the respondent held various positions in the company until she became Purchasing Staff.

On October 30, 2003, Viajar received a Letter-Memorandum dated October 27, 2003 from GMC, through Almocera, informing her that her services were no longer needed, effective November 30, 2003 because her position as Purchasing Staff at the Purchasing Group, Cebu Operations was deemed redundant. Immediately thereafter, the respondent consulted her immediate superior at that time, Thaddeus Oyas, who told her that he too was shocked upon learning about it.9

When Viajar reported for work on October 31, 2003, almost a month before the effectivity of her severance from the company, the guard on duty barred her from entering GMC’s premises. She was also denied access to her office computer and was restricted from punching her daily time record in the bundy clock.10

On November 7, 2003, Viajar was invited to the HRD Cebu Office where she was asked to sign certain documents, which turned out to be an "Application for Retirement and Benefits." The respondent refused to sign and sought clarification because she did not apply for retirement and instead asserted that her services were terminated for alleged redundancy. Almocera told her that her signature on the Application for Retirement and Benefits was needed to process her separation pay. The respondent also claimed that between the period of July 4, 2003 and October 13, 2003, GMC hired fifteen (15) new employees which aroused her suspicion that her dismissal was not necessary.11 At the time of her termination, the respondent was receiving the salary rate ofP19,651.41 per month.12

For its part, the petitioner insisted that Viajar’s dismissal was due to the redundancy of her position. GMC reasoned out that it was forced to terminate the services of the respondent because of the economic setbacks the company was suffering which affected the company’s profitability, and the continuing rise of its operating and interest expenditures. Redundancy was part of the petitioner’s concrete and actual cost reduction measures. GMC also presented the required "Establishment Termination Report" which it filed before the Department of Labor and Employment (DOLE) on October 28, 2003, involving thirteen (13) of its employees, including Viajar. Subsequently, GMC issued to the respondent two (2) checks respectively amounting to P440,253.02 andP21,211.35 as her separation pay.13

On April 18, 2005, the Labor Arbiter (LA) of the NLRC RAB No. VII, Cebu City, rendered a Decision, the decretal portion of which reads:

WHEREFORE, foregoing considered, judgment is hereby rendered declaring that respondents acted in good faith in terminating the complainant from the service due to redundancy of works, thus, complainant’s refusal to accept the payment of her allowed separation pay and other benefits under the law is NOT JUSTIFIED both in fact and law, and so, therefore complainant’s case for illegal dismissal against the herein respondents and so are complainant’s monetary claims are hereby ordered DISMISSED for lack of merit.

SO ORDERED.14

The LA found that the respondent was properly notified on October 30, 2003 through a Letter-Memorandum dated October 27, 2003, signed by GMC’s

HRD Manager Almocera, that her position as Purchasing Staff had been declared redundant. It also found that the petitioner submitted to the DOLE on October 28, 2003 the "Establishment Termination Report." The LA even faulted the respondent for not questioning the company’s action before the DOLE Regional Office, Region VII, Cebu City so as to compel the petitioner to prove that Viajar’s position was indeed redundant. It ruled that the petitioner complied with the requirements under Article 283 of the Labor Code, considering that the nation was then experiencing an economic downturn and that GMC must adopt measures for its survival.15

Viajar appealed the aforesaid decision to the NLRC. On October 28, 2005, the NLRC promulgated its decision, the dispositive portion of which reads:

WHEREFORE, premises considered, the Decision of the Labor Arbiter declaring the validity of complainant’s termination due to redundancy is hereby AFFIRMED. Respondent General Milling Corporation is hereby ordered to pay complainant’s separation pay in the amount of P461,464.37.

SO ORDERED.16

The NLRC, however, stated that it did not agree with the LA that Viajar should be faulted for failing to question the petitioner’s declaration of redundancy before the DOLE Regional Office, Region VII, Cebu City. It was not imperative for Viajar to challenge the validity of her termination due to redundancy.17 Notwithstanding, the NLRC affirmed the findings of the LA that Viajar’s dismissal was legal considering that GMC complied with the requirements provided for under Article 283 of the Labor Code and existing jurisprudence, particularly citing Asian Alcohol Corporation v. NLRC.18 The NLRC further stated that Viajar was aware of GMC’s "reduction mode," as shown in the GMC Vismin Manpower Complement, as follows:

Year Manpower ProfileNo. of Employees

Terminated (Redundancy)

2000 795

2001 782

2002 736 41

2003 721 24

2004 697 16

2005 696 (As of June 2005) 0619

The NLRC stated that the characterization of positions as redundant is an exercise of the employer’s business judgment and prerogative. It also ruled that the petitioner did not exercise this prerogative in bad faith and that the payment of separation pay in the amount of P461,464.37 was in compliance with Article 283 of the Labor Code.20

Respondent Viajar filed a Motion for Reconsideration which was denied by the NLRC in its Resolution dated January 31, 2006.

Undaunted, Viajar filed a petition for certiorari before the CA. In the now assailed Decision dated September 21, 2007, the CA granted the petition, reversing the decision of the NLRC in the following manner:

WHEREFORE, premises considered, this Petition for Certiorari is GRANTED. The Decision, dated 28 October 2005, and Resolution, dated 31 January 2006 respectively, of public respondent National Labor Relations Commission-Fourth Division, Cebu City, in NLRC Case No. V-000416-05 (RAB VII-12-2495-03) are SET ASIDE. A new judgment is entered DECLARING the dismissal ILLEGAL and ordering respondent to reinstate petitioner without loss of seniority rights and other privileges with full backwages inclusive of allowances and other benefits computed from the time she was dismissed on 30 November 2003 up to the date of actual reinstatement. Further, moral and exemplary damages, in the amount of Fifty Thousand Pesos ([P]50,000.00) each; and attorney’s fees equivalent to ten percent (10%) of the total monetary award, are awarded.

Costs against respondent.

SO ORDERED.21

Aggrieved by the reversal of the NLRC decision, GMC filed a motion for reconsideration. However, in its Resolution dated January 30, 2008, the CA denied the same; hence, this petition.

The petitioner raises the following issues, to wit:

I. THE DECISION OF SEPTEMBER 21, 2007 AND THE RESOLUTION OF JANUARY 30, 2008 OF THE COURT OF APPEALS ARE CONTRARY TO LAW AND ESTABLISHED JURISPRUDENCE.

II. THE DECISION OF SEPTEMBER 21, 2007 AND THE RESOLUTION OF JANUARY 30, 2008 OF THE COURT OF APPEALS VIOLATE THE LAW AND ESTABLISHED JURISPRUDENCE ON THE OBSERVANCE OF RESPECT AND FINALITY TO FACTUAL FINDINGS OF THE NATIONAL LABOR RELATIONS COMMISSION.

III. THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN ITS DECISION OF SEPTEMBER 21, 2007 AND RESOLUTION OF JANUARY 30, 2008 AS THE SAME ARE CONTRARY TO THE EVIDENCE ON RECORD.22

The petition is denied.

The petitioner argues that the factual findings of the NLRC, affirming that of the LA must be accorded respect and finality as it is supported by evidence on record. Both the LA and the NLRC found the petitioner’s evidence sufficient to terminate the employment of respondent on the ground of redundancy. The evidence also shows that GMC has complied with the procedural and substantive requirements for a valid termination. There was, therefore, no reason for the CA to disturb the factual findings of the NLRC.23

The rule is that factual findings of quasi-judicial agencies such as the NLRC are generally accorded not only respect, but at times, even finality because of the special knowledge and expertise gained by these agencies from handling matters falling under their specialized jurisdiction.24 It is also settled that this Court is not a trier of facts and does not normally embark in the evaluation of evidence adduced during trial.25 This rule, however, allows for exceptions. One of these exceptions covers instances when the findings of fact of the trial court, or of the quasi-judicial agencies concerned, are conflicting or contradictory with those of the CA. When there is a variance in the factual findings, it is incumbent upon the Court to re-examine the facts once again.26

Furthermore, another exception to the general rule is when the said findings are not supported by substantial evidence or if on the basis of the available

facts, the inference or conclusion arrived at is manifestly erroneous.27Factual findings of administrative agencies are not infallible and will be set aside when they fail the test of arbitrariness.28 In the instant case, the Court agrees with the CA that the conclusions arrived at by the LA and the NLRC are manifestly erroneous.

GMC claims that Viajar was validly dismissed on the ground of redundancy which is one of the authorized causes for termination of employment. The petitioner asserts that it has observed the procedure provided by law and that the same was done in good faith. To justify the respondent’s dismissal, the petitioner presented: (i) the notification Letter-Memorandum dated October 27, 2003 addressed to the respondent which was received on October 30, 2003;29 (ii) the "Establishment Termination Report" as prescribed by the DOLE;30 (iii) the two (2) checks issued in the respondent’s name amounting to P440,253.02 and P21,211.35 as separation pay;31 and (iv) the list of dismissed employees as of June 6, 2006 to show that GMC was in a "reduction mode."32 Both the LA and the NLRC found these sufficient to prove that the dismissal on the ground of redundancy was done in good faith.

The Court does not agree.

Article 283 of the Labor Code provides that redundancy is one of the authorized causes for dismissal. It reads:

Article 283. Closure of establishment and reduction of personnel. – The employer may also terminate the employment of any employee due to the installment of labor-saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the worker and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher.

A fraction of at least six (6) months shall be considered one (1) whole year. (Emphasis supplied)

From the above provision, it is imperative that the employer must comply with the requirements for a valid implementation of the company’s redundancy program, to wit: (a) the employer must serve a written notice to the affected employees and the DOLE at least one (1) month before the intended date of retrenchment; (b) the employer must pay the employees a separation pay equivalent to at least one month pay or at least one month pay for every year of service, whichever is higher; (c) the employer must abolish the redundant positions in good faith; and (d) the employer must set fair and reasonable criteria in ascertaining which positions are redundant and may be abolished.33

In Smart Communications, Inc., v. Astorga,34 the Court held that:

The nature of redundancy as an authorized cause for dismissal is explained in the leading case of Wiltshire File Co., Inc. v. National Labor Relations Commission, viz:

"x x x redundancy in an employer’s personnel force necessarily or even ordinarily refers to duplication of work. That no other person was holding the same position that private respondent held prior to termination of his services does not show that his position had not become redundant. Indeed, in any well organized business enterprise, it would be surprising to find duplication of work and two (2) or more people doing the work of one person. We believe that redundancy, for purposes of the Labor Code, exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise. Succinctly put, a position is redundant where it is superfluous, and superfluity of a position or positions may be the outcome of a number of factors, such as overhiring of workers, decreased volume of business, or dropping of a particular product line or service activity previously manufactured or undertaken by the enterprise."

The characterization of an employee’s services as superfluous or no longer necessary and, therefore, properly terminable, is an exercise of business judgment on the part of the employer. The wisdom and soundness of such characterization or decision is not subject to discretionary review provided,

of course, that a violation of law or arbitrary or malicious action is not shown.35 (Emphasis supplied and citations omitted)

While it is true that the "characterization of an employee’s services as superfluous or no longer necessary and, therefore, properly terminable, is an exercise of business judgment on the part of the employer,"36 the exercise of such judgment, however, must not be in violation of the law, and must not be arbitrary or malicious. The Court has always stressed that a company cannot simply declare redundancy without basis. To exhibit its good faith and that there was a fair and reasonable criteria in ascertaining redundant positions, a company claiming to be over manned must produce adequate proof of the same.

We reiterate what was held in Caltex (Phils.), Inc. v. NLRC:37

In Asufrin, Jr. v. San Miguel Corporation, we ruled that it is not enough for a company to merely declare that it has become overmanned (sic). It must produce adequate proof of such redundancy to justify the dismissal of the affected employees.

In Panlilio v. National Labor Relations Commission, we held that evidence must be presented to substantiate redundancy such as but not limited to the new staffing pattern, feasibility studies/proposal, on the viability of the newly created positions, job description and the approval by the management of the restructuring.38 (Emphasis supplied and citations omitted)

In the instant case, the Court agrees with the CA when it held that the petitioner failed to present substantial proof to support GMC’s general allegations of redundancy. As shown from the records, the petitioner simply presented as its evidence of good faith and compliance with the law the notification letter to respondent Viajar;39 the "Establishment Termination Report" it submitted to the DOLE Office;40 the two (2) checks issued in the respondent’s name amounting to P440,253.02 and P21,211.35;41 and the list of terminated employees as of June 6, 2006.42 We agree with the CA that these are not enough proof for the valid termination of Viajar’s employment on the ground of redundancy.

The letter-memorandum which contains general allegations is not enough to convince this Court that Viajar’s termination of employment due to redundancy was warranted under the circumstances. There is no showing

that GMC made an evaluation of the existing positions and their effect to the company. Neither did GMC exert efforts to present tangible proof that it was experiencing business slow down or over hiring. The "Establishment Termination Report" it submitted to the DOLE Office did not account for anything to justify declaring the positions redundant. The Court notes that the list of terminated employees presented by GMC was a list taken as of June 6, 2006 or almost three years after the respondent was illegally dismissed and almost a year after the LA promulgated its decision. While the petitioner had been harping that it was on a "reduction mode" of its employees, it has not presented any evidence (such as new staffing pattern, feasibility studies or proposal, viability of newly created positions, job description and the approval of the management of the restructuring,43audited financial documents like balance sheets, annual income tax returns and others)44 which could readily show that the company’s declaration of redundant positions was justified. Such proofs, if presented, would suffice to show the good faith on the part of the employer or that this business prerogative was not whimsically exercised in terminating respondent’s employment on the ground of redundancy. Unfortunately, these are wanting in the instant case. The petitioner only advanced a self-serving general claim that it was experiencing business reverses and that there was a need to reduce its manpower complement.

On the other hand, the respondent presented proof that the petitioner had been hiring new employees while it was firing the old ones,45 negating the claim of redundancy. It must, however, be pointed out that in termination cases, like the one before us, the burden of proving that the dismissal of the employees was for a valid and authorized cause rests on the employer. It was incumbent upon the petitioner to show by substantial evidence that the termination of the employment of the respondent was validly made and failure to discharge that duty would mean that the dismissal is not justified and therefore illegal.46

Furthermore, the Court cannot overlook the fact that Viajar was prohibited from entering the company premises even before the effectivity date of termination; and was compelled to sign an "Application for Retirement and Benefits." These acts exhibit the petitioner’s bad faith since it cannot be denied that the respondent was still entitled to report for work until November 30, 2003. The demand for her to sign the "Application for Retirement and Benefits" also contravenes the fact that she was terminated

due to redundancy. Indeed, there is a difference between voluntary retirement of an employee and forced termination due to authorized causes.

In Quevedo v. Benguet Electric Cooperative, Incorporated,47 this Court explained the difference between retirement and termination due to redundancy, to wit:

While termination of employment and retirement from service are common modes of ending employment, they are mutually exclusive, with varying juridical bases and resulting benefits. Retirement from service is contractual (i.e. based on the bilateral agreement of the employer and employee), while termination of employment is statutory (i.e. governed by the Labor Code and other related laws as to its grounds, benefits and procedure). The benefits resulting from termination vary, depending on the cause. For retirement, Article 287 of the Labor Code gives leeway to the parties to stipulate above a floor of benefits.

x x x x

The line between voluntary and involuntary retirement is thin but it is one which this Court has drawn. Voluntary retirement cuts employment ties leaving no residual employer liability; involuntary retirement amounts to a discharge, rendering the employer liable for termination without cause. The employee’s intent is the focal point of analysis. In determining such intent, the fairness of the process governing the retirement decision, the payment of stipulated benefits, and the absence of badges of intimidation or coercion are relevant parameters.48 (Emphasis supplied and citations omitted)

Clearly, the instant case is not about retirement since the term has its peculiar meaning and is governed by Article 287 of the Labor Code. Rather, this is a case of termination due to redundancy under Article 283 of the Labor Code. Thus, the demand of GMC for the respondent to sign an "Application for Retirement and Benefits" is really suspect.

Finally, the Court agrees with the CA that the award of moral and exemplary damages is proper.1âwphi1 The Court has awarded moral damages in termination cases when bad faith, malice or fraud attend the employee’s dismissal or where the act oppresses labor, or where it was done in a manner contrary to morals, good customs or public policy.49 We quote with favor the findings of the CA:

We also award moral and exemplary damages to petitioner. While it is true that good faith is presumed, the circumstances surrounding the dismissal of petitioner negate its existence. Moral damages may be recovered only where the dismissal of the employee was tainted by bad faith or fraud, or where it constituted an act oppressive to labor, and done in a manner contrary to morals, good customs or public policy while exemplary damages are recoverable only if the dismissal was done in a wanton, oppressive, or malevolent manner. To reiterate, immediately after receipt of her termination letter which was effective on 30 November 2003, petitioner was no longer treated as an employee of respondent as early as the 31st of October 2003; she was already barred from entering the company premises; she was deprived access to her office computer; and she was excluded from the bandy [sic] clock. She was also made to sign documents, including an "APPLICATION FOR RETIREMENT AND BENEFITS" in the guise of payment of her separation pay. When petitioner confronted her immediate superior regarding her termination, the latter’s shock aggravated her confusion and suffering. She also learned about the employment of a number of new employees, several of whom were even employed in her former department. Petitioner likewise suffered mental torture brought about by her termination even though its cause was not clear and substantiated.50 (Citations omitted)

WHEREFORE, the petition is DENIED. The Decision dated September 21, 2007 of the Court of Appeals, as well as its Resolution dated January 30, 2008 in CA-G.R. SP No. 01734, are hereby AFFIRMED.

SO ORDERED.

THIRD DIVISION

G.R. No. 192518, October 15, 2014

PHILIPPINE LONG DISTANCE TELEPHONE COMPANY AND/OR ERNANI TUMIMBANG,Petitioners, v. HENRY

ESTRANERO, Respondent.

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 February 15, 2010 and Resolution3 dated May 25, 2010 of the Court of Appeals (CA) in CA-G.R. SP No. 108297, which affirmed the Decision4 dated August 29, 2008 of the National Labor Relations Commission (NLRC) in NLRC-NCR Case No. 00-10-08679-05, and its Resolution5 dated January 30, 2009 denying Philippine Long Distance Telephone Company's (PLDT) Motion for Reconsideration. The NLRC Decision affirmed the Decision6 dated December 8, 2006 of the Labor Arbiter (LA) ordering PLDT to pay Henry Estranero (respondent) his separation pay.

The Facts

Petitioner PLDT is a public utility corporation engaged in the business of providing telecommunication services to the general public. On July 1, 1995, PLDT employed the respondent as an Auto-Mechanic/Electrician Helper, Job Grade 3 with a monthly salary of P15,000.00 at the time of his separation from the service in 2003.

In the year 1995, PLDT adopted a company-wide Manpower Reduction Program (MRP), aimed at reducing its work force. To commence with its program, PLDT offered the affected employees an attractive redundancy pay consisting of 100% of their basic monthly salary for every year of service, in addition to their retirement benefits, if entitled. For those who were not qualified to the retirement benefits, they were offered separation or redundancy package of 200% of their basic monthly salary for every year of service.

By virtue of the MRP, a number of positions were declared redundant. Among those gravely affected by the MRP was the Fleet Management Division where the respondent was assigned, on account of the significant decrease of company vehicles, machineries, and equipment that required mechanical servicing and repair. Consequently, the respondent's position was included in those declared as redundant.

Attracted by the separation pay offered by the company, the respondent expressed his conformity to his inclusion in the MRP. In the inter-office Memorandum dated April 21, 2003, the respondent declared that he has no objection to being included in the redundancy program of PLDT. After having signified his intention and after approval thereof by his superior

officers, the respondent's name was included in the list of redundant employees for that period and a Notice of Separation Due to Redundancy was submitted to the Department of Labor and Employment on April 25, 2003. He was then made to sign a deed denominated as a Receipt, Release and Quitclaim for his severance from employment, thus availed of the offered personnel reduction program. Thereafter, PLDT proceeded to compute the respondent's redundancy/separation benefits.

Since his length of service was seven (7) years, eleven (11) months and fifteen (15) days, which was rounded to 8 years, the respondent was not qualified for retirement pay which required an employee to have worked for at least 15 years. The respondent was nonetheless entitled to 200% of his basic monthly salary for every year of service by way of redundancy pay or equivalent to P240,000.00. In addition, he was also entitled to other benefits he has earned for the years prior to, and during the year of his actual separation, i.e., 2002 and 2003 sick leave benefits, 2002 and 2003 vacation leave and vacation leave premium benefits, longevity pay, mid-year bonus, 13th month pay and Christmas bonus, all in the sum of P27,028.37. Thus, his aggregate redundancy pay plus other earned benefits amounted to P267,028.37.

However, the respondent had outstanding liabilities arising from various loans he obtained from different entities, namely: the Home Development Mutual Fund (HDMF), PLDT Employees Credit Cooperative, Inc., PLDT Service Cooperative, Inc.,7 Social Security System (SSS), and the Manggagawa ng Komunikasyon sa Pilipinas, which summed to P267,028.37.8 Thus, PLDT deducted the said amount from the payment that the respondent was supposed to receive as his redundancy pay.

As a result, when the respondent was made to sign the Receipt, Release and Quitclaim, it showed that his take home pay was in the amount of "zero pesos." This prompted the respondent to retract his availment of the separation pay package offered to him through a letter addressed to the company dated May 8, 2003. Despite said retraction, however, the respondent was no longer allowed to report for work.

Subsequently, the respondent filed a complaint for illegal dismissal with reinstatement, as well as moral and exemplary damages plus attorney's fees, docketed as NLRC-NCR Case No. 04-02820-97, against PLDT and Ernani Tumimbang (petitioners), the Division Head of the Fleet Management

Division where the respondent was assigned.

In due course, the LA rendered a Decision dated December 8, 2006 in favor of the respondent, disposing as follows:chanRoblesvirtualLawlibrary

WHEREFORE, foregoing premises considered, respondent Philippine Long Distance Telephone Company is hereby ordered to pay complainant Henry T. Estra[n]ero his separation pay in the amount of P267,038.37 [sic].

The "set-off of complainant's outstanding loans in the amount of P267,038.37 [sic] against his separation pay invoked by respondents is hereby dismissed for lack of jurisdiction.

All other claims are hereby ordered dismissed for lack of merit.

SO ORDERED.9

The LA sustained the validity of PLDT's redundancy program as an authorized cause to terminate the employment of the respondent, and his entitlement to the redundancy/separation pay pursuant to the MRP, being more advantageous than the benefits allowed under the law. The LA, however, ruled that the office lacks jurisdiction to pass upon the issue of PLDT's act in deducting the total outstanding loans which the respondent obtained from different entities since the same does not involve an employer-employee relationship, and may only be enforced by PLDT through a separate civil action in the regular courts.

On appeal, the NLRC affirmed the LA decision. The NLRC ruled that the respondent should be paid his separation pay on account of redundancy. As to the setting-off of the respondent's outstanding loans, it agreed with the LA that the same is not a labor dispute but one arising from a debtor-creditor relation where PLDT stands as a collecting agent over which the labor tribunals has no jurisdiction.

The petitioners filed a motion for reconsideration but it was denied; hence, they filed a petition forcertiorari with the CA.

On February 15, 2010, the appellate court promulgated its Decision affirming the assailed NLRC decision. The CA held that there is no more question as to the legality of the respondent's dismissal from employment as

the respondent had accepted the validity of his dismissal from service. The controversy arose when the petitioners deducted from the respondent's redundancy pay the latter's outstanding liabilities arising from various loans he obtained from different entities such that his take home pay became zero.

In sustaining the respondent's claim for redundancy pay, the appellate court ratiocinated:chanRoblesvirtualLawlibrary

The deductions subject of this case pertain to loans which x x x respondent availed from various entities. Hence, as above stated, there must be proof that there is a personal written authorization from x x x respondent authorizing petitioners to deduct from his terminal pay his outstanding loans from said entities. Petitioners failed to present convincing evidence that, indeed, x x x respondent, has knowledge and consented to these deductions. On the contrary, x x x respondent maintains that petitioners unilaterally made the application of deductions without his knowledge, much less consent. Thus, it is the burden of petitioners to present proof of the validity of the deductions. However, aside from their bare allegations, they did not offer any concrete and tangible evidence proving their authority to deduct the outstanding loans of x x x respondents from his redundancy pay. They did not submit any written Authority to Deduct to evince the validity of the deductions. While they submitted two written Authority to Deduct signed by x x x respondent pertaining to his loans in the PLDT Multi-Purpose [Cooperative], Inc. (Telescoop), this Court cannot, on face value, conclude from said documents that x x x respondent has given his consent to deduct his loans from his redundancy pay. At most, said Authority to Deduct pertain[s] only to his loan obtained from Telescoop, but even so, the amount stated therein does not even match the amount deducted from his redundancy pay.10 (Citation omitted)

The CA further stated that the petitioners are not without any recourse to recover from the respondent the unauthorized payment they have made in his behalf. It has a right to recover from the respondent the sum so paid out, at least to the extent in which the payment may have been beneficial to the respondent.

Aggrieved by the foregoing disquisition, the petitioners moved for reconsideration but it was denied by the appellate court; hence, the present petition for review on certiorari.

The Issue

As presented, the issue for resolution hinges on whether or not the petitioners can validly deduct the respondent's outstanding loan obligation from his redundancy pay.

Ruling of the Court


At the outset, the issues in this case are factual. "Under Rule 45 of the Rules of Court, only questions of law may be raised in this Court; such factual issues may be considered and resolved only when the findings of facts and the conclusions of the [LA] are inconsistent with those of the NLRC and the CA."11 It is apparent from the arguments of the petitioners that they are calling for the Court to re-evaluate the evidence presented by the parties. "Once the issue invites a review of the evidence, the question posed is one of fact."12 The petitioners are, therefore, raising questions of facts beyond the ambit of the Court's review.

Nevertheless, this Court has thoroughly reviewed the records in this case and found that the NLRC did not commit any grave abuse of its discretion amounting to lack or excess of jurisdiction in rendering its decision in favor of the respondent. 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 main, this Court is in consonance with the CA that the instant case is not about jurisdiction to determine the validity of the set-off but more of the petitioner's authority to deduct from the redundancy pay of the respondent his outstanding loans obtained from different entities. It is whether the deductions done by the petitioners are authorized under existing laws or subject to a written authorization from the respondent.13cralawred

The antecedent facts that gave rise to the respondent's dismissal from employment are not disputed in this case. There is no question about the validity of the MRP implemented by PLDT in 1995, since redundancy is one of the authorized causes for termination of employment.14 The respondent, however, argued that the deduction of the outstanding loans that he obtained from different entities from his redundancy pay was contrary to law. On the

other hand, the petitioners insisted that they can validly deduct the said loans from the respondent's redundancy pay since the respondent was able to obtain said loans because of his employment with PLDT.

It is clear in Article 11315 of the Labor Code that no employer, in his own behalf or in behalf of any person, shall make any deduction from the wages of his employees, except in cases where the employer is authorized by law or regulations issued by the Secretary of Labor and Employment, among others. The Omnibus Rules Implementing the Labor Code, meanwhile, provides that deductions from the wages of the employees may be made by the employer when such deductions are authorized by law, or when the deductions are with the written authorization of the employees for payment to a third person.16 Thus, any withholding of an employee's wages by an employer may only be allowed in the form of wage deductions under the circumstances provided in Article 113 of the Labor Code, as well as the Omnibus Rules implementing it. Further, Article 11617 of the Labor Code clearly provides that it is unlawful for any person, directly or indirectly, to withhold any amount from the wages of a worker without the worker's consent.

In this case, the deductions made to the respondent's redundancy pay do not fall under any of the circumstances provided under Article 113, nor was it established with certainty that the respondent has consented to the said deductions or that the petitioners had authority to make such deductions.

As aptly stated by the CA, the matter would have been different if the deductions refer to the respondent's contributions for his being a member of SSS, HDMF, or withholding taxes on income, because if such was the case, the contributions are deductions already sanctioned by existing laws. Here, it is evidently emphasized that the subject deductions pertain to the respondent's outstanding loans from various entities.

Furthermore, the petitioners may not offset the outstanding loans of the respondent against the latter's monetary benefits. The records expressly revealed that the respondent has obtained various loans from different entities and not with PLDT. Accordingly, set-off or legal compensation cannot take place between PLDT and the respondent because they are not mutually creditor and debtor of each other. Thus, there can be no valid set-off because the respondent's creditor is not PLDT.18cralawred

The Court further agrees with the labor tribunals that the petitioners cannot offset the outstanding balance of the respondent's loan obligation with his redundancy pay because the balance on the loan does not come within the scope of jurisdiction of the LA. The demand for payment of the said loans is not a labor, but a civil dispute. It involves debtor-creditor relations, rather than employee-employer relations. Evidently, the respondent's unpaid balance on his loans cannot be offset against the redundancy pay due to him.

In fine, the Court rules that PLDT has no legal right to withhold the respondent's redundancy pay and other benefits to recompense for his outstanding loan obligations to different entities. The respondent's entitlement to his redundancy pay is mandated by law which the petitioners cannot unjustly deny.

WHEREFORE, the Decision dated February 15, 2010 and Resolution dated May 25, 2010 of the Court of Appeals in CA-G.R. SP No. 108297 are AFFIRMED.

SO ORDERED.

Peralta,* (Acting Chairperson), Villarama, Jr., Reyes, Perlas-Bernabe,** and Jardeleza, JJ., concur.

Endnotes:

* Acting Chairperson per Special Order No. 1815 dated October 3, 2014 vice Associate Justice Presbitero J. Velasco, Jr.

**Additional member per Special Order No. 1816 dated October 3, 2014 vice Associate Justice Presbitero J. Velasco, Jr.

1Rollo, pp. 10-45.

2 Penned by Associate Justice Rosmari D. Carandang, with Associate Justices Ramon M. Bato, Jr. and Amy C. Lazaro-Javier, concurring; id. at 49-62.

3 Id. at 65-66.

4 Id. at 91-97.

5 Id. at 99-100.

6 Issued by Labor Arbiter Thelma M. Concepcion; id. at 154-160.

7 PLDT Service Cooperative Inc. was later renamed as PLDT Employees Multi-Purpose Cooperative.

8

Home Development Mutual Fund Loan P 5,585.57 Manggagawa ng Komunikasyon sa Pilipinas Loan

4,000.00

PLDT Employees Credit Cooperative, Inc. Loan

78,011.93

PLDT Service Cooperative, Inc. Loan 177,704.31 SSS Loan___________________________

11,730.00

Total Outstanding Loans 267,028.37 [sic] Rollo, p. 157.

9Rollo, p. 160.

10 Id. at 58-59.

11Lopez Sugar Corp. v. Franco, 497 Phil. 806, 817 (2005).

12 Go v. Looyuko, G.R. No. 196529, July 1, 2013, 700 SCRA 313, 318-319.

13Rollo, p. 35.

14Article 283. Closure of establishment and reduction of personnel. - The employer may also terminate the employment of any employee due to the installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of the operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Department of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor

saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or to at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year.

15 Article 113. Wage Deduction. —No employer, in his own behalf or in behalf of any person, shall make any deduction from wages of his employees, except:chanroblesvirtuallawlibrary

(a) In cases where the worker is insured with his consent by the employer, and the deduction is to recompense the employer for the amount paid by him as premium on the insurance;

(b) For union dues, in cases where the right of the worker or his union to check-off has been recognized by the employer or authorized in writing by the individual worker concerned; and

(c) In cases where the employer is authorized by law or regulations issued by Secretary of Labor.

16Rule VIII, Section 10. Deductions from the wages of the employees may be made by the employer in any of the following cases:

(a) When the deductions are authorized by law, including deductions for the insurance premiums advanced by the employer in behalf of the employee as well as union dues where the right to check-off has been recognized by the employer or authorized in writing by the individual employee himself;

(b) When the deductions are with the written authorization of the employees for payment to a third person and the employer agrees to do so, provided that the latter does not receive any pecuniary benefit, directly or indirectly, from the transaction

17Article 116. Withholding of wages and kickbacks prohibited. It shall be unlawful for any person, directly or indirectly, to withhold any amount from

the wages of a worker or induce him to give up any part of his wages by force, stealth, intimidation, threat or by any other means whatsoever without the worker's consent.

SECOND DIVISION

COATS MANILA BAY, INC., G.R. No. 172628

Petitioner,

Present:

QUISUMBING, J.,

Chairperson,

- versus - CARPIO MORALES,

TINGA,

VELASCO, JR., and

BRION, JJ.

PURITA M. ORTEGA (represented

by Alejandro San Pedro, Jr.) and

MARINA A. MONTERO, Promulgated:

Respondents.

February 13, 2009

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

D E C I S I O N

TINGA, J.:

In this Petition for Review,[1] Coats Manila Bay, Inc. (petitioner) assails the decision[2] of the Court of Appeals dated 25 January 2002 which ruled that respondents were illegally dismissed by petitioner as the latter failed to substantiate its claim that it observed fair and reasonable criteria in selecting employees for dismissal as part of its redundancy program. The appellate court set aside the decision and resolution of the National Labor Relations Commission (NLRC) reversing the labor arbiters decision granting respondents complaints for illegal dismissal.

The facts are as follows:

Petitioner, a corporation registered under Philippine laws, is primarily engaged in the business of thread production. Purita M. Ortega and Marina A. Montero (respondents) were both employed by petitioner as Clerk Analysts in the Industrial Engineering Department. Both were members of Anglo-KMU Monthly Union (Union).[3]

On 27 April 2000, petitioner issued a memorandum announcing that a redundancy plan would be implemented.[4] It was stated that the redundancy program was necessary to prevent further losses. Petitioner assured its employees that implementing a redundancy program rather than a retrenchment program would result in better benefits to those dismissed.

http://sc.judiciary.gov.ph/jurisprudence/2009/feb2009/172628.htm#_ftn2




As a result of this redundancy program, 135 employees were terminated, including respondents. They were advised on 9 May 2000 that they would be dismissed effective 15 June 2000.[5] On 10 May 2000, petitioner filed with the Department of Labor and Employment its Establishment Termination Report,[6] indicating that it was terminating 135 of its employees, including respondents, on the ground of redundancy. On 31 May 2000, petitioner and the Union held a labor-management meeting to discuss the fate of the employees affected by the redundancy program.[7] On 1 June 2000, respondents received their respective separation payments and thereafter executed release waivers and quitclaims in favor of petitioner.[8] In the meantime, 11 of the terminated employees were rehired by petitioner to different positions but with lower salaries.

On 8 June 2000, respondents filed a complaint for illegal dismissal, backwages, reinstatement, vacation/sick leave, 13th month pay, moral and exemplary damages, attorneys fees, litigation expenses and CBA benefits with the NLRC against petitioner and/or its Chief Executive Officer Arsenio N. Tanco (Tanco).[9]

Respondents asserted in their position paper that despite their dismissal due to redundancy, their functions were assigned to other workers.[10] They also claimed that they were constrained to sign the quitclaims and release waivers due to their pressing need for the separation pay. They further alleged that as a result of their termination they had suffered humiliation, wounded feelings, mental anguish and thus prayed for exemplary and morals damages well as attorneys fees.

Petitioner and Tanco claimed that they had the management prerogative to implement a redundancy program as per Article 283 of the Labor Code.[11]They aver that both respondents were notified that they would








be subject to redundancy and that they never objected thereto as shown by the execution of their respective waivers/quitclaims.

On 21 October 2002, the Labor Arbiter rendered a decision[12] declaring illegal respondents dismissal and directing petitioner to reinstate respondents to their former positions. The dispositive portion of the decision reads:

WHEREFORE, premises considered, the complainants are hereby declared illegally dismissed, and respondent Coats Manila Bay, Inc. is thereby directed to reinstate them to their former positions without loss of seniority rights and other benefits, to pay their full backwages, including their 13 th month pay, from the time of their termination up to the time of their actual reinstatement, and to pay each complainant 10% of the total award as attorneys fees.

Nevertheless, the sums of money already paid by and received from the respondents by the complainants when they were terminated from the service shall be deducted from the total amount of their respective awards in this case, in the amount as computed by the NLRC NCR Computation Unit.

All other claims are dismissed for lack of merit.

SO ORDERED.[13]

On 18 November 2002, petitioner appealed the decision of the Labor Arbiter to the NLRC. On 21 January 2004, the NLRC reversed the decision of the Labor Arbiter and held that the dismissal was valid due to redundancy. Respondents moved for reconsideration but this was denied by the NLRC in a resolution dated 30 March 2005.



Undaunted, respondents filed a petition for certiorari with the Court of Appeals. The Court of Appeals granted their petition, reversed the decision of the NLRC and reinstated the decision of the Labor Arbiter. The dispositive portion of the decision states:

WHEREFORE, the petition, being meritorious is GRANTED. The decision of the NLRC dated January 21, 2004 and its Resolution dated March 30, 2005 in NLRC NCR CA No. 033967-03 (NLRC NCR Case No. 06-03132-2000) are hereby REVERSED and SET ASIDE. The decision of the Labor Arbiter dated October 21, 2002(NLRC NCR Case No. 06-03132-2000) is REINSTATED and AFFIRMED.

SO ORDERED.

The Court of Appeals ratiocinated that the record is bare of any evidence that fair and reasonable criteria in selecting the respondents were used. Moreover, the waivers and quitclaims executed by respondents did not negate their right to pursue their claims, the appellate court stated.

In the instant petition, petitioner asserts that the implementation of its redundancy program was not discriminatory, and that it implemented reasonable criteria in selecting employees to be retrenched. Moreover, the decision to dismiss respondents was reached after consultations with the Union. Petitioner alsomaintains that the quitclaims executed by respondents, in which the latter acknowledged receipt of their salaries, 13th month pay, vacation leave conversion, retrenchment pay and refund of withholding taxes, were not procured through fraud or deceit on its part, and

that respondents had better educational attainment than the other workers; hence, the two understood what they were signing.

Respondents filed their comment,[14] asserting that petitioner raised no substantial argument to warrant reconsideration.[15] They contend that petitionercannot invoke redundancy since there was no showing that the functions of respondents are duplicitous or superfluous. They also assert that petitioner failed to show that it was suffering from a serious downturn in business that would warrant redundancy given that such serious business downturn was the cause given by petitioner in the termination letters sent to respondents. They also assert that their educational attainment is irrelevant since the compelling factor in their acceptance of separation pay was the dire economic necessity to be caused by their impending loss of jobs.

The issues posed before the Court may thus be simplified into two: (i) the propriety of the redundancy program implemented by petitioner; and (ii) the validity of the waivers and quitclaims executed by respondents.

The petition is meritorious.

Propriety of redundancy program

For purposes of the Labor Code, redundancy exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise. Succinctly put, a position is redundant where it is superfluous, and superfluity of a position or positions may be the outcome of a number of factors, such as over hiring of workers, decreased volume of business, or dropping of a particular product line or service activity previously manufactured or undertaken by the enterprise.[16] That no other person was holding the same position prior to the termination of ones services, does not show that his position had not become redundant. Indeed, in any well-organized business enterprise, it would be surprising to find duplication of work and two (2) or more people doing the work of one person.[17] Just like installation of labor-saving devices, the ground of





redundancy does not require the exhibition of proof of losses or imminent losses. In fact, of all the statutory grounds provided in Article 283 of the Labor Code, it is only retrenchment which requires proof of losses or possible losses as justification for termination of employment.[18]

The Court recognizes that a host of relevant factors comes into play in determining cost-efficient saving measures and in choosing who among the employees should be retained or separated. It is well settled that the characterization of an employees services as no longer necessary or sustainable, and, therefore, properly terminable, is an exercise of business judgment on the part of the employer. However, the wisdom or soundness of such characterization or decision is not subject to discretionary review provided, of course, that violation of law or arbitrary or malicious action is not shown.[19] In several instances, the Court has held that it is important for a company to have fair and reasonable criteria in implementing its redundancy program, such as but not limited to, (a) preferred status, (b) efficiency and (c) seniority.[20]

\

We are satisfied that petitioner employed reasonable criteria in choosing which positions to declare redundant.

The Court notes that considerable deliberations were made before the redundancy program was implemented. As early as 22 April 2000, management had been upfront regarding its plans to implement a redundancy program, issuing a memorandum informing its employees that imminent serious business downturn had forced it to take urgent steps to reduce (its) workforce. The memorandum also mentioned the criteria for selection of employees to be made redundant. Thus: x x x primarily performance, viz absenteeism, record of disciplinary action, efficiency and work attitude. All other things being equal, the basis will be seniority.[21]





Records also show that petitioner held a labor-management meeting on 31 May 2000, wherein it discussed with the Union the redundant positions as well as the possible placement of the would-be displaced employees, the wage rate and work hours. Obviously, the redundancy program was carried out with the full consent and participation of the duly recognized labor union, which represents the employees-members. The minutes of the meeting which were duly signed by both the management and the union panels read in part:

Marina Montero and Purita Ortegas positions are redundant. The same is true with Robert Higados position. As earlier mentioned, Management told the Union there are no more available monthly positions but should they wish to take up daily jobs Management is willing to accommodate them.

x x x

On the case of Marina Montero, Mr. Dequito suggested that Management accommodate M. Montero for one or two more years since she is already retirable. Engr. Valle told the Union that they have checked the records and found out that M. Monteros service is not even close to 28 years.[22]

Moreover, a review of the records shows that respondents positions were abolished because there was duplicity of functions of clerk analysts in the Industrial Engineering Section and finishing production clerks in the Operations Department. Even the union representatives agreed that respondents positions were redundant. Petitioner found that it was more


cost-efficient to maintain only one employee to handle the computation of incentives of the production employees with the use of computers. [23]

Respondents, as well as the Court of Appeals, insist that petitioner did not present a clear criteria in implementing its redundancy program. We do not agree. Petitioners failure to exactly state in the memorandum or in the termination notices that respondents do not enjoy a preferred status, or are not efficient or do not possess seniority, cannot be equated with failure to apply reasonable criteria. A simple reading of the memorandum and the deliberations during the labor-management meeting shows that the fate of the affected employees was deliberated upon and decided with circumspection. The totality of the actions of petitioner shows that the redundancy program was fair, well-thought of, and made in good faith.

Neither is the claim of discrimination well-founded. Respondents compare themselves to the other employees who were included in the redundancy program and allegedly reinstated by petitioner. Upon closer scrutiny, however, we find that said employees were indeed part of the redundancy program but were taken back, upon the agreement between the Union and petitioner. Of the 135 terminated employees, only 11 were taken back. It must be stressed, however, that true, the 11 employees were re-employed but they were not reinstated in their former positions. Aside from agreeing to a reduced workweek, these employees conceded to pay cuts, and accepted positions which were different from the ones they originally held prior to the implementation to the redundancy program.[24]

Moreover, of the remaining terminated employees who were not re-employed, only respondents complained of illegal dismissal and discrimination. It would probably be a different matter had petitioner re-employed each and every terminated employee, save for respondents. Had such been the case, it would have been easy to infer that respondents were singled out and discriminated against, and more



important, it would prove that there was no valid reason to implement a redundancy program. But, precisely, that is not the case here. Besides, petitioner and theUnion had exercised business judgment in choosing who should be re-employed. Absent any showing of arbitrariness or bad faith, the Court will not interfere with their decision.

Validity of Release Waiver and Quitclaim

The Court of Appeals ruled that the release waivers and quitclaims had not negated respondents right to pursue their claims, ratiocinating that:

What appears is that petitioners by reason of dire economic necessity were constrained to accept their separation pay and signed the quitclaims. When petitioners signed the quitclaims, they faced the impending threat of losing their jobs after June 15, 2000. This dilemma placed petitioners in no position to resist their employers offer of separation pay. The fact, however, is that petitioners continue to press their claims against private respondent company, which negates the idea that they waived their rights or claims. The reason for this is that the employee does not really stand on an equal footing with his employer. In some cases, he may be so penurious that he is willing to bargain even rights secured to him by law.[25] (emphasis supplied)

The Court disagrees. Not all quitclaims are per se invalid or against policy, except: (1) where there is clear proof that the waiver was wangled from an


unsuspecting or gullible person; or (2) where the terms of settlement are unconscionable on their face; in these cases, the law will step in to annul the questionable transaction.[26] Indeed, there are legitimate waivers that represent a voluntary and reasonable settlement of laborers claims which should be respected by the Court as the law between the parties. Where the person making the waiver has done so voluntarily, with a full understanding thereof, and the consideration for the quitclaim is credible and reasonable, the transaction must be recognized as being a valid and binding undertaking,[27] and may not later be disowned simply because of a change of mind.[28]

In the case at bar, the release waivers and quitclaims were executed by respondents without any force or duress exerted on them. Respondents merely alleged that they voluntarily executed the documents by reason of dire economic necessity. Dire necessity may be an acceptable ground to annul quitclaims if the consideration is unconscionably low and the employee was tricked into accepting it,[29] but is not an acceptable ground for annulling the release when it is not shown that the employee has been forced to execute it.[30]

The release documents embodied reasonable settlement of the parties claims. Respondents received hefty sumsOrtega received P363,594.28 while Montero got P348,975.97the said amounts being what they are by law entitled to receive,[31] much higher than the separation pay they would have received had petitioners hand been forced and a retrenchment program initiated. Respondents were made fully aware of the implications of release documents. They are not unlearned nor gullible. They even wrote down in Filipino that they understood the terms of the release document and attested that they have received all the benefits due them.[32] There would have been no question on their right to file their complaint had they not signed and executed the Release Waiver and Quitclaim. In the absence of any showing that they were forced or tricked into signing the release documents, the Court cannot set aside the same merely because respondents had subsequently changed their minds.








WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals dated January 25, 2002 in C.A. G.R. SP No. 89754 is REVERSED and SET ASIDE and the Decision of the NLRC dated 21 January 2004 is REINSTATED. No costs.

SO ORDERED.


Manila

SECOND DIVISION

G.R. No. 202996 June 18, 2014

MARLO A. DEOFERIO, Petitioner, vs.INTEL TECHNOLOGY PHILIPPINES, INC. and/or MIKE WENTLING, Respondents.

D E C I S I O N

BRION, J.:

We resolve the petition for review on certiorari1 filed by petitioner Marlo A. Deoferio to challenge the February 24, 2012 decision2 and the August 2, 2012 resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. 115708.

The Factual Antecedents

http://www.lawphil.net/judjuris/juri2014/jun2014/gr_202996_2014.html#fnt3



On February 1, 1996, respondent Intel Technology Philippines, Inc. (Intel)employed Deoferio as a product quality and reliability engineer with a monthly salary of P9,000.00. In July2001, Intel assigned him to the United States as a validation engineer for an agreed period of two years and with a monthly salary of US$3,000.00. On January 27, 2002, Deoferio was repatriated to the Philippines after being confined at Providence St. Vincent Medical Center for major depression with psychosis.4 In the Philippines, he worked as a product engineer with a monthly salary of P23,000.00.5

Deoferio underwent a series of medical and psychiatric treatment at Intel’s expense after his confinement in the United States. In 2002, Dr. Elizabeth Rondain of Makati Medical Center diagnosed him to be suffering from mood disorder, major depression, and auditory hallucination.6 He was also referred to Dr. Norieta Balderrama, Intel’s forensic psychologist, and to a certain Dr. Cynthia Leynes who both confirmed his mental condition.7 On August 8, 2005, Dr. Paul Lee, a consultant psychiatrist of the Philippine General Hospital, concluded that Deoferio was suffering from schizophrenia. After several consultations, Dr. Lee issued a psychiatric report dated January 17,2006 concluding and stating that Deoferio’s psychotic symptoms are not curable within a period of six months and "will negatively affect his work and social relation with his co-worker[s]."8 Pursuant to these findings, Intel issued Deoferio a notice of termination on March 10, 2006.9

Deoferio responded to his termination of employment by filing a complaint for illegal dismissal with prayer for money claims against respondents Intel and Mike Wentling (respondents). He denied that he ever had mental illness and insisted that he satisfactorily performed his duties as a product engineer. He argued that Intel violated his statutory right to procedural due process when it summarily issued a notice of termination. He further claimed that he was entitled to a salary differential equivalent to the pre-terminated period of his assignment in the United States minus the base pay that he had already received. Deoferio also prayed for backwages, separation pay, moral and exemplary damages, as well as attorney’s fees.10

In defense, the respondents argued that Deoferio’s dismissal was based on Dr. Lee’s certification that: (1) his schizophrenia was not curable within a period of six months even with proper medical treatment; and (2) his continued employment would be prejudicial to his and to the other employees’ health.11 The respondents also insisted that Deoferio’s presence









at Intel’s premises would pose an actual harm to his co-employees as shown by his previous acts. On May 8, 2003, Deoferio emailed an Intel employee with this message: "All soul’s day back to work Monday WW45.1." On January 18, 2005, he cut the mouse cables, stepped on the keyboards, and disarranged the desks of his co-employees.12 The respondents also highlighted that Deoferio incurred numerous absences from work due to his mental condition, specifically, from January 31, 2002 until February 28, 2002,13from August 2002 until September 2002,14 and from May 2003 until July 2003.15 Deoferio also took an administrative leave with pay from January 2005 until December 2005.16

The respondents further asserted that the twin-notice requirement in dismissals does not apply to terminations under Article 284 of the Labor Code.17 They emphasized that the Labor Code’s implementing rules (IRR) only requires a competent public health authority’s certification to effectively terminate the services of an employee.18They insisted that Deoferio’s separation and retirement payments for P247,517.35 were offset by his company car loan which amounted to P448,132.43.19 He was likewise not entitled to moral and exemplary damages, as well as attorney’s fees, because the respondents faithfully relied on Dr. Lee’s certification that he was not fit to work as a product engineer.20

The Labor Arbitration Ruling

In a decision21 dated March 6, 2008,the Labor Arbiter (LA) ruled that Deoferio had been validly dismissed. The LA gave weight to Dr. Lee’s certification that Deoferio had been suffering from schizophrenia and was not fit for employment. The evidence on record shows that Deoferio’s continued employment at Intel would pose a threat to the health of his co-employees. The LA further held that the Labor Code and its IRR do not require the employer to comply with the twin-notice requirement in dismissals due to disease. The LA also found unmeritorious Deoferio’s money claims against Intel.22

On appeal by Deoferio, the National Labor Relations Commission (NLRC) wholly affirmed the LA’s ruling.23 The NLRC also denied24 Deoferio’s motion for reconsideration,25 prompting him to seek relief from the CA through a petition for certiorari under Rule 65 of the Rules of Court.

The CA’s Ruling















On February 24, 2012, the CA affirmed the NLRC decision. It agreed with the lower tribunals’ findings that Deoferio was suffering from schizophrenia and that his continued employment at Intel would be prejudicial to his health and to those of his co-employees. It ruled that the only procedural requirement under the IRR is the certification by a competent public health authority on the non-curability of the disease within a period of six months even with proper medical treatment. It also concurred with the lower tribunals that Intel was justified in not paying Deoferio separation pay as required by Article 284 of the Labor Code because this obligation had already been offset by the matured car loan that Deoferio owed Intel.26

Deoferio filed the present petition after the CA denied his motion for reconsideration.27

The Petition

In the present petition before the Court, Deoferio argues that the uniform finding that he was suffering from schizophrenia is belied by his subsequent employment at Maxim Philippines Operating Corp. and Philips Semiconductors Corp., which both offered him higher compensations. He also asserts that the Labor Code does not exempt the employer from complying with the twin-notice requirement in terminations due to disease.28

The Respondents’ Position

In their Comment,29 the respondents posit that the petition raises purely questions of fact which a petition for review on certiorari does not allow. They submit that Deoferio’s arguments have been fully passed upon and found unmeritorious by the lower tribunals and by the CA. They additionally argue that Deoferio’s subsequent employment in other corporations is irrelevant in determining the validity of his dismissal; the law merely requires the non-curability of the disease within a period of six months even with proper medical treatment.

The respondents also maintain that Deoferio’s claim for salary differential is already barred by prescription under Article 291 of the Labor Code.30 Even assuming that the claim for salary differential has been timely filed, the respondents assert that the parties expressly agreed in the International Assignment Relocation Agreement that "the assignment length is only an estimate and not a guarantee of employment for any particular length of






time."31Moreover, his assignment in the United States was merely temporary and did not change his salary base, an amount which he already received.

The Issues

This case presents to us the following issues:

(1) Whether Deoferio was suffering from schizophrenia and whether his continued employment was prejudicial to his health, as well as to the health of his co-employees;

(2) Whether the twin-notice requirement in dismissals applies to terminations due to disease; and

As part of the second issue, the following issues are raised:

(a) Whether Deoferio is entitled to nominal damages for violation of his right to statutory procedural due process; and

(b) Whether the respondents are solidarily liable to Deoferio for nominal damages.

(3) Whether Deoferio is entitled to salary differential, backwages, separation pay, moral and exemplary damages, as well as attorney’s fees.

The Court’s Ruling

We find the petition partly meritorious.

Intel had an authorized cause to dismiss Deoferio from employment

Concomitant to the employer’s right to freely select and engage an employee is the employer’s right to discharge the employee for just and/or authorized causes. To validly effect terminations of employment, the discharge must be for a valid cause in the manner required by law. The purpose of these two-pronged qualifications is to protect the working class from the employer’s arbitrary and unreasonable exercise of its right to dismiss. Thus, in termination cases, the law places the burden of proof upon the employer to show by substantial evidence that the termination was for a lawful cause and in the manner required by law.


In concrete terms, these qualifications embody the due process requirement in labor cases - substantive and procedural due process. Substantive due process means that the termination must be based on just and/or authorized causes of dismissal. On the other hand, procedural due process requires the employer to effect the dismissal in a manner specified in the Labor Code and its IRR.32

The present case involves termination due to disease – an authorized cause for dismissal under Article 284 of the Labor Code. As substantive requirements, the Labor Code and its IRR33 require the presence of the following elements:

(1) An employer has been found to be suffering from any disease.

(2) His continued employment is prohibited by law or prejudicial to his health, as well as to the health of his co-employees.

(3) A competent public health authority certifies that the disease is of such nature or at such a stage that it cannot be cured within a period of six months even with proper medical treatment. With respect to the first and second elements, the Court liberally construed the phrase "prejudicial to his health as well as to the health of his co-employees" to mean "prejudicial to his health or to the health of his co-employees." We did not limit the scope of this phrase to contagious diseases for the reason that this phrase is preceded by the phrase "any disease" under Article 284 of the Labor Code, to wit:

Art. 284. Disease as ground for termination. – An employer may terminate the services of an employee who has been found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health as well as to the health of his co-employees: Provided, That he is paid separation pay equivalent to at least one (1) month salary or to one-half (1/2) month salary for every year of service, whichever is greater, a fraction of at least six (6) months being considered as one (1) whole year. [underscores, italics and emphases ours]

Consistent with this construction, we applied this provision in resolving illegal dismissal cases due to non-contagious diseases such as stroke, heart attack, osteoarthritis, and eye cataract, among others. In Baby Bus, Inc. v. Minister of Labor,34 we upheld the labor arbitration’s finding that Jacinto Mangalino’s continued employment – after he suffered several strokes –




would be prejudicial to his health. In Duterte v. Kingswood Trading Co., Inc.,35 we recognized the applicability of Article 284 of the Labor Code to heart attacks. In that case, we held that the employer- company’s failure to present a certification from a public health authority rendered Roque Duterte’s termination due to a heart attack illegal. We also applied this provision in Sy v. Court of Appeals36to determine whether Jaime Sahot was illegally dismissed dueto various ailments such as presleyopia, hypertensive retinopathy, osteoarthritis, and heart enlargement, among others. In Manly Express, Inc. v. Payong, Jr.,37 we ruled that the employer-company’s non-presentment of a certification from a public health authority with respect to Romualdo Payong Jr.’s eye cataract was fatal to its defense.

The third element substantiates the contention that the employee has indeed been suffering from a disease that: (1) is prejudicial to his health as well as to the health of his co-employees; and (2) cannot be cured within a period of six months even with proper medical treatment. Without the medical certificate, there can be no authorized cause for the employee’s dismissal. The absence of this element thus renders the dismissal void and illegal.

Simply stated, this requirement is not merely a procedural requirement, but a substantive one.1âwphi1 The certification from a competent public health authority is precisely the substantial evidence required by law to prove the existence of the disease itself, its non-curability within a period of six months even with proper medical treatment, and the prejudice that it would cause to the health of the sick employee and to those of his co-employees.

In the current case, we agree with the CA that Dr. Lee’s psychiatric report substantially proves that Deoferio was suffering from schizophrenia, that his disease was not curable within a period of six months even with proper medical treatment, and that his continued employment would be prejudicial to his mental health. This conclusion is further substantiated by the unusual and bizarre acts that Deoferio committed while at Intel’s employ.

The twin-notice requirement appliesto terminations under Article 284 ofthe Labor Code

The Labor Code and its IRR are silent on the procedural due process required in terminations due to disease. Despite the seeming gap in the law,




Section 2, Rule 1, Book VI of the IRR expressly states that the employee should be afforded procedural due process in all cases of dismissals.38

In Sy v. Court of Appeals39 and Manly Express, Inc. v. Payong, Jr.,40 promulgated in 2003 and 2005, respectively, the Court finally pronounced the rule that the employer must furnish the employee two written notices in terminations due to disease, namely: (1) the notice to apprise the employee of the ground for which his dismissal is sought; and (2) the notice informing the employee of his dismissal, to be issued after the employee has been given reasonable opportunity to answer and to be heard on his defense. These rulings reinforce the State policy of protecting the workers from being terminated without cause and without affording them the opportunity to explain their side of the controversy.

From these perspectives, the CA erred in not finding that the NLRC gravely abused its discretion when it ruled that the twin-notice requirement does not apply to Article 284 of the Labor Code. This conclusion is totally devoid of any legal basis; its ruling is wholly unsupported by law and jurisprudence. In other words, the NLRC’s unprecedented, whimsical and arbitrary ruling, which the CA erroneously affirmed, amounted to a jurisdictional error.

Deoferio is entitled to nominaldamages for violation of his right tostatutory procedural due process

Intel’s violation of Deoferio’s right to statutory procedural due process warrants the payment of indemnity in the form of nominal damages. In Jaka Food Processing Corp. v. Pacot,41 we distinguished between terminations based on Article 282 of the Labor Code42 and dismissals under Article 283 of the Labor Code.43 We then pegged the nominal damages at P30,000.00 if the dismissal is based on a just cause but the employer failed to comply with the twin-notice requirement. On the other hand, we fixed the nominal damages at P50,000.00 if the dismissal is due to an authorized cause under Article 283 of the Labor Code but the employer failed to comply with the notice requirement. The reason is that dismissals for just cause imply that the employee has committed a violation against the employer, while terminations under Article 283 of the Labor Code are initiated by the employer in the exercise of his management prerogative.







With respect to Article 284 of the Labor Code, terminations due to disease do not entail any wrongdoing on the part of the employee. It also does not purely involve the employer’s willful and voluntary exercise of management prerogative – a function associated with the employer's inherent right to control and effectively manage its enterprise.44 Rather, terminations due to disease are occasioned by matters generally beyond the worker and the employer's control.

In fixing the amount of nominal damages whose determination is addressed to our sound discretion, the Court should take into account several factors surrounding the case, such as: (1) the employer’s financial, medical, and/or moral assistance to the sick employee; (2) the flexibility and leeway that the employer allowed the sick employee in performing his duties while attending to his medical needs; (3) the employer’s grant of other termination benefits in favor of the employee; and (4) whether there was a bona fide attempt on the part of the employer to comply with the twin-notice requirement as opposed to giving no notice at all.

We award Deoferio the sum of P30,000.00 as nominal damages for violation of his statutory right to procedural due process. In so ruling, we take into account Intel’s faithful compliance with Article 284 of the Labor Code and Section 8, Rule 1, Book 6 of the IRR. We also note that Deoferio’s separation pay equivalent to one-half month salary for every year of service45 was validly offset by his matured car loan. Under Article 1278 of the Civil Code, in relation to Article 1706 of the Civil Code46 and Article 113(c) of the Labor Code,47 compensation shall take place when two persons are creditors and debtors of each other in their own right. We likewise consider the fact that Intel exhibited real concern to Deoferio when it financed his medical expenses for more than four years. Furthermore, prior to his termination, Intel liberally allowed Deoferio to take lengthy leave of absences to allow him to attend to his medical needs.

Wentling is not personally liable forthe satisfaction of nominal damagesin favor of Deoferio

Intel shall be solely liable to Deoferio for the satisfaction of nominal damages. Wentling, as a corporate officer, cannot be held liable for acts done in his official capacity because a corporation, by legal fiction, has a personality separate and distinct from its officers, stockholders, and





members. There is also no ground for piercing the veil of corporate fiction because Wentling acted in good faith and merely relied on Dr. Lee’s psychiatric report in carrying out the dismissal.48

Deoferio is not entitled to salarydifferential, backwages, separationpay, moral and exemplary damages,as well as attorney's fees

Deoferio's claim for salary differential is already barred by prescription. Under Article 291 of the Labor Code, all money claims arising from employer-employee relations shall be filed within three years from the time the cause of action accrued. In the current case, more than four years have elapsed from the pre-termination of his assignment to the United States until the filing of his complaint against the respondents. We thus see no point in further discussing this matter. His claim for backwages, separation pay, moral and exemplary damages, as well as attorney's fees must also necessarily fail as a consequence of our finding that his dismissal was for an authorized cause and that the respondents acted in good faith when they terminated his services.

WHEREFORE, premises considered, we partially grant the petition; the assailed February 24, 2012 decision and the August 2, 2012 resolution of the Court of Appeals stand but respondent Intel Technology Philippines, Inc. is ordered to pay petitioner Marlo A. Deoferio nominal damages in the amount of P30,000.00. We totally deny the petition with respect to respondent Mike Wending.

SO ORDERED.


Manila

FIRST DIVISION

G.R. No. 160325 October 4, 2007

ROQUE S. DUTERTE, petitioner, vs.


KINGSWOOD TRADING CO., INC., FILEMON LIM and NATIONAL LABOR RELATIONS COMMISSION,respondents.

D E C I S I O N

GARCIA, J.:

By this petition for review on certiorari, petitioner Roque S. Duterte seeks the review and setting aside of the decision1 dated June 20, 2003 of the Court of Appeals (CA) in CA-G.R. SP No. 71729, as reiterated in its resolution2 of October 5, 2003, affirming an earlier resolution3 of the National Labor Relations Commission (NLRC) which ruled that petitioner was not illegally dismissed from employment due to disease under Article 284 of the Labor Code.

The facts:

In September 1993, petitioner was hired as truck/trailer driver by respondent Kingswood Trading Company, Inc. (KTC) of which co-respondent Filemon Lim is the President. Petitioner was on the 6:00 a.m. – 6:00 p.m. shift. He averaged 21 trips per month, getting P700 per trip. When not driving, petitioner was assigned to clean and maintain respondent KTC’s equipment and vehicles for which he was paid P125 per day. Regularly, petitioner would be seconded by respondent Filemon Lim to drive for one of KTC’s clients, the Philippine National Oil Corporation, but always subject to respondents’ convenience.

On November 8, 1998, petitioner had his first heart attack and was confined for two weeks at the Philippine Heart Center (PHC). This was confirmed by respondent KTC which admitted that petitioner was declared on sick leave with corresponding notification.

A month later, petitioner returned to work armed with a medical certificate signed by his attending physician at the PHC, attesting to petitioner’s fitness to work. However, said certificate was not honored by the respondents who refused to allow petitioner to work.

In February 1999, petitioner suffered a second heart attack and was again confined at the PHC. Upon release, he stayed home and spent time to recuperate.

http://www.lawphil.net/judjuris/juri2007/oct2007/gr_160325_2007.html#fnt3



In June 1999, petitioner attempted to report back to work but was told to look for another job because he was unfit. Respondents refused to declare petitioner fit to work unless physically examined by the company physician. Respondents’ promise to pay petitioner his separation pay turned out to be an empty one. Instead, petitioner was presented, for his signature, a document as proof of his receipt of the amount of P14,375.00 as first installment of his Social Security System (SSS) benefits. Having received no such amount, petitioner refused to affix his signature thereon and instead requested for the necessary documents from respondents to enable him to claim his SSS benefits, but the latter did not heed his request.

On November 11, 1999, petitioner filed against his employer a complaint for illegal dismissal and damages.

In a decision4 dated September 26, 2000, the labor arbiter found for the petitioner. However, while categorically declaring that petitioner’s dismissal was illegal, the labor arbiter, instead of applying Article 2795 of the Labor Code on illegal dismissals, applied Article 284 on Disease as ground for termination on the rationale that since the respondents admitted that petitioner could not be allowed back to work because of the latter’s disease, the case fell within the ambit of Article 284. We quote the fallo of the labor arbiter’s decision:

WHEREFORE, in the light of the foregoing, judgment is hereby rendered declaring complainant to have been terminated from employment on the ground that he has been suffering from a disease.

Respondents are hereby directed to pay complainant as follows:

1. Separation pay equivalent to one-half (1/2) month salary for every year of service computed at six (6) years of service in the amount of Forty-Two Thousand (P42,000.00) Pesos.

2. Holiday pay for three (3) years in the amount of Twenty-One Thousand (P21,000.00) Pesos; and

3. Service Incentive Leave pay for three (3) years in the amount of Ten Thousand (P10,000.00) Pesos.

All other claims herein sought are hereby denied for lack of merit and factual basis.



SO ORDERED.

On respondents’ appeal, the NLRC, in its Resolution6 of April 24, 2002, set aside the labor arbiter’s decision, ruling that Article 284 of the Labor Code has no application to this case, there being "no illegal dismissal to speak of." The NLRC accordingly dismissed petitioner’s complaint for illegal dismissal, thus:

WHEREFORE, the decision appealed from is VACATED and SET ASIDE.7 A new one is hereby entered DISMISSING the instant case for lack of merit.

Therefrom, petitioner went on certiorari to the CA in CA-G.R. SP No. 71729. In the herein assailed decision dated June 20, 2003, the CA upheld the NLRC Resolution, saying that the Commission committed no grave abuse of discretion in holding that petitioner was not illegally dismissed and could not be granted any relief. With his motion for a reconsideration having been denied by the CA in its resolution of October 5, 2003, petitioner is now with this Court via the present recourse.

We REVERSE.

At bottom, this case involves the simple issue of the legality of one’s termination from employment made complicated, however, by over analysis. Simply put, the question at hand pivots on who has the onus of presenting the necessary medical certificate to justify what would otherwise be classified as legal or illegal, as the case may be, dismissal from the service. The following may be another formulation of the issue: For purposes of Article 284 of the Labor Code, would the dismissal of an employee on the ground of disease under the said Article 284 still require the employer to present a certification from a competent public health authority that the disease is of such a nature that it could not be cured within a period of six months even with proper medical treatment? To both the NLRC and the CA, a dismissal on the ground of disease under Article 284 of the Code is illegal only if the employee himself presents the required certification from the proper health authority. Since, as in this case, petitioner failed to produce such certification, his dismissal could not be illegal.

In the precise words of the NLRC which the CA effectively affirmed:



Neither can it be gainsaid that Article 284 of the Labor Code applies in the instant case since the complainant [petitioner] failed to establish that he is suffering from a disease and his continued employment is prohibited by law or prejudicial to his health or to the health of his co-employees nor was he able to prove that his illness is of such nature or at such stage that it cannot be cured within a period of six months even with proper treatment.8

In order for the complainant to be covered by Article 284 of the Labor Code, he must first present a certification by a competent public health authority that his continued employment will result in the aforesaid consequences, but unfortunately for the complainant, we find none in the instant case. For the respondents to require the complainant to submit a medical certificate showing that he is already physically fit as a condition of his continued employment under the prevailing circumstance cannot be considered as neither harsh nor oppressive. xxx

Prescinding from the above, there is no illegal dismissal to speak of. This finding is further strengthened by the fact that no termination letter or formal notice of dismissal was adduced to prove that complainant’s services have been terminated. Considering that no illegal dismissal took place, the complainant’s claim that his right to due process of law had been violated finds no application to the case at bar. (Emphasis added).

The Court disagrees with the NLRC and CA.

Article 284 of the Labor Code explicitly provides:

Art. 284. DISEASE AS GROUND FOR TERMINATION. -- An employer may terminate the services of an employee who has been found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health as well as to the health of his co-employees: Provided, That he is paid separation pay equivalent to at least one (1) month salary or to one-half (1/2) month salary for every year of service, whichever is greater, a fraction of at least six (6) months being considered as one (1) whole year.


Corollarily, in order to validly terminate employment on the basis of disease, Book VI, Rule I, Section 8 of the Omnibus Implementing Rules of the Labor Code requires:

Disease as a ground for dismissal. -- Where the employee suffers from a disease and his continued employment is prohibited by law or prejudicial to his health or to the health of his co-employees, the employer shall not terminate his employment unless there is a certification by a competent public health authority that the disease is of such nature or at such a stage that it cannot be cured within a period of six (6) months even with proper medical treatment. If the disease or ailment can be cured within the period, the employer shall not terminate the employee but shall ask the employee to take a leave. The employer shall reinstate such employee to his former position immediately upon the restoration of his normal health. (Book VI, Rule 1, Sec. 8 of the Implementing Rules)

In a very real sense, both the NLRC and the appellate court placed on the petitioner the burden of establishing, by a certification of a competent public authority, that his ailment is such that it cannot be cured within a period of six months even with proper medical treatment. And pursuing their logic, petitioner could not claim having been illegally dismissed due to disease, failing, as he did, to present such certification.

To be sure, the NLRC’s above posture is, to say the least, without basis in law and jurisprudence. And when the CA affirmed the NLRC, the appellate court in effect placed on the petitioner the onus of proving his entitlement to separation pay and thereby validated herein respondents’ act of dismissing him from employment even without proof of existence of a legal ground for dismissal.

The law is unequivocal: the employer, before it can legally dismiss its employee on the ground of disease, must adduce a certification from a competent public authority that the disease of which its employee is suffering is of such nature or at such a stage that it cannot be cured within a period of six months even with proper treatment.

Here, the record does not contain the required certification. And when the respondents asked the petitioner to look for another job because he was unfit to work, such unilateral declaration, even if backed up by the findings of its

company doctors, did not meet the quantum requirement mandated by the law, i.e., there must be a certification by a competent public authority.9

For sure, the posture taken by both the NLRC and the CA is inconsistent with this Court’s pronouncement in Tan v. National Labor Relations Commission,10 thus:

Consistent with the Labor Code state policy of affording protection to labor and of liberal construction of labor laws in favor of the working class, Sec. 8, Rule 1, Book VI, of the Omnibus Rules Implementing the Labor Code provides – Where the employee suffers from a disease and his continued employment is prohibited by law or prejudicial to his health or to the health of his co-employees, the employer shall not terminate his employment, unless there is a certification by a competent public authority that the disease is of such nature or at such a stage, that it cannot be cured within a period of six (6) months even with proper medical treatment.. There is absolutely nothing on record to show that such a certification was ever obtained by [the employer] much less that one was issued by a competent public authority …[o]n the contrary, what appears on record is a Medical Certificate dated May 5, 1999 issued by Dr. Lenita C. de Castro certifying to the contrary, i.e., that [the employee] was in fact already fit to return to work. However, [the employer] did not accept the certificate and insisted that [the employee] present one issued by a government physician. For his failure to present such a certificate, [the employee] was penalized with dismissal. Obviously, the condition imposed by [the employer] finds no basis under the law. To reiterate, contrary to [the employer’s] insistence that [the employee] first obtain a medical certificate attesting that he was already cured of pulmonary tuberculosis, the abovequoted Sec. 9, Rule 1, Book VI, of the Omnibus Rules is clear that the burden is upon [the employer] not [the employee] to justify the dismissal with a certificate public authority that [the employee’s] disease is at such stage or of such nature that it cannot be cured within six (6) months even with proper medical treatment. For [the employer’s] blatant failure to present one, we can only rule that [the employee’s] dismissal, like that of Garrido, is illegal, invalid and unjustified. (Emphasis and words in brackets supplied.)



In Triple Eight Integrated Services, Inc. v. NLRC,11 the Court explains why the submission of the requisite medical certificate is for the employer’s compliance, thus:

The requirement for a medical certificate under Article 284 of the Labor Code cannot be dispensed with; otherwise, it would sanction the unilateral and arbitrary determination by the employer of the gravity or extent of the employee’s illness and thus defeat the public policy on the protection of labor.

In thus ruling out an illegal dismissal situation in the instant case, the CA effectively agreed with the NLRC’s view that the fact of dismissal must be evidenced by positive and overt acts, citing Veterans Phil. Scout Security Agency v. NLRC.12 Said case, however, is not on all fours with the present one. In Veterans, the employer offered the complainant-employee a monthly cash allowance and other benefit pending a new assignment. Therein, the employee was not forthrightly nor constructively dismissed. In fact, the employee in Veterans was found to be in bad faith as he filed his complaint for illegal dismissal the day immediately after he accepted the company’s offer of employment benefits. Hence, the Court’s ruling in Veterans that the fact of dismissal must be evidenced by positive and overt acts indicating the intention to dismiss. These considerations do not obtain here. Petitioner was not allowed back to work. Neither did he receive any monetary assistance from his employer, and, worse, respondents refused to give him the necessary documents to enable him to claim his SSS benefits.

Much was made by the NLRC – and the CA – about petitioner’s refusal to comply with respondents’ order to submit a medical certificate – irresistibly implying that such refusal is what constrained them to refuse to take petitioner back in.

We are not persuaded.

Even assuming, in gratia argumenti, that petitioner committed what may be considered an act of insubordination for refusing to present a medical certificate, such offense, without more, certainly did not warrant the latter’s placement in a floating status, a veritable dismissal, and deprived of his only source of livelihood.

We are not unmindful of the connection between the nature of petitioner’s disease and his job as a truck/trailer driver. We are also fully aware that



petitioner’s job places at stake the safety of the public. However, we do not agree with the NLRC that petitioner was validly dismissed because his continued employment was prohibited by the basic legal mandate that reasonable diligence must be exercised to prevent prejudice to the public, which justified respondents in refusing work to petitioner. Petitioner could have been admitted back to work performing other tasks, such as cleaning and maintaining respondent company’s machine and transportation assets.

As a final consideration, the Court notes that the NLRC, as sustained by the CA, considered the petitioner as a field worker and, on that basis, denied his claim for benefits under Articles 9413 to 9514 of the Labor Code, such as holiday pay and service incentive leave pay. Article 82 of the Code lists personnel who are not entitled to the benefits aforementioned.15 Among the excluded group are "field personnel," referring 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. As a general proposition, field personnel are those whose job/service are not or cannot be effectively monitored by the employer or his representative, their workplace being away from the principal office and whose hours and days of work cannot be determined with reasonable certainty. Field personnel 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 employer. Thus, to determine whether an employee is a field employee, it is also necessary to ascertain if actual hours of work in the field can be determined with reasonable certainty by the employer. In so doing, an inquiry must be made as to whether or not the employee’s time and performance are constantly supervised by the employer.16

Guided by the foregoing norms, petitioner was definitely a regular employee of respondent company and not its field personnel, as the term is used in the Labor Code. As it were, he was based at the principal office of the respondent company. His actual work hours, i.e., from 6:00 a.m. to 6:00 p.m., were ascertainable with reasonable certainty. He averaged 21 trips per month. And if not driving for the company, he was paid P125.00 per day for cleaning and maintaining KTC’s equipment. Not falling under the category of field personnel, petitioner is consequently entitled to both holiday pay and





service incentive leave pay, as mandated by Articles 94 and 95 of the Labor Code.

All told, we rule and so hold that petitioner’s dismissal did not comply with both the substantive and procedural aspects of due process. Clearly, his dismissal is tainted with invalidity.17

WHEREFORE, the assailed decision of the CA in CA-G.R. SP No. 71729 is REVERSED and SET ASIDE.Respondents are declared guilty of illegal dismissal and are ordered to pay petitioner separation pay equivalent to one (1) month pay for every year of service, in lieu of his reinstatement, plus his full backwages from the time his employment was terminated up to the time this Decision becomes final. For this purpose, let this case beREMANDED to the labor arbiter for the computation of petitioner’s separation pay, backwages and other monetary awards due him.

Costs against respondents.

SO ORDERED.


Manila

SECOND DIVISION

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 XRETIREMENT 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.



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 IIRetirement 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.


Manila

THIRD DIVISION

G.R. No. 155146 January 24, 2006

DR. PERLA A. POSTIGO, FRANCISCO F. ALMACEN, NARCISO M. ALMENDRAL, NENA E. BASTO, JUANITO M. BERNARDINO, ADELFA B. CRESCINI, MARCIAL R. DE JESUS, DR. PEDRO LOPEZ DE LEON, PREMIA M. DUMLAO, DAVID F. ESTACIO, LINA G. ESTRELLA, GENOVEVA V. HERNANDEZ, PEDRO A. PARIL, PEDRO H. SINGSON, ALBERTO A. TUDIO, MARIETTA B. ULIT, LOURDES C. LEGASPI, PEDRO PEROCHO, LANI CORTEZ, GUADALUPE B. MACATANGAY, DOLORES C. FERNANDEZ, LUMINOSA G. REYNO, ESTRELLA P. SURATOS, LYDIA E. DE BOSCH, ZENAIDA C. CARRIEDO, DR. FINAFLOR C. TAN, Petitioners, vs.PHILIPPINE TUBERCULOSIS SOCIETY, INC., Respondent.

D E C I S I O N

QUISUMBING, J.:

This petition assails the Decision1 dated June 13, 2002 of the Court of Appeals in CA-G.R. SP No. 59597, which set aside the Resolution2 dated January 31, 2000 of the National Labor Relations Commission (NLRC) in NLRC NCR CN 00-02-02148-99. The NLRC had dismissed the respondent’s appeal from the Decision of the Labor Arbiter, who ordered the payment of retirement benefits under Republic Act No. 7641 to petitioners. This petition likewise assails the Resolution3 dated September 3, 2002 of the Court of Appeals denying petitioners’ motion for reconsideration.

The antecedent facts, as summarized by the Court of Appeals and borne by the records, are as follows:

Petitioners Dr. Perla A. Postigo, et al., were regular employees of the respondent Philippine Tuberculosis Society, Inc. (PTSI). They retired on various dates from 1996 to 1998. Upon retirement from service, some of the petitioners who were compulsory members of the Government Service Insurance System (GSIS) obtained retirement benefits from the GSIS.

At the time the petitioners retired, Article 287 of the Labor Code had been amended by Republic Act No. 7641.4Rep. Act No. 7641 granted retirement pay to qualified employees in the private sector, in the absence of any retirement plan or agreement with the company. As the respondent did not have a retirement plan for its employees, aside from its contribution to the

http://www.lawphil.net/judjuris/juri2006/jan2006/gr_155146_2006.html#fnt4




GSIS, petitioners claimed from the respondent their retirement benefits under Rep. Act No. 7641. The respondent denied their claims on the ground that the accommodation extended by the GSIS to the petitioners removed them from the coverage of the law.

The petitioners then sought the opinion of the Bureau of Working Conditions (BWC) of the Department of Labor and Employment regarding their entitlement to the retirement benefits provided in Rep. Act No. 7641.5 The BWC confirmed their entitlement.6 The same opinion was rendered and submitted by the respondent’s legal counsel, Atty. Rene V. Sarmiento, to its Board of Directors.7 Despite this, respondent PTSI refused to pay the petitioners their retirement benefits.

The petitioners then filed a complaint before the Labor Arbiter.

In a Decision8 dated June 30, 1999, the Labor Arbiter declared petitioners entitled to retirement benefits under Rep. Act No. 7641. However, one petitioner, Dr. Finaflor C. Tan who was awarded her terminal leave pay, was not included in the award of retirement benefits.

Aggrieved, respondent PTSI appealed to the NLRC. Instead of posting the required cash or surety bond equivalent to the amount of the award, the respondent filed a Motion to Reduce Bond on the ground that the amount awarded by the Labor Arbiter was erroneous. On January 31, 2000, the NLRC dismissed the appeal for failure to post the required cash or surety bond.

Undaunted, the respondent elevated the matter to the Court of Appeals. On June 13, 2002, the CA reversed the NLRC’s decision in this wise:

Indeed, in several occasions, the Supreme Court has cautioned the NLRC to give Article 223 of the Labor Code, as amended, particularly the provisions on requiring a bond on appeals involving monetary awards, a liberal interpretation in line with the desired objective of resolving controversies on the merits.

Hence, considering the timeliness of the filing of the motion to reduce the appeal bond and the meritorious ground upon which it relies, We believe and so hold that the legal requirement of posting an appeal bond has been substantially satisfied. Public respondent acted with grave abuse of





discretion in dismissing the appeal without passing upon the motion to reduce the appeal bond.

WHEREFORE, the petition is hereby GRANTED. Resolutions dated 31 January 2000 and 24 May 2000 in NLRC-NCR CN 00-02-02148-99 of public respondent National Labor Relations Commission are hereby SET ASIDE. The NLRC is directed to act on the Motion to Reduce Bond and to give due course to the Appeal.

SO ORDERED.9

The petitioners now submit the following issues for our consideration:

I. Whether or not the remand of the case to the NLRC would only further delay the resolution of this case.

II. Whether or not the Honorable Court of Appeals decided the instant case in accordance with law and applicable jurisprudence and based on the evidence on record for having failed to apply the jurisprudential precepts that:

a. errors in the computation of the monetary award are properly a subject of appeal and should be ventilated at the appropriate time, not in a mere motion to reduce bond; and

b. the posting of a bond is an indispensable requirement to perfect an employer’s appeal.

III. Whether or not Petitioners are entitled to the benefits of the Retirement Pay Law.

IV. Whether or not Petitioners are entitled to interest on their retirement benefits for the unjustified withholding thereof.

V. Whether or not Petitioner Dr. Tan should be made similarly entitled to her retirement pay, which was inadvertently excluded by the Labor Arbiter, pursuant to the timely motion to render judgment nunc pro tuncshe filed before the Labor Arbiter and which was consistently raised all the way up to this Honorable Court, in order to effect a complete disposition of the instant case.10



In short, petitioners raise for our resolution these issues: (1) Did the Court of Appeals err in granting the petition and directing the NLRC to act on the Motion to Reduce Bond and to give due course to the appeal? and (2) Are the petitioners entitled to benefits under Rep. Act No. 7641?

On the first issue, petitioners contend that (1) errors in the computation of the monetary award are properly a subject of appeal and should be ventilated at the appropriate time, not in a mere motion to reduce bond; and (2) the posting of a bond is an indispensable requirement to perfect an employer’s appeal.

Respondent counters that in case the monetary award is being disputed, an appeal may still be filed without the appeal bond, provided that a motion to reduce bond is filed within the reglementary period.

We think that the Court of Appeals did not err in granting the petition and holding that there was substantial compliance in the posting of a cash or surety bond. We likewise find Nationwide Security and Allied Services, Inc. v. NLRC11 and Rosewood Processing, Inc. v. NLRC12 inapplicable to this case.

In Nationwide Security, the petitioners therein filed a motion to reduce bond instead of an appeal or surety bond. The NLRC denied the motion on the grounds that petitioners’ alleged inability to post the bond was without basis, and to grant the motion on the grounds stated therein would be tantamount to ruling on the merits. In affirming the decision of the NLRC, the Court noted that petitioners had funds from its other businesses to post the required bond. Further, the errors raised in the motion dealt with matters that would go into the merits of the case and were thus more appropriate in an appeal.

In this case, respondent deferred the posting of the surety bond in view of the alleged erroneous computation by the Labor Arbiter of the monetary award. While the Labor Arbiter awarded P5,480,484.2513 as retirement benefits, only P5,072,277.73,14 according to the respondent’s computation was due and owing to the petitioners. Since the motion raised a pure mathematical error, the same may be resolved without going into the merits of the case.

In Rosewood, the petitioner therein filed a motion to reduce the bond with the appeal bond, albeit not in the amount equivalent to the monetary award in the judgment appealed from. The Court held that the NLRC gravely





abused its discretion in dismissing the appeal since a consideration of the merits appearing in the appeal as well as the filing of the appeal bond show that there was substantial compliance with the rules governing appeal.

Here, aside from the fact that the filing of the motion was justified, the respondent immediately submitted asupersedeas bond15 with its motion for reconsideration of the NLRC resolution dismissing its appeal. In Ong v. Court of Appeals,16 we ruled that the aggrieved party may file the appeal bond within the ten-day reglementary period following the receipt of the resolution of the NLRC to forestall the finality of such resolution.17 Hence, while the appeal of a decision involving a monetary award in labor cases may be perfected only upon the posting of a cash or surety bond and the posting of the bond is an indispensable requirement to perfect such an appeal, a relaxation of the appeal bond requirement could be justified by substantial compliance with the rule.

Article 223 of the Labor Code provides that an appeal from a decision of the Labor Arbiter must be made within ten calendar days from receipt of a copy of the decision by the aggrieved party; and if the decision involves a monetary award, an appeal by the aggrieved party may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the NLRC in the amount equivalent to the monetary award. In addition, Section 6, Rule VI of the New Rules of Procedure of the NLRC provides that the Commission may, in justifiable cases and upon motion of the aggrieved party, reduce the amount of the bond. Further, the filing of the motion to reduce bond does not stop the running of the period to perfect appeal.

Time and again, this Court has ruled that while the above-mentioned rule treats the filing of a cash or surety bond in the amount equivalent to the monetary award in the judgment appealed from, as a jurisdictional requirement to perfect an appeal, the bond requirement on appeals involving awards is sometimes given a liberal interpretation in line with the desired objective of resolving controversies on the merits.18

The special circumstances in this case, upon which the motion to reduce the bond was predicated, justify the relaxation of the appeal bond requirement. However, considering that the claim for retirement benefits was made sometime in 1999 to support the petitioners during the twilight years of their lives, there is no doubt that a remand of the case to the NLRC will only





unduly delay the determination of their entitlement to such benefits. Moreover, since the case calls for the resolution of a question of law, we consider it more appropriate to resolve the appeal at this juncture, rather than remand the case to the NLRC.

We come now to the second issue. The petitioners contend that despite their compulsory membership in the GSIS, they are still covered by Rep. Act No. 7641 for the following reasons: (1) the respondent is registered with the Securities and Exchange Commission as a non-stock and non-profit corporation; hence, it is a private entity and its employees are employees in the private sector; and (2) the petitioners are not included in the exemptions from coverage of Rep. Act No. 7641.

Respondent PTSI counters that as an employer in the public sector, it is not covered by Rep. Act No. 7641 which applies only to employees in the private sector. It relies on Section 3, Rule I of the Amended Rules Implementing Title II, Book IV of the Labor Code, to wit:

SEC. 3. Employer–(a) The term shall mean any person natural or juridical, domestic or foreign, who carries on in the Philippines any trade, business, industry, undertaking or activity of any kind and uses the services of another person who is under his orders as regards the employment.

(b) An employer shall belong to either:

(1) The public sector covered by the GSIS, comprising the National Government, including government-owned or controlled corporations, the Philippine Tuberculosis Society, the Philippine National Red Cross, and the Philippine Veterans Bank; or

(2) The private sector covered by the SSS, comprising all employers other than those defined in the immediately preceding paragraph.

Respondent’s reliance on the afore-quoted rules is unfounded. The definition of a public sector employer as quoted above is relevant only for purposes of coverage under the Employees’ Compensation and State Insurance Fund. Instead, it is the implementing rules of Title II, Book VI of the Labor Code, which provides for the coverage and exemptions of retirement benefits. Thus:

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.

SEC. 2. Exemption. – 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.

. . .

Having determined the applicable implementing rules, we now proceed to resolve whether the respondent is a private corporation or a public corporation; and consequently, whether the petitioners are employees in the private sector or in the public sector.

On this score, the case of Feliciano v. Commission on Audit,19 finds strong relevance. Although with different factual circumstances, the Court discussed therein the two classes of corporations recognized by the 1987 Constitution. The first refers to private corporations created under a general law; the second refers to government-owned or controlled corporations created by special charters. We also reiterated that under Section 14 of the Corporation Code, "[a]ll corporations organized under this Code shall file with the Securities and Exchange Commission articles of incorporation …"

The respondent was incorporated on March 11, 1960 as a non-profit, benevolent and non-stock corporation under the Corporation Code.20 Having been created under the general corporation law instead of a special charter, we hold that the respondent is a private and not a governmental corporation. More so, Section 2(1), Article IX(B) of the 1987 Constitution provides:

SECTION 2. (1) The civil service embraces all branches, subdivisions, instrumentalities, and agencies of the Government, including government-owned or controlled corporations with original charters.

Extant on the records is the respondent’s admission that although its employees are compulsory members of the GSIS, said employees are not



governed by the Civil Service Law. If the respondent is truly a government-owned or controlled corporation, and petitioners are employees in the public sector, then, they should have been covered by said law. The truth, however, is that, the respondent is a non-profit but private corporation organized under the Corporation Code, and the petitioners are covered by the Labor Code and not by the Civil Service Law.

From the foregoing, it is clear to us that the petitioners are employees in the private sector, hence entitled to the benefits of Rep. Act No. 7641.

Even assuming that by virtue of their compulsory inclusion in the GSIS, the petitioners became employees in the public sector, they are still entitled to the benefits of Rep. Act No. 7641 since they are not covered by the Civil Service Law and its regulations. This much is certain upon reading the implementing rules of Title II, Book VI of the Labor Code as afore-cited as well as the Labor Advisory on Retirement Pay Law.21 Under the said advisory, the coverage of, as well as the exclusion from, Rep. Act No. 7641 has been delineated as follows:

RA 7641 or the Retirement Pay Law 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. They shall include part-time employees, employees of service and other job contractors and domestic helpers or persons in the personal service of another.

The law does not cover employees of retail, service and agricultural establishments or operations employing not more than (10) employees or workers and 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. (Underscoring ours.)

Neither do we find merit in the respondent’s argument that the rationale behind the enactment of Rep. Act No. 7641 justifies the exclusion of employees in the public sector, who are already enjoying retirement benefits under the GSIS law, from the New Retirement Law.

We direct the respondent’s attention to Section 2 of Rep. Act No. 7641, to wit:


SEC. 2. Nothing in this Act shall deprive any employee of benefits to which he may be entitled under existing laws or company policies or practices.

In addition, Rule II of the Rules Implementing Book VI of the Labor Code provides as follows:

SEC. 8. Relation to agreements and regulations. – Nothing in this Rule shall justify an employer from withdrawing or reducing any benefits, supplements or payments as provided in existing laws, individual or collective agreements or employment practices or policies.

. . .

In Juco v. NLRC,22 we clarified that employees of government-owned and controlled corporations with special charters are covered under the Civil Service. On the other hand, employees of government-owned and controlled corporations under the Corporation Code are governed by the provisions of the Labor Code.

The Philippine Tuberculosis Society, Inc. (PTSI) belongs to the latter category and, therefore, covered by Rep. Act No. 7641 which is an amendment to the Labor Code. The accommodation under Rep. Act No. 1820 extending GSIS coverage to PTSI employees did not take away from petitioners the beneficial coverage afforded by Rep. Act No. 7641. Hence, the retirement pay payable under Article 287 of the Labor Code as amended by Rep. Act No. 7641 should be considered apart from the retirement benefit claimable by the petitioners under the social security law or, as in this case, the GSIS law.

As to the alleged prolonged refusal by the respondent to pay the petitioners their retirement benefits, we do not think that the respondent’s stance was entirely in bad faith. The respondent harbored the honest belief that their compulsory coverage in the GSIS converted it into a public corporation excluded from the coverage of Rep. Act No. 7641. As noted by this Court, the respondent even filed a supersedeas bond, albeit belatedly, with its motion for reconsideration of the NLRC resolution dismissing its appeal. Such act only demonstrates that the respondent filed the appeal in good faith. We could not speculate and say that respondent did not intend to pay the petitioners their retirement benefits in case the appeal is dismissed.


On the matter of petitioner Dr. Finaflor C. Tan, records show she has two causes of action: (1) non-payment of terminal leave pay; and (2) non-payment of retirement benefits.23 While the Labor Arbiter ruled that she is entitled to the commutation into cash of her unused leave credits which is the equivalent of her terminal leave pay, the former did not include her in the award of retirement benefits. This was properly raised in the Motion to Render Judgment Nunc Pro Tunc24 filed by the petitioners on October 29, 1999 before the NLRC. We see no cogent reason why she should be excluded from the over-all award of retirement benefits considering that she has participated in the proceedings before the Labor Arbiter.

WHEREFORE, this petition is PARTIALLY GRANTED. The Decision dated June 13, 2002 of the Court of Appeals in CA-G.R. SP No. 59597, directing the NLRC to act on the Motion to Reduce Bond and to give due course to the Appeal, as well as its Resolution denying the petitioners’ motion for reconsideration, are MODIFIED.

Consequently, it is DECLARED that the petitioners are entitled to retirement benefits under Rep. Act No. 7641. In addition to retirement benefits, petitioner Dr. Finaflor C. Tan is entitled to the commutation into cash of her unused leave credits which is the equivalent of her terminal leave pay. Likewise, the petitioners are entitled to attorney’s fees, equivalent to 10% of the total monetary award.

Let this case be remanded to the Labor Arbiter for the computation of the retirement benefits and terminal leave pay above-mentioned. No pronouncement as to costs.

SO ORDERED.


Manila

FIRST DIVISION

G.R. No. 156934 March 16, 2007

ALPHA C. JACULBE, Petitioner, vs.SILLIMAN UNIVERSITY,Respondent.



D E C I S I O N

CORONA, J.:

Petitioner comes to us via this petition for review on certiorari1 to challenge a decision2 of the Court of Appeals (CA) and the resolution3 affirming it.

Sometime in 1958, petitioner began working for respondent’s university medical center as a nurse.4

In a letter dated December 3, 1992,5 respondent, through its Human Resources Development Office, informed petitioner that she was approaching her 35th year of service with the university and was due for automatic retirement on November 18, 1993, at which time she would be 57 years old. This was pursuant to respondent’s retirement plan for its employees which provided that its members could be automatically retired "upon reaching the age of 65 or after 35 years of uninterrupted service to the university."6 Respondent required certain documents in connection with petitioner’s impending retirement.

A brief exchange of letters7 between petitioner and respondent followed. Petitioner emphatically insisted that the compulsory retirement under the plan was tantamount to a dismissal and pleaded with respondent to be allowed to work until the age of 60 because this was the minimum age at which she could qualify for SSS8 pension. But respondent stood pat on its decision to retire her, citing "company policy."

On November 15, 1993, petitioner filed a complaint in the National Labor Relations Commission (NLRC) for "termination of service with preliminary injunction and/or restraining order."9 On November 18, 1993, respondent compulsorily retired petitioner.

After the parties submitted their position papers, the labor arbiter rendered a decision finding respondent guilty of illegal dismissal and ordered that petitioner be reinstated and paid full backwages.10 On appeal, however, the NLRC reversed the labor arbiter’s decision and dismissed the complaint for lack of merit.11 The NLRC likewise denied petitioner’s motion for reconsideration.12 In the assailed decision and resolution, the CA affirmed the NLRC.

Hence, this petition.

http://www.lawphil.net/judjuris/juri2007/mar2007/gr_156934_2007.html#fnt12












The issues for our consideration are:

1) did respondent’s retirement plan imposing automatic retirement after 35 years of service contravene the security of tenure clause in the 1987 Constitution and the Labor Code?

2) did respondent commit illegal dismissal by retiring petitioner solely by reason of such provision in its retirement plan?

Retirement plans allowing employers to retire employees who are less than the compulsory retirement age of 65 are not per se repugnant to the constitutional guaranty of security of tenure. Article 287 of the Labor Code 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. xxx

By its express language, the Labor Code permits employers and employees to fix the applicable retirement age at below 60 years.13

However, after reviewing the assailed decision together with the rules and regulations of respondent’s retirement plan, we find that the plan runs afoul of the constitutional guaranty of security of tenure contained in Article XIII, also known as the provision on Social Justice and Human Rights.

The CA, in ruling against petitioner, premised its decision to uphold the retirement plan on her voluntary participation therein:

The petitioner in this case may, however, argue that the Pantranco case is not applicable in the case at bar as the controversy in the said case involves a compulsory retirement on the basis of the length of service rendered by the employee as agreed in an existing CBA, whereas in the present case, the private respondent compulsorily retired the petitioner not based on a CBA but on the retirement scheme provided for in the private respondent’s retirement plan. Nonetheless, this argument must fail. The contract fixing for retirement age as allowed under Article 287 of the Labor Code does not exclusively refer to CBA which provides for an agreed retirement age. The said provision explicitly allows, as well, other applicable employment contract to fix retirement age.


The records disclose that the private respondent’s Retirement Plan has been in effect for more than 30 years. The said plan is deemed integrated into the employment contract between private respondent and its employeesas evidenced by the latter’s voluntary contribution through monthly salary deductions. Previous retirees have already enjoyed the benefits of the retirement plan, and ever since the said plan was effected, no questions or disagreement have been raised, until the same was made to apply to the petitioner. xxx14 (emphasis ours)

The problem with this line of reasoning is that a perusal of the rules and regulations of the plan shows that participation therein was not voluntary at all.

Rule III of the plan, on membership, stated:

SECTION 1 – MEMBERSHIP

All full-time Filipino employees of the University will automatically become members of the Plan, provided, however, that those who have retired from the University, even if rehired, are no longer eligible for membership in the Plan. A member who continues to serve the University cannot withdraw from the Plan.

xxx xxx xxx

SECTION 2 – EFFECTIVITY OF MEMBERSHIP

Membership in the Plan starts on the day a person is hired on a full-time basis by the University.

SECTION 3 – TERMINATION OF MEMBERSHIP

Termination of membership in the Plan shall be upon the death of the member, resignation or termination of employee’s contract by the University, or retirement from the University.15 (emphasis ours).

Rule IV, on contributions, stated:

The Plan is contributory. The University shall set aside an amount equivalent to 3½% of the basic salaries of the faculty and staff. To this shall be added a 5% deduction from the basic salaries of the faculty and staff.



A member on leave with the University approval shall continue paying, based on his pay while on leave, his leave without pay should pay his contributions to the Plan. However, a member, who has been on leave without pay should pay his contributions based on his salary plus the University’s contributions while on leave or the full amount within one month immediately after the date of his reinstatement. Provided[,] further that if a member has no sufficient source of income while on leave may pay within six months after his reinstatement.16

From the language of the foregoing retirement plan rules, the compulsory nature of both membership in and contribution to the plan debunked the CA’s theory that petitioner’s "voluntary contributions" were evidence of her willing participation therein. It was through no voluntary act of her own that petitioner became a member of the plan. In fact, the only way she could have ceased to be a member thereof was if she stopped working for respondent altogether. Furthermore, in the rule on contributions, the repeated use of the word "shall" ineluctably pointed to the conclusion that employees had no choice but to contribute to the plan (even when they were on leave).

According to the assailed decision, respondent’s retirement plan "ha(d) been in effect for more than 30 years."17What was not pointed out, however, was that the retirement plan came into being in 197018 or 12 years after petitioner started working for respondent. In short, it was not part of the terms of employment to which petitioner agreed when she started working for respondent. Neither did it become part of those terms shortly thereafter, as the CA would have us believe.

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.19 In Pantranco North Express, Inc. v. NLRC,20 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 latter’s imposition of the early






retirement age in its retirement plan, opting instead to harp on petitioner’s 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,21 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.

Not only was petitioner still a good eight years away from the compulsory retirement age but she was also still fully capable of discharging her duties as shown by the fact that respondent’s board of trustees seriously considered rehiring her after the effectivity of her "compulsory retirement."22

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 employer’s 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.

At this point, reinstatement is out of the question.1awphi1.nét Petitioner is now 71 years old and therefore well over the statutory compulsory retirement age. For this reason, we grant her separation pay in lieu of reinstatement. It is also for this reason that we modify the award of backwages in her favor, to be computed from the time of her illegal dismissal on November 18, 1993 up to her compulsory retirement age.

WHEREFORE, the petition is hereby GRANTED. The decision of the Court of Appeals in CA-G.R. SP No. 50445 isREVERSED and SET ASIDE. The October 25, 1994 decision of the labor arbiter finding respondent guilty of illegal dismissal is REINSTATED, with the MODIFICATION that, in lieu of reinstatement, petitioner is awarded separation pay, the award of backwages to be computed from the time of her illegal dismissal up to her compulsory retirement age.

SO ORDERED.

THIRD DIVISION



G.R. No. 201483, August 04, 2014

CONRADO A. LIM, Petitioner, v. 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 backwages of an illegally dismissed employee.

The Facts

On February 8, 2001, 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) dismissed the complaint for lack of merit. On April 11, 2003, the National Labor Relations Commission (NLRC) in NLRC NCR No. 02-00926-01, reversed the LA and declared Lim to have been illegally dismissed. The dispositive portion of the NLRC decision reads:chanRoblesvirtualLawlibrary

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.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:chanRoblesvirtualLawlibrary

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.


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, 2007.5cralawred

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 of actual 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, 2001up 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.8cralawred

In his Comment, Lim argued that the body of the NLRC decision explictly stated that he was entitled to full backwages from the time he was illegally dismissed until his actual reinstatement, which was also in accord with Article 279 of the Labor Code and all prevailing jurisprudence.9cralawred

Ruling of the LA

On April 21, 2009, the LA issued the order10 granting the motion for execution filed by Lim. Holding that the backwages should be reckoned until April 11, 2003 only in accordance with the NLRC decision, the LA disposed:chanRoblesvirtualLawlibrary

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%) or P13,750.00; 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:cralawlawlibrary

A. Backwages:2/3/01 to 4/11/03 = 26.26P13,750.00 x 26.26 = P361,075.0013th 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 = 50,000.00C. Exemplary Damages =

20,000.00P484,023.95

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 Cautelam for Reconsideration or Recomputation and Partial Execution of Monetary Award,” insisting that his backwages should be computed up to his actual reinstatement.12On 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.13Aggrieved, petitioner filed a petition for certiorari before 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 fallo was 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 of whether 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 Appeals and 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 ofEastern Shipping Lines v. Court of Appeals in 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 Article 279 of the Labor Code and the prevailing jurisprudence provide that illegally dismissed workers are entitled to an award of backwages from the time of 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 part of the judgment, it may, in case of uncertainty or ambiguity, be referred to for 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 fallo of 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 benefits found 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 become final 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.18 Granting 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 clear from 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 claims for 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 explains that 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:Whether the petitioner’s motion for reconsideration and motion ad cautelam/appeal were belatedly filed?

Whether the computation of backwages should be reckoned until the promulgation of the NLRC Decision on April 11, 2003 or until actual reinstatement?

Whether the petitioner is entitled to the unpaid 10% annual salary increase from 1998-2000?

Whether the petitioner is entitled to the 10% annual salary increase after the year 2000?

Whether the petitioner is entitled to holiday pay?

Whether the petitioner is entitled to sick leave pay?

Whether the respondents should be held jointly and severally liable for additional moral and exemplary damages?

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 that the 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:chanRoblesvirtualLawlibrary

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:chanRoblesvirtualLawlibrary

In fine, the act of complainant-appellant herein, do not constitute a serious misconduct as to justify 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.20cralawred

[Emphasis and underscoring supplied]

Nowhere in the body of the NLRC decision was there a discussion restricting the award of backwages. Nonetheless, the fallo of the said decision limited the computation of the backwages up to its promulgation on April 11, 2003, in this wise:chanRoblesvirtualLawlibrary

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.21cralawred


Considering that the judgment decreeing 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 to the 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 in the dispositive portion violates the rule on immutability of judgments.22cralawred

The cases of Session Delights Ice Cream and Fast Foods v. Court of Appeals (Session Delights)23 andNacar v. Gallery Frames (Nacar)24 shed much light on the apparent discrepancy in the case at hand. As in the present case, both involve labor cases finding that 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 Nacar also made a declaration that separation pay in lieu of reinstatement be “computed only up to promulgation of this decision.”26 The 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.28cralawred

The Court’s disquisition in Session Delights, also referenced with approval in Nacar, is enlightening:chanRoblesvirtualLawlibrary

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 second part 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 re-computed. 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, on the other hand, posit that a re-computation 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 finality and 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 re-computed; 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 re-computed 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 re-computation 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 part of 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 to add 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 it is 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 separation pay 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 x29cralawred

[Emphases and underscoring supplied]

Although the NLRC decision in the present case did not provide a precise computation, the principles enunciated in Session Delights still 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.30cralawred

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 when separation pay in lieu of reinstatement is allowed, where the finality of the illegal dismissal decision instead becomes the reckoning point.32cralawred

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.33cralawred

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 December 26, 2007. Lim replied in a letter,35dated 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 fallo of the NLRC decision, and the 10% salary increase per annum in backwages until actual reinstatement.

The pertinent portion of the fallo of the NLRC decision reads:chanRoblesvirtualLawlibrary

The Computation and Research Unit (CRU) of this Commission is hereby directed to compute the backwages and the 10% annual increase from 1998 to 2000.36

In awarding the 10% annual salary increase from 1998 to 2000, the body of the NLRC decision explained:chanRoblesvirtualLawlibrary

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 2000.37cralawred


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:chanRoblesvirtualLawlibrary

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;38chanrobleslaw

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 of the unpaid salary increase from 1998-2000, as follows:cralawlawlibrary

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 15,125.0 10% 1,512.50 18,150.0

0 0Total 49,650.0

0

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 or other benefits that might have been received by their co-workers who were not dismissed.43cralawred

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, an employee must receive his

daily wage even if he does not work on a regular holiday. The purpose of holiday pay is to prevent diminution of the monthly income of workers on account of work interruptions declared by the State.44cralawred

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 of the 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 to his monetary award.

This matter is clearly for the LA to determine being the labor official charged with the implementation of decision46 and 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:chanRoblesvirtualLawlibrary

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 or not 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’s discretion as to the form it will take, namely – cash, time-off, or vacation allowance. Considering that the conversion options of 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 Shipping must also be awarded, as follows:chanRoblesvirtualLawlibrary

1. the unpaid 10% annual increase from 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 annum thereafter until the same is fully paid; andChanRoblesVirtualawlibrary

2. the backwages, 13th month pay as well as unpaid vacation and sick leaves shall earn a 6% per annum interest 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 Delights and Nacar, no interest was expressly awarded before the judgments became final and executory, yet in both cases, the Court, nonetheless, awarded legal interest. Session Delights explained 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 rate of legal interest, should be 12% per annumfrom finality until satisfaction.49cralawred

The rules on legal interest in Eastern Shipping have, 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 annum legal interest in judgments under Eastern Shipping shall apply only until June 30, 2013, and the new rate of 6% per annum shall be applied from July 1, 2013 onwards.50cralawred

Petitioner also prays that he be awarded interest at a rate of 6% per annum on 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:chanRoblesvirtualLawlibrary

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 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.51cralawred

[Emphasis supplied]It is plain from the above that the interest of 6% per annum for 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. Respondent HMR Philippines, Inc. is ORDERED to PAY petitioner Conrado A. Lim:chanRoblesvirtualLawlibrary

(1) backwages 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 month pay;(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.

SO ORDERED.

Republic of the PhilippinesSupreme Court

Manila

FIRST DIVISION

BPI EMPLOYEES UNION G.R. No. 178699METRO MANILA and

ZENAIDA UY, Petitioners,

- versus -

BANK OF THE PHILIPPINE

ISLANDS, Respondent.

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

BANK OF THE PHILIPPINE

G.R. No. 178735

ISLANDS, Petitioner, Present:

CORONA, C.J.,

Chairperson,- versus - LEONARDO-DE

CASTRO, BERSAMIN,

DEL CASTILLO, andBPI EMPLOYEES UNION PEREZ, ⃰ JJ.METRO MANILA and ZENAIDA UY, Promulgated:

Respondents. September 21, 2011x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

- - - - - - - - - - x

D E C I S I O N

DEL CASTILLO, J.:

The base figure in computing the award of back wages to an illegally dismissed employee is the employees basic salary plus regular allowances and

benefits received at the time of dismissal, unqualified by any wage and benefit increases granted in the interim.[1]

By these consolidated Petitions for Review on Certiorari,[2] the Bank of the Philippine Islands (BPI), BPI Employees Union-Metro Manila (the Union) and Zenaida Uy (Uy) seek modification of the Court of Appeals' (CA) Amended Decision[3] dated July 4, 2007 in CA-G.R. SP No. 92631. Said Amended Decision computed Uy's back wages and other monetary awards pursuant to the final and executory Decision[4] dated March 31, 2005 of this Court in G.R. No. 137863 based on her salary rate at the time of her dismissal and disregarded the salary increases granted in the interim as well as other benefits which were not proven to have been granted at the time of Uy's dismissal from the service. Factual Antecedents On December 14, 1995, Uys services as a bank teller in BPIs Escolta Branch was terminated on grounds of gross disrespect/discourtesy towards an officer, insubordination and absence without leave. Uy, together with the Union, thus filed a case for illegal dismissal. On December 31, 1997, the Voluntary Arbitrator[5] rendered a Decision[6] finding Uy's dismissal as illegal and ordering BPI to immediately reinstate Uy and to pay her full back wages, including all her other benefits under the Collective Bargaining Agreement (CBA) and attorneys fees.[7]

On October 28, 1998, the CA affirmed with modification the Decision of the Voluntary Arbitrator. Instead of reinstatement, the CA ordered BPI to pay Uy her separation pay. Further, instead of full back wages, the CA fixed Uy's back wages to three years.[8]

The case eventually reached this Court when both parties separately filed petitions for review on certiorari. While BPIs petition which was docketed as G.R. No. 137856 was denied for failure to comply with the requirements of a valid certification of non-forum shopping,[9] Uys and the Unions petition which was docketed as G.R. No. 137863 was given due course.

On March 31, 2005, the Court rendered its Decision[10] in G.R. No. 137863, the dispositive portion of which reads:

WHEREFORE, the instant petition is GRANTED. The

assailed 28 October 1998 Decision and 8 March 1999 Resolution of the Court of Appeals are hereby MODIFIED as follows: 1) respondent BPI is DIRECTED to pay petitioner Uy backwages from the time of her illegal dismissal until her actual reinstatement; and 2) respondent BPI is ORDERED to reinstate petitioner Uy to her former position, or to a substantially equivalent one, without loss of seniority right and other benefits attendant to the position.

SO ORDERED.[11]

Ruling of the Voluntary Arbitrator After the Decision in G.R. No. 137863 became final and executory, Uy and

the Union filed with the Office of the Voluntary Arbitrator a Motion for the Issuance of a Writ of Execution.[12]

In Uys computation, she based the amount of her back wages on

the current wage level and included all the increases in wages and benefits under the CBA that were granted during the entire period of her illegal dismissal. These include the following: Cost of Living Allowance (COLA), Financial Assistance, Quarterly Bonus, CBA Signing Bonus, Uniform Allowance, Medicine Allowance, Dental Care, Medical and Doctors Allowance, Tellers Functional Allowance, Vacation Leave, Sick Leave, Holiday Pay, Anniversary Bonus, Burial Assistance and Omega watch.[13]

BPI disputed Uy's/Unions computation arguing that it contains items which

are not included in the term back wages and that no proof was presented to show that Uy was receiving all the listed items therein before her termination. It claimed that the basis for the computation of back wages should be the employees wage rate at the time of dismissal.[14]

In an Order dated December 6, 2005,[15] the Voluntary Arbitrator agreed with Uys/Unions contention that full back wages should include all wage and benefit increases, including new benefits granted during the period of dismissal. The Voluntary Arbitrator opined that this Courts March 31, 2005 Decision in G.R. No. 137863 reinstated his December 31, 1997 Decision which ordered the payment of full back wages computed from the time of dismissal until actual reinstatement including all benefits under the CBA. Nonetheless, the Voluntary Arbitrator excluded the claims for uniform allowance, anniversary bonus and Omega watch for want of basis for their grant.

The Voluntary Arbitrator thus granted the motion for issuance of writ of

execution and computed Uys back wages in the total amount of P3,897,197.89 as follows:

Basic Monthly Salary (BMS) ..............................................P 2,062, 087.50Cost of Living Allowance.......................................................... 56, 100.00Financial

Assistance.................................................................... 39,000.00Total Quarterly Bonuses ....................................................... 693,

820.00CBA Signing Bonus................................................................... 32, 500.00Medicine Allowance................................................................... 58, 400.00Dental Care .............................................................................. 14,

120.00Medical and Doctors Allowance.................................... 58,

400.00Tellers Functional Allowance........................................ 25,

500.00Vacation Leave............................................................................ 187,

085.50Sick Leave.................................................................................... 187,

085.50Holiday Pay.................................................................................. 128,

808.65

Attorneys Fee.............................................................................. 354, 290.72

Grand

Total....................................................................................P 3,897,197.89[16]

A Writ of Execution[17] and a Notice of Garnishment[18] were subsequently issued. Ruling of the Court of Appeals Imputing grave abuse of discretion on the part of the Voluntary Arbitrator, BPI filed with the CA a Petition for Certiorari with urgent Motion for the Issuance of a Temporary Restraining Order (TRO) and/or Writ of Preliminary Injunction.[19] BPI alleged that the Voluntary Arbitrators erroneous computation of back wages amended and varied the terms of the March 31, 2005 final and executory Decision in G.R. No. 137863. Specifically, it averred that the Voluntary Arbitrator erred in computing back wages based on the current rate and in including the wage increases or benefits given in the interim as well as attorney's fees. BPI further argued that there was no basis for the award of tellers functional allowance, cash conversion of vacation and sick leaves and dental care allowance.

In their Comment,[20] Uy and the Union alleged that BPIs remedy is not

a certiorari petition under Rule 65 of the Rules of Court but an appeal from judgments, final orders and resolutions of voluntary arbitrators under Rule 43 of the Rules of Court. They also contended that BPIs petition is wanting in substance.

Meanwhile, the CA issued a TRO[21] restraining the implementation of the

December 6, 2005 Order of the Voluntary Arbitrator and the corresponding Writ of Execution issued on December 12, 2005. Upon receipt of the TRO, Uy and the Union filed an Urgent Motion for Clarification[22] on whether the TRO

encompasses even the implementation of the reinstatement aspect of the March 31, 2005 Decision of this Court in G.R. No. 137863.

The CA initially rendered a Decision[23] on May 24, 2006. In said Decision,

the CA held that BPI's resort to certiorari was proper and that the award of CBA benefits and attorney's fees has legal basis. The CA however found that the Voluntary Arbitrator erroneously computed Uy's back wages based on the current rate. The CA also deleted the award of dental allowance since it was granted in 2002 or more than six years after Uy's dismissal.

Both parties thereafter filed their respective motions for

reconsideration. Consequently, on July 4, 2007, the CA issued the herein assailed Amended Decision.

In its Amended Decision, the CA upheld the propriety of BPIs resort

to certiorari. It also ruled that this Courts March 31, 2005 Decision in G.R. No. 137863 did not reinstate the December 31, 1997 Decision of the Voluntary Arbitrator awarding full back wages including CBA benefits. The CA ruled that the computation of Uys full back wages, as defined under Republic Act No. 6715, should be based on the basic salary at the time of her dismissal plus the regular allowances that she had been receiving likewise at the time of her dismissal. It held that any increase in the basic salary occurring after Uys dismissal as well as all benefits given after said dismissal should not be awarded to her in consonance with settled jurisprudence on the matter. Accordingly, the CA pronounced that Uys basic salary, which amounted to P10,895.00 at the time of her dismissal on December 14, 1995, is to be used as the base figure in computing her back wages, exclusive of any increases and/or modifications. As Uys entitlement to COLA, quarterly bonus and financial assistance are not disputed, the CA retained their award provided that, again, the base figure for the computation of these benefits should be the rate then prevailing at the time of Uys dismissal.

The CA deleted the award of CBA signing bonus, medicine allowance,

medical and doctors allowance and dental care allowance for lack of sufficient proof that these benefits were already being received and enjoyed by Uy at the time of her dismissal. However, it held that the tellers functional allowance should rightfully be given to Uy as a regular bank teller as well as the holiday pay and

monetary equivalent of vacation and sick leave benefits. As for the attorneys fees, the CA ruled that Uys right over the same has already been resolved and has attained finality when it was neither assailed nor raised as an issue after the Voluntary Arbitrator awarded it in favor of Uy.

Finally, the CA likewise ruled that Uys reinstatement was effectively

restrained by the TRO issued by it. Pertinent portions of the CAs Amended Decision read:

All told, We find Petitioners Motion for Reconsideration to

be partly meritorious and so hold that Private Respondent Uy is entitled to the following sums to be included in the computation:

1. Basic Monthly Salary, COLA and Quarterly

Bonus, with P10,895.00 as the base figure, computed from the time of her dismissal up to her actual reinstatement;

2. Tellers Functional Allowance, based on the rate at

the time of her dismissal; 3. Monetary Equivalent of Vacation and Sick

Leaves, and Holiday Pay, based on the rate at the time of her dismissal;

4. Attorneys Fees, which is 10% of the total amount

of the award. Anent the Private Respondents Urgent Motion for

Clarification, Private Respondent asked whether the TRO issued by this Court on January 3, 2006 restrained the reinstatement of Private Respondent Uy.

We answer in the affirmative. The wordings of the Resolution ordering the issuance of a

temporary restraining order are clear. The TRO was issued to restrain the implementation and/or enforcement of the Public Respondents Order dated December 6, 200[5] and the Writ of

Execution, dated December 12, 200[5]. Considering that said Order and the ensuing Writ are for the reinstatement of Private Respondent Uy, hence, the TRO, indeed, effectively restrained Uys reinstatement.

WHEREFORE, Private Respondents Motion for Partial

Reconsideration is DENIED and Petitioners Motion for Partial Reconsideration is GRANTED IN PART. The Decision of this Court promulgated on May 24, 2006 is hereby amended, and the Public Respondent Voluntary Arbitrator is ordered to recompute the amount of backwages due to Private Respondent Uy consistent with the foregoing ruling.

SO ORDERED.[24]

From the foregoing Amended Decision, both parties separately filed

petitions before this Court. Uys and the Unions petition is docketed as G.R. No 178699, and that of BPI is docketed as G.R. No. 178735. The Court resolved to consolidate both petitions in a Resolution dated September 3, 2007.[25]

Issues

G.R. No. 178699

Uy and the Union argue that the CA effectively amended the final Decision

in G.R. No. 137863. They allege that the issues raised in G.R. No. 137863 were confined only to the propriety of the CAs award of back wages for a fixed period of three years as well as the order for the payment of separation pay in lieu of reinstatement. Hence, the Voluntary Arbitrators award of CBA benefits as components of Uys back wages and the attorneys fees, which were not raised as issues in G.R. No. 137863, should no longer be disturbed.

Uy and the Union likewise assail the CAs order restraining Uys

reinstatement despite the finality of this Courts Decision ordering such reinstatement. They also fault the CA in not dismissing BPIs petition for being an improper mode of appeal. Finally, Uy and the Union assert that a twelve percent

(12%) interest per annum should be imposed on the total amount due to Uy, computed from the finality of the Decision of this Court in G.R. No. 137863 until full compliance thereof by BPI.

G.R. No. 178735

On the other hand, BPI alleges that Uy's/Unions petition should be

dismissed for lack of proof of service of the petition on the lower court concerned as required by the Rules of Court. BPI also argues that the CA erred in including the tellers functional allowance and the vacation and sick leave cash equivalent in the computation of Uys backwages. Also, BPI questions the propriety of the award of attorneys fees.

Our Ruling

The March 31, 2005 Decision of this Court in G.R. No. 137863 did not reinstate the December 31, 1997 Decision of the Voluntary Arbitrator which ordered the payment of full back wages including all benefits under the CBA. We agree with the CAs finding that the March 31, 2005 Decision of this Court in G.R. No. 137863 did not in anyway reinstate the Voluntary Arbitrators December 31, 1997 Decision regarding the award of CBA benefits.

To recall, after Uy and the Union filed the case for illegal dismissal,

the Voluntary Arbitrator rendered his Decision[26] on December 31, 1997, the dispositive portion of which reads:

WHEREFORE, premises considered, judgment is hereby rendered declaring the dismissal of complainant Zenaida Uy as illegal and ordering the respondent Bank of the Philippine Islands to immediately reinstate her to her position as bank teller of the Escolta Branch without loss of seniority rights and with full backwages computed from the time she was dismissed on December 14, 1995

until she is actually reinstated in the service, and including all her other benefits which are benefits under their Collective Bargaining Agreement (CBA). For reasonable attorneys fees, respondent is also ordered to pay complainant the equivalent of 10% of the recoverable award in this case. SO ORDERED.[27]

On appeal, the CA, in its October 28, 1998 Decision,[28] affirmed with modification the Decision of the Voluntary Arbitrator. Instead of full back wages, the CA limited the award to three years. Also, in lieu of reinstatement, the CA ordered BPI to pay separation pay, thus:

WHEREFORE, the judgment appealed from

is AFFIRMED with the MODIFICATION that instead of reinstatement, the petitioner Bank of the Philippine Islands is DIRECTEDto pay Uy back salaries not exceeding three (3) years and separation pay of one month for every year of service. The said judgment is AFFIRMED in all other respects.

SO ORDERED.[29]

As already discussed, both parties appealed to this Court. However, BPIs

petition was dismissed outright for failure to comply with the requirements for a valid certification of non- forum shopping. Uys and the Unions petition docketed as G.R. No. 137863, on the other hand, was given due course. On March 31, 2005, the Court rendered its Decision disposing thus:

WHEREFORE, the instant petition is GRANTED. The

assailed 28 October 1998 Decision and 8 March 1999 Resolution of the Court of Appeals are hereby MODIFIED as follows: 1) respondent BPI is DIRECTED to pay petitioner Uy backwages from the time of her illegal dismissal until her actual reinstatement; and 2) respondent BPI is ORDERED to reinstate petitioner Uy to her former position, or to a substantially equivalent one, without loss of seniority right and other benefits attendant to the position.

SO ORDERED.[30]

From the foregoing, it is clear that Uys and the Unions contention that the

March 31, 2005 Decision of this Court in G.R. No. 137863 in effect reinstated the December 31, 1997 Decision of the Voluntary Arbitrator awarding full back wages including the CBA benefits, is without basis. What is clear is that the March 31, 2005 Decision modified the October 28, 1998 Decision of the CA by awarding full back wages instead of limiting the award to a period of three years. This interpretation is further bolstered by the Courts discussion in the main body of March 31, 2005 Decision as to the meaning of full back wages in view of the passage of Republic Act No. 6715[31] on March 21, 1989 which amended Article 279 of the Labor Code, as follows:

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 the 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. (Italics supplied) Jurisprudence dictates that such award of back wages is without

qualifications and deductions,[32] that is, unqualified by any wage increases or other benefits that may have been received by co-workers who were not dismissed.[33] It is likewise settled that the base figure to be used in the computation of back wages is pegged at the wage rate at the time of the employees dismissal unqualified by deductions, increases and/or modifications.[34]

We thus fully agree with the observation of the CA in its Amended

Decision that the back wages as discussed in the March 31, 2005 Decision in G.R. No. 137863 did not include salary increases and CBA benefits, viz:

There is no ambiguity or omission in the dispositive portion of the SC decision but Public Respondent erroneously concluded

that said SC decision effectively reinstated Public Respondent's December 31, 1997 Decision. There is a need to read the findings and conclusions reached by the Supreme Court in the subject decision to understand what was finally adjudicated.

In the dispositive portion of Its Decision of March 31, 2005,

the Supreme Court expressly awarded Uy full backwages from the time of her dismissal up to the time of her actual reinstatement. The full backwages, as referred to in the body of the decision pertains to backwages as defined in Republic Act No. 6715. Under said law, and as provided in numerous jurisprudence, full backwages means backwages without any deduction or qualification, including benefits or their monetary equivalent the employee is enjoying at the time of his dismissal.

Clearly, it is the intention of the Supreme Court to grant unto

Private Respondent Uy full backwages as defined under RA 6715. Consequently, any benefit or allowance over and above that allowed and provided by said law is deemed excluded under said SC Decision. The CBA benefits awarded by Public Respondent is not within the benefits under RA 6715. Said benefits are not to be included in the backwages. x x x[35]

The CA correctly deleted theaward of CBA benefits.

Thus, we find that the CA properly disregarded the salary increases and

correctly computed Uys back wages based on the salary rate at the time of Uys dismissal plus the regular allowances that she had been receiving likewise at the time of her dismissal.[36] The CA also correctly deleted the signing bonus, medicine allowance, medical and doctors allowance and dental care allowance, as they were all not proven to have been granted to Uy at the time of her dismissal from service. The award of attorneys fees is proper.

We likewise affirm the CAs award of attorneys fees. The issue on its grant has already been threshed out and settled with finality when the parties failed to question it on appeal. As aptly held by the CA in its Amended Decision:

Based on the evidence, We find Uy to be entitled to

Attorneys fees. True, the SC Decision did not include the award of attorneys fees; however, after the Public Respondent awarded said attorneys fees in favor of Private Respondent Uy, said award was neither assailed nor raised as an issue before the Court of Appeals and the Supreme Court. Hence, the March 31, 2005 Decision of the Supreme Court and the Court of Appeals Decision as modified no longer mention said award.

Consequently, as the right of Uy to attorneys fees has already

been resolved and had attained finality, Petitioner cannot now question its inclusion to the computation of awards given to Private Respondent Uy during the execution proceedings.[37]

The issue concerning the CAs temporary restraining order which covered the reinstatement aspect of this Courts final decision has been rendered moot by Uys subsequent reinstatement in BPIs payroll on August 1, 2006. While we agree with Uy's/Unions postulation that it was improper for the CA to restrain the implementation of the reinstatement aspect of this Courts final and executory Decision considering that BPIs appeal with the CA only questioned the propriety of the Voluntary Arbitrators computation of back wages, suffice it to say that this particular issue has already been rendered moot by Uys reinstatement. As manifested by BPI in its Comment,[38] Uy, with her acquiescence, was reinstated in BPI's payroll on August 1, 2006. Notably, this fact was not at all disputed or denied by Uy in any of her pleadings.BPI's resort to certiorari under Rule 65 of the Rules of Court is proper.

Section 1, Rule 41 of the Rules of Court explicitly provides that no appeal may be taken from an order of execution, the remedy of an aggrieved party being an appropriate special civil action under Rule 65 of the Rules of Court. Thus, BPI correctly availed of the remedy of certiorari under Rule 65 of the Rules of Court when it assailed the December 6, 2005 order of execution of the Voluntary Arbitrator. A legal interest at 12% per annumshould be imposed upon the monetary awards granted in favor of Uy commencing from the finality of this Courts March 31, 2005 Decision until full satisfaction thereof. Pursuant to our ruling in Eastern Shipping Lines, Inc. v. Court of Appeals,[39] the legal interest of 12% per annum shall be imposed upon the monetary award granted in favor of Uy, from the time this Courts March 31, 2005 Decision became final and executory until full satisfaction thereof, for the delay caused. This natural consequence of a final judgment is not defeated notwithstanding the fact that the parties were at variance in the computation of what is due to Uy under the judgment.[40]

The CA was properly served with a copy of Uy's/Unions petition in compliance with the Rules of Court. BPI's allegation that Uy's/Unions petition in G.R. No. 178699 should be dismissed outright for failure to furnish the lower court concerned of their petition is without basis.Records disclose that Uy's/Unions petition was accompanied with an affidavit of service with the corresponding registry receipt[41] showing that the CA was duly provided with a copy of the petition.

Uy is entitled to tellers functional allowance but not to vacation and sick leave cash conversion. BPI contends that at the time of Uys dismissal, she was no longer functioning as a teller but as a low-counter staff and as such, Uy is not anymore entitled to the tellers functional allowance pursuant to company policy. Furthermore, BPI argues that Uy is neither entitled to the monetary conversion of vacation and sick leaves for failure to prove that she is entitled to these benefits at the time of her dismissal. We rule that Uy is entitled to the tellers functional allowance since Uys function as a teller at the time of her dismissal was factually established and was never impugned by the parties during the proceedings held in the main case. Besides, BPI did not present any evidence to substantiate its allegation that Uy was assigned as a low-counter staff at the time of her dismissal. It is a hornbook rule that he who alleges must prove.[42] Neither was there any proof on record which could support this bare allegation. As to the vacation and sick leave cash conversion benefit, we disagree with the CAs pronouncement that entitlement to the same should not be necessarily proved. It is to be noted that this privilege is not statutory or mandatory in character but only voluntarily granted.[43] As such, the existence of this benefit as well as the employee's entitlement thereto cannot be presumed but should be proved by the employee.[44] The records, however, failed to prove that Uy was receiving this benefit at the time of her dismissal on December 14, 1995. The CBA covering the period April 1, 2001 to March 31, 2006, which was presented by the parties does not at all prove that vacation and sick leave credits, as well as the privilege of converting the same into cash, were granted before the CBAs effectivity in 2001. We thus hold that Uy failed to prove that she is entitled to such benefit as a matter of right. WHEREFORE, the petitions in G.R. Nos. 178699 and 178735 are both PARTIALLY GRANTED. The Amended Decision dated July 4, 2007 of the Court of Appeals in CA-G.R. SP No. 92631 is hereby AFFIRMED with MODIFICATIONS. The back wages of Zenaida Uy should be computed as follows:

1. Basic Monthly Salary, Cost of Living Allowance, Financial

Assistance and Quarterly Bonus, with P10,895.00 as the base figure which is her salary rate at the time of her dismissal, computed from the time of her dismissal on December 14, 1995 up to her reinstatement on August 1, 2006;

2. Tellers Functional Allowance, based on the rate at the time of her

dismissal; 3. Holiday Pay, based on the rate at the time of her dismissal; 4. Attorneys Fees, which is 10% of the total amount of the award;

and 5. Interest at 12% per annum on the total amount of the awards

commencing from the finality of the Decision in G.R. No. 137863 until full payment thereof.

6. The award for the monetary conversion of vacation and sick leave

is deleted.The Voluntary Arbitrator is hereby ORDERED TO RECOMPUTE the

amounts due to Zenaida Uy in accordance with the above disposition.

SO ORDERED.


Manila

THIRD DIVISION

G.R. No. 211228 November 12, 2014

UNIVERSITY OF PANGASINAN, INC., CESAR DUQUE/JUAN LLAMAS AMOR/DOMINADOR REYES,Petitioners, vs.

FLORENTINO FERNANDEZ and HEIRS OF NILDA FERNANDEZ, Respondents.

D E C I S I O N

REYES, J.:

University of Pangasinan, Inc. (UPI), an educational institution, and its former officials, Cesar Duque, Juan Llamas Amor and Dominador Reyes (collectively referred to as the petitioners), are before this Court with a petition for review on certiorari1 filed under Rule 45 of the Rules of Court to assail the Decision2 rendered by the Court of Appeals (CA) on November 5, 2013 and the Resolution3 thereafter issued on February 7, 2014 in CA-G.R. SP No. 107230. The CA reversed and set aside the Decision4 dated July 21, 2008 and Resolution5 dated November 11, 2008 of the National Labor Relations Commission’s (NLRC) First Division in NLRC-NCR CA No. 027116-01 (AE-09-06) granting the appeal filed by the petitioners against the Order6 dated August 22, 2006 ofLabor Arbiter [LA] Luis D. Flores (LA Flores). The CA, ineffect, reinstated LA Flores’ order approving an updated computation of the money claims of Florentino Fernandez (Florentino) and his now deceased wife, Nilda Fernandez (Nilda),7 both faculty members of UPI, who were illegally dismissed from service on May 9, 2000 for alleged dishonesty, abuse of authority and unbecoming conduct.

Antecedents

The CA aptly summarized the facts of the case up to the filing before it of the Petition for Certiorari8 by Florentino and the heirs of Nilda (respondents), viz:

This case arose from a complaint for illegal dismissal filed by [Florentino and Nilda] on May 18, 2000 against [UPI], its President Cesar Duque, Executive Vice-President Juan Llamas Amor and Director for Student Affairs Dominador Reyes x x x.

In a Decision dated November 6, 2000, [Labor Arbiter Rolando D. Gambito (LA Gambito)] ruled that [Florentino and Nilda] were illegally dismissed by [the petitioners]. The dispositive portion of the Decision reads:

"ACCORDINGLY, judgment is hereby rendered as follows:

1. Declaring that [the petitioners] are not liable for unfair labor practice;

2. Declaring that [Florentino and Nilda] were dismissed from their positions as college instructors without just and valid cause;

3. Ordering [UPI] and/or its president Cesar T. Duque, and vice-president, Juan Llamas Amor to pay [Florentino and Nilda] backwages, allowances and other benefits computed from the date of their dismissal on May 9, 2000 up to November 6, 2000, date of promulgation of decision;

4. Ordering that instead of reinstatement of [Florentino and Nilda] to their former positions, [the petitioners] should pay them separation pay equivalent to one (1) month salary for every year of service, a fraction of at least six (6) months shall be considered as one (1) whole year;

5. Ordering the [petitioners] to pay [Florentino and Nilda] attorney’s fees inthe amount of P20,000[.00];

6. Denying [Florentino and Nilda’s] claim for moral and exemplary damages and all other claims for want of merit.

COMPUTATION OF AWARD:

(1)

BACKWAGES (May 9-November 6, 2000);

a)

[Florentino]P10,706.95 (mo. rate) x 5 mos. &21

P63,754.

82

days =

b)

[Nilda]P11,282.28 (mo. rate) x 5 mos. &21 days =

P67,180.

83

TOTAL BACKWAGES

P 130,93

5.65

(2)

Separation Pay:

[Florentino]P10,706.95 (mo. rate) x 26 years

P278,38

0.70

[Nilda]P11,282.28 x 29 years

P327,18

6.12

TOTAL

P605,56

6.82

ATTORNEY’S FEES:

P 20,000.

00

TOTAL AWARD:

BACKWAGESP

130,935.65

SEPARATION PAYP

605,566.82

ATTORNEY’S FEESP

20,000.00

P756,50

2.47

SO ORDERED."

[The petitioners] interposed anappeal to the NLRC, which affirmed [LA Gambito’s] Decision in a Resolution dated June 29, 2001 x x x[.]

x x x x

[The petitioners] filed a Motion for Reconsiderationwhich was granted by the NLRC in a Resolution dated February 21, 2002, the dispositive portion of which reads:

"WHEREFORE, finding compelling reasons to reverse Our previous ruling, the Motion for Reconsideration is hereby GRANTED, the Resolution dated June 29, 2001 is hereby SET ASIDE and the decision of [LA Gambito] REVERSED. The complaint is hereby DISMISSED with costs against [Florentino and Nilda].

SO ORDERED."

Aggrieved, [Florentino and Nilda] filed a Petition for Certiorari with [the CA] to annul the NLRC’s Resolution dated February 21, 2002. On September 13, 2004, [the CA] rendered a Decision granting the petition. The dispositive portion thereof reads:

"WHEREFORE, premises considered, the petition is hereby GRANTED. The assailed resolution dated February 21, 2002 of x x x NLRC (First Division) in NLRC NCR Case No. SUB-RAB 01-07-05-0092-00; NLRC NCR CA No. 027116-2001 is hereby REVERSED and SET ASIDE. The

decision of [LA Gambito] dated November 6, 2000 is hereby REINSTATED.

SO ORDERED."

[UPI] appealed [the CA’s] Decision to the Supreme Court but which was denied by the Supreme Court in a Resolution dated February 21, 2005 on the ground that [UPI] failed toproperly verify its petition in accordance with Section 1, Rule 45 in relation to Section 4, Rule 7, and A.M. No. 00-2-10-SC. [UPI’s] motion for reconsideration was likewise denied with finality by the Supreme Court in a Resolution dated June 6, 2005.

As a consequence, an Entry of Judgment was issued by the Supreme Court declaring its Resolution dated February 21, 2005 final and executory as of July 11, 2005.

Subsequently, [Florentino and Nilda] moved for a re-computation of their award to include their backwages and other benefits from the date of the decision of [LA Gambito] up to the finality of the decision on July 11, 2005. They likewise moved for the issuance of a writ of execution. During the pre-execution conference, [UPI] questioned the re-computation of [Florentino and Nilda’s] backwages and awards. In view of a stand-off, [LA Flores] required both parties to submit their respective computations and justifications.

On August 22, 2006, [LA Flores] issuedan Order ruling as follows:

"Before Us is an OmnibusMotion filed by [UPI] through its legal counsel alleging among other things the adoption of the final decision of [LA Gambito] dated November 6, 2000.

"xxx Please take note that x x x the decision rendered by the [CA] reinstating the decision of [LA Gambito] x x x was declared final and executory by no less than the Supreme Court of the Philippines by its issuance of a final entry of Judgment dated July 11, 2005.

Hence, there is a need to update and upgrade the computation of money claims and separation pay which has amounted now to P2,165,467.02 as finally completed by our Labor Arbitration Associate Galo Regino L. Esperanza hereto attached as Annex "A".

The pending motion to Dismiss is hereby set aside for lack of merit.

The substitution of [the] heirs of [Nilda] is hereby granted.

SO ORDERED."

On the same date (August 22, 2006),[LA Flores] issued a writ of execution.

[UPI] filed a Motion for Reconsiderationof the above Order but it was denied by [LA Flores] in an Order dated September 12, 2006 on the ground that no motion for reconsideration of any order or decision is allowed under Section 19, Rule V of the NLRC Rules of Procedure.

In another Order likewise dated September 12, 2006, [LA Flores] denied [UPI’s] Motion to Quash Writ of Executionand directed the sheriff to proceed with the due execution of the writ.

[The petitioners] interposed an appeal to the NLRC questioning [LA Flores’] Orders dated August 22, 2006 and September 12, 2006 basically alleging that [Florentino and Nilda] are only entitled to the amount of P756,502.47 awarded by [LA Gambito] in the Decision dated November 6, 2000, and not the recomputed amount ofP2,165,467.02.

In the assailed Decision dated July 21, 2008, the NLRC granted the appeal. x x x

x x x x

[Florentino and Nilda] filed a Motion for Reconsiderationbut it was denied by the NLRC in a Resolution dated November 11, 2008 x x x[.]

x x x x9 (Citations omitted and italics in the original)

Proceedings before the CA

The respondents filed before the CA a Petition for Certiorari10 primarily anchored on the issue of what the proper basis was for the computation of backwages and benefits to be paid to an employee. They claimed that the reckoning period should be from the time of illegal dismissal on May 9, 2000 up to the finalityof the decision to be executed on July 11, 2005 as

stated in the Entry of Judgment. Further, an interest of 12% per annumshould be imposed upon the total adjudged award.

On November 5, 2013, the CA rendered the assailed Decision, the decretal portion of which reads:

WHEREFORE,premises considered, the Petition for Certiorari is GRANTED. The Decision dated July 21, 2008 and Resolution dated November 11, 2008 of the [NLRC] are REVERSEDand SET ASIDEand [LA Flores’] Order dated August 22, 2006 is REINSTATED.

[The petitioners] are ORDEREDto PAY[the respondents] the following:

1) backwages computed from May 9, 2000 (the date when [Florentino and Nilda] were illegally dismissed from employment) up to July 11, 2005 (the date of the finality of the Supreme Court’s Resolution per Entry of Judgment);

2) separation pay computed from [Florentino and Nilda’s] respective first day[s] of employment with [UPI] up to July 11, 2005 at the rate of one month pay per year of service;

3) attorney’s fees inthe amount of P20,000.00; and

4) legal interest of twelve percent (12%) per annum of the total monetary awards computed from July 11, 2005 until their full satisfaction.

The [LA] is hereby ORDEREDto make another re-computation according to the above directives.

SO ORDERED.11

In explaining its decision, the CA cited the following reasons:

We are mindful of the principle of immutability of judgment [and] that the fallo embodies the court’s decisive action on the issue/s posed, and is thus the part of the decision that must be enforced during execution. However, said doctrine finds no application in the case at bench.

It must be stressed that in illegal dismissal cases, the re- computation of backwages and similar benefits is merely an inevitable consequence of the delay in paying the awards stated in the [LA’s] decision. The instant controversy is not novel and was settled and adequately explained by the Supreme Court in the case of Session Delights Ice Cream and Fast Foods vs. [CA], viz: x x x x

In concrete terms, the question is whether a re-computation in the course of execution of the [LA’s] original computation of the awards made, pegged as of the time the decision was rendered and confirmed with modification by a final CA decision, is legally proper. The question is posed, given that the petitioner did not immediately pay the awards stated in the original [LA’s] decision; it delayed payment because it continued with the litigation until final judgment at the CA level.

A source of misunderstanding in implementing the final decision in this case proceeds from the way the original [LA] 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 second part is the computation of the awards made.On its face, the computation the [LA] 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 re-computed. This is the part, too, that the petitioner now posits should no longer be re-computed because the computation is already in the [LA’s] decision that the CA had affirmed. The public and private respondents, on the other hand, posit that a re-computation 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 reinstatement.

That the [LA’s] decision, at the same time that it found that an illegal dismissal had taken place, also made a computation of the award, is understandable in light of Section 3, Rule VIII of the then NLRC Rules of

Procedure which requires that a computation be made. This Section in part states:

[T]he [LA] of origin, in cases involving monetary awards and at all events, as far as practicable, shall embody in any such decision or order the detailed and full amount awarded.

Clearly implied from this original computation is its currency up to the finality of the [LA’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.

x x x x

We see no error in the CA decision confirming that a re-computation is necessary as it essentially considered the [LA’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 [LA’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 [LA’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). Inthis 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 [LA] of origin as the labor official charged with the implementation of decisions before the NLRC.

As the CA correctly pointed out, the basis for the computation of separation pay and backwages is Article 279 of the Labor Code, as amended, which reads:

"xxx 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."

x 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 bya 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 part of 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 to add 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 x

That the amount the petitioner shall now pay has greatly increased is a consequence that it cannot avoid as it is the risk that it ran when it continued to seek recourses against the [LA’s] decision. Article 279 provides for the consequences of illegal dismissal in no uncertain terms, qualified only by jurisprudence in its interpretation of when separation pay 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. The decision also becomes a judgment for money from which another consequence flows – the payment of interest in case ofdelay. This was what the CA correctly decreed when it provided for the payment of the legal interest of 12% from the finality of the judgment, in accordance with our ruling in Eastern Shipping Lines, Inc. v. [CA].

x x x The strict legalism in limiting the computation of the backwages and other benefits simply because the Decision of the [LA] provided a computation only up to the date of the promulgation of his Decision on November 6, 2000 cannotoverride or prejudice the substantive rights of anillegally dismissed employee under the law and extant jurisprudence.

Likewise, pursuant to the above ruling of the Supreme Court, the monetary award in favor of [the respondents] should earn legal interest at the rate of 12% fromJuly 11, 2005, the date of the finality of the Decision, as a necessary consequence of [the petitioners’] legal actions in questioning the execution of the [LA’s] Decision x x x.

x x x x

With regard to [the respondents’] claims for additional attorney’s fees as well as moral and exemplary damages, suffice it to state that the [LA] has already awarded [in their favor] the amount of P20,000.00 as attorney’s feesbut denied [their] claim for damages in his Decision dated November 6, 2000. Any modification, which effectively increases or decreases the original amount awarded as attorney’s fees is not included or contemplated in the discussion above on re-computation of monetary awards. Pursuant to the Session Delights Ice Cream and Fast Foodsruling, the award of attorney’s fees involves a specific sum and "would have continuing currency". If at all, the attorney’s fees awarded in favor of[the respondents] will earn legal interest pursuant to the rules laid down in Eastern Shipping Lines vs. [CA].

[The respondents’] claim for moral and exemplary damages was correctly denied by the [LA]. While their dismissal may be illegal, there was no showing that [the petitioners] acted in bad faith. x x x.12 (Citations omitted)

The CA, in the herein assailed Resolution issued on February 7, 2014, denied the petitioners’ Motion for Reconsideration.13

Issues

Unperturbed, the petitioners seekto reverse the CA’s ruling by presenting before this Court the arguments below:

A.

A FINAL AND EXECUTORY DECISION IS IMMUTABLE AND CAN NO LONGER BE MODIFIED. THE ORDER OF [LA] FLORES, AS SUSTAINED IN THE ASSAILED RULINGS, CANNOT MODIFY THE FINALAND EXECUTORY GAMBITO DECISION.

B.

EVEN ASSUMING ARGUENDOTHAT THE RE-COMPUTATION OF AWARDS IS VALID, [UPI] IS NOT LIABLE TO PAY BACKWAGES AND SEPARATION PAY FOR THE FULL PERIOD FROM 06 NOVEMBER 2000 UP TO 11 JULY 2005. RESPONDENTS WERE NOT REINSTATED IN THE GAMBITO DECISION.

C.

RESPONDENTS ARE NOT ENTITLED TO BACKWAGES AND SEPARATION PAY BEYOND THEIR RETIREMENT AGES. NEITHER ARE THEY ENTITLED TO LEGAL INTEREST AT 12%.14

In support of the instant petition,the petitioners allege that the doctrines enunciated in Session Delights Ice Cream and Fast Foods v. Court of Appeals (Sixth Division)15 do not apply in the case at bar. LA Gambito explicitly qualified the award of backwages and separation pay to be computed from the date of dismissal up to November 6, 2000. The said qualification appears both in the immutable and computation portions of the judgment.16

The petitioners also lament that the writ of execution issued by LA Flores included an award of 13th month pay, which is nowhere to be found in LA Gambito’s decision.17

It is further claimed that the petitioners did not immediately satisfy LA Gambito’s award because the NLRC reversed the same. Hence, the petitioners cannot be faulted for relying upon the NLRC decision and defending it before the CA. Consequently, even if backwages and separation pay were really due, their computation should not include the period from February 21, 2002 to September 13, 2004,18 during which time the NLRC’s disquisition that there was no illegal dismissal stood.19

The petitioners likewise aver that since Florentino and Nilda turned 60 on December 11, 2002 and April 30, 2002, respectively, backwages and separation pay could only be computed up to those dates. Under both UPI’s retirement plan and Article 28720 of the Labor Code, 60 is the optional retirement age. On July 18, 2005, Florentino and Nilda filed separate claims for retirement benefits. They, in effect, had admitted that 60 and not 65 is the retirement age for UPI’s faculty members. Relevantly, in Espejo v. NLRC,21 the Court ruled that an employee may retire, or may be retired by his employer upon reaching the age of 60.22

Lastly, the petitioners cite Nacar v. Gallery Frames23 to argue that legal interest should only be 6% and not 12%.24

In their Comment,25 the respondents insist that Florentino’s compulsory retirement was due only on the day before he turned 65 on December 11, 2002. Nilda, on the other hand, would have been retired only on the day before she died on May 7, 2006.26 The respondents likewise claim that 12% and not 6% should be imposed upon the award as annual interest. Ruling of the Court

This Court affirms but modifies the ruling of the CA.

The issues, being interrelated, shall be discussed jointly.

Updating the computation ofawards to include as wellbackwages and separation paycorresponding to the period afterthe rendition of LA Gambito’s

decision on November 6, 2000 up toits finality on July 11, 2005 is notviolative of the principle ofimmutability of a final andexecutory judgment.

This Court need not belabor the first two issues raised since they have been amply discussed by the CA in the assailed decision and resolution.

In Session Delightsaptly quoted by the CA and reiterated in several cases including Nacarand Gonzales v. Solid Cement Corporation,27 the Court was emphatic that:

[N]o essential change is made by a re-computation as this step is a necessary consequence that flows fromthe 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 part of 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 to add on until full satisfaction, as expressed under Article 279 of the Labor Code. The re- computation of the consequencesof illegal dismissal upon execution of the decision does not constitute an alteration or amendment of the final decision being implemented. The illegaldismissal 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 x

That the amount the petitioner shall now pay has greatly increased is a consequence that it cannot avoid asit is the risk that it ran when it continued to seek recourses against the labor arbiter’s decision. Article 279 provides for the consequences ofillegal dismissal in no uncertain terms, qualified only by jurisprudence in its interpretation of when separation pay 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 x.28 (Citation omitted and underscoring ours)

Prescinding from the above, the Court finds no reversible error committed by the CA when it affirmed LA Flores’ Order dated August 22, 2006, which allowed the updating beyond November 6, 2000 of the computation of backwages and separation pay awarded to the respondents. The CA correctly ruled that the backwages should be computed from May 9, 2000, the date of illegal dismissal, up toJuly 11, 2005, the date of the Entry of Judgment, while separation pay should be reckoned from the respective first days of employment of Florentino and Nilda up to July 11, 2005 as well.

While the dispositive portion of theherein assailed CA decision did notexplicitly refer to the 13th monthpay, its inclusion in the computationapproved by LA Flores is proper.

Presidential Decree No. 85129 (P.D. No. 851) is the law directing the 13th month payment. On the other hand, Article 279 of the Labor Code in part provides that an illegally-dismissed employee shall be entitled to full backwages, inclusive of allowances, and other benefits ortheir monetary equivalent computed from the time compensation was withheld up to the time of actual reinstatement.

In Gonzales, a final and executory decision of the LA did not explicitly award the 13th month pay. During the execution proceedings, the NLRC included it in the computation. The CA deleted the same. This Court thereafter ruled that the CA abused its discretion since "the 13th month pay fell due x x x by legal mandate."30

In the body and dispositive portion of LA Gambito’s Decision31 dated November 6, 2000, which became final and executory on July 11, 2005, he did not explicitly include the 13th month pay in the award. However, the decision stated that Florentino and Nilda were entitled to full backwages and other benefits.

Subsequently, the Labor Arbitration Associate’s updated computation of the award32 included the 13th month pay and was approved by LA Flores through the latter’s August 22, 2006 Order. The NLRC set aside LA Flores’ order, but the CA reinstated the same. The dispositive portion of the CA decision expressly ordered the award of backwages, separation pay,

attorney’s fees and legal interest, but conspicuously absent was a reference to the inclusion of the 13th month pay.33

The Court finds that despite the CA’s non-explicit reference to the 13th month pay, following the doctrine in Gonzales, its inclusion in the computation is proper. Entitlement to it is a right granted by P.D. No. 851. Besides, the computation of award for backwages and other benefits is a mere legal consequence of the finding that there was illegal dismissal.34

In computing the backwages andbenefits awarded to therespondents, the reckoning periodis not interrupted by the NLRC’sreversal of LA Gambito’s finding ofillegal dismissal.

The petitioners argue that even if backwages and benefits were really due, the computation should not includethe period from February 21, 2002 to September 13, 2004, during which time the NLRC’s disquisition that there was no illegal dismissal stood.

The argument fails to persuade.

In Gonzales, the Court stated that the increase in the amount that the corporation had to pay "is a consequence that it cannot avoid as it is the risk that it ran when it continued to seek recourses against the [LA’s] decision."35

Further, in Reyes v. NLRC, et al.,36 the Court declared that:

One of the natural consequences of a finding that an employee has been illegally dismissed is the payment of backwages corresponding to the period from his dismissal up to actual reinstatement. The statutory intent of this matter is clearly discernible. The payment of backwages allows the employee to recover from the employer that which he has lost by way of wages as a result of his dismissal. Logically, it must be computed from the date of petitioner’s illegal dismissal up to the time of actual reinstatement. There can be no gap or interruption, lest we defeat the very reason of the law in granting the same. x x x.37 (Citation omitted and underscoring ours)

Although in Reyes, the issue relates to the delay in filing of the complaint for illegal dismissal from the time of termination, there is no preclusion to

apply the doctrine that there should be no gap or interruption in the reckoning period during which the dismissed employee is entitled to backwages and benefits. The statutory intent in the award of backwages and benefits is clear. Further, as declared in Gonzales, an employer takes a risk in assailing the LA’s finding of illegal dismissal, but there is no insulation from the consequences therefrom.

The CA properly imposed a legalinterest upon the total monetaryaward reckoned from the Entry ofJudgment on July 11, 2005 until fullsatisfaction thereof, but the Courtmodifies the rate indicated in theassailed decision to conform to thedoctrine in Nacar.

In Gonzales, the Court stated that when there is a finding of illegal dismissal and an award of backwages and separation pay, "[t]he decision also becomes a judgment for money from which another consequence flows—the payment of interest in case of delay."38

Again in Gonzales, the Court instructed that legal interest is imposable upon the "total unpaid judgment amount, from the time x x x the decision (on the merits in the original case) became final."39

In the case at bar, the CA properly imposed the legal interest upon the total monetary award even if none was explicitly included in the fine print of LA Gambito’s decision and LA Flores’ order. The imposition of legal interest is not to be considered as an alteration of the final judgment to be executed. The legal interest is already deemed read into the decision.

As to the correct rate of imposable interest, the petitioners argue that only 6% and not 12% is mandated pursuant to the ruling in Nacar.

Nacaris instructive anent the rate ofinterest imposable upon the total adjudged monetary award, viz:

[T]he Bangko Sentral ng Pilipinas Monetary Board (BSP-MB), in its Resolution No. 796 dated May 16, 2013, approved the amendment of Section 240 of Circular No. 905, Series of 1982 and, accordingly, issued

Circular No. 799,41 Series of 2013, effective July 1, 2013, the pertinent portion of which reads:

The Monetary Board, in its Resolution No. 796 dated 16 May 2013, approved the following revisions governing the rate of interest in the absence of stipulation in loan contracts, thereby amending Section 2 of Circular No. 905, Series of 1982:

Section 1. The rate of interest for the loan or for bearance of any money, goods or credits and the rate allowed in judgments, in the absence of an express contract as to such rate of interest, shall be six percent (6%) per annum.

Section 2. In view of the above, Subsection X305.1 of the Manual of Regulations for Banks and Sections 4305Q.1, 4305S.3 and 4303P.1 of the Manual of Regulations for Non-Bank Financial Institutions are hereby amended accordingly.

This Circular shall take effect on 1 July 2013.

Thus, from the foregoing, in the absence of an express stipulation as to the rate of interest that would govern the parties, the rate of legal interest for loans or forbearance ofany money, goods or credits and the rate allowed in judgments shall no longer be twelve percent (12%) per annum– as reflected in the case of Eastern Shipping Linesand Subsection X305.1 of the Manual of Regulationsfor Banks and Sections 4305Q.1, 4305S.3 and 4303P.1 of the Manual of Regulations for Non-Bank Financial Institutions, before its amendment by BSP-MB Circular No. 799 – but will now be six percent (6%) per annum effective July 1, 2013. It should be noted, nonetheless, that the new rate could only be applied prospectively and not retroactively. Consequently, the twelve percent (12%) per annumlegal interest shall apply only until June 30, 2013. Come July 1, 2013 the new rate of six percent (6%) per annum shall be the prevailing rate of interest when applicable.

x x x x

Nonetheless, with regard to those judgments that have become final and executory prior to July 1, 2013, saidjudgments shall not be disturbed and shall continue to be implemented applying the rate of interest fixed therein.42 (Some citations omitted and underscoring ours)

In Nacar, during the execution proceedings, the LA, NLRC and the CA did not impose a legal interestupon the total adjudged award. Thereafter, this Court granted the petition filed before it by the dismissed employee pleading for the imposition upon the monetary award of the legal interest, which the Court declared to be 12% per annumfrom the date of the Entry of Judgment on May 27, 2002 to June 30, 2013, and 6% per annum from July 1, 2013 until their full satisfaction.

Similarly, in the case of Florentino and Nilda, LA Gambito’s decision became final and executory on July11, 2005, during which time, the prevailing rate of legal interest was 12%. Note, however, that LA Gambito’s decision and subsequently, even LA Flores’ Order, dated August 22, 2006, made no explicit award of legal interest. As discussed above though, the imposition of the legal interest is already deemed read into the decision and order. For the same reason, the CA, in the herein assailed decision, expressly included the said interest in the computation.

In Nacar, and in the case before this Court now, the judgments finding that the employees were illegally dismissed became final and executory before July 1, 2013. In both cases too, the said judgments did not explicitly include the imposition of the legal interest upon the total adjudged award. In the case of Florentino and Nilda, it was the CA, which first expressly included the legal interest in the equation. In Nacar, this Court made the explicit inclusion and pegged the rate at12% from the date of the Entry of Judgment up to June 30, 2013, and at 6% from July 1, 2013 until full satisfaction thereof. The circumstances in the instant petition are similar to the foregoing, hence, Nacarfinds application. Consequently, the Court imposes upon the total adjudged award an interest of 12% interest per annum reckoned from July 11, 2005 until June30, 2013. The interest of 6% per annumis imposed from July 1, 2013 until full satisfaction of the judgment award.

The computation of backwages andseparation pay due to Florentinoand Nilda properly includes theperiod from 2002 to 2005.

The petitioners point out that Florentino and Nilda turned 60 on December 11, 2002 and April 30, 2002, respectively. Thus, backwages and separation pay could only be computed up to those dates since under both UPI’s retirement plan and Article 287 ofthe Labor Code, 60 is the optional

retirement age. Further, on July 18, 2005, Florentino and Nilda filed separate claims for retirement benefits, hence, effectively admitting that 60 and not 65 is the retirement age for UPI’s faculty members.

Nilda and Florentino were born on April 30, 1942 and December 11, 1942, respectively. In 2002, both had turned 60 and can opt to retire. The Court cannot, however, agree that this isthe cut-off date for the computation of backwages and separation pay due to them because of the reasons discussed below.

First, 60 is merely an optional but not the mandatory retirement age. Second, the evidence submitted do not showat whose option it is to retire the faculty members before the age of 65. Third, there is no proof whatsoever that the faculty members of UPI indeed retire at 60 years of age. Fourth, Florentino and Nilda filed claims for retirement pay in 2005 when they were both 63, hence, their acts did not necessarily constitute an admission that 60 is the retirement age for UPI’s faculty members.

In view of the above, the Court finds that no mistake was committed by LA Flores and the CA in allowing the computation of backwages and separation pay due to Florentino and Nilda to include the period beyond 2002.

WHEREFORE, premises considered, the Decision of the Court of Appeals rendered on November 5, 2013,and the Resolution issued on February 7, 2014 in CA-G.R. SP No. 107230 are AFFIRMED with MODIFICATIONS. The petitioners herein, University of Pangasinan, Inc. and its former officials, Cesar Duque, Juan Llamas Amor and Dominador Reyes are ORDERED TO PAY Florentino Fernandez and the Heirs of Nilda Fernandez the following:

(1) backwages, including the 13th month pay, to be computed from May 9, 2000, the date of illegal dismissal from employment, up to July 11, 2005, the date of finalityof the Court Resolution in G.R. No. 166103 per Entry of Judgment;

(2) separation pay computed from Florentino Fernandez and Nilda Fernandez’s respective first days of employment with the University of Pangasinan, Inc. up to July 11, 2005 at the rate of one month pay per year of service;

(3) attorney's fees in the amount of P20,000.00; and

(4) interest of twelve percent ( 12%) per annum of the total monetary award, computed from July 11, 2005 to June 30, 2013, and six percent (6%) per annum from July 1, 2013 until full satisfaction.

The LABOR ARBITER is hereby ORDERED to make a RECOMPUTATION of the total monetary benefits awarded and due to Florentino Fernandez and Nilda Fernandez in accordance with this Resolution.

SO ORDERED.


Manila

THIRD DIVISION

G.R. No. 162447 December 27, 2006

ANABELLE MUAJE-TUAZON and ALMER R. ABING, petitioners, vs.WENPHIL CORPORATION, ELIZABETH P. ORBITA*, and THE COURT OF APPEALS, respondents.

D E C I S I O N

QUISUMBING, J.:

Before us is a petition for review under Rule 45 assailing the Decision1 dated August 27, 2003 of the Court of Appeals in CA-G.R. SP No. 75419 and its Resolution dated February 23, 2004 denying reconsideration. The Court of Appeals reversed the National Labor Relations Commission's finding of illegal dismissal.

The pertinent facts of the case are as follows:

Petitioners Annabelle M. Tuazon and Almer R. Abing worked as branch managers of the Wendy's food chains in MCU Caloocan and Meycauayan, respectively, of respondent Wenphil Corporation. From September 14 to November 8, 1998, Wendy's had a "Biggie Size It! Crew Challenge" promotion contest. The branch with the highest sales of "Biggie Size It" wins. The Meycauayan and MCU Caloocan branches won first and second places, respectively. Because of its success, respondent had a second run of the contest from April 26 to July 4, 1999. The Meycauayan branch won again. The MCU Caloocan branch failed to make it among the winners.2

Before the start of the third round from October 18, 1999 to January 16, 2000, Abing was assigned to the SM North Edsa Annex branch while Tuazon was assigned to the Meycauayan branch. Before the announcement of the third round winners, management received reports that as early as the first round of the contest, the Meycauayan, MCU Caloocan, Tandang Sora and Fairview branches cheated. An internal investigation ensued.3

On February 3, 2000, petitioners were summoned to the main office regarding the reported anomaly. Petitioners denied there was cheating. Immediately thereafter, petitioners were notified, in writing, of hearings scheduled on February 4 and 7, 2000 and of their immediate suspension.4 Thereafter, on February 29, 2000, petitioners were dismissed.

Petitioners filed, with the Regional Arbitration Branch, a complaint for illegal suspension and dismissal against respondent Wenphil Corporation and its General Manager, Elizabeth P. Orbita. Petitioners insisted that they were innocent of the accusations and were dismissed without cause. They claimed that the real reason for their termination was their persistent demands for overtime and holiday pay. They aver that (a) they were not notified beforehand why they were called to the main office; (b) their right to due process was denied; and (c) they were not afforded counsel despite their request for one.

In their defense, respondents maintained that petitioners were terminated for dishonesty amounting to serious misconduct and willful breach of trust. They presented affidavits of witnesses, receipts and other documents to support the charges against petitioners. Respondents posited that since petitioners occupied managerial positions, loss of trust and confidence by the employer was sufficient cause for their termination. Moreover, respondents insisted that petitioners were afforded due process, with two

required notices, and the opportunity to defend themselves. Lastly, respondents asserted that the preventive suspension was necessary for the protection of the company's property and possible destruction of evidence pending investigation.

During the hearings, the Labor Arbiter disregarded the affidavits of respondents' witnesses for being executed only after the company investigation and held that respondents' evidence insufficiently proved the alleged cheating of the petitioners. The Labor Arbiter ruled in favor of the petitioners as follows:

WHEREFORE, judgment is hereby rendered finding the suspension and dismissal of complainants Almer R. Abing and Annabelle M. Tuazon illegal. Respondent WENPHIL CORPORATION is hereby ordered to:

1. immediately reinstate complainants to their former or equivalent position, actual or in payroll at, their option, without loss of seniority rights and benefits.

2. to pay them backwages from the time they were illegally dismissed on 03 February 2000 until their reinstatement, computed as of the date of this decision, as follows:

([P15,000] + 3,000 + 2,000 + 1,000) x 10 months = P210,000.00 for each complainant.

3. to pay them ten (10%) percent attorney's fees.

All other claims are dismissed for lack of merit.

SO ORDERED.5

Respondents appealed to the National Labor Relations Commission (NLRC), which affirmed with modification the decision of the Labor Arbiter in this wise:

WHEREFORE, the appealed Decision is hereby AFFIRMED but with the following modifications:

1. Declaring the preventive suspension of the complainants to be legal. Accordingly, the period from February 3-28, 2000, during which they were preventively suspended, shall be excluded in the computation of their backwages; and

2. Ordering respondent company to pay complainants separation pay, in lieu of reinstatement, at the rate of one (1) month salary for every year of service to be computed from the date of employment up to the actual payment thereof.

SO ORDERED.6

Denied reconsideration, respondents elevated the case to the Court of Appeals, which found substantial proof of petitioners' misconduct. The appellate court held that although the affidavits were executed after the company investigation, the facts and issues therein were discussed during the investigation and submitted to the management before the decision to dismiss the petitioners was made. It also ruled that respondent Wenphil sufficiently complied with the due process requirement. The appellate court ruled as follows:

WHEREFORE, premises considered, the instant petition for certiorari is hereby GRANTED. The assailed resolutions of the National Labor Relations Commission dated January 30, 2002 and September 24, 2002 are hereby SET ASIDE. In lieu thereof, judgment is hereby rendered REVERSING and SETTING ASIDE the decision of the Labor Arbiter, dated December 8, 2000 rendered in NLRC NCR Cases Nos. 30-03-00993-00 and 30-03-01020-00. The private respondents' complaints filed in the aforementioned cases are hereby DISMISSED.

SO ORDERED.7

Petitioners moved for reconsideration but the same was denied. Petitioners now come before us assigning the following errors:

I. THE FACTUAL BASES USED BY THE COURT OF APPEALS IN REVERSING THE RULING OF THE NLRC IS (sic) ACTUALLY UNFOUNDED;

II. THE COURT OF APPEALS HAD DELIBERATELY OVERLOOKED THE FACT THAT THE INTERROGATION PROCESS CONDUCTED BY THE EMPLOYER IS VOID AB INITIO, HENCE, CANNOT BE USED AS A SUBSTITUTE FOR LAWFUL INVESTIGATION FOR PURPOSES OF DUE PROCESS;

III. THE COURT OF APPEALS HAD WHIMSICALLY GIVE[N] TOO MUCH WEIGHT TO THE AFFIDAVITS WHICH ASIDE FROM BEING SELF-SERVING, ARE NON-EXISTEN[T] AT THE TIME THEY WERE USED AS A GROUND FOR THE DISMISSAL OF THE PETITIONERS;

IV. IN REVERSING THE FACTUAL FINDINGS OF THE LABOR TRIBUNALS, THE COURT OF APPEALS WENT TO THE EXTENT OF OVER-EXPANDING ITS CERTIORARI JURISDICTION, IN VIOLATION OF LAW AND ESTABLISHED JURISPRUDENCE ON THE MATTER;

V. THE LABOR ARBITER, BEING THE ONE WHO ACTUALLY CONDUCTED THE HEARING IN THE ARBITRATION STATE AND HAD PERSONALLY OBSERVED THE DEMEANOR OF [THE] PARTIES DURING THE HEARING, HIS FACTUAL FINDINGS (sic) CARRY HEAVIER WEIGHT THAN THE EVALUATION OF [THE] COURT OF APPEALS' JUSTICES WHO MERELY RELY (sic) THEIR FINDINGS SOLELY FROM THE RECORD OF THE CASE (sic).8

Essentially, we are asked to resolve the following issues: (1) Did the appellate court act in excess of its jurisdiction when it reviewed factual findings of the Labor Arbiter and NLRC? (2) Was there compliance with the due process requirement? (3) Were petitioners illegally dismissed?

On the threshold procedural issue, petitioners contend that the appellate court went beyond its jurisdiction when it re-evaluated the findings of facts of the Labor Arbiter also affirmed by the NLRC.

Respondents counter that the appellate court correctly exercised its power of certiorari since the Labor Arbiter and the NLRC gravely abused their discretion when it failed to consider the affidavits of the witnesses against the petitioners. They also point out that the present petition raises questions of fact which are not proper in a petition for review under Rule 45.

The rule is that a petition for certiorari is available when any tribunal, board or officer exercising judicial or quasi-judicial functions has acted without or in excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction.9 Generally, factual issues are not proper subjects for certiorari which is limited to the issue of jurisdiction and grave abuse of discretion.10 Grave abuse of discretion is committed when the board, tribunal or officer exercising judicial function fails to consider evidence adduced by the parties.11 In the present case, the Labor Arbiter and the NLRC disregarded the affidavits of the witnesses against the petitioners.

Moreover, where the party's contention appears to be clearly tenable, or where the broader interest of justice and public policy so require, the court may, in a certiorari proceeding, correct the error committed.12 Hence, in our view, the Court of Appeals correctly exercised its power of certiorari when it re-evaluated the findings of fact by the Labor Arbiter and the NLRC.

The general rule is that the jurisdiction of this Court in a petition for review under Rule 45 is confined to a review of questions of law. Further, the findings of fact of the Court of Appeals, when supported by substantial evidence, are conclusive and binding on the parties, and are not reviewed by this Court, except when the findings are contrary with those of the lower court or quasi-judicial bodies.13 The contradictory findings of the NLRC and the Court of Appeals provide sufficient justification for our review of the facts.

On the second issue. Did Wenphil comply with the due process requirement before dismissing the petitioners?

Petitioners aver that their right to due process was violated. They were not notified of the accusation against them before they were summoned to the main office of Wenphil on February 3, 2000 for investigation. Further, they assert that the company investigation was irregular or void since they were not allowed to seek the assistance of counsel, and that they were not present when the testimonies of the witnesses were taken, and they were not given the opportunity to confront the witnesses against them.

First, the law requires that the employee be given two written notices before terminating his employment, namely: (1) a notice which apprises the employee of the particular acts or omissions for which his dismissal is

sought; and (2) the subsequent notice which informs the employee of the employer's decision to dismiss him.14

The records show that the petitioners were given written notices informing them that they were charged with serious misconduct and dishonesty in relation to the "Biggie Size It! Crew Challenge" program, and notifying them of the scheduled hearings on February 4 and 7, 2000.15 Although notices were given to them only on February 3, 2000, it will be noted that there were other investigations or hearings set after February 4 and 7 where they had the opportunity to explain their side after they were apprised of their alleged infractions. We note likewise that petitioners, thinking that their verbal explanations were sufficient, opted to forego a written explanation, and did not appear during the set hearing. These actions were choices that petitioners voluntarily made.

On record are the written notices dated February 29, 2000,16 whereby petitioners were notified of respondents' decision to terminate them. Petitioner Tuazon acknowledged receipt of her notice as evidenced by her signature on the company's copy. Petitioner Abing's refusal to sign the company's copy, despite his own copy having been tendered to him, does not invalidate the notice of his termination.

Petitioners contend that they were not given the opportunity to confront the witnesses against them. Petitioners must be reminded, however, that confrontation of witnesses is required only in adversarial criminal prosecutions, and not in company investigations for the administrative liability of the employee.17 Additionally, actual adversarial proceedings become necessary only for clarification, or when there is a need to propound searching questions to witnesses who give vague testimonies. This is not an inherent right, and in company investigations, summary proceedings may be conducted.18

Finally, on the last issue. Petitioners contend that respondents did not sufficiently prove the existence of a just cause for their termination, hence they were illegally dismissed.

There is no denying that petitioners were managerial employees. They executed management policies, they had the power to hire personnel and assign them tasks; and discipline the employees in their branch. They recommended actions on employees to the head office.19 Pertinent is Article

212 (m) of the Labor Code defining a managerial employee as one who is vested with powers or prerogatives to lay down and execute management policies and/or hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees. Consequently, as managerial employees, in the case of petitioners, the mere existence of grounds for the loss of trust and confidence justify their dismissal.20 Pursuant to our ruling in Caoile v. National Labor Relations Commission,21 as long as the employer has a reasonable ground to believe that the managerial employee concerned is responsible for the purported misconduct, or the nature of his participation renders him unworthy of the trust and confidence demanded by his position, the managerial employee can be dismissed.

In the present case, the tape receipts presented by respondents showed that there were anomalies committed in the branches managed by the petitioners. On the principle of respondeat superior or command responsibility alone, petitioners may be held liable for negligence in the performance of their managerial duties, unless petitioners can positively show that they were not involved. Their position requires a high degree of responsibility that necessarily includes unearthing of fraudulent and irregular activities.22 Their bare, unsubstantiated and uncorroborated denial of any participation in the cheating does not prove their innocence nor disprove their alleged guilt.23 Additionally, some employees declared in their affidavits24 that the cheating was actually the idea of the petitioners.

Petitioners make much of the fact that the affidavits were executed only after the investigation. This is of no moment. For even without the affidavits, sufficient basis exists for respondents' loss of trust and confidence on the petitioners as managerial officers.

WHEREFORE, the petition is DENIED. The Decision dated August 27, 2003 and Resolution dated February 23, 2004 of the Court of Appeals in CA-G.R. SP No. 75419 are hereby AFFIRMED.

No pronouncement as to costs.

SO ORDERED.


Baguio City

SECOND DIVISION

G.R. No. 195227 April 21, 2014

FROILAN M. BERGONIO, JR., DEAN G. PELAEZ, CRISANTO O. GEONGO, WARLITO O. JANAYA, SALVADOR VILLAR, JR., RONALDO CAFIRMA, RANDY LUCAR, ALBERTO ALBUERA, DENNIS NOPUENTE and ALLAN SALVACION, Petitioners, vs.SOUTH EAST ASIAN AIRLINES and IRENE DORNIER, Respondents.

D E C I S I O N

BRION, J.:

We resolve in this petition for review on certiorari1 the challenge to the September 30, 2010 decision2 and the January 13, 2011 resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. 112011.

This CA decision reversed the July 16, 2008 decision4 of the National Labor Relations Commission (NLRC), which, in turn, affirmed the March 13, 2008 order5 of the Labor Arbiter (LA) in NLRC Case No. 00-04-05469- 2004. The LA granted the Motion filed by petitioners Froilan M. Bergonio, Jr., Dean G. Pelaez, et.al., (collectively, the petitioners) for the release of the garnished amount to satisfy the petitioners’ accrued wages.

The Factual Antecedents

On April 30, 2004, the petitioners filed before the LA a complaint for illegal dismissal and illegal suspension with prayer for reinstatement against respondents South East Asian Airlines (SEAIR) and Irene Dornier as SEAIR’s President (collectively, the respondents).

In a decision dated May 31, 2005, the LA found the petitioners illegally dismissed and ordered the respondents, among others, to immediately reinstate the petitioners with full backwages. The respondents received their copy of this decision on July 8, 2005.6

On August 20, 2005, the petitioners filed before the LA a Motion for issuance of Writ of Execution for their immediate reinstatement.

http://www.lawphil.net/judjuris/juri2014/apr2014/gr_195227_2014.html#fnt6






During the scheduled pre-execution conference held on September 14, 2005, the respondents manifested their option to reinstate the petitioners in the payroll. The payroll reinstatement, however, did not materialize. Thus, on September 22, 2005, the petitioners filed before the LA a manifestation for their immediate reinstatement.

On October 3, 2005, the respondents filed an opposition to the petitioners’ motion for execution.7 They claimed that the relationship between them and the petitioners had already been strained because of the petitioners’ threatening text messages, thus precluding the latter’s reinstatement.

On October 7, 2005, the LA granted the petitioners’ motion and issued a writ of execution.8

The respondents moved to quash the writ of execution with a prayer to hold in abeyance the implementation of the reinstatement order.9 They maintained that the relationship between them and the petitioners had been so strained that reinstatement was no longer possible.

The October 7, 2005 writ of execution was returned unsatisfied. In response, the petitioners filed a motion for re-computation of accrued wages, and, on January 25, 2006, a motion for execution of the re-computed amount. On February 16, 2006, the LA granted this motion and issued an alias writ of execution.10

On February 21, 2006, the respondents issued a Memorandum11 directing the petitioners to report for work on February 24, 2006. The petitioners failed to report for work on the appointed date. On February 28, 2006, the respondents moved before the LA to suspend the order for the petitioners’ reinstatement.12

Meanwhile, the respondents appealed with the NLRC the May 31, 2005 illegal dismissal ruling of the LA.

In an order dated August 15, 2006,13 the NLRC dismissed the respondents’ appeal for non-perfection. The NLRC likewise denied the respondents’ motion for reconsideration in its November 29, 2006 resolution, prompting the respondents to file before the CA a petition for certiorari.

The NLRC issued an Entry of Judgment on February 6, 2007 declaring its November 29, 2006 resolution final and executory. The petitioners forthwith








filed with the LA another motion for the issuance of a writ of execution, which the LA granted on April 24, 2007. The LA also issued another writ of execution.14 A Notice of Garnishment was thereafter issued to the respondents’ depositary bank – Metrobank-San Lorenzo Village Branch, Makati City – in the amount of P1,900,000.00 on June 6, 2007.

On December 18, 2007, the CA rendered its decision (on the illegal dismissal ruling of the LA) partly granting the respondents’ petition. The CA declared the petitioners’ dismissal valid and awarded them P30,000.00 as nominal damages for the respondents’ failure to observe due process.

The records show that the petitioners appealed the December 18, 2007 CA decision with this Court. In a resolution dated August 4, 2008, the Court denied the petition. The Court likewise denied the petitioners’ subsequent motion for reconsideration, and thereafter issued an Entry of Judgment certifying that its August 4, 2008 resolution had become final and executory on March 9, 2009.

On January 31, 2008, the petitioners filed with the LA an Urgent Ex-Parte Motion for the Immediate Release of the Garnished Amount.

In its March 13, 2008 order,15 the LA granted the petitioners’ motion; it directed Metrobank-San Lorenzo to release the P1,900,000.00 garnished amount. The LA found valid and meritorious the respondents’ claim for accrued wages in view of the respondents’ refusal to reinstate the petitioners despite the final and executory nature of the reinstatement aspect of its (LA’s) May 31, 2005 decision. The LA noted that as of the December 18, 2007 CA decision (that reversed the illegal dismissal findings of the LA), the petitioners’ accrued wages amounted to P3,078,366.33.

In its July 16, 2008 resolution,16 the NLRC affirmed in toto the LA’s March 13, 2008 order. The NLRC afterwards denied the respondents’ motion for reconsideration for lack of merit.17

The respondents assailed the July 16, 2008 decision and September 29, 2009 resolution of the NLRC via a petition for certiorari filed with the CA.

The CA’s ruling

The CA granted the respondents’ petition.18 It reversed and set aside the July 16, 2008 decision and the September 29, 2009 resolution of the NLRC and






remanded the case to the Computation and Examination Unit of the NLRC for the proper computation of the petitioners’ accrued wages, computed up to February 24, 2006.

The CA agreed that the reinstatement aspect of the LA’s decision is immediately executory even pending appeal, such that the employer is obliged to reinstate and pay the wages of the dismissed employee during the period of appeal until the decision (finding the employee illegally dismissed including the reinstatement order) is reversed by a higher court. Applying this principle, the CA noted that the petitioners’ accrued wages could have been properly computed until December 18, 2007, the date of the CA’s decision finding the petitioners validly dismissed.

The CA, however, pointed out that when the LA’s decision is "reversed by a higher tribunal, an employee may be barred from collecting the accrued wages if shown that the delay in enforcing the reinstatement pending appeal was without fault" on the employer’s part. In this case, the CA declared that the delay in the execution of the reinstatement order was not due to the respondents’ unjustified act or omission. Rather, the petitioners’ refusal to comply with the February 21, 2006 return-to-work Memorandum that the respondents issued and personally delivered to them (the petitioners) prevented the enforcement of the reinstatement order.

Thus, the CA declared that, given this peculiar circumstance (of the petitioners’ failure to report for work), the petitioners’ accrued wages should only be computed until February 24, 2006 when they were supposed to report for work per the return-to-work Memorandum. Accordingly, the CA reversed, for grave abuse of discretion, the NLRC’s July 16, 2008 decision that affirmed the LA’s order to release the garnished amount.

The Petition

The petitioners argue that the CA gravely erred when it ruled, contrary to Article 223, paragraph 3 of the Labor Code, that the computation of their accrued wages stopped when they failed to report for work on February 24, 2006. They maintain that the February 21, 2006 Memorandum was merely an afterthought on the respondents’ part to make it appear that they complied with the LA’s October 7, 2005 writ of execution. They likewise argue that had the respondents really intended to have them report for work to comply with the writ of execution, the respondents could and should have issued the

Memorandum immediately after the LA issued the first writ of execution. As matters stand, the respondents issued the Memorandum more than four months after the issuance of this writ and only after the LA issued the alias writ of execution on February 16, 2006.

Additionally, the petitioners direct the Court’s attention to the several pleadings that the respondents filed to prevent the execution of the reinstatement aspect of the LA’s May 31, 2005 decision, i.e., the Opposition to the Issuance of the Writ of Execution, the Motion to Quash the Writ of Execution and the Motion to Suspend the Order of Reinstatement. They also point out that in all these pleadings, the respondents claimed that strained relationship barred their (the petitioners’) reinstatement, evidently confirming the respondents’ lack of intention to reinstate them.

Finally, the petitioners point out that the February 21, 2006 Memorandum directed them to report for work at Clark Field, Angeles, Pampanga instead of at the NAIA-Domestic Airport in Pasay City where they had been assigned. They argue that this directive to report for work at Clark Field violates Article 223, paragraph 3 of the Labor Code that requires the employee’s reinstatement to be under the same terms and conditions prevailing prior to the dismissal. Moreover, they point out that the respondents handed the Memorandum only to Pelaez, who did not act in representation of the other petitioners, and only in the afternoon of February 23, 2006.

Thus, the petitioners claim that the delay in their reinstatement was in fact due to the respondents’ unjustified acts and that the respondents never really complied with the LA’s reinstatement order.

The Case for the Respondents

The respondents counter, in their comment,19 that the issues that the petitioners raise in this petition are all factual in nature and had already considered and explained in the CA decision. In any case, the respondents maintain that the petitioners were validly dismissed and that they complied with the LA’s reinstatement order when it directed the petitioners to report back to work, which directive the petitioners did not heed.

The respondents add that while the reinstatement of an employee found illegally dismissed is immediately executory, the employer is nevertheless not prohibited from questioning this rule especially when the latter has valid


and legal reasons to oppose the employee’s reinstatement. In the petitioners’ case, the respondents point out that their relationship had been so strained that reinstatement was no longer possible. Despite this strained relationship, the respondents point out that they still required the petitioners to report back to work if only to comply with the LA’s reinstatement order. Instead of reporting for work as directed, the petitioners, however, insisted for a payroll reinstatement, which option the law grants to them (the respondents) as employer. Also, contrary to the petitioners’ claim, the Memorandum directed them to report at Clark Field, Pampanga only for a re-orientation of their respective duties and responsibilities.

Thus, relying on the CA’s ruling, the respondents claim that the delay in the petitioners’ reinstatement was in fact due to the latter’s refusal to report for work after the issuance of the February 21, 2006 Memorandum in addition to their strained relationship.


We GRANT the petition.Preliminary considerations: jurisdictionallimitations of the Court’s Rule 45 review ofthe CA’s Rule 65 decision in labor cases

In a Rule 45 petition for review on certiorari, what we review are the legal errors that the CA may have committed in the assailed decision, in contrast with the review for jurisdictional errors that we undertake in an original certiorari action. In reviewing the legal correctness of the CA decision in a labor case taken under Rule 65 of the Rules of Court, we examine the CA decision in the context that it determined the presence or the absence of grave abuse of discretion in the NLRC decision before it and not on the basis of whether the NLRC decision, on the merits of the case, was correct. Otherwise stated, we proceed from the premise that the CA undertook a Rule 65 review, not a review on appeal, of the NLRC decision challenged before it. Within this narrow scope of our Rule 45 review, the question that we ask is: Did the CA correctly determine whether the NLRC committed grave abuse of discretion in ruling on the case?20

In addition, the Court’s jurisdiction in a Rule 45 petition for review on certiorari is limited to resolving only questions of law.


The present petition essentially raises the question – whether the petitioners may recover the accrued wages prior to the CA’s reversal of the LA’s May 31, 2005 decision. This is a question of law that falls well within the Court’s power in a Rule 45 petition.

Resolution of this question of law, however, is inextricably linked with the largely factual issue of whether the accrued wages should be computed until December 17, 2008 when the CA reversed the illegal dismissal findings of the LA or only until February 24, 2006 when the petitioners were supposed to report for work per the February 21, 2006 Memorandum. In either case, the determination of this factual issue presupposes another factual issue, i.e., whether the delay in the execution of the reinstatement order was due to the respondents’ fault. As questions of fact, they are proscribed by our Rule 45 jurisdiction; we generally cannot address these factual issues except to the extent necessary to determine whether the CA correctly found the NLRC in grave abuse of discretion in affirming the release of the garnished amount despite the respondents’ issuance of and the petitioners’ failure to comply with the February 21, 2006 return-to-work Memorandum.

The jurisdictional limitations of our Rule 45 review of the CA’s Rule 65 decision in labor cases, notwithstanding, we resolve this petition’s factual issues for we find legal errors in the CA’s decision. Our consideration of the facts taken within this narrow scope of our factual review power convinced us, as our subsequent discussion will show, that no grave abuse of discretion attended the NLRC decision.

Nature of the reinstatement aspect of theLA’s decision on a finding of illegaldismissal

Article 223 (now Article 229)21 of the Labor Code governs appeals from, and the execution of, the LA’s decision. Pertinently, paragraph 3, Article 223 of the Labor Code provides:

Article 223. APPEAL

x x x x

In any event, the decision of the Labor Arbiter reinstating a dismissed or separated employee, insofar as the reinstatement aspect is concerned, shall immediately be executory, pending appeal. The employee shall either be


admitted back to work under the same terms and conditions prevailing prior to his dismissal or separation or, at the option of the employer, merely reinstated in the payroll. The posting of a bond by the employer shall not stay the execution for reinstatement provided herein. [Emphasis and underscoring supplied]

Under paragraph 3, Article 223 of the Labor Code, the LA’s order for the reinstatement of an employee found illegally dismissed is immediately executory even during pendency of the employer’s appeal from the decision. Under this provision, the employer must reinstate the employee – either by physically admitting him under the conditions prevailing prior to his dismissal, and paying his wages; or, at the employer’s option, merely reinstating the employee in the payroll until the decision is reversed by the higher court.22 Failure of the employer to comply with the reinstatement order, by exercising the options in the alternative, renders him liable to pay the employee’s salaries.23

Otherwise stated, a dismissed employee whose case was favorably decided by the LA is entitled to receive wages pending appeal upon reinstatement, which reinstatement is immediately executory.24 Unless the appellate tribunal issues a restraining order, the LA is duty bound to implement the order of reinstatement and the employer has no option but to comply with it.25

Moreover, and equally worth emphasizing, is that an order of reinstatement issued by the LA is self-executory, i.e., the dismissed employee need not even apply for and the LA need not even issue a writ of execution to trigger the employer’s duty to reinstate the dismissed employee.

In Pioneer Texturizing Corp. v. NLRC, et. al.,26 decided in 1997, the Court clarified once and for all this self-executory nature of a reinstatement order. After tracing back the various Court rulings interpreting the amendments introduced by Republic Act No. 671527 on the reinstatement aspect of a labor decision under Article 223 of the Labor Code, the Court concluded that to otherwise "require the application for and issuance of a writ of execution as prerequisites for the execution of a reinstatement award would certainly betray and run counter to the very object and intent of Article 223, i.e., the immediate execution of a reinstatement order."28








In short, therefore, with respect to decisions reinstating employees, the law itself has determined a sufficiently overwhelming reason for its immediate and automatic execution even pending appeal.29 The employer is duty-bound to reinstate the employee, failing which, the employer is liable instead to pay the dismissed employee’s salary. The Court’s consistent and prevailing treatment and interpretation of the reinstatement order as immediately enforceable, in fact, merely underscores the right to security of tenure of employees that the Constitution30 protects.

The employer is obliged to pay thedismissed employee’s salary if herefuses to reinstate until actualreinstatement or reversal by a highertribunal; circumstances that may bar anemployee from receiving the accrued wages

As we amply discussed above, an employer is obliged to immediately reinstate the employee upon the LA’s finding of illegal dismissal; if the employer fails, it is liable to pay the salary of the dismissed employee. Of course, it is not always the case that the LA’s finding of illegal dismissal is, on appeal by the employer, upheld by the appellate court. After the LA’s decision is reversed by a higher tribunal, the employer’s duty to reinstate the dismissed employee is effectively terminated. This means that an employer is no longer obliged to keep the employee in the actual service or in the payroll. The employee, in turn, is not required to return the wages that he had received prior to the reversal of the LA’s decision.31

The reversal by a higher tribunal of the LA’s finding (of illegal dismissal), notwithstanding, an employer, who, despite the LA’s order of reinstatement, did not reinstate the employee during the pendency of the appeal up to the reversal by a higher tribunal may still be held liable for the accrued wages of the employee, i.e., the unpaid salary accruing up to the time the higher tribunal reverses the decision.32 The rule, therefore, is that an employee may still recover the accrued wages up to and despite the reversal by the higher tribunal. This entitlement of the employee to the accrued wages proceeds from the immediate and self-executory nature of the reinstatement aspect of the LA’s decision.

By way of exception to the above rule, an employee may be barred from collecting the accrued wages if shown that the delay in enforcing the





reinstatement pending appeal was without fault on the part of the employer. To determine whether an employee is thus barred, two tests must be satisfied: (1) 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. Note that under the second test, the delay must be without the employer’s fault. 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 LA’s decision.33

Application of the two-fold test; thepetitioners are entitled to receive theiraccrued salaries until December 18, 2007

As we earlier pointed out, the core issue to be resolved is whether the petitioners may recover the accrued wages until the CA’s reversal of the LA’s decision. An affirmative answer to this question will lead us to reverse the assailed CA decision for legal errors and reinstate the NLRC’s decision affirming the release of the garnished amount. Otherwise, we uphold the CA’s decision to be legally correct. To resolve this question, we apply the two-fold test.

First, the existence of delay - whether there was actual delay or whether the order of reinstatement pending appeal was not executed prior to its reversal? We answer this test in the affirmative.

To recall, on May 31, 2005, the LA rendered the decision finding the petitioners illegally dismissed and ordering their immediate reinstatement. Per the records, the respondents received copy of this decision on July 8, 2005. On August 20, 2005, the petitioners filed before the LA a Motion for Issuance of Writ of Execution for their immediate reinstatement. The LA issued the Writ of Execution on October 7, 2005. From the time the respondents received copy of the LA’s decision, and the issuance of the writ of execution, until the CA reversed this decision on December 17, 2008, the respondents had not reinstated the petitioners, either by actual reinstatement or in the payroll. This continued non-execution of the reinstatement order in fact moved the LA to issue an alias writ of execution on February 16, 2006 and another writ of execution on April 24, 2007.


From these facts and without doubt, there was actual delay in the execution of the reinstatement aspect of the LA’s May 31, 2005 decision before it was reversed in the CA’s decision.

Second, the cause of the delay – whether the delay was not due to the employer’s unjustified act or omission. We answer this test in the negative; we find that the delay in the execution of the reinstatement pending appeal was due to the respondents’ unjustified acts.

In reversing, for grave abuse of discretion, the NLRC’s order affirming the release of the garnished amount, the CA relied on the fact of the issuance of the February 21, 2006 Memorandum and of the petitioners’ failure to comply with its return-to-work directive. In other words, with the issuance of this Memorandum, the CA considered the respondents as having sufficiently complied with their obligation to reinstate the petitioners. And, the subsequent delay in or the non-execution of the reinstatement order was no longer the respondents’ fault, but rather of the petitioners who refused to report back to work despite the directive.

Our careful consideration of the facts and the circumstances that surrounded the case convinced us that the delay in the reinstatement pending appeal was due to the respondents’ fault. For one, the respondents filed several pleadings to suspend the execution of the LA’s reinstatement order, i.e., the opposition to the petitioners’ motion for execution filed on October 3, 2005; the motion to quash the October 7, 2005 writ of execution with prayer to hold in abeyance the implementation of the reinstatement order; and the motion to suspend the order for the petitioners’ reinstatement filed on February 28, 2006 after the LA issued the February 16, 2006 alias writ of execution. These pleadings, to our mind, show a determined effort on the respondents’ part to prevent or suspend the execution of the reinstatement pending appeal.

Another reason is that the respondents, contrary to the CA’s conclusion, did not sufficiently notify the petitioners of their intent to actually reinstate them; neither did the respondents give them ample opportunity to comply with the return-to-work directive. We note that the respondents delivered the February 21, 2006 Memorandum (requiring the petitioners to report for work on February 24, 2006) only in the afternoon of February 23, 2006. Worse, the respondents handed the notice to only one of the petitioners – Pelaez – who did not act in representation of the others. Evidently, the petitioners

could not reasonably be expected to comply with a directive that they had no or insufficient notice of.

Lastly, the petitioners continuously and actively pursued the execution of the reinstatement aspect of the LA’s decision, i.e., by filing several motions for execution of the reinstatement order, and motion to cite the respondents in contempt and re-computation of the accrued wages for the respondents’ continued failure to reinstate them.

These facts altogether show that the respondents were not at all sincere in reinstating the petitioners. These facts – when taken together with the fact of delay – reveal the respondents’ obstinate resolve and willful disregard of the immediate and self-executory nature of the reinstatement aspect of the LA’s decision.

A further and final point that we considered in concluding that the delay was due to the respondents’ fault is the fact that per the 2005 Revised Rules of Procedure of the NLRC (2005 NLRC Rules),34 employers are required to submit a report of compliance within ten (10) calendar days from receipt of the LA’s decision, noncompliance with which signifies a clear refusal to reinstate. Arguably, the 2005 NLRC Rules took effect only on January 7, 2006; hence, the respondents could not have been reasonably expected to comply with this duty that was not yet in effect when the LA rendered its decision (finding illegal dismissal) and issued the writ of execution in 2005. Nevertheless, when the LA issued the February 16, 2006 alias writ of execution and the April 24, 2007 writ of execution, the 2005 NLRC Rules was already in place such that the respondents had become duty-bound to submit the required compliance report; their noncompliance with this rule all the more showed a clear and determined refusal to reinstate.

All told, under the facts and the surrounding circumstances, the delay was due to the acts of the respondents that we find were unjustified. We reiterate and emphasize, Article 223, paragraph 3, of the Labor Code mandates the employer to immediately reinstate the dismissed employee, either by actually reinstating him/her under the conditions prevailing prior to the dismissal or, at the option of the employer, in the payroll. The respondents' failure in this case to exercise either option rendered them liable for the petitioners' accrued salary until the LA decision was reversed by the CA on December 17, 2008. We, therefore, find that the NLRC, in affirming the release of the garnished amount, merely implemented the mandate of Article


223; it simply recognized as immediate and self-executory the reinstatement aspect of the LA's decision.

Accordingly, we reverse for legal errors the CA decision.1âwphi1 We find no grave abuse of discretion attended the NLRC's July 16, 2008 resolution that affirmed the March 13, 2008 decision of the LA granting the release of the garnished amount.

WHEREFORE, in light of these considerations, we hereby GRANT the petition. We REVERSE and SET ASIDE the September 30, 2010 decision and the January 13, 2011 resolution of the Court of Appeals (CA) in CA-G.R. Sp No. 112011. Accordingly, we REINSTATE the July 16, 2008 decision of the National Labor Relations Commission (NLRC) affirming the March 13, 2008 order of the Labor Arbiter in NLRC Case No. 00-04-05469-2004.

Costs against the respondents South East Asian Airlines and Irene Dornier.

SO ORDERED.

labor relations seious misconduct part 2

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